Registration No. 333-55230
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Pan-American Assurance Company Variable Life Separate Account
(Exact Name of Trust)
B. Pan-American Assurance Company
(Name of Depositor)
C. Pan-American Life Center
601 Poydras Street
New Orleans, Louisiana 70130
(Complete address of depositor's principal executive offices)
D. Name and complete address of agent for service:
William Thiel Steen
Vice President, General Counsel and Corporate Secretary
Pan-American Life Insurance Company
Corporate Legal, 12th Floor
601 Poydras Street
New Orleans, Louisiana 70130
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
4401 West Tradewinds Avenue, Suite 207
Fort Lauderdale, Florida 33308
(954) 771-6667
E. Flexible Premium Adjustable Variable Life Insurance Policy
(Title and amount of securities being registered)
F. Proposed maximum aggregate offering price to the public of the
securities being registered:
Continuous offering
G. Amount of Filing Fee: Not Applicable
H. Approximate date of proposed public offering:
As soon as practicable after the effective date of this filing.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
N-8B-2 Item Caption in Prospectus
- ------------ ------------------------------
1(a) Other Information
(b) The Flexible Premium Adjustable Variable Life Insurance Policy
2 Other Information - Pan-American
3 Not Applicable
4 Other Information
5 Other Information
6(a) Not Applicable
(b) Not Applicable
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Purchases; Separate Account and Separate Account Fund Choices;
Access to Your Cash Surrender Value
11 Separate Account and Separate Account Fund Choices
12 Separate Account and Separate Account Fund Choices
13 Expenses
14 Purchases
15 Purchases
16 Purchases; Separate Account and Separate Account Fund Choices
17 Access to Your Cash Surrender Value
18 Access to Your Cash Surrender Value
19 Reports to Owners
20 Not Applicable
21 Access to Your Cash Surrender Value
22 Not Applicable
23 Not Applicable
24 Other Information
25 Other Information - Pan-American
26 Expenses
27 Other Information - Pan-American
28 Other Information - Executive Officers and Directors
29 Other Information - Pan-American
30 Other Information - Pan-American
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Other Information
36 Not Applicable
37 Not Applicable
38 Other Information
39 Other Information
40 Not Applicable
41 Not Applicable
42 Not Applicable
43 Not Applicable
44 Purchases
45 Separate Account and Separate Account Fund Choices; Other
Information
46 Purchases; Access to Your Cash Surrender Value
47 Not Applicable
48 Not Applicable
49 Not Applicable
50 Not Applicable
51 Other Information; Purchases; Pan-American; The Flexible Premium
Adjustable Variable Life Insurance Policy
52 Investment Options
53 Other Information
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICY
ISSUED BY
PAN-AMERICAN VARIABLE LIFE SEPARATE ACCOUNT
AND
PAN-AMERICAN ASSURANCE COMPANY
This Prospectus describes the Flexible Premium Adjustable Variable Life
Insurance Policy (Policies) offered by Pan-American Assurance Company
(Pan-American).
The Policy is a Life Insurance Policy and has been designed to be used
to create or conserve one's estate, retirement planning and other insurance
needs of individuals and businesses.
The Policy has 27 investment choices - a Fixed Account and 26 Separate
Account Funds listed below.
When you buy a Policy, to the extent you have selected Separate Account
Funds, you bear the complete investment risk. Your Accumulated Value in the
Policy, when based on the investment experience of the Separate Account Funds,
is variable and may increase or decrease. The duration or amount of the Death
Benefit may be fixed or may vary depending on the investment experience and the
Death Benefit Option selected.
You can put your Premiums into our Fixed Account and/or any of the
following Separate Account Funds:
MFS Variable Insurance Trust
Advised by MFS Management, Inc.
MFS Money Market Series - Initial Class
MFS Total Return Series - Service Class
MFS Investors Trust Series - Service Class (growth with income)(formerly, MFS
Growth with Income Series - Service Class)
MFS Emerging Growth Series - Service Class
MFS Investors Growth Stock Series - Service Class (formerly, MFS Growth Series -
Service Class)
MFS Utilities Series - Service Class
MFS Mid Cap Growth Series - Service Class
INVESCO Variable Investment Funds
Advised by Invesco Funds Group, Inc.
