As filed with the Securities and Exchange
Commission on January 31, 2001 Registration No. 33-63657
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 9
TO
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Aetna Insurance Company of America
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Florida
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06-1286272
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5100 West Lemon Street, Suite 213, Tampa, Florida 33609
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Julie E. Rockmore, Counsel
Aetna Insurance Company of America
151 Farmington Avenue, TS31, Hartford, Connecticut 06156
(860) 273-4686
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(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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The annuities covered by this registration statement are to be issued from time
to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [XX]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box. [XX]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
_____________________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [ ] _____________________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________________
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CROSS REFERENCE SHEET
PURSUANT TO REGULATION S-K
ITEM 501(B)
FORM S-2
ITEM NO. INFORMATION REQUIRED IN PROSPECTUS LOCATION
-------- ---------------------------------- --------
1 Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus................ Outside Front Cover
2 Inside Front and Outside Back Cover
Pages of Prospectus.................................... Table of Contents (inside front
cover)
3 Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges........................... Contract Overview
4 Use of Proceeds........................................ Purchase; Investments
5 Determination of Offering Price........................ Not Applicable
6 Dilution............................................... Not Applicable
7 Selling Security Holders............................... Not Applicable
8 Plan of Distribution................................... Other Topics - Contract
Distribution
9 Description of Securities to be Registered............. Guaranteed Terms and
Guaranteed Interest Rates
10 Interests of Named Experts and Counsel................. Not Applicable
11 Information with Respect to the
Registrant............................................. Not Applicable
12 Incorporation of Certain Information by Reference...... Other Topics - Incorporation of
Certain Documents by Reference
13 Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................................ Not Applicable
PROSPECTUS - MAY 1, 2001
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THE CONTRACT. The contract described in this prospectus is a group or
individual, single purchase payment, modified guaranteed deferred annuity
contract issued by Aetna Insurance Company of America (the Company, we, us,
our). The contract is available as a nonqualified deferred annuity.
Additionally, the contract is available as a rollover to a traditional
Individual Retirement Annuity (IRA) under section 408(b) of the Internal Revenue
Code of 1986, as amended (Tax Code) or a rollover to a Roth IRA under Tax Code
section 408A. See "Purchase" in this prospectus for additional information.
The contract is not offered for sale in the State of New York.
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WHY READING THIS PROSPECTUS IS IMPORTANT. This prospectus contains facts about
the contract that you should know before investing. The information will help
you determine if the contract is right for you. Read this prospectus carefully.
If you do invest in the contract, retain this document for future reference.
TABLE OF CONTENTS...................PAGE 3
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HOW IT WORKS. Upon purchase, you may direct your purchase payment to different
guaranteed terms ranging up to and including twenty years. Each guaranteed term
has its own guaranteed interest rate. When the guaranteed term(s) end, you can
reinvest in another guaranteed term, begin receiving income payments, or
withdraw your full account value.
WITHDRAWALS. You may withdraw all or part of your accumulated funds at any
time. WITHDRAWALS PRIOR TO THE END OF A GUARANTEED TERM MAY BE SUBJECT TO A
MARKET VALUE ADJUSTMENT AND CERTAIN FEES. UPON A FULL WITHDRAWAL, YOU COULD,
THEREFORE, RECEIVE LESS THAN YOUR PURCHASE PAYMENT. SEE THE "MARKET VALUE
ADJUSTMENT" SECTION, P. 16, AND "FEES" SECTION, P. 10, IN THIS PROSPECTUS FOR
ADDITIONAL INFORMATION.
ADDITIONAL DISCLOSURE INFORMATION. Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of
these securities or passed on the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense. We do not intend
for this prospectus to be an offer to sell or a solicitation of an offer to
buy these securities in any state that does not permit their sale. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. The contract is not a deposit with, obligation
of, or guaranteed or endorsed by any bank, nor is it insured by the FDIC.
Our Home Office: Our Service Center:
Aetna Insurance Company of America Aetna Insurance Company of America
5100 West Lemon Street 151 Farmington Avenue
Suite 213 Hartford, Connecticut 06156
Tampa, Florida 33609 1-800-262-3862
1-813-261-9582
PRO.63657-01
TABLE OF CONTENTS
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CONTRACT OVERVIEW.........................................................4
Questions: Contacting the Company (sidebar)
Contract Design
Who's Who
Contract Phases
Contract Facts
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GUARANTEED TERMS AND GUARANTEED INTEREST RATES ...........................6
YOUR CHOICES AT THE END OF A GUARANTEED TERM .............................8
PURCHASE .................................................................8
RIGHT TO CANCEL ..........................................................9
FEES ....................................................................10
WITHDRAWALS .............................................................13
SYSTEMATIC DISTRIBUTION OPTIONS .........................................14
MARKET VALUE ADJUSTMENT (MVA) ...........................................16
DEATH BENEFIT ...........................................................17
INCOME PHASE ............................................................18
INVESTMENTS .............................................................21
TAXATION ................................................................23
OTHER TOPICS ............................................................29
Contract Distribution-- Contract Modification-- Transfer of Ownership;
Assignment--Involuntary Terminations-- Legal Matters and Proceedings--
Experts-- Getting Further Information-- Incorporation of Certain Documents by
Reference--Inquiries
APPENDIX I--CALCULATING A MARKET VALUE ADJUSTMENT (MVA) .................33
3
CONTRACT OVERVIEW
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QUESTIONS: CONTACTING THE COMPANY. The following is intended as a summary. Please read each section of this prospectus
To answer your questions, contact for additional detail.
your sales representative or write
or call our Service Center: CONTRACT DESIGN
The contract described in this prospectus is a group or individual,
Aetna Insurance single purchase payment, modified guaranteed deferred annuity
Company of America contract issued by Aetna Insurance Company of America. It is intended
151 Farmington Avenue to be used as a retirement savings vehicle that allows you to invest in
Hartford, CT 06156-1277 fixed interest options in order to help meet long-term financial goals.
1-800-262-3862 WHO'S WHO
The contract holder (you): The person to whom we issue an
individual contract or a certificate under a group contract.
The Company (we, us, our): Aetna Insurance Company of America. We issue the contract.
The contract: Both individual contracts and certificates under a
group contract are referred to in this prospectus as the contract.
CONTRACT PHASES
THE ACCUMULATION PHASE
- At Investment. Upon purchase, you may direct your purchase
payment to different guaranteed terms ranging up to and
including twenty years. Each guaranteed term has its own
guaranteed interest rate. Generally, your purchase
payment will earn interest at the guaranteed interest rate(s)
for the duration of the guaranteed term(s) you select.
If you withdraw or transfer amounts prior to the end of a
guaranteed term, those amounts may be subject to a market
value adjustment and certain fees. See "Market Value
Adjustment" and "Fees."
- At Maturity. We will notify you at least 18 days before the
guaranteed term ends. If you do not make any election before
the guaranteed term ends, we will automatically renew the
contract for a guaranteed term of the same or similar
duration. If you do not want to automatically renew, contact us
before the guaranteed term ends. Prior to the end of a
guaranteed term, you can elect to reinvest in a different
guaranteed term, begin income phase payments, or withdraw the
full amount available at maturity.
THE INCOME PHASE
You may start receiving income phase payments any time after the first
year of the contract. Several payment options are available. See
"Income Phase." In general, you may receive payments for a specified
period of time or for life; receive payments monthly, quarterly,
semi-annually or annually; and select an option that provides a
death benefit to beneficiaries.
4
CONTRACT FACTS
FREE LOOK/RIGHT TO CANCEL: You may cancel the contract within ten days of
receipt (or as otherwise provided by state law). See "Right to Cancel."
DEATH BENEFIT: A beneficiary may receive a benefit in the event of your death
prior to the income phase. Benefits during the income phase depend upon the
payment option selected. See "Death Benefit" and "Income Phase."
WITHDRAWALS: During the accumulation phase, you may withdraw all or part of
your account value. Amounts withdrawn may be subject to a market value
adjustment, early withdrawal charge, maintenance fee, tax withholding and
taxation. See "Market Value Adjustment," "Withdrawals," "Fees" and
"Taxation."
SYSTEMATIC DISTRIBUTION OPTIONS: You may elect to receive regular payments
from your account, while retaining the account in the accumulation phase.
See "Systematic Distribution Options."
FEES: Certain fees may be deducted from your account value. See "Fees."
TAXATION: You will not generally pay taxes on any earnings from the annuity
contract described in this prospectus until they are withdrawn. Tax-qualified
retirement arrangements (e.g., IRAs) also defer payment of taxes on earnings
until they are withdrawn. If you are considering funding a tax-qualified
retirement arrangement with an annuity contract, you should know that the
annuity contract does not provide any additional tax deferral of earnings
beyond the tax deferral provided by the tax-qualified retirement arrangement.
However, annuities do provide other features and benefits which may be
valuable to you. You should discuss your alternatives with your financial
representative.
Taxes will generally be due when you receive a distribution. Tax penalties
may apply in some circumstances. See "Taxation."
MARKET VALUE ADJUSTMENT (MVA): If you withdraw all or part of your account
value before a guaranteed term is completed, an MVA may apply. The MVA
reflects the change in the value of the investment due to changes in interest
rates since the date of investment, and may be positive or negative. See
"Market Value Adjustment."
5
GUARANTEED TERMS AND GUARANTEED INTEREST RATES
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The contract offers fixed interest options called guaranteed terms. On
the application or enrollment form, 0you select the guaranteed term(s)
you want to invest in from among the guaranteed terms we offer at that
time. Your purchase payment earns interest at the guaranteed interest
rate applicable to that guaranteed term.
GUARANTEED TERMS
START DATE. Guaranteed terms always start on the first business day of the month.
LENGTH. Guaranteed terms are offered at our discretion for various lengths of time
ranging up to and including twenty years.
MINIMUM PAYMENTS. Your single purchase payment must be at least
$10,000. You may divide your single purchase payment among any of the
various guaranteed terms we offer, but you must invest at least $1,000
in any single guaranteed term.
