AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 2000
- -------------------------------------------------------------------------------
FILE NOS. 333-94785
811-07467
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. 2 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
AMENDMENT NO. 14 /X/
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
(Exact Name of Registrant)
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
(Name of Depositor)
ONE ALLSTATE DRIVE
P.O. BOX 9095
FARMINGVILLE, NEW YORK 11738
516/451-5300
(Address and Telephone Number of Depositor's Principal Offices)
MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
847-402-2400
(Name, Address and Telephone Number of Agent for Service)
COPIES TO:
RICHARD T. CHOI, ESQUIRE TERRY R. YOUNG, ESQUIRE
FREEDMAN, LEVY, KROLL & SIMONDS ALFS, INC.
1050 CONNECTICUT AVENUE, N.W. 3100 SANDERS ROAD
SUITE 825 SUITE J5B
WASHINGTON, D.C. 20036-5366 NORTHBROOK, IL 60062
Approximate date of proposed public offering: As soon as practicable after the
effective date of the registration statement.
Title of Securities Being Registered: Units of Interest in the Allstate Life of
New York Separate Account A under deferred variable annuity contracts.
<PAGE>
ALLSTATE CUSTOM PORTFOLIO VARIABLE ANNUITY
Allstate Life Insurance Company Prospectus dated May 1, 2000
of New York
P.O. Box 94038, Palatine, IL 60094-4038
Telephone Number: 1-800-692-4682
Allstate Life Insurance Company of New York ("Allstate New York") is offering
the Allstate Custom Portfolio Variable Annuity, a group flexible premium
deferred variable annuity contract ("Contract"). This prospectus contains
information about the Contract that you should know before investing. Please
keep it for future reference.
The Contract currently offers 29 investment alternatives ("investment
alternatives"). The investment alternatives include the fixed account ("Fixed
Account") and 28 variable sub-accounts ("Variable Sub-Accounts") of the Allstate
Life of New York Separate Account A ("Variable Account"). Each Variable
Sub-Account invests exclusively in shares of one of the following mutual fund
portfolios ("Portfolios"):
<TABLE>
<CAPTION>
<S> <C>
AIM Variable Insurance Funds: Oppenheimer Variable Account Funds:
AIM V.I. Balanced Fund Oppenheimer Aggressive Growth Fund/VA
AIM V.I. Capital Appreciation Fund Oppenheimer Main Street Growth & Income Fund/VA
AIM V.I. Government Securities Fund Oppenheimer Strategic Bond Fund/VA
AIM V.I. Growth Fund The Dreyfus Socially Responsible Growth Fund, Inc.:
AIM V.I. High Yield Fund Dreyfus Socially Responsible Growth Fund
AIM V.I. International Equity Fund Dreyfus Stock Index Fund, Inc.:
AIM V.I. Value Fund Dreyfus Stock Index Fund
Fidelity Variable Insurance Products Fund (VIP): Dreyfus Variable Investment Fund:
Fidelity VIP Contrafund Portfolio Dreyfus VIF Appreciation Portfolio
Fidelity VIP Equity-Income Portfolio Wells Fargo Variable Trust:
Fidelity VIP Growth Portfolio Wells Fargo VT Asset Allocation Fund
Fidelity VIP Growth Opportunities Portfolio Wells Fargo VT Equity Income Fund
Fidelity VIP Overseas Portfolio Wells Fargo VT Growth Fund
Franklin Templeton Variable Insurance Products Trust: Delaware Group Premium Fund, Inc.:
Templeton Asset Strategy Fund - Class 2 Delaware GP Small Cap Value Series
Templeton International Securities Fund - Class 2 Delaware GP Trend Series
HSBC Variable Insurance Funds:
HSBC VI Cash Management Fund
HSBC VI Fixed Income Fund
HSBC VI Growth & Income Fund
</TABLE>
We (Allstate New York) have filed a Statement of Additional Information, dated
May 1, 2000, with the Securities and Exchange Commission ("SEC"). It contains
more information about the Contract and is incorporated herein by reference,
which means it is legally a part of this prospectus. Its table of contents
appears on page __ of this prospectus. For a free copy, please write or call us
at the address or telephone number above, or go to the SEC's Web site
(http://www.sec.gov). You can find other information and documents about us,
including documents that are legally part of this prospectus, at the SEC's Web
site.
The Securities and Exchange Commission has not approved or
disapproved the securities described in this prospectus, nor
has it passed on the accuracy or the adequacy of this
prospectus. Anyone who tells you otherwise is committing a
federal crime.
The Contracts may be distributed through broker-dealers
that have relationships with banks or other
IMPORTANT financial institutions or by employees of such banks.
NOTICES However, the Contracts are not deposits, or obligations
of, or guaranteed by such institutions or any federal
regulatory agency. Investment in the Contracts involves
investment risks, including possible loss of principal.
The Contracts are not FDIC insured.
The Contracts are only available in New York.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
<S> <C> <C>
Important Terms........................................
Overview The Contract at a Glance...............................
How the Contract Works.................................
Expense Table..........................................
Financial Information..................................
The Contract...........................................
Purchases..............................................
Contract Features Contract Value.........................................
Investment Alternatives................................
The Variable Sub-Accounts........................
The Fixed Account ...............................
Transfers........................................
Expenses...............................................
Access To Your Money...................................
Income Payments........................................
Death Benefits.........................................
More Information:
Allstate New York................................
The Variable Account.............................
The Portfolios...................................
Other Information The Contract ..........................................
Qualified Plans .................................
Legal Matters....................................
Year 2000........................................
Taxes..................................................
Annual Reports and Other Documents.....................
Performance Information................................
Experts................................................
Appendix A - Market Value Adjustment Examples..........
Appendix B - Withdrawal Adjustment Example ............
Statement of Additional Information Table of Contents..
</TABLE>
<PAGE>
IMPORTANT TERMS
- ------------------------------------------------------------------------------
This prospectus uses a number of important terms that you may not be familiar
with. The index below identifies the page that describes each term. The first
use of each term in this prospectus appears in highlights.
Page
Accumulation Phase.......................................
Accumulation Unit .......................................
Accumulation Unit Value .................................
Allstate New York ("We").................................
Anniversary Values.......................................
Annuitant................................................
Automatic Additions Program .............................
Automatic Portfolio Rebalancing Program..................
Beneficiary .............................................
Cancellation Period .....................................
*Contract ................................................
Contract Anniversary.....................................
Contract Owner ("You") ..................................
Contract Value ..........................................
Contract Year...........................................
Death Benefit Anniversary ...............................
Dollar Cost Averaging Program............................
Due Proof of Death.......................................
Fixed Account............................................
Guarantee Periods ......................................
Income Plan .............................................
Investment Alternatives .................................
Issue Date ..............................................
Market Value Adjustment .................................
Payout Phase.............................................
Payout Start Date .......................................
Portfolios ..............................................
Preferred Withdrawal Amount..............................
Qualified Contracts .....................................
Right to Cancel .........................................
SEC......................................................
Settlement Value .......................................
Systematic Withdrawal Program ...........................
Treasury Rate ...........................................
Valuation Date...........................................
Variable Account ........................................
Variable Sub-Account ....................................
* The Allstate Custom Portfolio Variable Annuity is a group contract and
your ownership is represented by certificates. References to "Contract" in
this prospectus include certificates, unless the context requires
otherwise.
<PAGE>
THE CONTRACT AT A GLANCE
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The following is a snapshot of the Contract. Please read the remainder of
this prospectus for more information.
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Flexible Payments
You can purchase a Contract with as little
as $3,000 ($2,000 for a "Qualified
Contract," which is a Contract issued with
a qualified plan). You can add to your
Contract as often and as much as you like,
but each payment must be at least $100. You
must maintain a minimum account size of
$1,000.
---------------------------------- -----------------------------------------
---------------------------------- -----------------------------------------
Right to Cancel You may cancel your Contract
within 10 days after receipt ("Cancellation
Period"). Upon cancellation we will return
your purchase payments adjusted to the
extent federal or state law permits to
reflect the investment experience of any
amounts allocated to the Variable Account.
---------------------------------- -----------------------------------------
---------------------------------- -----------------------------------------
Expenses You will bear the following expenses:
o Total Variable Account annual fees equal
to 1.25% of average daily net assets
o Annual contract maintenance charge of
$30 (with certain exceptions)
o Withdrawal charges ranging from 0% to 7%
of payment withdrawn (with certain
exceptions)
o Transfer fee of $10 after 12th transfer
in any Contract Year (fee currently
waived)
o State premium tax (New York currently
does not impose one).
In addition, each Portfolio pays expenses
that you will bear indirectly if you invest
in a Variable Sub-Account.
---------------------------------- -----------------------------------------
---------------------------------- -----------------------------------------
Investment
Alternatives The Contract offers 29 investment
alternatives including:
o the Fixed Account (which credits
interest at rates we guarantee), and
o 28 Variable Sub-Accounts investing in
Portfolios offering professional money
management by:
A I M Advisors, Inc.
Fidelity Management & Research Company
Templeton Investment Counsel, Inc.
OppenheimerFunds, Inc.
The Dreyfus Corporation
Wells Fargo Bank, N.A.
Delaware Management Company
HSBC Asset Management (Americas) Inc.
To find out current rates being paid on the
Fixed Account, or to find out how the
Variable Sub-Accounts have performed,
please call us at 1-800-692-4682.
---------------------------------- -----------------------------------------
<PAGE>
----------------------------------- ----------------------------------------
Special Services For your convenience, we offer
these special services:
o Automatic Portfolio Rebalancing
Program
o Automatic Additions Program
o Dollar Cost Averaging Program
o Systematic Withdrawal Program
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
Income Payments You can choose fixed income
payments, variable income payments, or a
combination of the two. You can receive
your income payments in one of the
following ways:
o life income with guaranteed payments
o a joint and survivor life income with
guaranteed payments
o guaranteed payments for a specified
period (5 to 30 years)
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
Death Benefits If you die before the Payout
Start Date, we will pay the death benefit
described in the Contract.
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
Transfers Before the Payout Start Date, you may
transfer your Contract value ("Contract
Value") among the investment alternatives,
with certain restrictions. Transfers to
the Fixed Account must be at least $500.
We do not currently impose a fee upon
transfers. However, we reserve the right
to charge $10 per transfer after the 12th
transfer in each "Contract Year," which we
measure from the date we issue your
contract or a Contract anniversary
("Contract Anniversary").
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
Withdrawals You may withdraw some or all of your
Contract Value at anytime during the
Accumulation Phase. Full or partial
withdrawals also are available under
limited circumstances on
or after the Payout Start Date.
In general, you must withdraw at least $50
at a time ($1,000 for withdrawals made
during the Payout Phase). A 10% federal
tax penalty may apply if you withdraw
before you are 59 1/2 years old. A
withdrawal charge and Market Value
Adjustment also may apply.
----------------------------------- ----------------------------------------
<PAGE>
HOW THE CONTRACT WORKS
- ------------------------------------------------------------------------------
The Contract basically works in two ways.
First, the Contract can help you (we assume you are the Contract owner) save for
retirement because you can invest in up to 29 investment alternatives and pay no
federal income taxes on any earnings until you withdraw them. You do this during
what we call the "Accumulation Phase" of the Contract. The Accumulation Phase
begins on the date we issue your Contract (we call that date the "Issue Date")
and continues until the Payout Start Date, which is the date we apply your money
to provide income payments. During the Accumulation Phase, you may allocate your
purchase payments to any combination of the Variable Sub-Accounts and/or Fixed
Account. If you invest in the Fixed Account, you will earn a fixed rate of
interest that we declare periodically. If you invest in any of the Variable
Sub-Accounts, your investment return will vary up or down depending on the
performance of the corresponding Portfolios.
Second, the Contract can help you plan for retirement because you can use it to
receive retirement income for life and/or for a pre-set number of years, by
selecting one of the income payment options (we call these "Income Plans")
described on page __. You receive income payments during what we call the
"Payout Phase" of the Contract, which begins on the Payout Start Date and
continues until we make the last payment required by the Income Plan you select.
During the Payout Phase, if you select a fixed income payment option, we
guarantee the amount of your payments, which will remain fixed. If you select a
variable income payment option, based on one or more of the Variable
Sub-Accounts, the amount of your payments will vary up or down depending on the
performance of the corresponding Portfolios. The amount of money you accumulate
under your Contract during the Accumulation Phase and apply to an Income Plan
will determine the amount of your income payments during the Payout Phase.
The timeline below illustrates how you might use your Contract.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<C>
Issue Payout Start
Date Accumulation Phase Date Payout
Phase
--------------------------------------------------------------------------------------------------------------------------->
You save for retirement
| | | |
You buy You elect to receive income You can receive Or you can
a Contract payments or receive a lump income payments receive income
sum payment for a set period payments for life
</TABLE>
As the Contract owner, you exercise all of the rights and privileges provided by
the Contract. If you die, any surviving Contract owner, or if there is none, the
Beneficiary will exercise the rights and privileges provided by the Contract.
See "The Contract." In addition, if you die before the Payout Start Date, we
will pay a death benefit to any surviving Contract owner or, if none, to your
Beneficiary. See "Death Benefits."
Please call us at 1-800-692-4682 if you have any question about how the
Contract works.
<PAGE>
EXPENSE TABLE
- ------------------------------------------------------------------------------
The table below lists the expenses that you will bear directly or indirectly
when you buy a Contract. The table and the examples that follow do not reflect
premium taxes because New York currently does not impose premium taxes on
annuities. For more information about Variable Account expenses, see "Expenses,"
below. For more information about Portfolio expenses, please refer to the
accompanying prospectuses for the Portfolios.
- ------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of purchase payments)*
<TABLE>
<CAPTION>
Number of Complete Years
Since We Received the Purchase
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Payment Being Withdrawn: 0 1 2 3 4 5 6 7+
Applicable Charge: 7% 6% 5% 4% 3% 2% 1% 0%
Annual Contract Maintenance Charge............................$30.00**
Transfer Fee..................................................$10.00***
-----------------------------------------------------------------------
</TABLE>
* Each Contract Year, you may withdraw up to 15% of purchase payments
without incurring a withdrawal charge or a Market Value Adjustment.
** We will waive this charge in certain cases. See "Expenses."
***Applies solely to the thirteenth and subsequent transfers within a
Contract Year excluding transfers due to dollar cost averaging or
automatic portfolio rebalancing. We are currently waiving the transfer
fee.
------------------------------------------------------------------------
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average daily net assets deducted from each Variable
Sub-Account)
Mortality and Expense Risk Charge...................................1.15%
Administrative Expense Charge.......................................0.10%
Total Variable Account Annual Expenses..............................1.25%
------------------------------------------------------------------------
<PAGE>
----------------------------------------------------------------------------
PORTFOLIO ANNUAL EXPENSES
(after any fee waivers or reductions) (as a percentage of Portfolio average
daily net assets)(1)
<TABLE>
<CAPTION>
Total Annual
Management 12b-1 Fee Other Expenses Portfolio Expenses
Fee
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds:
AIM V.I. Balanced Fund(2) 0.65% 0.56% 1.21%
AIM V.I. Capital Appreciation Fund 0.62% 0.11% 0.73%
AIM V.I. Growth Fund 0.63% 0.10% 0.73%
AIM V.I. Government Securities Fund 0.50% 0.40% 0.90%
AIM V.I. High Yield Fund(2) 0.35% 0.79% 1.14%
AIM V.I. International Equity Fund 0.75% 0.22% 0.97%
AIM V.I. Value Fund 0.61% 0.15% 0.76%
Fidelity Variable Insurance Products Fund (VIP):
Fidelity VIP Contrafund Portfolio(3) 0.58% 0.09% 0.67%
Fidelity VIP Equity Income Portfolio(3) 0.48% 0.09% 0.57%
Fidelity VIP Growth Portfolio(3) 0.58% 0.08% 0.66%
Fidelity VIP Growth Opportunities Portfolio(3) 0.58% 0.11% 0.69%
Fidelity VIP Overseas Portfolio(3) 0.73% 0.18% 0.91%
Franklin Templeton Variable Insurance Products Trust (4)
Templeton Asset Strategy Fund - Class 2(4) 0.60% 0.25%(5) 0.18% 1.03%
Templeton International Securities Fund - Class 2(4) 0.69% 0.25%(5) 0.19% 1.13%
Oppenheimer Variable Account Funds:
Oppenheimer Aggressive Growth Fund/VA 0.66% 0.01% 0.67%
Oppenheimer Main Street Growth & Income Fund/VA 0.73% 0.05% 0.78%
Oppenheimer Strategic Bond Fund/VA 0.74% 0.04% 0.78%
The Dreyfus Socially Responsible Growth Fund, Inc.:
Dreyfus Socially Responsible Growth Fund 0.75% 0.04% 0.79%
Dreyfus Stock Index Fund, Inc.:
Dreyfus Stock Index Fund 0.25% 0.01% 0.26%
Dreyfus Variable Investment Fund:
Dreyfus VIF Appreciation Portfolio(6) 0.75% 0.03% 0.78%
Wells Fargo Variable Trust:
Wells Fargo VT Asset Allocation Fund 0.42% 0.25%(7) 0.33% 1.00%
Wells Fargo VT Equity Income Fund 0.38% 0.25%(7) 0.37% 1.00%
Wells Fargo VT Growth Fund 0.32% 0.25%(7) 0.43% 1.00%
Delaware Group Premium Fund, Inc.:
Delaware GP Small Cap Value Series 0.75% 0.10% 0.85%
Delaware GP Trend Series 0.75% 0.07% 0.82%
HSBC Variable Insurance Funds:
HSBC VI Cash Management Fund(2) 0.00% 0.93% 0.93%
HSBC VI Fixed Income Fund(2) 0.00% 1.15% 1.15%
HSBC VI Growth & Income Fund(2) 0.33% 0.82% 1.15%
</TABLE>
Footnotes
(1) Figures shown in the table are for the year ended December 31,1999.
(2) Absent voluntary reductions and reimbursements for certain Portfolios,
management fees, 12b-1 fees, other expenses, and total Portfolio annual
expenses expressed as a percentage of average net assets of the Portfolios
would have been as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Management 12b-1 Other Total Annual
Portfolio Fee Fee Expenses Portfolio Expenses
----------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------- -- --------------------- ---------------------- -------------------------
<S> <C> <C> <C>
<C>
AIM V.I. Balanced Fund 0.75% 0.56% 1.31%
-------------------------------------------------- -- --------------------- ---------------------------------------------
-------------------------------------------------- -- --------------------- ---------------------------------------------
AIM V.I. High Yield Fund 0.63% 0.79% 1.42%
-------------------------------------------------- -- --------------------- ---------------------------------------------
HSBC VI Cash Management Fund 0.35% 1.51% 1.86%
-------------------------------------------------- -- --------------------- ---------------------------------------------
HSBC VI Fixed Income Fund 0.55% 2.16% 2.71%
-------------------------------------------------- -- --------------------- ----------------------------------------------
-------------------------------------------------- -- --------------------- ----------------------------------------------
HSBC VI Growth & Income Fund 0.55% 0.93% 1.48%
- ------------------------------------------------------ -- --------------------- ------------------------------------------
----------------------------------------------------- -- --------------------- -------------------------------------------
AIM Advisors, Inc. may discontinue all or part of these voluntary
reductions and reimbursements at any time. HSBC Asset Management (Americas)
Inc. will notify investors of any material revision or cancellation of a
waiver or expense reimbursement, which may be terminated at any time at the
option of HSBC Asset Management (Americas) Inc.
(3) A portion of the brokerage commissions that these Portfolios paid was used
to reduce the Portfolios' expenses. In addition, certain Portfolios, or
Fidelity Management & Research Company on behalf of certain Portfolios,
have entered into arrangements with their custodian whereby credits
realized as a result of uninvested cash balances were used to reduce
custodian expenses. Including these reductions, total operating expenses
would have been 0.65% for VIP Contrafund, 0.56% for VIP Equity Income,
0.65% for VIP Growth, 0.68% for VIP Growth Opportunities, and 0.87% for VIP
Overseas.
(4) On February 28, 2000, shareholders approved a merger and reorganization that
combined the Templeton Variable Products Series Fund with the Franklin
Templeton Variable Insurance Products Trust, effective May 1, 2000. The
merger and reorganization also combined the Templeton Asset Allocation Fund
with the Templeton Global Asset Allocation Fund, now called the Templeton
Asset Strategy Fund, and the Templeton International Fund with the Templeton
International Equity Fund, now called the Templeton International Securities
Fund, effective May 1, 2000. Allstate New York has made corresponding
changes to the names of the Variable Sub-Accounts that invest in these
Portfolios.
The shareholders of the Templeton Global Asset Allocation Fund and the
Templeton International Equity Fund had approved new management fees, which
apply to the combined funds effective May 1, 2000. The table shows restated
total expenses based on the new fees and the assets of the Portfolios as of
December 31, 1999, and not the assets of the combined Portfolios. However,
if the table reflected both the new fees and the combined assets, the
Portfolios' expenses after May 1, 5000 would be estimated as follows:
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Management Total Annual
Portfolio Fee 12b-1 Fee Other Expenses Portfolio
Expenses
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Templeton Asset Strategy Fund - Class 2 0.60% 0.25% 0.14% 0.99%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Templeton International Securities Fund
- Class 2 0.65% 0.25% 0.20% 1.10%
-------------------------------------------------- -- --------------------- -------------------------------------------
(5) The Portfolios' class 2 distribution plan or "rule 12b-1 plan" is
described in the Portfolios' respective prospectuses. While the maximum
amount payable under the Portfolios' class 2 rule 12b-1 plan is 0.35% per
year of the Portfolios' average daily net assets, the Board of Trustees of
Franklin Templeton Variable Insurance Products Trust has set the current
rate at 0.25% per year.
(6) Effective May 1, 2000, Dreyfus VIF Capital Appreciation Portfolio was
renamed Dreyfus VIF Appreciation Portfolio. Allstate New York has made
corresponding changes to the names of the Variable Sub-Accounts that
invest in these Portfolios.
(7) The figures shown in the table represent Expenses as of December 31, 1999
and have been adjusted for changes in contract that occurred during 1999.
The Portfolios' "rule 12b-1 plan" is described in the Portfolios'
respective prospectuses.
</TABLE>
<PAGE>
EXAMPLE 1
The example below shows the dollar amount of expenses that you would bear
directly or indirectly if you:
o invested $1,000 in a Variable Sub-Account,
o earned a 5% annual return on your investment, and
o surrendered your Contract, or began receiving income payments for a
specified period of less than 120 months, at the end of each time period.
The example does not include any taxes you may be required to pay if you
surrender your Contract. The example does not include deductions for premium
taxes because New York does not charge premium taxes on annuities.
<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds:
AIM V.I. Balanced $ 85 $122 $161 $289
AIM V.I. Capital Appreciation $ 81 $107 $-137 $239
AIM V.I. Government Securities $ 82 $113 $146 $257
AIM V.I. Growth $ 81 $107 $137 $239
AIM V.I. High Yield $ 85 $120 $158 $282
AIM V.I. International Equity $ 83 $115 $149 $264
AIM V.I. Value $ 81 $108 $138 $242
Fidelity Variable Insurance Products Fund (VIP):
Fidelity VIP Contrafund $ 80 $105 $134 $233
Fidelity VIP Equity Income $ 79 $102 $128 $222
Fidelity VIP Growth $ 81 $105 $133 $231
Fidelity VIP Growth Opportunities $ 80 $106 $135 $235
Fidelity VIP Overseas $ 82 $113 $146 $258
Franklin Templeton Variable Insurance Products Trust:
Templeton Asset Strategy - Class 2 $ 84 $117 $152 $270
Templeton International Securities - Class 2 $ 85 $120 $157 $280
Oppenheimer Variable Account Funds:
Oppenheimer Aggressive Growth/VA $ 80 $105 $134 $233
Oppenheimer Main Street Growth & Income/VA $ 81 $109 $139 $244
Oppenheimer Strategic Bond/VA $ 81 $109 $139 $244
The Dreyfus Socially Responsible Growth Fund, Inc.:
Dreyfus Socially Responsible Growth $ 81 $109 $140 $245
Dreyfus Stock Index Fund:
Dreyfus Stock Index $ 76 $ 93 $112 $188
Dreyfus Variable Investment Fund:
Dreyfus VIF Appreciation $ 81 $109 $139 $244
Wells Fargo Variable Trust:
Wells Fargo VT Asset Allocation $ 83 $116 $151 $267
Wells Fargo VT Equity Income $ 83 $116 $151 $267
Wells Fargo VT Growth $ 83 $116 $151 $267
Delaware Group Premium Fund, Inc.:
Delaware GP Small Cap Value Series $ 82 $111 $143 $252
Delaware GP Trend Series $ 81 $110 $141 $248
HSBC Variable Insurance Funds:
HSBC VI Cash Management $ 92 $142 $194 $352
HSBC VI Fixed Income $101 $168 $236 $429
HSBC VI Growth & Income $ 88 $130 $175 $316
</TABLE>
<PAGE>
EXAMPLE 2
Same assumptions as Example 1 above, except that you decided not to surrender
your Contract, or you began receiving income payments (for at least 120 months
if under an Income Plan with a specified period), at the end of each period.
<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds:
AIM V.I. Balanced $ 26 $ 80 $136 $289
AIM V.I. Capital Appreciation $ 21 $ 65 $111 $239
AIM V.I. Government Securities $ 23 $ 70 $120 $257
AIM V.I. Growth $ 21 $ 65 $111 $239
AIM V.I. High Yield $ 25 $ 78 $132 $282
AIM V.I. International Equity $ 23 $ 72 $124 $264
AIM V.I. Value $ 21 $ 66 $113 $242
Fidelity Variable Insurance Products Fund (VIP):
Fidelity VIP Contrafund $ 20 $ 63 $108 $233
Fidelity VIP Equity Income $ 19 $ 63 $103 $222
Fidelity VIP Growth $ 20 $ 64 $108 $231
Fidelity VIP Growth Opportunities $ 21 $ 64 $109 $235
Fidelity VIP Overseas $ 23 $ 70 $121 $258
Franklin Templeton Variable Insurance Products Trust:
Templeton Asset Strategy - Class 2 $ 24 $ 74 $127 $270
Templeton International Securities-- Class 2 $ 25 $ 77 $132 $280
Oppenheimer Variable Account Funds:
Oppenheimer Aggressive Growth/VA $ 20 $ 63 $108 $233
Oppenheimer VA Main Street Growth & Income/VA $ 22 $ 66 $114 $244
Oppenheimer Strategic Bond/VA $ 22 $ 66 $114 $244
The Dreyfus Socially Responsible Growth Fund, Inc.:
Dreyfus Socially Responsible Growth $ 2 $ 67 $114 $245
Dreyfus Stock Index Fund:
Dreyfus Stock Index $ 16 $ 50 $ 86 $188
Dreyfus Variable Investment Fund:
Dreyfus VIF Appreciation $ 22 $ 66 $114 $244
Wells Fargo Variable Trust:
Wells Fargo VT Asset Allocation $ 24 $ 73 $125 $267
Wells Fargo VT Equity Income $ 24 $ 73 $125 $267
Wells Fargo VT Growth $ 24 $ 73 $125 $267
Delaware Group Premium Fund, Inc.:
Delaware GP Small Cap Value Series $ 22 $ 69 $117 $252
Delaware GP Trend Series $ 22 $ 68 $116 $248
HSBC Variable Insurance Funds:
HSBC VI Cash Management $ 33 $ 99 $169 $352
HSBC VI Fixed Income $ 41 $125 $210 $429
HSBC VI Growth & Income $ 29 $ 88 $150 $316
</TABLE>
Please remember that you are looking at examples and not a representation of
past or future expenses. Your actual expenses may be lesser or greater than
those shown above. Similarly, your rate of return may be lesser or greater than
5%, which is not guaranteed. To reflect the contract maintenance charge in the
examples, we estimated an equivalent percentage charge, based on an assumed
average Contract size of $40,000.
<PAGE>
FINANCIAL INFORMATION
- ------------------------------------------------------------------------------
To measure the value of your investment in the Variable Sub-Accounts during the
Accumulation Phase, we use a unit of measure we call the "Accumulation Unit."
Each Variable Sub-Account has a separate value for its Accumulation Units we
call "Accumulation Unit Value." Accumulation Unit Value is analogous to, but not
the same as, the share price of a mutual fund.
There are no Accumulation Unit Values to report because the Contracts were first
offered as of the date of this Prospectus. The financial statements of the
Variable Account and Allstate New York appear in the Statement of Additional
Information.
<PAGE>
THE CONTRACT
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CONTRACT OWNER
The Allstate Custom Portfolio Variable Annuity is a contract between you, the
Contract owner, and Allstate New York, a life insurance company. As the Contract
owner, you may exercise all of the rights and privileges provided to you by the
Contract. That means it is up to you to select or change (to the extent
permitted):
o the investment alternatives during the Accumulation and Payout Phases,
o the amount and timing of your purchase payments and withdrawals,
o the programs you want to use to invest or withdraw money,
o the income payment plan you want to use to receive retirement income,
o the Annuitant (either yourself or someone else) on whose life the income
payments will be based,
o the Beneficiary or Beneficiaries who will receive the benefits that the
Contract provides when the last surviving Contract owner dies, and
o any other rights that the Contract provides.
If you die, any surviving Contract owner or, if none, the Beneficiary may
exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-natural person and a natural
person. The maximum issue age of any Contract owner is age 85. The maximum issue
age of any Annuitant is age 80.
You can use the Contract with or without a qualified plan. A qualified plan is a
retirement savings plan, such as an IRA or tax-sheltered annuity, that meets the
requirements of the Internal Revenue Code. Qualified plans may limit or modify
your rights and privileges under the Contract. We use the term "Qualified
Contract" to refer to a Contract issued with a qualified plan. See "Qualified
Plans" on page __.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of
income payments (other than under Income Plans with guaranteed payments for a
specified period). You initially designate an Annuitant in your application. If
the Contract owner is a natural person you may change the Annuitant prior to the
Payout Start Date. In our discretion, we may permit you to designate a joint
Annuitant, who is a second person on whose life income payments depend, on the
Payout Start Date.
If the Annuitant dies prior to the Payout Start Date, the new Annuitant will be:
o the youngest Contract owner, if living, otherwise
o the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person who may elect to receive the death benefit or
become the new Contract owner if the sole surviving Contract owner dies before
the Payout Start Date. If the sole surviving Contract owner dies after the
Payout Start Date, the Beneficiary will receive any guaranteed income payments
scheduled to continue.
You may name one or more Beneficiaries when you apply for a Contract. You may
change or add Beneficiaries at any time by writing to us, unless you have
designated an irrevocable Beneficiary. We will provide a change of Beneficiary
form to be signed and filed with us. Any change will be effective at the time
you sign the written notice, whether or not the Annuitant is living when we
receive the notice. Until we receive your written notice to change a
Beneficiary, we are entitled to rely on the most recent Beneficiary information
in our files. We will not be liable as to any payment or settlement made prior
to receiving the written notice. Accordingly, if you wish to change your
Beneficiary, you should deliver your written notice to us promptly.
If you do not name a Beneficiary or, if the named Beneficiary is no longer
living and there are no other surviving Beneficiaries, the new Beneficiary will
be:
o your spouse or, if he or she is no longer alive,
o your surviving children equally, or if you have no surviving children,
o your estate.
If more than one Beneficiary survives you (or the Annuitant if the Contract
owner is not a natural person), we will divide the death benefit among your
Beneficiaries according to your most recent written instructions. If you have
not given us written instructions, we will pay the death benefit in equal
amounts to the surviving Beneficiaries.
MODIFICATION OF THE CONTRACT
Only an Allstate New York officer may approve a change in or waive any provision
of the Contract. Any change or waiver must be in writing. None of our agents has
the authority to change or waive the provisions of the Contract. We may not
change the terms of the Contract without your consent, except to conform the
Contract to applicable law or changes in the law. If a provision of the Contract
is inconsistent with state law, we will follow state law.
ASSIGNMENT
We will not honor an assignment of an interest in a Contract as collateral or
security for a loan. However, you may assign periodic income payments under the
Contract prior to the Payout Start Date. No Beneficiary may assign benefits
under the Contract until they are due. We will not be bound by any assignment
until the assignor signs it and files it with us. We are not responsible for the
validity of any assignment. Federal law prohibits or restricts the assignment of
benefits under many types of retirement plans and the terms of such plans may
themselves contain restrictions on assignments. An assignment may also result in
taxes or tax penalties. You should consult with an attorney before trying to
assign your Contract.
<PAGE>
PURCHASES
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MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $3,000 ($2,000 for a Qualified
Contract). All subsequent purchase payments must be $100 or more. You may make
purchase payments at any time prior to the Payout Start Date. We reserve the
right to limit the maximum amount of purchase payments, or reduce the minimum
purchase payment we will accept. We reserve the right to reject any application.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments of at least $100 ($500 for allocation
to the Fixed Account) by automatically transferring amounts from your bank
account. Please consult with your sales representative for detailed information.
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to allocate your
purchase payments among the investment alternatives. The allocation you specify
on your application will be effective immediately. All allocations must be in
whole percents that total 100% or in whole dollars. You can change your
allocations by notifying us in writing. We reserve the right to limit the
availability of the investment alternatives.
We will allocate your purchase payments to the investment alternatives according
to your most recent instructions on file with us. Unless you notify us in
writing otherwise, we will allocate subsequent purchase payments according to
the allocation for the previous purchase payment. We will effect any change in
allocation instructions at the time we receive written notice of the change in
good order.
We will credit the initial purchase payment that accompanies your completed
application to your Contract within 2 business days after we receive the payment
at our service center. If your application is incomplete, we will ask you to
complete your application within 5 business days. If you do so, we will credit
your initial purchase payment to your Contract within that 5 business day
period. If you do not, we will return your purchase payment at the end of the 5
business day period unless you expressly allow us to hold it until you complete
the application. We will credit subsequent purchase payments to the Contract at
the close of the business day on which we receive the purchase payment at our
service center located in Northbrook, Illinois(mailing address: P.O. Box 94038,
Palatine, Illinois, 60094-4038; overnight mail: 3100 Sanders Road, Suite J4A,
Northbrook, Illinois, 60062).
We are open for business each day Monday through Friday that the New York Stock
Exchange is open for business. We also refer to these days as "Valuation Dates."
Our business day closes when the New York Stock Exchange closes, usually 4:00
p.m. Eastern Time (3:00 p.m. Central Time). If we receive your purchase payment
after 4:00 p.m. Eastern Time (3:00 p.m. Central Time) on any Valuation Date, we
will credit your purchase payment using the Accumulation Unit Values computed on
the next Valuation Date.
RIGHT TO CANCEL
You may cancel the Contract by returning it to us within the Cancellation
Period, which is the 10 day period after you receive the Contract (60 days if
you are exchanging another contract for the Contract described in this
prospectus). You may return it by delivering it or mailing it to us. If you
exercise this "Right to Cancel," the Contract terminates and we will pay you the
full amount of your purchase payments allocated to the Fixed Account. Upon
cancellation, as permitted by federal or state law, we will return your purchase
payments allocated to the Variable Account after an adjustment to the extent
federal or state law permits to reflect investment gain or loss that occurred
from the date of allocation through the date of cancellation. If your Contract
is qualified under Section 408 of the Internal Revenue Code, we will refund the
greater of any purchase payments or the Contract Value.
<PAGE>
CONTRACT VALUE
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On the Issue Date, the Contract Value is equal to the initial purchase payment.
Your Contract Value at any other time during the Accumulation Phase is equal to
the sum of the value as of the most recent Valuation Date of your Accumulation
Units in the Variable Sub-Accounts you have selected, plus the value of your
interest in the Fixed Account.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Sub-Account to
credit to your Contract, we divide (i) the amount of the purchase payment or
transfer you have allocated to a Variable Sub-Account by (ii) the Accumulation
Unit Value of that Variable Sub-Account next computed after we receive your
payment or transfer. For example, if we receive a $10,000 purchase payment
allocated to a Variable Sub-Account when the Accumulation Unit Value for the
Sub-Account is $10, we would credit 1,000 Accumulation Units of that Variable
Sub-Account to your Contract. Withdrawals and transfers from a Variable
Sub-Account would, of course, reduce the number of Accumulation Units of that
Sub-Account allocated to your Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Sub-Account
will rise or fall to reflect:
o changes in the share price of the Portfolio in which the Variable
Sub-Account invests, and
o the deduction of amounts reflecting the mortality and expense risk charge,
administrative expense charge, and any provision for taxes that have
accrued since we last calculated the Accumulation Unit Value.
We determine contract maintenance charges, withdrawal charges, and transfer fees
(currently waived) separately for each Contract. They do not affect Accumulation
Unit Value. Instead, we obtain payment of those charges and fees by redeeming
Accumulation Units. For details on how we calculate Accumulation Unit Value,
please refer to the Statement of Additional Information.
We determine a separate Accumulation Unit Value for each Variable Sub-Account on
each Valuation Date.
You should refer to the prospectuses for the Portfolios that accompany this
prospectus for a description of how the assets of each Portfolio are valued,
since that determination directly bears on the Accumulation Unit Value of the
corresponding Variable Sub-Account and, therefore, your Contract Value.
<PAGE>
INVESTMENT ALTERNATIVES: The Variable Sub-Accounts
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You may allocate your purchase payments to up to 28 Variable Sub-Accounts. Each
Variable Sub-Account invests in the shares of a corresponding Portfolio. Each
Portfolio has its own investment objective(s) and policies. We briefly describe
the Portfolios below.
For more complete information about each Portfolio, including expenses and risks
associated with the Portfolio, please refer to the accompanying prospectus for
the Portfolio. You should carefully review the Portfolio prospectuses before
allocating amounts to the Variable Sub-Accounts.
<TABLE>
<CAPTION>
- --------------------------------------------------- -----------------------------------------------------------------------
<S> <C> <C>
Portfolio: Each Portfolio Seeks Investment
Adviser:
- - ---------------------------------------------------------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS:
- - ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Balanced Fund* As high a total return as possible,
consistent with preservation
of capital
A I M Advisors, Inc.
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
AIM V.I. Capital Appreciation Fund* Growth of capital
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
AIM V.I. Government Securities Fund* A high level of current income
consistent with reasonable
concern for safety of principal
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
AIM V.I. Growth Fund* Growth of capital
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
AIM V.I. High Yield Fund* A high level of current income
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
AIM V.I. International Equity Fund* Long-term growth of capital
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
AIM V.I. Value Fund* Long-term growth of capital; income
is a secondary objective
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Contrafund Portfolio Long-term capital appreciation
Fidelity Management
& Research Company
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
Fidelity VIP Equity-Income Portfolio Reasonable income
- ---------------------------------------------------- --------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
Fidelity VIP Growth Portfolio Capital appreciation
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
Fidelity VIP Growth Opportunities
Portfolio Capital growth
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
Fidelity VIP Overseas Portfolio Long-term growth of capital
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS FUND:
- ------------------------------------------------- ------------------------------------------------------------------------------
Templeton Asset Strategy Fund - Class 2 High total return Templeton
Investment
Counsel, Inc.
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
Templeton International Securities Fund Long-term capital growth
- - Class 2
- --------------------------------------------------- ----------------------------------------------------------------------------
- --------------------------------------------------- ----------------------------------------------------------------------------
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
- --------------------------------------------------- ----------------------------------------------------------------------------
Oppenheimer Aggressive Growth Fund/VA Capital appreciation OppenheimerFunds,
Inc.
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
Oppenheimer Main Street Growth & High total return, which
Income Fund/VA includes growth in the value
of its shares as well as current
income, from equity and debt
securities
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA High level of current income
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.; THE DREYFUS STOCK INDEX FUND;
AND THE DREYFUS VARIABLE INVESTMENT FUND (VIF):
- -------------------------------------------------------------------------------------------------------------------------------
Dreyfus Socially Responsible Growth Fund Capital growth and, secondarily,
current income
The Dreyfus
Corporation
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund To match the total returns of
the Standard & Poor's 500
Composite Stock Index
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
Dreyfus VIF Appreciation Portfolio
Long-term capital growth
consistent with the preservation
of capital; current income is a
secondary goal
- --------------------------------------------------- --------------------------------------------------- -----------------------
- --------------------------------------------------- --------------------------------------------------- -----------------------
WELLS FARGO VARIABLE TRUST:
- --------------------------------------------------- --------------------------------------------------- -----------------------
Wells Fargo VT Asset Allocation Fund Long-term total return, consistent
with reasonable risk
Wells Fargo Bank,
N.A.
- -------------------------------------------------- ----------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
Wells Fargo VT Equity Income Fund Long-term capital appreciation
and above-average dividend income
- -------------------------------------------------- ----------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
Wells Fargo VT Growth Fund Long-term capital appreciation
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
DELAWARE GROUP PREMIUM FUND, INC.:
- --------------------------------------------------- --------------------------------------------------- -----------------------
Delaware GP Small Cap Value Series Capital appreciation Delaware Management
Company
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Delaware GP Trend Series Long-term capital appreciation
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
HSBC VARIABLE INSURANCE FUNDS:
- -------------------------------------------------------------------------------------------------------------------------------
HSBC VI Cash Management Fund As high a level of current income as is
consistent with preservation of capital and liquidity
HSBC Asset
Management (Americas)
Inc.
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
HSBC VI Fixed Income Fund High current income consistent
with appreciation of capital
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
HSBC VI Growth & Income Fund Long-term growth of capital and
current income
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Portfolios' investment objectives may be changed by the Portfolios' Board
of Trustees without shareholder approval.
Amounts you allocate to Variable Sub-Accounts may grow in value, decline in
value, or grow less than you expect, depending on the investment performance of
the Portfolios in which those Variable Sub-Accounts invest. You bear the
investment risk that the Portfolios might not meet their investment objectives.
Shares of the Portfolios are not deposits, or obligations of, or guaranteed or
endorsed by any bank and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency.
INVESTMENT ALTERNATIVES : The Fixed Account
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You may allocate all or a portion of your purchase payments to the Fixed
Account. The Fixed Account supports our insurance and annuity obligations. The
Fixed Account consists of our general assets other than those in segregated
asset accounts. We have sole discretion to invest the assets of the Fixed
Account, subject to applicable law. Any money you allocate to the Fixed Account
does not entitle you to share in the investment experience of the Fixed Account.
GUARANTEE PERIODS
Each payment or transfer allocated to the Fixed Account earns interest at a
specified rate that we guarantee for a period of years we call a Guarantee
Period. Guarantee Periods may range from 1 to 10 years. We are currently
offering Guarantee Periods of 1, 3, 5, 7, and 10 years in length. In the future
we may offer Guarantee Periods of different lengths or stop offering some
Guarantee Periods. You select one or more Guarantee Periods for each purchase
payment or transfer. If you do not select the Guarantee Period for a purchase
payment or transfer, we will assign the shortest Guarantee Period available
under the Contract for such payment or transfer.
Each payment or transfer allocated to a Guarantee Period must be at least $500.
We reserve the right to limit the number of additional purchase payments that
you may allocate to the Fixed Account. Please consult with your sales
representative for more information.
INTEREST RATES
We will tell you what interest rates and Guarantee Periods we are offering at a
particular time. We may declare different interest rates for Guarantee Periods
of the same length that begin at different times. We will not change the
interest rate that we credit to a particular allocation until the end of the
relevant Guarantee Period.
We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set those interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, our sales commission and administrative
expenses, general economic trends, and competitive factors. We determine the
interest rates to be declared in our sole discretion. We can neither predict nor
guarantee what those rates will be in the future. For current interest rate
information, please contact your sales representative or Allstate New York at
1-800-692-4682. The interest rate will never be less than the minimum guaranteed
amount stated in the Contract.
HOW WE CREDIT INTEREST
We will credit interest daily to each amount allocated to a Guarantee Period at
a rate that compounds to the effective annual interest rate that we declared at
the beginning of the applicable Guarantee Period. The following example
illustrates how a purchase payment allocated to the Fixed Account would grow,
given an assumed Guarantee Period and effective annual interest rate:
Purchase Payment..............................$10,000
Guarantee Period..............................5 years
Annual Interest Rate........................... 4.50%
<TABLE>
<CAPTION>
END OF CONTRACT YEAR
<S> <C> <C> <C> <C> <C>
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Beginning Contract Value $10,000.00
X (1 + Annual Interest Rate) X 1.045
----------
$10,450.00
Contract Value at end of Contract Year $10,450.00
X (1 + Annual Interest Rate) X 1.045
----------
$10,920.25
Contract Value at end of Contract Year $10,920.25
X (1 + Annual Interest Rate) X 1.045
----------
$11,411.66
Contract Value at end of Contract Year $11,411.66
X (1 + Annual Interest Rate) X 1.045
----------
$11,925.19
Contract Value at end of Contract Year $11,925.19
X (1 + Annual Interest Rate) X 1.045
----------
$12,461.82
Total Interest Credited During Guarantee Period = $2,461.82 ($12,461.82-$10,000)
</TABLE>
This example assumes no withdrawals during the entire 5 year Guarantee Period.
If you were to make a withdrawal, you may be required to pay a withdrawal
charge. In addition, the amount withdrawn may be increased or decreased by a
Market Value Adjustment that reflects changes in interest rates since the time
you invested the amount withdrawn. The hypothetical interest rate is for
illustrative purposes only and is not intended to predict future interest rates
to be declared under the Contract. Actual interest rates declared for any given
Guarantee Period may be more or less than shown above but will never be less
than the guaranteed minimum rate stated in the Contract.
RENEWALS
At least 15 but not more than 45 days prior to the end of each Guarantee Period,
we will mail you a notice asking you what to do with your money, including the
accrued interest. During the 30-day period after the end of the Guarantee
Period, you may:
1) take no action. We will automatically apply your money to a new Guarantee
Period of the shortest duration available. The new Guarantee Period will
begin on the day the previous Guarantee Period ends. The new interest rate
will be our then current declared rate for a Guarantee Period of that
length; or
2) instruct us to apply your money to one or more new Guarantee Periods of
your choice. The new Guarantee Period(s) will begin on the day the previous
Guarantee Period ends. The new interest rate will be our then current
declared rate for those Guarantee Periods; or
3) instruct us to transfer all or a portion of your money to one or more
Variable Sub-Accounts. We will effect the transfer on the day we receive
your instructions. We will not adjust the amount transferred to include a
Market Value Adjustment; or
4) withdraw all or a portion of your money. You may be required to pay a
withdrawal charge, but we will not adjust the amount withdrawn to include a
Market Value Adjustment. You may also be required to pay premium taxes and
withholding (if applicable). The amount withdrawn will be deemed to have
been withdrawn on the day the previous Guarantee Period ends. Unless you
specify otherwise, amounts not withdrawn will be applied to a new Guarantee
Period of the shortest duration available. The new Guarantee Period will
begin on the day the previous Guarantee Period ends.
Under our automatic laddering program ("Automatic Laddering Program"), you may
choose, in advance, to use Guarantee Periods of the same length for all
renewals. You can select this Program at any time during the Accumulation Phase,
including on the Issue Date. We will apply renewals to Guarantee Periods of the
selected length until you direct us in writing to stop. We may stop offering
this Program at any time. For additional information on the Automatic Laddering
Program, please call our Customer Service unit at 1-800-692-4682.
MARKET VALUE ADJUSTMENT
All withdrawals in excess of the Preferred Withdrawal Amount, and transfers from
a Guarantee Period, other than those taken during the 30 day period after such
Guarantee Period expires, are subject to a Market Value Adjustment. A Market
Value Adjustment also applies when you apply amounts currently invested in a
Guarantee Period to an Income Plan (unless paid or applied during the 30 day
period after such Guarantee Period expires). A positive Market Value Adjustment
will apply to amounts currently invested in a Guarantee Period that are paid out
as death benefits. We will not apply a Market Value Adjustment to a transfer you
make as part of a Dollar Cost Averaging Program. We also will not apply a Market
Value Adjustment to a withdrawal you make:
o within the Preferred Withdrawal Amount as described on page __, or
o to satisfy the IRS minimum distribution rules for the Contract.
We apply the Market Value Adjustment to reflect changes in interest rates from
the time you first allocate money to a Guarantee Period to the time it is
removed from that Guarantee Period. We calculate the Market Value Adjustment by
comparing the Treasury Rate for a period equal to the Guarantee Period at its
inception to the Treasury Rate for a period equal to the time remaining in the
Guarantee Period when you remove your money. "Treasury Rate" means the U.S.
Treasury Note Constant Maturity Yield as reported in Federal Reserve Bulletin
Release H.15.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. As such, you bear the investment risk associated with changes in
interest rates. If interest rates increase significantly, the Market Value
Adjustment and any withdrawal charge, premium taxes, and income tax withholding
(if applicable) could reduce the amount you receive upon full withdrawal of your
Contract Value to an amount that is less than the purchase payment plus interest
at the minimum guaranteed interest rate under the Contract.
Generally, if the Treasury Rate at the time you allocate money to a Guarantee
Period is higher than the applicable current Treasury Rate for a period equal to
the time remaining in the Guarantee Period, then the Market Value Adjustment
will result in a higher amount payable to you or transferred. Conversely, if the
Treasury Rate at the time you allocate money to a Guarantee Period is lower than
the applicable Treasury Rate for a period equal to the time remaining in the
Guarantee Period, then the Market Value Adjustment will result in a lower amount
payable to you or transferred.
For example, assume that you purchase a Contract and you select an initial
Guarantee Period of 5 years and the 5 year Treasury Rate for that duration
is 4.50%. Assume that at the end of 3 years, you make a partial withdrawal.
If, at that later time, the current 2 year Treasury Rate is 4.20%, then the
Market Value Adjustment will be positive, which will result in an increase
in the amount payable to you. Conversely, if the current 2 year Treasury
Rate is 4.80%, then the Market Value Adjustment will be negative, which
will result in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix A
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.
<PAGE>
INVESTMENT ALTERNATIVES: Transfers
- ------------------------------------------------------------------------------
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the
investment alternatives at any time. The minimum amount that you may transfer
into a Guarantee Period is $500. You may request transfers in writing on a form
that we provided or by telephone according to the procedure described below. We
currently do not assess, but reserve the right to assess, a $10 charge on each
transfer in excess of 12 per Contract Year. We treat transfers to or from more
than one Portfolio on the same day as one transfer. Transfers you make as part
of a Dollar Cost Averaging Program or Automatic Portfolio Rebalancing Program do
not count against the 12 free transfers per Contract Year.
We will process transfer requests that we receive before 4:00 p.m. Eastern Time
(3:00 p.m. Central Time) on any Valuation Date using the Accumulation Unit
Values for that Date. We will process requests completed after 4:00 p.m. Eastern
Time (3:00 p.m. Central Time) on any Valuation Date using the Accumulation Unit
Values for the next Valuation Date. The Contract permits us to defer transfers
from the Fixed Account for up to 6 months from the date we receive your request.
If we decide to postpone transfers from the Fixed Account for 10 days or more,
we will pay interest as required by applicable law. Any interest would be
payable from the date we receive the transfer request to the date we make the
transfer.
If you transfer an amount from a Guarantee Period other than during the 30 day
period after such Guarantee Period expires, we will increase or decrease the
amount by a Market Value Adjustment. If any transfer reduces your value in such
Guarantee Period to less than $500, we will treat the request as a transfer of
the entire value in such Guarantee Period.
We reserve the right to waive any transfer fees and restrictions.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Sub-Accounts
to change the relative weighting of the Variable Sub-Accounts on which your
variable income payments will be based. In addition, you will have a limited
ability to make transfers from the Variable Sub-Accounts to increase the
proportion of your income payments consisting of fixed income payments. You may
not, however, convert any portion of your right to receive fixed income payments
into variable income payments.
You may not make any transfers for the first 6 months after the Payout Start
Date. Thereafter, you may make transfers among the Variable Sub-Accounts or make
transfers from the Variable Sub-Accounts to increase the proportion of your
income payments consisting of fixed income payments. Your transfers must be at
least 6 months apart.
TELEPHONE TRANSFERS
You may make transfers by telephone by calling 1-800-692-4682, if you first send
us a completed authorization form. The cut off time for telephone transfer
requests is 4:00 p.m. Eastern Time (3:00 p.m. Central Time). In the event that
the New York Stock Exchange closes early, i.e., before 4:00 p.m. Eastern Time
(3:00 p.m. Central Time), or in the event that the Exchange closes early for a
period of time but then reopens for trading on the same day, we will process
telephone transfer requests as of the close of the Exchange on that particular
day. We will not accept telephone requests received at any telephone number
other than the number that appears in this paragraph or received after the close
of trading on the Exchange.
We may suspend, modify or terminate the telephone transfer privilege at any time
without notice.
We use procedures that we believe provide reasonable assurance that the
telephone transfers are genuine. For example, we tape telephone conversations
with persons purporting to authorize transfers and request identifying
information. Accordingly, we disclaim any liability for losses resulting from
allegedly unauthorized telephone transfers. However, if we do not take
reasonable steps to help ensure that a telephone authorization is valid, we may
be liable for such losses.
DOLLAR COST AVERAGING PROGRAM
Through the Dollar Cost Averaging Program, you may automatically transfer a set
amount every month during the Accumulation Phase from any Variable Sub-Account,
or the 1 year Guarantee Period of the Fixed Account, to any other Variable
Sub-Account. You may not use dollar cost averaging to transfer amounts to the
Fixed Account.
We will not charge a transfer fee for transfers made under this Program, nor
will such transfers count against the 12 transfers you can make each Contract
Year without paying a transfer fee. In addition, we will not apply the Market
Value Adjustment to these transfers.
The theory of dollar cost averaging is that if purchases of equal dollar amounts
are made at fluctuating prices, the aggregate average cost per unit will be less
than the average of the unit prices on the same purchase dates. However,
participation in this program does not assure you of a greater profit from your
purchases under the Program nor will it prevent or necessarily reduce losses in
a declining market.
Call or write us for instructions on how to enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Sub-Accounts, the
performance of each Sub-Account may cause a shift in the percentage you
allocated to each Sub-Account. If you select our Automatic Portfolio Rebalancing
Program, we will automatically rebalance the Contract Value in each Variable
Sub-Account and return it to the desired percentage allocations. Money you
allocate to the Fixed Account will not be included in the rebalancing.
We will rebalance your account each quarter according to your instructions. We
will transfer amounts among the Variable Sub-Accounts to achieve the percentage
allocations you specify. You can change your allocations at any time by
contacting us in writing or by telephone. The new allocation will be effective
with the first rebalancing that occurs after we receive your request. We are not
responsible for rebalancing that occurs prior to receipt of your request.