INVESCO Blue Chip Growth Fund
INVESCO Small Company Growth Fund
INVESCO Technology Fund
INVESCO Health Sciences Fund
INVESCO Financial Services Fund
INVESCO Dynamics Fund (mid cap growth)
INVESCO Equity Income Fund
Berger Institutional Products Trust
Advised by Berger, LLC
Berger IPT - Large Cap Growth Fund
Berger IPT - Small Company Growth Fund
Berger IPT - International Fund
(sub-advised by Bank of Ireland Asset Management (U.S.), Limited)
Berger IPT - New Generation Fund (mid cap growth)
J.P. Morgan Series Trust II
Advised by J.P. Morgan Investment Management, Inc.
J.P. Morgan Bond Portfolio
J.P. Morgan U.S. Disciplined Equity Portfolio
J.P. Morgan Small Company Portfolio
J.P. Morgan International Opportunity Portfolio
Dreyfus Investment Portfolios
Advised by Founder Assets Management, LLC
Dreyfus Investment Portfolios - Founders Growth Portfolio
Dreyfus Investment Portfolios - Founders Discovery Portfolio (small value)
Dreyfus Investment Portfolios - Founders Passport Portfolio (small cap growth)
Dreyfus Investment Portfolios - Founders International Equity Portfolio
(large cap growth)
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
Please read this Prospectus before investing and keep it on file for future
reference. It contains important information about the Pan-American Flexible
Premium Adjustable Variable Life Insurance Policy. The Securities and Exchange
Commission maintains a website (http://www.sec.gov) that contains information
regarding companies that file electronically with the Commission.
The Policies:
o are not bank deposits
o are not federally insured
o are not endorsed by bank or government agency
o are not guaranteed and may be subject to loss of principal
Date:
TABLE OF CONTENTS
DEFINITIONS...................................................................
SUMMARY .....................................................................
The Flexible Premium Adjustable Variable Life Insurance Policy.......
Purchases............................................................
Investment Choices...................................................
Death Benefit........................................................
Taxes ............................................................
Access to Your Cash Surrender Value..................................
Other Information....................................................
EXPENSES .....................................................................
Premium Expense Charges..............................................
Monthly Deduction ...................................................
The Cost of Insurance Charge.........................................
Cost of Insurance Rates .............................................
Administrative Charge................................................
Selection and Issue Charge...........................................
Asset Charge.........................................................
Rider Charges........................................................
Surrender Charges....................................................
Transfer Charge Expenses.............................................
Taxes ............................................................
Separate Account Fund Expenses.......................................
PART I - THE VARIABLE LIFE INSURANCE POLICY...................................
PURCHASES.....................................................................
Payment of Premiums..................................................
Allocation of Net Premiums...........................................
Grace Period.........................................................
Insufficient Cash Surrender Value....................................
Reinstatement........................................................
Right To Refund......................................................
THE SEPARATE ACCOUNT AND SEPARATE ACCOUNT FUND CHOICES........................
Substitution and Limitations on Further Investments..................
Transfers............................................................
Telephone Transfers..................................................
Dollar Cost Averaging................................................
Asset Rebalancing....................................................
Accumulation Unit Values.............................................
FIXED ACCOUNT.................................................................
DEATH BENEFIT.................................................................
Change in Death Benefit Option.......................................
Change in Specified Amount...........................................
TAXES .....................................................................
Life Insurance in General............................................
Taking a Distribution From Your Policy...............................
Diversification......................................................
ACCESS TO YOUR CASH SURRENDER VALUE...........................................
Full Surrender.......................................................
Effect of a Partial Surrender on Your Specified Amount...............
LOANS .....................................................................
Loan Interest (Charged)..............................................
Loan Interest (Credited).............................................
Loan Repayment.......................................................
OTHER INFORMATION.............................................................
Pan-American.........................................................
Riders ............................................................
Paid-Up Insurance....................................................
Optional Methods of Settlement.......................................
General Policy Provisions...........................................
Distributors.........................................................
Suspension of Payments or Transfers..................................
Ownership............................................................
Beneficiary..........................................................
Executive Officers and Directors.....................................
Voting ............................................................
Disregard of Voting Instructions.....................................
Legal Opinions.......................................................
Federal Tax Status...................................................
Reports to Owners....................................................
Legal Proceedings....................................................
Experts ............................................................
Financial Statements.................................................
APPENDIX A
ILLUSTRATIONS OF POLICY VALUES.......................................
APPENDIX B
EXAMPLES OF CALCULATIONS OF SURRENDER CHARGE ........................