GUARANTEED INTEREST RATES
We state the guaranteed interest rates as an effective annual rate of
return. In other words, we credit the interest you earn on your
purchase payment at a rate that provides the guaranteed rate of
return over a one year period, assuming you make no withdrawals.
Guaranteed interest rates will never be less than the minimum guaranteed
interest rate stated in the contract. We reserve the right to
offer, from time to time, guaranteed interest rates to prospective
investors that are higher than those offered to current contract holders
with respect to guaranteed terms of the same duration.
ONE GUARANTEED TERM/MULTIPLE GUARANTEED INTEREST RATES. More than
one guaranteed interest rate may be applicable during a guaranteed term
greater than one year. For example, a guaranteed term of five years may
apply one guaranteed interest rate for the first year, a different
guaranteed interest rate for the next two years, and a third
guaranteed interest rate for the last two years.
EXAMPLE OF INTEREST CREDITING AT THE GUARANTEED INTEREST RATE. The
example below shows how interest is credited during a guaranteed term.
The hypothetical guaranteed interest rate used in this example is
illustrative only and is not intended to predict future
guaranteed interest rates to be offered under the contract. Actual
guaranteed interest rates offered may be more or less than those
shown. The example assumes no withdrawals of any amount during the
entire seven-year guaranteed term illustrated. The example does not
reflect any market value adjustment, federal income taxes, possible tax
penalties, or deductions of any early withdrawal charge, premium
taxes, or maintenance fees. See "Withdrawals," "Market Value
Adjustment," "Fees" and "Taxation."
6
EXAMPLE:
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Purchase payment: $20,000
Guaranteed term: 7 years
Guaranteed interest rate: 6.00% per year
The guaranteed interest rate is applied in this example by using the formula:
1 + the guaranteed interest rate = 1.06
Account Value at End of Interest Earned at End of
Each Contract Year Each Contract Year
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Contract year 1 = $21,200.00 Interest at end of contract year
($20,000.00 x 1.06) 1 = $1,200.00
Contract year 2 = $22,472.00 Interest at end of contract year
($21,200.00 x 1.06) 2 = $1,272.00
Contract year 3 = $23,820.32 Interest at end of contract year
($22,472.00 x 1.06) 3 = $1,348.32
Contract year 4 = $25,249.54 Interest at end of contract year
($23,820.32 x 1.06) 4 = $1,429.22
Contract year 5 = $26,764.51 Interest at end of contract year
($25,249.54 x 1.06) 5 = $1,514.97
Contract year 6 = $28,370.38 Interest at end of contract year
($26,764.51 x 1.06) 6 = $1,605.87
End of guaranteed term = $30,072.61 Interest at end of contract year
($28,370.38 x 1.06) 7 = $1,702.23
Total interest credited in guaranteed term = $10,072.61 ($30,072.61 - $20,000)
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DETERMINATION OF GUARANTEED INTEREST RATES. We will periodically determine the
guaranteed interest rates we offer at our sole discretion. We have no specific
formula for determining the rate of interest we will declare as future
guaranteed interest rates. Our determination of guaranteed interest rates is
influenced by, but does not necessarily correspond to, interest rates available
on the types of debt instruments in which we intend to invest the amounts
attributable to the contract. See "Investments." The Company's management will
also consider various factors in determining guaranteed interest rates for a
given guaranteed term, including some or all of the following:
- - Regulatory and tax requirements;
- - Sales commissions;
- - Administrative expenses;
- - General economic trends; and
- - Competitive factors.
THE COMPANY'S MANAGEMENT DETERMINES THE GUARANTEED INTEREST RATES WE WILL OFFER.
WE CANNOT PREDICT NOR GUARANTEE FUTURE LEVELS OF GUARANTEED INTEREST RATES ABOVE
THE CONTRACTUALLY GUARANTEED MINIMUM RATE NOR GUARANTEE WHAT RATES WILL BE
OFFERED IN THE FUTURE.
7
YOUR CHOICES AT THE END OF A GUARANTEED TERM
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At least 18 calendar days prior to the end of a guaranteed term, we
will notify you that the guaranteed term is about to end. At the end of
a guaranteed term, you can do three things with the amount you have
accumulated for that guaranteed term:
- Reinvest all or part of it in another guaranteed term;
- Withdraw all or part of it; or
- Use all or part of it to start your income phase payments.
These choices can also be combined. For example, you can withdraw part
of the amount you have accumulated and reinvest the balance or reinvest
part and use the balance to start income phase payments. Each of these
choices has certain consequences, which you should consider carefully.
See "Withdrawals," "Income Phase" and "Taxation."
REQUESTING YOUR CHOICE. Once you decide what you want to do with your
account value for that guaranteed term, you must advise us of your
decision by completing an election form. We must receive your completed
election form at least five days prior to the end of the guaranteed
term to which it applies.
If we do not receive your properly completed election form in time, or
you do not submit an election form, your account value at the end of the
guaranteed term will be automatically reinvested in the
following manner:
- For a guaranteed term equal to the guaranteed term just ended;
- If no such guaranteed term is available, for the guaranteed term
with the next shortest duration; or
- If no such shorter guaranteed term is available, for the
guaranteed term with the next longest duration.
Your account value will then earn interest at the guaranteed interest
rate applicable to the guaranteed term automatically selected for you.
We will mail a confirmation statement to you the next business
day after the completion of the just-ended guaranteed term advising
you of the new guaranteed term and guaranteed interest rate.
PURCHASE
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CONTRACT TYPE. The contract may be purchased as one of the following:
(1) A nonqualified deferred annuity;
(2) A rollover to a traditional individual retirement annuity
(IRA) under Tax Code section 408(b) (limitations apply, see
"Purchasing a Traditional IRA" in this section); or
(3) A rollover to a Roth IRA under Tax Code section 408A
(limitations apply, see "Purchasing a Roth IRA" in this
section).
HOW TO PURCHASE. To purchase a contract, complete an application or
enrollment form and submit it to the Company along with your purchase
payment.
8
PAYMENT METHODS. The following purchase payment methods are allowed:
- - One lump-sum payment; or
- - Transfer or rollover from a pre-existing plan or account.
We reserve the right to reject any payments without advance notice.
PAYMENT AMOUNT. The minimum purchase payment is $10,000. We may limit the amount
of the maximum purchase payment. All purchase payments over $1,000,000 will be
allowed only with our consent. You may not make any additional purchase payments
under an existing contract. However, eligible persons may purchase additional
contracts at the then prevailing guaranteed interest rates and guaranteed terms.
PURCHASING A TRADITIONAL IRA. To purchase the contract as a traditional IRA,
your purchase payment must be a transfer of amounts held in one of the
following:
- - A traditional individual retirement account under Tax Code section
408(a);
- - A traditional individual retirement annuity under Tax Code section
408(b); or
- - A retirement plan qualified under Tax Code section 401 or 403.
PURCHASING A ROTH IRA. A contract may be purchased as a Roth IRA under Tax Code
section 408A, by transferring amounts previously accumulated under another Roth
IRA or from a traditional individual retirement annuity or individual retirement
account, provided certain conditions are met. See "Taxation."
ACCEPTANCE OR REJECTION OF APPLICATIONS OR ENROLLMENT FORMS. We must accept or
reject your application or enrollment form within two business days of receipt.
If the application or enrollment form is incomplete, we may hold it and any
accompanying purchase payment for five days. Payments may be held for longer
periods only with your consent, pending acceptance of the application or
enrollment form. If the application or enrollment form is accepted, a contract
will be issued to you. If the application or enrollment form is rejected, we
will return it and any payments to you, without interest.
WHAT HAPPENS TO YOUR PURCHASE PAYMENT? If we accept your application or
enrollment form, your purchase payment becomes part of our general assets and is
credited to an account established for you. We will confirm the crediting of
your purchase payment within five business days of receipt of your properly
completed application or enrollment form. You start earning interest on your
purchase payment beginning on the effective date of the contract, which is the
date your purchase payment is credited. During the period of time between the
date your purchase payment is credited and the start of the guaranteed term you
selected, your purchase payment earns interest at the guaranteed interest rate
applicable to the guaranteed term you selected.
RIGHT TO CANCEL
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You may cancel the contract within ten days of receiving it (or as otherwise
provided by state law) by returning it to our Service Center along with a
written notice of cancellation. We will issue a refund within seven days of our
receipt of the contract and written notice of cancellation. The refund will
equal the amount of your purchase payment.
9
FEES
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The following fees and other deductions may impact your account value:
- Early Withdrawal Charge (see below);
- Maintenance Fee (see below);
- Premium Taxes (see below);
- Market Value Adjustment (see "Market Value Adjustment"); and
- Taxation (see "Taxation").
EARLY WITHDRAWAL CHARGE
Withdrawals of all or a portion of your account value may be subject to a charge.
AMOUNT. The amount is a percentage of the purchase payment you withdraw. The
percentage will be determined by the early withdrawal charge schedule below.
PURPOSE. This is a deferred sales charge. It reimburses some of our sales and
administrative expenses associated with the contract.
EARLY WITHDRAWAL CHARGE SCHEDULE:
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Years since purchase payment
credited: 0 1 2 3 4 5 6 7
Fee as a percentage
of payment withdrawn: 7% 7% 6% 6% 5% 4% 2% 0%
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HOW WE APPLY THE SCHEDULE. For purposes of applying the early
withdrawal charge, all time periods are measured from the date your
purchase payment is credited, even if you reinvest all or part of your
account value in another guaranteed term. Once the early withdrawal
charge declines to 0%, it no longer applies, regardless of how long you
own the contract.
The early withdrawal charge applies only to withdrawals of your purchase
payment. However, for the purposes of this charge, we assume you are
withdrawing all or part of your purchase payment first (not your
earnings). This assumption is not made for tax purposes. See
"Taxation."
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EXAMPLE. Assume the first guaranteed term you select is for five years.
Further assume that at the end of this five-year guaranteed term, you
decide to reinvest your account value for another guaranteed term of
four years. Assume you then make a withdrawal (but not a special
withdrawal, as described below) during the second year of the new
guaranteed term. Because six years have passed since your purchase
payment was credited, you would pay a 2% early withdrawal charge, even
though you could have withdrawn all or part of your account value at the
end of the first five-year guaranteed term without paying an
early withdrawal charge. See "Waiver of Charge," below. However, if you
make a withdrawal during the third year of the new guaranteed term, or
anytime thereafter, you would pay no early withdrawal charge, because
seven years would have passed since your purchase payment was credited.