Example:
Assume that you want your initial purchase payment split among 2
Variable Sub-Accounts. You want 40% to be in the AIM V.I. Balanced
Variable Sub-Account and 60% to be in the Fidelity VIP Growth Variable
Sub-Account. Over the next 2 months the bond market does very well
while the stock market performs poorly. At the end of the first
quarter, the AIM V.I. Balanced Variable Sub-Account now represents 50%
of your holdings because of its increase in value. If you choose to
have your holdings rebalanced quarterly, on the first day of the next
quarter we would sell some of your units in the AIM V.I. Balanced
Variable Sub-Account and use the money to buy more units in the
Fidelity VIP Growth Variable Sub-Account so that the percentage
allocations would again be 40% and 60% respectively.
The Automatic Portfolio Rebalancing Program is available only during the
Accumulation Phase. The transfers made under the Program do not count towards
the 12 transfers you can make without paying a transfer fee, and are not subject
to a transfer fee.
Portfolio rebalancing is consistent with maintaining your allocation of
investments among market segments, although it is accomplished by reducing your
Contract Value allocated to the better performing segments.
<PAGE>
EXPENSES
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As a Contract owner, you will bear, directly or indirectly, the charges and
expenses described below.
CONTRACT MAINTENANCE CHARGE
During the Accumulation Phase, on each Contract Anniversary, we will deduct a
$30 contract maintenance charge from your Contract Value invested in each
Variable Sub-Account in proportion to the amount invested. We also will deduct a
full contract maintenance charge if you withdraw your entire Contract Value,
unless your Contract qualifies for a waiver, described below. During the Payout
Phase, we will deduct the charge proportionately from each income payment.
The charge is for the cost of maintaining each Contract and the Variable
Account. Maintenance costs include expenses we incur in billing and collecting
purchase payments; keeping records; processing death claims, cash withdrawals,
and policy changes; proxy statements; calculating Accumulation Unit Values and
income payments; and issuing reports to Contract owners and regulatory agencies.
We cannot increase the charge. We will waive this charge if:
o total purchase payments equal $50,000 or more, or
o all of your money is allocated to the Fixed Account on a Contract
Anniversary.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily at an annual rate of 1.15%
of the average daily net assets you have invested in the Variable Sub-Accounts.
The mortality and expense risk charge is for all the insurance benefits
available with your Contract (including our guarantee of annuity rates and the
death benefits), for certain expenses of the Contract, and for assuming the risk
(expense risk) that the current charges will be sufficient in the future to
cover the cost of administering the Contract. If the charges under the Contract
are not sufficient, then we will bear the loss.
We guarantee the mortality and expense risk charge and we cannot increase it. We
assess the mortality and expense risk charge during both the Accumulation Phase
and the Payout Phase.
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge daily at an annual rate of 0.10% of
the average daily net assets you have invested in the Variable Sub-Accounts. We
intend this charge to cover actual administrative expenses that exceed the
revenues from the contract maintenance charge. There is no necessary
relationship between the amount of administrative charge imposed on a given
Contract and the amount of expenses that may be attributed to that Contract. We
assess this charge each day during the Accumulation Phase and the Payout Phase.
We guarantee that we will not raise this charge.
TRANSFER FEE
We do not currently impose a fee upon transfers among the investment
alternatives. However, we reserve the right to charge $10 per transfer after the
12th transfer in each Contract Year. We will not charge a transfer fee on
transfers that are part of a Dollar Cost Averaging or Automatic Portfolio
Rebalancing Program.
WITHDRAWAL CHARGE
We may assess a withdrawal charge of up to 7% of the purchase payment(s) you
withdraw in excess of the Preferred Withdrawal Amount, adjusted by a Market
Value Adjustment. The charge declines by 1% annually to 0% after 7 complete
years from the day we receive the purchase payment being withdrawn. A schedule
showing how the charge declines appears on page __. During each Contract Year,
you can withdraw up to 15% of purchase payments without paying the charge.
Unused portions of this 15% "Preferred Withdrawal Amount" are not carried
forward to future Contract Years.
We determine the withdrawal charge by:
o multiplying the percentage corresponding to the number of complete years
since we received the purchase payment being withdrawn, times
o the part of each purchase payment withdrawal that is in excess of the
Preferred Withdrawal Amount, adjusted by a Market Value Adjustment.
We will deduct withdrawal charges, if applicable, from the amount paid. For
purposes of the withdrawal charge, we will treat withdrawals as coming from the
oldest purchase payments first. However, for federal income tax purposes, please
note that withdrawals are considered to have come first from earnings in the
Contract, which means you pay taxes on the earnings portion of your withdrawal.
We do not apply a withdrawal charge in the following situations:
o on the Payout Start Date (a withdrawal charge may apply if you elect to
receive income payments for a specified period of less than 120 months);
o the death of the Contract owner or Annuitant (unless the Settlement
Value is used);
o withdrawals taken to satisfy IRS minimum distribution rules for the
Contract; and
o withdrawals made after all purchase payments have been withdrawn.
We use the amounts obtained from the withdrawal charge to pay sales commissions
and other promotional or distribution expenses associated with marketing the
Contracts. To the extent that the withdrawal charge does not cover all sales
commissions and other promotional or distribution expenses, we may use any of
our corporate assets, including potential profit which may arise from the
mortality and expense risk charge or any other charges or fee described above,
to make up any difference.
Withdrawals may be subject to tax penalties or income tax and a Market Value
Adjustment. You should consult your own tax counsel or other tax advisers
regarding any withdrawals.
PREMIUM TAXES
Currently, we do not make deductions for premium taxes under the Contract
because New York does not charge premium taxes on annuities. We may deduct taxes
that may be imposed in the future from purchase payments or the Contract Value
when the tax is incurred or at a later time.
DEDUCTION FOR VARIABLE ACCOUNT INCOME TAXES
We are not currently making a provision for taxes. In the future, however, we
may make a provision for taxes if we determine, in our sole discretion, that we
will incur a tax as a result of the operation of the Variable Account. We will
deduct for any taxes we incur as a result of the operation of the Variable
Account, whether or not we previously made a provision for taxes and whether or
not it was sufficient. Our status under the Internal Revenue Code is briefly
described in the Statement of Additional Information.
OTHER EXPENSES
Each Portfolio deducts advisory fees and other expenses from its assets. You
indirectly bear the charges and expenses of the Portfolios whose shares are held
by the Variable Sub-Accounts. These fees and expenses are described in the
accompanying prospectus for the Portfolios. For a summary of these charges and
expenses, see pages ___ above. We may receive compensation from the investment
advisers or administrators of the Portfolios for administrative services we
provide to the Portfolios.
<PAGE>
ACCESS TO YOUR MONEY
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You can withdraw some or all of your Contract Value at any time prior to the
Payout Start Date. Full or partial withdrawals also are available under limited
circumstances on or after the Payout Start Date. See "Income Plans" on page __.
The amount payable upon withdrawal is the Contract Value next computed after we
receive the request for a withdrawal at our service center, adjusted by any
Market Value Adjustment, less any withdrawal charges, contract maintenance
charges, income tax withholding, penalty tax, and any premium taxes. We will pay
withdrawals from the Variable Account within 7 days of receipt of the request,
subject to postponement in certain circumstances.
You can withdraw money from the Variable Account or the Fixed Account. To
complete a partial withdrawal from the Variable Account, we will cancel
Accumulation Units in an amount equal to the withdrawal and any applicable
withdrawal charge and premium taxes.
You must name the investment alternative from which you are taking the
withdrawal. If none is named, then the withdrawal request is incomplete and
cannot be honored.
In general, you must withdraw at least $50 at a time. You also may withdraw a
lesser amount if you are withdrawing your entire interest in a Variable
Sub-Account.
If you request a total withdrawal, you must return your Contract to us.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under
the Contract if:
1) The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;
2) An emergency exists as defined by the SEC; or
3) The SEC permits delay for your protection.
In addition, we may delay payments or transfers from the Fixed Account for up to
6 months or a shorter period if required by law. If we delay payment or transfer
for 10 business days or more, we will pay interest as required by law. Any
interest would be payable from the date we receive the withdrawal request to the
date we make the payment or transfer.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly,
quarterly, semi-annual, or annual basis at any time prior to the Payout Start
Date. The minimum amount of each systematic withdrawal is $50. At our
discretion, systematic withdrawals may not be offered in conjunction with the
Dollar Cost Averaging Program or the Automatic Portfolio Rebalancing Program.
Depending on fluctuations in the net asset value of the Variable Sub-Accounts
and the value of the Fixed Account, systematic withdrawals may reduce or even
exhaust the Contract Value. Income taxes may apply to systematic withdrawals.
Please consult your tax advisor before taking any withdrawal.
We will make systematic withdrawal payments to you or your designated payee. We
may modify or suspend the Systematic Withdrawal Program and charge a processing
fee for the service. If we modify or suspend the Systematic Withdrawal Program,
existing systematic withdrawal payments will not be affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal would reduce the amount in any
Guarantee Period to less than $500, we will treat it as a request to withdraw
the entire amount invested in such Guarantee Period. In addition, if your
request for a partial withdrawal would reduce the Contract Value to less than
$1,000, we may treat it as a request to withdraw your entire Contract Value.
Your Contract will terminate if you withdraw all of your Contract Value. We
will, however, ask you to confirm your withdrawal request before terminating
your Contract. If we terminate your Contract, we will distribute to you its
Contract Value, adjusted by any applicable Market Value Adjustment, less
withdrawal and other charges and applicable taxes.
<PAGE>
INCOME PAYMENTS
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PAYOUT START DATE
The Payout Start Date is the day that we apply your money to an Income Plan. The
Payout Start Date must be no later than the Annuitant's 90th birthday.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An "Income Plan" is a series of payments on a scheduled basis to you or to
another person designated by you. You may choose and change your choice of
Income Plan until 30 days before the Payout Start Date. If you do not select an
Income Plan, we will make income payments in accordance with Income Plan 1 with
guaranteed payments for 10 years. After the Payout Start Date, you may not make
withdrawals (except as described below) or change your choice of Income Plan.
Three Income Plans are available under the Contract. Each is available to
provide:
o fixed income payments;
o variable income payments; or
o a combination of the two.
The three Income Plans are:
Income Plan 1 -- Life Income with Guaranteed Payments. Under this plan,
we make periodic income payments for at least as long as the Annuitant
lives. If the Annuitant dies before we have made all of the guaranteed
income payments, we will continue to pay the remainder of the
guaranteed income payments as required by the Contract.
Income Plan 2 -- Joint and Survivor Life Income with Guaranteed
Payments. Under this plan, we make periodic income payments for at
least as long as either the Annuitant or the joint Annuitant is alive.
If both the Annuitant and the joint Annuitant die before we have made
all of the guaranteed income payments, we will continue to pay the
remainder of the guaranteed income payments as required by the
Contract.
Income Plan 3 -- Guaranteed Payments for a Specified Period (5 Years to
30 Years). Under this plan, we make periodic income payments for the
period you have chosen. These payments do not depend on the Annuitant's
life. Income payments for less than 120 months may be subject to a
withdrawal charge. We will deduct the mortality and expense risk charge
from the Variable Sub-Account assets that support variable income
payments even though we may not bear any mortality risk.
The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amounts of each income payment. As a general
rule, longer guarantee periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a minimum specified period for guaranteed
payments.
If you choose Income Plan 1 or 2, or, if available, another Income Plan with
payments that continue for the life of the Annuitant or joint Annuitant, we may
require proof of age and sex of the Annuitant or joint Annuitant before starting
income payments, and proof that the Annuitant or joint Annuitant is alive before
we make each payment. Please note that under such Income Plans, if you elect to
take no minimum guaranteed payments, it is possible that the payee could receive
only 1 income payment if the Annuitant and any joint Annuitant both die before
the second income payment, or only 2 income payments if they die before the
third income payment, and so on.
Generally, you may not make withdrawals after the Payout Start Date. One
exception to this rule applies if you are receiving variable income payments
that do not depend on the life of the Annuitant (such as under Income Plan 3).
In that case you may terminate all or part of the Variable Account portion of
the income payments at any time and receive a lump sum equal to the present
value of the remaining variable payments associated with the amount withdrawn.
The minimum amount you may withdraw under this feature is $1,000. A withdrawal
charge may apply. You will also have a limited ability to make transfers from
the Variable Account portion of the income payments to increase the proportion
of your income payments consisting of fixed income payments. You may not,
however, convert any portion of your right to receive fixed income payments into
variable income payments. We deduct applicable premium taxes from the Contract
Value at the Payout Start Date.
We may make other Income Plans available. You may obtain information about them
by writing or calling us.
You must apply at least the Contract Value in the Fixed Account on the Payout
Start Date to fixed income payments. If you wish to apply any portion of your
Fixed Account balance to provide variable income payments, you should plan ahead
and transfer that amount to the Variable Sub-Accounts prior to the Payout Start
Date. If you do not tell us how to allocate your Contract Value among fixed and
variable income payments, we will apply your Contract Value in the Variable
Account to variable income payments and your Contract Value in the Fixed Account
to fixed income payments.
We will apply your Contract Value, adjusted by a Market Value Adjustment, less
applicable taxes to your Income Plan on the Payout Start Date. If the Contract
Value is less than $2,000 or not enough to provide an initial payment of at
least $20, and state law permits, we may:
o terminate the Contract and pay you the Contract Value, adjusted by any
Market Value Adjustment and less any applicable taxes, in a lump sum
instead of the periodic payments you have chosen, or
o reduce the frequency of your payments so that each payment will be at least
$20.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results
of the Variable Sub-Accounts you select, the premium taxes you pay, the age and
sex of the Annuitant, and the Income Plan you choose. We guarantee that the
payments will not be affected by (a) actual mortality experience and (b) the
amount of our administration expenses.
We cannot predict the total amount of your variable income payments. Your
variable income payments may be more or less than your total purchase payments
because (a) variable income payments vary with the investment results of the
underlying Portfolio and (b) the Annuitant could live longer or shorter than we
expect based on the tables we use.
In calculating the amount of the periodic payments in the annuity tables in the
Contract, we assumed an annual investment rate of 3%. If the actual net
investment return of the Variable Sub-Accounts you choose is less than this
assumed investment rate, then the dollar amount of your variable income payments
will decrease. The dollar amount of your variable income payments will increase,
however, if the actual net investment return exceeds the assumed investment
rate. The dollar amount of the variable income payments stays level if the net
investment return equals the assumed investment rate. Please refer to the
Statement of Additional Information for more detailed information as to how we
determine variable income payments.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from the Fixed Account for the
duration of the Income Plan. We calculate the fixed income payments by:
1) adjusting the portion of the Contract Value in the Fixed Account on the
Payout Start Date by any applicable Market Value Adjustment;
2) deducting any applicable premium tax; and
3) applying the resulting amount to the greater of (a) the appropriate value
from the income payment table in your Contract or (b) such other value as
we are offering at that time.
We may defer making fixed income payments for a period of up to 6 months or such
shorter time as state law may require. If we defer payments for 10 business days
or more, we will pay interest as required by law from the date we receive the
withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age. However, we
reserve the right to use income payment tables that do not distinguish on the
basis of sex to the extent permitted by law. In certain employment-related
situations, employers are required by law to use the same income payment tables
for men and women. Accordingly, if the Contract is to be used in connection with
an employment-related retirement or benefit plan, you should consult with legal
counsel as to whether the purchase of a Contract is appropriate. For qualified
plans, where it is appropriate, we may use income payment tables that do not
distinguish on the basis of sex.
<PAGE>
DEATH BENEFITS
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We will pay a death benefit if, prior to the Payout Start Date:
1) any Contract owner dies or,
2) the Annuitant dies, if the Contract owner is not a natural person.
We will pay the death benefit to the new Contract owner as determined
immediately after the death. The new Contract owner would be a surviving
Contract owner or, if none, the Beneficiary(ies).
Death Benefit Amount
Prior to the Payout Start Date, the death benefit is equal to the greatest of:
1) the Contract Value as of the date we determine the death benefit, or
2) the Settlement Value (that is, the amount payable on a full withdrawal
of Contract Value) on the date we determine the death benefit, or
3) the Contract Value on the Death Benefit Anniversary immediately
preceding the date we determine the death benefit, adjusted by any
purchase payments, withdrawal adjustment as defined below, and charges
made since that Death Benefit Anniversary. A "Death Benefit
Anniversary" is every seventh Contract Anniversary beginning with the
Issue Date. For example, the Issue Date, 7th and 14th Contract
Anniversaries are the first three Death Benefit Anniversaries, or
4) the greatest of the Anniversary Values as of the date we determine the
death benefit. An "Anniversary Value" is equal to the Contract Value
on a Contract Anniversary, increased by purchase payments made since
that anniversary and reduced by the amount of any withdrawal
adjustment, as defined below, since that anniversary. Anniversary
Values will be calculated for each Contract Anniversary prior to the
earlier of:
(i) the date we determine the death benefit, or
(ii) the deceased's 75th birthday or 5 years after the Issue Date, if
later.
A positive Market Value Adjustment will apply to amounts currently invested in a
Guarantee Period that are paid out as death benefits.
The value of the death benefit will be determined at the end of the Valuation
Date on which we receive a complete request for payment of the death benefit,
which includes Due Proof of Death.
The withdrawal adjustment is equal to (a) divided by (b), with the result
multiplied by (c), where:
(a) = the withdrawal amount,
(b) = the Contract Value immediately prior to the withdrawal, and
(c) = the value of the applicable death benefit alternative immediately prior
to the withdrawal.
See Appendix B for an example representative of how the withdrawal adjustment
applies.
We will not settle any death claim until we receive Due Proof of Death. We will
accept the following documentation as Due Proof of Death:
o a certified copy of a death certificate; or
o a certified copy of a decree of a court of competent jurisdiction as to a
finding of death; or
o any other proof acceptable to us.
Death Benefit Payments
A death benefit will be paid:
1) if the Contract owner elects to receive the death benefit distributed in a
single payment within 180 days of the date of death, and
2) if the death benefit is paid as of the day the value of the death benefit
is determined.
Otherwise, the Settlement Value will be paid. The new Contract owner may make a
single withdrawal of any amount within one year of the date of death without
incurring a withdrawal charge. However, any applicable Market Value Adjustment,
determined as of the date of the withdrawal, will apply. We are currently
waiving the 180 day limit, but we reserve the right to enforce the limitation in
the future. The Settlement Value paid will be the Settlement Value next computed
on or after the requested distribution date for payment, or on the mandatory
distribution date of 5 years after the date of death.
In any event, the entire value of the Contract must be distributed within 5
years after the date of death unless an Income Plan is elected or a surviving
spouse continues the Contract in accordance with the provisions described below.
If the Contract owner eligible to receive the death benefit is not a natural
person, the Contract owner may elect to receive the distribution upon death in
one or more distributions.
If the Contract owner is a natural person, the Contract owner may elect to
receive the distribution upon death either in one or more distributions, or by
periodic payments through an Income Plan. Payments from the Income Plan must
begin within one year of the date of death and must be payable throughout:
o the life of the Contract owner; or
o a period not to exceed the life expectancy of the Contract owner; or
o the life of the Contract owner with payments guaranteed for a period not to
exceed the life expectancy of the Contract owner.
If the surviving spouse of the deceased Contract owner is the new Contract
owner, then the spouse may elect one of the options listed above or may continue
the Contract in the Accumulation Phase as if the death had not occurred. The
Contract may only be continued once. If the Contract is continued in the
Accumulation Phase, the surviving spouse may make a single withdrawal of any
amount within one year of the date of death without incurring a withdrawal
charge. However, any applicable Market Value Adjustment, determined as of the
date of the withdrawal, will apply.
<PAGE>
MORE INFORMATION
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ALLSTATE NEW YORK
Allstate New York is the issuer of the Contract. Allstate New York is a stock
life insurance company organized under the laws of the State of New York.
Allstate New York was incorporated in 1967 and was known as "Financial Life
Insurance Company" from 1967 to 1978. From 1978 to 1984, Allstate New York was
known as "PM Life Insurance Company." Since 1984 the company has been known as
"Allstate Life Insurance Company of New York."
Allstate New York is currently licensed to operate in New York. Our home office
is One Allstate Drive, Farmingville, New York 11738. Our service center is
located in Northbrook, Illinois.
Allstate New York is a wholly owned subsidiary of Allstate Life Insurance
Company ("Allstate Life"), a stock life insurance company incorporated under the
laws of the State of Illinois. Allstate Life is a wholly owned subsidiary of
Allstate Insurance Company, a stock property-liability insurance company
incorporated under the laws of the State of Illinois. With the exception of the
directors qualifying shares, all of the outstanding capital stock of Allstate
Insurance Company is owned by The Allstate Corporation.
Several independent rating agencies regularly evaluate life insurers'
claims-paying ability, quality of investments, and overall stability. A.M. Best
Company assigns Allstate New York the financial performance rating of A+(g).
Standard & Poor's Insurance Rating Services assigns an AA+ (Very Strong)
financial strength rating and Moody's assigns an Aa2 (Excellent) financial
strength rating to Allstate New York. These ratings do not reflect the
investment performance of the Variable Account. We may from time to time
advertise these ratings in our sales literature.
THE VARIABLE ACCOUNT
Allstate New York established the Allstate Life of New York Separate Account A
on December 15, 1995. We have registered the Variable Account with the SEC as a
unit investment trust. The SEC does not supervise the management of the Variable
Account or Allstate New York.
We own the assets of the Variable Account. The Variable Account is a segregated
asset account under New York law. That means we account for the Variable
Account's income, gains and losses separately from the results of our other
operations. It also means that only the assets of the Variable Account that are
in excess of the reserves and other Contract liabilities with respect to the
Variable Account are subject to liabilities relating to our other operations.
Our obligations arising under the Contracts are general corporate obligations of
Allstate New York.
The Variable Account consists of multiple Variable Sub-Accounts, 28 of which are
available through the Contracts. Each Variable Sub-Account invests in a
corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one
or more of them, if we believe marketing, tax, or investment conditions so
warrant. We do not guarantee the investment performance of the Variable Account,
its Sub-Accounts or the Portfolios. We may use the Variable Account to fund our
other annuity contracts. We will account separately for each type of annuity
contract funded by the Variable Account.
THE PORTFOLIOS
Dividends and Capital Gain Distributions. We automatically reinvest all
dividends and capital gains distributions from the Portfolios in shares of the
distributing Portfolio at their net asset value.
Voting Privileges. As a general matter, you do not have a direct right to vote
the shares of the Portfolios held by the Variable Sub-Accounts to which you have
allocated your Contract Value. Under current law, however, you are entitled to
give us instructions on how to vote those shares on certain matters. Based on
our present view of the law, we will vote the shares of the Portfolios that we
hold directly or indirectly through the Variable Account in accordance with
instructions that we receive from Contract owners entitled to give such
instructions.
As a general rule, before the Payout Start Date, the Contract owner or anyone
with a voting interest is the person entitled to give voting instructions. The
number of shares that a person has a right to instruct will be determined by
dividing the Contract Value allocated to the applicable Variable Sub-Account by
the net asset value per share of the corresponding Portfolio as of the record
date of the meeting. After the Payout Start Date, the person receiving income
payments has the voting interest. The payee's number of votes will be determined
by dividing the reserve for such Contract allocated to the applicable Variable
Sub-Account by the net asset value per share of the corresponding Portfolio. The
votes decrease as income payments are made and as the reserves for the Contract
decrease.
We will vote shares attributable to Contracts for which we have not received
instructions, as well as shares attributable to us, in the same proportion as we
vote shares for which we have received instructions, unless we determine that we
may vote such shares in our own discretion. We will apply voting instructions to
abstain on any item to be voted on a pro-rata basis to reduce the votes eligible
to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to
voting instructions to the extent permitted by law. If we disregard voting
instructions, we will include a summary of that action and our reasons for that
action in the next semi-annual financial report we send to you.
Changes in Portfolios. If the shares of any of the Portfolios are no longer
available for investment by the Variable Account or if, in our judgment, further
investment in such shares is no longer desirable in view of the purposes of the
Contract, we may eliminate that Portfolio and substitute shares of another
eligible investment portfolio. Any substitution of securities will comply with
the requirements of the 1940 Act. We also may add new Variable Sub-Accounts that
invest in additional mutual funds. We will notify you in advance of any changes.
Conflicts of Interest. Certain of the Portfolios sell their shares to Variable
Accounts underlying both variable life insurance and variable annuity contracts.
It is conceivable that in the future it may be unfavorable for variable life
insurance Variable Accounts and variable annuity Variable Accounts to invest in
the same Portfolio. The boards of directors of these Portfolios monitor for
possible conflicts among Variable Accounts buying shares of the Portfolios.
Conflicts could develop for a variety of reasons. For example, differences in
treatment under tax and other laws or the failure by a Variable Account to
comply with such laws could cause a conflict. To eliminate a conflict, a
Portfolio's board of directors may require a Variable Account to withdraw its
participation in a Portfolio. A Portfolio's net asset value could decrease if it
had to sell investment securities to pay redemption proceeds to a Variable
Account withdrawing because of a conflict.
THE CONTRACT
Distribution. ALFS, Inc.* ("ALFS"), located at 3100 Sanders Road, Northbrook,
Illinois 60062, serves as principal underwriter of the Contracts. ALFS is a
wholly owned subsidiary of Allstate Life Insurance Company. ALFS is a registered
broker- dealer under the Securities and Exchange Act of 1934, as amended
("Exchange Act"), and is a member of the National Association of Securities
Dealers, Inc.
We will pay commissions to broker-dealers who sell the Contracts. Commissions
paid may vary, but we estimate that the total commissions paid on all Contract
sales will not exceed 6.25% of any purchase payments. These commissions are
intended to cover distribution expenses. Contracts may be sold by
representatives or employees of banks which may be acting as broker-dealers
without separate registration under the Exchange Act, pursuant to legal and
regulatory exceptions.
Allstate New York does not pay ALFS a commission for distribution of the
Contracts. The underwriting agreement with ALFS provides that we will reimburse
ALFS for any liability to Contract owners arising out of services rendered or
Contracts issued.
Administration. We have primary responsibility for all administration of the
Contracts and the Variable Account. We provide the following administrative
services, among others:
o issuance of the Contracts; o maintenance of Contract owner records; o Contract
owner services; o calculation of unit values; o maintenance of the Variable
Account; and o preparation of Contract owner reports.
We will send you Contract statements and transaction confirmations at least
annually. The annual statement details values and specific Contract data for
each particular Contract. You should notify us promptly in writing of any
address change. You should read your statements and confirmations carefully and
verify their accuracy. You should contact us promptly if you have a question
about a periodic statement. We will investigate all complaints and make any
necessary adjustments retroactively, but you must notify us of a potential error
within a reasonable time after the date of the questioned statement. If you wait
too long, we will make the adjustment as of the date that we receive notice of
the potential error.
We also will provide you with additional periodic and other reports, information
and prospectuses as may be required by federal securities laws.
* Effective May 1, 2000, Allstate Life Financial Services, Inc. was renamed
ALFS, Inc.
QUALIFIED PLANS
If you use the Contract with a qualified plan, the plan may impose different or
additional conditions or limitations on withdrawals, waivers of withdrawal
charges, death benefits, Payout Start Dates, income payments, and other Contract
features. In addition, adverse tax consequences may result if qualified plan
limits on distributions and other conditions are not met. Please consult your
qualified plan administrator for more information.
LEGAL MATTERS
Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised Allstate New York
on certain federal securities law matters. All matters of New York law
pertaining to the Contracts, including the validity of the Contracts and
Allstate New York's right to issue such Contracts under New York insurance law,
have been passed upon by Michael J. Velotta, General Counsel of Allstate New
York.
YEAR 2000
Allstate New York is heavily dependent upon complex computer systems for all
phases of its operations, including customer service and policy and contract
administration. Since many of Allstate New York's older computer software
programs recognize only the last two digits of the year in any date, some
software may have failed to operate properly in or after the year 1999, if the
software was not reprogrammed or replaced ("Year 2000 Issue"). Allstate New York
believes that many of its counterparties and suppliers also had potential Year
2000 Issues that could affect Allstate New York. In 1995, Allstate Insurance
Company commenced a four-phase plan intended to mitigate and/or prevent the
adverse effects of Year 2000 Issues. These strategies included normal
development and enhancement of new and existing systems, upgrades to operating
systems already covered by maintenance agreements, and modifications to existing
systems to make them Year 2000 compliant. The plan also included Allstate New
York actively working with its major external counterparties and suppliers to
assess their compliance efforts and Allstate New York's exposure to them.
Because of the accuracy of this plan, and its timely completion, Allstate New
York has experienced no material impacts on its results of operations, liquidity
or financial position due to the Year 2000 issue. Year 2000 costs are expensed
as incurred.
<PAGE>
TAXES
- ------------------------------------------------------------------------------
The following discussion is general and is not intended as tax advice. Allstate
New York makes no guarantee regarding the tax treatment of any Contract or
transaction involving a Contract.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax adviser.
Taxation of Annuities in General
Tax Deferral. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where:
1) the Contract owner is a natural person,
2) the investments of the Variable Account are "adequately diversified"
according to Treasury Department regulations, and
3) Allstate New York is considered the owner of the Variable Account
assets for federal income tax purposes.
Non-natural Owners. As a general rule, annuity contracts owned by non-natural
persons such as corporations, trusts, or other entities are not treated as
annuity contracts for federal income tax purposes. The income on such contracts
is taxed as ordinary income received or accrued by the owner during the taxable
year. Please see the Statement of Additional Information for a discussion of
several exceptions to the general rule for Contracts owned by non-natural
persons.
Diversification Requirements. For a Contract to be treated as an annuity for
federal income tax purposes, the investments in the Variable Account must be
"adequately diversified" consistent with standards under Treasury Department
regulations. If the investments in the Variable Account are not adequately
diversified, the contract will not be treated as an annuity contract for federal
income tax purposes. As a result, the income on the Contract will be taxed as
ordinary income received or accrued by the owner during the taxable year.
Although Allstate New York does not have control over the Portfolios or their
investments, we expect the Portfolios to meet the diversification requirements.
Ownership Treatment. The IRS has stated that you will be considered the owner of
Variable Account assets if you possess incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. At the time
the diversification regulations were issued, the Treasury Department announced
that the regulations do not provide guidance concerning circumstances in which
investor control of the Variable Account investments may cause an investor to be
treated as the owner of the Variable Account. The Treasury Department also
stated that future guidance would be issued regarding the extent that owners
could direct sub-account investments without being treated as owners of the
underlying assets of the Variable Account.
Your rights under the Contract are different than those described by the IRS in
rulings in which it found that contract owners were not owners of Variable
Account assets. For example, you have the choice to allocate premiums and
Contract Values among more investment alternatives. Also, you may be able to
transfer among investment alternatives more frequently than in such rulings.
These differences could result in you being treated as the owner of the Variable
Account. If this occurs, income and gain from the Variable Account assets would
be includible in your gross income. Allstate New York does not know what
standards will be set forth in any regulations or rulings which the Treasury
Department may issue. It is possible that future standards announced by the
Treasury Department could adversely affect the tax treatment of your Contract.
We reserve the right to modify the Contract as necessary to attempt to prevent
you from being considered the federal tax owner of the assets of the Variable
Account. However, we make no guarantee that such modification to the Contract
will be successful.
Taxation of Partial and Full Withdrawals. If you make a partial withdrawal under
a non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
Contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a partial withdrawal
under a Qualified Contract, the portion of the payment that bears the same ratio
to the total payment that the investment in the Contract (i.e., nondeductible
IRA contributions, after tax contributions to qualified plans) bears to the
contract value, is excluded from your income. If you make a full withdrawal
under a non-Qualified Contract or a Qualified Contract, the amount received will
be taxable only to the extent it exceeds the investment in the contract.
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are included in gross income only to the extent that
distributions exceed contributions. "Qualified distributions" from Roth IRAs are
not included in gross income. "Qualified distributions" are any distributions
made more than 5 taxable years after the taxable year of the first contribution
to any Roth IRA and which are:
o made on or after the date the individual attains age 59 1/2,
o made to a beneficiary after the Contract owner's death,
o attributable to the Contract owner being disabled, or
o for a first time home purchase (first time home purchases are subject to a
lifetime limit of $10,000).
If you transfer a non-Qualified Contract without full and adequate consideration
to a person other than your spouse (or to a former spouse incident to a
divorce), you will be taxed on the difference between the Contract Value and the
investment in the Contract at the time of transfer. Except for certain Qualified
Contracts, any amount you receive as a loan under a Contract, and any assignment
or pledge (or agreement to assign or pledge) of the Contract Value is treated as
a withdrawal of such amount or portion.
Taxation of Annuity Payments. Generally, the rule for income taxation of annuity
payments received from a non-Qualified Contract provides for the return of your
investment in the Contract in equal tax-free amounts over the payment period.
The balance of each payment received is taxable. For fixed annuity payments, the
amount excluded from income is determined by multiplying the payment by the
ratio of the investment in the Contract (adjusted for any refund feature or
period certain) to the total expected value of annuity payments for the term of
the contract. If you elect variable annuity payments, the amount excluded from
taxable income is determined by dividing the investment in the Contract by the
total number of expected payments. The annuity payments will be fully taxable
after the total amount of the investment in the Contract is excluded using these
ratios. If you die, and annuity payments cease before the total amount of the
investment in the Contract is recovered, the unrecovered amount will be allowed
as a deduction for your last taxable year.
Taxation of Annuity Death Benefits. Death of a Contract owner, or death of the
Annuitant if the Contract is owned by a non-natural person, will cause a
distribution of death benefits from a Contract. Generally, such amounts are
included in income as follows:
1) if distributed in a lump sum, the amounts are taxed in the same manner
as a full withdrawal, or
2) if distributed under an annuity option, the amounts are taxed in the
same manner as an annuity payment. Please see the Statement of
Additional Information for more detail on distribution at death
requirements.
Penalty Tax on Premature Distributions. A 10% penalty tax applies to the taxable
amount of any premature distribution from a non-Qualified Contract. The penalty
tax generally applies to any distribution made prior to the date you attain age
59 1/2. However, no penalty tax is incurred on distributions:
1) made on or after the date the Contract owner attains age 59 1/2;
2) made as a result of the Contract owner's death or disability;
3) made in substantially equal periodic payments over the owner's life or
life expectancy,
4) made under an immediate annuity; or
5) attributable to investment in the contract before August 14, 1982.
You should consult a competent tax advisor to determine if any other exceptions
to the penalty apply to your situation. Similar exceptions may apply to
distributions from Qualified Contracts.
Aggregation of Annuity Contracts. All non-qualified deferred annuity contracts
issued by Allstate New York (or its affiliates) to the same Contract owner
during any calendar year will be aggregated and treated as one annuity contract
for purposes of determining the taxable amount of a distribution.
TAX QUALIFIED CONTRACTS
The income on qualified plan and IRA investments is tax deferred and variable
annuities held by such plans do not receive any additional tax deferral. You
should review the annuity features, including all benefits and expenses, prior
to purchasing a variable annuity in a qualified plan or IRA.
Contracts may be used as investments with certain qualified plans such as:
o Individual Retirement Annuities or Accounts (IRAs) under Section 408 of the
Code;
o Roth IRAs under Section 408A of the Code;
o Simplified Employee Pension Plans under Section 408(k) of the Code;
o Savings Incentive Match Plans for Employees (SIMPLE) Plans under Section
408(p) of the Code;
o Tax Sheltered Annuities under Section 403(b) of the Code;
o Corporate and Self Employed Pension and Profit Sharing Plans; and
o State and Local Government and Tax-Exempt Organization Deferred
Compensation Plans.
Allstate New York reserves the right to limit the availability of the Contract
for use with any of the qualified plans listed above. In the case of certain
qualified plans, the terms of the plans may govern the right to benefits,
regardless of the terms of the Contract.
Restrictions Under Section 403(b) Plans. Section 403(b) of the Tax Code provides
tax-deferred retirement savings plans for employees of certain non-profit and
educational organizations. Under Section 403(b), any Contract used for a 403(b)
plan must provide that distributions attributable to salary reduction
contributions made after December 31, 1988, and all earnings on salary reduction
contributions, may be made only:
1) on or after the date the employee
o attains age 59 1/2,
o separates from service,
o dies,
o becomes disabled, or
2) on account of hardship (earnings on salary reduction contributions may
not be distributed on account of hardship).
These limitations do not apply to withdrawals where Allstate New York is
directed to transfer some or all of the Contract Value to another 403(b) plan.
INCOME TAX WITHHOLDING
Allstate New York is required to withhold federal income tax at a rate of 20% on
all "eligible rollover distributions" unless you elect to make a "direct
rollover" of such amounts to an IRA or eligible retirement plan. Eligible
rollover distributions generally include all distributions from Qualified
Contracts, excluding IRAs, with the exception of:
1) required minimum distributions, or
2) a series of substantially equal periodic payments made over a period
of at least 10 years, or,
3) over the life (joint lives) of the participant (and beneficiary).
Allstate New York may be required to withhold federal and state income taxes on
any distributions from non-Qualified Contracts or Qualified Contracts that are
not eligible rollover distributions, unless you notify us of your election to
not have taxes withheld.
<PAGE>
ANNUAL REPORTS AND OTHER DOCUMENTS
- ------------------------------------------------------------------------------
Allstate New York's annual report on Form 10-K for the year ended December 31,
1999 is incorporated herein by reference, which means that it is legally a part
of this prospectus.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Exchange Act are also incorporated herein by reference, which means
that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR"
system using the identifying number CIK No. 0000948255. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov. You also can view these materials at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. For more information on the operations of SEC's Public Reference Room,
call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents), please
write or call us at Customer Service, P.O. Box 94038, Palatine, Illinois
60094-4038 (telephone: 1-800-692-4682).
<PAGE>
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
We may advertise the performance of the Variable Sub-Accounts, including yield
and total return information. Yield refers to the income generated by an
investment in a Variable Sub-Account over a specified period. Total return
represents the change, over a specified period of time, in the value of an
investment in a Variable Sub-Account after reinvesting all income distributions.
All performance advertisements will include, as applicable, standardized yield
and total return figures that reflect the deduction of insurance charges, the
contract maintenance charge, and withdrawal charge. Performance advertisements
also may include total return figures that reflect the deduction of insurance
charges, but not the contract maintenance or withdrawal charges. The deduction
of such charges would reduce the performance shown. In addition, performance
advertisements may include aggregate, average, year-by-year, or other types of
total return figures.
Performance information for periods prior to the inception date of the Variable
Sub-Accounts will be based on the historical performance of the corresponding
Portfolios for the periods beginning with the inception dates of the Portfolios
and adjusted to reflect current Contract expenses. You should not interpret
these figures to reflect actual historical performance of the Variable Account.
We may include in advertising and sales materials tax deferred compounding
charts and other hypothetical illustrations that compare currently taxable and
tax deferred investment programs based on selected tax brackets. Our
advertisements also may compare the performance of our Variable Sub-Accounts
with: (a) certain unmanaged market indices, including but not limited to the Dow
Jones Industrial Average, the Standard & Poor's 500, and the Shearson Lehman
Bond Index; and/or (b) other management investment companies with investment
objectives similar to the underlying funds being compared. In addition, our
advertisements may include the performance ranking assigned by various
publications, including the Wall Street Journal, Forbes, Fortune, Money,
Barron's, Business Week, USA Today, and statistical services, including Lipper
Analytical Services Mutual Fund Survey, Lipper Annuity and Closed End Survey,
the Variable Annuity Research Data Survey, and SEI.
EXPERTS
The financial statements and related financial statement schedules of Allstate
New York as of December 31, 1999 and 1998 and for each of the three years in the
period ended December 31, 1999, which are incorporated herein by reference, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which are incorporated herein by reference, and are included in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
The financial statements of the Variable Account as of December 31, 1999, and
for each of the periods in the two years then ended, which are incorporated
herein by reference, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which are incorporated herein by reference,
and are included in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
<PAGE>
APPENDIX A
MARKET VALUE ADJUSTMENT EXAMPLES
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the applicable Guarantee
Period for the week preceding the establishment of the Guarantee Period.
N = the number of whole and partial years from the date we receive the
withdrawal, transfer or death benefit request, or from the Payout Start
Date to the end of the Guarantee Period.
J = the Treasury Rate for a maturity of length N for the week preceding
the receipt of the withdrawal, transfer, death benefit, or income payment
request. If a note with a maturity of length N is not available, a
weighted average will be used. If N is one year or less, J will be the
1-year Treasury Rate.
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as
reported in Federal Reserve Bulletin Release H.15.
The Market Value Adjustment factor is determined from the following formula:
.9 X (I - J) X N
To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount transferred, withdrawn (in excess of the
Preferred Withdrawal Amount), paid as a death benefit, or applied to an Income
Plan, from a Guarantee Period at any time other than during the 30 day period
after such Guarantee Period expires.
<PAGE>
EXAMPLES OF MARKET VALUE ADJUSTMENT
<TABLE>
<CAPTION>
<S> <C>
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Guaranteed Interest Rate: 4.50%
5 Year Treasury Rate at the time the
Guarantee Period is established: 4.50%
Full Surrender: End of Contract Year 3
NOTE: These examples assume that premium taxes are not applicable.
EXAMPLE 1: (Assumes declining interest rates)
Step 1. Calculate Contract Value at End of Contract Year 3: $10,000.00 X (1.045)3 = $11,411.66
Step 2. Calculate the Preferred Withdrawal Amount: .15 X $10,000.00 X (1.045)2 = $1,638.04
Step 3. Calculate the Market Value Adjustment: I = 4.5%
J = 4.2%
730 Days
--------
N = 365 days = 2
Market Value Adjustment Factor: .9 X (I-J) X N
= .9 X (.045 - .042) X (730/365) = .0054
Market Value Adjustment = Market Value Adjustment
Factor X Amount Subject to Market
Value Adjustment:
= .0054 X ($11,411.66-$1,638.04 = $52.78
Step 4. Calculate the Withdrawal Charge: .05 X ($10,000.00 - $1,500.00 + $52.78) = $420.74
Step 5. Calculate the amount received by Customers as a
result of full withdrawal at the end of Contract Year 3: $11,411.66 - $427.68 + $52.78 = $11,043.70
</TABLE>
<PAGE>
EXAMPLE 2: (Assumes rising interest rates)
<TABLE>
<CAPTION>
<S> <C>
Step 1. Calculate Contract Value at End of Contract Year 3: $10,000.00 X (1.045)3 = $11,411.66
Step 2. Calculate the Preferred Withdrawal Amount: .15 X $10,000.00 X (1.045)2 = $1,638.04
Step 3. Calculate the Market Value Adjustment: I = 4.5%
J = 4.8%
730 days
--------
N = 365 days = 2
Market Value Adjustment Factor: .9 X (I-J) X N
= .9 X (.045 - .048) X (730/365) = -.0054
Market Value Adjustment = Market Value Adjustment
Factor X Amount Subject to Market Value Adjustment
-.0054 X ($10,000.00 - $1,638.04) = -$52.78
Step 4. Calculate the Withdrawal Charge: .05 X ($10,000.00 - $1,638.04 - $52.78) = $415.46
Step 5. Calculate the amount received by customers as a
result of full withdrawal at the end of Contract Year 3: $11,411.66 - $415.46 - $52.78 = $10,943.42
</TABLE>
<PAGE>
APPENDIX B
WITHDRAWAL ADJUSTMENT EXAMPLE
Issue Date: January 1, 1999
Initial Purchase Payment: $50,000
<TABLE>
<CAPTION>
Death Benefit Amount
Contract Contract Death
Value Before Transaction Value Benefit Greatest
Occurrence Amount After Anniversary Anniversary
Date Type of Occurrence Occurrence Value Value
<S> <C> <C> <C> <C> <C> <C>
1/1/99 Issue Date - $50,000 $50,000 $50,000 $50,000
1/1/00 Contract Anniversary $55,000 - $55,000 $50,000 $55,000
7/1/00 Partial Withdrawal $60,000 $15,000 $45,000 $37,500 $41,250
</TABLE>
Withdrawal adjustment equals the partial withdrawal amount divided by the
Contract Value immediately prior to the partial withdrawal multiplied by the
value of the applicable death benefit amount alternative immediately prior to
the partial withdrawal.
<TABLE>
<CAPTION>
<S> <C>
Death Benefit Anniversary Value Death Benefit
Partial Withdrawal Amount (w) $15,000
Contract Value Immediately Prior to Partial Withdrawal (a) $60,000
Value of Applicable Death Benefit Amount Immediately Prior to Partial Withdrawal (d) $50,000
Withdrawal Adjustment [(w)/(a)]*(d) $12,500
Adjusted Death Benefit $37,500
Greatest Anniversary Value Death Benefit
Partial Withdrawal Amount (w) $15,000
Contract Value Immediately Prior to Partial Withdrawal (a) $60,000
Value of Applicable Death Benefit Amount Immediately Prior to Partial Withdrawal (d) $55,000
Withdrawal Adjustment [(w)/a)]*(d) $13,750
Adjusted Death Benefit $41,250
This example represents the proportional reduction applicable in all contracts.
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Description Page
Additions, Deletions or Substitutions of Investments......................
The Contract..............................................................
Purchases........................................................
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers).....
Performance Information...................................................
Calculation of Accumulation Unit Values...................................
Calculation of Variable Income Payments...................................
General Matters...........................................................
Incontestability.................................................
Settlements......................................................
Safekeeping of the Variable Account's Assets.....................
Premium Taxes....................................................
Tax Reserves.....................................................
Federal Tax Matters.......................................................
Qualified Plans...........................................................
Experts...................................................................
Financial Statements......................................................
-----------------------------------------------
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made. We do not authorize anyone to provide
any information or representations regarding the offering described in this
prospectus other than as contained in this prospectus.
[back cover]
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Allstate Life Insurance Company of New York Statement of Additional Information
Allstate Life of New York Separate Account A dated May 1, 2000
One Allstate Drive, Farmingville, New York 11738
</TABLE>
Service Center
P.O. Box 94038, Palatine, IL 60094-4038
Telephone Number: 1-800-692-4682
This Statement of Additional Information supplements the information in the
prospectus for the Allstate Custom Portfolio Variable Annuity. This Statement of
Additional Information is not a prospectus. You should read it with the
prospectus, dated May 1, 2000, for the Contract. You may obtain a prospectus by
writing or calling us at the service center address or telephone number listed
above.
Except as otherwise noted, this Statement of Additional Information uses the
same defined terms as the prospectus.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Description Page
<S> <C>
Additions, Deletions or Substitutions of Investments
The Contract
Purchases
Tax-free Exchanges (1035 Exchanges, Rollovers
and Transfers)
Performance Information
Calculation of Accumulation Unit Values
Calculation of Variable Income Payments
General Matters
Incontestability
Settlements
Safekeeping of the Variable Account's Assets
Premium Taxes
Tax Reserves
Federal Tax Matters
Qualified Plans
Experts
Financial Statements
</TABLE>
<PAGE>
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
- ------------------------------------------------------------------------------
We may add, delete, or substitute the Portfolio shares held by any Variable
Sub-Account to the extent the law permits. We may substitute shares of any
Portfolio with those of another Portfolio of the same or different mutual fund
if the shares of the Portfolio are no longer available for investment, or if we
believe investment in any Portfolio would become inappropriate in view of the
purposes of the Variable Account.
We will not substitute shares attributable to a Contract owner's interest in a
Variable Sub-Account until we have notified the Contract owner of the change,
and until the Securities and Exchange Commission has approved the change, to the
extent such notification and approval are required by law. Nothing contained in
this Statement of Additional Information shall prevent the Variable Account from
purchasing other securities for other series or classes of contracts, or from
effecting a conversion between series or classes of contracts on the basis of
requests made by Contract owners.
We also may establish additional Variable Sub-Accounts or series of Variable
Sub-Accounts. Each additional Variable Sub-Account would purchase shares in a
new Portfolio of the same or different mutual fund. We may establish new
Variable Sub-Accounts when we believe marketing needs or investment conditions
warrant. We determine the basis on which we will offer any new Variable
Sub-Accounts in conjunction with the Contract to existing Contract owners. We
may eliminate one or more Variable Sub-Accounts if, in our sole discretion,
marketing, tax or investment conditions so warrant.
We may, by appropriate endorsement, change the Contract as we believe necessary
or appropriate to reflect any substitution or change in the Portfolios. If we
believe the best interests of persons having voting rights under the Contracts
would be served, we may operate the Variable Account as a management company
under the Investment Company Act of 1940 or we may withdraw its registration
under such Act if such registration is no longer required.
<PAGE>
THE CONTRACT
- -------------------------------------------------------------------------------
The Contract is primarily designed to aid individuals in long-term financial
planning. You can use it for retirement planning regardless of whether the
retirement plan qualifies for special federal income tax treatment.
PURCHASE OF CONTRACTS
We offer the Contracts to the public through banks as well as brokers licensed
under the federal securities laws and state insurance laws. The principal
underwriter for the Variable Account, ALFS, Inc.* ("ALFS"), distributes the
Contracts. ALFS is an affiliate of Allstate New York. The offering of the
Contracts is continuous. We do not anticipate discontinuing the offering of the
Contracts, but we reserve the right to do so at any time.
*Effective May 1, 2000, Allstate Life Financial Services, Inc. was renamed ALFS,
Inc.
TAX-FREE EXCHANGES (1035 EXCHANGES, ROLLOVERS AND TRANSFERS)
We accept purchase payments that are the proceeds of a Contract in a transaction
qualifying for a tax-free exchange under Section 1035 of the Internal Revenue
Code ("Code"). Except as required by federal law in calculating the basis of the
Contract, we do not differentiate between Section 1035 purchase payments and
non-Section 1035 purchase payments.
We also accept "rollovers" and transfers from Contracts qualifying as
tax-sheltered annuities ("TSAs"), individual retirement annuities or accounts
("IRAs"), or any other Qualified Contract that is eligible to "rollover" into an
IRA. We differentiate among non-Qualified Contracts, TSAs, IRAs and other
Qualified Contracts to the extent necessary to comply with federal tax laws. For
example, we restrict the assignment, transfer, or pledge of TSAs and IRAs so the
Contracts will continue to qualify for special tax treatment. A Contract owner
contemplating any such exchange, rollover or transfer of a Contract should
contact a competent tax adviser with respect to the potential effects of such a
transaction.
<PAGE>
PERFORMANCE INFORMATION
- -------------------------------------------------------------------------------
From time to time we may advertise the "standardized," "non-standardized," and
"adjusted historical" total returns of the Variable Sub-Accounts, as described
below. Please remember that past performance is not an estimate or guarantee of
future performance and does not necessarily represent the actual experience of
amounts invested by a particular Contract owner. The performance figures shown
do not reflect any applicable taxes.
STANDARDIZED TOTAL RETURNS
A Variable Sub-Account's standardized total return represents the average annual
total return of that Sub-Account over a particular period. We compute
standardized total return by finding the annual percentage rate that, when
compounded annually, will accumulate a hypothetical $1,000 purchase payment to
the redeemable value at the end of the one, five or ten year period, or for a
period from the date of commencement of the Variable Sub-Account's operations,
if shorter than any of the foregoing. We use the following formula prescribed by
the SEC for computing standardized total return:
1000(1 + T)n = ERV
where:
T = average annual total return
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of 1, 5, or 10 year
periods or shorter period
n = number of years in the period
1000 = hypothetical $1,000 investment
When factoring in the withdrawal charge assessed upon redemption, we exclude the
Preferred Withdrawal Amount, which is the amount you can withdraw from the
Contract without paying a withdrawal charge. We also use the withdrawal charge
that would apply upon redemption at the end of each period. Thus, for example,
when factoring in the withdrawal charge for a one year standardized total return
calculation, we would use the withdrawal charge that applies to a withdrawal of
a purchase payment made one year prior.
When factoring in the contract maintenance charge, we pro rate the charge by
dividing (i) the contract maintenance charges by (ii) an assumed average
Contract size of $40,000. We then multiply the resulting percentage by a
hypothetical $1,000 investment.
The standardized total returns for the Variable Sub-Accounts for the periods
ended December 31, 1999 are set out below. No standardized total returns are
shown for the HSBC VI Cash Management Variable Sub-Account. In addition, no
standardized total returns are shown for the Fidelity VIP Contrafund, Fidelity
VIP Equity-Income, Fidelity VIP Growth, Fidelity VIP Growth Opportunities,
Fidelity VIP Overseas, Templeton Asset Strategy - Class 2*, Templeton
International Securities - Class 2*, Oppenheimer Aggressive Growth/VA,
Oppenheimer Main Street Growth & Income/VA, Oppenheimer Strategic Bond/VA,
Dreyfus Socially Responsible Growth, Dreyfus Stock Index, Dreyfus VIF
Appreciation**, Wells Fargo VT Asset Allocation, Wells Fargo VT Equity Income,
Wells Fargo VT Growth, Delaware GP Small Cap Value Series, Delaware GP Trend
Series, HSBC VI Fixed Income, and HSBC VI Growth & Income Variable Sub-Accounts,
which had not commenced operations as of the date of this Statement of
Additional Information.
The offering of the Allstate Custom Portfolio Variable Annuity Contracts to the
public had not commenced prior to the date of this Statement of Additional
Information. Accordingly, performance figures for the Variable Sub-Accounts
prior to that date reflect the historical performance of the Variable
Sub-Accounts, adjusted to reflect the current level of charges that apply to the
Variable Sub-Accounts under the Contracts, as well as the withdrawal charge and
contract maintenance charge described above.
<PAGE>
The Variable Sub-Accounts commenced operations on the following dates:
AIM V.I. Balanced October 25, 1999
AIM V.I. Capital Appreciation October 14, 1996
AIM V.I. Government Securities October 14, 1996
AIM V.I. Growth October 14, 1996
AIM V.I. High Yield October 25, 1999
AIM V.I. International Equity October 14, 1996
AIM V.I. Value October 14, 1996
*On February 28, 2000, shareholders approved a merger and reorganization that
combined the Templeton Asset Allocation Fund with the Templeton Global Asset
Allocation Fund, now called the Templeton Asset Strategy Fund, and the Templeton
International Fund with the Templeton International Equity Fund, now called the
Templeton International Securities Fund, effective May 1, 2000. Allstate New
York has made corresponding changes to the names of the Variable Sub-Accounts
that invest in these Portfolios.
**Effective May 1, 2000, the Dreyfus VIF Capital Appreciation Portfolio was
renamed the Dreyfus VIF Appreciation Portfolio. Allstate New York has made
corresponding changes to the names of the Variable Sub-Accounts that invest in
these Portfolios.