DEFINITIONS
Accumulated Value: The sum of your Policy values in the Separate Account Funds,
the Fixed Account and the Loan Account.
Accumulation Unit: A unit of measure used to calculate your Accumulated Value in
the Separate Account Funds.
Age: Issue Age is the age of the Insured on Insured's nearest birthday on the
Policy Date. Attained Age is the Insured's Issue Age plus the number of
completed Policy Years as of the date for which age is being determined.
Beneficiary: The person or persons named in the application or at a later date
to receive the Death Benefit under the Policy or any rider(s).
Business Day: Each day that the New York Stock Exchange and We are open for
business. The Separate Account will be valued each Business Day.
Cash Surrender Value: Your Accumulated Value less any Surrender Charge.
Death Benefit: The amount used to determine the proceeds payable upon the death
of the Insured.
Effective Date of Coverage: The effective date of coverage under this policy
shall be as follows:
o The Policy Date shall be the effective date for all coverage provided in
the application.
o For any increase or addition to coverage, the effective date shall be the
Monthly Anniversary Day on which we first charge for the coverage.
o For any insurance that has been reinstated, the effective date shall be The
Monthly Anniversary Day on which we resume assessing the Monthly
Deductions.
Fixed Account: A portion of the General Account into which you can allocate Net
Premiums or transfer Accumulated Values. It does not share in the investment
experience of the Separate Account.
General Account: Our general investment account, which includes the Fixed
Account and the Loan Account, contains our assets with the exception of the
Separate Account and other segregated asset accounts.
Grace Period: The period we provide you to make a payment of a premium
sufficient to cover the Monthly Deduction when your Cash Surrender Value becomes
insufficient to keep your Policy in force.
Indebtedness: Unpaid Policy loans plus unpaid Policy loan interest.
Insured: The person whose life is insured under the Policy.
Loan Account: An account established within our General Account for any amounts
transferred from the Fixed Account and the Separate Account as a result of
loans. The Loan Account is credited with interest and is not based on the
experience of any Separate Account.
Maturity Date: The Policy Anniversary nearest the Insured's 100th birthday. If
increases in the Specified Amount or other Policy charges result in multiple
Maturity Dates, the Maturity Date will then be modified to be the first of all
such Maturity Dates.
Monthly Anniversary Day: The same day of each month as the Policy Date for each
succeeding month the Policy remains in force. If the Monthly Anniversary Day
falls on a day that is not a Business Day, any Policy transaction due as of that
day will be processed the first Business Day following such date.
Monthly Deduction: The amount we deduct from your Accumulated Value each month
which covers some of the costs associated with your Policy.
Net Premium: We deduct a Premium Expense Charge from each Premium paid. The Net
Premium is the Premium paid less the Premium Expense Charge.
Owner: The person entitled to all the ownership rights under the Policy. If
Joint Owners are named, all references to you or Owner shall mean Joint Owners.
Policy: The Policy includes the basic policy, applications and any riders or
endorsements.
Policy Anniversary: The same month and day as the Policy Date for each
succeeding year the Policy remains in force. If the Policy Anniversary falls on
a day that is not a Business Day, any Policy transaction due as of that day will
be processed the first Business Day following such date.
Policy Date: The Policy Date is the day set by us or agreed to by us from which
Policy Months and Policy Anniversaries are determined. All riders, increases,
decreases, reinstatements and changes in insurance coverage will be effective on
a Monthly Anniversary Day.
Policy Month: The one-month period from the Policy Date to the same date of the
next month, or from one Monthly Anniversary Day to the next.
Policy Year: The one year period from the Policy Date to the first Policy
Anniversary or from one Policy Anniversary to the next.
Premium: A payment you make towards the Policy and that does not re-pay any
Indebtedness.
Premium Expense Charge: We deduct a Premium Expense Charge from each Premium
Payment. It is your Premium Payment less the Premium Expense Charge which is
allocated to the Fixed Account or Separate Account.
Separate Account: A segregated asset account maintained by us in which a portion
of our assets has been allocated for the Policies as well as other policies.
Separate Account Funds: Those investment options available through the Separate
Account.
Specified Amount: A dollar amount used to determine the death benefit of your
policy. This amount is chosen by you. You can increase and decrease the
Specified Amount subject to the terms of your Policy. The initial Specified
Amount is that amount in place on the Policy Date.
We, Us, Our, and Ours: Pan-American Assurance Company.
You, Your, and Yours: The Owner of the Policy.