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10
SPECIAL WITHDRAWALS. After 12 months from the contract effective date, you may
make one withdrawal equal to 10% or less of your account value during any
calendar year, valued at the time we receive your withdrawal request in writing,
and we will not deduct any early withdrawal charge. This special withdrawal is
subject to the following restrictions:
- - It applies only to the first withdrawal each calendar year;
- - All subsequent withdrawals that calendar year are subject to an early
withdrawal charge, even if you did not withdraw the full 10% with your first
withdrawal; and
- - If your first withdrawal of the calendar year is in excess of 10% of your
account value, the excess amount is subject to an early withdrawal charge.
WAIVER OF CHARGE. The early withdrawal charge is waived for amounts that are:
- - Withdrawn at the end of a guaranteed term, provided that at least five
days prior to the end of that guaranteed term we receive your withdrawal
request in writing. (If you reinvest those amounts in another guaranteed
term, future withdrawals will be subject to an early withdrawal charge as
described above); or
- - $2,500 or less, provided that no withdrawal has been made from your
account during the prior 12 months; or
- - Withdrawn due to your election of a systematic distribution option (see
"Systematic Distribution Options"); or
- - Withdrawn due to an involuntary termination. This may occur if your account
value is less than $2,500. See "Other Topics--Involuntary Terminations."
NURSING HOME WAIVER. If approved in your state, you may withdraw all or a
portion of your account value without an early withdrawal charge if all of the
following conditions are met:
- - More than one account year has elapsed since the date your purchase
payment was credited;
- - The annuitant designated under the contract has spent at least 45
consecutive days in a licensed nursing facility (in New Hampshire, the
facility may be non-licensed); and
- - The withdrawal is requested within three years of the designated
annuitant's admission to a licensed nursing facility (in Oregon there is no
three year limitation and in New Hampshire, the facility may be
non-licensed).
We will not waive the early withdrawal charge if the annuitant was in a licensed
nursing care facility at the time you purchased the contract. The nursing home
waiver may not be available in all states.
MARKET VALUE ADJUSTMENT AND TAXATION. Except for withdrawals at the end of a
guaranteed term as noted above, and withdrawals under a systematic distribution
option, a market value adjustment is applicable to any amounts you withdraw.
Regardless of when or how withdrawals are taken, you may also be required to pay
taxes and tax penalties. See "Market Value Adjustment" and "Taxation."
continued -
11
(Fees, continued)
ANNUAL MAINTENANCE FEE
Currently we do not charge a maintenance fee. However, prior to
the time you enter the income phase, an annual maintenance fee may be
deducted from your account value on each anniversary of the contract's
effective date and if you make a full withdrawal from the contract.
The terms and conditions under which the maintenance fee may be deducted
are stated in the contract. A maintenance fee would be used to
reimburse us for our administrative expenses relating to establishing
and maintaining the contract.
PREMIUM TAXES
MAXIMUM AMOUNT. Some states and municipalities charge a premium tax on annuities.
These taxes currently range from 0% to 4%, depending upon the jurisdiction.
WHEN/HOW. We reserve the right to deduct premium taxes from your
account value or from your payment to the account at any time, but not
before there is a tax liability under state law. For example,
we may deduct premium taxes at the time of a complete withdrawal or we may
reflect the cost of premium taxes in our income phase payment rates
when you commence income phase payments. If, at your death, your
beneficiary elects to receive a lump-sum distribution, a charge may
be deducted for any premium taxes paid on your behalf for which we
have not been reimbursed. If we deduct premium taxes from your
purchase payment, the amount invested in a guaranteed term will
be equal to the amount of your purchase payment reduced by any
applicable premium tax.
12
WITHDRAWALS
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You may withdraw all or part of your account value at any time during the
accumulation phase. Amounts are withdrawn on a pro rata basis from each of the
guaranteed terms under the contract. You may request that we inform you in
advance of the amount payable upon a withdrawal.
STEPS FOR MAKING A WITHDRAWAL.
- - Select the withdrawal amount.
1) Full withdrawal: You will receive, reduced by any required withholding tax,
your account value, plus or minus any applicable market value adjustment,
and minus any applicable early withdrawal charge and annual maintenance
fee.
2) Partial Withdrawal (Percentage or Specified Dollar Amount): You will
receive, reduced by any required withholding tax, the amount you specify,
subject to the value available in your account. However, the amount
actually withdrawn from your account will be adjusted for any applicable
early withdrawal charge and any positive or negative market value
adjustment, and accordingly, may be more or less than the amount requested.
- - Properly complete a disbursement form and submit it to our Service
Center.
DELIVERY OF PAYMENT. Payment of withdrawal requests will be made in accordance
with the SEC's requirements. Normally, payment will be sent not later than seven
days following our receipt of the disbursement form in good order. However,
under certain emergency situations, we may defer payment of any withdrawal for a
period not exceeding six months from the date we receive your withdrawal
request.
TAXES, FEES AND DEDUCTIONS. Amounts withdrawn may be subject to one or more of the
following:
- - Early Withdrawal Charge: Withdrawals of all or a portion of your account may
be subject to an early withdrawal charge. This is a deferred sales charge that
reimburses us for some of the sales and administrative expenses associated with
the contract. See "Fees--Early Withdrawal Charge."
- - Annual Maintenance Fee: If you make a full withdrawal from the contract, we
may deduct any applicable annual maintenance fee. See "Fees--Annual Maintenance
Fee."
- - Market Value Adjustment (MVA): The MVA reflects changes in interest rates
since the deposit period. The MVA may be positive or negative. If you make
a withdrawal before the end of a guaranteed term, we will calculate an MVA
and the amount withdrawn will be adjusted for any applicable positive or
negative MVA. See "Market Value Adjustment."
- - Tax Penalty: If you make a withdrawal before you attain age 59 1/2, the amount
withdrawn may be subject to a 10% penalty tax. See "Taxation."
- - Tax Withholding: Amounts withdrawn may be subject to withholding for federal
income taxes. See "Taxation."
All applicable fees and deductions are deducted from the amount of your
withdrawal in accordance with the terms of the contract. Any market value
adjustment applicable to your withdrawal, taxes, fees and deductions may either
increase or decrease the amount paid to you. To determine which may apply, refer
to the appropriate sections of this prospectus, contact your sales
representative or call our Service Center at the number listed in "Contract
Overview."
13
SYSTEMATIC DISTRIBUTION OPTIONS
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FEATURES OF A SYSTEMATIC DISTRIBUTION OPTION
A systematic distribution option allows you to receive regular
payments from the contract without moving into the income phase. By
remaining in the accumulation phase, certain rights and flexibility not
available during the income phase are retained.
The following systematic distribution options may be available:
- SWO--SYSTEMATIC WITHDRAWAL OPTION. SWO is a series of automatic partial withdrawals
from your account based on a payment method you select. It is designed for those who
want a periodic income while retaining investment flexibility for amounts
accumulated under the contract.
SWO allows you to withdraw either a specified amount or a specified percentage of
the contract's value, or to withdraw amounts over a specified time period that you
determine, within certain limits described in the contract. SWO payments can be
made on a monthly or quarterly basis, and the amount of each payment is determined
by dividing the designated annual amount by the number of payments due each
calendar year. SWO payments are withdrawn pro rata from each of the guaranteed
terms under the contract.
Under a contract purchased as a traditional IRA, if the SWO payment for any year
is less than the minimum required distribution under the Tax Code, the SWO payment
will be increased to an amount equal to the minimum distribution amount.
If you participate in SWO, you may not utilize a special withdrawal to make
additional withdrawals from the contract. See "Withdrawals--Special Withdrawals."
- ECO--ESTATE CONSERVATION OPTION. ECO offers the same investment flexibility as SWO,
but is designed for those who want to receive only the minimum distribution the Tax
Code requires each year.
Under ECO, we calculate the minimum distribution amount required by law, and pay you
that amount once a year. ECO is not available under nonqualified contracts or under
Roth IRA contracts. ECO payments are withdrawn pro rata from each of the guaranteed
terms under the contract. We will, upon request, inform you in advance of the amount
payable under ECO.
If you participate in ECO, you may not utilize a special withdrawal to make
additional withdrawals from the contract. See "Withdrawals--Special Withdrawals."
- OTHER SYSTEMATIC DISTRIBUTION OPTIONS. We may add additional systematic distribution
options from time to time. You may obtain additional information relating to any of
the systematic distribution options from your sales representative or from our
Service Center.
AVAILABILITY. If allowed by applicable law, we reserve the right to discontinue the
availability of one or all of the systematic distribution options for new
elections at any time and to change the terms of future elections.
ELIGIBILITY. To exercise one of these options you must meet certain
age criteria and your account value must meet certain minimum
requirements. To determine if you meet the age and account value
criteria and to assess terms and conditions that may apply, contact
your sales representative or our Service Center.
14
TERMINATION. You may revoke a systematic distribution option at any time by
submitting a written request to our Service Center. However, once cancelled, you
or your spousal beneficiary may not elect SWO again. In addition, once
cancelled, ECO may not be elected again until 36 months have elapsed.
DEDUCTIONS AND TAXATION. When you elect a systematic distribution option, your
account value remains in the accumulation phase and subject to the applicable
charges and deductions described in "Fees." However, we will not apply an early
withdrawal charge or market value adjustment to any part of your account value
paid under SWO or ECO. Taking a withdrawal through a systematic distribution
option may have tax consequences. If you are concerned about tax implications
consult a tax adviser before one of these options is elected. See "Taxation."
15
MARKET VALUE ADJUSTMENT (MVA)
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PURPOSE OF THE MVA. If you make an early withdrawal from the contract,
we may need to liquidate certain assets or use existing cash flow
that would otherwise be available to invest at current interest rates.