<TABLE>
<CAPTION>
Variable Sub-Account One Year Five Years Since Inception
<S> <C> <C> <C>
AIM V.I. Balanced N/A N/A 53.64%*
AIM V.I. Capital Appreciation 36.80% N/A 19.63%
AIM V.I. Government Securities -8.56% N/A 2.62%
AIM V.I. Growth 24.54% N/A 25.32%
AIM V.I. High Yield N/A N/A -2.79%*
AIM V.I. International Equity 47.11% N/A 21.95%
AIM V.I. Value 22.27% N/A 24.33%
</TABLE>
* Standardized total returns for the AIM V.I. Balanced and High Yield Variable
Sub-Accounts are not annualized.
<PAGE>
NON-STANDARDIZED TOTAL RETURNS
From time to time, we also may quote rates of return that reflect changes in the
values of each Variable Sub-Account's accumulation units. We may quote these
"non-standardized total returns" on an annualized, cumulative, year-by-year, or
other basis. These rates of return take into account asset-based charges, such
as the mortality and expense risk charge and administration charge. However,
these rates of return do not reflect withdrawal charges, contract maintenance
charges, or any taxes. Such charges, if reflected, would reduce the performance
shown.
Annualized returns reflect the rate of return that, when compounded annually,
would equal the cumulative rate of return for the period shown. We compute
annualized returns according to the following formula:
Annualized Return = (1 + r)1/n - 1
where r = cumulative rate of return for the period shown, and n =
number of years in the period.
The method of computing annualized rates of return is similar to that for
computing standardized performance, described above, except that rather than
using a hypothetical $1,000 investment and the ending redeemable value thereof,
we use the changes in value of an accumulation unit.
Cumulative rates of return reflect the cumulative change in value of an
accumulation unit over the period shown. Year -by-year rates of return reflect
the change in value of an accumulation unit during the course of each year
shown. We compute these returns by dividing the accumulation unit value at the
end of each period shown, by the accumulation unit value at the beginning of
that period, and subtracting one. We compute other total returns on a similar
basis.
We may quote non-standardized total returns for 1, 3, 5 and 10 year periods, or
period since inception of the Variable Sub-Account's operations, as well as
other periods, such as year-to-date (prior calendar year end to the day stated
in the advertisement); "year to most recent quarter" (prior calendar year end to
the end of the most recent quarter); "the prior calendar year"; and the "n" most
recent calendar years.
<PAGE>
The non-standardized total returns for the Variable Sub-Accounts for the period
ended December 31, 1999 are set out below. The Contracts were first offered for
sale as of the date of this Statement of Additional Information. Certain of the
Variable Sub-Accounts were available for investment prior to that date.
Accordingly, the performance shown reflects the historical performance of the
Variable Sub-Accounts, adjusted to reflect the current asset-based charges that
apply to the Variable Sub-Accounts under the Contracts (but not the withdrawal
charge, contract maintenance charge, or applicable taxes). No non-standardized
total returns are shown for the HSBC VI Cash Management Variable Sub-Account. In
addition, no non-standardized total returns are shown for the Fidelity VIP
Contrafund, Fidelity VIP Equity-Income, Fidelity VIP Growth, Fidelity VIP Growth
Opportunities, Fidelity VIP Overseas, Templeton Asset Strategy - Class 2,
Templeton International Securities - Class 2, Oppenheimer Aggressive Growth/VA,
Oppenheimer Main Street Growth & Income/VA, Oppenheimer Strategic Bond/VA,
Dreyfus Socially Responsible Growth, Dreyfus Stock Index, Dreyfus VIF
Appreciation, Wells Fargo VT Asset Allocation, Wells Fargo VT Equity Income,
Wells Fargo VT Growth, Delaware GP Small Cap Value Series, Delaware GP Trend
Series, HSBC VI Fixed Income, and HSBC VI Growth & Income Variable Sub-Accounts,
which had not commenced operations as of the date of this Statement of
Additional Information.
The inception date of each Variable Sub-Account appears under "Standardized
Total Returns," above.
<TABLE>
<CAPTION>
Variable Sub-Account One Year Five Years Since Inception
<S> <C> <C> <C>
AIM V.I. Balanced N/A N/A 106.27%*
AIM V.I. Capital Appreciation 42.82% N/A 20.40%
AIM V.I. Government Securities -2.54% N/A 3.68%
AIM V.I. Growth 33.56% N/A 26.01%
AIM V.I. High Yield N/A N/A 33.86%*
AIM V.I. International Equity 53.12% N/A 22.68%
AIM V.I. Value 28.29% N/A 25.03%
</TABLE>
*Non-standardized total returns for the AIM V.I. Balanced and High Yield
Variable Sub-Accounts are not annualized.
<PAGE>
ADJUSTED HISTORICAL TOTAL RETURNS
We may advertise the total return for periods prior to the date that the
Variable Sub-Accounts commenced operations. We will calculate such "adjusted
historical total returns" using the historical performance of the underlying
Portfolios and adjusting such performance to reflect the current level of
charges that apply to the Variable Sub-Accounts under the Contract, the contract
maintenance charge and the appropriate withdrawal charge.
The adjusted historical total returns for the Variable Sub-Accounts for the
periods ended December 31, 1999 are set out below. No adjusted historical total
returns are shown for the HSBC VI Cash Management Variable Sub-Account. In
addition, no adjusted historical total returns are shown for the HSBC VI Fixed
Income and HSBC VI Growth & Income Variable Sub-Accounts, because the Portfolios
in which they invest had not commenced operations as of the date of this
Statement of Additional Information.
The following list provides the inception date for the Portfolio corresponding
to each of the Variable Sub-Accounts included in the tables.
Inception Date of
Variable Sub-Account Corresponding Portfolio
AIM V.I. Balanced May 1, 1998
AIM V.I. Capital Appreciation May 5, 1993
AIM V.I. Government Securities May 5, 1993
AIM V.I. Growth May 5, 1993
AIM V.I. High Yield May 1, 1998
AIM V.I. International Equity May 5, 1993
AIM V.I. Value May 5, 1993
Fidelity VIP Contrafund January 3, 1995
Fidelity VIP Equity-Income October 9, 1986
Fidelity VIP Growth October 9, 1986
Fidelity VIP Growth Opportunities January 3, 1995
Fidelity VIP Overseas January 28, 1987
Templeton Asset Strategy - Class 2* August 24, 1988
Templeton International Securities - Class 2* May 1, 1992
Oppenheimer Aggressive Growth/VA August 15, 1986
Oppenheimer Main Street Growth & Income/VA July 5, 1995
Oppenheimer Strategic Bond/VA May 3, 1993
Dreyfus Socially Responsible Growth October 7, 1993
Dreyfus Stock Index September 29, 1989
Dreyfus VIF Appreciation** April 5, 1993
Wells Fargo VT Asset Allocation April 15, 1994
Wells Fargo VT Equity Income May 6, 1996
Wells Fargo VT Growth April 12, 1994
Delaware GP Small Cap Value Series December 27, 1993
Delaware GP Trend Series December 27, 1993
* On February 28, 2000, shareholders approved a merger and reorganization that
combined the Templeton Asset Allocation Fund with the Templeton Global Asset
Allocation Fund, now called the Templeton Asset Strategy Fund, and the
Templeton International Fund with the Templeton International Equity Fund, now
called the Templeton International Securities Fund, effective May 1, 2000.
Allstate New York has made corresponding changes to the names of the Variable
Sub-Accounts that invest in these Portfolios.
<PAGE>
**Effective May 1, 2000, the Dreyfus VIF Capital Appreciation Portfolio was
renamed the Dreyfus VIF Appreciation Portfolio. Allstate New York has made
corresponding changes to the names of the Variable Sub-Accounts that invest in
these Portfolios.
<TABLE>
<CAPTION>
10 Years or
Since Inception
Variable Sub-Account One Year Five Years of Portfolio (if less)
<S> <C> <C> <C>
AIM V.I. Balanced 11.81% N/A 14.28%
AIM V.I. Capital Appreciation 36.80% 23.04% 20.20%
AIM V.I. Government Securities -8.56% 4.53% 3.20%
AIM V.I. Growth 27.54% 26.01% 20.04%
AIM V.I. High Yield 3.14% N/A -5.90%
AIM V.I. International Equity 47.11% 19.92% 17.10%
AIM V.I. Value 22.27% 24.16% 20.56%
Fidelity VIP Contrafund 16.70% N/A 24.44%
Fidelity VIP Equity-Income -1.01% 14.89% 12.00%
Fidelity VIP Growth 29.72% 24.26% 16.66%
Fidelity VIP Growth Opportunities -5.02% N/A 17.86%
Fidelity VIP Overseas 34.88% 15.52% 8.77%
Templeton Asset Strategy - Class 2 15.03% 15.14% 11.27%
Templeton International Securities - Class 2 15.71% 15.26% 13.79%
Oppenheimer Aggressive Growth/VA 75.31% 27.85% 18.76%
Oppenheimer Main Street Growth & Income/VA 14.18% N/A 23.92%
Oppenheimer Strategic Bond/VA -4.47% 6.46% 5.59%
Dreyfus Socially Responsible Growth 22.45% 25.82% 21.69%
Dreyfus Stock Index 13.09% 26.26% 16.16%
Dreyfus VIF Appreciation 4.06% 23.73% 18.49%
Wells Fargo VT Asset Allocation 1.87% 10.71% 9.45%
Wells Fargo VT Equity Income 0.54% N/A 14.90%
Wells Fargo VT Growth 12.92% 17.93% 16.29%
Delaware GP Small Cap Value Series -12.06% 11.03% 9.55%
Delaware GP Trend Series 63.32% 28.12% 23.05%
</TABLE>
<PAGE>
CALCULATION OF ACCUMULATION UNIT VALUES
- ------------------------------------------------------------------------------
The value of Accumulation Units will change each Valuation Period according to
the investment performance of the Portfolio shares purchased by each Variable
Sub-Account and the deduction of certain expenses and charges. A "Valuation
Period" is the period from the end of one Valuation Date and continues to the
end of the next Valuation Date. A Valuation Date ends at the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m. Eastern Time).
The Accumulation Unit Value of a Variable Sub-Account for any Valuation Period
equals the Accumulation Unit Value as of the immediately preceding Valuation
Period, multiplied by the Net Investment Factor (described below) for that
Sub-Account for the current Valuation Period.
NET INVESTMENT FACTOR
The Net Investment Factor for a Valuation Period is a number representing the
change, since the last Valuation Period, in the value of Sub-account assets per
Accumulation Unit due to investment income, realized or unrealized capital gain
or loss, deductions for taxes, if any, and deductions for the mortality and
expense risk charge and administrative expense charge. We determine the Net
Investment Factor for each Variable Sub-Account for any Valuation Period by
dividing (A) by (B) and subtracting (C) from the result, where:
(A) is the sum of:
(1) the net asset value per share of the Portfolio underlying the
Variable Sub-Account determined at the end of the current
Valuation Period; plus,
(2) the per share amount of any dividend or capital gain
distributions made by the Portfolio underlying the Variable
Sub-Account during the current Valuation Period;
(B) is the net asset value per share of the Portfolio underlying the
Variable Sub-Account determined as of the end of the immediately
preceding Valuation Period; and
(C) is the sum of the annualized mortality and expense risk and
administrative expense charges divided by the number of days in the
current calendar year and then multiplied by the number of calendar days
in the current Valuation Period.
<PAGE>
CALCULATION OF VARIABLE INCOME PAYMENTS
- ------------------------------------------------------------------------------
We calculate the amount of the first variable income payment under an Income
Plan by applying the Contract Value allocated to each Variable Sub-Account less
any applicable premium tax charge deducted at the time, to the income payment
tables in the Contract. We divide each such portion of the first variable
annuity income payment by the Variable Sub-Account's then current Annuity Unit
value to determine the number of annuity units ("Annuity Units") upon which
later income payments will be based. To determine income payments after the
first, we simply multiply the number of Annuity Units determined in this manner
for each Variable Sub-Account by the then current Annuity Unit value ("Annuity
Unit Value") for that Variable Sub-Account.
CALCULATION OF ANNUITY UNIT VALUES
Annuity Units in each Variable Sub-Account are valued separately and Annuity
Unit Values will depend upon the investment experience of the particular
Portfolio in which the Variable Sub-Account invests. We calculate the Annuity
Unit Value for each Variable Sub-Account at the end of any Valuation Period by:
o multiplying the Annuity Unit Value at the end of the immediately preceding
Valuation Period by the Variable Sub-Account's Net Investment Factor
(described in the preceding section) for the Period; and then
o dividing the product by the sum of 1.0 plus the assumed investment rate for
the Valuation Period.
The assumed investment rate adjusts for the interest rate assumed in the income
payment tables used to determine the dollar amount of the first variable income
payment, and is at an effective annual rate which is disclosed in the Contract.
We determine the amount of the first variable income payment paid under an
Income Plan using the income payment tables set out in the Contracts. The
Contracts include tables that differentiate on the basis of sex, except in
states that require the use of unisex tables.
<PAGE>
GENERAL MATTERS
- ------------------------------------------------------------------------------
INCONTESTABILITY
We will not contest the Contract after we issue it.
SETTLEMENTS
We may require you to return the Contract to us prior to any settlement. We must
receive due proof of the Contract owner(s) death (or Annuitant's death if there
is a non-natural Contract owner) before we will settle a death claim.
SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS
We hold title to the assets of the Variable Account. We keep the assets
physically segregated and separate and apart from our general corporate assets.
We maintain records of all purchases and redemptions of the Portfolio shares
held by each of the Variable Sub-Accounts.
The Portfolios do not issue stock certificates. Therefore, we hold the Variable
Account's assets in open account in lieu of stock certificates. See the
Portfolios' prospectuses for a more complete description of the custodian of the
Portfolios.
PREMIUM TAXES
Applicable premium tax rates depend on the Contract owner's state of residency
and the insurance laws and our status in those states where premium taxes are
incurred. Premium tax rates may be changed by legislation, administrative
interpretations, or judicial acts. The State of New York currently does not
impose a premium tax.
TAX RESERVES
We do not establish capital gains tax reserves for any Variable Sub-Account nor
do we deduct charges for tax reserves because we believe that capital gains
attributable to the Variable Account will not be taxable. However, we reserve
the right to deduct charges to establish tax reserves for potential taxes on
realized or unrealized capital gains.
<PAGE>
FEDERAL TAX MATTERS
- ------------------------------------------------------------------------------
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. WE MAKE
NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR TRANSACTION
INVOLVING A CONTRACT.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on the individual circumstances
of each person. If you are concerned about any tax consequences with regard to
your individual circumstances, you should consult a competent tax adviser.
TAXATION OF ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
Allstate New York is taxed as a life insurance company under Part I of
Subchapter L of the Internal Revenue Code. Since the Variable Account is not an
entity separate from Allstate New York, and its operations form a part of
Allstate New York, it will not be taxed separately as a "Regulated Investment
Company" under Subchapter M of the Code. Investment income and realized capital
gains of the Variable Account are automatically applied to increase reserves
under the contract. Under existing federal income tax law, Allstate New York
believes that the Variable Account investment income and capital gains will not
be taxed to the extent that such income and gains are applied to increase the
reserves under the contract. Accordingly, Allstate New York does not anticipate
that it will incur any federal income tax liability attributable to the Variable
Account, and therefore Allstate New York does not intend to make provisions for
any such taxes. If Allstate New York is taxed on investment income or capital
gains of the Variable Account, then Allstate New York may impose a charge
against the Variable Account in order to make provision for such taxes.
EXCEPTIONS TO THE NON-NATURAL OWNER RULE
There are several exceptions to the general rule that annuity contracts held by
a non-natural owner are not treated as annuity contracts for federal income tax
purposes. Contracts will generally be treated as held by a natural person if the
nominal owner is a trust or other entity which holds the Contract as agent for a
natural person. However, this special exception will not apply in the case of an
employer who is the nominal owner of an annuity contract under a non-qualified
deferred compensation arrangement for its employees. Other exceptions to the
non-natural owner rule are: (1) contracts acquired by an estate of a decedent by
reason of the death of the decedent; (2) certain qualified contracts; (3)
contracts purchased by employers upon the termination of certain qualified
plans; (4) certain contracts used in connection with structured settlement
agreements, and (5) contracts purchased with a single premium when the annuity
starting date is no later than a year from purchase of the annuity and
substantially equal periodic payments are made, not less frequently than
annually, during the annuity period.
IRS REQUIRED DISTRIBUTION AT DEATH RULES
In order to be considered an annuity contract for federal income tax purposes,
an annuity contract must provide: (1) if any owner dies on or after the annuity
start date but before the entire interest in the contract has been distributed,
the remaining portion of such interest must be distributed at least as rapidly
as under the method of distribution being used as of the date of the owner's
death; (2) if any owner dies prior to the annuity start date, the entire
interest in the contract will be distributed within five years after the date of
the owner's death. These requirements are satisfied if any portion of the
owner's interest which is payable to (or for the benefit of) a designated
beneficiary is distributed over the life of such beneficiary (or over a period
not extending beyond the life expectancy of the beneficiary) and the
distributions begin within one year of the owner's death. If the owner's
designated beneficiary is the surviving spouse of the owner, the contract may be
continued with the surviving spouse as the new owner. If the owner of the
contract is a non-natural person, then the annuitant will be treated as the
owner for purposes of applying the distribution at death rules. In addition, a
change in the annuitant on a contract owned by a non-natural person will be
treated as the death of the owner.
<PAGE>
QUALIFIED PLANS
- -----------------------------------------------------------------------------
The Contract may be used with several types of qualified plans. The income on
qualified plan and IRA investments is tax deferred and variable annuities held
by such plans do not receive any additional tax deferral. You should review the
annuity features, including all benefits and expenses, prior to purchasing a
variable annuity in a qualified plan or IRA. Allstate New York reserves the
right to limit the availability of the Contract for use with any of the
Qualified Plans listed below. The tax rules applicable to participants in such
qualified plans vary according to the type of plan and the terms and conditions
of the plan itself. Adverse tax consequences may result from excess
contributions, premature distributions, distributions that do not conform to
specified commencement and minimum distribution rules, excess distributions and
in other circumstances. Contract owners and participants under the plan and
annuitants and beneficiaries under the Contract may be subject to the terms and
conditions of the plan regardless of the terms of the Contract.
INDIVIDUAL RETIREMENT ANNUITIES
Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity (IRA).
Individual Retirement Annuities are subject to limitations on the amount that
can be contributed and on the time when distributions may commence. Certain
distributions from other types of qualified plans may be "rolled over" on a
tax-deferred basis into an Individual Retirement Annuity. An IRA generally may
not provide life insurance, but it may provide a death benefit that equals the
greater of the premiums paid and the Contract's Cash Value. The Contract
provides a death benefit that in certain circumstances may exceed the greater of
the payments and the Contract Value. It is possible that the death benefit could
be viewed as violating the prohibition on investment in life insurance contracts
with the result that the Contract would not be viewed as satisfying the
requirements of an IRA.
ROTH INDIVIDUAL RETIREMENT ANNUITIES
Section 408A of the Code permits eligible individuals to make nondeductible
contributions to an individual retirement program known as a Roth Individual
Retirement Annuity. Roth Individual Retirement Annuities are subject to
limitations on the amount that can be contributed and on the time when
distributions may commence. "Qualified distributions" from Roth Individual
Retirement Annuities are not includible in gross income. "Qualified
distributions" are any distributions made more than five taxable years after the
taxable year of the first contribution to the Roth Individual Retirement
Annuity, and which are made on or after the date the individual attains age 59
1/2, made to a beneficiary after the owner's death, attributable to the owner
being disabled or for a first time home purchase (first time home purchases are
subject to a lifetime limit of $10,000). "Nonqualified distributions" are
treated as made from contributions first and are includible in gross income to
the extent such distributions exceed the contributions made to the Roth
Individual Retirement Annuity. The taxable portion of a "nonqualified
distribution" may be subject to the 10% penalty tax on premature distributions.
Subject to certain limitations, a traditional Individual Retirement Account or
Annuity may be converted or "rolled over" to a Roth Individual Retirement
Annuity. The taxable portion of a conversion or rollover distribution is
includible in gross income, but is exempted from the 10% penalty tax on
premature distributions.
SIMPLIFIED EMPLOYEE PENSION PLANS
Section 408(k) of the Code allows employers to establish simplified employee
pension plans for their employees using the employees' individual retirement
annuities if certain criteria are met. Under these plans the employer may,
within specified limits, make deductible contributions on behalf of the
employees to their individual retirement annuities. Employers intending to use
the Contract in connection with such plans should seek competent advice. In
particular, employers should consider that an IRA generally may not provide life
insurance, but it may provide a death benefit that equals the greater of the
premiums paid and the contract's cash value. The Contract provides a death
benefit that in certain circumstances may exceed the greater of the payments and
the Contract Value.
<PAGE>
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE PLANS)
Sections 408(p) and 401(k) of the Code allow employers with 100 or fewer
employees to establish SIMPLE retirement plans for their employees. SIMPLE plans
may be structured as a SIMPLE retirement account using an employee's IRA to hold
the assets or as a Section 401(k) qualified cash or deferred arrangement. In
general, a SIMPLE plan consists of a salary deferral program for eligible
employees and matching or nonelective contributions made by employers. Employers
intending to use the Contract in conjunction with SIMPLE plans should seek
competent tax and legal advice.
TAX SHELTERED ANNUITIES
Section 403(b) of the Code permits public school employees and employees of
certain types of tax-exempt organizations (specified in Section 501(c)(3) of the
Code) to have their employers purchase annuity contracts for them, and subject
to certain limitations, to exclude the purchase payments from the employees'
gross income. An annuity contract used for a Section 403(b) plan must provide
that distributions attributable to salary reduction contributions made after
12/31/88, and all earnings on salary reduction contributions, may be made only
on or after the date the employee attains age 59 1/2, separates from service,
dies, becomes disabled or on the account of hardship (earnings on salary
reduction contributions may not be distributed for hardship). These limitations
do not apply to withdrawals where Allstate New York is directed to transfer some
or all of the Contract Value to another 403(b) plan.
CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS
Sections 401(a) and 403(a) of the Code permit corporate employers to establish
various types of tax favored retirement plans for employees. The Self-Employed
Individuals Retirement Act of 1962, as amended, (commonly referred to as "H.R.
10" or "Keogh") permits self-employed individuals to establish tax favored
retirement plans for themselves and their employees. Such retirement plans may
permit the purchase of annuity contracts in order to provide benefits under the
plans.
STATE AND LOCAL GOVERNMENT AND TAX-EXEMPT ORGANIZATION
DEFERRED COMPENSATION PLANS
Section 457 of the Code permits employees of state and local governments and
tax-exempt organizations to defer a portion of their compensation without paying
current taxes. The employees must be participants in an eligible deferred
compensation plan. To the extent the Contracts are used in connection with an
eligible plan, employees are considered general creditors of the employer and
the employer as owner of the contract has the sole right to the proceeds of the
contract. Generally, under the non-natural owner rules, such Contracts are not
treated as annuity contracts for federal income tax purposes. Under these plans,
contributions made for the benefit of the employees will not be includible in
the employees' gross income until distributed from the plan. However, under a
Section 457 plan all the compensation deferred under the plan must remain solely
the property of the employer, subject only to the claims of the employer's
general creditors, until such time as made available to the employee or a
beneficiary.
<PAGE>
EXPERTS
- ------------------------------------------------------------------------------
The financial statements and related financial statement schedules of Allstate
New York as of December 31, 1999 and 1998 and for each of the three years in the
period ended December 31, 1999 that appear in this Statement of Additional
Information have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein, and are included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
The financial statements of the Variable Account as of December 31, 1999, and
for each of the periods in the two years then ended that appear in this
Statement of Additional Information have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
<PAGE>
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
The financial statements of the Variable Account as of December 31, 1999 and for
the periods in the two years then ended the financial statements and related
financial statement schedules of Allstate New York as of December 31, 1999 and
1998 and for each of the three years in the period ended December 31, 1999 and
the accompanying Independent Auditors' Reports appear on the pages that follow.
The financial statements of Allstate New York included herein should be
considered only as bearing upon the ability of Allstate New York to meet its
obligations under the Contracts.
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDER OF
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK:
We have audited the accompanying Statements of Financial Position of Allstate
Life Insurance Company of New York (the "Company", an affiliate of The Allstate
Corporation) as of December 31, 1999 and 1998, and the related Statements of
Operations and Comprehensive Income, Shareholder's Equity and Cash Flows for
each of the three years in the period ended December 31, 1999. Our audits also
included Schedule IV - Reinsurance and Schedule V - Valuation and Qualifying
Accounts. These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1999 and
1998, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1999 in conformity with generally
accepted accounting principles. Also, in our opinion, Schedule IV - Reinsurance,
and Schedule V - Valuation and Qualifying Accounts, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 25, 2000
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1999 1998
------------------ -------------------
<S> <C> <C>
($ in thousands, except par value data)
ASSETS
Investments
Fixed income securities, at fair value
(amortized cost $1,858,216 and $1,648,972) $ 1,912,545 $ 1,966,067
Mortgage loans 166,997 145,095
Short-term 46,037 76,127
Policy loans 31,109 29,620
----------------- ------------------
Total investments 2,156,688 2,216,909
Cash 1,135 3,117
Deferred policy acquisition costs 106,932 87,830
Accrued investment income 25,712 22,685
Reinsurance recoverables 1,949 2,210
Other assets 7,803 9,887
Separate Accounts 443,705 366,247
----------------- ------------------
TOTAL ASSETS $ 2,743,924 $ 2,708,885
================= ==================
LIABILITIES
Reserve for life-contingent contract benefits $ 1,098,016 $ 1,208,104
Contractholder funds 839,157 703,264
Current income taxes payable 10,132 14,029
Deferred income taxes 3,077 25,449
Other liabilities and accrued expenses 41,218 23,463
Payable to affiliates, net 4,731 38,835
Separate Accounts 443,705 366,247
----------------- ------------------
TOTAL LIABILITIES 2,440,036 2,379,391
----------------- ------------------
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 13)
SHAREHOLDER'S EQUITY
Common stock, $25 par value, 100,000 and 80,000
shares authorized, issued and outstanding 2,500 2,000
Additional capital paid-in 45,787 45,787
Retained income 225,367 198,801
Accumulated other comprehensive income:
Unrealized net capital gains 30,234 82,906
----------------- ------------------
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME 30,234 82,906
----------------- ------------------
TOTAL SHAREHOLDER'S EQUITY 303,888 329,494
----------------- ------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 2,743,924 $ 2,708,885
================= ==================
</TABLE>
See notes to financial statements.
2
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
($ in thousands) 1999 1998 1997
------------------ ------------------ ------------------
<S> <C> <C> <C>
REVENUES
Premiums (net of reinsurance ceded
of $4,253, $3,204 and $3,087 ) $ 63,748 $ 85,771 $ 90,366
Contract charges 38,626 33,281 28,597
Net investment income 148,331 134,413 124,887
Realized capital gains and losses (2,096) 4,697 701
--------- --------- --------
248,609 258,162 244,551
--------- --------- --------
COSTS AND EXPENSES
Contract benefits (net of reinsurance recoveries
of $1,166, $997 and $1,985 ) 178,267 183,839 179,872
Amortization of deferred policy acquisition costs 8,985 7,029 5,023
Operating costs and expenses 20,151 24,703 23,644
--------- --------- --------
207,403 215,571 208,539
--------- --------- --------
INCOME FROM OPERATIONS
BEFORE INCOME TAX EXPENSE 41,206 42,591 36,012
Income tax expense 14,640 14,934 13,296
--------- --------- --------
NET INCOME 26,566 27,657 22,716
--------- --------- --------
OTHER COMPREHENSIVE (LOSS) INCOME, AFTER TAX
Change in unrealized net capital gains and losses (52,672) 18,427 27,627
--------- -------- --------
COMPREHENSIVE (LOSS) INCOME $ (26,106) $ 46,084 $ 50,343
========= ======== ========
</TABLE>
See notes to financial statements.
3
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------
1999 1998 1997
------------------ ------------------- -----------------
($ in thousands)
COMMON STOCK
<S> <C> <C> <C>
Balance, beginning of year $ 2,000 $ 2,000 $ 2,000
Issuance of new shares of stock 500 - -
----------------- ----------------- -----------------
Balance, end of year 2,500 2,000 2,000
----------------- ----------------- -----------------
ADDITIONAL CAPITAL PAID-IN $ 45,787 $ 45,787 $ 45,787
----------------- ----------------- -----------------
RETAINED INCOME
Balance, beginning of year $ 198,801 $ 171,144 $ 148,428
Net income 26,566 27,657 22,716
----------------- ----------------- -----------------
Balance, end of year 225,367 198,801 171,144
----------------- ----------------- -----------------
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of year $ 82,906 $ 64,479 $ 36,852
Change in unrealized net capital gains
and losses (52,672) 18,427 27,627
----------------- ----------------- -----------------
Balance, end of year 30,234 82,906 64,479
----------------- ----------------- -----------------
TOTAL SHAREHOLDER'S EQUITY $ 303,888 $ 329,494 $ 283,410
================= ================= =================
</TABLE>
See notes to financial statements.
4
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
($ in thousands) 1999 1998 1997
------------------ ------------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 26,566 $ 27,657 $ 22,716
Adjustments to reconcile net income to net cash
provided by operating activities
Amortization and other non-cash items (37,619) (34,890) (31,112)
Realized capital gains and losses 2,096 (4,697) (701)
Interest credited to contractholder funds 36,736 41,200 31,667
Changes in:
Life-contingent contract benefits and
contractholder funds 38,527 53,343 68,114
Deferred policy acquisition costs (17,262) (16,693) (10,781)
Income taxes payable 2,094 13,865 (158)
Other operating assets and liabilities 13,049 (15,974) 8,545
----------------- ----------------- -----------------
Net cash provided by operating activities 64,187 63,811 88,290
----------------- ----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of fixed income securities 161,443 65,281 15,723
Investment collections
Fixed income securities 21,822 159,648 120,061
Mortgage loans 7,479 5,855 5,365
Investments purchases
Fixed income securities (383,961) (292,444) (236,984)
Mortgage loans (31,888) (24,252) (35,200)
Change in short-term investments, net 29,493 (55,846) 16,342
Change in policy loans, net (1,489) (2,020) (2,241)
----------------- ----------------- -----------------
Net cash used in investing activities (197,101) (143,778) (116,934)
----------------- ----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 500 - -
Contractholder fund deposits 197,439 137,473 79,384
Contractholder fund withdrawals (67,007) (54,782) (51,374)
----------------- ----------------- -----------------
Net cash provided by financing activities 130,932 82,691 28,010
----------------- ----------------- -----------------
NET (DECREASE) INCREASE IN CASH (1,982) 2,724 (634)
CASH AT THE BEGINNING OF YEAR 3,117 393 1,027
----------------- ----------------- -----------------
CASH AT END OF YEAR $ 1,135 $ 3,117 $ 393
================= ================= =================
</TABLE>
See notes to financial statements.
5
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
1. GENERAL
BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Allstate Life
Insurance Company of New York (the "Company"), a wholly owned subsidiary of
Allstate Life Insurance Company ("ALIC"), which is wholly owned by Allstate
Insurance Company ("AIC"), a wholly owned subsidiary of The Allstate Corporation
(the "Corporation"). These financial statements have been prepared in conformity
with generally accepted accounting principles.
To conform with the 1999 presentation, certain amounts in the prior years'
financial statements and notes have been reclassified.
NATURE OF OPERATIONS
The Company markets a broad line of life insurance and savings products in the
state of New York through a combination of exclusive agencies, securities firms,
banks, specialized brokers and through direct response marketing. Life insurance
consists of traditional products, including term and whole life,
interest-sensitive life and immediate annuities with life contingencies. Savings
products include deferred annuities and immediate annuities without life
contingencies. Deferred annuities include fixed rate, market value adjusted and
variable annuities. Group pension savings products include immediate annuities
also referred to as retirement annuities. In 1999, annuity premiums and deposits
represented 76.2% of the Company's total statutory premiums and deposits.
The Company monitors economic and regulatory developments which have the
potential to impact its business. Recently enacted federal legislation will
allow for banks and other financial organizations to have greater participation
in the securities and insurance businesses. This legislation may present an
increased level of competition for sales of the Company's products. Furthermore,
the market for deferred annuities and interest-sensitive life insurance is
enhanced by the tax incentives available under current law. Any legislative
changes which lessen these incentives are likely to negatively impact the demand
for these products.
Additionally, traditional demutualizations of mutual insurance companies and
enacted and pending state legislation to permit mutual insurance companies to
convert to a hybrid structure known as a mutual holding company could have a
number of significant effects on the Company by (1) increasing industry
competition through consolidation caused by mergers and acquisitions related to
the new corporate form of business; and (2) increasing competition in capital
markets.
Although the Company currently benefits from agreements with financial services
entities who market and distribute its products, change in control of these
non-affliliated entities with which the Company has alliances could negatively
impact the Company's sales.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Fixed income securities include bonds and mortgage-backed and asset-backed
securities. All fixed income securities are carried at fair value and may be
sold prior to their contractual maturity ("available for sale"). The difference
between amortized cost and fair value, net of deferred income taxes, certain
deferred policy acquisition costs, and certain reserves for life-contingent
contract benefits, is reflected as a component of shareholder's equity.
Provisions are recognized for declines in the value of fixed income securities
that are other than temporary. Such writedowns are included in realized capital
gains and losses.
6
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
Mortgage loans are carried at outstanding principal balance, net of unamortized
premium or discount and valuation allowances. Valuation allowances are
established for impaired loans when it is probable that contractual principal
and interest will not be collected. Valuation allowances for impaired loans
reduce the carrying value to the fair value of the collateral or the present
value of the loan's expected future repayment cash flows discounted at the
loan's original effective interest rate. Valuation allowances on loans not
considered to be impaired are established based on consideration of the
underlying collateral, borrower financial strength, current and expected market
conditions, and other factors.
Short-term investments are carried at cost or amortized cost which approximates
fair value, and includes collateral received in connection with securities
lending activities. Policy loans are carried at the unpaid principal balances.
Investment income consists primarily of interest and short-term investment
dividends. Interest is recognized on an accrual basis and dividends are recorded
at the ex-dividend date. Interest income on mortgage-backed and asset-backed
securities is determined on the effective yield method, based on estimated
principal repayments. Accrual of income is suspended for fixed income securities
and mortgage loans that are in default or when the receipt of interest payments
is in doubt. Realized capital gains and losses are determined on a specific
identification basis.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company utilizes financial futures contracts which are derivative financial
instruments. By meeting specific criteria these futures are designated as
accounting hedges and accounted for on a deferral basis. In order to qualify as
accounting hedges, financial futures contracts must reduce the primary market
risk exposure on an enterprise or transaction basis in conjunction with a hedge
strategy; be designated as a hedge at the inception of the transaction; and be
highly correlated with the fair value of, or interest income or expense
associated with, the hedged item at inception and throughout the hedge period.
Derivatives that are not designated as accounting hedges are accounted for on a
fair value basis.
If, subsequent to entering into a hedge transaction, the financial futures
contract becomes ineffective (including if the occurrence of a hedged
anticipatory transaction is no longer probable), the Company terminates the
derivative position. Gains and losses on these terminations are reported in
realized capital gains and losses in the period they occur. The Company may also
terminate derivatives as a result of other events or circumstances. Gains and
losses on these terminations are deferred and amortized over the remaining life
of the hedged item.
The Company accounts for financial futures as hedges using deferral accounting
for anticipatory investment purchases and sales when the criteria for futures
(discussed above) are met. In addition, anticipated transactions must be
probable of occurrence and their significant terms and characteristics
identified. Under deferral accounting, gains and losses on financial futures
contracts are deferred as other liabilities and accrued expenses. Once the
anticipated transaction occurs, the deferred gains and losses are considered
part of the cost basis of the asset and reported net of tax in shareholder's
equity. The gains and losses deferred are then recognized in conjunction with
the earnings on the hedged item. Fees and commissions paid on these derivatives
are also deferred as an adjustment to the carrying value of the hedged item.
RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS AND INTEREST CREDITED
Traditional life insurance products consist principally of products with fixed
and guaranteed premiums and benefits, primarily term and whole life insurance
products and certain annuities with life contingencies. Premiums from these
products are recognized as revenue when due. Benefits are recognized in relation
to
7
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
such revenue so as to result in the recognition of profits over the life of
the policy and are reflected in contract benefits.
Interest-sensitive life contracts are insurance contracts whose terms are not
fixed and guaranteed. The terms that may be changed include premiums paid by the
contractholder, interest credited to the contractholder account balance and one
or more amounts assessed against the contractholder. Premiums from these
contracts are reported as deposits to the contractholder funds. Contract charge
revenue consists of fees assessed against the contractholder account balance for
cost of insurance (mortality risk), contract administration and surrender
charges. Contract benefits include interest credited to contracts and claims
incurred in excess of the related contractholder account balance.
Limited payment contracts, a type of life-contingent immediate annuity or
traditional life product, are contracts that provide insurance protection over a
contract period that extends beyond the period in which premiums are collected.
Gross premiums in excess of the net premium on limited payment contracts are
deferred and recognized over the contract period. Contract benefits are
recognized in relation to such revenue so as to result in the recognition of
profits over the life of the policy.
Contracts that do not subject the Company to significant risks arising from
mortality or morbidity are referred to as investment contracts. Fixed rate
annuities, market value adjusted annuities and immediate annuities without life
contingencies are considered investment contracts. Deposits received for such
contracts are reported as deposits to contractholder funds. Contract charge
revenue for investment contracts consists of charges assessed against the
contractholder account balance for contract administration and surrenders.
Contract benefits include interest credited and claims incurred in excess of the
related contractholder account balance.
Crediting rates for fixed rate annuities and interest-sensitive life contracts
are adjusted periodically by the Company to reflect current market conditions.
Investment contracts also include variable annuity contracts which are sold as
Separate Accounts products. The assets supporting these products are legally
segregated and available only to settle Separate Accounts contract obligations.
Deposits received are reported as Separate Accounts liabilities. The Company's
contract charge revenue for these contracts consists of charges assessed against
the Separate Accounts fund balances for contract maintenance, administration,
mortality, expense and surrenders.
DEFERRED POLICY ACQUISITION COSTS
Certain costs which vary with and are primarily related to acquiring life and
savings business, principally agents and brokers remuneration, premium taxes,
certain underwriting costs and direct mail solicitation expenses, are deferred
and amortized into income. Deferred policy acquisition costs are periodically
reviewed as to recoverability and written down where necessary.
For traditional life insurance and limited payment contracts, these costs are
amortized in proportion to the estimated revenue on such business. Assumptions
relating to estimated revenue, as well as to all other aspects of the deferred
acquisition costs and reserve calculations, are determined based upon conditions
as of the date of the policy issue and are generally not revised during the life
of the policy. Any deviations from projected business inforce, resulting from
actual policy terminations differing from expected levels, and any estimated
premium deficiencies change the rate of amortization in the period such events
occur. Generally, the amortization period for these contracts approximates the
estimated lives of the policies.
For interest-sensitive life and investment contracts, the costs are amortized in
proportion to the estimated gross profits on such business over the estimated
lives of the contract periods. Gross profits are determined
8
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
at the date of policy issue and comprise estimated investment, mortality,
expense margins and surrender charges. Assumptions underlying the gross profits
are periodically updated to reflect actual experience, and changes in the amount
or timing of estimated gross profits will result in adjustments to the
cumulative amortization of these costs.
The present value of future profits inherent in acquired blocks of insurance is
classified as a component of deferred policy acquisition costs. The present
value of future profits is amortized over the life of the blocks of insurance
using current crediting rates.
To the extent unrealized gains or losses on securities carried at fair value
would result in an adjustment of estimated gross profits had those gains or
losses actually been realized, the related carrying value of deferred
acquisition costs, including present value of future profits, are adjusted
together with accumulated unrealized net capital gains included in shareholder's
equity.
REINSURANCE RECOVERABLE
In the normal course of business, the Company seeks to limit aggregate and
single exposure to losses on large risks by purchasing reinsurance from other
insurers. Reinsurance recoverables are estimated based upon assumptions
consistent with those used in establishing the underlying reinsured contacts.
Insurance liabilities are reported gross of reinsurance recoverables.
Reinsurance does not extinguish the Company's primary liability under the
policies written and therefore reinsurers and amounts recoverable therefrom are
regularly evaluated by the Company and allowances for uncollectible reinsurance
are established as appropriate.
INCOME TAXES
The income tax provision is calculated under the liability method. Deferred tax
assets and liabilities are recorded based on the difference between the
financial statement and tax bases of assets and liabilities at the enacted tax
rates. The principal assets and liabilities giving rise to such differences are
insurance reserves and deferred policy acquisition costs. Deferred income taxes
also arise from unrealized capital gains and losses on fixed income securities
carried at fair value.
SEPARATE ACCOUNTS
The Company issues deferred variable annuity contracts, the assets and
liabilities of which are legally segregated and recorded as assets and
liabilities of the Separate Accounts. Absent any contract provisions wherein the
Company contractually guarantees either a minimum return or account value to the
beneficiaries of the contractholders in the form of a death benefit, the
contractholders bear the investment risk that the Separate Accounts' funds may
not meet their stated investment objectives.
The assets of the Separate Accounts are carried at fair value. Separate Accounts
liabilities represent the contractholders' claims to the related assets and are
carried at the fair value of the assets. In the event that the asset value of
certain contractholder accounts are projected to be below the value guaranteed
by the Company, a liability is established through a charge to earnings.
Investment income and realized capital gains and losses of the Separate Accounts
accrue directly to the contractholders and therefore, are not included in the
Company's statements of operations and comprehensive income. Revenues to the
Company from the Separate Accounts consist of contract maintenance and
administration fees, and mortality, surrender and expense charges.
RESERVES FOR LIFE-CONTINGENT CONTRACT BENEFITS
The reserve for life-contingent contract benefits, which relates to traditional
life insurance, group retirement annuities, immediate annuities with life
contingencies and certain variable annuity guarantees, is computed on the basis
of assumptions as to mortality, future investment yields, terminations and
9
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
expenses at the time the policy is issued. These assumptions, which for
traditional life insurance are applied using the net level premium method,
include provisions for adverse deviation and generally vary by such
characteristics as type of coverage, year of issue and policy duration. Detailed
reserve assumptions and reserve interest rates are outlined in Note 7. To the
extent that unrealized gains on fixed income securities would result in a
premium deficiency had those gains actually been realized, the related increase
in reserves is recorded as a reduction of the unrealized gains included in
shareholder's equity.
CONTRACTHOLDER FUNDS
Contractholder funds arise from the issuance of interest-sensitive life and
certain investment contracts. Deposits received are recorded as interest-bearing
liabilities. Contractholder funds are equal to deposits received, net of
commissions, and interest credited to the benefit of the contractholder less
withdrawals, mortality charges and administrative expenses. Detailed information
on crediting rates and surrender and withdrawal protection on contractholder
funds are outlined in Note 7.
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Commitments to extend mortgage loans have only off-balance-sheet risk because
their contractual amounts are not recorded in the Company's statements of
financial position. The contractual amounts and fair values of these instruments
are presented in Note 5.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
NEW ACCOUNTING STANDARDS
In 1999, the Company adopted Statement of Position ("SOP") 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments." The SOP
provides guidance concerning when to recognize a liability for insurance-related
assessments and how those liabilities should be measured. Specifically,
insurance-related assessments should be recognized as liabilities when all of
the following criteria have been met: 1) an assessment has been imposed or it is
probable that an assessment will be imposed, 2) the event obligating an entity
to pay an assessment has occurred and 3) the amount of the assessment can be
reasonably estimated. Adoption of this statement was not material to the
Company's results of operations or financial position.
PENDING ACCOUNTING STANDARDS
In June 1999, the Financial Accounting Standards Board delayed the effective
date of Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133
replaces existing pronouncements and practices with a single, integrated
accounting framework for derivatives and hedging activities. This statement
requires that all derivatives be recognized on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If the derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of derivatives will either be offset against the change in the
fair value of the hedged assets, liabilities, or firm commitments through
earnings or recognized in other comprehensive income until the hedged item is
recognized in earnings. Additionally, the change in fair value of a derivative
which is not effective as a hedge will be immediately recognized in earnings.
The delay was effected through the issuance of SFAS No. 137, which extends the
SFAS No. 133 requirements to fiscal years beginning after June 15, 2000. As
such, the Company expects to adopt the provisions of SFAS No. 133 as of January
1, 2001. The impact of this statement is dependent upon the Company's derivative
positions and market conditions existing at the date of adoption. Based on
existing interpretations of the requirements of SFAS
10
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
No. 133, the impact of the adoption is not expected to be material to the
results of operations or financial position of the Company.
3. RELATED PARTY TRANSACTIONS
REINSURANCE
The Company has reinsurance agreements with ALIC in order to limit aggregate and
single exposure on large risks. A portion of the Company's premiums and policy
benefits are ceded to ALIC and reflected net of such reinsurance in the
statements of operations and comprehensive income. Reinsurance recoverables and
the related reserve for life-contingent contract benefits and contractholder
funds are reported separately in the statements of financial position. The
Company continues to have primary liability as the direct insurer for risks
reinsured.
The following amounts were ceded to ALIC under reinsurance agreements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Premiums $ 3,408 $ 2,519 $ 2,171
Policy benefits 211 315 327
</TABLE>
Included in reinsurance recoverables at December 31, 1999 and 1998 are the net
amounts owed to ALIC of $458 and $3, respectively.
STRUCTURED SETTLEMENT ANNUITIES
The Company issued $14,561, $12,747 and $12,766 of structured settlement
annuities, a type of immediate annuity, in 1999, 1998 and 1997, respectively, at
prices determined based upon interest rates in effect at the time of purchase,
to fund structured settlements in matters involving AIC. Of these amounts,
$4,298, $5,152 and $3,468 relate to structured settlement annuities with life
contingencies and are included in premium income in 1999, 1998 and 1997,
respectively. Additionally, the reserve for life-contingent contract benefits
was increased by approximately 94% of such premium received in each of these
years. In most cases, these annuities were issued to Allstate Settlement
Corporation ("ASC"), a subsidiary of ALIC, which, under a "qualified
assignment", assumed AIC's obligation to make the future payments.
AIC has issued surety bonds to guarantee the payment of structured settlement
benefits assumed by ASC (from both AIC and non-related parties) and funded by
certain annuity contracts issued by the Company. ASC has entered into General
Indemnity Agreements pursuant to which it indemnified AIC for any liabilities
associated with the surety bonds and gives AIC certain collateral security
rights with respect to the annuities and certain other rights in the event of
any defaults covered by the surety bonds. Reserves recorded by the Company for
annuities related to the surety bonds were $1.19 billion and $1.08 billion at
December 31, 1999 and 1998, respectively.
BUSINESS OPERATIONS
The Company utilizes services performed by AIC and ALIC and business facilities
owned or leased, and operated by AIC in conducting its business activities. In
addition, the Company shares the services of employees with AIC. The Company
reimburses AIC and ALIC for the operating expenses incurred on behalf of the
Company. The Company is charged for the cost of these operating expenses based
on the level of services provided. Operating expenses, including compensation
and retirement and other benefit programs, allocated to the Company were
$16,155, $23,369 and $19,425 in 1999, 1998 and 1997, respectively. A
11
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
portion of these expenses relate to the acquisition of business which are
deferred and amortized over the contract period.
4. INVESTMENTS
FAIR VALUES
The amortized cost, gross unrealized gains and losses, and fair value for fixed
income securities are as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ---------------- FAIR
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
AT DECEMBER 31, 1999
U.S. government and agencies $ 413,875 $ 53,717 $ (2,705) $ 464,887
Municipal 60,256 997 (1,976) 59,277
Corporate 996,298 36,303 (31,695) 1,000,906
Foreign government 61,987 3,217 (639) 64,565
Mortgage-backed securities 291,304 4,770 (7,370) 288,704
Asset-backed securities 34,496 26 (316) 34,206
-------------- -------------- -------------- --------------
Total fixed income securities $ 1,858,216 $ 99,030 $ (44,701) $ 1,912,545
============== ============== ============== ==============
AT DECEMBER 31, 1998
U.S. government and agencies $ 443,930 $ 179,455 $ (1) $ 623,384
Municipal 31,617 2,922 (19) 34,520
Corporate 848,289 121,202 (899) 968,592
Mortgage-backed securities 291,520 14,294 (700) 305,114
Asset-backed securities 33,616 869 (28) 34,457
-------------- -------------- -------------- --------------
Total fixed income securities $ 1,648,972 $ 318,742 $ (1,647) $ 1,966,067
============== ============== ============== ==============
</TABLE>
SCHEDULED MATURITIES
The scheduled maturities for fixed income securities are as follows at December
31, 1999:
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
---- -----
<S> <C> <C>
Due in one year or less $ 6,720 $ 6,798
Due after one year through five years 168,795 168,859
Due after five years through ten years 217,305 218,381
Due after ten years 1,139,596 1,195,597
--------------- ---------------
1,532,416 1,589,635
Mortgage- and asset-backed securities 325,800 322,910
--------------- ---------------
Total $ 1,858,216 $ 1,912,545
=============== ===============
</TABLE>
Actual maturities may differ from those scheduled as a result of prepayments by
the issuers.
12
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
YEAR ENDED DECEMBER 31, 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Fixed income securities $ 135,561 $ 124,100 $ 116,763
Mortgage loans 12,346 10,309 7,896
Other 3,495 2,940 2,200
------------- ------------- -------------
Investment income, before expense 151,402 137,349 126,859
Investment expense 3,071 2,936 1,972
------------- ------------- -------------
Net investment income $ 148,331 $ 134,413 $ 124,887
============= ============= =============
</TABLE>
REALIZED CAPITAL GAINS AND LOSSES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Fixed income securities $ (2,207) $ 4,755 $ 955
Mortgage loans 42 (65) (221)
Other 69 7 (33)
------------ ----------- -------------
Realized capital gains and losses (2,096) 4,697 701
Income taxes (765) 1,644 245
------------ ----------- -------------
Realized capital gains and losses, after tax $ (1,331) $ 3,053 $ 456
============ =========== =============
</TABLE>
Excluding calls and prepayments, gross gains of $1,713, $2,905 and $471 and
gross losses of $3,920, $164 and $105 were realized on sales of fixed income
securities during 1999, 1998 and 1997, respectively.
UNREALIZED NET CAPITAL GAINS
Unrealized net capital gains on fixed income securities included in
shareholder's equity at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
COST/ GROSS UNREALIZED UNREALIZED
AMORTIZED COST FAIR VALUE GAINS LOSSES NET GAINS
-------------- ---------- ----- ------ ---------
<S> <C> <C> <C> <C> <C>
Fixed income securities $1,858,216 $1,912,545 $ 99,030 $(44,701) $ 54,329
========== ========== ======== ========
Reserve for life-contingent
contract benefits (7,815)
Deferred income taxes (16,280)
--------
Unrealized net capital gains $ 30,234
========
</TABLE>
<TABLE>
<CAPTION>
CHANGE IN UNREALIZED NET CAPITAL GAINS
YEAR ENDED DECEMBER 31, 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Fixed income securities $(262,766) $ 70,948 $123,519
Reserves for life contingent-contract benefits 179,891 (42,251) (80,155)
Deferred income taxes 28,362 (9,922) (14,876)
Deferred policy acquisition costs and other 1,841 (348) (861)
--------- -------- --------
(Decrease) increase in unrealized net capital gains $ (52,672) $ 18,427 $ 27,627
========= ======== ========
</TABLE>
13
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
INVESTMENT LOSS PROVISIONS AND VALUATION ALLOWANCES
Pretax provisions for investment losses, principally relating to valuation
allowances on mortgage loans were $114 and $261 in 1998 and 1997, respectively.
There was not a provision for investment losses in 1999.
MORTGAGE LOAN IMPAIRMENT
A mortgage loan is impaired when it is probable that the Company will be unable
to collect all amounts due according to the contractual terms of the loan
agreement.
The Company had no impaired loans at December 31, 1999 and 1998.
Valuation allowances for mortgage loans at December 31, 1999, 1998 and 1997 were
$600, $600 and $486, respectively. For the years ended December 31, 1999, 1998
and 1997, there were no reductions of the mortgage loan valuation allowance for
dispositions of impaired loans. Net additions to the mortgage loan valuation
allowances were $114 and $261 for the years ended December 31, 1998 and 1997,
respectively. There were no additions or reductions to the mortgage loan
valuation allowance for the year ended December 31, 1999.
INVESTMENT CONCENTRATION FOR MUNICIPAL BOND AND COMMERCIAL MORTGAGE PORTFOLIOS
AND OTHER INVESTMENT INFORMATION
The Company maintains a diversified portfolio of municipal bonds. The largest
concentrations in the portfolio are presented below. Except for the following,
holdings in no other state exceeded 5% of the portfolio at December 31, 1999:
<TABLE>
<CAPTION>
(% of municipal bond portfolio carrying value) 1999 1998
---- ----
<S> <C> <C>
Arizona 22.7% - %
California 20.2 17.4
Ohio 16.4 30.2
Illinois 11.6 21.1
Pennsylvania 7.5 -
Indiana 5.0 -
</TABLE>
The Company's mortgage loans are collateralized by a variety of commercial real
estate property types located throughout the United States. Substantially all of
the commercial mortgage loans are non-recourse to the borrower. The states with
the largest portion of the commercial mortgage loan portfolio are listed below.
Except for the following, holdings in no other state exceeded 5% of the
portfolio at December 31, 1999:
<TABLE>
<CAPTION>
(% of commercial mortgage portfolio carrying value) 1999 1998
---- ----
<S> <C> <C>
California 34.9% 41.9%
New York 27.6 26.3
Illinois 13.2 15.8
New Jersey 12.3 6.9
Pennsylvania 9.7 6.2
</TABLE>
14
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
The types of properties collateralizing the commercial mortgage loans at
December 31, are as follows:
<TABLE>
<CAPTION>
(% of commercial mortgage portfolio carrying value) 1999 1998
---- ----
<S> <C> <C>
Retail 33.1% 39.5%
Office buildings 18.9 11.7
Warehouse 18.5 19.2
Apartment complex 15.8 18.5
Industrial 4.6 5.5
Other 9.1 5.6
----- -----
100.0% 100.0%
===== =====
</TABLE>
The contractual maturities of the commercial mortgage loan portfolio as of
December 31, 1999, for loans that were not in foreclosure are as follows:
<TABLE>
<CAPTION>
NUMBER OF LOANS CARRYING VALUE PERCENT
--------------- -------------- -------
<S> <C> <C>
2000 2 $ 4,475 2.7%
2001 5 7,165 4.3
2002 2 5,904 3.5
2004 4 5,289 3.2
Thereafter 33 144,164 86.3
----- --------------- -----
Total 46 $ 166,997 100.0%
===== =============== =====
</TABLE>
In 1999, there were no commercial mortgage loans which were contractually due.