SUMMARY
The Flexible Premium Adjustable Variable Life Insurance Policy: The Flexible
Premium Adjustable Variable Life Insurance Policy offered by Pan-American is a
contract between you, the Owner, and Pan-American, a life insurance company.
The Policy provides for life insurance coverage on the person Insured and
provides for the payment of the Death Benefit to your selected Beneficiary upon
the death of the Insured, which generally shall be excludable from the gross
income of the Beneficiary. The Insured can be the same person as the Owner, but
does not have to be.
Under the Policy, the Minimum Initial Premium is due on or before coverage under
a Policy can begin. You may thereafter, subject to certain limitations, make
Premium payments, in any amount and any frequency. The Policy provides an
Accumulated Value, surrender rights, loan privileges and other features
traditionally associated with life insurance.
The Policy can lapse (terminate without value) when the Cash Surrender Value is
insufficient to cover the Monthly Deduction and a Grace Period of 65 days has
expired without an adequate payment being made.
You should consult your Policy for further understanding of its terms and
conditions and for any state-specific provisions and variances that may apply to
your Policy.
Purchases: You can buy the Policy by completing the proper forms. Your
Registered Representative can help you. The Minimum Initial Premium we will
accept will be computed for you with respect to the Specified Amount you have
requested. In some circumstances, we may contact you for additional information
regarding the Insured and may require the Insured to provide us with medical
records, a physician's statement or a complete medical examination.
The Policy is a flexible premium adjustable variable life insurance policy and,
unlike traditional insurance policies, there is no fixed schedule for Premium
payments after the initial premium. Under most circumstances it is anticipated
that you will need to make additional Premium payments, after the initial
premium, to keep the Policy in force. You can arrange with us to make Planned
Premium Payments.
Investment Choices: You may invest in the Fixed Account or in any or all of the
Separate Account Funds which are listed in the "Separate Account and Separate
Account Fund Choices" section below and which are more fully described in the
prospectuses for the Separate Account Funds.
Death Benefit: The amount of the Death Benefit depends on many factors, as
explained on page ____. The actual amount payable to your Beneficiary is the
Death Benefit less any Indebtedness.
At the time of application for a Policy, you designate a Beneficiary who is the
person or persons who will receive the Death Benefit. You may change your
Beneficiary at any time, unless you have designated an irrevocable Beneficiary.
The Beneficiary does not have to be a natural person.
Taxes: Your Policy has been designed to comply with the definition of life
insurance in the Internal Revenue Code. As a result, the Death Benefit paid
under the Policy should generally be excludable from the gross income of the
Beneficiary; however, Qualified plans are typically an exception to this. Your
earnings in the Policy are not taxed until you take them out. The tax treatment
of the loan proceeds and surrender proceeds will depend on whether the Policy is
considered a Modified Endowment Contract (MEC) as defined in the Internal
Revenue Code. Proceeds taken out of a MEC are considered to come from earnings
first and are includable in taxable income. If you are younger than 59 1/2 when
you take proceeds out of a MEC, you may also be subject to a 10% Federal tax
penalty on the earnings withdrawn.
Access to Your Cash Surrender Value: You can terminate your Policy at any time
and we will pay you the Cash Surrender Value of your Policy less any
Indebtedness. After the first Policy Year, you may surrender a part of your Cash
Surrender Value subject to the requirements of the Policy. When you terminate
your Policy, we will assess a Surrender Charge, and when you make a Partial
Surrender, we may assess a Partial Surrender Charge.
You can also borrow from us using your Policy as collateral.
Other Information:
Right to Examine Policy: Within 20 days (or longer if required in your state)
after the Policy is received, it may be cancelled for any reason by delivering
or mailing it to our Home Office or the Registered Representative through whom
it was purchased. This means that your letter to us must be postmarked no later
than 20 days after you receive the policy. In most states, we will refund to you
your Premiums paid or Accumulated Value plus any charges we deducted from your
Premium payment. This amount may be more or less than your Premium payment. If
you reside in a state that requires us to refund your Premium payment, then all
of your Premium payments are directed into the Fixed Account during the Right to
Examine Policy Period. In these cases, at the end of the Right to Examine Policy
Period, the Accumulated Value is reallocated in accordance with your Premium
allocation instructions on record.
Who should purchase this life insurance Policy? This life insurance Policy is
designed for individuals and businesses that have a need for death protection
but who also desire to potentially increase the values in their Policies through
investment in the Separate Account Funds.