The assets we may liquidate to provide your withdrawal amount may
be sold at a profit or a loss, depending upon market conditions. To
lessen this impact, certain withdrawals are subject to an MVA.
WHAT IS AN MVA? In certain situations described below,
including when you make a withdrawal before the end of a guaranteed term,
we will calculate an MVA and either add or deduct that value from the
amount withdrawn. The calculation we use to determine the MVA reflects
the change in the value of your investment due to changes in
interest rates since the start of the guaranteed term under the
contract. When these interest rates increase, the value of the
investment decreases, and the MVA amount may be negative and cause a
deduction from your withdrawal amount. Conversely, when these
interest rates decrease, the value of the investment increases, and the
MVA amount may be positive and cause an increase in your withdrawal
amount.
CALCULATION OF THE MVA. For a further explanation of how the MVA
is calculated, see Appendix I.
WHEN DOES AN MVA APPLY? An MVA may apply when:
- You request a withdrawal before the end of a guaranteed term. In this case the
withdrawal amount may be increased or decreased by the application of the MVA.
- You initiate income phase payments before the end of your guaranteed term. In this
case an MVA may be applied to any amounts used to start income phase payments.
While either a positive or negative MVA may apply to amounts used to start
a nonlifetime payment option, only a positive MVA will apply to amounts used to
start a lifetime payment option. See "Income Phase."
- We terminate the contract because your account value is less than $2,500.
- You cancel the contract.
- A death benefit is paid upon the death of the annuitant, more than six months after
the annuitant's death. See "Death Benefit."
- A death benefit is paid upon the death of a person other than the annuitant.
WHEN DOES AN MVA NOT APPLY? An MVA will not be applied to:
- Withdrawals under the Systematic Withdrawal Option or Estate Conservation Option as
described in "Systematic Distribution Options."
- A death benefit payable upon death of an annuitant, if paid within six months of the
annuitant's death. See "Death Benefit."
- Amounts withdrawn at the end of a guaranteed term, provided that at least five days
prior to the end of that guaranteed term we receive your withdrawal request in
writing. The MVA, however, remains applicable to any amount you reinvest for
another guaranteed term.
16
DEATH BENEFIT
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DURING THE ACCUMULATION PHASE This section provides information
WHO RECEIVES THE BENEFIT? If you or the annuitant die during the accumulation about the death benefit during the
phase, a death benefit will be paid to your beneficiary in accordance with the accumulation phase. For death
terms of the contract subject to the following: benefit information applicable to
- - Upon the death of a joint contract holder, the surviving joint contract holder will the income phase, see "Income
be deemed the designated beneficiary, and any other beneficiary on record will be Phase."
treated as the beneficiary at the death of the surviving joint contract holder.
- - If you are not a natural person, the death benefit will be payable at the death of the ANNUITANT: The person(s) on
annuitant designated under the contract or upon any change of the annuitant. whose life expectancy we
- - If you die and no beneficiary exists, the death benefit will be paid in a lump calculate the income phase
sum to your estate. payments.
DESIGNATING A BENEFICIARY(IES). You may designate a beneficiary on your
application or enrollment form, or by providing a written request in good order
to our Service Center.
CALCULATION OF THE BENEFIT. The death benefit is calculated as of the date proof
of death and the beneficiary's right to receive the death benefit are received
in good order at our Service Center. The amount of the death benefit is
determined as follows:
- - If the death benefit is paid within six months of the death of the annuitant,
the amount equals your account value.
- - If the death benefit is paid more than six months after the date of death
of the annuitant, or if paid upon your death and you are not the annuitant,
it equals your account value as adjusted by any applicable market value
adjustment.
- - If you are not the annuitant, the death benefit payable may be subject to
an early withdrawal charge.
BENEFIT PAYMENT OPTIONS. If you are the annuitant and you die before income
phase payments begin, or if you are not a natural person and the annuitant dies
before income phase payments begin, any beneficiary under the contract who is an
individual has several options for receiving payment of the death benefit. The
death benefit may be paid:
- - In one lump-sum payment;
- - In accordance with any of the available income phase payment options (see
"Income Phase--Payment Options"); or
- - In certain circumstances, your beneficiary, spousal beneficiary or joint
contract holder may have the option to continue the contract rather than
receive the death benefit.
TAXATION. The Tax Code requires distribution of death benefit proceeds within a
certain period of time. Failure to begin receiving death benefit payments within
those time periods can result in tax penalties. Regardless of the method of
payment, death benefit proceeds will generally be taxed to the beneficiary in
the same manner as if you had received those payments. See "Taxation" for
additional information.
CHANGE OF BENEFICIARY. You may change the beneficiary previously designated at
any time by submitting notice in writing to our Service Center. The change will
not be effective until we receive and record it.
17
INCOME PHASE
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We may have used the following During the income phase you receive payments from your accumulated
terms in prior prospectuses: account value. You may apply all or a portion of your account value to
provide these payments. Income phase payments are made to you or you can,
ANNUITY PHASE--Income Phase subject to availability, request that payments be deposited directly to your
bank account. After your death, we will send your designated beneficiary
ANNUITY OPTION--Payment Option any income phase payments still due. You may be required to pay taxes on all
or a portion of the income phase payments you receive. See "Taxation."
ANNUITY PAYMENT--Income PARTIAL ENTRY INTO THE INCOME PHASE. You may elect a payment option for a portion of
Phase Payment your account value, while leaving the remaining portion in a guaranteed term(s).
Whether the Tax Code considers such payments taxable as annuity payments or as
ANNUITIZATION--Initiating Income withdrawals is currently unclear; therefore, you should consult with a qualified
Phase Payments tax adviser before electing this option.
INITIATING INCOME PHASE PAYMENTS. At least 30 days prior to the date you
want to start receiving income phase payments, you must notify us in
writing of the following:
- Start date;
- Payment option (see the payment options table in this section); and
- Payment frequency (i.e., monthly, quarterly, semi-annually or annually).
The account will continue in the accumulation phase until you
properly initiate income phase payments. You may change your
payment option election up to 30 days before income phase payments
begin. Once you elect for income phase payments to begin, you may not
elect a different payment option or elect to receive a lump-sum payment.
WHAT AFFECTS PAYMENT AMOUNTS? Some of the factors that may affect
payment amounts include your age, your gender, your account value, the
payment option selected and number of guaranteed payments (if any)
selected.
MINIMUM PAYMENT AMOUNTS. The payment option you select must result in one
or both of the following:
- A first payment of at least $50; or
- Total yearly payments of at least $250.
If your account value is too low to meet these minimum payment amounts,
you must elect a lump-sum payment. We reserve the right to increase the
minimum payment amount based upon increases in the Consumer Price
Index--Urban.
PAYMENT START DATE. Income phase payments may start any time after
the first year of the contract, and will start the later of the
annuitant's 85th birthday or the tenth anniversary of your purchase
payment, unless you elect otherwise.
Regardless of your income phase payment start date, your income
phase payments will not begin until you have selected an income phase
payment option. Failure to select a payment option by your payment start
date, or postponement of the start date past the later of the
annuitant's 85th birthday or the tenth anniversary of your purchase
payment, may have adverse tax consequences. You should consult
with a qualified tax adviser if you are considering either of these
courses of action.
18
PAYMENT LENGTH. If you choose a lifetime income phase payment option with
guaranteed payments, the age of the annuitant plus the number of years for which
payments are guaranteed must not exceed 95 at the time payments begin.
Additionally, federal income tax requirements currently applicable to
traditional IRAs provide that the period of years guaranteed may not be greater
than the joint life expectancies of the payee and his or her designated
beneficiary.
CHARGES DEDUCTED. No early withdrawal charge will be applied to amounts used to
start income phase payments, although a market value adjustment may be
applicable.
MARKET VALUE ADJUSTMENT. If your income phase payments start before the end of
your guaranteed term, a market value adjustment will be applied to any amounts
used to start income phase payments. If you select a lifetime payment option,
only a positive market value adjustment will be applied. See "Market Value
Adjustment."
DEATH BENEFIT DURING THE INCOME PHASE. Upon the death of either the annuitant or
the surviving joint annuitant, the amount payable, if any, to your beneficiary
depends on the payment option currently in force. Any amounts payable must be
paid at least as rapidly as under the method of distribution in effect at the
annuitant's death. If you die and you are not the annuitant, any remaining
payments will continue to be made to your beneficiary at least as rapidly as
under the method of distribution in effect at your death.
TAXATION. To avoid certain tax penalties, you or your beneficiary must meet the
distribution rules imposed by the Tax Code. See "Taxation."
continued -
19
(Income phase, continued)
INCOME PHASE PAYMENT OPTIONS
The following table lists the income phase payment options and
accompanying death benefits that may be available during the income
phase. We may offer additional payment options under the contract
from time to time.
TERMS USED IN THE TABLES:
ANNUITANT: The person(s) on whose life expectancy the income phase payments are
calculated.
BENEFICIARY: The person designated to receive the death benefit payable under the
contract.
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LIFETIME INCOME PHASE PAYMENT OPTIONS
- -------------------------------------- ------------------------------------------------------------------------------------------
LENGTH OF PAYMENTS: For as long as the annuitant lives. It is possible only one payment
will be made should the annuitant die prior to the second payment's due date.
Life Income DEATH BENEFIT--NONE: All payments end upon the annuitant's death.
- -------------------------------------- ------------------------------------------------------------------------------------------
- -------------------------------------- ------------------------------------------------------------------------------------------
LENGTH OF PAYMENTS: For as long as the annuitant lives, with payments guaranteed
for your choice of 5, 10, 15, or 20s, or other periods specified in the
contract.
Life Income--
Guaranteed DEATH BENEFIT: If the annuitant dies before we have made all the guaranteed payments,
Payments payments will continue to the beneficiary.
- -------------------------------------- ------------------------------------------------------------------------------------------
LENGTH OF PAYMENTS: For as long as either annuitant lives. It is possible only one
payment will be made should both the annuitant and joint annuitant die before
the second payment's due date.
Life Income-- CONTINUING PAYMENTS: When you select this option, you will also choose either: (A)
Two Lives 100%, 662/3%, or 50% of the payment to continue to the surviving annuitant after
the first death; or (B) 100% of the payment to continue to the first
annuitant on the second annuitant's death, and 50% of the payment to continue
to the second annuitant on the first annuitant's death.