SECURITIES ON DEPOSIT
At December 31, 1999, fixed income securities with a carrying value of $1,903
were on deposit with regulatory authorities as required by law.
5. FINANCIAL INSTRUMENTS
In the normal course of business, the Company invests in various financial
assets, incurs various financial liabilities and enters into agreements
involving derivative financial instruments and other off-balance-sheet financial
instruments. The fair value estimates of financial instruments presented on the
following page are not necessarily indicative of the amounts the Company might
pay or receive in actual market transactions. Potential taxes and other
transaction costs have not been considered in estimating fair value. The
disclosures that follow do not reflect the fair value of the Company as a whole
since a number of the Company's significant assets (including deferred policy
acquisition costs and reinsurance recoverables) and liabilities (including
traditional life and interest-sensitive life insurance reserves and deferred
income taxes) are not considered financial instruments and are not carried at
fair value. Other assets and liabilities considered financial instruments such
as accrued investment income and cash are generally of a short-term nature.
Their carrying values are assumed to approximate fair value.
15
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
FINANCIAL ASSETS
The carrying value and fair value of financial assets at December 31, are as
follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
----- ----- ----- -----
<S> <C> <C> <C> <C>
Fixed income securities $ 1,912,545 $ 1,912,545 $ 1,966,067 $ 1,966,067
Mortgage loans 166,997 159,853 145,095 154,872
Short-term investments 46,037 46,037 76,127 76,127
Policy loans 31,109 31,109 29,620 29,620
Separate Accounts 443,705 443,705 366,247 366,247
</TABLE>
CARRYING VALUE AND FAIR VALUE INCLUDE THE EFFECTS OF DERIVATIVE FINANCIAL
INSTRUMENTS WHERE APPLICABLE.
Fair values for fixed income securities are based on quoted market prices where
available. Non-quoted securities are valued based on discounted cash flows using
current interest rates for similar securities. Mortgage loans are valued based
on discounted contractual cash flows. Discount rates are selected using current
rates at which similar loans would be made to borrowers with similar
characteristics, using similar properties as collateral. Loans that exceed 100%
loan-to-value are valued at the estimated fair value of the underlying
collateral. Short-term investments are highly liquid investments with maturities
of less than one year whose carrying value are deemed to approximate fair value.
The carrying value of policy loans are deemed to approximate fair value.
Separate Accounts assets are carried in the statements of financial position at
fair value based on quoted market prices.
FINANCIAL LIABILITIES
The carrying value and fair value of financial liabilities at December 31, are
as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
----- ----- ----- -----
<S> <C> <C> <C> <C>
Contractholder funds on
investment contracts $ 627,488 $ 605,113 $ 512,239 $ 518,448
Separate Accounts 443,705 443,705 366,247 366,247
</TABLE>
The fair value of contractholder funds on investment contracts is based on the
terms of the underlying contracts. Reserves on investment contracts with no
stated maturities (single premium and flexible premium deferred annuities) are
valued at the account balance less surrender charges. The fair value of
immediate annuities and annuities without life contingencies with fixed terms is
estimated using discounted cash flow calculations based on interest rates
currently offered for contracts with similar terms and durations. Separate
Accounts liabilities are carried at the fair value of the underlying assets.
DERIVATIVE FINANCIAL INSTRUMENTS
The only derivative financial instruments used by the Company are financial
futures contracts. The Company primarily uses this derivative financial
instrument to reduce its exposure to market risk, specifically interest rate
risk, in conjunction with asset/liability management. The Company does not hold
or issue these instruments for trading purposes.
16
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
The following table summarizes the contract amount, credit exposure, fair value
and carrying value of the Company's derivative financial instruments:
<TABLE>
<CAPTION>
CARRYING
VALUE
CONTRACT CREDIT FAIR ASSETS/
AMOUNT EXPOSURE VALUE (LIABILITIES)
------ -------- ----- -------------
<S> <C> <C> <C> <C>
AT DECEMBER 31, 1999
Financial futures contracts $ 8,700 $ - $ (29) $ 588
AT DECEMBER 31, 1998
Financial futures contracts $ 15,000 $ - $ (15) $ (223)
</TABLE>
CARRYING VALUE IS REPRESENTATIVE OF DEFERRED GAINS AND LOSSES.
The contract amounts are used to calculate the exchange of contractual payments
under the agreements and are not representative of the potential for gain or
loss on these agreements.
Credit exposure represents the Company's potential loss if all of the
counterparties failed to perform under the contractual terms of the contracts
and all collateral, if any, became worthless. This exposure is measured by the
fair value of contracts with a positive fair value at the reporting date. The
Company manages its exposure to credit risk primarily by establishing risk
control limits. To date, the Company has not incurred any losses as financial
futures contracts have limited off-balance-sheet credit risk as they are
executed on organized exchanges and require daily cash settlement of margins.
Fair value is the estimated amount that the Company would receive (pay) to
terminate or assign the contracts at the reporting date, thereby taking into
account the current unrealized gains or losses of open contracts. Dealer and
exchange quotes are used to value the Company's derivatives.
Financial futures are commitments to either purchase or sell designated
financial instruments at a future date for a specified price or yield. They may
be settled in cash or through delivery. As part of its asset/liability
management, the Company generally utilizes financial futures contracts to manage
its market risk related to anticipatory investment purchases and sales.
Financial futures used as hedges of anticipatory transactions pertain to
identified transactions which are probable to occur and are generally completed
within 90 days.
Market risk is the risk that the Company will incur losses due to adverse
changes in market rates and prices. Market risk exists for all of the derivative
financial instruments that the Company currently holds, as these instruments may
become less valuable due to adverse changes in market conditions. The Company
mitigates this risk through established risk control limits set by senior
management. In addition, the change in the value of the Company's derivative
financial instruments designated as hedges are generally offset by the change in
the value of the related assets and liabilities.
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Commitments to extend mortgage loans are agreements to lend to a borrower
provided there is no violation of any condition established in the contract. The
Company enters into these agreements to commit to future loan fundings at a
predetermined interest rate. Commitments generally have fixed expiration dates
or other termination clauses. Commitments to extend mortgage loans, which are
secured by the underlying properties, are valued based on estimates of fees
charged by other institutions to make
17
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
similar commitments to borrowers. At December 31, 1999, the Company had $10,000
in mortgage loan commitments which had a fair value of $100. The Company had no
mortgage loan commitments at December 31, 1998.
6. DEFERRED POLICY ACQUISITION COSTS
Certain costs of acquiring business which were deferred and amortized for the
years ended December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Balance, beginning of year $ 87,830 $ 71,946
Acquisition costs deferred 26,247 23,723
Amortization charged to income (8,861) (8,238)
Adjustment from unlocking assumptions (124) 1,209
Effect of unrealized gains/(losses) 1,840 (810)
------------ ------------
Balance, end of year $ 106,932 $ 87,830
============ ============
</TABLE>
7. RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS AND CONTRACTHOLDER FUNDS
At December 31, the reserve for life-contingent contract benefits consists of
the following:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Immediate annuities:
Structured settlement annuities $ 1,024,049 $ 1,135,813
Other immediate annuities 2,933 2,577
Traditional life 70,254 68,511
Other 780 1,203
----------- ------------
Total life-contingent contract benefits $ 1,098,016 $ 1,208,104
=========== ============
</TABLE>
The assumptions for mortality generally utilized in calculating reserves
include, the U.S. population with projected calendar year improvements and age
setbacks for impaired lives for structured settlement annuities; the 1983 group
annuity mortality table for other immediate annuities; and actual Company
experience plus loading for traditional life. Interest rate assumptions vary
from 3.5% to 10.3% for immediate annuities and 4.5% to 7.0% for traditional
life. Other estimation methods include the present value of contractually fixed
future benefits for structured settlement annuities, the present value of
expected future benefits based on historical experience for other immediate
annuities and the net level premium reserve method using the Company's
withdrawal experience rates for traditional life.
Premium deficiency reserves are established, if necessary and have been recorded
for the structured settlement annuity business, to the extent the unrealized
gains on fixed income securities would result in a premium deficiency had those
gains actually been realized. A liability of $8 million and $188 million is
included in the reserve for life-contingent contract benefits with respect to
this deficiency for the years ended December 31, 1999 and 1998, respectively.
The decrease in this liability in 1999 reflects declines in unrealized capital
gains on fixed income securities.
18
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
At December 31, contractholder funds consists of the following:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Interest-sensitive life $211,729 $189,970
Fixed annuities:
Immediate annuities 303,564 285,977
Deferred annuities 273,864 177,317
Other investment contracts 50,000 50,000
-------- --------
Total contractholder funds $839,157 $703,264
======== ========
</TABLE>
Contractholder funds are equal to deposits received, net of commissions, and
interest credited to the benefit of the contractholder less withdrawals,
mortality charges and administrative expenses. Interest rates credited range
from 5.5% to 6.5% for interest-sensitive life contracts; 3.5% to 9.8% for
immediate annuities; 4.0% to 7.9% for deferred annuities and 6.6% for other
investment contracts. Withdrawal and surrender charge protection includes: i)
for interest-sensitive life, either a percentage of account balance or dollar
amount grading off generally over 20 years; and ii) for deferred annuities not
subject to a market value adjustment, either a declining or a level percentage
charge generally over nine years or less. Approximately 2% of deferred annuities
are subject to a market value adjustment.
8. CORPORATION RESTRUCTURING
On November 10, 1999 the Corporation announced a series of strategic initiatives
to aggressively expand its selling and servicing capabilities. The Corporation
also announced that it is implementing a program to reduce current annual
expenses by approximately $600 million. The reduction will result in the
elimination of approximately 4,000 current non-agent positions, across all
employment grades and categories by the end of 2000, or approximately 10% of the
Corporation's non-agent work force. The impact of the reduction in employee
positions is not expected to materially impact the results of operations of the
Company.
These cost reductions are part of a larger initiative to redeploy the cost
savings to finance new initiatives including investments in direct access and
internet channels for new sales and service capabilities, new competitive
pricing and underwriting techniques, new agent and claim technology and enhanced
marketing and advertising. As a result of the cost reduction program, the
Corporation recorded restructuring and related charges of $81 million pretax
during the fourth quarter of 1999. The Corporation anticipates that additional
pretax restructuring related charges of approximately $100 million will be
expensed as incurred throughout 2000. The Company's allocable share of these
expenses were immaterial in 1999 and are expected to be immaterial in 2000.
9. INCOME TAXES
The Company joins the Corporation and its other eligible domestic subsidiaries
(the "Allstate Group") in the filing of a consolidated federal income tax return
and is party to a federal income tax allocation agreement (the "Allstate Tax
Sharing Agreement"). Under the Allstate Tax Sharing Agreement, the Company pays
to or receives from the Corporation the amount, if any, by which the Allstate
Group's federal income tax liability is affected by virtue of inclusion of the
Company in the consolidated federal income tax return. Effectively, this
19
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
results in the Company's annual income tax provision being computed, with
adjustments, as if the Company filed a separate return.
Prior to June 30, 1995, the Corporation was a subsidiary of Sears, Roebuck & Co.
("Sears") and, with its eligible domestic subsidiaries, was included in the
Sears consolidated federal income tax return and federal income tax allocation
agreement. Effective June 30, 1995, the Corporation and Sears entered into a new
tax sharing agreement, which governs their respective rights and obligations
with respect to federal income taxes for all periods during which the
Corporation was a subsidiary of Sears, including the treatment of audits of tax
returns for such periods.
The Internal Revenue Service ("IRS") has completed its review of the Allstate
Group's federal income tax returns through the 1993 tax year. Any adjustments
that may result from IRS examinations of tax returns are not expected to have a
material impact on the financial position, liquidity or results of operations of
the Company.
The components of the deferred income tax assets and liabilities at December 31,
are as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
DEFERRED ASSETS
Life and annuity reserves $ 42,248 $ 41,073
Discontinued operations 366 364
Other postretirement benefits 296 328
Other assets 1,319 2,023
------------- -------------
Total deferred assets 44,229 43,788
DEFERRED LIABILITIES
Deferred policy acquisition costs (25,790) (20,573)
Unrealized net capital gains (16,280) (44,642)
Difference in tax bases of investments (3,194) (1,784)
Prepaid commission expense (682) (790)
Other liabilities (1,360) (1,448)
------------- -------------
Total deferred liabilities (47,306) (69,237)
------------- -------------
Net deferred liability $ (3,077) $ (25,449)
============= =============
</TABLE>
The components of income tax expense for the year ended December 31, are as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Current $ 8,650 $ 13,679 $ 14,874
Deferred 5,990 1,255 (1,578)
-------- -------- --------
Total income tax expense $ 14,640 $ 14,934 $ 13,296
======== ======== ========
</TABLE>
The Company paid income taxes of $12,547, $3,788 and $13,350 in 1999, 1998 and
1997, respectively.
20
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
A reconciliation of the statutory federal income tax rate to the effective
income tax rate on income from operations for the year ended December 31, is as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 35.0% 35.0%
State income tax expense 1.6 1.6 2.2
Other (1.1) (1.5) (.3)
----- ----- -----
Effective income tax rate 35.5% 35.1% 36.9%
===== ===== =====
</TABLE>
Prior to January 1, 1984, the Company was entitled to exclude certain amounts
from taxable income and accumulate such amounts in a "policyholder surplus"
account. The balance in this account at December 31, 1999, approximately $389,
will result in federal income taxes payable of $136 if distributed by the
Company. No provision for taxes has been made as the Company has no plan to
distribute amounts from this account. No further additions to the account have
been permitted since the Tax Reform Act of 1984.
10. STATUTORY FINANCIAL INFORMATION
The Company's statutory capital and surplus was $214,738 and $196,416 at
December 31, 1999 and 1998, respectively. The Company's statutory net income was
$18,767, $13,649 and $18,592 for the years ended December 31, 1999, 1998 and
1997, respectively.
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company prepares its statutory financial statements in accordance with
accounting practices prescribed or permitted by the New York Department of
Insurance. Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners ("NAIC"), as
well as state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not so
prescribed. The Company does not follow any permitted statutory accounting
practices that have a significant impact on statutory surplus or statutory net
income.
The NAIC's codification initiative has produced a comprehensive guide of
statutory accounting principles, which the Company will implement in January
2001. The Company's state of domicile, New York, continues to review
codification and existing statutory accounting requirements for desired
revisions to existing state laws and regulations. The requirements are not
expected to have a material impact on the statutory surplus of the Company.
DIVIDENDS
The ability of the Company to pay dividends is dependent on business conditions,
income, cash requirements of the Company and other relevant factors. Under New
York Insurance Law, a notice of intention to distribute any dividend must be
filed with the New York Superintendent of Insurance not less than 30 days prior
to the distribution. Such proposed declaration is subject to the
Superintendent's disapproval.
RISK-BASED CAPITAL
The NAIC has a standard for assessing the solvency of insurance companies, which
is referred to as risk-based capital ("RBC"). The requirement consists of a
formula for determining each insurer's RBC and a model law specifying regulatory
actions if an insurer's RBC falls below specified levels. The RBC formula for
life insurance companies establishes capital requirements relating to insurance,
business, asset and
21
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
interest rate risks. At December 31, 1999, RBC for the Company was significantly
above a level that would require regulatory action.
11. BENEFIT PLANS
PENSION PLANS
Defined benefit pension plans, sponsored by AIC, cover domestic full-time
employees and certain part-time employees. Benefits under the pension plans are
based upon the employee's length of service, average annual compensation and
estimated social security retirement benefits. AIC's funding policy for the
pension plans is to make annual contributions in accordance with accepted
actuarial cost methods. The (benefit) and cost to the Company included in net
income was $(263), $382 and $597 for the pension plans in 1999, 1998 and 1997,
respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
AIC also provides certain health care and life insurance benefits for retired
employees. Qualified employees may become eligible for these benefits if they
retire in accordance with AIC's established retirement policy and are
continuously insured under AIC's group plans or other approved plans for ten or
more years prior to retirement. AIC shares the cost of the retiree medical
benefits with retirees based on years of service, with AIC's share being subject
to a 5% limit on annual medical cost inflation after retirement. AIC's
postretirement benefit plans currently are not funded. AIC has the right to
modify or terminate these plans.
PROFIT SHARING FUND
Employees of the Corporation and its domestic subsidiaries, including the
Company are also eligible to become members of The Savings and Profit Sharing
Fund of Allstate Employees ("Allstate Plan"). The Corporation's contributions
are based on the Corporation's matching obligation and performance.
The Company paid $176, $567, $164 in 1999, 1998 and 1997, respectively for
profit sharing.
12. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income on a pretax and after-tax basis for
the year ended December 31, are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------ ----------------------------- ------------------------------
AFTER- AFTER- AFTER-
PRETAX TAX TAX PRETAX TAX TAX PRETAX TAX TAX
------ --- ------ ------ --- ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UNREALIZED CAPITAL GAINS
AND LOSSES:
Unrealized holding
(losses) gains arising
during the period $(83,241) $ 29,134 $(54,107) $ 33,218 $(11,626) $ 21,592 $ 43,686 $(15,290) $ 28,396
Less: reclassification
adjustments (2,207) 772 (1,435) 4,869 (1,704) 3,165 1,183 (414) 769
-------- -------- -------- -------- -------- -------- -------- -------- --------
Unrealized net capital
(losses) gains (81,034) 28,362 (52,672) 28,349 (9,922) 18,427 42,503 (14,876) 27,627
-------- -------- -------- -------- -------- -------- -------- -------- --------
Other comprehensive
(loss) income $(81,034) $ 28,362 $(52,672) $ 28,349 $ (9,922) $ 18,427 $ 42,503 $(14,876) $ 27,627
======== ======== ========= ======== ======== ======== ======== ======== ========
</TABLE>
22
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
13. COMMITMENTS AND CONTINGENT LIABILITIES
REGULATIONS AND LEGAL PROCEEDINGS
The Company's business is subject to the effect of a changing social, economic
and regulatory environment. Public and regulatory initiatives have varied and
have included employee benefit regulation, controls on medical care costs,
removal of barriers preventing banks from engaging in the securities and
insurance business, tax law changes affecting the taxation of insurance
companies, the tax treatment of insurance products and its impact on the
relative desirability of various personal investment vehicles, and proposed
legislation to prohibit the use of gender in determining insurance rates and
benefits. The ultimate changes and eventual effects, if any, of these
initiatives are uncertain.
From time to time the Company is involved in pending and threatened litigation
in the normal course of its business in which claims for monetary damages are
asserted. In the opinion of management, the ultimate liability, if any, arising
from such pending or threatened litigation is not expected to have a material
effect on the results of operations, liquidity or financial position of the
Company.
GUARANTY FUNDS
Under state insurance guaranty fund laws, insurers doing business in a state can
be assessed, up to prescribed limits, for certain obligations of insolvent
insurance companies to policyholders and claimants. The Company's expense
related to these funds have been immaterial.
MARKETING AND COMPLIANCE ISSUES
Companies operating in the insurance and financial services markets have come
under the scrutiny of regulators with respect to market conduct and compliance
issues. Under certain circumstances, companies have been held responsible for
providing incomplete or misleading sales materials and for replacing existing
policies with policies that were less advantageous to the policyholder. The
Company monitors its sales materials and enforces compliance procedures to
mitigate any exposure to potential litigation. The Company is a member of the
Insurance Marketplace Standards Association, an organization which advocates
ethical market conduct.
23
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE IV--REINSURANCE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1999 AMOUNT CEDED AMOUNT
- ---------------------------- ------ ----- ------
<S> <C> <C> <C>
Life insurance in force $ 14,140,049 $ 1,066,993 $ 13,073,056
============ =========== ============
Premiums and contract charges:
Life and annuities $ 99,760 $ 3,397 $ 96,363
Accident and health 6,867 856 6,011
------------ ----------- ------------
$ 106,627 $ 4,253 $ 102,374
============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1998 AMOUNT CEDED AMOUNT
- ---------------------------- ------ ----- ------
<S> <C> <C> <C>
Life insurance in force $ 12,656,826 $ 857,500 $ 11,799,326
============ ========= ============
Premiums and contract charges:
Life and annuities $ 116,455 $ 2,318 $ 114,137
Accident and health 5,801 886 4,915
------------ --------- ------------
$ 122,256 $ 3,204 $ 119,052
============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1997 AMOUNT CEDED AMOUNT
- ---------------------------- ------ ----- ------
<S> <C> <C> <C>
Life insurance in force $ 11,339,990 $ 721,040 $ 10,618,950
============ ========= ============
Premiums and contract charges:
Life and annuities $ 116,167 $ 2,185 $ 113,982
Accident and health 5,883 902 4,981
------------ --------- ------------
$ 122,050 $ 3,087 $ 118,963
============ ========= ============
</TABLE>
24
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE V--VALUATION AND QUALIFYING ACCOUNTS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
OF PERIOD EXPENSES DEDUCTIONS PERIOD
--------- -------- ---------- ------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Allowance for estimated losses
on mortgage loans $ 600 $ - $ - $ 600
============ ============ ============ ============
YEAR ENDED DECEMBER 31, 1998
Allowance for estimated losses
on mortgage loans $ 486 $ 114 $ - $ 600
============ ============ ============ ============
YEAR ENDED DECEMBER 31, 1997
Allowance for estimated losses
on mortgage loans $ 225 $ 261 $ - $ 486
============ ============ ============ ============
</TABLE>
25
<PAGE>
---------------------------------------------
ALLSTATE LIFE OF NEW
YORK SEPARATE
ACCOUNT A
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999
AND FOR THE PERIODS ENDED DECEMBER 31, 1999
AND DECEMBER 31, 1998 AND INDEPENDENT
AUDITORS' REPORT
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholder of
Allstate Life Insurance Company of New York:
We have audited the accompanying statement of net assets of Allstate Life of
New York Separate Account A as of December 31, 1999 (including the assets of
each of the individual sub-accounts which comprise the Account as disclosed
in Note 1), and the related statements of operations for the period then
ended and the statements of changes in net assets for each of the periods in
the two year period then ended for each of the individual sub-accounts which
comprise the Account. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at December 31, 1999
by correspondence with the account custodians. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Allstate Life of New York Separate
Account A as of December 31, 1999 (including the assets of each of the
individual sub-accounts which comprise the Account), and the results of
operations for each of the individual sub-accounts for the period then ended
and the changes in their net assets for each of the periods in the two year
period then ended in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Chicago, Illinois
March 27, 2000
<PAGE>
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
- ------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Allocation to Sub-Accounts investing in the AIM Variable Insurance Funds, Inc.:
Aggressive Growth, 12,432 shares (cost $158,759) $ 177,153
Balanced Fund, 6,444 shares (cost $79,572) 84,024
Capital Appreciation, 255,543 shares (cost $6,215,783) 9,092,204
Capital Development, 3,871 shares (cost $40,870) 46,028
Diversified Income, 262,808 shares (cost $2,884,027) 2,643,852
Global Utilities, 55,043 shares (cost $987,756) 1,254,971
Government Securities, 114,229 shares (cost $1,272,606) 1,214,257
Growth, 300,263 shares (cost $7,319,062) 9,683,482
Growth and Income, 493,077 shares (cost $11,214,069) 15,576,292
High Yield, 1,933 shares (cost $17,487) 17,433
International Equity, 165,155 shares (cost $3,272,322) 4,837,388
Money Market, 1,578,022 shares (cost $1,578,022) 1,578,022
Value, 665,744 shares (cost $17,789,516) 22,302,412
--------------
Total Assets 68,507,518
LIABILITIES
Payable to Allstate Life Insurance Company of New York:
Accrued contract maintenance charges 19,014
--------------
Net Assets $ 68,488,504
==============
</TABLE>
See notes to financial statements.
2
<PAGE>
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc. Sub-Accounts
---------------------------------------------------------------------------
For the Period Ended December 31, 1999
---------------------------------------------------------------------------
Aggressive Capital Capital Diversified
Growth (a) Balanced (a) Appreciation Development (a) Income
---------- ------------ ------------ --------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ - $ 1,095 $ 188,516 $ - $ 164,843
Charges from Allstate Life Insurance Company
of New York
Mortality and expense risk (143) (119) (76,212) (56) (28,287)
Administrative expense (11) (9) (5,645) (4) (2,095)
---------- ------------ ------------ --------------- -------------
Net investment income (loss) (154) 967 106,659 (60) 134,461
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from sales of investments:
Proceeds from sales 123 189 324,982 55 476,703
Cost of investments sold 117 182 276,808 52 493,648
---------- ------------ ------------ --------------- -------------
Net realized gains (losses) 6 7 48,174 3 (16,945)
---------- ------------ ------------ --------------- -------------
Change in unrealized gains (losses) 18,394 4,451 2,401,290 5,157 (181,607)
---------- ------------ ------------ --------------- -------------
Net gains (losses) on investments 18,400 4,458 2,449,464 5,160 (198,552)
---------- ------------ ------------ --------------- -------------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 18,246 $ 5,425 $2,556,123 $ 5,100 $ (64,091)
========== ============ ============ =============== =============
</TABLE>
(a) For the Period Beginning October 25, 1999 and Ended December 31, 1999
See notes to financial statements.
3
<PAGE>
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc. Sub-Accounts
------------------------------------------------------------------------
For the Period Ended December 31, 1999
------------------------------------------------------------------------
Global Government Growth High
Utilities Securities Growth and Income Yield (a)
----------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 18,906 $ 43,946 $ 337,039 $ 129,184 $ 399
Charges from Allstate Life Insurance Company
of New York
Mortality and expense risk (9,493) (32,564) (83,130) (132,390) (14)
Administrative expense (703) (2,412) (6,158) (9,807) (1)
----------- ------------ ------------ ------------ -------------
Net investment income (loss) 8,710 8,970 247,751 (13,013) 384
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from sales of investments:
Proceeds from sales 157,147 2,759,791 423,990 458,270 15
Cost of investments sold 137,026 2,894,175 359,129 380,204 15
----------- ------------ ------------ ------------ -------------
Net realized gains (losses) 20,121 (134,384) 64,861 78,066 -
----------- ------------ ------------ ------------ -------------
Change in unrealized gains (losses) 236,069 (54,186) 1,792,381 3,178,263 (54)
----------- ------------ ------------ ------------ -------------
Net gains (losses) on investments 256,190 (188,570) 1,857,242 3,256,329 (54)
----------- ------------ ------------ ------------ -------------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 264,900 $ (179,600) $2,104,993 $3,243,316 $ 330
=======-=== ============ ============ ============ =============
</TABLE>
(a) For the Period Beginning October 25, 1999 and Ended December 31, 1999
See notes to financial statements.
4
<PAGE>
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc. Sub-Accounts
---------------------------------------------------------
For the Period Ended December 31, 1999
---------------------------------------------------------
International Money
Equity Market Value
-------------- ------------ -------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 154,775 $ 61,128 $ 355,310
Charges from Allstate Life Insurance Company
of New York
Mortality and expense risk (37,180) (17,854) (173,801)
Administrative expense (2,754) (1,322) (12,874)
-------------- ------------ -------------
Net investment income (loss) 114,841 41,952 168,635
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from sales of investments:
Proceeds from sales 300,780 1,206,358 530,128
Cost of investments sold 248,263 1,206,358 459,369
-------------- ------------ -------------
Net realized gains (losses) 52,517 - 70,759
-------------- ------------ -------------
Change in unrealized gains (losses) 1,419,551 - 3,419,919
-------------- ------------ -------------
Net gains (losses) on investments 1,472,068 - 3,490,678
-------------- ------------ -------------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $1,586,909 $ 41,952 $ 3,659,313
============== ============ =============
</TABLE>
See notes to financial statements.
5
<PAGE>
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31,
- --------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc. Sub-Accounts
-------------------------------------------------------------------------
Aggressive Capital
Growth Balanced Capital Appreciation Development
------------ ------------ ----------------------------- ------------
1999 (a) 1999 (a) 1999 1998 1999 (a)
------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (154) $ 967 $ 106,659 $ 66,071 $ (60)
Net realized gains (losses) 6 7 48,174 760 3
Change in unrealized gains (losses) 18,394 4,451 2,401,290 457,939 5,157
------------ ------------ ------------- ------------- ------------
Change in net assets resulting from operations 18,246 5,425 2,556,123 524,770 5,100
------------ ------------ ------------- ------------- ------------
FROM CAPITAL TRANSACTIONS
Deposits 43,819 49,251 2,073,160 2,056,465 17,015
Benefit payments - - (23,548) (29,888) -
Payments on termination - (79) (225,136) (115,473) -
Contract maintenance charges (48) (24) (3,267) (1,759) (12)
Transfers among the sub-accounts
and with the Fixed Account - net 115,087 29,427 408,212 (181,131) 23,912
------------ ------------ ------------- ------------- ------------
Change in net assets resulting
from capital transactions 158,858 78,575 2,229,421 1,728,214 40,915
------------ ------------ ------------- ------------- ------------
INCREASE (DECREASE) IN NET ASSETS 177,104 84,000 4,785,544 2,252,984 46,015
NET ASSETS AT BEGINNING OF PERIOD - - 4,304,137 2,051,153 -
------------ ------------ ------------- ------------- ------------
NET ASSETS AT END OF PERIOD $ 177,104 $ 84,000 $ 9,089,681 $ 4,304,137 $ 46,015
============ ============ ============= ============= ============
</TABLE>
(a) For the Period Beginning October 25, 1999 and Ended December 31, 1999
See notes to financial statements.
6
<PAGE>
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31,
- -----------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc. Sub-Accounts
----------------------------------------------------------------------------
Diversified Income Global Utilities Government Securities
------------------------- ------------------------ --------------------------
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 134,461 $ 94,730 $ 8,710 $ 4,558 $ 8,970 $ 79,067
Net realized gains (losses) (16,945) 7,969 20,121 (484) (134,384) 109,308
Change in unrealized gains (losses) (181,607) (85,959) 236,069 24,459 (54,186) (23,404)
------------ ------------ ------------ ----------- ------------ ------------
Change in net assets resulting from operations (64,091) 16,740 264,900 28,533 (179,600) 164,971
------------ ------------ ------------ ----------- ------------ ------------
FROM CAPITAL TRANSACTIONS
Deposits 1,187,532 1,222,826 734,901 356,711 635,526 2,725,221
Benefit payments (12,220) (32,778) (3,120) (4,815) (661,198) -
Payments on termination (185,900) (37,509) (82,757) (3,609) (403,351) (8,618)
Contract maintenance charges (810) (491) (463) (223) 317 (913)
Transfers among the sub-accounts
and with the Fixed Account - net (46,215) (98,970) (53,342) (93,970) (1,749,948) 268,867
------------ ------------ ------------ ----------- ------------ ------------
Change in net assets resulting
from capital transactions 942,387 1,053,078 595,219 254,094 (2,178,654) 2,984,557
------------ ------------ ------------ ----------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS 878,296 1,069,818 860,119 282,627 (2,358,254) 3,149,528
------------ ------------ ------------ ----------- ------------ ------------
NET ASSETS AT BEGINNING OF PERIOD 1,764,822 695,004 394,504 111,877 3,572,174 422,646
------------ ------------ ------------ ----------- ------------ ------------
NET ASSETS AT END OF PERIOD $2,643,118 $1,764,822 $1,254,623 $ 394,504 $1,213,920 $3,572,174
============ ============ ============ =========== ============ ============
</TABLE>
See notes to financial statements.
7
<PAGE>
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31,
- --------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc. Sub-Accounts
-------------------------------------------------------------------
Growth Growth and Income High Yield
-------------------------- --------------------------- ----------
1999 1998 1999 1998 1999 (a)
------------ ------------ ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 247,751 $ 225,339 $ (13,013) $ 21,895 $ 384
Net realized gains (losses) 64,861 29,091 78,066 17,916 -
Change in unrealized gains (losses) 1,792,381 542,074 3,178,263 1,076,360 (54)
------------ ------------ ------------- ------------ ----------
Change in net assets resulting from operations 2,104,993 796,504 3,243,316 1,116,171 330
------------ ------------ ------------- ------------ ----------
FROM CAPITAL TRANSACTIONS
Deposits 3,265,114 2,076,025 5,424,896 3,226,558 17,103
Benefit payments (26,647) (7,214) (46,523) (82,435) -
Payments on termination (298,191) (100,412) (319,041) (161,641) -
Contract maintenance charges (3,399) (1,377) (5,525) (2,399) (5)
Transfers among the sub-accounts
and with the Fixed Account - net 453,397 30,657 672,802 75,882 -
------------ ------------ ------------- ------------ ----------
Change in net assets resulting
from capital transactions 3,390,274 1,997,679 5,726,609 3,055,965 17,098
------------ ------------ ------------- ------------ ----------
INCREASE (DECREASE) IN NET ASSETS 5,495,267 2,794,183 8,969,925 4,172,136 17,428
NET ASSETS AT BEGINNING OF PERIOD 4,185,527 1,391,344 6,602,044 2,429,908 -
------------ ------------ ------------- ------------ ----------
NET ASSETS AT END OF PERIOD $9,680,794 $4,185,527 $15,571,969 $6,602,044 $ 17,428
============ ============ ============= ============ ==========
</TABLE>
(a) For the Period Beginning October 25, 1999 and Ended December 31, 1999
See notes to financial statements.
8
<PAGE>
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc. Sub-Accounts
----------------------------------------------------------------------------------
International Equity Money Market Value
-------------------------- ------------------------- ---------------------------
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 114,841 $ (7,420) $ 41,952 $ 26,737 $ 168,635 $ 261,042
Net realized gains (losses) 52,517 5,640 - - 70,759 32,103
Change in unrealized gains (losses) 1,419,551 165,760 - - 3,419,919 1,022,492
------------ ------------ ------------ ----------- ------------- ------------
Change in net assets resulting from operations 1,586,909 163,980 41,952 26,737 3,659,313 1,315,637
------------ ------------ ------------ ----------- ------------- ------------
FROM CAPITAL TRANSACTIONS
Deposits 1,110,124 716,187 1,305,204 509,817 11,613,584 3,273,006
Benefit payments (27,341) (6,664) (28,371) (36,887) (57,538) (7,168)
Payments on termination (93,590) (33,261) (413,731) (16,252) (646,773) (103,596)
Contract maintenance charges (1,428) (726) (468) (218) (7,380) (2,602)
Transfers among the sub-accounts
and with the Fixed Account - net 298,246 41,000 (295,054) 32,193 584,939 235,246
------------ ------------ ------------ ----------- ------------- ------------
Change in net assets resulting
from capital transactions 1,286,011 716,536 567,580 488,653 11,486,832 3,394,886
------------ ------------ ------------ ----------- ------------- ------------
INCREASE (DECREASE) IN NET ASSETS 2,872,920 880,516 609,532 515,390 15,146,145 4,710,523
NET ASSETS AT BEGINNING OF PERIOD 1,963,126 1,082,610 968,052 452,662 7,150,077 2,439,554
------------ ------------ ------------ ----------- ------------- ------------
NET ASSETS AT END OF PERIOD $4,836,046 $1,963,126 $1,577,584 $ 968,052 $22,296,222 $7,150,077
============ ============ ============ =========== ============= ============
</TABLE>
See notes to financial statements.
9
<PAGE>
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION
Allstate Life of New York Separate Account A (the "Account"), a unit
investment trust registered with the Securities and Exchange Commission
under the Investment Company Act of 1940, is a Separate Account of
Allstate Life Insurance Company of New York ("Allstate New York"). The
assets of the Account are legally segregated from those of Allstate New
York. Allstate New York is wholly owned by Allstate Life Insurance
Company, a wholly owned subsidiary of Allstate Insurance Company, which is
wholly owned by The Allstate Corporation.
Allstate New York issues two variable annuity contracts, the AIM Lifetime
Plus-SM- ("Lifetime Plus") and the AIM Lifetime Plus-SM-II ("Lifetime Plus
II"), the deposits of which are invested at the direction of the
contractholders in the sub-accounts that comprise the Account. Absent any
contract provisions wherein Allstate New York contractually guarantees
either a minimum return or account value to the beneficiaries of the
contractholders in the form of a death benefit, the contractholders bear
the investment risk that the sub-accounts may not meet their stated
objectives. The sub-accounts invest in the following underlying mutual
fund portfolios of the AIM Variable Insurance Funds, Inc., (the "Funds").
Aggressive Growth Growth
Balanced Growth and Income
Capital Appreciation High Yield
Capital Development International Equity
Diversified Income Money Market
Global Utilities Value
Government Securities
Allstate New York provides insurance and administrative services to the
contractholders for a fee. Allstate New York also maintains a fixed
account ("Fixed Account"), to which contractholders may direct their
deposits and receive a fixed rate of return. Allstate New York has sole
discretion to invest the assets of the Fixed Account, subject to
applicable law.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS - Investments consist of shares of the Funds,
and are stated at fair value based on quoted market prices at
December 31, 1999.
INVESTMENT INCOME - Investment income consists of dividends declared by
the Funds and is recognized on the ex-dividend date.
REALIZED GAINS AND LOSSES - Realized gains and losses represent the
difference between the proceeds from sales of portfolio shares by the
Account and the cost of such shares, which is determined on a weighted
average basis.
10
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES - The Account intends to qualify as a segregated
asset account as defined in the Internal Revenue Code ("Code"). As such,
the operations of the Account are included in the tax return of Allstate
New York. Allstate New York is taxed as a life insurance company under the
Code. No federal income taxes are allocable to the Account as the Account
did not generate taxable income.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates.
3. EXPENSES
ADMINISTRATIVE EXPENSE CHARGE - Allstate New York deducts administrative
expense charges daily at a rate equal to .10% per annum of the average
daily net assets of the Account for the Lifetime Plus and Lifetime Plus
II. Allstate New York guarantees that the amount of this charge will not
increase over the life of the contract.
CONTRACT MAINTENANCE CHARGE - Allstate New York deducts an annual
maintenance charge of $35 for Lifetime Plus and Lifetime Plus II on each
contract anniversary and guarantees that this charge will not increase
over the life of the contract. This charge will be waived if certain
conditions are met.
MORTALITY AND EXPENSE RISK CHARGE - Allstate New York assumes mortality
and expense risks related to the operations of the Account and deducts
charges daily based on the daily net assets of the Account. The mortality
and expense risk charge covers insurance benefits available with the
contract and certain expenses of the contract. It also covers the risk
that the current charges will not be sufficient in the future to cover the
cost of administering the contract. Allstate New York guarantees that the
amount of this charge will not increase over the life of the contract. At
the contractholder's discretion, additional options, primarily death
benefits, may be purchased for an additional charge.
11
<PAGE>
4. UNITS ISSUED AND REDEEMED
<TABLE>
<CAPTION>
(Units in whole amounts) Unit activity during 1999
---------------------------------------------
Accumulation
Units Outstanding Units Units Units Outstanding Unit Value
December 31, 1998 Issued Redeemed December 31, 1999 December 31, 1999
----------------- ------------ ------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Investments in the AIM Variable Insurance
Funds, Inc. Sub-Accounts:
Aggressive Growth - 12,664 (3) 12,661 $ 13.99
Balanced - 6,390 (8) 6,382 13.16
Capital Appreciation 287,336 167,925 (29,513) 425,748 21.35
Capital Development - 3,949 (1) 3,948 11.66
Diversified Income 146,644 128,234 (47,677) 227,201 11.63
Global Utilities 25,418 45,026 (9,036) 61,408 20.43
Government Securities 301,983 79,492 (272,981) 108,494 11.19
Growth 220,831 192,666 (30,283) 383,214 25.26
Growth and Income 361,890 324,260 (41,017) 645,133 24.14
High Yield - 1,751 - 1,751 9.96
International Equity 136,898 105,320 (21,528) 220,690 21.91
Money Market 87,010 167,828 (117,406) 137,432 11.48
Value 405,246 646,140 (64,309) 987,077 22.59
Units relating to accrued contract maintenance charges are included in units redeemed.
</TABLE>
12
<PAGE>
PART C
OTHER INFORMATION
24A. FINANCIAL STATEMENTS
Allstate Life Insurance Company of New York Financial Statements and Financial
Statement Schedules and Allstate Life of New York Separate Account A Financial
Statements are included in Part B of this Registration Statement.
24B. EXHIBITS
Unless otherwise indicated, the following exhibits, which correspond to those
required by Item 24(b) of Form N-4, are filed herewith:
(1) Form of Resolution of the Board of Directors of Allstate Life Insurance
Company of New York authorizing establishment of the Allstate Life of New
York Separate Account A (Incorporated herein by reference to Post-Effective
Amendment No. 3 to Registrant's Form N-4 Registration Statement (File No.
033-65381) dated April 30, 1999.)
(2) Not Applicable
(3) (a) Form of Underwriting Agreement among Allstate Life Insurance Company of
New York and Allstate Life Financial Services, Inc.* (Previously filed in
Pre-Effective Amendment No. 1 to this Registration Statement (File No.
333-94785) dated February 14, 2000.)
*Effective May 1, 2000, Allstate Life Financial Services, Inc. was renamed ALFS,
Inc.
(4) Form of Contract for the Allstate Custom Portfolio Variable Annuity, a
group flexible premium deferred variable annuity contract (Previously filed
in the initial filing of this Registration Statement (File No. 333-94785)
dated January 14, 2000.)
(5) Form of Application for Allstate Custom Portfolio Variable Annuity
(Previously filed in Pre-Effective Amendment No. 1 to this Registration
Statement (File No. 333-94785) dated February 14, 2000.)
(6) (a) Restated Certificate of Incorporation of Allstate Life Insurance
Company of New York (Previously filed in Depositor's Form 10-K dated March
30, 1999 and incorporated herein by reference.)
(b) Amended By-laws of Allstate Life Insurance Company of New York (Previously
filed in Depositor's Form 10-K dated March 30, 1999 and incorporated herein
by reference.)
(7) Not applicable
(8) (a) Form of Participation Agreement among Allstate Life Insurance Company
of New York, AIM Variable Insurance Funds, Inc. and AIM Distributiors, Inc.
(Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Form N-4 Registration Statement (File No. 033-65381) dated
September 20, 1996.)
(b) Participation Agreement among Allstate Life Insurance Company of New
York, Delaware Group Premium Fund, Inc. and Delaware Investments
(Previously filed in Pre-Effective Amendment No. 1 to this Registration
Statement (File No. 333-94785) dated February 14, 2000.)
(c) Form of Participation Agreement among Allstate Life Insurance Company
of New York, Dreyfus Variable Investment Fund, The Dreyfus Socially
Responsible Growth Fund, Inc., Dreyfus Life and Annuity Index Fund, Inc.
(D/B/A Dreyfus Stock Index Fund), and Dreyfus Investment Portfolios.
(d) Form of Participation Agreement among Allstate Life Insurance Company
of New York, Variable Insurance Products Fund and Fidelity Distributors
Corporation.
(e) Form of Participation Agreement among Glenbrook Life and Annuity
Company, Franklin Templeton Variable Insurance Products Trust and Franklin
Templeton Distributors, Inc. (Incorporated by reference to Post-Effective
Amendment No. 7 to Form N-4 Registration Statement of Glenbrook Life and
Annuity Company Variable Annuity Account(File No. 033-91914) dated December
14, 1998.)
(f) Form of Amendment to Participation Agreement among Glenbrook Life and
Annuity Company, Franklin Templeton Variable Insurance Products Trust and
Franklin Templeton Distributors, Inc., adding Allstate Life Insurance
Company of New York as a party to the Agreement.
(g) Form of Participation Agreement among Allstate Life Insurance Company
of New York, Variable Insurance Funds and HSBC Asset Management (Americas)
Inc.
(h) Form of Participation Agreement among Allstate Life Insurance Company
of New York, Oppenheimer Variable Account Funds and OppenheimerFunds, Inc.
(i) Form of Participation Agreement among Allstate Life Insurance Company
of New York, Wells Fargo Variable Trust and Stephens Inc.
(9) Opinion and Consent of Michael J. Velotta, Vice President, Secretary
and General Counsel of Allstate Life Insurance Company of New York
(Previously filed in the initial filing of this Registration Statement
(File No. 333-94785) dated January 14, 2000.)
(10) (a) Independent Auditors' Consent
(b) Consent of Freedman, Levy, Kroll & Simonds
(11) Not applicable
(12) Not applicable
(13)(a) Schedule of Computation of Performance Quotations for Allstate Custom
Portfolio Variable Annuity (standardized and non-standardized total
returns)(Previously filed in Pre-Effective Amendment No. 1 to this
Registration Statement (File No. 333-94785) dated February 14, 2000.)
(13)(b) Schedule of Computation of Performance Quotations for Allstate Custom
Portfolio Variable Annuity (adjusted historical total returns).
(14) Not applicable
(99) (a) Power of Attorney for Kevin R. Slawin (Incorporated herein by reference
to Pre-Effective Amendment No. 1 to Registrant's Form N-4 Registration
Statement (File Number 033-65381) dated September 20, 1996.)
(b) Power of Attorney for Thomas J. Wilson, II, Michael J. Velotta, Marcia
D. Alazraki, Cleveland Johnson, Jr., John R. Raben, Jr., and Sally A.
Slacke (Incorporated herein by reference to Post-Effective Amendment No. 3
to Registrant's Form N-4 Registration Statement (File Number 033-65381)
dated April 30, 1999.)
(c) Power of Attorney for Samuel L. Pilch (Incorporated herein by reference
to Post-Effective Amendment No. 4 to Registrant's Form N-4 Registration
Statement (File Number 033-65381) dated November 12, 1999.)
(d) Power of Attorney for Vincent A. Fusco (Previously filed in
Pre-Effective Amendment No. 1 to this Registration Statement (File No.
333-94785) dated February 14, 2000.)
<PAGE>
25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICE WITH
BUSINESS ADDRESS* DEPOSITOR OF THE ACCOUNT
<S> <C>
Thomas J. Wilson, II Director and President
Michael J. Velotta Director, Vice President, Secretary and General Counsel
Marcia D. Alazraki Director
Marla G. Friedman Director and Vice President
Vincent A. Fusco Director and Chief Operations Officer
Cleveland Johnson, Jr. Director
Kenneth R. O'Brien Director
John R. Raben, Jr. Director
Sally A. Slacke Director
Kevin R. Slawin Director and Vice President
Patricia W. Wilson Director and Assistant Vice President
Karen C. Gardner Vice President
Samuel H. Pilch Controller
Casey J. Sylla Chief Investment Officer
James P. Zils Treasurer
Sharmaine M. Miller Chief Administrative Officer
Richard L. Baker Assistant Vice President
D. Steven Boger Assistant Vice President
Patricia A. Coffey Assistant Vice President
Adrian B. Corbiere Assistant Vice President
Dorothy E. Even Assistant Vice President
John M. Goense Assistant Vice President
Judith P. Greffin Assistant Vice President
Keith A. Hauschildt Assistant Vice President
Ronald Johnson Assistant Vice President
Charles D. Mires Assistant Vice President
Barry S. Paul Assistant Vice President
C. Nelson Strom Assistant Vice President and Corporate Actuary
Timothy N. Vander Pas Assistant Vice President
David A. Walsh Assistant Vice President
Joanne M. Derrig Assistant Secretary and Assistant General Counsel
Emma M. Kalaidjian Assistant Secretary
Paul N. Kierig Assistant Secretary
Mary J. McGinn Assistant Secretary
Ralph A. Bergholtz Assistant Treasurer
Mark A. Bishop Assistant Treasurer
Robert B. Bodett Assistant Treasurer
Barbara S. Brown Assistant Treasurer
Rhonda Hoops Assistant Treasurer
Peter S. Horos Assistant Treasurer
Thomas C. Jensen Assistant Treasurer
Kathleen A. Knudson Assistant Treasurer
David L. Kocourek Assistant Treasurer
Daniel C. Leimbach Assistant Treasurer
Beth K. Marder Assistant Treasurer
Jeffrey A. Mazer Assistant Treasurer
Ronald A. Mendel Assistant Treasurer
Stephen J. Stone Assistant Treasurer
R. Steven Taylor Assistant Treasurer
Louise J. Walton Assistant Treasurer
Jerry D. Zinkula Assistant Treasurer
</TABLE>
*The principal business address of Mr. Fusco is One Allstate Drive, P.O. Box
9095, Farmingville, New York 11738. The principal business address of the other
foregoing officers and directors is 3100 Sanders Road, Northbrook, Illinois
60062.
<PAGE>
26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR REGISTRANT
Incorporated herein by reference to Annual Report on Form 10-K, filed by the
Allstate Corporation on March 28, 2000 (File No. 1-11840).
27. NUMBER OF CONTRACT OWNERS
As of the date of the filing of this Registration Statement, the offering of the
Allstate Custom Portfolio Variable Annuity Contract had not commenced.
28. INDEMNIFICATION
The by-laws of both Allstate Life Insurance Company of New York (Depositor) and
ALFS, Inc. (Principal Underwriter), provide for the indemnification of its
Directors, Officers and Controlling Persons, against expenses, judgments, fines
and amounts paid in settlement as incurred by such person, if such person acted
properly. No indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of a duty to the company, unless a
court determines such person is entitled to such indemnity.
Insofar as indemnification for liability arising out of the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the registrant of expenses incurred by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of is counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
29A. RELATIONSHIP OF PRINCIPAL UNDERWRITER TO OTHER INVESTMENT COMPANIES
(a) Registrant's principal underwriter is also the principal underwriter with
respect to the following investment companies:
Allstate Financial Advisors Separate Account 1
Allstate Life Insurance Company Separate Account A
Charter National Variable Account
Charter National Variable Annuity Account
Glenbrook Life Multi-Manager Variable Account
Glenbrook Life and Annuity Company Separate Account A
Glenbrook Life AIM Variable Life Separate Account A
Glenbrook Life and Annuity Company Variable Annuity Account
Glenbrook Life Variable Life Separate Account A
Glenbrook Life Variable Life Separate Account B
Glenbrook Life Scudder Variable Account (A)
Glenbrook Life Discover Variable Account A
Intramerica Variable Annuity Account
Lincoln Benefit Life Variable Annuity Account
Lincoln Benefit Life Variable Account
(b) The directors and officers of the principal underwriter are:
<TABLE>
<CAPTION>
Name and Principal Business Positions and Offices with Underwriter
Address** of Each Such Person
- - ---------------------------- ----------------------
<S> <C>
Thomas J. Wilson, II Director
Kevin R. Slawin Director
Michael J. Velotta Director and Secretary
John R. Hunter President and Chief Executive Officer
Janet M. Albers Vice President and Controller
Brent H. Hamann Vice President
Andrea J. Schur Vice President
Terry R. Young General Counsel and Assistant Secretary
James P. Zils Treasurer
Lisa A. Burnell Assistant Vice President and Compliance Officer
Joanne M. Derrig Assistant Secretary and Assistant General Counsel
Emma M. Kalaidjian Assistant Secretary
Carol S. Watson Assistant Secretary
Barry S. Paul Assistant Treasurer
</TABLE>
** The principal address of ALFS, Inc. is 3100
Sanders Road, Northbrook, Illinois.
(c) Compensation of ALFS, Inc.
None
30. LOCATION OF ACCOUNTS AND RECORDS
The Depositor, Allstate Life Insurance Company of New York, is located at One
Allstate Drive, P.O. Box 9095, Farmingville, New York 11738.
The Underwriter, ALFS, Inc. is located at 3100
Sanders Road, Northbrook, Illinois 60062.
Each company maintains those accounts and records required to be maintained
pursuant to Section 31(a) of the Investment Company Act and the rules
promulgated thereunder.
31. MANAGEMENT SERVICES
None
32. UNDERTAKINGS
The Registrant undertakes to file a post-effective amendment to the Registration
Statement as frequently as is necessary to ensure that the audited financial
statements in the Registration statement are never more than 16 months old for
so long as payments under the variable annuity contracts may be accepted.
Registrant furthermore agrees to include either, as part of any prospectus or
application to purchase a contract offered by the prospectus, a toll-free number
(1-800-692-4682) that an applicant can call to request a Statement of Additional
Information or a post card or similar written communication that the applicant
can remove to send for a Statement of Additional Information. Finally, the
Registrant agrees to deliver any Statement of Additional Information and any
Financial Statements required to be made available under this Form N-4 promptly
upon written or oral request.
33. REPRESENTATIONS PURSUANT TO SECTION 403(B) OF THE INTERNAL
REVENUE CODE
Allstate Life Insurance Company of New York represents that it is relying upon a
November 28, 1988 Securities and Exchange Commission no-action letter issued to
the American Council of Life Insurance and that the provisions of paragraphs 1-4
of the no-action letter have been complied with.
34. REPRESENTATION REGARDING CONTRACT EXPENSES
Allstate Life Insurance Company of New York represents that the fees and charges
deducted under the Contracts described in this Registration Statement, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by Allstate Life Insurance
Company of New York under the Contracts. Allstate Life Insurance Company of New
York bases its representation on its assessment of all of the facts and
circumstances, including such relevant factors as: the nature and extent of such
services, expenses and risks; the need for Allstate Life Insurance Company of
New York to earn a profit; the degree to which the Contracts include innovative
features; and the regulatory standards for exemptive relief under the Investment
Company Act of 1940 used prior to October 1996,including the range of industry
practice. This representation applies to all Contracts sold pursuant to this
Registration Statement, including those sold on the terms specifically described
in the prospectus(es) contained herein, or any variations therein, based on
supplements, endorsements, or riders to any Contracts or prospectus(es), or
otherwise.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Allstate Life of New York Separate Account A, certifies
that it meets the requirements of Securities Act Rule 485(b) for effectiveness
of this Amendment to the Registration Statement and has caused this amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the Township of Northfield, State of Illinois, on the 24th
day of April, 2000.
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
(REGISTRANT)
BY: ALLSTATE LIFE INSURANCE COMPANY OF
NEW YORK
(DEPOSITOR)
By: /s/ MICHAEL J. VELOTTA
-------------------------------------
Michael J. Velotta
Vice President, Secretary and
General Counsel
As required by the Securities Act of 1933, this Registration Statement has been
duly signed below by the following Directors and Officers of Allstate Life
Insurance Company of New York on the 24st day of April, 2000.