This life insurance Policy offers individuals the ability to:
1. create or conserve one's estate;
2. supplement retirement income;
3. access Separate Account Funds through loans and
surrenders.
This life insurance Policy offers businesses the ability to:
1. protect the business in the event a key employee dies;
2. provide debt protection for business loans;
3. create a fund for employee benefits, buy-outs and
future business needs.
If you currently own a variable insurance policy on the life of the Insured, you
should consider whether the purchase of the Policy is appropriate.
Also, you should carefully consider whether the Policy should be used to replace
an existing Policy on the life of the Insured.
Inquiries: If you need more information about buying a Policy or if you need
Policy Owner service (such as to change Policy information, to inquire into
Policy values or to make a loan), please contact us at our Home Office:
Pan-American Assurance Company
Pan-American Life Center
601 Poydras Street
New Orleans, Louisiana 70130
1-877-WEWILL-0 (1-877-929-4550)
Reproposals: You can request that we prepare for you information on
modifications to your Policy once it has been issued to you. These requests can
be made to us at our Home Office directly by you or by your Registered
Representative. We have reserved the right in the Policy to assess up to $100 to
reimburse us for the costs associated with preparing such Reproposals. Such
modifications would include changes in Death Benefit options, changes in
Specified Amount and changes in premium amount. However, changes in allocations
are not usually considered appropriate for re-proposal.
EXPENSES
There are charges and other expenses associated with the Policy that reduce the
return on your investment in the Policy. The charges and expenses are:
Premium Expense Charges
We deduct a Premium Expense Charge from each Premium payment that you make. Any
portion of a payment which is applied to repay a loan will not be subject to a
Premium Expense Charge. (See "Loans - Loan Repayment" below.) The Premium
Expense Charge is 5.75% of each premium paid in all Policy Years.
The Premium Expense Charge is to cover some of our costs incurred in selling the
Policy and in issuing it, such as commissions, premium tax, Federal taxes and
administrative costs.
Monthly Deduction
On the Policy Date and on each Monthly Anniversary Day thereafter, we make a
Monthly Deduction from the Accumulated Value of your Policy. The Monthly
Deduction will be taken on a pro-rata basis from the Separate Account Funds and
the Fixed Account, exclusive of the Loan Account. The Monthly Deduction is the
sum of:
1. the Cost of Insurance Charge;
2. the Administrative Charge;
3. the Selection and Issue Charge; and
4. the cost for any Policy riders.
The Cost of Insurance Charge
This charge compensates us for insurance coverage provided for the month and
certain other expenses. The cost of insurance is determined separately for the
initial Specified Amount and for any subsequent increases.
The cost of insurance for the Insured is calculated as (a), multiplied by the
result of (b) minus (c), where:
(a) is the cost of insurance rate as described in the Cost of Insurance Rates
section;
(b) is the Insured's Death Benefit at the beginning of the Policy month; and
(c) is the Accumulated Value at the beginning of the Policy month. For purposes
of calculating the cost of insurance as discussed above, if you have
elected Option 1 and you have made increases to your Specified Amount, then
your Accumulated Value shall be considered first to be a part of the
Specified Amount up to the initial Specified Amount. If your Accumulated
Value exceeds the initial Specified Amount, it shall then be considered a
part of additional Specified Amount resulting from increases in the order
of the increases. We do this because we calculate the cost of insurance for
the initial Specified Amount and each increase separately.
Cost of Insurance Rates
The monthly cost of insurance rate is based on the gender, attained age, Policy
Year and rating class at issue or date of increase of the Insured. Attained age
means age nearest birthday on the prior anniversary of the original amount of
insurance or each increase, as applicable. We reserve the right to adjust the
monthly cost of insurance rates uniformly by class based on changing
expectations. However, the cost of insurance rates will not be greater than
those shown in the Table of Guaranteed Maximum Insurance Rates shown in your
Policy. The guaranteed cost of insurance rates are based on the gender distinct
1980 CSO Smoker or Nonsmoker Mortality Table, Age Nearest Birthday.
Administrative Charge
We assess an Administrative Charge which is five dollars ($5) per month. This
charge compensates us for some of our administrative costs.