DEATH BENEFIT--NONE: Payments cease upon the death of both annuitants.
- -------------------------------------- ------------------------------------------------------------------------------------------
LENGTH OF PAYMENTS: For as long as either annuitant lives, with payments guaranteed
for a minimum of 120 months, or other periods specified in the contract.
Life Income--
Two Lives-- CONTINUING PAYMENTS: 100% of the payment will continue to the surviving annuitant after
Guaranteed the first death.
Payments
DEATH BENEFIT: If both annuitants die before the guaranteed payments have all been paid,
payments will continue to the beneficiary.
- ---------------------------------------------------------------------------------------------------------------------------------
NONLIFETIME INCOME PHASE PAYMENT OPTION
- ---------------------------------------------------------------------------------------------------------------------------------
LENGTH OF PAYMENTS: Payments will continue for your choice of 10 through 30
Nonlifetime-- years (or other periods specified in the contract).
Guaranteed
Payments DEATH BENEFIT: If the annuitant dies before we make all the guaranteed payments, payment
will continue to the beneficiary.
- ---------------------------------------------------------------------------------------------------------------------------------
20
INVESTMENTS
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT. Payments received under the contract and allocated to
guaranteed terms will be deposited to, and accounted for, in a nonunitized
separate account that we established under Florida law. Prior to January 5,
2000, amounts allocated to guaranteed terms were deposited to, and accounted
for, in a nonunitized separate account that we had established under Connecticut
law. A nonunitized separate account is a separate account in which you do not
participate in the performance of the assets through unit values or any other
interest.
Persons allocating amounts to the nonunitized separate account do not receive a
unit value of ownership of assets accounted for in the separate account. The
assets accrue solely to our benefit and we bear the entire risk of investment
gain or loss. All of our obligations due to allocations to the nonunitized
separate account are contractual guarantees we have made and are accounted for
in the separate account. All of our general assets are available to meet the
guarantees under the contracts. However, to the extent provided for in the
applicable contracts, assets of the nonunitized separate account are not
chargeable with liabilities arising out of any other business we conduct.
Income, gains or losses of the separate account are credited to or charged
against the assets of the separate account without regard to other income, gains
or losses of the Company.
SETTING GUARANTEED INTEREST RATES. We do not have any specific formula for
setting guaranteed interest rates for the guaranteed terms. We expect the
guaranteed interest rates to be influenced by, but not necessarily correspond
to, yields on fixed income securities we acquire with amounts allocated to the
guaranteed terms when the guaranteed interest rates are set.
TYPES OF INVESTMENTS. Our assets will be invested in accordance with the
requirements established by applicable state laws regarding the nature and
quality of investments that may be made by life insurance companies and the
percentage of their assets that may be committed to any particular type of
investment. In general, these laws permit investments, within specified limits
and subject to certain qualifications, in federal, state, and municipal
obligations, corporate bonds, preferred and common stocks, real estate
mortgages, and certain other investments.
We intend to invest in assets which, in the aggregate, have characteristics,
especially cash flow patterns, reasonably related to the characteristics of the
liabilities. Various immunization techniques will be used to achieve the
objective of close aggregate matching of assets and liabilities. We will
primarily invest in investment-grade fixed income securities including:
- - Securities issued by the United States Government or its agencies or
instrumentalities, which issues may or may not be guaranteed by the United
States Government;
- - Debt securities that are rated, at the time of purchase, within the four
highest grades assigned by Moody's Investors Services, Inc. (Aaa, Aa, A or
Baa) or Standard & Poor's Corporation (AAA, AA, A or BBB) or any other
nationally recognized rating organizations;
continued -
21
(Investments, continued)
- Other debt instruments including those issued or guaranteed by banks or bank
holding companies and of corporations, which although not rated by Moody's, Standard
& Poor's, or other nationally recognized rating organizations, are deemed by
the Company's management to have an investment quality comparable to securities
which may be purchased as stated above; and
- Commercial paper, cash or cash equivalents, and other short-term investments having a
maturity of less than one year which are considered by the Company's management to
have investment quality comparable to securities which may be purchased as stated
above.
In addition, we may invest in futures and options. We purchase
financial futures and related options and options on securities
solely for nonspeculative hedging purposes. In the event securities
prices are anticipated to decline, we may sell a futures contract or
purchase a put option on futures or securities to protect the value of
securities held in or to be sold for the nonunitized separate account.
Similarly, if securities prices are expected to rise, we may purchase a
futures contract or a call option against anticipated positive cash
flow or we may purchase options on securities.
WHILE THIS SECTION GENERALLY DESCRIBES OUR INVESTMENT STRATEGY,
WE ARE NOT OBLIGATED TO INVEST THE ASSETS ATTRIBUTABLE TO THE CONTRACT
ACCORDING TO ANY PARTICULAR STRATEGY, EXCEPT AS MAY BE REQUIRED
BY FLORIDA AND OTHER STATE INSURANCE LAWS. ADDITIONALLY, THE GUARANTEED
INTEREST RATES WE ESTABLISH NEED NOT RELATE TO THE INVESTMENT PERFORMANCE
WE EXPERIENCE.
22
TAXATION
- -----------------------------------------------------------------------------------------
INTRODUCTION IN THIS SECTION
- Introduction
- The Contract
This section discusses our understanding of current federal income tax laws affecting - Taxation of Withdrawals
the contract. You should keep the following in mind when reading it: and Other Distributions
- 10% Penalty Tax
- - Your tax position (or the tax position of the beneficiary, as applicable) - Withholding for Federal
determines federal taxation of amounts held or paid out under the contract. Income Tax Liability
- - Tax laws change. It is possible a future change could affect contracts issued - Minimum Distribution
in the past. Requirements
- - This section addresses federal income tax rules and does not discuss federal - More Rules Specific to
estate and gift tax implications, state and local taxes or any other tax IRAs
provisions. - More Rules Specific to
- - We do not make any guarantee about the tax treatment of the contract or Nonqualified Contract
transactions involving the contract. - Taxation of the Company
- -----------------------------------------------------------------------------------------
We do not intend this information to be tax advice. For advice about the effect
of federal income taxes or any other taxes on amounts held or paid out under the
contract, consult a tax adviser.
- -----------------------------------------------------------------------------------------
TAXATION OF GAINS PRIOR TO DISTRIBUTION. You will not generally pay taxes on any
earnings from the annuity contract described in this prospectus until they are
withdrawn. Tax-qualified retirement arrangements under Tax Code sections 408(b)
and 408A also generally defer payment of taxes on earnings until they are
withdrawn. (See "Taxation of Withdrawals and Other Distributions" later in this
"Taxation" section for a discussion of how distributions under the various types
of plans are taxed.) If you are considering funding one of these tax-qualified
retirement arrangements with an annuity contract, you should know that the When consulting a tax adviser, be
annuity contract does not provide any additional tax deferral of earnings beyond certain he or she has expertise in
the tax deferral provided by the tax-qualified retirement arrangement. However, the Tax Code sectionsapplicable
annuities do provide other features and benefits which may be valuable to you. to your tax concerns.
You should discuss your alternatives with your financial representative.
THE CONTRACT
The contract is designed for use on a non-tax-qualified basis as a nonqualified
contract, or with certain retirement arrangements that qualify under Tax Code
sections 408(b) or 408A.
The tax rules vary according to whether the contract is a nonqualified contract
or used with a retirement arrangement. If used with a retirement arrangement,
you need to know the Tax Code section under which your arrangement qualifies.
Contact your sales representative or our Service Center to learn which Tax Code
section applies to your arrangement.
Contract holders are responsible for determining that contributions,
distributions and other transactions satisfy applicable laws. Legal counsel and
a tax adviser should be consulted regarding the suitability of the contract.
continued -
23
(Taxation, continued)
TAXATION OF WITHDRAWALS AND OTHER DISTRIBUTIONS
Certain tax rules apply to distributions from the contract. A
distribution is any amount taken from the contract including
withdrawals, income payments, rollovers, exchanges and death
benefit proceeds. We report the taxable portion of all distributions
to the IRS.
NONQUALIFIED CONTRACTS. A full withdrawal of a nonqualified
contract is taxable to the extent the amount received exceeds the
investment in the contract. A partial withdrawal is taxable to the
extent the account value immediately before the withdrawal exceeds the
investment in the contract. In other words, a partial withdrawal is
treated first as a withdrawal of taxable earnings.
For income phase payments, a portion of each payment that represents the
investment in the contract is not taxable. An exclusion ratio is
calculated to determine the nontaxable portion.
For fixed income phase payments, in general, there is no tax on the
portion of each payment which represents the same ratio that the
investment in the contract bears to the total dollar amount of the
expected payments as defined in Tax Code section 72(c). The entire
income phase payment will be taxable once the recipient has recovered the
investment in the contract.
All deferred nonqualified annuity contracts that are issued by the
Company (or its affiliates) to the same contract holder during any
calendar year are treated as one annuity contract for purposes of
determining the amount includible in gross income under Tax Code section
72(e). In addition, the Treasury Department has specific authority to
issue regulations that prevent the avoidance of Tax Code section 72(e)
through the serial purchase of annuity contracts or otherwise.
408(B) IRA. All distributions from a 408(b) traditional individual retirement annuity
(IRA) are taxed as received unless one of the following applies:
- The distribution is rolled over to another traditional IRA or, if the IRA
contains only amounts previously rolled over from a 401(a), 401(k), or 403(b) plan,
to another plan of the same type.
- You made after-tax contributions to the plan. In this case, the distribution
will be taxed according to rules detailed in the Tax Code.
408A ROTH IRA. A qualified distribution from a Roth IRA is not
taxed when it is received. A qualified distribution is a
distribution that meets both of the following requirements:
- Made after the five-taxable year period beginning with the first taxable year
for which a contribution was made; and
- Made after you attain age 59-1/2, die, become permanently and totally disabled,
or for a qualified first-time home purchase.