*/THOMAS J. WILSON, II President and Director
- - ---------------------- (Principal Executive Officer)
Thomas J. Wilson, II
*/VINCENT A. FUSCO Director and Chief Operations Officer
- - ----------------------------
Vincent A. Fusco
/s/MICHAEL J. VELOTTA Vice President, Secretary, General
- - ----------------------- Counsel and Director
Michael J. Velotta
*/KEVIN R. SLAWIN Vice President and Director
- - ------------------ (Principal Financial Officer)
Kevin R. Slawin
*/SAMUEL J. PILCH Controller
- - ---------------------- (Principal Accounting Officer)
Samuel H. Pilch
*/MARCIA D. ALAZRAKI Director
- - --------------------
Marcia D. Alazraki
*/CLEVELAND JOHNSON, JR. Director
- - ------------------------
Cleveland Johnson, Jr.
*/JOHN R. RABEN, JR. Director
- - ---------------------
John R. Raben, Jr.
*/SALLY A. SLACKE Director
- - ---------------------
Sally A. Slacke
*/ By Michael J. Velotta, pursuant to Powers of Attorney previously filed.
<PAGE>
Exhibit Index
Exhibit Description
(8) (c) Form of Participation Agreement among Allstate Life Insurance Company
of New York, Dreyfus, Variable Investment Fund, The Dreyfus Socially
Responsible Growth Fund, Inc., Dreyfus Life and Annuity Index Fund, Inc.,
and Dreyfus Investment Portfolios.
(d) Form of Participation Agreement among Allstate Life Insurance Company
of New York, Variable Insurance Products Fund and Fidelity Distributors
Corporation.
(f) Form of Amendment to Participation Agreement among Glenbrook Life and
Annuity Company and Franklin Templeton Variable Insurance Products Trust
and Franklin Templeton Distributors, Inc., adding Allstate Life Insurance
Company of New York as a party to the Agreement.
(g) Form of Participation Agreement among Allstate Life Insurance Company
of New York, Variable Insurance Funds and HSBC Asset Management (Americas)
Inc.
(h) Form of Participation Agreement among Allstate Life Insurance Company
of New York, Oppenheimer Variable Account Funds and Oppenheimer Funds, Inc.
(i) Form of Participation Agreement among Allstate Life Insurance Company
of New York, Wells Fargo Variable Trust, and Stephens Inc.
(10) (a) Independent Auditors' Consent
(b) Consent of Freedman, Levy, Kroll & Simonds
(13)(b) Schedule of Computation of Performance Quotations for Allstate Custom
Portfolio Variable Annuity (adjusted historical total returns).
Exhibit 8(c)
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the day of , 2000, ALLSTATE LIFE INSURANCE
COMPANY OF NEW YORK, a life insurance company organized under the laws of the
State of New York (Insurance Company"), and each of DREYFUS VARIABLE INVESTMENT
FUND; THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.; DREYFUS LIFE AND
ANNUITY INDEX FUND, INC. (d/b/a DREYFUS STOCK INDEX FUND); AND DREYFUS
INVESTMENT PORTFOLIOS (each a "Fund").
ARTICLE I
DEFINITIONS
<TABLE>
<CAPTION>
<S> <C>
1.1 "Act" shall mean the Investment Company Act of 1940, as amended.
1.2 "Board" shall mean the Board of Directors or Trustees, as the case may be,
of a Fund, which has the responsibility for management and control of the Fund.
1.3 "Business Day" shall mean any day for which a Fund calculates net asset
value per share as described in the Fund's Prospectus.
1.4 "Commission" shall mean the Securities and Exchange Commission.
1.5 "Contract" shall mean a variable annuity or life insurance contract
that uses any Participating Fund (as defined below) as an underlying
investment medium. Individuals who participate under a group Contract
are "Participants."
1.6 "Contractholder" shall mean any entity that is a party to a Contract
with a Participating Company (as defined below).
1.7 "Disinterested Board Members" shall mean those members of the Board of
a Fund that are not deemed to be "interested persons" of the Fund, as
defined by the Act.
1.8 "Dreyfus" shall mean The Dreyfus Corporation and its affiliates,
including Dreyfus Service Corporation.
1.9 "Participating Companies" shall mean any insurance company (including
Insurance Company) that offers variable annuity and/or variable life
insurance contracts to the public and that has entered into an
agreement with one or more of the Funds.
<PAGE>
1.10 "Participating Fund" shall mean each Fund, including, as applicable,
any series thereof, specified in Exhibit A, as such Exhibit may be
amended from time to time by agreement of the parties hereto, the
shares of which are available to serve as the underlying investment
medium for the aforesaid Contracts.
1.11 "Prospectus" shall mean the current prospectus and statement of
additional information of a Fund, as most recently filed with the
Commission.
1.12 "Separate Account" shall mean Allstate Life of New York Separate
Account A, a separate account established by Insurance Company in
accordance with the laws of the State of New York.
1.13 "Software Program" shall mean the software program used by a Fund for
providing Fund and account balance information including net asset
value per share. Such Program may include the Lion System. In
situations where the Lion System or any other Software Program used by
a Fund is not available, such information may be provided by telephone.
The Lion System shall be provided to Insurance Company at no charge.
1.14 "Insurance Company's General Account(s)" shall mean the general
account(s) of Insurance Company and its affiliates that invest in a
Fund.
ARTICLE II
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b)
it has legally and validly established the Separate Account pursuant to
the insurance laws of the State of New York and the regulation
thereunder the purpose of offering to the public certain individual and
group variable annuity and life insurance contracts; (c) it has
registered the Separate Account as a unit investment trust under the
Act to serve as the segregated investment account for the Contracts;
and (d) the Separate Account is eligible to invest in shares of each
Participating Fund without such investment disqualifying any
Participating Fund as an investment medium for insurance company
separate accounts supporting variable annuity contracts or variable
life insurance contracts.
<PAGE>
2.2 Insurance Company represents and warrants that (a) the Contracts will
be described in a registration statement filed under the Securities Act
of 1933, as amended ("1933 Act"); (b) the Contracts will be issued and
sold in compliance in all material respects with all applicable federal
and state laws; and (c) the sale of the Contracts shall comply in all
material respects with state insurance law requirements. Insurance
Company agrees to notify each Participating Fund promptly of any
investment restrictions imposed by state insurance law and applicable
to the Participating Fund.
2.3 Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to the Separate
Account are, in accordance with the applicable Contracts, to be
credited to or charged against such Separate Account without regard to
other income, gains or losses from assets allocated to any other
accounts of Insurance Company. Insurance Company represents and
warrants that the assets of the Separate Account are and will be kept
separate from Insurance Company's General Account and any other
separate accounts Insurance Company may have, and will not be charged
with liabilities from any business that Insurance Company may conduct
or the liabilities of any companies affiliated with Insurance Company.
2.4 Each Participating Fund represents that it is registered with the
Commission under the Act as an open-end, management investment company
and possesses, and shall maintain, all legal and regulatory licenses,
approvals, consents and/or exemptions required for the Participating
Fund to operate and offer its shares as an underlying investment medium
for Participating Companies.
2.5 Each Participating Fund represents that it is currently qualified as a
regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and that it will make every
effort to maintain such qualification (under Subchapter M or any
successor or similar provision) and that it will notify Insurance
Company immediately upon having a reasonable basis for believing that
it has ceased to so qualify or that it might not so qualify in the
future.
2.6 Insurance Company represents and agrees that the Contracts are
currently, and at the time of issuance will be, treated as life
insurance policies or annuity contracts, whichever is appropriate,
under applicable provisions of the Code, and that it will make every
effort to maintain such treatment and that it will notify each
Participating Fund and Dreyfus immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or
that they might not be so treated in the future. Insurance Company
agrees that any prospectus offering a Contract that is a "modified
endowment contract," as that term is defined in Section 7702A of the
Code, will identify such Contract as a modified endowment contract (or
policy).
2.7 Each Participating Fund agrees that its assets shall be managed and
invested in a manner that complies with the requirements of Section
817(h) of the Code.
2.8 Insurance Company agrees that each Participating Fund shall be
permitted (subject to the other terms of this Agreement) to make its
shares available to other Participating Companies and Contractholders.
<PAGE>
2.9 Each Participating Fund represents and warrants that any of its
directors, trustees, officers, employees, investment advisers, and
other individuals/entities who deal with the money and/or securities of
the Participating Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit
of the Participating Fund in an amount not less than that required by
Rule 17g-1 under the Act. The aforesaid Bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company.
2.10 Insurance Company represents and warrants that all of its employees and
agents who deal with the money and/or securities of each Participating
Fund are and shall continue to be at all times covered by a blanket
fidelity bond or similar coverage in an amount not less than the
coverage required to be maintained by the Participating Fund. The
aforesaid Bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.11 Insurance Company agrees that Dreyfus shall be deemed a third party
beneficiary under this Agreement and may enforce any and all rights
conferred by virtue of this Agreement.
ARTICLE III
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in shares of each Participating Fund.
3.2 Each Participating Fund agrees to make its shares available for
purchase at the then applicable net asset value per share by Insurance
Company and the Separate Account on each Business Day pursuant to rules
of the Commission. Notwithstanding the foregoing, each Participating
Fund may refuse to sell its shares to any person, or suspend or
terminate the offering of its shares, if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole
discretion of its Board, acting in good faith and in light of its
fiduciary duties under federal and any applicable state laws, necessary
and in the best interests of the Participating Fund's shareholders.
3.3 Each Participating Fund agrees that shares of the Participating Fund
will be sold only to (a) Participating Companies and their separate
accounts or (b) "qualified pension or retirement plans" as determined
under Section 817(h)(4) of the Code. Except as otherwise set forth in
this Section 3.3, no shares of any Participating Fund will be sold to
the general public.
3.4 Each Participating Fund shall use its best efforts to provide closing
net asset value, dividend and capital gain information on a per-share
basis to Insurance Company by 6:00 p.m. Eastern time on each Business
Day. Any material errors in the calculation of net asset value,
dividend and capital gain information shall be reported immediately
upon discovery to Insurance Company. Non-material errors will be
corrected in the next Business Day's net asset value per share.
<PAGE>
3.5 At the end of each Business Day, Insurance Company will use the
information described in Sections 3.2 and 3.4 to calculate the unit
values of the Separate Account for the day. Using this unit value,
Insurance Company will process the day's Separate Account transactions
received by it by the close of trading on the floor of the New York
Stock Exchange (currently 4:00 p.m. Eastern time) to determine the net
dollar amount of each Participating Fund's shares that will be
purchased or redeemed at that day's closing net asset value per share.
The net purchase or redemption orders will be transmitted to each
Participating Fund by Insurance Company by 11:00 a.m. Eastern time on
the Business Day next following Insurance Company's receipt of that
information. Subject to Sections 3.6 and 3.8, all purchase and
redemption orders for Insurance Company's General Accounts shall be
effected at the net asset value per share of each Participating Fund
next calculated after receipt of the order by the Participating Fund or
its Transfer Agent.
3.6 Each Participating Fund appoints Insurance Company as its agent for the
limited purpose of accepting orders for the purchase and redemption of
Participating Fund shares for the Separate Account. Each Participating
Fund will execute orders at the applicable net asset value per share
determined as of the close of trading on the day of receipt of such
orders by Insurance Company acting as agent ("effective trade date"),
provided that the Participating Fund receives notice of such orders by
11:00 a.m. Eastern time on the next following Business Day and, if such
orders request the purchase of Participating Fund shares, the
conditions specified in Section 3.8, as applicable, are satisfied. A
redemption or purchase request that does not satisfy the conditions
specified above and in Section 3.8, as applicable, will be effected at
the net asset value per share computed on the Business Day immediately
preceding the next following Business Day upon which such conditions
have been satisfied in accordance with the requirements of this Section
and Section 3.8. Insurance Company represents and warrants that all
orders submitted by the Insurance Company for execution on the
effective trade date shall represent purchase or redemption orders
received from Contractholders prior to the close of trading on the New
York Stock Exchange on the effective trade date.
3.7 Insurance Company will make its best efforts to notify each applicable
Participating Fund in advance of any unusually large purchase or
redemption orders.
<PAGE>
3.8 If Insurance Company's order requests the purchase of a Participating
Fund's shares, Insurance Company will pay for such purchases by wiring
Federal Funds to the Participating Fund or its designated custodial
account on the day the order is transmitted. Insurance Company shall
make all reasonable efforts to transmit to the applicable Participating
Fund payment in Federal Funds by 12:00 noon Eastern time on the
Business Day the Participating Fund receives the notice of the order
pursuant to Section 3.5. Each applicable Participating Fund will
execute such orders at the applicable net asset value per share
determined as of the close of trading on the effective trade date if
the Participating Fund receives payment in Federal Funds by 12:00
midnight Eastern time on the Business Day the Participating Fund
receives the notice of the order pursuant to Section 3.5. If payment in
Federal Funds for any purchase is not received or is received by a
Participating Fund after 12:00 noon Eastern time on such Business Day,
Insurance Company shall promptly, upon each applicable Participating
Fund's request, reimburse the respective Participating Fund for any
charges, costs, fees, interest or other expenses incurred by the
Participating Fund in connection with any advances to, or borrowings or
overdrafts by, the Participating Fund, or any similar expenses incurred
by the Participating Fund, as a result of portfolio transactions
effected by the Participating Fund based upon such purchase request. If
Insurance Company's order requests the redemption of any Participating
Fund's shares valued at or greater than $1 million dollars, the
Participating Fund will wire such amount to Insurance Company within
seven days of the order.
3.9 Each Participating Fund has the obligation to ensure that its shares
are registered with applicable federal agencies at all times.
3.10 Each Participating Fund will confirm each purchase or redemption order
made by Insurance Company. Transfer of Participating Fund shares will
be by book entry only. No share certificates will be issued to
Insurance Company. Insurance Company will record shares ordered from a
Participating Fund in an appropriate title for the corresponding
account.
3.11 Each Participating Fund shall credit Insurance Company with the
appropriate number of shares.
3.12 On each ex-dividend date of a Participating Fund or, if not a Business
Day, on the first Business Day thereafter, each Participating Fund
shall communicate to Insurance Company the amount of dividend and
capital gain, if any, per share. All dividends and capital gains shall
be automatically reinvested in additional shares of the applicable
Participating Fund at the net asset value per share on the ex-dividend
date. Each Participating Fund shall, on the day after the ex-dividend
date or, if not a Business Day, on the first Business Day thereafter,
notify Insurance Company of the number of shares so issued.
<PAGE>
ARTICLE IV
STATEMENTS AND REPORTS
4.1 Each Participating Fund shall provide monthly statements of account as
of the end of each month for all of Insurance Company's accounts by the
fifteenth (15th) Business Day of the following month.
4.2 Each Participating Fund shall distribute to Insurance Company copies of
the Participating Fund's Prospectuses, proxy materials, notices,
periodic reports and other printed materials (which the Participating
Fund customarily provides to its shareholders) in quantities as
Insurance Company may reasonably request for distribution to each
Contractholder and Participant. Insurance Company may elect to print
the Participating Fund's prospectus and/or its statement of additional
information in combination with other fund companies' prospectuses and
statements of additional information, which are also offered in
Insurance Companies insurance product at their own cost. At Insurance
Company's request, the Participating Fund will provide, in lieu of
printed documents, camera-ready copy or diskette of prospectuses,
annual and semi-annual reports for printing by the Insurance Company.
4.3 Each Participating Fund will provide to Insurance Company at least one
complete copy of all registration statements, Prospectuses, reports,
proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Participating Fund
or its shares, contemporaneously with the filing of such document with
the Commission or other regulatory authorities.
4.4 Insurance Company will provide to each Participating Fund at least one
copy of all registration statements, Prospectuses, reports, proxy
statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Contracts or the
Separate Account, contemporaneously with the filing of such document
with the Commission.
4.5 Insurance Company will provide Participating Funds on a semi-annual
basis, or more frequently as reasonably requested by the Participating
Funds, with a current tabulation of the number of existing Variable
Contract owners of Insurance Company whose Variable Contract values are
invested in the Participating Funds. This tabulation will be sent to
Participating Funds in the form of a letter signed by a duly authorized
officer of the Insurance Company attesting to the accuracy of the
information contained in the letter.
<PAGE>
ARTICLE V
EXPENSES
5.1 The charge to each Participating Fund for all expenses and costs of the
Participating Fund, including but not limited to management fees,
administrative expenses and legal and regulatory costs, will be
included in the determination of the Participating Fund's daily net
asset value per share.
5.2 Except as provided in Article IV and V, in particular in the next
sentence, Insurance Company shall not be required to pay directly any
expenses of any Participating Fund or expenses relating to the
distribution of its shares. Insurance Company shall pay the following
expenses or costs:
a. Such amount of the production expenses of any Participating
Fund materials, including the cost of printing a Participating
Fund's Prospectus, or marketing materials for prospective
Insurance Company Contractholders and Participants as Dreyfus
and Insurance Company shall agree from time to time.
b. Distribution expenses of any Participating Fund
materials or marketing materials for prospective Insurance
Company Contractholders and Participants.
c. Distribution expenses of any Participating Fund
materials or marketing materials for
Insurance Company Contractholders and Participants.
Except as provided herein, all other expenses of each Participating
Fund shall not be borne by Insurance Company.
<PAGE>
ARTICLE VI
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of (i) the amended order dated
December 31, 1997 of the Securities and Exchange Commission under
Section 6(c) of the Act with respect to Dreyfus Variable Investment
Fund and Dreyfus Life and Annuity Index Fund, Inc.; and (ii) the order
dated February 5, 1998 of the Securities and Exchange Commission under
Section 6(c) of the Act with respect to The Dreyfus Socially
Responsible Growth Fund, Inc. and Dreyfus Investment Portfolios, and,
in particular, has reviewed the conditions to the relief set forth in
each related Notice. As set forth therein, if Dreyfus Variable
Investment Fund, Dreyfus Life and Annuity Index Fund, Inc., The Dreyfus
Socially Responsible Growth Fund, Inc. or Dreyfus Investment Portfolios
is a Participating Fund, Insurance Company agrees, as applicable, to
report any potential or existing conflicts promptly to the respective
Board of Dreyfus Variable Investment Fund, Dreyfus Life and Annuity
Index Fund, Inc., The Dreyfus Socially Responsible Growth Fund, Inc.
and/or Dreyfus Investment Portfolios, and, in particular, whenever
contract voting instructions are disregarded, and recognizes that it
will be responsible for assisting each applicable Board in carrying out
its responsibilities under such application. Insurance Company agrees
to carry out such responsibilities with a view to the interests of
existing Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board
Members, determines that a material irreconcilable conflict exists with
regard to Contractholder investments in a Participating Fund, the Board
shall give prompt notice to all Participating Companies and any other
Participating Fund. If the Board determines that Insurance Company is
responsible for causing or creating said conflict, Insurance Company
shall at its sole cost and expense, and to the extent reasonably
practicable (as determined by a majority of the Disinterested Board
Members), take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may include,
but shall not be limited to:
a. Withdrawing the assets allocable to the Separate Account
from the Participating Fund and reinvesting such assets in
another Participating Fund (if applicable) or a different
investment medium, or submitting the question of whether such
segregation should be implemented to a vote of all affected
Contractholders; and/or
b. Establishing a new registered management investment company.
<PAGE>
6.3 If a material irreconcilable conflict arises as a result of a decision
by Insurance Company to disregard Contractholder voting instructions
and said decision represents a minority position or would preclude a
majority vote by all Contractholders having an interest in a
Participating Fund, Insurance Company may be required, at the Board's
election, to withdraw the investments of the Separate Account in that
Participating Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will any
Participating Fund be required to bear the expense of establishing a
new funding medium for any Contract. Insurance Company shall not be
required by this Article to establish a new funding medium for any
Contract if an offer to do so has been declined by vote of a majority
of the Contractholders materially adversely affected by the
irreconcilable material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or any Participating Fund taken or omitted as a result
of any act or failure to act by Insurance Company pursuant to this
Article VI, shall relieve Insurance Company of its obligations under,
or otherwise affect the operation of, Article V.
ARTICLE VII
VOTING OF PARTICIPATING FUND SHARES
7.1 Each Participating Fund shall provide Insurance Company with copies, at
no cost to Insurance Company, of the Participating Fund's proxy
material, reports to shareholders and other communications to
shareholders in such quantity as Insurance Company shall reasonably
require for distributing to Contractholders or Participants.
Insurance Company shall:
(a) solicit voting instructions from Contractholders or
Participants on a timely basis and in accordance with
applicable law;
(b) vote the Participating Fund shares in accordance
with instructions received from Contractholders or
Participants; and
(c) vote the Participating Fund shares for which no
instructions have been received in the same proportion as
Participating Fund shares for which instructions have been
received.
<PAGE>
Insurance Company agrees at all times to vote its General Account
shares in the same proportion as the Participating Fund shares for
which instructions have been received from Contractholders or
Participants. Insurance Company further agrees to be responsible for
assuring that voting the Participating Fund shares for the Separate
Account is conducted in a manner consistent with other Participating
Companies.
7.2 Insurance Company agrees that it shall not, without the prior written
consent of each applicable Participating Fund and Dreyfus, solicit,
induce or encourage Contractholders to (a) change or supplement the
Participating Fund's current investment adviser or (b) change, modify,
substitute, add to or delete from the current investment media for the
Contracts.
ARTICLE VIII
MARKETING AND REPRESENTATIONS
8.1 Each Participating Fund or its underwriter shall periodically furnish
Insurance Company with the following documents, in quantities as
Insurance Company may reasonably request:
a. Current Prospectus and any supplements thereto; and
b. Other marketing materials.
Expenses for the production of such documents shall be borne by
Insurance Company in accordance with Section 5.2 of this Agreement.
8.2 Insurance Company shall designate certain persons or entities that
shall have the requisite licenses to solicit applications for the sale
of Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by Insurance Company. Insurance Company
shall make reasonable efforts to market the Contracts and shall comply
with all applicable federal and state laws in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to
each applicable Participating Fund or its designee, each piece of sales
literature or other promotional material in which the Participating
Fund, its investment adviser or the administrator is named, at least
fifteen Business Days prior to its use. No such material shall be used
unless the Participating Fund or its designee approves such material.
Such approval (if given) must be in writing and shall be presumed not
given if not received within ten Business Days after receipt of such
material. Each applicable Participating Fund or its designee, as the
case may be, shall use all reasonable efforts to respond within ten
days of receipt.
8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of a Participating Fund or
concerning a Participating Fund in connection with the sale of the
Contracts other than the information or representations contained in
the registration statement or Prospectus of, as may be amended or
supplemented from time to time, or in reports or proxy statements for,
the applicable Participating Fund, or in sales literature or other
promotional material approved by the applicable Participating Fund.
<PAGE>
8.5 Each Participating Fund shall furnish, or shall cause to be furnished,
to Insurance Company, each piece of the Participating Fund's sales
literature or other promotional material in which Insurance Company or
the Separate Account is named, at least fifteen Business Days prior to
its use. No such material shall be used unless Insurance Company
approves such material. Such approval (if given) must be in writing and
shall be presumed not given if not received within ten Business Days
after receipt of such material. Insurance Company shall use all
reasonable efforts to respond within ten days of receipt.
8.6 Each Participating Fund shall not, in connection with the sale of
Participating Fund shares, give any information or make any
representations on behalf of Insurance Company or concerning Insurance
Company, the Separate Account, or the Contracts other than the
information or representations contained in a registration statement
or prospectus for the Contracts, as may be amended or supplemented
from time to time, or in published reports for the Separate Account
that are in the public domain or approved by Insurance Company for
distribution to Contractholders or Participants, or in sales
literature or other promotional material approved by Insurance
Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for
use, in a newspaper, magazine or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures or other public media), sales literature (such as any
written communication distributed or made generally available to
customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications
distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of
additional information, shareholder reports and proxy materials, and
any other material constituting sales literature or advertising under
National Association of Securities Dealers, Inc. rules, the Act or the
1933 Act.
<PAGE>
ARTICLE IX
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless each
Participating Fund, Dreyfus, each respective Participating Fund's
investment adviser and sub-investment adviser (if applicable), each
respective Participating Fund's distributor, and their respective
affiliates, and each of their directors, trustees, officers, employees,
agents and each person, if any, who controls or is associated with any
of the foregoing entities or persons within the meaning of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of Section 9.1),
against any and all losses, claims, damages or liabilities joint or
several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted)
for which the Indemnified Parties may become subject, under the 1933
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect to thereof) (i) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in information furnished by Insurance Company
for use in the registration statement or Prospectus or sales literature
or advertisements of the respective Participating Fund or with respect
to the Separate Account or Contracts, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading; (ii) arise out of or as a result of conduct,
statements or representations (other than statements or representations
contained in the Prospectus and sales literature or advertisements of
the respective Participating Fund) of Insurance Company or its agents,
with respect to the sale and distribution of Contracts for which the
respective Participating Fund's shares are an underlying investment;
(iii) arise out of the wrongful conduct of Insurance Company or persons
under its control with respect to the sale or distribution of the
Contracts or the respective Participating Fund's shares; (iv) arise out
of Insurance Company's incorrect calculation and/or untimely reporting
of net purchase or redemption orders; or (v) arise out of any breach by
Insurance Company of a material term of this Agreement or as a result
of any failure by Insurance Company to provide the services and furnish
the materials or to make any payments provided for in this Agreement.
Insurance Company will reimburse any Indemnified Party in connection
with investigating or defending any such loss, claim, damage, liability
or action; provided, however, that with respect to clauses (i) and (ii)
above Insurance Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon any untrue statement or omission or alleged omission made
in such registration statement, prospectus, sales literature, or
advertisement in conformity with written information furnished to
Insurance Company by the respective Participating Fund specifically for
use therein. This indemnity agreement will be in addition to any
liability which Insurance Company may otherwise have.
<PAGE>
9.2 Each Participating Fund severally agrees to indemnify and hold harmless
Insurance Company and each of its directors, officers, employees,
agents and each person, if any, who controls Insurance Company within
the meaning of the 1933 Act against any losses, claims, damages or
liabilities to which Insurance Company or any such director, officer,
employee, agent or controlling person may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (1) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or Prospectus or
sales literature or advertisements of the respective Participating
Fund; (2) arise out of or are based upon the omission to state in the
registration statement or Prospectus or sales literature or
advertisements of the respective Participating Fund any material fact
required to be stated therein or necessary to make the statements
therein not misleading; or (3) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the registration statement or Prospectus or sales
literature or advertisements with respect to the Separate Account or
the Contracts and such statements were based on information provided to
Insurance Company by the respective Participating Fund; and the
respective Participating Fund will reimburse any legal or other
expenses reasonably incurred by Insurance Company or any such director,
officer, employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the respective Participating Fund will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or omission or alleged omission made in such registration statement,
Prospectus, sales literature or advertisements in conformity with
written information furnished to the respective Participating Fund by
Insurance Company specifically for use therein. This indemnity
agreement will be in addition to any liability which the respective
Participating Fund may otherwise have.
9.3 Each Participating Fund severally shall indemnify and hold Insurance
Company harmless against any and all liability, loss, damages, costs or
expenses which Insurance Company may incur, suffer or be required to
pay due to the respective Participating Fund's (1) incorrect
calculation of the daily net asset value, dividend rate or capital gain
distribution rate; (2) incorrect reporting of the daily net asset
value, dividend rate or capital gain distribution rate; and (3)
untimely reporting of the net asset value, dividend rate or capital
gain distribution rate; provided that the respective Participating Fund
shall have no obligation to indemnify and hold harmless Insurance
Company if the incorrect calculation or incorrect or untimely reporting
was the result of incorrect information furnished by Insurance Company
or information furnished untimely by Insurance Company or otherwise as
a result of or relating to a breach of this Agreement by Insurance
Company.
<PAGE>
9.4 Promptly after receipt by an indemnified party under this Article of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Article, notify the indemnifying party of the
commencement thereof. The omission to so notify the indemnifying party
will not relieve the indemnifying party from any liability under this
Article IX, except to the extent that the omission results in a failure
of actual notice to the indemnifying party and such indemnifying party
is damaged solely as a result of the failure to give such notice. In
case any such action is brought against any indemnified party, and it
notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, assume the defense thereof, with counsel
satisfactory to such indemnified party, and to the extent that the
indemnifying party has given notice to such effect to the indemnified
party and is performing its obligations under this Article, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation.
Notwithstanding the foregoing, in any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party shall
have mutually agreed to the retention of such counsel or (ii) the named
parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX.
The provisions of this Article IX shall survive termination of this
Agreement.
9.5 Insurance Company shall indemnify and hold each respective
Participating Fund, Dreyfus and sub-investment adviser of the
Participating Fund harmless against any tax liability incurred by the
Participating Fund under Section 851 of the Code arising from purchases
or redemptions by Insurance Company's General Accounts or the account
of its affiliates.
<PAGE>
ARTICLE X
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions
herein.
10.2 This Agreement shall terminate without penalty:
a. As to any Participating Fund, at the option of Insurance
Company or the Participating Fund at any time from the date
hereof upon 180 days' notice, unless a shorter time is
agreed to by the respective Participating Fund and Insurance
Company;
b. As to any Participating Fund, at the option of Insurance
Company, if shares of that Participating Fund are not
reasonably available to meet the requirements of the
Contracts as determined by Insurance Company. Prompt notice
of election to terminate shall be furnished by Insurance
Company, said termination to be effective ten days after
receipt of notice unless the Participating Fund makes
available a sufficient number of shares to meet the
requirements of the Contracts within said ten-day period;
c. As to a Participating Fund, at the option of Insurance
Company, upon the institution of formal proceedings against
that Participating Fund by the Commission, National
Association of Securities Dealers or any other regulatory
body, the expected or anticipated ruling, judgment or
outcome of which would, in Insurance Company's reasonable
judgment, materially impair that Participating Fund's
ability to meet and perform the Participating Fund's
obligations and duties hereunder. Prompt notice of election
to terminate shall be furnished by Insurance Company with
said termination to be effective upon receipt of notice;
d. As to a Participating Fund, at the option of each
Participating Fund, upon the institution of formal
proceedings against Insurance Company by the Commission,
National Association of Securities Dealers or any other
regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in the Participating
Fund's reasonable judgment, materially impair Insurance
Company's ability to meet and perform Insurance Company's
obligations and duties hereunder. Prompt notice of election
to terminate shall be furnished by such Participating Fund
with said termination to be effective upon receipt of
notice;
<PAGE>
e. As to a Participating Fund, at the option of that
Participating Fund, if the Participating Fund shall
determine, in its sole judgment reasonably exercised in good
faith, that Insurance Company has suffered a material
adverse change in its business or financial condition or is
the subject of material adverse publicity and such material
adverse change or material adverse publicity is likely to
have a material adverse impact upon the business and
operation of that Participating Fund or Dreyfus, such
Participating Fund shall notify Insurance Company in writing
of such determination and its intent to terminate this
Agreement, and after considering the actions taken by
Insurance Company and any other changes in circumstances
since the giving of such notice, such determination of the
Participating Fund shall continue to apply on the sixtieth
(60th) day following the giving of such notice, which
sixtieth day shall be the effective date of termination;
f. As to a Participating Fund, at the option of Insurance
Company, if Insurance Company shall determine, in its sole
judgment reasonably exercised in good faith that the
Participating Fund has suffered a material adverse change in
its business or financial condition or is the subject of
material adverse publicity and such material adverse change
or material adverse publicity is likely to have a material
adverse impact upon the business and operations of Insurance
Company or its Separate Account, the Insurance Company shall
notify the Participating Fund in writing of such
determination and its intent to terminate this Agreement,
and after considering the actions taken by the Participating
Fund and any other changes in circumstances since the giving
of such notice, such determination of Insurance Company
shall continue to apply to the sixtieth (60th) day following
the giving of such notice, which sixtieth day shall be the
effective date of termination;
g. Upon termination of the Investment Advisory Agreement
between that Participating Fund and Dreyfus or its
successors unless Insurance Company specifically approves
the selection of a new Participating Fund investment
adviser. Such Participating Fund shall promptly furnish
notice of such termination to Insurance Company;
h. As to a Participating Fund, in the event that Participating
Fund's shares are not registered, issued or sold in
accordance with applicable federal law, or such law
precludes the use of such shares as the underlying
investment medium of Contracts issued or to be issued by
Insurance Company. Termination shall be effective
immediately as to that Participating Fund only upon such
occurrence without notice;
<PAGE>
i. At the option of a Participating Fund upon a determination
by its Board in good faith that it is no longer advisable
and in the best interests of shareholders of that
Participating Fund to continue to operate pursuant to this
Agreement. Termination pursuant to this Subsection (h) shall
be effective upon notice by such Participating Fund to
Insurance Company of such termination;
j. At the option of a Participating Fund if the Contracts cease
to qualify as annuity contracts or life insurance policies,
as applicable, under the Code, or if such Participating Fund
reasonably believes that the Contracts may fail to so
qualify;
k. At the option of any party to this Agreement, upon another
party's breach of any material provision of this Agreement;
l. At the option of a Participating Fund, if the Contracts are
not registered, issued or sold in accordance with applicable
federal and/or state law; or
m. Upon assignment of this Agreement, unless made with the
written consent of every other
non-assigning party.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f or
10.2k herein shall not affect the operation of Article V of this
Agreement. Any termination of this Agreement shall not affect the
operation of Article IX of this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section
10.2 hereof, each Participating Fund and Dreyfus may, at the option of
the Participating Fund, continue to make available additional shares of
that Participating Fund for as long as the Participating Fund desires
pursuant to the terms and conditions of this Agreement as provided
below, for all Contracts in effect on the effective date of termination
of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if that Participating Fund and
Dreyfus so elect to make additional Participating Fund shares
available, the owners of the Existing Contracts or Insurance Company,
whichever shall have legal authority to do so, shall be permitted to
reallocate investments in that Participating Fund, redeem investments
in that Participating Fund and/or invest in that Participating Fund
upon the making of additional purchase payments under the Existing
Contracts. In the event of a termination of this Agreement pursuant to
Section 10.2 hereof, such Participating Fund and Dreyfus, as promptly
as is practicable under the circumstances, shall notify Insurance
Company whether Dreyfus and that Participating Fund will continue to
make that Participating Fund's shares available after such termination.
If such Participating Fund shares continue to be made available after
such termination, the provisions of this Agreement shall remain in
effect and thereafter either of that Participating Fund or Insurance
Company may terminate the Agreement as to that Participating Fund, as
so continued pursuant to this Section 10.3, upon prior written notice
to the other party, such notice to be for a period that is reasonable
under the circumstances but, if given by the Participating Fund, need
not be for more than six months.
<PAGE>
10.4 Termination of this Agreement as to any one Participating Fund shall
not be deemed a termination as to any other Participating Fund unless
Insurance Company or such other Participating Fund, as the case may be,
terminates this Agreement as to such other Participating Fund in
accordance with this Article X.
ARTICLE XI
AMENDMENTS
11.1 Any other changes in the terms of this Agreement, except for the
addition or deletion of any Participating Fund as specified in Exhibit
A, shall be made by agreement in writing between Insurance Company and
each respective Participating Fund.
ARTICLE XII
NOTICE
12.1 Each notice required by this Agreement shall be given by certified
mail, return receipt requested, to the appropriate parties at the
following addresses:
Insurance Company: Allstate Life Insurance Company of New York
3100 Sanders Road, Suite J5D
Northbrook, IL 60062
Attn: Michael J. Velotta, ESQ.
Participating Funds: [Name of Fund]
c/o Premier Mutual Fund Services, Inc.
200 Park Avenue
New York, New York 10166
Attn: Vice President and Assistant Secretary
with copies to: [Name of Fund]
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Attn: General Counsel
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10038-4982
Attn: Lewis G. Cole, Esq.
Stuart H. Coleman, Esq.
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
<PAGE>
ARTICLE XIII
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of each Fund by the
undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this Agreement shall only be binding upon the
assets and property of the Fund and shall not be binding upon any
director, trustee, officer or shareholder of the Fund individually. It
is agreed that the obligations of the Funds are several and not joint,
that no Fund shall be liable for any amount owing by another Fund and
that the Funds have executed one instrument for convenience only.
ARTICLE XIV
LAW
14.1 This Agreement shall be construed in accordance with the internal laws
of the State of New York, without giving effect to principles of
conflict of laws.
ARTICLE XV
FOREIGN TAX CREDITS
15.1 Each Participating Fund agrees to consult in advance with Insurance
Company concerning any decision to elect or not to pass through the
benefit of any foreign tax credits to the Participating Fund's
shareholders pursuant to Section 853 of the Code.
</TABLE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
<TABLE>
<CAPTION>
<S> <C>
ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK
By:
Its:
Attest:_____________________
DREYFUS LIFE AND ANNUITY INDEX FUND, INC. (d/b/a DREYFUS STOCK INDEX
FUND)
By:
Its:
Attest:_____________________
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
By:
Its:
Attest:_____________________
DREYFUS VARIABLE INVESTMENT FUND
By:
Its:
Attest:_____________________
DREYFUS INVESTMENT PORTFOLIOS
By:
Its:
Attest:_____________________
</TABLE>
<PAGE>
EXHIBIT A
LIST OF PARTICIPATING FUNDS
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Exhibit 8(d)
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of the ___day of
_______, 2000 by and among ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK,
(hereinafter the "Company"), a New York corporation, on its own behalf and on
behalf of each segregated asset account of the Company set forth on Schedule A
hereto as may be amended from time to time (each such account hereinafter
referred to as the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND, an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION
(hereinafter the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser")
is duly registered as an investment adviser under the federal Investment
Advisers Act of 1940 and any applicable state securities law; and
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WHEREAS, the Company has registered or will register certain
variable life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such shares
to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares
of the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 10:00 a.m. Boston time
on the next following Business Day. Beginning within three months of the
effective date of this Agreement, the Company agrees that orders for the
purchase or redemption of shares of the Funds on behalf of the Accounts will be
placed directly by the Company with the Funds or their transfer agent by
electronic transmission. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
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1.3. The Fund and the Underwriter agree that shares of the Fund
will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Section 2.5 of
Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of
Portfolio shares offered by the then current prospectus of the Fund shall be
made in accordance with the provisions of such prospectus. The Company agrees
that all net amounts available under the variable annuity contracts with the
form number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, as such Schedule A may be amended from time to time
hereafter by mutual written agreement of all the parties hereto, (the
"Contracts") shall be invested in the Fund, in such other Funds advised by the
Adviser as may be mutually agreed to in writing by the parties hereto, or in the
Company's general account, provided that such amounts may also be invested in an
investment company other than the Fund.
1.7. The Company shall pay for Fund shares on the next Business
Day after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
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1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are
or will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under the New York Insurance Code and has registered or, prior to
any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of New
York and all applicable federal and state securities laws and that the Fund is
and shall remain registered under the 1940 Act. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently
treated as endowment or annuity insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
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2.5. (a) With respect to Initial Class shares, the Fund
currently does not intend to make any payments to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make
such payments in the future. The Fund has adopted a "no fee" or "defensive" Rule
12b-1 Plan under which it makes no payments for distribution expenses. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
the Fund undertakes to have a board of trustees, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule 12b-1
to finance distribution expenses.
(b) With respect to Service Class shares, the Fund has adopted a Rule
12b-1 Plan under which it makes payments to finance distribution expenses.
The Fund represents and warrants that it has a board of trustees, a
majority of whom are not interested persons of the Fund, which has
formulated and approved the Fund's Rule 12b-1 Plan to finance distribution
expenses of the Fund and that any changes to the Fund's Rule 12b-1 Plan
will be approved by a similarly constituted board of trustees.
2.6. The Fund makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states except that the Fund represents that the Fund's investment
policies, fees and expenses are and shall at all times remain in compliance with
the laws of the State of New York and the Fund and the Underwriter represent
that their respective operations are and shall at all times remain in material
compliance with the laws of the State of New York to the extent required to
perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of New York and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is
and shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
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2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, and that said bond is issued by a reputable bonding company, includes
coverage for larceny and embezzlement, and is in an amount not less than $5
million. The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Underwriter in the event that such coverage no longer
applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many
printed copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the Company
in lieu thereof, the Fund shall provide camera-ready film containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure annually as
required by the 1933 Act and/or the 1940 Act, the cost of printing shall be
borne by the Fund. If the Company chooses to receive camera-ready film in lieu
of receiving printed copies of the Fund's prospectus, the Fund will reimburse
the Company in an amount equal to the product of A and B where A is the number
of such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
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3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.1) to shareholders in such quantity
as the Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall: (i) solicit
voting instructions from Contract owners; (ii) vote the Fund shares in
accordance with instructions received from Contract owners; and (iii) vote Fund
shares for which no instructions have been received in a particular separate
account in the same proportion as Fund shares of such portfolio for which
instructions have been received in that separate account, so long as and to the
extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
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4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
of the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
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ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made directly
by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the
Fund's prospectus, proxy materials and reports to owners of Contracts issued by
the Company.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts
in such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
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7.2. The Company will report any potential or existing conflicts
of which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested trustees, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
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7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the
Fund and each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
<PAGE>
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by
or on behalf of the Fund for use in the Registration Statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Fund not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of
this Agreement; or
<PAGE>
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless
the Company and each of its directors and officers and each person, if any, who
controls the Company and its affiliated principal underwriter within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Underwriter which shall not be unreasonably withheld) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
<PAGE>
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company
for use in the Registration Statement or prospectus
for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
<PAGE>
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of each Account.
<PAGE>
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
result from the gross negligence, bad faith or willful misconduct of the Board
or any member thereof, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund; as limited by and in accordance with the
provisions of Sections 8.3(b) and 8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
<PAGE>
8.3(d). The Company and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio based
upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under
any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify;
or
<PAGE>
(e) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio fails to meet the
diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both of
the Fund or the Underwriter respectively, shall determine,
in their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a
material adverse change in its business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that either the
Fund or the Underwriter has suffered a material adverse
change in its business, operations, financial condition or
prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written
notice to the Company, if the Company gives the Fund and
the Underwriter the written notice specified in Section
1.6(b) hereof and at the time such notice was given there
was no notice of termination outstanding under any other
provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective
forty five (45) days after the notice specified in Section
1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
<PAGE>
10.3 The Company shall not redeem Fund shares attributable to
the Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Allstate Life Insurance Company of New York
3100 Sanders Road, Suite J5D
Northbrook, IL 60062
Attention: Michael J. Velotta, Esq.
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
<PAGE>
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
The Company shall promptly notify the Fund and the Underwriter of any change in
control of the Company.
<PAGE>
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under
statutory accounting principles) and annual report
(prepared under generally accepted accounting
principles ("GAAP"), if any), as soon as practical
and in any event within 90 days after the end of
each fiscal year;
(b) the Company's quarterly statements (statutory)
(and GAAP, if any), as soon as practical and in
any event within 45 days after the end of each
quarterly period:
(c) any financial statement, proxy statement, notice
or report of the Company sent to stockholders
and/or policyholders, as soon as practical after
the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state
insurance regulator, as soon as practical after
the filing thereof;
(e) any other report submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of
the books of the Company, as soon as practical
after the receipt thereof.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By: _________________________
Name: _________________________
Title: _________________________
VARIABLE INSURANCE PRODUCTS FUND
By: ________________________
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Kevin J. Kelly
Vice President
<PAGE>
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account
Allstate Life of New York NYLU 446
Separate Account A -
December 15, 1995
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At
this time the Underwriter will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
<PAGE>
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found
on the Cards includes:
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<CAPTION>
<S> <C>
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes (already on Cards as
printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the Company or its
tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small, single sheet of paper
that requests Customers to vote as quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and approved in advance by
Fidelity Legal.
</TABLE>
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
<PAGE>
Exhibit 8(f)
AMENDMENT TO FUND PARTICIPATION AGREEMENT
Glenbrook Life and Annuity Company, Templeton Variable Products Series Fund
and Franklin Templeton Distributors, Inc. hereby amend their Fund Participation
Agreement dated as of January 10, 1999, ("Agreement"), by:
1. Adding Allstate Life Insurance Company of New York, a life insurance
company organized under the laws of New York, as a party to the Agreement
between and among Templeton Variable Products Series Fund (the "Trust"), an
open-end management investment company organized as a business trust under
Massachusetts law, Franklin Templeton Distributors, Inc., a California
corporation, the Trust's principal underwriter (the "Underwriter") and
Glenbrook Life and Annuity Company, a life insurance company organized as a
corporation under Illinois law (the "Company"). Both Allstate Life
Insurance Company of New York and Glenbrook Life and Annuity Company shall
hereinafter be referred to as the "Company."
2. Adding Section, "Agreement"
Agreement
1.0 Form of Agreement. This Agreement shall create a separate agreement for
each Company as though each Company had separately executed an identical
Fund Participation Agreement with the Trust and the Underwriter. No rights,
responsibilities or liabilities arising under the Agreement as it pertains
to one Company shall be enforceable by or against any party to the
Agreement as it pertains to another Company.
3. Adding Allstate Life Insurance Company of New York to Article VII, "Notices"
If to the Company:
Allstate Life Insurance Company of New York
Suite J5B
3100 Sanders Road
Northbrook, IL 60062
Attention: Angela King, Esq.
4. Replacing Schedule A of the Agreement with Amended Schedule A-C, attached;
and
5. Replacing Schedule E of the Agreement with Amended Schedule E, attached;
<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Amendment to Fund Participation Agreement, to be effective as of
[ ], 1999.
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<S> <C> <C> <C>
Glenbrook Life and Annuity Company Templeton Variable Products Series Fund
By its authorized officer By its authorized officer
By: By:
----------------------------------------------------
Name: John Hunter Name: Karen L. Skidmore
Title: Senior Vice President and Director Title: Assistant Vice President and
Assistant Secretary
Allstate Life Insurance Company of New York Franklin Templeton Distributors, Inc.
- ------------------------------------------- -------------------------------------
By its authorized officer By its authorized officer
By:___________________________________ By:
Name: John Hunter Name: Deborah Gatzek
Title: Senior Vice President and Director Title: Senior Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A - C
Contracts Issued by Glenbrook Life and Annuity Company
and Allstate Life of New York
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Contract 1 Contract 2 Contract 3
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
Contract/Product Name STI Classic Variable Annuity Glenbrook Provider Variable Allstate Provider Variable
----------------------
and Type Annuity Annuity
--------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Registered (Y/N) Yes Yes No
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
SEC Registration Number
- -1933 Act 033-00999 333-00999 Product in development
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Representative Form
Numbers GLAU246 GLAU228, GLAU229
GLA14
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Separate Account Glenbrook Life and Annuity Glenbrook Life Multi-Manager Allstate Life of New York
Name/Date Established Company Variable Annuity Variable Account Separate Account A
Account -
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
SEC Registration Number -
1940 Act 811-7541 811-7541
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Templeton Variable TVP - Templeton Bond Fund - TVP - Templeton Stock Fund - TVP - Templeton Stock Fund -
Products Series Fund Class 2 - Templeton Class 2 - Templeton Class 2 - Templeton
("TVP") -Portfolios and Investment Counsel, Inc. Investment Counsel, Inc. Investment Counsel, Inc.
Classes - Adviser
TVP - Templeton Stock Fund - TVP - Templeton International TVP - Templeton International
Class 2 - Templeton Fund - Class 2 - Templeton Fund - Class 2 - Templeton
Investment Counsel, Inc. Investment Counsel, Inc. Investment Counsel, Inc.
TVP - Templeton Developing TVP - Templeton Developing
Markets Fund - Class 2 - Markets Fund - Class 2 -
Templeton Asset Management, Templeton Asset Management,
Ltd. Ltd.
TVP - Mutual Shares
TVP - Mutual Shares
Investments Fund -
Class 2 -
Investments Fund -
Class 2 - Franklin
Mutual Advisers,
LLC. Franklin Mutual
Advisers, LLC.
TVP - Franklin Small Cap TVP - Franklin Small Cap
Investments Fund - Class 2 Investments Fund - Class 2
-Franklin Advisers, Inc. -Franklin Advisers, Inc.
- --------------------------- ------------------------------- ------------------------------- -------------------------------
<PAGE>
SCHEDULE A - C
Contracts Issued by Glenbrook Life and Annuity Company
and Allstate Life of New York
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Contract 4 Contract 5 Contract 6
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Contract/Product Name and Allstate Custom Portfolio
Type Variable Annuity
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Registered (Y/N) Yes
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
SEC Registration Number
- -1933 Act Product in development
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Representative Form
Numbers NYLU446
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Separate Account Allstate Life of New York
Name/Date Established Separate Account A
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
SEC Registration Number -
1940 Act
- --------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------- ------------------------------- ------------------------------- -------------------------------
Templeton Variable TVP - Templeton Asset
Products Series Fund Allocation Fund - Class 2 -
("TVP") -Portfolios and Templeton Investment Counsel,
Classes - Adviser Inc.
TVP - Templeton International
Fund - Class 2 - Templeton
Investment Counsel, Inc.
- --------------------------- ------------------------------- ------------------------------- -------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE D
Other Portfolios Available under the Contracts
<S> <C>
- --------------------------------------------------------------------- -----------------------------------------------------
AIM V.I. Balanced MFS Emerging Growth Series
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
AIM V.I. Diversified Income MFS Research Series
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
AIM V.I. International Equity MFS Growth with Income Series
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
AIM V.I. Growth MFS New Discovery Series
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
AIM V.I. Value
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
AIM V.I. Growth & Income Oppenheimer Aggressive Growth
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
AIM V.I. Government Securities Oppenheimer Capital Appreciation
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
AIM V.I. High Yield Oppenheimer Global Securities
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
AIM V.I. Capital Appreciation Oppenheimer Main Street Growth & Income
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
Oppenheimer Multiple Strategies
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
Dreyfus Socially Responsible Growth Oppenheimer Strategic Bond
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
Dreyfus Stock Index
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
Dreyfus VIF Growth & Income Goldman Sachs VIT Capital Growth
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
Dreyfus VIF Money Market Goldman Sachs VIT CORE Small Cap Equity
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
Dreyfus Capital Appreciation Goldman Sachs VIT CORE U.S. Equity
- --------------------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------- ------------------------------------------------------
Goldman Sachs VIT Global Income
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
Federated Prime Money Fund II Goldman Sachs VIT International Equity
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
Fidelity VIP Equity-Income Morgan Stanley Dean Witter Equity Growth
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
Fidelity VIP Growth Morgan Stanley Dean Witter Mid Cap Value
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
Fidelity VIP High Income Morgan Stanley Dean Witter Fixed Income
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
Fidelity VIP Overseas Morgan Stanley Dean Witter Value
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- ----------------------------------------------------
Fidelity VIP II Contrafund Morgan Stanley Dean Witter Global Equity
- --------------------------------------------------------------------- ----------------------------------------------------
- --------------------------------------------------------------------- ----------------------------------------------------
Fidelity VIP II Index 500
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
Fidelity VIP Growth Opportunities STI Capital Appreciation
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
STI International Equity
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
STI Investment Grade Bond
- --------------------------------------------------------------------- ----------------------------------------------------
- --------------------------------------------------------------------- ----------------------------------------------------
STI Mid-Cap Equity
- --------------------------------------------------------------------- -------------------------------------------------
- --------------------------------------------------------------------- ----------------------------------------------------
STI Small Cap Equity
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
STI Value Income Stock
- --------------------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------- -----------------------------------------------------
STI Growth and Income
- --------------------------------------------------------------------- ----------------------------------------------------
- --------------------------------------------------------------------- ----------------------------------------------------
STI Quality Stock Growth
- --------------------------------------------------------------------- ----------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE E
RULE 12B-1 PLANS
Compensation Schedule
Each Portfolio named below shall pay the following amounts pursuant to the terms
and conditions referenced below under its Class 2 Rule 12b-1 Distribution Plan,
stated as a percentage per year of Class 2's average daily net assets
represented by shares of Class 2.
Portfolio Name Maximum Annual Payment Rate
- --------------------------------------------------------------------------------
Templeton Bond Fund 0.15%
Templeton Stock Fund 0.25%
Templeton Developing Markets Fund 0.25%
Templeton International Fund 0.25%
Templeton Asset Allocation Fund 0.25%
Mutual Shares Investments Fund 0.25%
Frankllin Small Cap Investments Fund 0.25%
Agreement Provisions
If the Company, on behalf of any Account, purchases Trust Portfolio shares
("Eligible Shares") which are subject to a Rule 12b-1 Plan adopted under the
1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees (collectively
"you") you provide administrative and other services which assist in the
promotion and distribution of Eligible Shares or Variable Contracts offering
Eligible Shares, the Underwriter, the Trust or their affiliates (collectively,
"we") may pay you a Rule 12b-1 fee. "Administrative and other services" may
include, but are not limited to, furnishing personal services to owners of
Contracts which may invest in Eligible Shares ("Contract Owners"), answering
routine inquiries regarding a Portfolio, coordinating responses to Contract
Owner inquiries regarding the Portfolios, maintaining such accounts or providing
such other enhanced services as a Trust Portfolio or Contract may require,
maintaining customer accounts and records, or providing other services eligible
for service fees as defined under NASD rules. Your acceptance of such
compensation is your acknowledgment that eligible services have been rendered.
All Rule 12b-1 fees, shall be based on the value of Eligible Shares owned by the
Company on behalf of its Accounts, and shall be calculated on the basis and at
the rates set forth in the Compensation Schedule stated above. The aggregate
annual fees paid pursuant to each Plan shall not exceed the amounts stated as
the "annual maximums" in the Portfolio's prospectus, unless an increase is
approved by shareholders as provided in the Plan. These maximums shall be a
specified percent of the value of a Portfolio's net assets attributable to
Eligible Shares owned by the Company on behalf of its Accounts (determined in
the same manner as the Portfolio uses to compute its net assets as set forth in
its effective Prospectus).
You shall furnish us with such information as shall reasonably be requested by
the Trust's Boards of Trustees ("Trustees") with respect to the Rule 12b-1 fees
paid to you pursuant to the Plans. We shall furnish to the Trustees, for their
review on a quarterly basis, a written report of the amounts expended under the
Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must be
approved annually by a vote of the Trustees, including the Trustees who are not
interested persons of the Trust and who have no financial interest in the Plans
or any related agreement ("Disinterested Trustees"). Each Plan may be terminated
at any time by the vote of a majority of the Disinterested Trustees, or by a
vote of a majority of the outstanding shares as provided in the Plan, on sixty
(60) days' written notice, without payment of any penalty. The Plans may also be
terminated by any act that terminates the Underwriting Agreement between the
Underwriter and the Trust, and/or the management or administration agreement
between Franklin Advisers, Inc. or Templeton Investment Counsel, Inc. or their
affiliates and the Trust. Continuation of the Plans is also conditioned on
Disinterested Trustees being ultimately responsible for selecting and nominating
any new Disinterested Trustees. Under Rule 12b-1, the Trustees have a duty to
request and evaluate, and persons who are party to any agreement related to a
Plan have a duty to furnish, such information as may reasonably be necessary to
an informed determination of whether the Plan or any agreement should be
implemented or continued. Under Rule 12b-1, the Trust is permitted to implement
or continue Plans or the provisions of any agreement relating to such Plans from
year-to-year only if, based on certain legal considerations, the Trustees are
able to conclude that the Plans will benefit each affected Trust Portfolio and
class. Absent such yearly determination, the Plans must be terminated as set
forth above. In the event of the termination of the Plans for any reason, the
provisions of this Schedule E relating to the Plans will also terminate.