Selection and Issue Charge
The Selection and Issue Charge is assessed upon each $1,000 of Specified Amount
and is applied separately to the initial Specified Amount and to each increase
in Specified Amount. The charge is based upon the age at issue of the coverage
segment, gender, rate class, the Specified Amount of the coverage segment, and
Policy Year of the coverage segment. This charge compensates us for costs
incurred in administering features of the Policy, underwriting costs, and
certain administrative costs.
Reproposals
You may request that we prepare a reproposal. We have reserved the right to
assess a fee up to $100 for the preparation of such reproposal.
Extension of Maturity Date
You will be assessed a $100 administration fee upon the Maturity Date, unless
you elect not to extend your Maturity Date.
Asset Charge
We assess an Asset Charge as part of the daily calculation of the Accumulation
Unit Value for each Separate Account Fund which is expressed on an annual basis
as 0.75% of the Separate Account during the first 10 Policy Years, and 0.40%
thereafter. The daily charge is 0.002055% during the first 10 Policy Years and
0.001096% thereafter. This charge compensates us for some of our administrative
expenses and mortality risks.
Rider Charges
We charge separately for some of the riders that may be attached to the Policy.
We deduct any cost of these riders for a Policy Month as part of the Monthly
Deduction on each Monthly Anniversary Day.
Surrender Charges
We will assess a charge against the Accumulated Value of the Policy if this
Policy is surrendered within the Surrender Charge Period described in the
"Access to Your Cash Surrender Value" section. This charge compensates us for
certain sales and administrative expenses and financial risks. There is an
example of how the Surrender Charges work in Appendix B to this Prospectus. The
Surrender Charge is specific to your Policy and is shown on your Policy
Schedule. The highest possible Surrender Charge that we would assess is for a 55
year old male smoker and it is $45.50 per $1,000 of Specified Amount.
If there is an increase in the Specified Amount, additional Surrender Charges
will apply to the amount of the increase. These additional Surrender Charges
apply for a Surrender Charge Period following the increase in Specified Amount
which appears on the Policy contract amendment that places the increase in
effect.
If you make a Partial Surrender, a Partial Surrender Charge will be deducted
from the Accumulated Value equal to the greater of: $25 or (a) multiplied by the
ratio, not to exceed 1, of (b) minus (c), all divided by (d), where:
(a) is the Surrender Charge;
(b) is the sum of the Partial Surrender amount and all previous Partial
Surrenders;
(c) is the 50% Exclusion Percentage. See discussion below.
(d) is the Cash Surrender Value.
This 50% Exclusion Percentage allows you to surrender or withdraw 50% of your
cash surrender value without a surrender charge. Only when a withdrawal will
cause more than 50% of the cash surrender value to have been taken out of the
policy will we assess a surrender charge. Every time a withdrawal or partial
surrender is taken, we will look at all partial surrenders or withdrawals that
have been taken to date to see if the 50% Exclusion Percentage has been
exceeded. Until that 50% figure is reached, we will charge only $25 per
surrender.
Transfer Charge Expenses
We reserve the right to assess a maximum transfer charge of $25.00 per transfer
after the first twelve (12) transfers in any Policy Year have been made. This
charge compensates us for some of the costs associated with processing a
transfer.
Pre-scheduled transfers, which include those made pursuant to the Dollar Cost
Averaging Option, the Asset Rebalancing Option, and the Right to Examine Policy
Period, as set forth in the "Transfers" section, will not count towards the
limitation to twelve free transfers.
Taxes
We reserve the right to deduct any taxes levied by any governmental entity
which, at our sole discretion, are determined to have resulted from the
administration of the Policy.
Separate Account Fund Expenses
The annual expenses of the Separate Account Funds for the year ending December
31, 2000, below are based on the date provided by the respective Fund Groups. We
have not independently verified such data. Future expenses may be greater or
less than those shown.