If a distribution is not qualified, the accumulated earnings are
taxable. A partial distribution will first be treated as a return of
contributions, which is not taxable.
24
TAXATION OF DEATH BENEFIT PROCEEDS. In general, payments received by your
beneficiaries after your death are taxed in the same manner as if you had
received those payments.
10% PENALTY TAX
Under certain circumstances, the Tax Code may impose a 10% penalty tax on the
taxable portion of any distribution from a nonqualified contract or from a
contract used with a 408A Roth IRA or 408(b) traditional IRA.
NONQUALIFIED CONTRACT. The 10% penalty tax applies to the taxable portion of a
distribution from a nonqualified annuity unless one or more of the following have
occurred:
- - The taxpayer has attained age 59 1/2;
- - The taxpayer has become disabled within the meaning of the Tax Code;
- - The contract holder has died; - The distribution is made in
substantially equal periodic payments (at least annually) over the life or
life expectancy of the taxpayer or the joint lives or joint life
expectancies of the taxpayer and beneficiary; or
- - The distribution is allocable to investment in the contract before
August 14, 1982.
408(B) TRADITIONAL IRA AND 408A ROTH IRA. The 10% penalty tax applies to the
taxable portion of a distribution from a 408(b) or 408A IRA, unless one or more
of the following have occurred:
- - You have attained age 59 1/2;
- - You have become disabled within the meaning of the Tax Code;
- - You have died;
- - The distribution is rolled over in accordance with the Tax Code;
- - The distribution is made in substantially equal periodic payments
(at least annually) over your life or life expectancy or the joint lives
or joint life expectancies of you and your beneficiary;
- - The distribution is equal to unreimbursed medical expenses that qualify
for deduction as specified in the Tax Code;
- - The distribution is used to pay for health insurance premiums for certain
unemployed individuals;
- - The amount is withdrawn for a first-time home purchase; or - The
amount withdrawn is for higher education expenses.
These exceptions also apply to a distribution from a Roth IRA that is not a
qualified distribution or a rollover to a Roth IRA that is not a qualified
rollover contribution.
WITHHOLDING FOR FEDERAL INCOME TAX LIABILITY
Any distributions under the contract are generally subject to withholding.
Federal income tax liability rates vary according to the type of distribution
and the recipient's tax status:
- - Nonqualified Contracts, 408(b) and 408A IRAs. Generally, you or a
beneficiary may elect not to have tax withheld from distributions.
continued -
25
(Taxation, continued)
- Non-resident Aliens. If you or your beneficiary are a
non-resident alien, then any withholding is governed by Tax
Code section 1441 based on the individual's citizenship, the
country of domicile and treaty status.
MINIMUM DISTRIBUTION REQUIREMENTS
If your contract is a 408(b) traditional IRA, to avoid certain
tax penalties, you and any beneficiary must meet the minimum
distribution requirements imposed by the Tax Code. The requirements do
not apply to nonqualified contracts or Roth IRA contracts, except with
regard to death benefits. These rules may dictate one or more of the
following:
- Start date for distributions;
- The time period in which all amounts in your account(s) must be
distributed; and - Distribution amounts.
START DATE. If your contract is a 408(b) IRA, generally you must begin
receiving distributions by April 1 of the calendar year following the
calendar year in which you attain age 70 1/2.
TIME PERIOD. We must pay out distributions from 408(b) IRA
contracts over a period not longer than one of the following time
periods:
- Over your life or the joint lives of you and your beneficiary; or
- Over a period not greater than your life expectancy or the joint life
expectancies of you and your beneficiary.
50% EXCISE TAX. If you fail to receive the minimum required distribution for any tax
year from a 408(b) IRA, a 50% excise tax is imposed on the required amount that was
not distributed.
MINIMUM DISTRIBUTION OF DEATH BENEFIT PROCEEDS (EXCEPT NONQUALIFIED CONTRACTS).
The following applies to 408(b) and 408A IRAs. Different distribution
requirements apply if your death occurs:
- After you begin receiving minimum distributions under the contract; or
- Before you begin receiving such distributions.
If your death occurs after you begin receiving minimum distributions
under the contract, distributions must be made at least as rapidly as
under the method in effect at the time of your death. Tax Code section
401(a)(9) provides specific rules for calculating the minimum required
distributions at your death. The rules differ, dependent upon both of
the following:
- Whether your minimum required distribution was calculated
each year based on your single life expectancy or the joint
life expectancies of you and your beneficiary; and
- Whether life expectancy was recalculated.
THE RULES ARE COMPLEX AND ANY BENEFICIARY SHOULD CONSULT WITH A
TAX ADVISER BEFORE ELECTING THE METHOD OF CALCULATION TO SATISFY THE
MINIMUM DISTRIBUTION REQUIREMENTS. THE RULES ARE SUBJECT TO CHANGE AS
A RESULT OF NEW REGULATIONS PROPOSED BY THE INTERNAL REVENUE SERVICE
ON JANUARY 17, 2001.
If your death occurs before you begin receiving minimum
distributions under the contract, your entire balance must be
distributed by December 31 of the calendar year containing the fifth
anniversary of the date of your death. For example, if you die on
26
September 1, 2001, your entire balance must be distributed to the beneficiary by
December 31, 2006. However, if the distribution begins by December 31 of the
calendar year following the calendar year of your death, then payments may be
made in either of the following time-frames:
- - Over the life of the beneficiary; or
- - Over a period not extending beyond the life expectancy of the beneficiary.
START DATES FOR SPOUSAL BENEFICIARIES. If the beneficiary is your spouse, the
distribution must begin on or before the later of the following:
- - December 31 of the calendar year following the calendar year of your death;
or
- - December 31 of the calendar year in which you would have attained
age 70 1/2.
SPECIAL RULE FOR IRA SPOUSAL BENEFICIARIES. In lieu of taking a distribution
under these rules, a spousal beneficiary may elect to treat the account as his
or her own IRA and defer taking a distribution until he or she reaches age 70
1/2. The surviving spouse is deemed to have made such an election if the
surviving spouse makes a rollover to or from the account or fails to take a
distribution within the required time period.
MINIMUM DISTRIBUTION OF DEATH BENEFIT PROCEEDS (NONQUALIFIED CONTRACTS) DEATH
OF CONTRACT HOLDER. The following requirements apply to nonqualified contracts
at the death of the contract holder. Different distribution requirements apply
if you are the contract holder and your death occurs:
- - After you begin receiving income phase payments under the contract; or
- - Before you begin receiving such distributions.
If your death occurs after you begin receiving income phase payments,
distribution must be made at least as rapidly as under the method in effect at
the time of your death.
If your death occurs before you begin receiving income phase payments, your
entire balance must be distributed within five years after the date of your
death. For example, if you die on September 1, 2001, your entire balance must
be distributed by August 31, 2005. However, if the distribution begins within
one year of your death, then payments may be made in one of the following
time-frames:
- - Over the life of the beneficiary; or
- - Over a period not extending beyond the life expectancy of the beneficiary.
SPOUSAL BENEFICIARIES. If the beneficiary is your spouse, the account may be
continued with the surviving spouse as the new contract holder.
DEATH OF ANNUITANT. If the contract holder is a non-natural person and the
annuitant dies, the same rules apply as outlined above for death of the
contract holder. If the contract holder is a natural person but not the
annuitant and the annuitant dies, the beneficiary must elect an income phase
payment option within 60 days of the date of death, or any gain under the
contract will be includible in the beneficiary's income in the year the
annuitant dies.
MORE RULES SPECIFIC TO IRAS
Tax Code section 408(b) permits eligible individuals to contribute to an IRA on
a pre-tax (deductible) basis. Employers may establish Simplified Employee
Pension (SEP)
continued -
27
(Taxation, continued)
plans and contribute to a traditional IRA owned by the
employee. Tax Code section 408A permits eligible individuals to
contribute to a Roth IRA on an after-tax (nondeductible) basis.
ASSIGNMENT OR TRANSFER OF CONTRACTS.
Adverse tax consequences may result if you assign or transfer your
interest in the contract to persons other than your spouse incident
to a divorce.
ELIGIBILITY. Eligibility to contribute to a traditional 408(b)
IRA on a pre-tax basis or to establish a Roth IRA or to rollover
or transfer from a traditional 408(b) IRA to a Roth IRA depends on
your adjusted gross income.
ROLLOVERS AND TRANSFERS. Rollovers and direct transfers are permitted
from a 401, 403(a) or a 403(b) arrangement to a traditional 408(b)
IRA. Distributions from these arrangements are not permitted to be
transferred or rolled over to a Roth IRA. A Roth IRA can accept
transfers/rollovers only from a traditional 408(b) IRA, subject to
ordinary income tax, or from another Roth IRA.
MORE RULES SPECIFIC TO NONQUALIFIED CONTRACTS
IN GENERAL. Tax Code section 72 governs taxation of annuities in
general. A contract holder under a nonqualified contract who is a
natural person generally is not taxed on increases in the account
value until distribution occurs by withdrawing all or part of such
account value. The taxable portion of a distribution is taxable as
ordinary income.
NON-NATURAL CONTRACT HOLDERS OF A NONQUALIFIED CONTRACT. If the
contract holder is not a natural person, a nonqualified contract
generally is not treated as an annuity for income tax purposes and
the income on the contract for the taxable year is currently taxable as
ordinary income. Income on the contract is any increase over the
year in the full withdrawal value, adjusted for purchase payments made
during the year, amounts previously distributed and amounts previously
included in income. There are some exceptions to the rule and a
non-natural person should consult with its tax adviser prior to
purchasing this contract. A non-natural person exempt from
federal income taxes should consult with its tax adviser regarding
treatment of income on the contract for purposes of the unrelated
business income tax. When the contract holder is not a natural
person, a change in annuitant is treated as the death of the contract
holder.
TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A NONQUALIFIED CONTRACT. A
transfer of ownership of a nonqualified contract, the
designation of an annuitant, payee or other beneficiary who is not also
the contract holder, the selection of certain annuity dates, or the
exchange of a contract may result in certain tax consequences. The
assignment, pledge, or agreement to assign or pledge any portion of the
account value generally will be treated as a distribution. Anyone
contemplating any such designation, transfer, assignment, selection, or
exchange should contact a tax adviser regarding the potential tax
effects of such a transaction.