Any obligation assumed by the Trust pursuant to this Agreement shall be limited
in all cases to the assets of the Trust and no person shall seek satisfaction
thereof from shareholders of the Trust. You agree to waive payment of any
amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Fund.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule E, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable statutes,
rules and regulations of all rule 12b-1 fees received from us in the prospectus
of the contracts.
<PAGE>
Exhibit 8(g)
A - 1
PARTICIPATION AGREEMENT
Among
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK,
VARIABLE INSURANCE FUNDS,
HSBC ASSET MANAGEMENT AMERICAS INC.
and
BISYS FUND SERVICES
THIS AGREEMENT, dated as of the ___ day of , 2000 by and among Allstate
Life Insurance Company of New York (the "Company"), a New York life insurance
company, on its own behalf and on behalf of each segregated asset account of the
Company set forth on Schedule A hereto as may be amended from time to time (each
account hereinafter referred to as the "Account"), Variable Insurance Funds (the
"Fund"), a Massachusetts business trust, HSBC Asset Management Americas Inc.
(the "Adviser"), a New York corporation and BISYS Fund Services (the
"Underwriter"), a [INSERT STATE]corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance and variable annuity contracts (the
"Variable Insurance Products") to be offered by insurance companies which have
entered into participation agreements with the Fund and the Adviser
("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Fund are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (the "SEC") dated December 10, 1998 (Variable Insurance Funds, et
al., File No. 812-10694, Investment Company Act Rel. No. 23594) granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended (the
"1940 Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, if and to the
extent necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies, qualified pension and retirement plans
outside of the separate account context, the manager of a Fund or certain
related corporations, and the general account of a life insurance company, or
certain related corporations, whose separate account holds, or will hold, shares
of the Fund (the "Mixed and Shared Funding Exemptive Order"), and the Fund
hereby provides notice to the Company that appropriate prospectus disclosure
regarding potential risks of mixed and shared funding may be appropriate;
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Adviser, which serves as investment adviser to certain
Portfolios of the Fund, is duly registered as an investment adviser under the
federal Investment Advisers Act of 1940, as amended;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by an
Account (the "Contracts"), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement;
WHEREAS, each Account is duly established and maintained as a segregated
asset account, duly established by the Company, to set aside and invest assets
attributable to the aforesaid Contracts;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker-dealer with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter exclusive authority to distribute
the Fund's shares, and has agreed to instruct, and has so instructed, the
Underwriter to make available to the Company, for purchase on behalf of the
Account, Fund shares of those Designated Portfolios selected by the
Adviser. Pursuant to such authority and instructions, and subject to
Article X hereof, the Underwriter shall make available to the Company for
purchase on behalf of the Account, shares of those Designated Portfolios
listed on Schedule A to this Agreement, such purchases to be effected at
net asset value in accordance with Section 1.3 of this Agreement.
Notwithstanding the foregoing, (i) Fund series (other than those listed on
Schedule A) in existence now or that may be established in the future will
be made available to the Company only as the Fund and the Adviser may so
provide, and (ii) the Board of Trustees of the Fund (the "Board") may
suspend or terminate the offering of Fund shares of any Designated
Portfolio or class thereof, if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of
the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, suspension or termination is
necessary in the best interests of the shareholders of such Designated
Portfolio.
1.2. The Fund shall redeem, at the Company's request, any full or fractional
Designated Portfolio shares held by the Company on behalf of the Account,
such redemptions to be effected at net asset value in accordance with
Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) the
Company shall not redeem Fund shares attributable to Contract owners except
in the circumstances permitted in Section 10.3 of this Agreement, and (ii)
the Fund may delay redemption of Fund shares of any Designated Portfolio to
the extent permitted by the 1940 Act, and any rules, regulations or orders
thereunder.
1.3. Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as an agent of the Fund for the
limited purpose of receiving purchase and redemption requests on
behalf of the Account (but not with respect to any Fund shares that
may be held in the general account of the Company) for shares of those
Designated Portfolios made available hereunder, based on allocations
of amounts to the Account or subaccounts thereof under the Contracts
and other transactions relating to the Contracts or the Account.
Receipt of any such request (or relevant transactional information
therefor) on any day the New York Stock Exchange is open for trading
and on which a Designated Portfolio calculates its net asset value
pursuant to the rules of the SEC (a "Business Day") by the Company as
such limited agent of the Fund prior to the time that the Designated
Portfolio ordinarily calculates its net asset value as described from
time to time in the Fund's prospectus, shall constitute receipt by the
Fund on that same Business Day, provided that the Fund receives notice
of such request by 9:30 a.m. Eastern Time on the next following
Business Day.
(b) The Company shall pay for shares of each Designated Portfolio on the
same day that it notifies the Fund of a purchase request for such
shares. Payment for Designated Portfolio shares shall be made in
federal funds transmitted to the Fund by wire to be received by the
Fund by noon, Eastern Time, on the day the Fund is notified of the
purchase request for Designated Portfolio shares (unless the Fund
determines and so advises the Company that sufficient proceeds are
available from redemption of shares of other Designated Portfolios
effected pursuant to redemption requests tendered by the Company on
behalf of the Account). If federal funds are not received on time,
such funds will be invested, and Designated Portfolio shares purchased
thereby will be issued, as soon as practicable and the Company shall
promptly, upon the Fund's request, reimburse the Fund for any charges,
costs, fees, interest or other expenses incurred by the Fund in
connection with any advances to, or borrowing or overdrafts by, the
Fund, or any similar expenses incurred by the Fund, as a result of
portfolio transactions effected by the Fund based upon such purchase
request. Upon receipt of federal funds so wired, such funds shall
cease to be the responsibility of the Company and shall become the
responsibility of the Fund.
(c) Payment for Designated Portfolio shares redeemed by the Account or the
Company shall be made in federal funds transmitted by wire to the
Company or any other designated person on the next Business Day after
the Fund is properly notified of the redemption order of such shares
(unless redemption proceeds are to be applied to the purchase of
shares of other Designated Portfolios in accordance with Section
1.3(b) of this Agreement), except that the Fund reserves the right to
redeem Designated Portfolio shares in assets other than cash and to
delay payment of redemption proceeds to the extent permitted under
Section 22(e) of the 1940 Act and any Rules thereunder, and in
accordance with the procedures and policies of the Fund as described
in the then current prospectus. The Fund shall not bear any
responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company, the Company alone shall be
responsible for such action.
(d) Any purchase or redemption request for Designated Portfolio shares
held or to be held in the Company's general account shall be effected
at the net asset value per share next determined after the Fund's
receipt of such request, provided that, in the case of a purchase
request, payment for Fund shares so requested is received by the Fund
in federal funds prior to close of business for determination of such
value, as defined from time to time in the Fund Prospectus.
1.4. The Fund shall make the net asset value per share for each Designated
Portfolio (s) available to the Company on a daily basis as soon as
reasonably practicable after the net asset value per share is calculated
but shall use its best efforts to make such net asset value available by
6:30 p.m, Eastern time. In the event that the Fund is unable to meet the
6:30 pm. Time stated herein, it shall provide additional time for the
Company to place orders for the purchase and redemption of shares. Such
additional time shall be equal to the additional time which fund takes to
make the net asset value available to the Company. If the Fund provides the
Company with materially incorrect share net asset value information through
no fault of the Company, the Company on behalf of the separate accounts,
shall be entitled to an adjustment to the number of shares purchased or
redeemed to reflect the correct share net asset value. Any material error
in the calculation of net asset value per share, divided or capital gain
information shall be reported promptly upon discovery to the Company. At
the end of each Business Day, the Company shall use the information
described in herein to calculate separate account unit values for the day.
Using these unit values, the Company shall process each such Business Day's
separate account transactions based on requests and premiums received by it
by the close of trading on the floor of the New York Stock Exchange
(currently 4:00 p.m., Eastern time) to determine the net dollar amount of
Fund shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined
shall be transmitted to Fund by the Company by 9:00 a.m., Eastern time on
the Business Day next following the Company's receipt of such requests and
premiums in accordance with the terms of this agreement. If the company's
order requests the purchase of Fund shares, the Company shall pay for such
purchase by wiring federal funds to Fund or its designated custodial
account on the day the order is transmitted by the Company. If the
Company's order requests a net redemption resulting in a payment of
redemption proceeds to the Company, Fund shall use it best efforts to wire
the redemption proceeds to the Company by the next Business Day, unless
doing so would require Fund to dispose of Designated Portfolio securities
or otherwise incur additional costs. In any event, proceeds shall be wired
to the Company within three Business Days or such longer period permitted
by the '40 Act or the rules, orders or regulations thereunder and Fund
shall notify the person designated in writing by the Company as the
recipient for such notice of such delay by 3:00 p.m., Eastern time the same
Business Day that the Company transmits the redemption order to Fund. If
the Company's order requests the application of redemption proceeds from
the redemption of shares to the purchase of shares of another Designated
Portfolio as shown on Schedule A, Fund shall so apply such proceeds on the
same Business Day that the Company transmits such order to the Fund.
1.5. The Fund shall furnish notice (by wire or telephone followed by written
confirmation) to the Company, as soon as reasonably practicable, of any
income dividends or capital gain distributions payable on any Designated
Portfolio shares. The Company, on its behalf and on behalf of the Account,
hereby elects to receive all such dividends and distributions as are
payable on any Designated Portfolio shares in the form of additional shares
of that Designated Portfolio. The Company reserves the right, on its behalf
and on behalf of the Account, to revoke this election and to receive all
such dividends and capital gain distributions in cash. The Fund shall
notify the Company promptly of the number of Designated Portfolio shares so
issued as payment of such dividends and distributions.
1.6. Issuance and transfer of Fund shares shall be by book entry only. Share
certificates will not be issued to the Company or the Account. Purchase and
redemption orders for Fund shares shall be recorded in an appropriate
ledger for the Account or the appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 1.8 hereof) and the cash value of
the Contracts may be invested in other investment companies, provided,
however, that until this Agreement is terminated pursuant to Article X, the
Company shall promote the Designated Portfolios on the same basis as other
funding vehicles available under the Contracts. Funding vehicles other than
those listed on Schedule A to this Agreement may be available for the
investment of the cash value of the Contracts, provided, however, (i) any
such vehicle or series thereof, has investment objectives or policies that
are substantially different from the investment objectives and policies of
the Designated Portfolios available hereunder; (ii) the Company gives the
Fund and the Underwriter 45 days written notice of its intention to make
such other investment vehicle available as a funding vehicle for the
Contracts; and (iii) unless such other investment company was available as
a Funding vehicle for the Contracts prior to the date of this Agreement and
the Company has so informed the Fund and the Underwriter prior to the
Fund's signing of this Agreement, the Fund or Adviser consents in writing
to the use of such other vehicle, such consent not to be unreasonably
withheld.
1.8. The Fund shall sell Fund shares only to Participating Insurance Companies
and their separate accounts and to persons or plans ("Qualified Persons")
that communicate to the Fund (or its designees) that they qualify to
purchase shares of the Fund under Section 817(h) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations thereunder
without impairing the ability of the Account to consider the portfolio
investments of the Fund as constituting investments of the Account for the
purpose of satisfying the diversification requirements of Section 817(h).
The Fund shall not sell Fund shares to any insurance company or separate
account unless an agreement substantially complying with Article VI of this
Agreement is in effect to govern such sales, to the extent required. The
Company hereby represents and warrants that it and the Account are
Qualified Persons. The Fund reserves the right to cease offering shares of
any Designated Portfolio in the discretion of the Fund.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts (a) are, or prior to
issuance will be, registered under the 1933 Act, or (b) are not registered
because they are properly exempt from registration under the 1933 Act or
will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and
warrants that the Contracts will be issued and sold in compliance in all
material respects with all applicable federal securities and state
securities and insurance laws and that the sale of the Contracts shall
comply in all material respects with state insurance suitability
requirements. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law,
that it has legally and validly established the Account prior to any
issuance or sale thereof as a segregated asset account under New York
insurance laws, and that it (a) has registered or, prior to any issuance or
sale of the Contracts, will register the Account as a unit investment trust
in accordance with the provisions of the 1940 Act and will cause each
Account to remain so registered and to serve as a segregated investment
account for the Contracts, or alternatively (b) has not registered the
Account in proper reliance upon an exclusion from registration under the
1940 Act. The Company shall register and qualify the Contracts or interests
therein as securities in accordance with the laws of the various states
only if and to the extent required by applicable law.
2.2. The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with applicable state and federal
securities laws and that the Fund is and shall remain registered under the
1940 Act. The Fund shall amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order
to effect the continuous offering of its shares. The Fund shall register
and qualify the shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Fund.
2.3. The Fund may make payments to finance distribution expenses pursuant to
Rule 12b-1 under the 1940 Act. Prior to financing distribution expenses
pursuant to Rule 12b-1, the Fund will have the Board, a majority of whom
are not interested persons of the Fund, formulate and approve a plan
pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses.
2.4. The Fund makes no representations as to whether any aspect of its
operations, including, but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the
various states.
2.5. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
2.6. Adviser represents and warrants that it is and will remain duly registered
and licensed in all material respects under all applicable federal and
state laws and shall perform its obligations hereunder in compliance in all
material respects with any applicable state and federal laws.
2.7. The Fund and the Adviser represent and warrant that all of their
trustees/directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the
Fund are and shall continue to be at all times covered by a blanket
fidelity bond or similar coverage for the benefit of the Fund in an amount
not less than the minimum coverage as required currently by Rule 17g-1
under the 1940 Act or related provisions as may be promulgated from time to
time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.8. The Company represents and warrants that all of its directors, officers,
employees, and other individuals/entities employed or controlled by the
Company dealing with the money and/or securities of the Account are covered
by a blanket fidelity bond or similar coverage for the benefit of the
Account, in an amount not less than $5 million. The aforesaid bond includes
coverage for larceny and embezzlement and is issued by a reputable bonding
company. The Company agrees to hold for the benefit of the Fund and to pay
to the Fund any amounts lost from larceny, embezzlement or other events
covered by the aforesaid bond to the extent such amounts properly belong to
the Fund pursuant to the terms of this Agreement. The Company agrees to
make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, and agrees to notify the
Fund and the Adviser in the event that such coverage no longer applies.
2.9 Underwriter represents and warrants that it is and will be a member in good
standing of the NASD and is and will be registered as a broker-dealer with
the SEC. Underwriter further represents that it will sell and distribute
the Variable Contracts in accordance with all applicable state and federal
laws and regulations, including without limitation the '33 Act, the '34 Act
and the '40 Act.
Underwriter represents that its operations are and shall at all times remain in
material compliance with the laws of the State of New York to the entent
required to perform this Agreement.
2.10 Underwriter represents and warrants that it is and will remain dully
registered and licensed in all material respects under all applicable
federal and state securities laws and shall perform its obligations
hereunder in compliance in all material respects with any applicable state
and federal laws.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Fund or its designee shall provide the Company with as many copies of
the Fund's current prospectus (describing only the Designated Portfolios
listed on Schedule A) or, to the extent permitted, the Fund's profiles as
the Company may reasonably request. The Company shall bear the expense of
printing copies of the current prospectus and profiles for the Contracts
that will be distributed to existing Contract owners, and the Fund shall
bear the expense of printing copies of the Fund's prospectus and profiles
that are used in connection with offering the Contracts issued by the
Company. If requested by the Company in lieu thereof, the Fund shall
provide such documentation (including a final copy of the new prospectus on
diskette at the Fund's expense) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if
the prospectus for the Fund is amended) to have the prospectus for the
Contracts and the Fund's prospectus or profile printed together in one
document (such printing to be at the Fund's expense).
3.2. The Fund's prospectus shall state that the current statement of additional
information ("SAI") for the Fund is available, and the Underwriter (or the
Fund), at its expense, shall provide a reasonable number of copies of such
SAI free of charge to the Company for itself and for any owner of a
Contract who requests such SAI.
3.3. The Fund shall provide the Company with information regarding the Fund's
expenses, which information may include a table of fees and related
narrative disclosure. for use in any prospectus or other descriptive
document relating to a Contract. The Company agrees that it will use such
information in the form provided. The Company shall provide prior written
notice of any proposed modification of such information, which notice will
describe in detail the manner in which the Company proposes to modify the
information, and agrees that it may not modify such information in any way
without the prior consent of the Fund.
3.4. The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received from
Contract owners;
(iii)vote Fund shares for which no instructions have been received in the
same proportion as Fund shares of such portfolio for which
instructions have been received; and
(iv) vote Fund shares it owns in the same proportion as those shares for
which it has received voting instructions, so long as and to the
extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company will vote Fund shares
held in any segregated asset account in the same proportion as Fund
shares of such portfolio for which voting instructions have been
received from Contract owners, to the extent permitted by law.
3.6. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Mixed and Shared Funding
Exemptive Order and consistent with any reasonable standards that the Fund
may adopt and provide in writing.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material
that the Company develops and in which the Fund (or a Designated Portfolio
thereof) or the Adviser or the Underwriter is named. No such material shall
be used until approved by the Fund or its designee, and the Fund will use
its best efforts for it or its designee to review such sales literature or
promotional material within five Business Days after receipt of such
material. The Fund or its designee reserves the right to reasonably object
to the continued use of any such sales literature or other promotional
material in which the Fund (or a Designated Portfolio thereof) or the
Adviser or the Underwriter is named, and no such material shall be used if
the Fund or its designee so object.
4.2. The Company shall not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund or the Adviser or
the Underwriter in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus or SAI for the Fund shares, as such registration statement and
prospectus or SAI may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in sales literature or other
promotional material approved by the Fund or its designee, except with the
permission of the Fund or its designee.
4.3. The Fund or its designee shall furnish, or cause to be furnished, to the
Company, each piece of sales literature or other promotional material that
it develops and in which the Company, and/or its Account, is named. No such
material shall be used until approved by the Company, and the Company will
use its best efforts to review such sales literature or promotional
material within five Business Days after receipt of such material. The
Company reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which the Company
and/or its Account is named, and no such material shall be used if the
Company so objects.
4.4. The Fund, the Adviser and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the
Company, the Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus (which
shall include an offering memorandum, if any, if the Contracts issued by
the Company or interests therein are not registered under the 1933 Act), or
SAI for the Contracts, as such registration statement, prospectus, or SAI
may be amended or supplemented from time to time, or in published reports
for the Account which are in the public domain or approved by the Company
for distribution to Contract owners, or in sales literature or other
promotional material approved by the Company or its designee, except with
the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of
the above, that relate to the Fund or its shares, promptly after the filing
of such document(s) with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests
therein are not registered under the 1933 Act), SAIs, reports,
solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments or supplements to any of the above, that relate
to the Contracts or the Account, promptly after the filing of such
document(s) with the SEC or other regulatory authorities. The Company shall
provide to the Fund or its designee any complaints received from the
Contract owners pertaining to the Fund or the Designated Portfolio.
4.7. The Fund will provide the Company with as much notice as is reasonably
practicable of any proxy solicitation for any Designated Portfolio, and of
any material change in the Fund's registration statement, particularly any
change resulting in a change to the registration statement or prospectus
for any Account. The Fund will work with the Company so as to enable the
Company to solicit proxies from Contract owners, or to make changes to its
prospectus or registration statement, in an orderly manner. The Fund will
make reasonable efforts to attempt to have changes affecting Contract
prospectuses become effective simultaneously with the annual updates for
such prospectuses.
4.8. For purposes of this Article IV, the phrase "sales literature and other
promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures, or
other public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the public,
including brochures, circulars, reports, market letters, form letters,
seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, SAIs,
shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Fund.
ARTICLE V. Fees and Expenses
5.1. The Fund and the Adviser shall pay no fee or other compensation to the
Company under this Agreement. If the Fund or any Portfolio adopts and
implements a plan pursuant to Rule 12b-1 to finance distribution expenses,
or a plan to finance Contract owner services, then the Fund or Underwriter
may make payments to the Company or to the underwriter for the Contracts if
and in amounts agreed to by the Underwriter in writing.
5.2. All expenses incident to performance by the Fund under this Agreement shall
be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall
bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, typesetting and
printing the prospectus, setting in type and printing the proxy materials
and reports to shareholders (including the costs of printing a prospectus
that constitutes an annual report), the preparation of all statements and
notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's prospectus
to owners of Contracts issued by the Company and of distributing the Fund's
proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification and Qualification
6.1. The Fund will invest its assets in such a manner as to ensure that the
Contracts will be treated as annuity or life insurance contracts, whichever
is appropriate, under the Code and the regulations issued thereunder (or
any successor provisions). Without limiting the scope of the foregoing,
each Designated Portfolio has complied and will continue to comply with
Section 817(h) of the Code and Treasury Regulation ss.1.817-5, and any
Treasury interpretations thereof, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts,
and any amendments or other modifications or successor provisions to such
Section or Regulations. In the event of a breach of this Article VI by the
Fund, it will take all reasonable steps (a) to notify the Company of such
breach and (b) to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Regulation 1.817-5.
6.2. The Fund represents that it is or will be qualified as a Regulated
Investment Company under Subchapter M of the Code, and that it will make
every effort to maintain such qualification (under Subchapter M or any
successor or similar provisions) and that it will notify the Company
immediately upon having a reasonable basis for believing that it has ceased
to so qualify or that it might not so qualify in the future.
6.3. The Company represents that the Contracts are currently, and at the time of
issuance shall be, treated as life insurance, endowment, or annuity
insurance contracts, under applicable provisions of the Code, and that it
will make every effort to maintain such treatment, and that it will notify
the Fund, the Adviser, and the Underwriter immediately upon having a
reasonable basis for believing the Contracts have ceased to be so treated
or that they might not be so treated in the future. The Company agrees that
any prospectus offering a contract that is a "modified endowment contract"
as that term is defined in Section 7702A of the Code (or any successor or
similar provision), shall identify such contract as a modified endowment
contract.
ARTICLE VII.
Potential Conflicts
The following provisions shall apply only upon the sale of shares of the Fund to
variable annuity and variable life insurance separate accounts, and then only to
the extent required under the 1940 Act.
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the Contract owners of all
separate accounts investing in the Fund and all other persons investing in
the Fund. A material irreconcilable conflict may arise for a variety of
reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; (f) a decision by an insurer to disregard the voting
instructions of contract owners; or (g) if applicable, a decision by a
qualified pension or retirement plan to disregard the voting instructions
of its participants. The Board shall promptly inform the Company if it
determines that a material irreconcilable conflict exists and the
implications thereof.
7.2. The Company, with a view only to the interests of Contract owners, will
report any potential or existing conflicts of which it is aware to the
Board. The Company, with a view only to the interests of Contract owners,
will assist the Board in carrying out its responsibilities under the Mixed
and Shared Funding Exemptive Order, by providing the Board with all
information reasonably necessary for the Board to consider any issues
raised. This includes, but is not limited to, an obligation by the Company
to inform the Board whenever Contract owner voting instructions are
disregarded. No less than annually, the Company shall submit to the Board
such reports, materials, or data as the Board reasonably requests so that
the Board may carry out its obligations under the Mixed and Shared Funding
Exemptive Order. Such reports, materials and data shall be submitted more
frequently if deemed appropriate by the Board.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of
the disinterested Board members), take whatever steps are necessary to
remedy or eliminate the irreconcilable material conflict, up to and
including: (1) withdrawing the assets allocable to some or all of the
separate accounts from the Fund or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited to)
another Portfolio of the Fund, or submitting the question as to whether
such segregation should be implemented to a vote of all affected contract
owners and, as appropriate, segregating the assets of any appropriate group
(i.e., annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected contract
owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the Account's
investment in the Fund and terminate this Agreement with respect to each
Account (at the Company's expense); provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Any such withdrawal and termination
must take place within six (6) months after the Fund gives written notice
that this provision is being implemented, and until the end of that six
month period the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund. No charge
or penalty will be imposed as a result of such withdrawal. The
responsibility to take such remedial action shall be carried out with a
view only to the interest of the contract owners.
7.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account (at the Company's expense) within six months after
the Board informs the Company in writing that it has determined that such
decision has created a material irreconcilable conflict; provided, however,
that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by
a majority of the disinterested members of the Board. Until the end of the
foregoing six month period, the Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the
Fund. The responsibilty to take such action shall be carried out with a
view only to the interest of the contract owners.
7.6. For purposes of Section 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any material irreconcilable conflict, but in no
event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a
new funding medium for the Contract if an offer to do so has been declined
by vote of a majority of Contract owners materially and adversely affected
by the material irreconcilable conflict. In the event that the Board
determines that any proposed action does not adequately remedy any material
irreconcilable conflict, then the Company will withdraw the Account's
investment in the Fund and terminate this Agreement within six (6) months
after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination
shall be limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the disinterested members of the
Board.
7.7. If and to the extent the Mixed and Shared Funding Exemptive Order or any
amendment thereto contains terms and conditions different from Sections
3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then the Fund
and/or the Participating Insurance Companies, as appropriate, shall take
such steps as may be necessary to comply with the Mixed and Shared Funding
Exemptive Order, and Sections 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of this
Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in the
Mixed and Shared Funding Exemptive Order or any amendment thereto. If and
to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3
under the 1940 Act is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with respect
to mixed or shared funding (as defined in the Mixed and Shared Funding
Exemptive Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then (a) the
Fund and/or the Participating Insurance Companies, as appropriate, shall
take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this
Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification by the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund, the
Adviser and the trustees/directors and officers of each, and each
person, if any, who controls the Fund or the Adviser within the
meaning of Section 15 of the 1933 Act or who is under common control
with the Fund or the Adviser (collectively, the "Indemnified Parties"
for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or litigation (including legal and
other expenses), to which the Indemnified Parties may become subject
under any statute or regulation, at common law or otherwise, insofar
as such losses, claims, damages, liabilities, expenses (or actions in
respect thereof), or settlements are related to the sale or
acquisition of the fund's shares or the contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statements of any material fact contained in the registration
statement, prospectus (which shall include a written description of a
Contract that is not registered under the 1933 Act), or SAI for the
Contracts or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use in the
registration statement, prospectus or SAI for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus, SAI, or sales literature of the Fund not
supplied by the Company or the Underwriter or persons under their
respective control) or wrongful conduct of the Company or the
Underwriter or their agents or persons under their respective
authorization or control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, SAI,
or sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was
made in reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any material failure by the Company or the
Underwriter to provide the services and furnish the materials under
the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the
qualification requirements specified in Article VI of this Agreement);
or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company or the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Company or the Underwriter; as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of its obligations or duties under
this Agreement.
8.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against an Indemnified Party, the Company
shall be entitled to participate, at its own expense, in the defense of
such action. The Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Company to such party of the Company's election to assume
the defense thereof, the Indemnified Party shall bear the fees and expenses
of any additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the
operation of the Fund.
8.2. Indemnification by the Fund
8.2(a). The Fund shall indemnify and hold harmless the Company and each of its
directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Fund) or litigation (including legal and
other expenses) to which the Indemnified Parties may become subject under
any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) or
settlements are related to the operations of the Fund and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus or SAI or sales literature of the Fund (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Fund or its
designee by or on behalf of the Company for use in the registration
statement, prospectus or SAI for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus, SAI or sales literature for the Contracts not
supplied by the Fund or its designees) or wrongful conduct of the Fund
or its designees, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, SAI
or sales literature covering the Contracts, or any amendment thereof
or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund or its designees to
provide the services and furnish the materials under the terms of this
Agreement (including a failure of the Fund, whether unintentional or
in good faith or otherwise, to comply with the diversification and
other qualification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof.
8.2(b). The Fund shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in
the performance or such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company or the Account, whichever is applicable.
8.2(c). The Fund shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Fund of any such claim shall not relieve the Fund from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any
such action is brought against an Indemnified Party, the Fund will be
entitled to participate, at its own expense, in the defense thereof. The
Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Fund
to such party of the Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Fund will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.2(d). The Indemnified Parties will promptly notify the Fund or its designees
of the commencement of any litigation or proceedings against it or any of
its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
8.3. Indemnification By the Adviser
8.3(a). The Adviser agrees to indemnify and hold harmless the Company and the
Underwriter and each of their respective directors and officers and each
person, if any, who controls the Company or the Underwriter within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Adviser) or litigation (including legal and other
expenses) to which the Indemnified Parties may be required to pay or may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, expenses, damages or liabilities (or
actions in respect thereof) or settlements are related to the sale or
acquisition of Fund shares or the Contracts and:
(i) Arise out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or sales literature of Fund (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
comformity with information furnished to Adviser or Fund by or on
behalf of the Company for use in the Registration Statement for Fund
or in sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares;
or
(ii) arise out of or as a result of statements or representations (other
that statements or representations contained in the registration
statement, prospectus or sales literature for the Contraccts not
supplied by Adviser or Fund or persons under their control) or
wrongful conduct of Fund or Adviser or persons under their control,
with respect to the sale or distribution of the Contracts or Fund
shares; or
(iii)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or
sales literature covering the Contracts or any amendment thereof or
supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company for
inclusion therein by or on behalf of Fund or Adviser;
(iv) arise out of or result from any material breach of any representation
and/or warranty made by the Adviser in this Agreement or arise out of
or result from any other material breach of this Agreement by the
Adviser; as limited by and in accordance with the provisions of
Sections 8.3(b) and 8.3(c) hereof.
8.3(b). The Adviser shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company, the Fund, the Adviser or the Account,
whichever is applicable.
8.3(c). The Adviser shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Adviser of any such claim shall not relieve the Adviser from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Adviser will be entitled to participate, at its own expense, in the defense
thereof. The Adviser also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After notice
from the Adviser to such party of the Adviser's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Adviser will not be liable
to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
8.3(d). The Company and the Fund shall promptly notify the Adviser of the
commencement of any litigation or proceeding against it or any of its
respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the
sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the Federal Securities
Laws and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in
accordance therewith. If, in the future, the Mixed and Shared Funding
Exemptive Order should no longer be necessary under applicable law, then
Article VII shall no longer apply.
ARTICLE X. Termination
10.1.This Agreement shall be effective as of the date hereof and shall continue
in full force and effect until the first to occur of:
(a) termination by any party, for any reason with respect to some or all
Designated Portfolios, by three (3) months advance written notice
delivered to the other parties; or
(b) termination by the Company by written notice to the Fund, Adviser and
the Underwriter based upon the Company's determination that shares of
the Fund are not reasonably available to meet the requirements of the
Contracts; said termination to be effective ten days after receipt of
notice unless Fund makes available a sufficient number of shares to
reasonably meet the requirements of the Contracts within said ten-day
period; or
(c) termination by the Company by written notice to the Fund, Adviser and
the Underwriter in the event any of the Designated Portfolio's shares
are not registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such shares as the
underlying investment media of the Contracts issued or to be issued by
the Company; said termination to be effective ten days after receipt
of notice unless Fund makes available a sufficient number of share to
reasonably meet the requirements of the Contracts within the said
ten-day period; or
(d) termination by the Fund or Adviser in the event that formal
administrative proceedings are instituted against the Company or
Underwriter by the NASD, the SEC, the Insurance Commissioner or like
official of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase of the Fund's
shares; provided, however, that the Fund or Adviser determines in its
sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of
the Company to perform its obligations under this Agreement. Prompt
notice of election to terminate shall be furnished by the Fund with
said termination to be effective upon receipt of notice; or
(e) termination by the Company in the event that formal administrative
proceedings are instituted against the Fund by the NASD, the SEC, or
any state securities or insurance department or any other regulatory
body; provided, however, that the Company determines in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of
the Fund or Adviser to perform its obligations under this Agreement.
Prompt notice of election to terminate shall be furnished by the
Company with said termination to be effective upon receipt of notice;
or
(f) termination by the Company by written notice to the Fund, the Adviser
and the Underwriter with respect to any Designated Portfolio in the
event that such Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M or fails to comply with the Section 817(h)
diversification requirements specified in Article VI hereof, or if the
Company reasonably believes that such Portfolio may fail to so qualify
or comply; or
(g) termination by the Fund or Adviser by written notice to the Company in
the event that the Contracts fail to meet the qualifications specified
in Article VI hereof; or
(h) termination by the Fund by written notice to the Company, if the
Company gives the Fund and the Underwriter the written notice
specified in Section 1.7(a)(ii) hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however, any termination under
this Section 10.1(j) shall be effective 45 days after the notice
specified in Section 1.7(a)(ii) was given; or
(i) termination by the Company upon any substitution of the shares of
another investment company or series thereof for shares of a
Designated Portfolio of the Fund in accordance with the terms of the
Contracts, provided that the Company has given at least 45 days prior
written notice to the Fund, Adviser and Underwriter of the date of
substitution; or
(j) termination by any party in the event that the Board determines that a
material irreconcilable conflict exists as provided in Article VII.
10.2.Notwithstanding any termination of this Agreement, the Fund and the
Underwriter shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination
of this Agreement (hereinafter referred to as "Existing Contracts"), unless
the Fund or its designee requests that the Company seek an order pursuant
to Section 26(b) of the 1940 Act to permit the substitution of other
securities for the shares of the Designated Portfolios. The Fund and/or the
Adviser shall split the cost of seeking such an order, and the Company
agrees that it shall reasonably cooperate with the Fund and seek such an
order upon request. Specifically, the owners of the Existing Contracts may
be permitted to reallocate investments in the Fund, redeem investments in
the Fund and/or invest in the Fund upon the making of additional purchase
payments under the Existing Contracts (subject to any such election by the
Fund). The parties agree that this Section 10.2 shall not apply to any
terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement. The
parties further agree that this Section 10.2 shall not apply to any
terminations under Section 10.1(g) of this Agreement.
10.3.The Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), (iii) upon 45
days prior written notice to the Fund, Adviser and Underwriter, as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act,
but only if a substitution of other securities for the shares of the
Designated Portfolios is consistent with the terms of the Contracts, or
(iv) as permitted under the terms of the Contract. Upon request, the
Company will promptly furnish to the Fund, Adviser and Underwriter
reasonable assurance that any redemption pursuant to clause (ii) above is a
Legally Required Redemption. Furthermore, except in cases where permitted
under the terms of the Contracts, the Company shall not prevent Contract
owners from allocating payments to a Portfolio that was otherwise available
under the Contracts without first giving the Fund, Adviser or the
Underwriter 90 days notice of its intention to do so.
10.4.Notwithstanding any termination of this Agreement, each party's obligation
under Article VIII to indemnify the other parties shall survive.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at
such other address as such party may from time to time specify in writing
to the other party.
<TABLE>
<CAPTION>
<S> <C> <C>
If to the Fund: Variable Insurance Funds
3435 Stelzer Road
Columbus, Ohio 43219-3035
If to the Company: Allstate Life Insurance Company of New York
3100 Sanders Road
Northbrook, Illinois 60062
If to the Adviser: HSBC Asset Management Americas Inc.
140 Broadway
New York, New York 10005
If to the Underwriter: BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
</TABLE>
ARTICLE XII. Miscellaneous
12.1.All persons dealing with the Fund must look solely to the property of the
respective Designated Portfolios listed on Schedule A hereto as though each
such Designated Portfolio had separately contracted with the Company and
the Adviser for the enforcement of any claims against the Fund. The parties
agree that neither the Board, officers, agents or shareholders of the Fund
assume any personal liability or responsibility for obligations entered
into by or on behalf of the Fund.
12.2.Subject to the requirements of legal process and regulatory authority, each
party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted
by this Agreement, shall not disclose, disseminate or utilize such names
and addresses and other confidential information without the express
written consent of the affected party until such time as such information
has come into the public domain, except as required by Federal or State
regulators.
12.3.The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4.This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.5.If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6.Each party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD,
and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the foregoing, each
party hereto further agrees to furnish the New York Superintendant with any
information or reports in connection with services provided under this
Agreement which such Superintendant may request in order to ascertain
whether the variable contract operations of the Company are being conducted
in a manner consistent with the New York insurance laws and regulations and
any other applicable law or regulations.
12.7.The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.8.This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties
hereto.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By its authorized officer
By: ____
Title:
Date:
VARIABLE INSURANCE FUNDS
By its authorized officer
By:
Title:
Date:
HSBC ASSET MANAGEMENT AMERICAS INC.
By its authorized officer
By:
Title:
Date:
BISYS FUND SERVICES
By its authorized officer
By:
Title:
Date:
<PAGE>
Schedule A
Contract Account Designated Portfolio(s)
1. NYLU446 Allstate Life of HSBC Variable Growth and Income Fund
New York Separate
Account A
2. NYLU446 Allstate Life of HSBC Variable Fixed Income Fund
New York Separate
Account A
3. NYLU446 Allstate Life of HSBC Variable Cash Management Fund
New York Separate
Account A
Date: __________________
<PAGE>
Exhibit 8(h)
PARTICIPATION AGREEMENT
By and Among
OPPENHEIMER VARIABLE ACCOUNT FUNDS,
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
and
OPPENHEIMERFUNDS, INC.
THIS AGREEMENT, made and entered into as of the ___ day of ________, 2000 by and
among Allstate Life Insurance Company of New York, a New York corporation
(hereinafter the "Company") on its own behalf and on behalf of each separate
account of the Company named in Schedule 1 to this Agreement, as may be amended
from time to time by mutual consent (each account referred to as the "Account"),
Oppenheimer Variable Account Funds, an open-end diversified management
investment company organized under the laws of the State of Massachusetts
(hereinafter the "Fund") and OppenheimerFunds, Inc., a Colorado Corporation
(hereinafter the "Adviser").
WHEREAS, the Fund engages in business as an open-end management investment
company and was established for the purpose of serving as the investment vehicle
for separate accounts established for variable life insurance policies and
variable annuity contracts to be offered by insurance companies (hereinafter
"Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio
(collectively the "Portfolios") of securities and other assets (the Portfolios
covered by this Agreement are specified in Schedule 2 attached hereto as may be
amended from time to time by mutual consent); and
<PAGE>
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (alternatively referred to as the "SEC" or the "Commission"), dated
July 16, 1986 (File No. 812-6234), granting Participating Insurance Companies
and variable annuity and variable life insurance separate accounts exemptions
from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life insurance
companies (hereinafter the "Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the "1933 Act"); and WHEREAS, the Adviser is
registered as an investment adviser under the Investment Advisers
Act of 1940 and serves as the investment adviser to the Fund;
WHEREAS, the Company has registered or will register certain variable annuity
and/or life insurance contracts (hereinafter "Contracts") under the 1933 Act
(unless an exemption from registration is available); and WHEREAS, the Account
is a duly organized, validly existing segregated asset account, established by
resolution of the Board of Directors of the Company under the insurance laws of
the State of New York, to set aside and invest assets attributable to the
Contracts. (The Contract(s) and the Account(s) covered by the Agreement are
specified in Schedule 1 attached hereto, as may be amended from time to time by
mutual consent); and
WHEREAS, the Company has registered the Account as a unit investment trust under
the 1940 Act (unless an exemption from registration is available); and
<PAGE>
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in the Portfolios named in Schedule 2 on
behalf of the Account to fund the Contracts named in Schedule 1 and the Fund is
authorized to sell such shares to unit investment trusts such as the Account at
net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Fund, the Adviser
and the Company agree as follows: ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of the Fund
which the Company orders on behalf of the Account, executing such orders on
a daily basis at the net asset value next computed after receipt by the
Fund or its designee of the order for the shares of the Fund. For purposes
of this Section 1.1, the Company shall be the designee of the Fund for
receipt of such orders from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives written (or
facsimile) notice of such order on the next following Business Day by no
later than 10:00 A.M. New York time; however, the Company undertakes to use
its best efforts to provide such notice to the Fund by no later than 9:30
A.M. New York time. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the SEC.
1.2. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with Section
1.1 hereof. Payment shall be in federal funds transmitted by wire pursuant
to instructions of the Fund's Treasurer or by a credit for any shares
redeemed.
<PAGE>
1.3. The Fund agrees to make an indefinite number of Fund shares
available for purchase at the applicable net asset value per share by the
Company for their separate Accounts listed in Schedule 2, on those days on
which the Fund calculates its net asset value pursuant to rules of the SEC;
provided, however, that the Board of Trustees of the Fund (hereinafter the
"Trustees") may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action
is required by law or by regulatory authorities having jurisdiction or is,
in the sole discretion of the Trustees, acting in good faith and in light
of their fiduciary duties under federal and any applicable state laws, in
the best interests of the shareholders of any Portfolio.
1.4. The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts, qualified
pension and retirement plans or such other persons as are permitted under
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), and regulations promulgated thereunder
(collectively, "Qualified Investors"), and/or to one or more registered
investment companies that restrict the sale of shares of such registered
investment companies to Qualified Investors, the sale of which will not
impair the tax treatment currently afforded the contracts.
1.5. The Fund shall not sell Fund shares to any insurance company or
separate account unless a contractual obligation is in effect with respect
to such sales to abide by the conditions of the Mixed and Shared Funding
Exemptive Order that are addressed in Section 3.4 and Article VII of this
Agreement.
<PAGE>
1.6. The Fund agrees to redeem for cash, upon the Company's request,
any full or fractional shares of the Fund held by the Company, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.6, the Company shall be the designee of the Fund
for receipt of requests for redemption and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives written (or
facsimile) notice of such request for redemption on the next following
Business Day by no later than 10:00 A.M. New York time; however the Company
undertakes to use its best efforts to provide such notice to the Fund by no
later than 9:30 A.M. New York time.
1.7. The Fund shall pay for the Fund shares that are redeemed within
the time period specified in the Fund's prospectus or statement of
additional information, provided, however, that if the Fund does not pay
for the Fund shares that are redeemed on the next Business Day after a
request to redeem shares is made, then the Fund shall apply any such delay
in redemptions uniformly to all holders of shares of that Portfolio.
Payment shall be in federal funds transmitted by wire pursuant to the
instructions of the Company or by a credit toward any shares purchased on
the Business Day on which the redemption payment is made.
1.8. The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule 2 offered by the then current prospectus and
statement of additional information of the Fund in accordance with the
provisions of such prospectus and statement of additional information.
1.9. Issuance and transfer of the Funds' shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of each
Account.
<PAGE>
1.10. The Fund shall furnish notice as soon as reasonably practicable
to the Company of any income, dividends or capital gain distributions
payable on the Portfolio's shares. The Company hereby elects to receive all
such dividends and distributions as are payable on the Portfolio shares in
additional shares of that Portfolio. The Company reserves the right to
revoke this election and thereafter to receive all such dividends and
distributions in cash. The Fund shall notify the Company of the number of
shares so issued as payment of such dividends and distributions.
1.11. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use
its best efforts to make such net asset value per share available by 6:30
p.m. New York time. In the event the Fund is unable to meet the 6:30 p.m.
time stated herein, it shall provide additional time for the Company to
place orders for the purchase and redemption of shares. Such additional
time shall be equal to the additional time which the Fund takes to make the
closing net asset value available to the Company. If the Fund provides
materially incorrect share net asset value information, the Fund shall make
an adjustment to the number of shares purchased or redeemed for the
Accounts to reflect the correct net asset value per share. Any material
error in the calculation or reporting of net asset value per share,
dividend or capital gains information shall be reported promptly upon
discovery to the Company.
<PAGE>
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act (unless an exemption from
registration is available) and, that the Contracts will be issued and sold
in compliance in all material respects with all applicable federal and
state laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and
in good standing under applicable state law and that it has registered the
Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts, and
that it will maintain such registration for so long as any Contracts are
outstanding or until registration is no longer required under federal and
state securities laws. The Company shall amend the registration statement
under the 1933 Act for the Contracts and the registration statement under
the 1940 Act for the Account from time to time as required in order to
effect the continuous offering of the Contracts or as may otherwise be
required by applicable law. The Company shall register and qualify the
Contracts for sale in accordance with the securities laws of the various
states only if and to the extent deemed necessary by the Company.
2.2. Subject to Article VI hereof, the Company represents that it
believes that the Contracts are currently and at the time of issuance will
be treated as life insurance or annuity contracts under applicable
provisions of the Internal Revenue Code and that it will make every effort
to maintain such treatment and that it will notify the Fund and the Adviser
immediately upon having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so treated in the
future.
2.3. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance and sold in accordance with applicable state and
federal law and that the Fund is and shall remain registered under the 1940
Act for as long as the Fund shares are sold. The Fund shall amend the
registration statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of
its shares. The Fund shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund.
2.4. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code and that
it will maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Company immediately upon
having a reasonable basis for believing that it has ceased to so qualify or
that it might not so qualify in the future.
<PAGE>
2.5. If the Fund considers the adoption of one or more plans under
Rule 12b-1 under the 1940 Act to finance distribution expenses (a "12b-1
Plan"), the Company agrees to provide the Trustees any information as may
be reasonably necessary for the Trustees to determine whether to adopt a
12b-1 Plan or Plans. The Fund shall notify the Company upon commencing to
finance distribution expenses pursuant to Rule 12b-1.
2.6. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply with applicable provisions of the 1940 Act.
2.7. The Adviser represents and warrants that it is and will remain
duly registered under all applicable federal and state securities laws and
that it shall perform its obligations for the Fund in compliance with any
applicable state and federal securities laws.
2.8. The Fund and Adviser each represent and warrant that all of its
respective Directors, Trustees, officers, employees, investment advisers,
and transfer agent of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond (which may, at the Fund's election, be
in the form of a joint insured bond) or similar coverage for the benefit of
the Fund in an amount not less than the minimal coverage as required
currently by Section 17(g) and Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by
a reputable insurance company. The Adviser agrees to make all reasonable
efforts to see that this bond or another bond containing these provisions
is always in effect, and agrees to notify the Company in the event that
such coverage no longer applies.
2.9. The Company represents and warrants that all of its directors,
officers, employees, agents, investment advisers, and other individuals and
entities dealing with the money and/or securities of the Fund are covered
by a blanket fidelity bond or similar coverage in an amount not less than
the equivalent of U.S. $3 million. The aforesaid bond shall include
coverage for larceny and embezzlement and shall be issued by a reputable
insurance company. The Company agrees that any amount received under such
bond in connection with claims that derive from arrangements described in
this Agreement will be paid by the Company for the benefit of the Fund. The
Company agrees to make all reasonable efforts to see that this bond or
another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Adviser in the event that such coverage no longer
applies.
2.10. The Fund and Adviser represent that the Fund's investment
policies, fees and expenses are and shall at all times remain in compliance
with applicable state securities laws, if any, and the Fund and Adviser
represent that their respective operations are and shall at all times
remain in material compliance with applicable state securities laws to the
extent required to perform this Agreement. The Fund and the Adviser also
represent that they will comply with any applicable state insurance law
restrictions, as provided in advance and in writing by the Company to the
Fund and the Adviser, including the furnishing of information about the
Fund not otherwise available to the Company which is required by state
insurance law to enable the Company to obtain the authority needed to issue
the Contracts in any applicable state.
ARTICLE III. Prospectus and Proxy Statements; Voting
3.1. At least annually, the Fund or the Adviser shall provide the
Company, free of charge, with as many copies of the current prospectuses
for the Portfolios as the Company may reasonably request for distribution
to existing Contract owners whose Contracts are funded by such Portfolios.
The Fund or the Adviser shall provide the Company, at the Company's
expense, with as many copies of the current prospectuses for the Portfolios
as the Company may reasonably request for distribution to prospective
purchasers of Contracts. If requested by the Company in lieu thereof, the
Fund shall provide such documentation (including a "camera ready" copy of
the new prospectuses dated on or after May 1, 1999 as set in type or, at
the request of the Company, as a diskette in the form sent to the financial
printer) and other assistance as is reasonably necessary in order for the
parties hereto once each year (or more frequently if the prospectuses for
the Portfolios are supplemented or amended) to have the prospectus for the
Contracts and the prospectuses for the Portfolios printed together in one
document. With respect to any prospectuses for the Portfolios that are
printed in combination with any one or more Contract prospectus (the
"Prospectus Booklet"), the costs of printing Prospectus Booklets for
distribution to existing Contract owners shall be prorated to the Fund
based on (a) the ratio of the number of pages of the prospectuses included
for the Portfolios in the Prospectus Booklets to the number of pages in the
Prospectus Booklet as a whole; and (b) the ratio of the number of Contract
owners with Contract value allocated to the Fund to the total number of
Contract owners; provided, however, that the Company shall bear all
printing expenses of such combined documents where used for distribution to
prospective purchasers or to owners of existing Contracts not funded by the
Portfolios.
3.2. The Fund's prospectus shall state that the statement of
additional information for the Fund is available from the Fund (or its
transfer agent). The Fund or its designee shall print and provide such
Statement to the Company and to any owner of a Contract or prospective
owner who requests such Statement at the Fund's expense.
3.3. The Fund or the Adviser, at its expense, shall provide the
Company with copies of the Fund's communications to shareholders and with
copies of the Fund's proxy material and semi-annual and annual reports to
shareholders (or may, at the Fund or the Adviser's option, reimburse the
Company for the pro rata cost of printing such materials) in such
quantities as the Company shall reasonably require, for distributing to
Contract owners at the Company's expense. Upon request, the Adviser shall
be permitted to review and approve the typeset form of such proxy material,
communications and shareholder reports prior to such printing.
<PAGE>
3.4. If and to the extent required by law (or the Mixed and
Shared Funding Exemptive Order) the Company shall: (i) solicit voting
instructions from Contract owners; (ii) vote the Fund shares in
accordance with instructions received from Contract owners or
participants; and (iii) vote Fund shares for which no instructions
have been received in the same proportion as Fund shares of such
Portfolio for which instructions have been received from the Company's
Contract owners; so long as and to the extent that the SEC continues
to interpret the 1940 Act to require pass-through voting privileges
for variable Contract owners. The Company reserves the right to vote
Fund shares held in any Account in its own right, to the extent
permitted by law.
3.5. The Fund will comply with all applicable provisions of the
1940 Act requiring voting by shareholders. ARTICLE IV. Sales Material
and Information
4.1. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee, each piece of sales literature or other
promotional material in which the Fund or the Adviser is named, at
least ten business days prior to its use. No such material shall be
used if the Fund or its designee reasonably objects in writing to such
use within ten business days after receipt of such material.
<PAGE>
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or the Adviser
concerning either of them in connection with the sale of the Contracts
other than the information or representations contained in the
registration statement or prospectus for the Fund shares, as such
registration statement and prospectus may be amended or supplemented
from time to time, or in reports or proxy statements for the Fund, or
in sales literature or other promotional material approved by the Fund
or its designee, except with the permission of the Fund. The Fund
agrees to respond to any request for approval in a prompt and timely
basis. The Company shall adopt and implement procedures reasonably
designed to ensure that information promulgated or distributed by the
Company or a subsidiary thereof, or their respective employees or
agents, concerning the Fund or the Adviser which is intended only for
use only by brokers or agents selling the Contracts (i.e., information
that is not intended for distribution to Contract owners or
prospective Contract owners) is so used, by their employees and
neither the Fund nor the Adviser shall be liable for any losses,
damages, or expenses relating to the improper use of such broker only
materials. The parties hereto agree that this section is not intended
to designate or otherwise imply that the Company is an underwriter or
distributor of the Fund's shares.
4.3. The Adviser or Fund shall furnish or cause to be furnished,
to the Company or its designee, each piece of sales literature or
other promotional material which the Adviser or Fund prepared or
caused to be prepared, in which the Company or its separate account is
named, at least ten business days prior to its use. No such material
shall be used if the Company or its designee reasonably objects in
writing to such use within ten business days after receipt of such
material.
4.4. The Adviser and the Fund shall not give any information or
make any representations on behalf of the Company or concerning the
Company, each Account, or the Contracts, other than information or
representations contained in (i) the registration statement or
prospectus for the Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, (ii)
reports for the Account which are in the public domain or approved by
the Company for distribution to Contract owners or participants, or
(iii) sales literature or other promotional material approved by the
Company or its designee, except with the permission of the Company.
The Company agrees to respond to any request for approval on a prompt
and timely basis. The Adviser shall adopt and implement procedures
reasonably designed to ensure that information promulgated or
distributed by the Fund and/or the Adviser or any subsidiary thereof,
or their respective employees or agents, concerning the Company, any
of its affiliates, or the Contracts which is intended only for use
only by brokers or agents selling the shares (i.e., information that
it not intended for distribution to shareowners or prospective
shareowners) is so used by their employees and agents, and neither the
Company nor any of its affiliates shall be liable for any losses,
damages, or expenses relating to the improper use of such broker only
materials. The parties agree that this section is not intended to
designate or otherwise imply that the Adviser is an underwriter or
distributor of the Contracts.
<PAGE>
4.5. The Adviser will provide to the Company at least one
complete copy of all registration statements, prospectuses, statements
of additional information, reports, proxy statements, sales literature
and other promotional materials prepared by or at the request of the
Fund, the Adviser, or any subsidiary of the Adviser, in which the
Company or its separate account is named, applications for exemptions,
requests for no-action letters, and all amendments to any of the
above, that relate to any Portfolio or its shares, contemporaneously
with the filing of such document with the SEC or other regulatory
authorities.
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, statements of
additional information, reports, solicitations for voting
instructions, sales literature and other promotional materials in
which the Fund (or any Portfolio) or the Adviser is named,
applications for exemptions, requests for no action letters, and all
amendments to any of the above, that relate to the Contracts or each
Account, contemporaneously with the filing of such document with the
SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited
to, advertisements (such as material published, or designed for use
in, a newspaper, magazine, or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures, electronic media, or other public media), sales
literature (i.e., any written communication distributed or made
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials
or other communications distributed or made generally available to
some or all agents or employees, and proxy materials and any other
material constituting sales literature or advertising under NASD
rules, the 1940 Act or the 1933 Act.
<PAGE>
4.8. The Company agrees and acknowledges that the Adviser is the
sole owner of the OppenheimerFunds, Inc. clasped hands mark and that
all use of any designation comprised in whole or part of such mark
under this Agreement shall inure to the benefit of the Adviser or the
Fund. The Company shall not use such mark on its own behalf or on
behalf of each Account in connection with marketing the Contracts
without prior written consent of the Adviser, which consent shall not
be unreasonably withheld, delayed or conditioned. Upon termination of
this Agreement for any reason, the Company shall cease all use of any
such mark.
4.9. Except as otherwise expressly provided in this Agreement or
as required by applicable law or regulation, neither the Fund nor the
Adviser, nor any subsidiary of the Adviser shall use any trademark,
trade name, service mark or logo of the Company or any of its
affiliates, or any variation of any such trademark, trade name,
service mark or logo, without the Company's prior written consent, the
granting of which shall be at the Company's sole option.
ARTICLE V. Fees and Expenses
5.1. The Fund and Adviser shall pay no fee or other compensation
to the Company under this Agreement, and the Company shall pay no fee
or other compensation to the Fund or Adviser, except as provided
herein or in any other written agreement.
5.2. All expenses incident to performance by each party of its
respective duties under this Agreement shall be paid by that party.
The Fund shall see to it that all its shares are registered and
authorized for issuance in accordance with applicable federal law and,
if and to the extent advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the
expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, the preparation
of all statements and notices required by any federal or state law,
and all applicable taxes on the issuance and transfer of the Fund's
shares to the Company.
5.3. The Company shall bear the expenses of distributing the
Fund's prospectus, proxy materials, communications and reports to
Contract owners and of printing and distributing the Fund's prospectus
to prospective Contract owners. ARTICLE VI. Diversification
<PAGE>
6.1. The Fund will at all times invest money from the Contracts
in such a manner as to ensure that the Contracts will be treated as
variable contracts under the Internal Revenue Code and the regulations
issued thereunder. Without limiting the scope of the foregoing, the
Fund represents and warrants that each Portfolio of the Fund will
comply with Section 817(h) of the Internal Revenue Code and Treasury
Regulation 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any
amendments or other modifications to such Section or Regulations (and
any revenue rulings, revenue procedures, notices, and other published
announcements of the Internal Revenue Service interpreting these
sections). In the event of a breach of this Article VI by the Fund, it
will take all reasonable steps (a) to notify the Company of such
breach and (b) to adequately diversify each Portfolio of the Fund so
as to achieve compliance within the grace period afforded by Treasury
Regulation 1.817-5. The Fund and Adviser represent that each Portfolio
is qualified as a Regulated Investment Company under Subchapter M of
the Code and that they will maintain such qualification (under
Subchapter M or any successor provision). ARTICLE VII. Potential
Conflicts
7.1. The Board of Trustees of the Fund (the "Board") will monitor
the Fund for the existence of any material irreconcilable conflict
between the interests of the Contract owners of all separate accounts
investing in the Fund. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretative letter, or
any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting instructions
given by Participating Insurance Companies or by variable annuity
contract and variable life insurance Contract owners; or (f) a
decision by an insurer to disregard the voting instructions of
Contract owners. The Board shall promptly inform the Company if it
determines that an irreconcilable material conflict exists and the
implications thereof.
<PAGE>
7.2. The Company has received a copy of the Mixed and Shared
Funding Exemptive Order, and in particular, has reviewed the
conditions to the requested relief set forth therein. The Company
agrees to be bound by the responsibilities of a participating
insurance company as set forth in the Mixed and Shared Funding
Exemptive Order, including without limitation the requirement that the
Company report any potential or existing conflicts of which it is
aware to the Board. The Company agrees to assist the Board in carrying
out its responsibilities in monitoring such conflicts under the Mixed
and Shared Funding Exemptive Order, by providing the Board in a timely
manner with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever Contract owner
voting instructions are disregarded and by confirming in writing, at
the Fund's request, that the Company is unaware of any such potential
or existing material irreconcilable conflicts.
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested Trustees, that a material irreconcilable
conflict exists, the Company and the relevant Participating Insurance
Companies shall, at their expense and to the extent reasonably
practicable (as determined by a majority of the disinterested
Trustees), take whatever steps are necessary to remedy or eliminate
the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate
accounts from the Fund or any Portfolio and reinvesting such assets in
a different investment medium, including (but not limited to) another
Portfolio of the Fund, or submitting the question whether such
segregation should be implemented to a vote of all affected Contract
owners and, as appropriate, segregating the assets of any appropriate
group (i.e., variable annuity Contract owners or life insurance
Contract owners, of one or more Participating Insurance Companies)
that votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed
separate account.
<PAGE>
7.4. If the Company's disregard of voting instructions could
conflict with the majority of Contract owners voting instructions, and
if the Company and/or the Fund and the Adviser reasonably determine
that a material irreconcilable conflict (as set forth in the Mixed and
Shared Funding Exemptive Order) may arise as a result, then the
Company may be required, at the Fund's election, to withdraw the
Account's investment in the Fund and terminate this Agreement. Any
such withdrawal and termination must take place within six (6) months
after the Fund gives written notice that this provision is being
implemented. Until such withdrawal and termination is implemented, the
Fund shall continue to accept and implement orders by the Company for
the purchase and redemption of shares of the Fund. Such withdrawal and
termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state regulators, then
the Company will withdraw the Account's investment in the Fund and
terminate this Agreement within six (6) months after the Fund informs
the Company in writing that it has determined that such decision has
created an irreconcilable material conflict. Until such withdrawal and
termination is implemented, the Fund shall continue to accept and
implement orders by the Company for the purchase and redemption of
shares of the Fund, subject to applicable regulatory limitation. Such
withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board.
<PAGE>
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the disinterested members of the Board shall determine
whether any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Fund be required to
establish a new funding medium for the Contracts. The Company shall
not be required by Section 7.3 to establish a new funding medium for
the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board
determines that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within
six (6) months after the Board informs the Company in writing of the
foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. Upon request, the Company shall at least annually submit to
the Board such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the duties imposed upon
it as delineated in the Mixed and Shared Funding Exemptive Order, and
said reports, materials and data shall be submitted more frequently if
deemed appropriate by the Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect
to mixed or shared funding (as defined in the Mixed and Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Mixed and Shared Funding Exemptive Order, the
(a) the Fund and/or the Participating Insurance Companies (including
the Company), as appropriate, shall take such reasonable steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable; and
(b) Sections 3.4, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s)
as so amended or adopted.
<PAGE>
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
(a). The Company agrees to indemnify and hold harmless the Fund
and the Adviser, each member of their Board of Trustees or Board of
Directors, each of their officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company) or litigation (including reasonable legal and other
expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition
of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement, prospectus or statement of additional
information for the Contracts or contained in sales literature or
other promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances which they were
made; provided that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Fund or
the Adviser for use in the registration statement, prospectus or
statement of additional information for the Contracts or sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
<PAGE>
(ii) arise out of or as a result of statements or representations
by or on behalf of the Company (other than statements or
representations contained in the Fund registration statement, Fund
prospectus or sales literature or other promotional material of the
Fund not supplied by the Company or persons under its control) or
wrongful conduct of the Company or persons under its control, with
respect to the sale or distribution of the Contracts or Fund shares,
provided any such statement or representation or such wrongful conduct
was not made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Advisor or the Fund;
or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund registration
statement, Fund prospectus, statement of additional information or
sales literature or other promotional material of the Fund or any
amendment thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made, if such statement
or omission was made in reliance upon information furnished to the
Fund or the Adviser by or on behalf of the Company or persons under
its control; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company.
except to the extent provided in Sections 8.1(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under
this Agreement.
<PAGE>
8.2. Indemnification by Adviser and Fund
8.2(a)(1). The Adviser agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if
any, who controls the Company within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Adviser) or litigation (including reasonable legal and other expenses)
to which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement, prospectus, statement of additional
information or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they
were made; provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Adviser or the Fund by or
on behalf of the Company for use in the Fund registration statement,
prospectus or statement of additional information, or sales literature
or other promotional material for the Contracts or of the Fund; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Contracts
or in the Contract registration statement, the Contract prospectus,
statement of additional information, or sales literature or other
promotional material for the Contracts not supplied by the Adviser or
the Fund or persons under the control of the Adviser or the Fund
respectively) or wrongful conduct of the Adviser or persons under its
control, with respect to the sale or distribution of the Contracts,
provided any such statement or representation or such wrongful conduct
was not made in reliance upon and in conformity with information
furnished to the Adviser or the Fund by or on behalf of the Company;
or
<PAGE>
(iii) arise out of any untrue statement or allegedly untrue
statement of a material fact contained in a registration statement,
prospectus, statement of additional information or sales literature
covering the Contracts (or any amendment thereof or supplement
thereto), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement or statements therein not misleading in light of the
circumstances in which they were made, if such statement or omission
was made in reliance upon information furnished to the Company by or
on behalf of the Fund or persons under the control of the Adviser; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser or the Fund in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Adviser or the Fund;
(v) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset value per
share or dividend or capital gain distribution rate;
except to the extent provided in Sections 8.2(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Adviser may
otherwise have.
8.2(a)(2) The Fund agrees to indemnify and hold harmless the
Indemnified Parties [as defined in Section 8.2(a)(1)] against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation
(including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the operations of the Fund or the sale or acquisition
of the Fund's shares and:
<PAGE>
(i) arise out of or are based upon (a) any untrue statement or
alleged untrue statement of any material fact or (b) the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein, in
light of the circumstances in which they were made, not misleading, if
such fact, statement or omission is contained in the registration
statement for the Fund or the Contracts, or in the prospectus or
statement of additional information for the Contracts or the Fund, or
in any amendment to any of the foregoing, or in sales literature or
other promotional material for the Contracts or of the Fund, provided,
however, that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement, fact or omission or such alleged
statement, fact or omission was made in reliance upon and in
conformity with information furnished to the Adviser or the Fund by or
on behalf of the Indemnified Party; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Contracts
or in the Contract registration statement, the Contract prospectus,
statement of additional information, or sales literature or other
promotional material for the Contracts not supplied by the Adviser or
the Fund or persons under the control of the Adviser or the Fund
respectively) or wrongful conduct of the Fund or persons under its
control with respect to the sale or distribution of Contracts,
provided any such statement or representation or such wrongful conduct
was not made in reliance upon and in conformity with information
furnished to the Adviser or the Fund by or on behalf of the Company;
or
(iii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund (including a failure, whether unintentional or
in good faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement);
(iv) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset value per
share or dividend or capital gain distribution rate;
except to the extent provided in Section 8.2(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Fund may
otherwise have.
<PAGE>
(b). The Fund and Adviser shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
<PAGE>
8.3 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("indemnifying party" for the purpose of this Section 8.3) shall not be liable
under the indemnification provisions of this Article VIII with respect to any
claim made against a party entitled to indemnification under this Article VIII
("indemnified party" for the purpose of this Section 8.3) unless such
indemnified party shall have notified the indemnifying party in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
indemnified party (or after such party shall have received notice of such
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is brought
under the indemnification provisions of this Article VIII, except to the extent
that the failure to notify results in the failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
failure to give such notice. In case any such action is brought against the
indemnified party, the indemnifying party will be entitled to participate, at
its own expense, in the defense thereof. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the indemnifying party to the indemnified
party of the indemnifying party's election to assume the defense thereof, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it, and the indemnifying party will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, which shall not be unreasonably withheld, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to the
benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement. ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New
York. 9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 Acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the SEC may grant (including, but not limited to, the
Mixed and Shared Funding Exemptive Order) and the terms hereof shall
be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1 This Agreement shall terminate:
(a) at the option of any party upon six month's advance written
notice to the other parties unless otherwise agreed in a separate
written agreement among the parties; or
<PAGE>
(b) at the option of the Company to the extent that shares of
Portfolios are not reasonably available to meet the requirements of
the Contracts as determined by the Company reasonably and in good
faith; or
(c) at the option of the Fund or the Adviser upon institution of
formal proceedings against the Company by the NASD, the SEC, the
insurance commission of any state or any other regulatory body
regarding the Company's duties under this Agreement or related to the
sale of the Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund shares, which
would have a material adverse effect on the Company's ability to
perform its obligations under this Agreement; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund or the Adviser by the NASD, the SEC, or
any state securities or insurance department or any other regulatory
body, which would have a material adverse effect on the Adviser's or
the Fund's ability to perform its obligations under this Agreement; or
(e) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals or the vote of the Contract owners
having an interest in the Account (or any subaccount) to substitute
the shares of another investment company for the corresponding
Portfolio shares of the Fund in accordance with the terms of the
Contracts for which those Portfolio shares had been selected to serve
as the underlying investment media. The Company will give 45 days
prior written notice to the Fund of the date of any proposed vote or
other action taken to replace the Fund's shares; or
<PAGE>
(f) at the option of the Company or the Fund upon a determination
by a majority of the Board, or a majority of the disinterested Board
members, that an irreconcilable material conflict exists among the
interests of (i) all Contract owners of variable insurance products of
all separate accounts or (ii) the interests of the Participating
Insurance Companies investing in the Fund as delineated in Article VII
of this Agreement; or
(g) at the option of the Company if the Fund ceases to qualify as
a Regulated Investment Company under Subchapter M of the Internal
Revenue Code, or under any successor or similar provision, or if the
Company reasonably believes that the Fund may fail to so qualify; or
(h) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Article VI hereof or if the
Company reasonably believes that the Fund will fail to meet such
requirements; or
(i) at the option of any party to this Agreement, upon another
party's failure to cure a material breach of any provision of this
Agreement within thirty days after written notice thereof; or (j) at
the option of the Company, if the Company determines in its sole
judgment exercised in good faith, that either the Fund or the Adviser
has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the subject
of material adverse publicity which is likely to have a material
adverse impact upon the business and operations of the Company; or
(k) at the option of the Fund or the Adviser, if the Fund or
Adviser respectively, shall determine in its sole judgment exercised
in good faith, that the Company has suffered a material adverse change
in its business, operations or financial condition since the date of
this Agreement or is the subject of material adverse publicity which
is likely to have a material adverse impact upon the business and
operations of the Fund or the Adviser; or
<PAGE>
(l) subject to the Fund's compliance with Article VI hereof, at
the option of the Fund in the event any of the Contracts are not
issued or sold in accordance with applicable requirements of federal
and/or state law.
10.2 Notice Requirement.
(a) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice shall be
given in advance of the effective date of termination as required by
such provisions.
(b) In the event that any termination of this Agreement is based
upon the provisions of Sections 10.1(b) - (d) or 10.1(g) - (i), prompt
written notice of the election to terminate this Agreement for cause
shall be furnished by the party terminating the Agreement to the
non-terminating parties, with said termination to be effective upon
receipt of such notice by the non-terminating parties.
(c) In the event that any termination of this Agreement is based
upon the provisions of Sections 10.1(j) or 10.1(k), prior written
notice of the election to terminate this Agreement for cause shall be
furnished by the party terminating this Agreement to the
non-terminating parties. Such prior written notice shall be given by
the party terminating this Agreement to the non-terminating parties at
least 30 days before the effective date of termination.
10.3 It is understood and agreed that the right to terminate this
Agreement pursuant to Section 10.1(a) may be exercised for any reason
or for no reason.
10.4. Effect of Termination.
<PAGE>
(a) Notwithstanding any termination of this Agreement pursuant to
Section 10.1 of this Agreement and subject to Section 1.3 of this
Agreement, the Company may require the Fund to continue to make
available additional shares of the Fund pursuant to the terms and
conditions of this Agreement as provided in paragraph (b) below, for
all Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts
shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.4 shall not apply to any terminations under
Article VII and the effect of such Article VII terminations shall be
governed by Article VII of this Agreement.
(b) If shares of the Fund continue to be made available after
termination of this Agreement pursuant to this Section 10.4, the
provisions of this Agreement shall remain in effect except for Section
10.1(a) and thereafter the Fund, the Adviser, or the Company may
terminate the Agreement, as so continued pursuant to this Section
10.4, upon written notice to the other party, such notice to be for a
period that is reasonable under the circumstances but need not be for
more than 90 days.
10.5 Except as necessary to implement Contract owner initiated or
approved transactions, or as required by state insurance laws or
regulations, the Company shall not redeem Fund shares attributable to
the Contracts (as opposed to Fund shares attributable to the Company's
assets held in the Account), and the Company shall not prevent
Contract owners from allocating payments to a Portfolio that was
otherwise available under the Contracts, until 45 days after the
Company shall have notified the Fund or the Adviser of its intention
to do so.
ARTICLE XI. Notices
Any notice shall be deemed duly given only if sent by hand, evidenced by written
receipt or by certified mail, return receipt requested, to the other party at
the address of such party set forth below or at such other address as such party
may from time to time specify in writing to the other party. All notices shall
be deemed given on the date received or rejected by the addressee.
If to the Fund:
Oppenheimer Variable Account Funds
6801 Tucson Way
Englewood, CO 80112
Attn: Treasurer
If to the Adviser:
OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0669
Attn: Andrew J. Donohue, Esq.
Executive Vice President and General Counsel
If to the Company:
Allstate Life Insurance Company of New York
3100 Sanders Road
Suite J5D
Northbrook, IL 60062
Attention: Michael J. Velotta, Esq.
ARTICLE XII. Miscellaneous
12.1. The Company and the Adviser each understand and agree that
the obligations of the Fund under this Agreement are not binding upon
any shareholder or Trustee of the Fund personally, but bind only the
Fund and the Fund's property; the Company and the Adviser each
represent that it has notice of the provisions of the Declaration of
Trust of the Fund disclaiming shareholder and Trustee liability for
acts or obligations of the Fund
<PAGE>
12.2. Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential
and all information reasonably identified as confidential in writing
by any other party hereto (including without limitation the names and
addresses of the owners of the Contracts) and, except as contemplated
by this Agreement, shall not disclose, disseminate or utilize such
confidential information until such time as it may come into the
public domain without the express written consent of the affected
party .
12.3. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one
and the same instrument.
12.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby.
12.6. This Agreement shall not be assigned by any party hereto
without the prior written consent of all the parties.
12.7. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation
the SEC, the NASD and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
12.8. Each party represents that the execution and delivery of
this Agreement and the consummation of the transactions contemplated
herein have been duly authorized by all necessary corporate or trust
action, as applicable, by such party and when so executed and
delivered this Agreement will be the valid and binding obligation of
such party enforceable in accordance with its terms.
<PAGE>
12.9. Except as may otherwise be required under Article VII, the
rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are
entitled to under state and federal laws.
12.10. It is understood by the parties that this Agreement is not
an exclusive arrangement in any respect. 12.11. The foregoing
constitutes the entire Agreement between the parties hereto, and shall
not be modified, amended or assigned except by an Agreement in writing
signed by an authorized representative of each such party.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed as of the date specified
below.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By its authorized officer,
By: ___________________________________
Title: __________________________________
Date:___________________________________
OPPENHEIMER VARIABLE ACCOUNT FUNDS
By its authorized officer,
By: ___________________________________
Title: _________________________________
Date: ___________________________________
OPPENHEIMERFUNDS, INC.
By its authorized officer,
By: ___________________________________
Title: _________________________________
Date: ___________________________________
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<S> <C>
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors: Funded by Separate Account:
Allstate Life of New York Separate Account A -- NYLU446
December 15, 1995
</TABLE>
<PAGE>
SCHEDULE 2
Portfolios of Oppenheimer Variable Account Funds:
Oppenheimer Aggressive Growth Fund /VA Oppenheimer Bond Fund/VA
Oppenheimer Capital Appreciation Fund/VA Oppenheimer Global
Securities Fund/VA Oppenheimer High Income Fund/VA Oppenheimer Main
Street Growth & Income Fund/VA Oppenheimer Small Cap Growth Fund/VA
Oppenheimer Strategic Income Fund/VA
<PAGE>
Exhibit 8(i)
PARTICIPATION AGREEMENT
By and Among
WELLS FARGO VARIABLE TRUST
And
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
And
STEPHENS INC.
THIS AGREEMENT, made and entered into this __th day of _______, 2000,
by and among Allstate Life Insurance Company of New York, a New York corporation
(the "Company"), on its own behalf and on behalf of each separate account of the
Company named in Exhibit A to this Agreement, as may be amended from time to
time (each separate account, a "Separate Account"), and Wells Fargo Variable
Trust, an open-end diversified management investment company organized under the
laws of the State of Delaware (the "Trust"), and Stephens Inc., an Arkansas
corporation (the "Underwriter").
WHEREAS, the Trust engages in business as an open-end diversified,
management investment company and was established for the purpose of serving as
the investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts to be offered by insurance
companies which have entered into participation agreements substantially similar
to this Agreement ("Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Trust are divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (each, a "Fund"); and
WHEREAS, an order from the U.S. Securities and Exchange Commission (the
"SEC" or "Commission"), dated September 28, 1998 (File No. 812-11158), grants
Participating Insurance Companies and variable annuity separate accounts and
variable life insurance separate accounts relief from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the Investment Company Act of 1940, as amended
(the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the
extent necessary to permit shares of the Trust to be sold to and held by
variable annuity separate accounts and variable life insurance separate accounts
of both affiliated and unaffiliated Participating Insurance Companies and
qualified pension and retirement plans ("Mixed and Shared Funding Order"), and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain variable
annuity and variable life insurance contracts under the 1933 Act and named in
Exhibit A to this Agreement, as it may be amended from time to time (the
"Contracts"); and
WHEREAS, the Separate Accounts are duly organized, validly existing
segregated asset accounts, established by resolution of the Board of Directors
of the Company under the insurance laws of the State of New York, to set aside
and invest assets attributable to the Contracts; and
WHEREAS, the Company has registered the Separate Accounts as unit
investment trusts under the 1940 Act; and
<PAGE>
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD");
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds named in
Exhibit B on behalf of the Separate Accounts to fund the Contracts, and the
Underwriter is authorized to sell such shares to unit investment trusts such as
the Separate Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Trust, and the Underwriter agree as follows: ARTICLE 1 Sale of Trust Shares
1.1. The Underwriter agrees to sell to the Company those shares of the Trust
which the Company orders on behalf of the Separate Accounts, executing such
orders on a daily basis at the net asset value next computed after receipt and
acceptance by the Trust or its designee of the order for the shares of the
Trust. For purposes of this Section 1.1, the Company shall be the designee of
the Trust for receipt of such orders from each Separate Account and receipt by
such designee shall constitute receipt by the Trust; provided that the Trust
receives notice of such order by 9:30 a.m. Eastern Time on the next following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the relevant Fund calculates its net
asset value.
<PAGE>
1.2. The Trust agrees to make its shares available indefinitely for purchase at
the applicable net asset value per share by Participating Insurance Companies
and their separate accounts on those days on which the Trust calculates its net
asset value pursuant to rules of the SEC; provided, however, that the Board of
Trustees of the Trust (hereinafter the "Trustees") may refuse to sell shares of
any Fund to any person, or suspend or terminate the offering of shares of any
Fund, if such action is required by law or by regulatory authorities having
jurisdiction, or is, in the sole discretion of the Trustees, acting in good
faith and in light of their fiduciary duties under federal and any applicable
state laws, necessary in the best interests of the shareholders of any Fund.
1.3. The Trust and the Underwriter agree that shares of the Trust will be sold
only to Participating Insurance Companies and their separate accounts, and to
qualified pension and retirement plans. No shares of the Trust will be sold to
the general public.
1.4. The Trust and the Underwriter will not sell Trust shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Articles 1, 3, 5, 7 and Section 2.8 of Article 2 of
this Agreement are in effect to govern such sales.
1.5. The Trust will not accept a purchase order from a qualified pension or
retirement plan if such purchase would make the plan shareholder an owner of 10
percent or more of the assets of a Fund unless such plan executes an agreement
with the Trust governing participation in such Fund that includes the conditions
set forth herein to the extent applicable. A qualified pension or retirement
plan will execute an application containing an acknowledgment of this condition
at the time of its initial purchase of shares of any Fund.
<PAGE>
1.6. The Trust agrees to redeem for cash, upon the Company's request, any full
or fractional shares of the Trust held by the Company, executing such requests
on a daily basis at the net asset value next computed after receipt and
acceptance by the Trust or its designee of the request for redemption. For
purposes of this Section 1.6, the Company shall be the designee of the Trust for
receipt of requests for redemption from each Separate Account and receipt by
such designee shall constitute receipt by the Trust; provided the Trust receives
notice of request for redemption by 9:30 a.m. Eastern Time on the next following
Business Day. Payment shall be in federal funds transmitted by wire to the
Company's account as designated by the Company in writing from time to time.
1.7. Each purchase, redemption, and exchange order placed by the Company shall
be placed separately for each Fund and shall not be netted with respect to any
Fund. However, with respect to payment of the purchase price by the Company and
of redemption proceeds by the Trust, the Company and the Trust shall net
purchase and redemption orders with respect to each Fund and shall transmit one
net payment for all Funds in accordance with Section 1.8.
<PAGE>
1.8. The Company agrees that purchases and redemptions of Fund shares offered by
the then current prospectus of the Fund shall be made in accordance with the
provisions of such prospectus. The Company agrees that all net amounts available
under the variable life insurance contracts and variable annuity contracts with
the form number(s) which are listed on Exhibit A attached hereto and
incorporated herein by this reference, as such Exhibit A may be amended from
time to time hereafter by mutual written agreement of all the parties hereto
(the "Contracts"), shall be invested in the Funds, in such other Funds managed
by Wells Fargo Bank as may be mutually agreed to in writing by the parties
hereto, or in the Company's general account, provided that such amounts may also
be invested in an investment company other than the Trust if (a) such other
investment company, or series thereof, has investment objectives or policies
that are substantially different from the investment objectives and policies of
all the Funds of the Trust which are actually used by the Company to fund the
Contracts; or (b) the Company gives the Fund and the Underwriter 45 days written
notice of its intention to make such other investment company available as a
funding vehicle for the Contacts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to their
signing this Agreement (a list of such funds appearing on Exhibit B to this
Agreement); or (d) the Fund or Underwriter consents to the use of such other
investment company.
1.9. In the event of net purchase, the Company shall pay for
shares by 2:00 p.m. Eastern Time on the next Business Day after an order to
purchase the Shares is deemed to be received in accordance with the provisions
of Section 1.1 hereof. In the event of net redemptions, the Trust shall pay the
redemption proceeds in accordance with the terms of the then-current prospectus
for the Trust. All such payments shall be in federal funds transmitted by wire.
For purposes of Section 2.4 and Section 2.11, upon receipt by the Trust of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.10. Issuance and transfer of the Trust's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Separate Account.
Purchase and redemption orders for Trust shares will be recorded in an
appropriate title for each Separate Account or the appropriate subaccount of
each Separate Account.
<PAGE>
1.11. The Trust shall furnish notice as soon as reasonably practicable to the
Company of any income, dividends, or capital gain distributions payable on the
Trust's shares. The Company hereby elects to receive all such dividends and
distributions as are payable on the Fund shares in the form of additional shares
of that Fund. The Company reserves the right to revoke this election and to
receive all such dividends and distributions in cash. The Trust shall notify the
Company of the number of shares so issued as payment of such dividends and
distributions.
1.12. The Trust shall make the net asset value per share for each Fund available
to the Company on a daily basis as soon as reasonably practical after the net
asset value per share is calculated and shall use its best efforts to make such
net asset value per share available by 5:30 p.m. Pacific Time, each business
day.
ARTICLE 2 Representations and Warranties
ARTICLE 1
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act, unless exempt therefrom, and that the Contracts
will be issued and sold in compliance with all applicable federal and state laws
and that the sale of the Contracts shall comply in all material respects with
applicable state insurance suitability requirements. The Company further
represents and warrants that: (i) it is an insurance company duly organized and
in good standing under applicable law; (ii) it has legally and validly
established each Separate Account as a segregated asset account under applicable
state law and has registered each Separate Account as a unit investment trust in
accordance with the provisions of the 1940 Act, unless exempt therefrom, to
serve as segregated investment accounts for the Contracts; and (iii) it will
maintain such registration, if required, for so long as any Contracts are
outstanding. The Company shall amend any registration statement under the 1933
Act for the Contracts and any registration statement under the 1940 Act for the
Separate Accounts from time to time as required in order to effect the
continuous offering of the Contracts or as may otherwise be required by
applicable law. The Company shall register and qualify the Contracts for sale in
accordance with the securities laws of the various states only if, and to the
extent, deemed necessary by the Company. 2.2. Subject to Article VI hereof, the
Company represents that the Contracts are currently and at the time of issuance
will be treated as life insurance, endowment, or annuity contracts under
applicable provisions of the Internal Revenue Code and that it will maintain
such treatment and that it will notify the Trust and the Underwriter immediately
upon having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
2.3. The Company represents that any prospectus offering a Contract that is a
life insurance contract where it is reasonably probable that such Contract would
be a "modified endowment contract," as that term is defined in Section 7702A of
the Internal Revenue Code will identify such Contract as a modified endowment
contract (or policy).
2.4. The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities dealing with the
money and/or securities of the Trust are covered by a blanket fidelity bond or
similar coverage in an amount not less than $5 million. The aforesaid includes
coverage for larceny and embezzlement and is issued by a reputable bonding
company. The Company agrees that any amounts received under such bond in
connection with claims that derive from arrangements described in this Agreement
will be held by the Company for the benefit of the Trust. The Company agrees to
see that this bond or another bond containing these provisions is always in
effect, and agrees to notify the Trust and the Underwriter in the event that
such coverage no longer applies. 1.1.
<PAGE>
2.5. The Company represents and warrants that it has taken all necessary steps
to ensure that it has addressed all Year 2000 transition issues, and that
neither the Trust nor the Underwriter and their affiliates, nor the owners of
the Contracts will experience any material negative effect as a result of the
Company's Year 2000 transition.
2.6. The Trust represents and warrants that Trust shares sold pursuant to this
Agreement shall be registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law, and that the Trust is and shall
remain registered under the 1940 Act for as long as the Trust shares are sold.
The Trust shall amend the registration statement for its shares under the 1933
and the 1940 Acts from time to time as required in order to effect the
continuous offering of its shares. The Trust shall register and qualify the
shares for sale in accordance with the laws of the various states only if, and
to the extent, deemed advisable by the Trust or the Underwriter.
2.7. The Trust represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code, and that it
will make every effort to maintain such qualification (under Subchapter M or any
successor or similar provision).
2.8. The Trust makes no representations as to whether any aspect of its
operations, including but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states, except that the Trust represents that it is and shall at all times
remain in compliance with the laws of the state of Delaware to the extent
required to perform this Agreement.
<PAGE>
2.9. The Trust represents and warrants that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the
Trust undertakes to have its Board of Trustees, a majority of whom are not
interested persons of the Trust, formulate and approve any plan under Rule 12b-1
("Rule 12b-1 Plan") to finance distribution expenses. The Trust shall notify the
Company immediately upon determining to finance distribution expenses pursuant
to Rule 12b-1.
2.10. The Trust represents that it is lawfully organized and validly existing
under the laws of Delaware and that it does and will comply with applicable
provisions of the 1940 Act.
2.11. The Trust represents and warrants that it and all of its trustees,
officers, employees and other individuals/entities having access to the funds
and/or securities of the Trust are and continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Trust in an
amount not less than the minimal coverage as required currently by Rule 17g-1 of
the 1940 Act or related provisions as may be promulgated from time to time. The
aforesaid bond includes coverage for larceny and embezzlement and is issued by a
reputable bonding company.
2.12. The Trust represents and warrants that it has taken all necessary steps to
ensure that it has addressed all Year 2000 transition issues.
2.13. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Trust's
shares in accordance with all applicable federal and state securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.14. The Underwriter represents and warrants that the Trust's investment
manager, Wells Fargo Bank, is exempt from registration as an investment adviser
under all applicable federal and state securities laws and that the investment
manager will perform its obligations to the Trust in accordance with any
applicable state and federal securities laws.
2.15. The Underwriter represents and warrants that it has taken all necessary
steps to ensure that it has addressed all Year 2000 transition issues.
<PAGE>
ARTICLE 3 Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company, at the Company's Trust's
expense, with as many copies of the Trust's current prospectus as the Company
may reasonably request. If requested by the Company in lieu thereof, the Trust
shall provide such documentation including a final copy of a current prospectus
set in type at the Trust's expense and other assistance as is reasonably
necessary in order for the Company at least annually (or more frequently if the
Trust's prospectus is amended more frequently) to have the new prospectus for
the Contracts and the Trust's new prospectus printed together in one document;
in such case at the Company's Trust's expense.
3.2. The Trust's prospectus shall state that the statement of additional
information for the Trust is available from the Underwriter (or, in the Trust's
discretion, the Prospectus shall state that such statement is available from the
Trust).
3.3. The Trust, at its expense, shall provide the Company with copies of its
proxy material, if any, reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require and the
Company shall bear the costs of distributing them to existing Contract owners or
participants.
3.4. The Trust hereby notifies the Company that it is appropriate to include in
the prospectuses pursuant to which the Contracts are offered disclosure
regarding the potential risks of mixed and shared funding.
3.5. To the extent required by applicable law the Company shall:
(1) solicit voting instructions from Contract owners or
participants;
(2) vote the Trust shares held in each Separate Account in
accordance with instructions received from Contract owners or
participants; and
(3) vote Trust shares held in each Separate Account for which no
timely instructions have been received, in the same proportion as
Trust shares of such Fund for which instructions have been received
from the Company's Contract owners or participants;
for so long as and to the extent that the 1940 Act requires
pass-through voting privileges for variable contract owners. The
Company reserves the right to vote Trust shares held in any segregated
asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in the Trust
calculates voting privileges in a manner consistent with other
Participating Insurance Companies and as required by the Mixed and
Shared Funding Order. The Trust will notify the Company of any changes
of interpretation or amendment to the Mixed and Shared Funding Order.
<PAGE>
3.6. The Trust will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Trust will either provide for annual
meetings (except to the extent that the Commission may interpret Section 16 of
the 1940 Act not to require such meetings) or comply with Section 16(c) of the
1940 Act (although the Trust is not one of the trusts described in Section 16(c)
of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b)
of the 1940 Act. Further, the Trust will act in accordance with the Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of Trustees and with whatever rules the Commission may promulgate with
respect thereto.
ARTICLE 4 Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or
the Underwriter, each piece of sales literature or other promotional material in
which the Trust or the Trust's investment manager, sub-advisers or Underwriter
is named, at least five business days prior to its use. No such material shall
be used if the Trust or the Underwriter reasonably objects in writing to such
use within five business days after receipt of such material.
4.2. The Company represents and agrees that sales literature for the Contracts
prepared by the Company or its affiliates will be consistent with every law,
rule, and regulation of any regulatory agency or self-regulatory agency that
applies to the Contracts or to the sale of the Contracts, including, but not
limited to, NASD Conduct Rule 2210 and IM-2210-2 thereunder.
4.3. The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus for the Trust shares as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports or proxy statements for the Trust, or in sales literature
or other promotional material approved by the Trust or by the Underwriter,
except with the permission of the Trust or the Underwriter. The Trust and the
Underwriter agree to respond to any request for approval on a prompt and timely
basis. The Company shall adopt and implement procedures reasonably designed to
ensure that information concerning the Trust, the Underwriter, or any of their
affiliates which is intended for use by brokers or agents selling the Contracts
(i.e., information that is not intended for distribution to Contract owners or
prospective Contract owners) is so used, and neither the Trust, the Underwriter,
nor any of their affiliates shall be liable for any losses, damages, or expenses
relating to the improper use of such broker only materials by agents of the
Company or its affiliates who are unaffiliated with the Trust or the
Underwriter. The parties hereto agree that this Section 4.3 is not intended to
designate nor otherwise imply that the Company is an underwriter or distributor
of the Trust's shares.
4.4. The Trust or the Underwriter shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company, its Separate
Account, or the Contracts are named, at least five business days prior to its
use. No such material shall be used if the Company reasonably objects in writing
to such use within five business days after receipt of such material.
4.5. The Trust represents and agrees that sales literature for the Trust
prepared by the Trust or its affiliates in connection with the sale of the
Contracts will be consistent with every law, rule, and Regulation of any
regulatory agency or self regulatory agency that applies to the Trust or to the
sale of Trust shares, including, but not limited to, NASD Conduct Rule 2210 and
IM-2210-2 thereunder.
<PAGE>
4.6. The Trust and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, each
Separate Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Separate Account which are in the
public domain or approved by the Company for distribution to Contract owners or
participants, or in sales literature or other promotional material approved by
the Company, except with the permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis. The Trust and
the Underwriter shall mark information produced by or on behalf of the Trust
"FOR BROKER USE ONLY" which is intended for use by brokers or agents selling the
Contracts (i.e., information that is not intended for distribution to Contract
owners or prospective Contract owners) is so used, and neither the Company nor
any of its affiliates shall be liable for any losses, damages, or expenses
arising on account of the use by brokers of such information with third parties
in the event that is not so marked.
4.7. The Trust will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Trust or its shares, contemporaneously
with the filing of such document with the SEC or other regulatory authorities.
4.8. The Company will provide to the Trust at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Separate Account, contemporaneously with the filing of such document with
the SEC or other regulatory authorities. The Company shall promptly inform the
Trust of the results of any examination by the SEC (or other regulatory
authorities) that relates to the Contracts, and the Company shall provide the
Trust with a copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination.
4.9. For purposes of this Article 4, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under NASD
Conduct Rules, the 1940 Act or the 1933 Act. ARTICLE 5 Fees and Expenses
<PAGE>
5.1. The Trust and Underwriter shall pay no fee or other compensation to the
Company under this Agreement, except subject a Rule 12b-1 Plan to finance
distribution expenses, in which case, subject to obtaining any required
exemptive orders or other regulatory approvals, the Underwriter may make
payments to the Company or to the underwriter for the Contracts if and in
amounts agreed to by the Underwriter in writing. Each party, however, shall, in
accordance with the allocation of expenses specified in this Agreement,
reimburse other parties for expenses initially paid by one party but allocated
to another party. In addition, nothing herein shall prevent the parties hereto
from otherwise agreeing to perform, and arranging for appropriate compensation
for, other services relating to the Trust and/or to the Separate Accounts.
5.2. All expenses incident to performance by the Trust of this Agreement shall
be paid by the Trust to the extent permitted by applicable law. All Trust shares
will be duly authorized for issuance and registered in accordance with
applicable federal law and to the extent deemed advisable by the Trust, in
accordance with applicable state law, prior to sale. The Trust shall bear the
expenses for the cost of registration and qualification of the Trust's shares,
preparation and filing of the Trust's prospectus and registration statement,
Trust proxy materials and reports, printing proxy materials and annual reports
for existing Contract owners, setting in type and printing the Trust's
prospectuses, the preparation of all statements and notices required by any
federal or state law, all taxes on the issuance or transfer of the Trust's
shares, and any expenses permitted to be paid or assumed by the Trust pursuant
to any Rule 12b-1 Plan under the 1940 Act duly adopted by the Trust.
5.3. The Company shall bear the expenses of printing and distributing the Trust
prospectuses and proxy statements and shareholder reports. The Company shall
bear all expenses associated with the registration, qualification, and filing of
the Contracts under applicable federal securities and state insurance laws; the
cost of preparing, printing, and distributing the Contracts' prospectuses and
statements of additional information; and the cost of printing and distributing
annual individual account statements for Contract owners as required by state
insurance laws.
<PAGE>
ARTICLE 6 Diversification
6.1. The Trust will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Internal Revenue Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Trust will comply with Section 817(h)
of the Internal Revenue Code and Treasury Regulation 1. 817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations or successors thereto. The Trust will provide the Company with a
certification of quarterly compliance with Section 817(h), and the regulations
thereunder, in such form as Trust and Company shall agree.
ARTICLE 7 Potential Conflicts
7.1. The Board of Trustees of the Trust (the "Trust Board") will monitor the
Trust for the existence of any material irreconcilable conflict among the
interests of the Contract owners of all separate accounts investing in the
Trust. A material irreconcilable conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Fund are
being managed; (e) a difference in voting instructions given by variable annuity
contract owners, variable life insurance contract owners, and trustees of
qualified pension or retirement plans; (f) a decision by a Participating
Insurance Company to disregard the voting instructions of Contract owners; or
(g) if applicable, a decision by a qualified pension or retirement plan to
disregard the voting instructions of plan participants. The Trust Board shall
promptly inform the Company if it determines that a material irreconcilable
conflict exists and the implications thereof. A majority of the Trust Board
shall consist of Trustees who are not "interested persons" of the Trust.
7.2. The Company has reviewed a copy of the Mixed and Shared Funding Order, and
in particular, has reviewed the conditions to the requested relief set forth
therein. The Company agrees to assist the Trust Board in carrying out its
responsibilities under the Mixed and Shared Funding Order, by providing the
Trust Board with all information reasonably necessary for the Trust Board to
consider any issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Trust Board whenever Contract owner voting
instructions are disregarded. The Trust Board shall record in its minutes or
other appropriate records, all reports received by it and all action with regard
to a conflict.
<PAGE>
7.3. If it is determined by a majority of the Trust Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested Trustees), take whatever steps are
necessary to remedy or eliminate the material irreconcilable conflict, up to and
including: (a) withdrawing the assets allocable to some or all of the Separate
Accounts from the relevant Fund and reinvesting such assets in a different
investment medium, including another Fund, or in the case of insurance company
participants submitting the question as to whether such segregation should be
implemented by a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity Contract owners
or life insurance Contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (b) establishing a new
registered management investment company or managed separate account.
7.4. If the Company's disregard of voting instructions could conflict with the
majority of Contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the Separate Account's
investment in the Trust and terminate this Agreement with respect to such
Separate Account, and no charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination shall take place within 30 days
after written notice is given that this provision is being implemented, subject
to applicable law but in any event consistent with the terms of the Mixed and
Shared Funding Order. Until such withdrawal and termination is implemented, the
Underwriter and the Trust shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Trust. Such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of disinterested
Trustees.
<PAGE>
7.5. If a particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state insurance regulators, then
the Company will withdraw the Separate Account's investment in the Trust and
terminate this Agreement with respect to such Separate Account within 30 days
after the Trust informs the Company of a material irreconcilable conflict,
subject to applicable law but in any event consistent with the terms of the
Mixed and Shared Funding Order. Until such withdrawal and termination is
implemented, the Underwriter and the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of the
Trust. Such withdrawal and termination shall be limited to the extent required
by the foregoing material irreconcilable conflict as determined by a majority of
disinterested Trustees.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Trust Board shall determine whether any
proposed action adequately remedies any material irreconcilable conflict, but in
no event will the Trust or the Underwriter be required to establish a new
funding medium for the Contracts. The Company shall not be required by Section
7.3 to establish a new funding medium for the Contracts if an offer to do so has
been declined by vote of a majority of Contract owners materially adversely
affected by the material irreconcilable conflict.
7.7. The Trust Board's determination of the existence of a material
irreconcilable conflict and its implication will be made known in writing to the
Company.
7.8. The Company shall at least annually submit to the Trust Board such
reports, materials, or data as the Trust Board may reasonably request so that
the Trustees may fully carry out the duties imposed upon the Trust Board by the
Mixed and Shared Funding Order, and said reports, materials and data shall be
submitted more frequently if deemed appropriate by the Trust Board.
<PAGE>
7.9. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3(T) is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Order) on terms and conditions
materially different from those contained in the Mixed and Shared Funding Order,
the Trust and/or the Company, as appropriate, shall take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as
adopted, to the extent such rules are applicable.
ARTICLE 8 Indemnification
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless
the Trust, the Underwriter, and each of the Trust's or the
Underwriter's directors, officers, employees, or agents and each
person, if any, who controls the Trust or the Underwriter within the
meaning of such terms under the federal securities laws (collectively,
the "indemnified parties" for purposes of this Section 8.1) against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company), or litigation
(including reasonable legal and other expenses), to which the
indemnified parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Trust's shares or the
Contracts and:
(1) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statements, prospectuses or statements of additional
information for the Contracts or contained in the Contracts, or sales
literature or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in
which they were made; provided that this agreement to indemnify shall
not apply as to any indemnified party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf
of the Trust for use in the registration statement, prospectus or
statement of information for the Contracts, or in the Contracts or
sales literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(2) arise out of or as a result of statements or representations
by or on behalf of the Company (other than statements or
representations contained in the Trust registration statement, Trust
prospectus or sales literature or other promotional material of the
Trust not supplied by the Company or persons under its control) or
wrongful conduct of the Company or persons under its control, with
respect to the sale or distribution of the Contracts or Trust shares;
or
(3) arise out of any untrue statement or alleged untrue statement
of a material fact contained in the Trust's registration statement,
prospectus, statement of additional information, or sales literature
or other promotional material of the Trust or any amendment thereof,
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances in which they were made, if such a statement or omission
was made in reliance upon and in conformity with information furnished
to the Trust by or on behalf of the Company or persons under its
control; or
(4) arise as a result of any failure by the Company to provide
the services and furnish the materials or to make any payments under
the terms of this Agreement; or
(5) arise out of any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or
result from any other material breach by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Company
may otherwise have.
(b) No party shall be entitled to indemnification by
the Company if such loss, claim, damage, liability or litigation is due
to the willful misfeasance, bad faith, gross negligence, or reckless
disregard of duty by the party seeking indemnification.
<PAGE>
(c) The indemnified parties will promptly notify the
Company of the commencement of any litigation or proceedings against
them in connection with the issuance or sale of the Trust shares or the
Contracts or the operation of the Trust.
8.2. Indemnification By the Underwriter
(a) The Underwriter agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees, or
agents and each person, if any, who controls the Company within the
meaning of such terms under the federal securities laws (collectively,
the "indemnified parties" for purposes of this Section 8.2) against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Underwriter), or litigation
(including reasonable legal and other expenses) to which the
indemnified parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Trust's shares or the
Contracts and:
<PAGE>
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement, prospectus, or statement of additional
information for the Trust, or sales literature or other promotional
material of the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this agreement to indemnify shall not apply as to any
indemnified party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Underwriter or the Trust by or on behalf
of the Company for use in the registration statement, prospectus, or
statement of additional information for the Trust or in sales
literature of the Trust (or any amendment or supplement thereto) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(2) arise out of or as a result of statements or representations
(other than statements or representations contained in the Contracts
or in the Contract or Trust registration statement, the Contract or
Trust prospectus, statement of additional information, or sales
literature or other promotional material for the Contracts or of the
Trust not supplied by the Underwriter or persons under the control of
the Underwriter) or wrongful conduct of the Underwriter or persons
under the control of the Underwriter, with respect to the sale or
distribution of the Contracts or Trust shares; or
(3) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement, prospectus,
statement of additional information, or sales literature or other
promotional material covering the Contracts (or any amendment thereof
or supplement thereto), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Underwriter or persons
under the control of the Underwriter; or
(4) arise as a result of any failure by the Underwriter to
provide the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the diversification requirements and
procedures related thereto specified in Article 6 of this Agreement);
or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter;
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the
Underwriter may otherwise have.
<PAGE>
(b) No party shall be entitled to indemnification by
the Underwriter if such loss, claim, damage, liability or litigation is
due to the willful misfeasance, bad faith, gross negligence, or
reckless disregard of duty by the party seeking indemnification.
(c) The indemnified parties will promptly notify the
Underwriter of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Contracts
or the operation of each Separate Account.
8.3. Indemnification By the Trust
(a) The Trust agrees to indemnify and hold harmless
the Company and each of its directors, officers, employees, or agents
and each person, if any, who controls the Company within the meaning of
such terms under the federal securities laws (collectively, the
"indemnified parties" for purposes of this Section 8.3) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Trust), or litigation
(including reasonable legal and other expenses) to which the
indemnified parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the operations of the Trust and:
(1) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements and
procedures related thereto specified in Article 6 of this Agreement);
or
(2) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Trust;
<PAGE>
except to the extent provided in Sections 8.3(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Trust
may otherwise have.
(b) No party shall be entitled to indemnification by
the Trust if such loss, claim, damage, liability or litigation is due
to the willful misfeasance, bad faith, gross negligence, or reckless
disregard of duty by the party seeking indemnification.
(c) The indemnified parties will promptly notify the
Trust of the commencement of any litigation or proceedings against it
in connection with the issuance or sale of the Contracts or the
operation of each Separate Account.
8.4. Indemnification Procedure
Any person obligated to provide indemnification under this Article 8
("indemnifying party" for the purpose of this Section 8.4) shall not be
liable under the indemnification provisions of this Article 8 with
respect to any claim made against a party entitled to indemnification
under this Article 8 ("indemnified party" for the purpose of this
Section 8.4) unless such indemnified party shall have notified the
indemnifying party in writing within a reasonable time after the
summons or other first legal process giving information of the nature
of the claim shall have been served upon such indemnified party (or
after such party shall have received notice of such service on any
designated agent), but failure to notify the indemnifying party of any
such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is
brought under the indemnification provision of this Article 8, except
to the extent that the failure to notify results in the failure of
actual notice to the indemnifying party and such indemnifying party is
damaged solely as a result of failure to give such notice. In case any
such action is brought against the indemnified party, the indemnifying
party will be entitled to participate, at its own expense, in the
defense thereof. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the indemnifying party to the
indemnified party of the indemnifying party's election to assume the
defense thereof, the indemnified party shall bear the fees and expenses
of any additional counsel retained by it, and the indemnifying party
will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but if settled with
such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this
Article 8. The indemnification provisions contained in this Article 8
shall survive any termination of this Agreement.
<PAGE>
ARTICLE 9 Applicable Law
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware without
giving effect to conflicts of laws provisions thereof.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 Acts, and the rules, regulations, and rulings thereunder,
including such exemptions from those statutes, rules and regulations as
the SEC may grant (including, but not limited to, the Mixed and Shared
Funding Order) and the terms hereof shall be interpreted and construed
in accordance therewith.
ARTICLE 10 Termination
10.1. This Agreement shall terminate automatically in the event of its
assignment, unless made with written consent of each party; or:
(a) at the option of any party upon six months advance written
notice to the other parties; or
(b) at the option of the Company if shares of the Funds
delineated in Exhibit B are not reasonably available to meet the
requirements of the Contracts as determined by the Company; or
(c) at the option of the Trust upon institution of formal
proceedings against the Company by the NASD, the SEC, the insurance
commission of any state or any other regulatory body, which would have
a material adverse effect on the Company's ability to perform its
obligations under this Agreement; or
<PAGE>
(d) at the option of the Company upon institution of formal
proceedings against the Trust or the Underwriter by the NASD, the SEC,
or any state securities or insurance department or any other
regulatory body, which would have a material adverse effect on the
Underwriter's or the Trust's ability to perform its obligations under
this Agreement; or
(e) at the option of the Trust or the Underwriter by written
notice to the Company, if the Company gives the Trust and the
Underwriter the written notice specified in Section 1.8(b) hereof and
at the time such notice was given there was no notice of termination
outstanding under any other provision of this Agreement; provided,
however, any termination under this Section 10.1(e) shall be effective
sixty (60) days after the notice specified in Section 1.8(b) was
given; or
(f) at the option of the Company or the Trust upon a
determination by a majority of the Trust Board, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists
among the interests of (i) all contract owners of variable insurance
products of all separate accounts, or (ii) the interests of the
Participating Insurance Companies investing in the Trust as delineated
in Article 7 of this Agreement; or
(g) at the option of the Company if the Trust ceases to qualify
as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code, or under any successor or similar provision, or if the
Company reasonably believes that the Trust may fail to so qualify; or
(h) at the option of the Company if the Trust fails to meet the
diversification requirements specified in Article 6 hereof or if the
Company reasonably believes that the Trust will fail to meet such
requirements; or
<PAGE>
(i) at the option of any party to this Agreement, upon
another party's material breach of any provision of this
Agreement; or
(j) at the option of the Company, if the Company determines
in its sole judgment exercised in good faith, that either the
Trust or the Underwriter has suffered a material adverse change
in its business, operations, or financial condition since the
date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon
the business and operations of the Company or the Contracts
(including the sale thereof); or
(k) at the option of the Trust or Underwriter, if the Trust
or Underwriter respectively, shall determine in its sole judgment
exercised in good faith, that the Company has suffered a material
adverse change in its business, operations, or financial
condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material
adverse impact upon the business and operations of the Trust or
Underwriter; or
(l) subject to the Trust's compliance with Article 6 hereof,
at the option of the Trust in the event any of the Contracts are
not issued or sold in accordance with applicable requirements of
federal and/or state law. Termination shall be effective
immediately upon such occurrence without notice.
10.2. Notice Requirement
(a) In the event that any termination of this
Agreement is based upon the provisions of Article 7, such prior written
notice shall be given in advance of the effective date of termination
as required by such provisions.
<PAGE>
(b) In the event that any termination of this
Agreement is based upon the provisions of Sections 10.l(b) - (d) or
10.1(g) - (i), prompt written notice of the election to terminate this
Agreement for cause shall be furnished by the party terminating the
Agreement to the non-terminating parties, with said termination to be
effective upon receipt of such notice by the non-terminating parties.
(c) In the event that any termination of this
Agreement is based upon the provisions of Sections 10.1(j) or 10. l(k),
prior written notice of the election to terminate this Agreement for
cause shall be furnished by the party terminating this Agreement to the
nonterminating parties. Such prior written notice shall be given by the
party terminating this Agreement to the non-terminating parties at
least 30 days before the effective date of termination.
10.3. It is understood and agreed that the right to terminate this Agreement
pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
10.4. Effect of Termination
(a) Notwithstanding any termination of this Agreement
pursuant to Section 10.1 of this Agreement and subject to Section 1.3
of this Agreement, the Company may require the Trust and the
Underwriter to continue to make available additional shares of the
Trust for so long after the termination of this Agreement as the
Company desires pursuant to the terms and conditions of this Agreement
as provided in paragraph (b) below, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred
to as "Existing Contracts"). Specifically, without limitation, the
owners of the Existing Contracts shall be permitted to reallocate
investments in the Trust, redeem investments in the Trust and/or invest
in the Trust upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.4 shall not
apply to any terminations under Article 7 and the effect of such
Article 7 terminations shall be governed by Article 7 of this
Agreement.
(b) If shares of the Trust continue to be made
available after termination of this Agreement pursuant to this Section
10.4, the provisions of this Agreement shall remain in effect except
for Section 10.l(a) and thereafter the Trust, the Underwriter, or the
Company may terminate the Agreement, as so continued pursuant to this
Section 10.4, upon written notice to the other party, such notice to be
for a period that is reasonable under the circumstances but need not be
for more than 90 days.
10.5 The Company shall not redeem Fund shares attributable to the Contracts
(as opposed to Fund shares attributable to the Company's assets held in
the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of
general application (hereinafter referred to as a "Legally Required
Redemption"). Upon request, the Company will promptly furnish to the
Trust and the Underwriter the opinion of counsel for the Company (which
counsel shall be reasonably satisfactory to the Trust and the
Underwriter) to the effect that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, except in cases
where permitted under the terms of the Contracts, the Company shall not
prevent Contract Owners from allocating payments to a Fund that was
otherwise available under the Contracts without first giving the Trust
or the Underwriter 90 days notice of its intention to do so.