TAXATION OF THE COMPANY
We are taxed as a life insurance company under the Tax Code. We own
all assets supporting the obligations of the contracts. Any
income earned on these assets is considered income to the Company.
28
OTHER TOPICS
- --------------------------------------------------------------------------------
CONTRACT DISTRIBUTION
The Company's broker-dealer affiliate, Aetna Investment Services, LLC (AIS),
serves as the principal underwriter for the securities sold under this
prospectus. AIS, a Delaware limited liability company, is registered as a
broker-dealer with the SEC. AIS is also a member of the National Association of
Securities Dealers, Inc. and the Securities Investor Protection Corporation.
AIS' principal office is located at 151 Farmington Avenue, Hartford,
Connecticut 06156.
As principal underwriter, AIS may enter into arrangements with one or more
registered broker-dealers to offer and sell the contracts described in this
prospectus. We call these entities "distributors." All individuals offering and
selling the contracts must be registered representatives of a broker-dealer and
must be licensed as insurance agents to sell variable annuity contracts.
COMMISSION PAYMENTS. Persons who offer and sell the contracts may be paid a
commission. The maximum percentage amount paid with respect to a given
purchase payment is 6% of the payment to an account. Asset-based service fees
may also be paid. Asset-based service fees will not exceed 11/4%of the assets
held under a contract. Some sales personnel may receive various types of
non-cash compensation as special sales incentives, including trips and
educational and/or business seminars. However, any such compensation will be
paid in accordance with NASD rules. The distributor may be reimbursed for
certain expenses. The name of the distributor and the registered
representative responsible for your account are stated in your application.
Commissions and sales related expenses are paid by us or our affiliates and
these are not deducted from payments to your account.
Independent third party broker-dealers who will act as wholesalers by assisting
us in finding broker-dealers interested in acting as distributors of the
contracts may also be contracted. These wholesalers may also provide training,
marketing and other sales related functions for us and for the distributors and
may provide certain administrative services to us in connection with the
contracts. Such wholesalers compensation may be paid based on purchase payments
for the contracts purchased through distributors selected by the wholesaler.
Third parties may also be designated to provide services in connection with the
contracts, such as reviewing applications for completeness and compliance with
insurance requirements and providing the distributors with approved marketing
material, prospectuses or other supplies. These parties will also receive
payments based on purchase payments for their services, to the extent
applicable securities laws and NASD rules allow such payments. All costs and
expenses related to these services will be paid by us or our affiliates.
CONTRACT MODIFICATION
Only an authorized officer of the Company may change the terms of the contract.
We may change the contract as required by federal or state law. In addition, we
may, upon 30 days' written notice to the contract holder, make other changes to
group contracts that would apply only to individuals who become participants
under that contract after the effective date of such changes. If the group
contract holder does not agree to a change, we reserve the right to refuse to
establish new accounts under the contract.
29
Certain changes will require the approval of appropriate state or
federal regulatory authorities.
TRANSFER OF OWNERSHIP; ASSIGNMENT
Your rights under a nonqualifiedcontract may be assigned or
transferred. An assignment of a contract will only be binding on us
if it is made in writing and sent to and accepted by us at our Service
Center. We will use reasonable procedures to confirm the assignment
is authentic, including verification of signature. If we fail to follow
our own procedures, we will be liable for any losses to you
directly resulting from the failure. Otherwise, we are not responsible
for the validity of any assignment. The rights of the contract holder
and the interest of the annuitant and any beneficiary will be subject
to the rights of any assignee we have on our records. We reserve the
right not to accept any assignment or transfer to a non-natural person.
In some cases, an assignment may have adverse tax consequences. You
should consult a tax adviser.
INVOLUNTARY TERMINATIONS
We reserve the right to terminate any account with a value of $2,500
or less immediately following a partial withdrawal. However, an IRA
may only be closed out when payments to the contract have not been
received for a 24-month period and the paid-up annuity benefit at
maturity would be less than $20 per month. If such right is exercised,
you will be given 90 days' advance written notice. No early withdrawal
charge will be deducted for involuntary terminations. We do not
intend to exercise this right in cases where the account value is
reduced to $2,500 or less solely due to investment performance.
LEGAL MATTERS AND PROCEEDINGS
The validity of the securities offered by this prospectus has been
passed upon by Counsel to the Company.
EXPERTS
We have incorporated by reference into Post Effective Amendment No. 9
to the Registration Statement of which this prospectus is a part
and/or into this prospectus.
- The balance sheets of the Company as of December 31, 2000 and 1999 and
the related statements of income, changes in shareholder's equity and cash flows
30
and the related schedule for each of the years in the three-year period ended
December 31, 2000.
- - The reports of________.
These statements are included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000. We have relied upon the reports of ________,
independent certified public accountants, and upon their authority as experts
in accounting and auditing.
GETTING FURTHER INFORMATION
This prospectus does not contain all of the information contained in the
registration statement of which this prospectus is a part. Portions of the
registration statement have been omitted from this prospectus as allowed by the
Securities and Exchange Commission (SEC). You may obtain the omitted
information from the offices of the SEC, as described below.
We are required by the Securities Exchange Act of 1934 to file periodic reports
and other information with the SEC. You may inspect or copy information
concerning the Company at the Public Reference Room of the SEC at:
Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549
You may also obtain copies of these materials at prescribed rates from the
Public Reference Room of the above office. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
You may also find more information about the Company at WWW.AETNAFINANCIAL.COM.
A copy of the Company's annual report on Form 10-K for the year ended December
31, 2000 accompanies this prospectus. We refer to Form 10-K for a description
of the Company and its business, including financial statements. We intend to
send contract holders annual account statements and other such legally required
reports. We do not anticipate such reports will include periodic financial
statements or information concerning the Company.
You can find this prospectus and other information the Company files
electronically with the SEC on the SEC's web site at WWW.SEC.GOV.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We have incorporated by reference the Company's latest Annual Report on
Form 10-K, as filed with the SEC and in accordance with the Securities and
Exchange Act of 1934. The Annual Report must accompany this prospectus.
Form 10-K contains additional information about the Company including certified
financial statements for the latest fiscal year. We have not filed any other
reports pursuant to Sections 13(a) or 15(d) of the Securities and Exchange Act
since the end of the fiscal year covered by that Form 10-K.
31
The registration statement for this prospectus incorporates some
documents by reference. We will provide a free copy of any such
documents upon the written or oral request of anyone who has received
this prospectus. We will not include exhibits to those documents unless
they are specifically incorporated by reference into the document.
Direct requests to:
Aetna Insurance Company of America
151 Farmington Avenue
Hartford, CT 06156
1-800-262-3862
INQUIRIES
You may contact us directly by writing or calling us at the address
or phone number shown above.
32
APPENDIX I
CALCULATING A MARKET VALUE ADJUSTMENT (MVA)
- ----------------------------------------------------------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENT FORMULA
The mathematical formula used to determine the MVA is:
x
----
((1+i)) 365
(-----)
((1+j))
Where:
- - i is the deposit period yield;
- - j is the current yield; and
- - x is the number of days remaining (computed from Wednesday of the week of
withdrawal) in the guaranteed term.
We make an adjustment in the formula of the MVA to reflect the period of time
remaining in the guaranteed term from the Wednesday of the week of a withdrawal.
EXPLANATION OF THE MARKET VALUE ADJUSTMENT FORMULA
The MVA essentially involves a comparison of two yields: the yield available at
the start of the current guaranteed term of the contract (the deposit period
yield) and the yield currently available (the current yield).
The MVA depends on the relationship between the following:
- - The deposit period yield of U.S. Treasury Notes that mature in the last
quarter of the guaranteed term; and
- - The current yield of these U.S. Treasury Notes at the time of withdrawal.
If the current yield is the lesser of the two, the MVA will decrease the amount
withdrawn from the contract to satisfy the withdrawal request (the MVA will be
positive). If the current yield is the higher of the two, the MVA will increase
the amount withdrawn from the contract to satisfy the withdrawal request (the
MVA will be negative, or detrimental to the investor). As a result of the MVA
imposed, the amount withdrawn from the contract prior to the maturity date may
be less than the amount paid into the contract.
To determine the deposit period yield and the current yield, certain information
must be obtained about the prices of outstanding U.S. Treasury Notes. This
information may be found each business day in publications such as the Wall
Street Journal, which publishes the yield-to-maturity percentages for all
Treasury Notes as of the preceding business day. These percentages are used in
determining the deposit period yield and the current yield for the MVA
calculation.
DEPOSIT PERIOD YIELD
Determining the deposit period yield in the MVA calculation involves
consideration of interest rates prevailing at the start of the guaranteed term
from which the withdrawal will be made, as follows:
- - We identify the Treasury Notes that mature in the last three months of
the guaranteed term; and
- - We determine the yield-to-maturity percentages of these Treasury Notes
for the last business day of each week in the deposit period.
The resulting percentages are then averaged to determine the deposit period
yield. The deposit period is the period of time during which the purchase
payment or any reinvestment may be made to available guaranteed terms. A deposit
period may be a month, a calendar quarter, or any other period of time we
specify.
33
CURRENT YIELD
To determine the current yield, we use the same Treasury Notes identified for
the deposit period yield--Treasury Notes that mature in the last three months of
the guaranteed term. However, the yield-to-maturity percentages used are those
for the last business day of the week preceding the withdrawal. We average these
percentages to determine the current yield.
EXAMPLES OF MVA CALCULATIONS
The following are examples of MVA calculations using several hypothetical
deposit period yields and current yields. These examples do not include the
effect of any early withdrawal charge that may be assessed under the contract
upon withdrawal.
EXAMPLE I.