<PAGE>
ARTICLE 11 Notices
Any notice shall be deemed duly given only if sent by hand, evidenced
by written receipt or by certified mail, return receipt requested, to
the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to
the other party. All notices shall be deemed given three business days
after the date received or rejected by the addressee.
<TABLE>
<CAPTION>
If to the Trust: Wells Fargo Variable Trust
111 Center Street
Little Rock, AK 72201
<S> <C> <C>
Attention: Richard H. Blank, Assistant Secretary
Copy: C. David Messman, Esq.
Vice President & Senior Counsel
Wells Fargo Bank
Legal Department
633 Folsom Street - 7th Floor
San Francisco, CA 94107-3600
If to the Company: Allstate Life Insurance Company of New York
3100 Sanders Road, Ste. N4A
Northbrook, IL 60062
Attention: Craig Whitehead, Senior Vice President and Director
If to the Underwriter: Stephens Inc.
111 Center Street
Little Rock, AK 72201
Attention: Richard H. Blank, Senior Vice President
</TABLE>
ARTICLE 12 Miscellaneous
<PAGE>
11.1. All persons dealing with the Trust must look solely to the property of the
Trust for the enforcement of any claims against the Trust as neither the
Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Trust.
11.2. Subject to law and regulatory authority, each party hereto shall treat as
confidential all information reasonably identified as such in writing by any
other party hereto (including without limitation the names and addresses of the
owners of the Contracts) and, except as contemplated by this Agreement, shall
not disclose, disseminate, or utilize such confidential information until such
time as it may come into the public domain without the express prior written
consent of the affected party.
11.3. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
11.4. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
11.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
11.6. This Agreement shall not be assigned by any party hereto without the prior
written consent of all the parties.
11.7. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit each other and such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
<PAGE>
11.8. Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or trust action, as applicable, by such
party and when so executed and delivered this Agreement will be the valid and
binding obligation of such party enforceable in accordance with its terms.
11.9. The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts, the
Separate Accounts or the Funds of the Trust.
11.10. The Trust has filed a Certificate of Trust with the Secretary of State of
the State of Delaware. The Company acknowledges that the obligations of or
arising out of the Trust's Declaration of Trust are not binding upon any of the
Trust's Trustees, officers, employees, agents or shareholders individually, but
are binding solely upon the assets and property of the Trust in accordance with
its proportionate interest hereunder. The Company further acknowledges that the
assets and liabilities of each Fund are separate and distinct and that the
obligations of or arising out of this instrument are binding solely upon the
assets or property of the Fund on whose behalf the Trust has executed this
instrument. The Company also agrees that the obligations of each Fund hereunder
shall be several and not joint, in accordance with its proportionate interest
hereunder, and the Company agrees not to proceed against any Fund for the
obligations of another Fund.
11.11. Except as otherwise expressly provided in this Agreement, neither the
Trust nor the underwriter nor any affiliate thereof shall use any trademark,
trade name, service mark or logo of the Company or any of its affiliates, or any
variation of any such trademark, trade name service mark or logo, without the
Company's prior consent, the granting of which shall be at the Company's sole
option. Except as otherwise expressly provided in this Agreement, neither the
Company nor any affiliate thereof shall use any trademark, trade name, service
mark or logo of the Trust or of the Underwriter, or any variation of any such
trademark, trade name, service mark or logo, without the prior consent of either
the Trust or of the Underwriter, as appropriate, the granting of which shall be
at the sole option of the Trust or of the Underwriter, as applicable. 1.1.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Wells Fargo Variable Trust
By:
Name: Richard H. Blank
Title: Assistant Secretary
Allstate Life Insurance Company of New York
By:
Name:
Title:
Stephens Inc.
By:
Name: Richard H. Blank
Title: Senior Vice President
<PAGE>
EXHIBIT A
Separate Accounts and Contracts
Subject to the Participation Agreement
Certificate
NYLU446
Separate Account
Allstate Life of New York Separate Account A
<PAGE>
EXHIBIT B
Funds Subject to the Participation Agreement
Wells Fargo Variable Trust Asset Allocation Fund
Wells Fargo Variable Trust Equity Income Fund
Wells Fargo Variable Trust Growth Fund
10(a) Independent Auditors' Consent
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Pre-Effective Amendment No. 2 to Registration
Statement No. 333-94785 of Allstate Life of New York Seperate Account A of
Allstate Life Insurance Company of New York on Form N-4 of our report dated
February 25, 2000 relating to the financial statements and the related financial
statement schedules of Allstate Life Insurance Company of New York, and our
report dated March 27, 2000 relating to the financial statements of Allstate
Life of New York Seperate Account A, appearing in the Statement of Additional
Information (which is incorporated by reference in the Prospectus of Allstate
Life of New York Seperate Account A of Allstate Life Insurance Company of New
York), which is part of such Registration Statement, and to the reference to us
under the heading "Experts" in such Statement of Additional Information.
Chicago, Illinois
April 24, 2000
<PAGE>
10(b) Consent of Freedman, Levy, Kroll & Simonds
FREEDMAN, LEVY, KROLL & SIMONDS
CONSENT OF
FREEDMAN, LEVY, KROLL & SIMONDS
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the prospectus contained in Pre-Effective Amendment No. 2 to the
Form N-4 Registration Statement of Allstate Life of New York Separate Account A
(File No. 333-94785).
/s/ Freedman, Levy, Kroll & Simonds
FREEDMAN, LEVY, KROLL & SIMONDS
Washington, D.C.
April 21, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AIM Balanced
31-Dec-98 NO. YEARS 1.000
TO
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 8.487243 117.82389
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 117.75723 1177.5723
1.000
FORMULA: 1000*(1+T)= 1177.5723 - (0.85 * 1000 * 0.07)
= 1118.0723
T = 11.81%
R = 11.81%
AIM Capital Appreciation
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 7.001828 142.81985
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 142.75318 1427.5318
1.000
FORMULA: 1000*(1+T)= 1427.5318 - (0.85 * 1000 * 0.07)
= 1368.0318
T = 36.80%
R = 36.80%
AIM Government Securities
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 10.260888 97.45745
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 97.39079 973.9079
1.000
FORMULA: 1000*(1+T)= 973.9079 - (0.85 * 1000 * 0.07)
= 914.4079
T = -8.56%
R = -8.56%
AIM Growth
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 7.487433 133.55712
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 133.49045 1334.9045
1.000
FORMULA: 1000*(1+T)= 1334.9045 - (0.85 * 1000 * 0.07)
= 1275.4045
T = 27.54%
R = 27.54%
AIM High Yield
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 9.161467 109.15282
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 109.08616 1090.8616
1.000
FORMULA: 1000*(1+T)= 1090.8616 - (0.85 * 1000 * 0.07)
= 1031.3616
T = 3.14%
R = 3.14%
AIM Value
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 7.795113 128.28550
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 128.21884 1282.1884
1.000
FORMULA: 1000*(1+T)= 1282.1884 - (0.85 * 1000 * 0.07)
= 1222.6884
T = 22.27%
R = 22.27%
AIM International Equity
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 6.530665 153.12376
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 153.05710 1530.5710
1.000
FORMULA: 1000*(1+T)= 1530.5710 - (0.85 * 1000 * 0.07)
= 1471.0710
T = 47.11%
R = 47.11%
Fidelity Equity Income
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 9.522959 105.00938
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 104.94271 1049.4271
1.000
FORMULA: 1000*(1+T)= 1049.4271 - (0.85 * 1000 * 0.07)
= 989.9271
T = -1.01%
R = -1.01%
Fidelity Growth Opportunities
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 9.900833 101.00160
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 100.93494 1009.3494
1.000
FORMULA: 1000*(1+T)= 1009.3494 - (0.85 * 1000 * 0.07)
= 949.8494
T = -5.02%
R = -5.02%
Fidelity Contrafund
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 8.149162 122.71200
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 122.64534 1226.4534
1.000
FORMULA: 1000*(1+T)= 1226.4534 - (0.85 * 1000 * 0.07)
= 1166.9534
T = 16.70%
R = 16.70%
Fidelity Overseas
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 7.097179 140.90105
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 140.83439 1408.3439
1.000
FORMULA: 1000*(1+T)= 1408.3439 - (0.85 * 1000 * 0.07)
= 1348.8439
T = 34.88%
R = 34.88%
Fidelity Growth
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 7.367472 135.73177
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 135.66510 1356.6510
1.000
FORMULA: 1000*(1+T)= 1356.6510 - (0.85 * 1000 * 0.07)
= 1297.1510
T = 29.72%
R = 29.72%
Templeton Asset
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 8.261606 121.04184
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 120.97517 1209.7517
1.000
FORMULA: 1000*(1+T)= 1209.7517 - (0.85 * 1000 * 0.07)
= 1150.2517
T = 15.03%
R = 15.03%
Templeton International
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 8.215040 121.72795
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 121.66129 1216.6129
1.000
FORMULA: 1000*(1+T)= 1216.6129 - (0.85 * 1000 * 0.07)
= 1157.1129
T = 15.71%
R = 15.71%
Oppenheimer Main Street
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 8.319665 120.19715
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 120.13048 1201.3048
1.000
FORMULA: 1000*(1+T)= 1201.3048 - (0.85 * 1000 * 0.07)
= 1141.8048
T = 14.18%
R = 14.18%
Oppenheimer Aggressive Growth
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 5.514837 181.32902
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 181.26236 1812.6236
1.000
FORMULA: 1000*(1+T)= 1812.6236 - (0.85 * 1000 * 0.07)
= 1753.1236
T = 75.31%
R = 75.31%
Oppenheimer Strategic Bond
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 9.847464 101.54899
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 101.48232 1014.8232
1.000
FORMULA: 1000*(1+T)= 1014.8232 - (0.85 * 1000 * 0.07)
= 955.3232
T = -4.47%
R = -4.47%
Dreyfus Stock Index
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 8.395805 119.10710
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 119.04044 1190.4044
1.000
FORMULA: 1000*(1+T)= 1190.4044 - (0.85 * 1000 * 0.07)
= 1130.9044
T = 13.09%
R = 13.09%
Dreyfus Capital Appreciation
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 9.084246 110.08068
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 110.01402 1100.1402
1.000
FORMULA: 1000*(1+T)= 1100.1402 - (0.85 * 1000 * 0.07)
= 1040.6402
T = 4.06%
R = 4.06%
Dreyfus Socially Responsible
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 7.784191 128.46550
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 128.39883 1283.9883
1.000
FORMULA: 1000*(1+T)= 1283.9883 - (0.85 * 1000 * 0.07)
= 1224.4883
T = 22.45%
R = 22.45%
Delaware Trend
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 5.940521 168.33540
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 168.26874 1682.6874
1.000
FORMULA: 1000*(1+T)= 1682.6874 - (0.85 * 1000 * 0.07)
= 1623.1874
T = 62.32%
R = 62.32%
Delaware Small Cap
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 10.643198 93.95672
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 93.89006 938.9006
1.000
FORMULA: 1000*(1+T)= 938.9006 - (0.85 * 1000 * 0.07)
= 879.4006
T = -12.06%
R = -12.06%
Wells Fargo Asset Allocation
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 9.269203 107.88414
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 107.81747 1078.1747
1.000
FORMULA: 1000*(1+T)= 1078.1747 - (0.85 * 1000 * 0.07)
= 1018.6747
T = 1.87%
R = 1.87%
Wells Fargo Equity Income
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 9.384289 106.56108
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 106.49442 1064.9442
1.000
FORMULA: 1000*(1+T)= 1064.9442 - (0.85 * 1000 * 0.07)
= 1005.4442
T = 0.54%
R = 0.54%
Wells Fargo Growth
12/31/98 NO. YEARS 1.000
TO
12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-98 1000.00 8.407637 118.93948
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 118.87282 1188.7282
1.000
FORMULA: 1000*(1+T)= 1188.7282 - (0.85 * 1000 * 0.07)
= 1129.2282
T = 12.92%
R = 12.92%
AIM Balanced
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 #VALUE! #VALUE!
FEE 31-Dec-95 0.666666667 #VALUE! #VALUE!
FEE 31-Dec-96 0.666666667 #VALUE! #VALUE!
FEE 31-Dec-97 0.666666667 #VALUE! #VALUE!
FEE 31-Dec-98 0.666666667 8.487243 0.07855
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 #VALUE! #VALUE!
5.000
FORMULA: 1000*(1+T)= #VALUE! - (0.85 * 1000 * 0.03)
= #VALUE!
T = N/A
R = N/A
AIM Capital Appreciation
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 3.508349 285.03436
FEE 31-Dec-95 0.666666667 4.701410 0.14180
FEE 31-Dec-96 0.666666667 5.458955 0.12212
FEE 31-Dec-97 0.666666667 6.119228 0.10895
FEE 31-Dec-98 0.666666667 7.001828 0.09521
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 284.49961 2844.9961
5.000
FORMULA: 1000*(1+T)= 2844.9961 - (0.85 * 1000 * 0.03)
= 2819.496056
T = 23.04%
R = 181.95%
AIM Government Securities
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 7.831365 127.69166
FEE 31-Dec-95 0.666666667 8.938032 0.07459
FEE 31-Dec-96 0.666666667 9.028620 0.07384
FEE 31-Dec-97 0.666666667 9.643745 0.06913
FEE 31-Dec-98 0.666666667 10.260888 0.06497
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 127.34247 1273.4247
5.000
FORMULA: 1000*(1+T)= 1273.4247 - (0.85 * 1000 * 0.03)
= 1247.924658
T = 4.53%
R = 24.79%
AIM Growth
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 3.117202 320.80051
FEE 31-Dec-95 0.666666667 4.148988 0.16068
FEE 31-Dec-96 0.666666667 4.838372 0.13779
FEE 31-Dec-97 0.666666667 6.062152 0.10997
FEE 31-Dec-98 0.666666667 7.487433 0.08904
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 320.23637 3202.3637
5.000
FORMULA: 1000*(1+T)= 3202.3637 - (0.85 * 1000 * 0.03)
= 3176.863669
T = 26.01%
R = 217.69%
AIM High Yield
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 #VALUE! #VALUE!
FEE 31-Dec-95 0.666666667 #VALUE! #VALUE!
FEE 31-Dec-96 0.666666667 #VALUE! #VALUE!
FEE 31-Dec-97 0.666666667 #VALUE! #VALUE!
FEE 31-Dec-98 0.666666667 9.161467 0.07277
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 #VALUE! #VALUE!
5.000
FORMULA: 1000*(1+T)= #VALUE! - (0.85 * 1000 * 0.03)
= #VALUE!
T = N/A
R = N/A
AIM Value
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 3.354698 298.08943
FEE 31-Dec-95 0.666666667 4.514127 0.14768
FEE 31-Dec-96 0.666666667 5.127467 0.13002
FEE 31-Dec-97 0.666666667 6.263346 0.10644
FEE 31-Dec-98 0.666666667 7.795113 0.08552
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 297.55309 2975.5309
5.000
FORMULA: 1000*(1+T)= 2975.5309 - (0.85 * 1000 * 0.03)
= 2950.030927
T = 24.16%
R = 195.00%
AIM International Equity
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 3.982711 251.08525
FEE 31-Dec-95 0.666666667 4.611347 0.14457
FEE 31-Dec-96 0.666666667 5.466957 0.12194
FEE 31-Dec-97 0.666666667 5.773499 0.11547
FEE 31-Dec-98 0.666666667 6.530665 0.10208
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 250.53452 2505.3452
5.000
FORMULA: 1000*(1+T)= 2505.3452 - (0.85 * 1000 * 0.03)
= 2479.845183
T = 19.92%
R = 147.98%
Fidelity Equity Income
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 4.922756 203.13824
FEE 31-Dec-95 0.666666667 6.567963 0.10150
FEE 31-Dec-96 0.666666667 7.401111 0.09008
FEE 31-Dec-97 0.666666667 9.210279 0.07238
FEE 31-Dec-98 0.666666667 9.522959 0.07001
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 202.73761 2027.3761
5.000
FORMULA: 1000*(1+T)= 2027.3761 - (0.85 * 1000 * 0.03)
= 2001.876069
T = 14.89%
R = 100.19%
Fidelity Growth Opportunities
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 #VALUE! #VALUE!
FEE 31-Dec-95 0.666666667 5.715657 0.11664
FEE 31-Dec-96 0.666666667 6.651505 0.10023
FEE 31-Dec-97 0.666666667 8.352657 0.07981
FEE 31-Dec-98 0.666666667 9.900833 0.06733
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 #VALUE! #VALUE!
5.000
FORMULA: 1000*(1+T)= #VALUE! - (0.85 * 1000 * 0.03)
= #VALUE!
T = N/A
R = N/A
Fidelity Contrafund
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 #VALUE! #VALUE!
FEE 31-Dec-95 0.666666667 4.587235 0.14533
FEE 31-Dec-96 0.666666667 5.491234 0.12141
FEE 31-Dec-97 0.666666667 6.732263 0.09903
FEE 31-Dec-98 0.666666667 8.149162 0.08181
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 #VALUE! #VALUE!
5.000
FORMULA: 1000*(1+T)= #VALUE! - (0.85 * 1000 * 0.03)
= #VALUE!
T = N/A
R = N/A
Fidelity Overseas
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 4.789626 208.78457
FEE 31-Dec-95 0.666666667 5.191669 0.12841
FEE 31-Dec-96 0.666666667 5.802300 0.11490
FEE 31-Dec-97 0.666666667 6.384198 0.10442
FEE 31-Dec-98 0.666666667 7.097179 0.09393
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 208.27624 2082.7624
5.000
FORMULA: 1000*(1+T)= 2082.7624 - (0.85 * 1000 * 0.03)
= 2057.26236
T = 15.52%
R = 105.73%
Fidelity Growth
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 3.340118 299.39062
FEE 31-Dec-95 0.666666667 4.465384 0.14930
FEE 31-Dec-96 0.666666667 5.058078 0.13180
FEE 31-Dec-97 0.666666667 6.168228 0.10808
FEE 31-Dec-98 0.666666667 7.367472 0.09049
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 298.84429 2988.4429
5.000
FORMULA: 1000*(1+T)= 2988.4429 - (0.85 * 1000 * 0.03)
= 2962.942861
T = 24.26%
R = 196.29%
Templeton Asset
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 4.868662 205.39524
FEE 31-Dec-95 0.666666667 5.893182 0.11313
FEE 31-Dec-96 0.666666667 6.919230 0.09635
FEE 31-Dec-97 0.666666667 7.884449 0.08455
FEE 31-Dec-98 0.666666667 8.261606 0.08069
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 204.95385 2049.5385
5.000
FORMULA: 1000*(1+T)= 2049.5385 - (0.85 * 1000 * 0.03)
= 2024.038492
T = 15.14%
R = 102.40%
Templeton International
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 4.845161 206.39149
FEE 31-Dec-95 0.666666667 5.540796 0.12032
FEE 31-Dec-96 0.666666667 6.789049 0.09820
FEE 31-Dec-97 0.666666667 7.626009 0.08742
FEE 31-Dec-98 0.666666667 8.215040 0.08115
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 205.93773 2059.3773
5.000
FORMULA: 1000*(1+T)= 2059.3773 - (0.85 * 1000 * 0.03)
= 2033.877346
T = 15.26%
R = 103.39%
Oppenheimer Main Street
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 #VALUE! #VALUE!
FEE 31-Dec-95 0.666666667 4.699602 0.14186
FEE 31-Dec-96 0.666666667 6.149800 0.10840
FEE 31-Dec-97 0.666666667 8.046020 0.08286
FEE 31-Dec-98 0.666666667 8.319665 0.08013
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 #VALUE! #VALUE!
5.000
FORMULA: 1000*(1+T)= #VALUE! - (0.85 * 1000 * 0.03)
= #VALUE!
T = N/A
R = N/A
Oppenheimer Aggressive Growth
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 2.900097 344.81605
FEE 31-Dec-95 0.666666667 3.795706 0.17564
FEE 31-Dec-96 0.666666667 4.506388 0.14794
FEE 31-Dec-97 0.666666667 4.969908 0.13414
FEE 31-Dec-98 0.666666667 5.514837 0.12089
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 344.17078 3441.7078
5.000
FORMULA: 1000*(1+T)= 3441.7078 - (0.85 * 1000 * 0.03)
= 3416.207842
T = 27.85%
R = 241.62%
Oppenheimer Strategic Bond
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 7.160742 139.65033
FEE 31-Dec-95 0.666666667 8.156048 0.08174
FEE 31-Dec-96 0.666666667 9.026633 0.07386
FEE 31-Dec-97 0.666666667 9.690650 0.06879
FEE 31-Dec-98 0.666666667 9.847464 0.06770
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 139.29158 1392.9158
5.000
FORMULA: 1000*(1+T)= 1392.9158 - (0.85 * 1000 * 0.03)
= 1367.41577
T = 6.46%
R = 36.74%
Dreyfus Stock Index
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 3.086983 323.94088
FEE 31-Dec-95 0.666666667 4.171434 0.15982
FEE 31-Dec-96 0.666666667 5.048648 0.13205
FEE 31-Dec-97 0.666666667 6.630776 0.10054
FEE 31-Dec-98 0.666666667 8.395805 0.07940
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 323.40241 3234.0241
5.000
FORMULA: 1000*(1+T)= 3234.0241 - (0.85 * 1000 * 0.03)
= 3208.52405
T = 26.26%
R = 220.85%
Dreyfus Capital Appreciation
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 3.413204 292.97985
FEE 31-Dec-95 0.666666667 4.502007 0.14808
FEE 31-Dec-96 0.666666667 5.583640 0.11940
FEE 31-Dec-97 0.666666667 7.062554 0.09439
FEE 31-Dec-98 0.666666667 9.084246 0.07339
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 292.47792 2924.7792
5.000
FORMULA: 1000*(1+T)= 2924.7792 - (0.85 * 1000 * 0.03)
= 2899.279243
T = 23.73%
R = 189.93%
Dreyfus Socially Responsible
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 3.140924 318.37765
FEE 31-Dec-95 0.666666667 4.174625 0.15969
FEE 31-Dec-96 0.666666667 5.001680 0.13329
FEE 31-Dec-97 0.666666667 6.332477 0.10528
FEE 31-Dec-98 0.666666667 7.784191 0.08564
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 317.82708 3178.2708
5.000
FORMULA: 1000*(1+T)= 3178.2708 - (0.85 * 1000 * 0.03)
= 3152.770781
T = 25.82%
R = 215.28%
Delaware Trend
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 2.869849 348.45039
FEE 31-Dec-95 0.666666667 3.945718 0.16896
FEE 31-Dec-96 0.666666667 4.324897 0.15415
FEE 31-Dec-97 0.666666667 5.183810 0.12861
FEE 31-Dec-98 0.666666667 5.940521 0.11222
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 347.81979 3478.1979
5.000
FORMULA: 1000*(1+T)= 3478.1979 - (0.85 * 1000 * 0.03)
= 3452.697873
T = 28.12%
R = 245.27%
Delaware Small Cap
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 5.826033 171.64338
FEE 31-Dec-95 0.666666667 7.126014 0.09355
FEE 31-Dec-96 0.666666667 8.623615 0.07731
FEE 31-Dec-97 0.666666667 11.319712 0.05889
FEE 31-Dec-98 0.666666667 10.643198 0.06264
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 171.28432 1712.8432
5.000
FORMULA: 1000*(1+T)= 1712.8432 - (0.85 * 1000 * 0.03)
= 1687.343208
T = 11.03%
R = 68.73%
Wells Fargo Asset Allocation
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 5.908192 169.25652
FEE 31-Dec-95 0.666666667 7.118115 0.09366
FEE 31-Dec-96 0.666666667 7.481986 0.08910
FEE 31-Dec-97 0.666666667 8.152068 0.08178
FEE 31-Dec-98 0.666666667 9.269203 0.07192
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 168.85339 1688.5339
5.000
FORMULA: 1000*(1+T)= 1688.5339 - (0.85 * 1000 * 0.03)
= 1663.033881
T = 10.71%
R = 66.30%
Wells Fargo Equity Income
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 #VALUE! #VALUE!
FEE 31-Dec-95 0.666666667 #VALUE! #VALUE!
FEE 31-Dec-96 0.666666667 6.421111 0.10382
FEE 31-Dec-97 0.666666667 8.036433 0.08296
FEE 31-Dec-98 0.666666667 9.384289 0.07104
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 #VALUE! #VALUE!
5.000
FORMULA: 1000*(1+T)= #VALUE! - (0.85 * 1000 * 0.03)
= #VALUE!
T = N/A
R = N/A
Wells Fargo Growth
30-Dec-94
TO NO. YEARS 5.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 31-Dec-94 1000.00 4.326401 231.13900
FEE 31-Dec-95 0.666666667 5.455142 0.12221
FEE 31-Dec-96 0.666666667 6.489748 0.10273
FEE 31-Dec-97 0.666666667 7.095659 0.09395
FEE 31-Dec-98 0.666666667 8.407637 0.07929
FEE 31-Dec-99 0.666666667 10.000000 0.06667
RESULTING VALUE 31-Dec-99 10.000000 230.67415 2306.7415
5.000
FORMULA: 1000*(1+T)= 2306.7415 - (0.85 * 1000 * 0.03)
= 2281.24151
T = 17.93%
R = 128.12%
Fidelity Equity Income
29-Dec-89
TO NO. YEARS 10.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 29-Dec-89 1000.00 3.179188 314.54573
FEE 29-Dec-90 0.666666667 2.654137 0.25118
FEE 29-Dec-91 0.666666667 3.379794 0.19725
FEE 29-Dec-92 0.666666667 3.979360 0.16753
FEE 29-Dec-93 0.666666667 4.670934 0.14273
FEE 29-Dec-94 0.666666667 4.926132 0.13533
FEE 29-Dec-95 0.666666667 6.567963 0.10150
FEE 29-Dec-96 0.666666667 7.490119 0.08901
FEE 29-Dec-97 0.666666667 9.040191 0.07374
FEE 29-Dec-98 0.666666667 9.542344 0.06986
FEE 29-Dec-99 0.666666667 9.918997 0.06721
RESULTING VALUE 29-Dec-99 9.918997 313.25038 3107.1295
10.000
FORMULA: 1000*(1+T)= 3107.1295 - (0.85 * 1000 * 0)
= 3107.129546
T = 12.00%
R = 210.71%
Fidelity Overseas
29-Dec-89
TO NO. YEARS 10.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 29-Dec-89 1000.00 3.846816 259.95525
FEE 29-Dec-90 0.666666667 3.767052 0.17697
FEE 29-Dec-91 0.666666667 3.854357 0.17296
FEE 29-Dec-92 0.666666667 3.435309 0.19406
FEE 29-Dec-93 0.666666667 4.476024 0.14894
FEE 29-Dec-94 0.666666667 4.822118 0.13825
FEE 29-Dec-95 0.666666667 5.191669 0.12841
FEE 29-Dec-96 0.666666667 5.777783 0.11538
FEE 29-Dec-97 0.666666667 6.338100 0.10518
FEE 29-Dec-98 0.666666667 6.948723 0.09594
FEE 29-Dec-99 0.666666667 8.962602 0.07438
RESULTING VALUE 29-Dec-99 8.962602 258.60475 2317.7714
10.000
FORMULA: 1000*(1+T)= 2317.7714 - (0.85 * 1000 * 0)
= 2317.771437
T = 8.77%
R = 131.78%
Fidelity Growth
29-Dec-89
TO NO. YEARS 10.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 29-Dec-89 1000.00 2.121813 471.29507
FEE 29-Dec-90 0.666666667 1.838162 0.36268
FEE 29-Dec-91 0.666666667 2.576288 0.25877
FEE 29-Dec-92 0.666666667 2.843451 0.23446
FEE 29-Dec-93 0.666666667 3.378504 0.19733
FEE 29-Dec-94 0.666666667 3.354093 0.19876
FEE 29-Dec-95 0.666666667 4.465384 0.14930
FEE 29-Dec-96 0.666666667 5.112381 0.13040
FEE 29-Dec-97 0.666666667 6.017339 0.11079
FEE 29-Dec-98 0.666666667 7.343345 0.09079
FEE 29-Dec-99 0.666666667 9.947885 0.06702
RESULTING VALUE 29-Dec-99 9.947885 469.49478 4670.4801
10.000
FORMULA: 1000*(1+T)= 4670.4801 - (0.85 * 1000 * 0)
= 4670.480076
T = 16.66%
R = 367.05%
Templeton Asset
29-Dec-89
TO NO. YEARS 10.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 29-Dec-89 1000.00 3.198820 312.61528
FEE 29-Dec-90 0.666666667 2.973820 0.22418
FEE 29-Dec-91 0.666666667 3.521482 0.18931
FEE 29-Dec-92 0.666666667 4.033903 0.16527
FEE 29-Dec-93 0.666666667 4.815322 0.13845
FEE 29-Dec-94 0.666666667 4.908043 0.13583
FEE 29-Dec-95 0.666666667 5.785937 0.11522
FEE 29-Dec-96 0.666666667 6.880513 0.09689
FEE 29-Dec-97 0.666666667 7.885748 0.08454
FEE 29-Dec-98 0.666666667 8.192700 0.08137
FEE 29-Dec-99 0.666666667 9.347471 0.07132
RESULTING VALUE 29-Dec-99 9.347471 311.31289 2909.9882
10.000
FORMULA: 1000*(1+T)= 2909.9882 - (0.85 * 1000 * 0)
= 2909.988224
T = 11.27%
R = 191.00%
Oppenheimer Aggressive Growth
29-Dec-89
TO NO. YEARS 10.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 29-Dec-89 1000.00 1.766505 566.08954
FEE 29-Dec-90 0.666666667 1.437829 0.46366
FEE 29-Dec-91 0.666666667 2.134389 0.31235
FEE 29-Dec-92 0.666666667 2.479841 0.26883
FEE 29-Dec-93 0.666666667 3.133771 0.21274
FEE 29-Dec-94 0.666666667 2.890137 0.23067
FEE 29-Dec-95 0.666666667 3.795706 0.17564
FEE 29-Dec-96 0.666666667 4.448785 0.14985
FEE 29-Dec-97 0.666666667 4.818563 0.13835
FEE 29-Dec-98 0.666666667 5.415561 0.12310
FEE 29-Dec-99 0.666666667 9.892546 0.06739
RESULTING VALUE 29-Dec-99 9.892546 563.94695 5578.8712
10.000
FORMULA: 1000*(1+T)= 5578.8712 - (0.85 * 1000 * 0)
= 5578.871177
T = 18.76%
R = 457.89%
Dreyfus Stock Index
29-Dec-89
TO NO. YEARS 10.000
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
INIT DEPOSIT 29-Dec-89 1000.00 2.218992 450.65507
FEE 29-Dec-90 0.666666667 2.060959 0.32347
FEE 29-Dec-91 0.666666667 2.438327 0.27341
FEE 29-Dec-92 0.666666667 2.839337 0.23480
FEE 29-Dec-93 0.666666667 3.065623 0.21747
FEE 29-Dec-94 0.666666667 3.046527 0.21883
FEE 29-Dec-95 0.666666667 4.171434 0.15982
FEE 29-Dec-96 0.666666667 5.159418 0.12921
FEE 29-Dec-97 0.666666667 6.526799 0.10214
FEE 29-Dec-98 0.666666667 8.480314 0.07861
FEE 29-Dec-99 0.666666667 9.961724 0.06692
RESULTING VALUE 29-Dec-99 9.961724 448.85039 4471.3237
10.000
FORMULA: 1000*(1+T)= 4471.3237 - (0.85 * 1000 * 0)
= 4471.323667
T = 16.16%
R = 347.13%
AIM Balanced
01-May-98
TO NO. YEARS 1.667
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 01-May-98 1000.00 7.682608 130.16413
1 FEE 01-May-99 0.666666667 8.847036 0.07535 0.07
2 FEE 31-Dec-99 0.666666667 10.000000 0.06667 0.06
3 FEE N/A 0 N/A 0.00000 0.05
4 N/A 0 N/A 0.00000 0.04
5 N/A 0 N/A 0.00000 0.03
6 N/A 0 N/A 0.00000 0.02
7 N/A 0 N/A 0.00000 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 130.02211 1300.2211
1.667
FORMULA: 1000*(1+T)= 1300.2211
= 1249.221103
T = 14.28%
R = 24.92%
AIM Capital Appreciation
05-May-93
TO NO. YEARS 6.656
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 05-May-93 1000.00 2.924378 341.95306
1 FEE 05-May-94 0.666666667 3.453897 0.19302 0.07
2 FEE 05-May-95 0.666666667 3.856894 0.17285 0.06
3 FEE 05-May-96 0.666666667 5.227152 0.12754 0.05
4 05-May-97 0.666666667 5.488770 0.12146 0.04
5 05-May-98 0.666666667 6.939144 0.09607 0.03
6 05-May-99 0.666666667 7.193292 0.09268 0.02
7 31-Dec-99 0.666666667 10.000000 0.06667 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 341.08277 3410.8277
6.656
FORMULA: 1000*(1+T)= 3410.8277
= 3402.327705
T = 20.20%
R = 240.23%
AIM Government Securities
05-May-93
TO NO. YEARS 6.656
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 05-May-93 1000.00 8.020218 124.68489
1 FEE 05-May-94 0.666666667 7.872052 0.08469 0.07
2 FEE 05-May-95 0.666666667 8.340065 0.07994 0.06
3 FEE 05-May-96 0.666666667 8.593351 0.07758 0.05
4 05-May-97 0.666666667 9.090251 0.07334 0.04
5 05-May-98 0.666666667 9.782544 0.06815 0.03
6 05-May-99 0.666666667 10.153087 0.06566 0.02
7 31-Dec-99 0.666666667 10.000000 0.06667 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 124.16887 1241.6887
6.656
FORMULA: 1000*(1+T)= 1241.6887
= 1233.188722
T = 3.20%
R = 23.32%
AIM Growth
05-May-93
TO NO. YEARS 6.656
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 05-May-93 1000.00 2.948809 339.11996
1 FEE 05-May-94 0.666666667 3.103156 0.21484 0.07
2 FEE 05-May-95 0.666666667 3.474393 0.19188 0.06
3 FEE 05-May-96 0.666666667 4.394389 0.15171 0.05
4 05-May-97 0.666666667 5.182378 0.12864 0.04
5 05-May-98 0.666666667 6.989077 0.09539 0.03
6 05-May-99 0.666666667 7.990645 0.08343 0.02
7 31-Dec-99 0.666666667 10.000000 0.06667 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 338.18741 3381.8741
6.656
FORMULA: 1040*(1+T)= 3381.8741
= 3373.374141
T = 20.04%
R = 237.34%
AIM High Yield
01-May-98
TO NO. YEARS 1.667
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 01-May-98 1000.00 10.461110 95.59215
1 FEE 01-May-99 0.666666667 9.805130 0.06799 0.07
2 FEE 31-Dec-99 0.666666667 10.000000 0.06667 0.06
3 FEE N/A 0 N/A 0.00000 0.05
4 N/A 0 N/A 0.00000 0.04
5 N/A 0 N/A 0.00000 0.03
6 N/A 0 N/A 0.00000 0.02
7 N/A 0 N/A 0.00000 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 95.45749 954.5749
1.667
FORMULA: 1000*(1+T)= 954.5749
= 903.5749207
T = -5.90%
R = -9.64%
AIM Value
05-May-93
TO NO. YEARS 6.656
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 05-May-93 1000.00 2.867015 348.79483
1 FEE 05-May-94 0.666666667 3.336170 0.19983 0.07
2 FEE 05-May-95 0.666666667 3.777920 0.17646 0.06
3 FEE 05-May-96 0.666666667 4.558917 0.14623 0.05
4 05-May-97 0.666666667 5.494045 0.12134 0.04
5 05-May-98 0.666666667 7.077952 0.09419 0.03
6 05-May-99 0.666666667 8.483391 0.07858 0.02
7 31-Dec-99 0.666666667 10.000000 0.06667 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 347.91151 3479.1151
6.656
FORMULA: 1000*(1+T)= 3479.1151
= 3470.615149
T = 20.56%
R = 247.06%
AIM International Equity
05-May-93
TO NO. YEARS 6.656
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 05-May-93 1000.00 3.475749 287.70777
1 FEE 05-May-94 0.666666667 4.036707 0.16515 0.07
2 FEE 05-May-95 0.666666667 4.179648 0.15950 0.06
3 FEE 05-May-96 0.666666667 5.015080 0.13293 0.05
4 05-May-97 0.666666667 5.546750 0.12019 0.04
5 05-May-98 0.666666667 6.802686 0.09800 0.03
6 05-May-99 0.666666667 6.632034 0.10052 0.02
7 31-Dec-99 0.666666667 10.000000 0.06667 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 286.86481 2868.6481
6.656
FORMULA: 1000*(1+T)= 2868.6481
= 2860.148053
T = 17.10%
R = 186.01%
Fidelity Equity Income
23-Oct-86
TO NO. YEARS 13.188
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 23-Oct-86 1000.00 2.333087 428.61668
1 FEE 23-Oct-87 0.666666667 2.276149 0.29289 0.07
2 FEE 23-Oct-88 0.666666667 2.789247 0.23901 0.06
3 FEE 23-Oct-89 0.666666667 3.198600 0.20842 0.05
4 23-Oct-90 0.666666667 2.488968 0.26785 0.04
5 23-Oct-91 0.666666667 3.316677 0.20100 0.03
6 23-Oct-92 0.666666667 3.710151 0.17969 0.02
7 23-Oct-93 0.666666667 4.627380 0.14407 0.01
8 23-Oct-94 0.666666667 5.008061 0.13312 0
9 23-Oct-95 0.666666667 6.174773 0.10797 0
10 23-Oct-96 0.666666667 7.086960 0.09407 0
11 23-Oct-97 0.666666667 9.026736 0.07385 0
12 23-Oct-98 0.666666667 8.640481 0.07716 0
13 23-Oct-99 0.666666667 9.661437 0.06900 0
14 FEE 31-Dec-99 0.666666667 10.000000 0.06667 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 426.46190 4264.6190
13.188
FORMULA: 1000*(1+T)= 4264.6190
= 4264.619032
T = 11.62%
R = 326.46%
Fidelity Growth Opportunities
31-Jan-95
TO NO. YEARS 4.914
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 31-Jan-95 1000.00 4.401761 227.18180
1 FEE 31-Jan-96 0.666666667 5.792304 0.11510 0.07
2 FEE 31-Jan-97 0.666666667 6.959742 0.09579 0.06
3 FEE 31-Jan-98 0.666666667 8.378752 0.07957 0.05
4 31-Jan-99 0.666666667 9.981873 0.06679 0.04
5 31-Dec-99 0.666666667 10.000000 0.06667 0.03
6 N/A 0 N/A 0.00000 0.02
7 N/A 0 N/A 0.00000 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 226.75790 2267.5790
4.914
FORMULA: 1000*(1+T)= 2267.5790
= 2242.078979
T = 17.86%
R = 124.21%
Fidelity Contrafund
03-Jan-95
TO NO. YEARS 4.991
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 03-Jan-95 1000.00 3.323847 300.85621
1 FEE 03-Jan-96 0.666666667 4.553190 0.14642 0.07
2 FEE 03-Jan-97 0.666666667 5.487353 0.12149 0.06
3 FEE 03-Jan-98 0.666666667 6.721904 0.09918 0.05
4 03-Jan-99 0.666666667 8.085530 0.08245 0.04
5 31-Dec-99 0.666666667 10.000000 0.06667 0.03
6 N/A 0 N/A 0.00000 0.02
7 N/A 0 N/A 0.00000 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 300.34000 3003.4000
4.991
FORMULA: 1000*(1+T)= 3003.4000
= 2977.90001
T = 24.44%
R = 197.79%
Fidelity Overseas
30-Jan-87
TO NO. YEARS 12.917
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 30-Jan-87 1000.00 3.088029 323.83116
1 FEE 30-Jan-88 0.666666667 2.785975 0.23929 0.07
2 FEE 30-Jan-89 0.666666667 3.083914 0.21618 0.06
3 FEE 30-Jan-90 0.666666667 3.846816 0.17330 0.05
4 30-Jan-91 0.666666667 3.735952 0.17845 0.04
5 30-Jan-92 0.666666667 3.984198 0.16733 0.03
6 30-Jan-93 0.666666667 3.611132 0.18461 0.02
7 30-Jan-94 0.666666667 4.767208 0.13984 0.01
8 30-Jan-95 0.666666667 4.789626 0.13919 0
9 30-Jan-96 0.666666667 5.191669 0.12841 0
10 30-Jan-97 0.666666667 5.802300 0.11490 0
11 30-Jan-98 0.666666667 6.587120 0.10121 0
12 30-Jan-99 0.666666667 7.189194 0.09273 0
13 31-Dec-99 0.666666667 10.000000 0.06667 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 321.88905 3218.8905
12.917
FORMULA: 1000*(1+T)= 3218.8905
= 3218.890468
T = 9.47%
R = 221.89%
Fidelity Growth
09-Oct-86
TO NO. YEARS 13.227
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 09-Oct-86 1000.00 1.397712 715.45497
1 FEE 09-Oct-87 0.666666667 1.761539 0.37846 0.07
2 FEE 09-Oct-88 0.666666667 1.657884 0.40212 0.06
3 FEE 09-Oct-89 0.666666667 2.180978 0.30567 0.05
4 09-Oct-90 0.666666667 1.718208 0.38800 0.04
5 09-Oct-91 0.666666667 2.344217 0.28439 0.03
6 09-Oct-92 0.666666667 2.474144 0.26945 0.02
7 09-Oct-93 0.666666667 3.373313 0.19763 0.01
8 09-Oct-94 0.666666667 3.199926 0.20834 0
9 09-Oct-95 0.666666667 4.355117 0.15308 0
10 09-Oct-96 0.666666667 5.034975 0.13241 0
11 09-Oct-97 0.666666667 6.379200 0.10451 0
12 09-Oct-98 0.666666667 5.491445 0.12140 0
13 09-Oct-99 0.666666667 8.404125 0.07933 0
14 FEE 31-Dec-99 0.666666667 10.000000 0.06667 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 712.36353 7123.6353
13.227
FORMULA: 1000*(1+T)= 7123.6353
= 7123.635289
T = 16.00%
R = 612.36%
Templeton Asset
24-Aug-88
TO NO. YEARS 11.351
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 24-Aug-88 1000.00 2.911438 343.47288
1 FEE 24-Aug-89 0.666666667 3.252637 0.20496 0.07
2 FEE 24-Aug-90 0.666666667 3.436356 0.19400 0.06
3 FEE 24-Aug-91 0.666666667 3.488517 0.19110 0.05
4 24-Aug-92 0.666666667 4.114640 0.16202 0.04
5 24-Aug-93 0.666666667 4.551310 0.14648 0.03
6 24-Aug-94 0.666666667 5.003545 0.13324 0.02
7 24-Aug-95 0.666666667 5.613891 0.11875 0.01
8 24-Aug-96 0.666666667 6.166146 0.10812 0
9 24-Aug-97 0.666666667 8.380997 0.07955 0
10 24-Aug-98 0.666666667 8.673086 0.07687 0
11 24-Aug-99 0.666666667 9.166109 0.07273 0
12 31-Dec-99 0.666666667 10.000000 0.06667 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 341.91839 3419.1839
11.351
FORMULA: 1000*(1+T)= 3419.1839
= 3419.18393
T = 11.44%
R = 241.92%
Templeton International
01-May-92
TO NO. YEARS 7.666
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 01-May-92 1000.00 3.703382 270.02345
1 FEE 01-May-93 0.666666667 3.793019 0.17576 0.07
2 FEE 01-May-94 0.666666667 4.863811 0.13707 0.06
3 FEE 01-May-95 0.666666667 4.992362 0.13354 0.05
4 01-May-96 0.666666667 5.989550 0.11130 0.04
5 01-May-97 0.666666667 7.025099 0.09490 0.03
6 01-May-98 0.666666667 8.900134 0.07491 0.02
7 01-May-99 0.666666667 8.925811 0.07469 0.01
8 31-Dec-99 0.666666667 10.000000 0.06667 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 269.15462 2691.5462
7.666
FORMULA: 1000*(1+T)= 2691.5462
= 2691.546242
T = 13.79%
R = 169.15%
Oppenheimer Main Street
05-Jul-95
TO NO. YEARS 4.490
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 05-Jul-95 1000.00 3.774832 264.91245
1 FEE 05-Jul-96 0.666666667 5.419791 0.12301 0.07
2 FEE 05-Jul-97 0.666666667 7.123446 0.09359 0.06
3 FEE 05-Jul-98 0.666666667 9.082962 0.07340 0.05
4 05-Jul-99 0.666666667 9.564101 0.06971 0.04
5 31-Dec-99 0.666666667 10.000000 0.06667 0.03
6 N/A 0 N/A 0.00000 0.02
7 N/A 0 N/A 0.00000 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 264.48609 2644.8609
4.490
FORMULA: 1000*(1+T)= 2644.8609
= 2619.360888
T = 23.92%
R = 161.94%
Oppenheimer Aggressive Growth
15-Aug-86
TO NO. YEARS 13.377
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 15-Aug-86 1000.00 1.132569 882.94841
1 FEE 15-Aug-87 0.666666667 1.464679 0.45516 0.07
2 FEE 15-Aug-88 0.666666667 1.323189 0.50383 0.06
3 FEE 15-Aug-89 0.666666667 1.783457 0.37381 0.05
4 15-Aug-90 0.666666667 1.605202 0.41532 0.04
5 15-Aug-91 0.666666667 1.862395 0.35796 0.03
6 15-Aug-92 0.666666667 2.031188 0.32822 0.02
7 15-Aug-93 0.666666667 2.756036 0.24189 0.01
8 15-Aug-94 0.666666667 2.762141 0.24136 0
9 15-Aug-95 0.666666667 3.463406 0.19249 0
10 15-Aug-96 0.666666667 4.246956 0.15698 0
11 15-Aug-97 0.666666667 4.887376 0.13641 0
12 15-Aug-98 0.666666667 4.984900 0.13374 0
13 15-Aug-99 0.666666667 6.606625 0.10091 0
14 FEE 31-Dec-99 0.666666667 10.000000 0.06667 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 879.24368 8792.4368
13.377
FORMULA: 1000*(1+T)= 8792.4368
= 8792.436826
T = 17.65%
R = 779.24%
Oppenheimer Strategic Bond
03-May-93
TO NO. YEARS 6.661
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 03-May-93 1000.00 6.893024 145.07421
1 FEE 03-May-94 0.666666667 7.182131 0.09282 0.07
2 FEE 03-May-95 0.666666667 7.476865 0.08916 0.06
3 FEE 03-May-96 0.666666667 8.270492 0.08061 0.05
4 03-May-97 0.666666667 9.092971 0.07332 0.04
5 03-May-98 0.666666667 9.949491 0.06701 0.03
6 03-May-99 0.666666667 10.022366 0.06652 0.02
7 31-Dec-99 0.666666667 10.000000 0.06667 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 144.53811 1445.3811
6.661
FORMULA: 1000*(1+T)= 1445.3811
= 1436.881072
T = 5.59%
R = 43.69%
Dreyfus Stock Index
29-Sep-89
TO NO. YEARS 10.253
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 29-Sep-89 1000.00 2.178817 458.96466
1 FEE 29-Sep-90 0.666666667 1.951077 0.34169 0.07
2 FEE 29-Sep-91 0.666666667 2.559236 0.26049 0.06
3 FEE 29-Sep-92 0.666666667 2.716705 0.24540 0.05
4 29-Sep-93 0.666666667 3.068037 0.21729 0.04
5 29-Sep-94 0.666666667 3.166982 0.21051 0.03
6 29-Sep-95 0.666666667 3.953637 0.16862 0.02
7 29-Sep-96 0.666666667 4.436178 0.15028 0.01
8 29-Sep-97 0.666666667 6.338526 0.10518 0
9 29-Sep-98 0.666666667 7.166407 0.09303 0
10 29-Sep-99 0.666666667 8.640660 0.07715 0
11 31-Dec-99 0.666666667 10.000000 0.06667 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 457.02835 4570.2835
10.253
FORMULA: 1000*(1+T)= 4570.2835
= 4570.28352
T = 15.97%
R = 357.03%
Dreyfus Capital Appreciation
05-Apr-93
TO NO. YEARS 6.738
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 05-Apr-93 1000.00 3.171403 315.31786
1 FEE 05-Apr-94 0.666666667 3.222692 0.20687 0.07
2 FEE 05-Apr-95 0.666666667 3.658669 0.18222 0.06
3 FEE 05-Apr-96 0.666666667 4.751864 0.14030 0.05
4 05-Apr-97 0.666666667 5.742877 0.11609 0.04
5 05-Apr-98 0.666666667 8.122797 0.08207 0.03
6 05-Apr-99 0.666666667 9.365604 0.07118 0.02
7 31-Dec-99 0.666666667 10.000000 0.06667 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 314.45247 3144.5247
6.738
FORMULA: 1000*(1+T)= 3144.5247
= 3136.024714
T = 18.49%
R = 213.60%
Dreyfus Socially Responsible
07-Oct-93
TO NO. YEARS 6.231
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 07-Oct-93 1000.00 2.927960 341.53472
1 FEE 07-Oct-94 0.666666667 3.146194 0.21190 0.07
2 FEE 07-Oct-95 0.666666667 4.048861 0.16466 0.06
3 FEE 07-Oct-96 0.666666667 4.781486 0.13943 0.05
4 07-Oct-97 0.666666667 6.611982 0.10083 0.04
5 07-Oct-98 0.666666667 6.071100 0.10981 0.03
6 07-Oct-99 0.666666667 8.640553 0.07716 0.02
7 31-Dec-99 0.666666667 10.000000 0.06667 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 340.66428 3406.6428
6.231
FORMULA: 1000*(1+T)= 3406.6428
= 3398.14283
T = 21.69%
R = 239.81%
Delaware Trend
27-Dec-93
TO NO. YEARS 6.010
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 27-Dec-93 1000.00 2.860485 349.59107
1 FEE 27-Dec-94 0.666666667 2.850369 0.23389 0.07
2 FEE 27-Dec-95 0.666666667 3.898140 0.17102 0.06
3 FEE 27-Dec-96 0.666666667 4.280893 0.15573 0.05
4 27-Dec-97 0.666666667 4.877596 0.13668 0.04
5 27-Dec-98 0.666666667 5.749386 0.11595 0.03
6 27-Dec-99 0.666666667 9.585375 0.06955 0.02
7 31-Dec-99 0.666666667 10.000000 0.06667 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 348.64157 3486.4157
6.010
FORMULA: 1000*(1+T)= 3486.4157
= 3477.915747
T = 23.05%
R = 247.79%
Delaware Small Cap
27-Dec-93
TO NO. YEARS 6.010
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 27-Dec-93 1000.00 5.733634 174.40946
1 FEE 27-Dec-94 0.666666667 5.798318 0.11498 0.07
2 FEE 27-Dec-95 0.666666667 7.086497 0.09408 0.06
3 FEE 27-Dec-96 0.666666667 8.547463 0.07800 0.05
4 27-Dec-97 0.666666667 10.993103 0.06064 0.04
5 27-Dec-98 0.666666667 10.218613 0.06524 0.03
6 27-Dec-99 0.666666667 9.649748 0.06909 0.02
7 31-Dec-99 0.666666667 10.000000 0.06667 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 173.86077 1738.6077
6.010
FORMULA: 1000*(1+T)= 1738.6077
= 1730.107733
T = 9.55%
R = 73.01%
Wells Fargo Asset Allocation
15-Apr-94
TO NO. YEARS 5.711
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 15-Apr-94 1000.00 5.894177 169.65897
1 FEE 15-Apr-95 0.666666667 6.344930 0.10507 0.07
2 FEE 15-Apr-96 0.666666667 7.213362 0.09242 0.06
3 FEE 15-Apr-97 0.666666667 7.350374 0.09070 0.05
4 15-Apr-98 0.666666667 8.926162 0.07469 0.04
5 15-Apr-99 0.666666667 9.476044 0.07035 0.03
6 31-Dec-99 0.666666667 10.000000 0.06667 0.02
7 N/A 0 N/A 0.00000 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 169.15907 1691.5907
5.711
FORMULA: 1000*(1+T)= 1691.5907
= 1674.590737
T = 9.45%
R = 67.46%
Wells Fargo Equity Income
06-May-96
TO NO. YEARS 3.652
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 06-May-96 1000.00 5.890710 169.75882
1 FEE 06-May-97 0.666666667 6.793753 0.09813 0.07
2 FEE 06-May-98 0.666666667 9.063448 0.07356 0.06
3 FEE 06-May-99 0.666666667 10.295835 0.06475 0.05
4 31-Dec-99 0.666666667 10.000000 0.06667 0.04
5 N/A 0 N/A 0.00000 0.03
6 N/A 0 N/A 0.00000 0.02
7 N/A 0 N/A 0.00000 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 169.45572 1694.5572
3.652
FORMULA: 1000*(1+T)= 1694.5572
= 1660.55721
T = 14.90%
R = 66.06%
Wells Fargo Growth
12-Apr-94
TO NO. YEARS 5.719
31-Dec-99
TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES
0 INIT DEPOSIT 12-Apr-94 1000.00 4.178689 239.30951
1 FEE 12-Apr-95 0.666666667 4.639599 0.14369 0.07
2 FEE 12-Apr-96 0.666666667 5.760885 0.11572 0.06
3 FEE 12-Apr-97 0.666666667 6.411601 0.10398 0.05
4 12-Apr-98 0.666666667 7.957512 0.08378 0.04
5 12-Apr-99 0.666666667 8.811992 0.07565 0.03
6 31-Dec-99 0.666666667 10.000000 0.06667 0.02
7 N/A 0 N/A 0.00000 0.01
8 N/A 0 N/A 0.00000 0
9 N/A 0 N/A 0.00000 0
10 N/A 0 N/A 0.00000 0
11 N/A 0 N/A 0.00000 0
12 N/A 0 N/A 0.00000 0
13 N/A 0 N/A 0.00000 0
14 FEE N/A 0 N/A 0.00000 0
15 FEE N/A 0 N/A 0.00000 0
RESULTING VALUE 31-Dec-99 10.000000 238.72001 2387.2001
5.719
FORMULA: 1000*(1+T)= 2387.2001
= 2370.200148
T = 16.29%
R = 137.02%
</TABLE>