Assumptions: Assumptions:
i, the deposit period yield, is 8% i, the deposit period yield, is 5%
j, the current yield, is 10% j, the current yield, is 6%
x, the number of days remaining (computed from x, the number of days remaining (computed from
Wednesday of the the week of withdrawal) Wednesday of week of withdrawal) in the
in the guaranteed term, is 927. guaranteed term, is 927.
x x
--- ----
MVA = ((1+i)) 365 MVA = ((1+i)) 365
(-----) (-----)
((1+j)) ((1+j))
927 927
---- ---
= ((1.08)) 365 = ((1.05)) 365
(------) (------)
((1.10)) ((1.06))
= .9545 = .9762
In this example the deposit period yield of 8% is less than the In this example the deposit period yield of 5% is less than
current yield of 10%, therefore, the MVA is less than one. The the current yield of 6%, therefore, the MVA is less than one.
amount withdrawn from the guaranteed term is multiplied by this The amount withdrawn from the guaranteed term is multiplied
MVA. by this MVA.
If a withdrawal or transfer of a specific dollar amount is If a withdrawal or transfer of a specific dollar amount is
requested, the amount withdrawn from a guaranteed term will requested, the amount withdrawn from a guaranteed term will
be increased to compensate for the negative MVA amount. For be increased to compensate for the negative MVA amount.
example, a withdrawal request to receive a check for $2,000 For example, a withdrawal request to receive a check for
would result in a $2,095.34 withdrawal from the guaranteed $2,000 would result in a $2,048.76 withdrawal from the
term. guaranteed term.
continued -
34
(Appendix I, continued)
EXAMPLE II.
Assumptions: Assumptions:
i, the deposit period yield, is 10% i, the deposit period yield, is 5%
j, the current yield, is 8% j, the current yield, is 4%
x, the number of days remaining (computed from Wednesday of x, the number of days remaining (computed from Wednesday of
the week of withdrawal) in the guaranteed term, is 927. the week of withdrawal) in the guaranteed term, is 927.
x x
--- ---
MVA = ((1+i)) 365 MVA = ((1+i)) 365
(-----) (-----)
((1+j)) ((1+j))
927 927
---- ---
= ((1.10)) 365 = ((1.05)) 365
(------) (------)
((1.08)) ((1.04))
= 1.0477 = 1.0246
In this example the deposit period yield of 10% is greater than In this example the deposit period yield of 5% is greater than
the current yield of 8%, therefore, the MVA is greater than one. the current yield of 4%, therefore, the MVA is greater than
The amount withdrawn from the guaranteed term is multiplied by one. The amount withdrawn from the guaranteed term is
this MVA. multiplied by this MVA.
If a withdrawal or transfer of a specific dollar amount is If a withdrawal or transfer of a specific dollar amount is
requested, the amount withdrawn from a guaranteed term will requested, the amount withdrawn from a guaranteed term will
be decreased to compensate for the positive MVA amount. For be decreased to compensate for the positive MVA amount.
example, a withdrawal request to receive a check for $2,000 For example, a withdrawal request to receive a check for
would result in a $1,908.94 withdrawal from the guaranteed $2,000 would result in a $1,951.98 withdrawal from the
term. guaranteed term.
35
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not Applicable
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Forida Statutes chapter 607.0859 governs the indemnification of officers,
directors, employees and agents of a Florida corporation. Section 607.0859(1)
provides that a corporation may indemnify a person who is or was a party to a
proceeding by reason of the fact that the person is or was a director,
officer, employee or agent of the corporation (or in certain other defined
circumstances) against liability (defined as obligations to pay a judgment,
settlement, penalty, fine, including an excise tax assessed with respect to
any employee benefit plan, and expenses actually and reasonably incurred with
respect to the proceeding). Section 607.0859(2) provides that a corporation
may indemnify a person who was or is a party to any proceeding by or in the
right of the corporation to procure a judgment in its favor by reason that
the person is or was connected to the corporation as noted in subsection (1)
against expenses and amounts paid in settlement not exceeding, in the
judgment of the board of directors, the estimated expense of litigating the
proceeding to conclusion, actually and reasonably incurred in connection with
the defense or settlement of such proceeding, including any appeal.
Indemnification under both subsection (1) and (2) is subject to a
determination that the person seeking indemnification has met the standard of
conduct set forth in the applicable subsection. However, pursuant to section
607.0859(3), to the extent that the person seeking indemnification has been
successful in defense of any proceeding, claim or issue referred to in
subsection (1) or (2), that person shall be indemnified against expenses that
he or she actually and reasonably incurred. Expenses incurred by an officer
or director in defending any such proceeding may be paid in advance of the
final disposition of the proceeding, provided that such person undertakes to
repay any such amount if he or she is ultimately found not to be entitled to
indemnification pursuant to section 607.0850. Expenses incurred by other
employees or agents may be advanced upon such terms and conditions deemed
appropriate by the board of directors.
Section 607.0850(4) provides that any indemnification under subsection (1) or
(2), unless made pursuant to a determination by a court, shall be made only
as authorized in the specific case upon a determination that that
indemnification is proper in the circumstances because the party has met the
applicable standard of conduct set forth in subsection (1) or (2). Such
determination may be made (a) by the disinterested directors, pursuant to
section 607.0850(4)(a); (b) by a committee duly designated by the board of
directors, pursuant to section 607.0850(4)(b); (c) by independent legal
counsel, pursuant to section 607.0850(4)(c); or (d) by the shareholders,
pursuant to section 607.0850(4)(d). The reasonableness of expenses and
authorization of indemnification shall be made in the same manner, except as
otherwise required by section 607.0850(5).
The indemnification and advancement of expenses provisions of section
607.0850 are not exclusive, and a corporation may make other or further
provisions for the indemnification or
advancement of expenses of parties identified in section 607.0850(1), except
as otherwise prohibited by section 607.0850(7). Indemnification and
advancement of expenses may also be ordered by a court of competent
jurisdiction, pursuant to section 607.0850(9). Section 607.0850(12)
specifically authorizes a corporation to procure indemnification insurance on
behalf of an individual who was a director, officer, employee or agent of the
corporation. Consistent with this statute, ING Groep N.V. has procured
insurance from Lloyd's of London and several major United States excess
insurers for its directors and officers and the directors and officers of its
subsidiary, including the Depositor.
ITEM 16. EXHIBITS
Exhibit No.
(1) Principal Underwriting Agreement between Aetna Insurance
Company of America and Aetna Investment Services, LLC(1)
(4) Instruments Defining the Rights of Security Holders
(a) Group Annuity Contract (Form No. G2-MGA-95)(2)
(b) Individual Annuity Contract (Form No. I2-MGA-95)(3)
(c) Certificate (G2CC-MGA-95) to Group Annuity Contract
Form No. G-MGA-95(4)
(d) Endorsement (E2-MGAIRA-95-2) to Group Annuity Contract
Form No. G2-MGA-95 and Certificate No. G2 CC-MGA-95(4)
(e) Endorsement (E2-MGAROTH-97) to Group Annuity Contract
Form No. G2-MGA-95 and Certificate No. G2CC-MGA-95(4)
(5) Opinion re Legality*
(10) Material contracts are listed under exhibit 10 in the
Company's Form 10-K for the fiscal year ended December 31,
2000 (File No. 33-81010), as filed with the Commission on
March __, 2001. Each of the exhibits so listed is incorporated
by reference as indicated in the Form 10-K
(13) Aetna Insurance Company of America Form 10-K for the fiscal
year ended December 31, 2000*
(23)(a) Consent of Independent Auditors*
(b) Consent of Legal Counsel (included in Exhibit (5) above)*
(24)(a) Powers of Attorney(5)
(b) Certificate of Resolution Authorizing Signature by Power
of Attorney(6)
(27) Financial Data Schedule*
Exhibits other than these listed are omitted because they are not required or
are not applicable.
*To be filed by amendment
1. Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-4 (File No. 333-87131), as filed on December 13, 2000.
2. Incorporated by reference to Registration Statement on Form S-2
(File No. 33-63657), as filed on October 25, 1995.
3. Incorporated by reference to Pre-Effective Amendment No. 3 to Registration
Statement on Form S-2 (File No. 33-63657), as filed on January 17, 1996.
4. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form S-2 (File No. 33-63657), as filed on November 24, 1997.
5. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 333-49581), as filed on January 29, 2001.
6. Incorporated by reference to Registration Statement on Form N-4
(File No. 33-59749), as filed on June 1, 1995.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes as follows, pursuant to Item
512 of Regulation S-K:
(a) Rule 415 offerings:
(1) To file, during any period in which offers or sales of the
registered securities are being made, a post-effective amendment
to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material changes to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
ITEM 18. FINANCIAL STATEMENTS AND SCHEDULES
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-2 and has duly caused this
Post-Effective Amendment No. 9 to the Registration Statement on Form S-2
(File No. 33-63657) to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Hartford, State of Connecticut, on this 31st
day of January, 2001.
AETNA INSURANCE COMPANY OF AMERICA
(REGISTRANT)
By: Thomas J. McInerney*
-------------------------
Thomas J. McInerney
President
Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 9 to Registration Statement on Form S-2 has been
signed by the following persons in the capacities and on the dates indicated.
Signature Title Date
Thomas J. McInerney* Director and President )
- ------------------------------------- (principal executive officer) )
Thomas J. McInerney )
)
Wayne R. Huneke* Director ) January
- ------------------------------------- ) 31, 2001
Wayne R. Huneke )
)
Philip R. Lowery* Director )
- ------------------------------------- )
Philip R. Lowery )
)
Robert C. Salipante* Director )
- ------------------------------------- )
Robert C. Salipante )
)
Mark A. Tullis* Director )
- ------------------------------------- )
Mark A. Tullis )
)
Michael W. Cunningham* Chief Financial Officer )
- ------------------------------------- )
Michael W. Cunningham )
)
Deborah Koltenuk* Corporate Controller )
- ------------------------------------- )
Deborah Koltenuk )
By: /s/ JULIE E. ROCKMORE
-------------------------------------
JULIE E. ROCKMORE
*Attorney-in-Fact
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
- ---------- ---------
16(5) Opinion re Legality *
16(13) Aetna Insurance Company of America Form 10-K
for the fiscal year ended December 31, 2000 *
16(23)(a) Consent of Independent Auditors *
16(23)(b) Opinion and Consent of Legal Counsel *
16(27) Financial Data Schedule *
*To be filed by amendment