FUND EXPENSES
(as a percentage of the average daily net assets of a Fund for
the most recent fiscal year, except as noted)
Total Annual
Reimbursements Portfolio
Management + 12b-1 + Other - (for certain = Expenses(After
Fees Fees Expenses Portfolios) Reimbursements)
------------- ------- ------------ --------------- --------------
MFS VARIABLE INSURANCE TRUST(1)
MFS Money Market Series (Initial Class) .50% -- .49% .37% .62%
MFS Mid Cap Growth Series (Service Class) .75% .20% 1.46% 1.30% 1.11%
MFS Investors Trust Series (Service Class) .75% .20% .12% -- 1.07%
MFS Total Return Series (Service Class) .75% .20% .15% -- 1.10%
MFS Emerging Growth Series (Service Class) .75% .20% .10% -- 1.05%
MFS Investors Growth Stock Series
(Service Class) .75% .20% .17% .01% 1.11%
MFS Utilities Series (Service Class) .75% .20% .16% -- 1.11%
BERGER INSTITUTIONAL PRODUCTS TRUST(2)
Berger IPT Small Company Growth Fund .85% -- .13% -- .98%
Berger IPT Large Cap Growth Fund .75% -- .15% -- .90%
Berger IPT New Generation Fund .85% -- 2.67% 2.37% 1.15%
Berger IPT--International Fund .85% -- 1.27% .92% 1.20%
DREYFUS INVESTMENT PORTFOLIOS(3)
Founders Discovery Portfolio .90% .25% .63% .28% 1.50%
Founders Passport Portfolio 1.00% .25% 2.64% 2.39% 1.50%
Founders International Equity Portfolio 1.00% .25% 2.77% 2.52% 1.50%
Founders Growth Portfolio .75% .25% 1.58% 1.58% 1.00%
INVESCO VARIABLE INVESTMENT FUNDS, INC.(4)
INVESCO VIF - Blue Chip Growth Fund .85% -- 2.03% 1.03% 1.85%
INVESCO VIF - Dynamics Fund .75% -- .34% -- 1.09%
INVESCO VIF - Equity Income Fund .75% -- .33% -- 1.08%
INVESCO VIF - Financial Services Fund .75% -- .34% -- 1.09%
INVESCO VIF - Health Sciences Fund .75% -- .32% -- 1.07%
INVESCO VIF - Small Company Growth Fund .75% -- .68% .06% 1.37%
INVESCO VIF - Technology Fund .72% -- .30% -- 1.02%
JP MORGAN SERIES TRUST II(5)
Small Company Portfolio .60% -- .72% .17% 1.15%
Bond Portfolio .30% -- .45% -- .75%
International Opportunity Portfolio .60% -- 1.13% .53% 1.20%
US Disciplined Equity Portfolio .35% -- .50% -- .85%
(1) The MFS Money Market Series consists of initial class shares, all other MFS
series consist of service class shares. Each series has adopted a
distribution plan under Rule 12b-1 that permits it to pay marketing and
other fees to support the sale and distribution of service class shares
(these fees are referred to as distribution fees). Each series has an
expense offset arrangement that reduces the series' custodian fee based
upon the amount of cash maintained by the series with its custodian and
dividend-disbursing agent. The series may enter into other similar
arrangements and directed brokerage arrangements, which would also have the
effect of reducing the series' expenses. 'Other Expenses' do not take into
account these expense reductions, and are therefore higher than the actual
expenses of the series. Had these fee reductions been taken into account,
'Total Annual Portfolio Expenses' would be lower, and for service class
shares would be estimated to be: 1.10% for Mid Cap Growth Series, 1.06% for
Investors Trust Series, 1.09% for Total Return Series, 1.04% for Emerging
Growth Series, 1.10% for Investors Growth Stock Series, 1.10% for Utilities
Series. MFS has contractually agreed, subject to reimbursement, to bear the
series' expenses such that 'Other Expenses'(after taking into account the
expense offset arrangement described above) do not exceed 0.15% annually.
These contractual fee arrangements will continue until at least May 1,
2002, unless changed with the consent of the board of trustees.
(2) Under a written contract, the Funds' investment adviser has agreed to waive
its advisory fee and reimburse the Funds to the extent that, at any time
during the life of a Fund, such Fund's annual operating expenses exceed a
specified amount (1.15% for Berger IPT_New Generation Fund and 1.20% for
Berger IPT_International Fund). The contract may not be terminated or
amended except by a vote of the Funds' Board of Trustees. Absent the waiver
and reimbursements, the 'Total Annual Portfolio Expenses' would have been
3.52% for Berger IPT_New Generation Fund and 2.12% for Berger
IPT_International Fund. Effective May 12, 2000, the investment advisory fee
charged to Berger IPT_International Fund was reduced to the following rates
of average daily net assets: 0.85% of the first $500 million, 0.80% of the
next $500 million, and 0.75% over $1 billion. The amount shown reflects the
restated advisory fee.
(3) The Dreyfus Corporation has agreed, until December 31, 2001, to waive
receipt of its fees and/or assume the expenses of the portfolio so that the
expenses (excluding taxes, brokerage commissions, extraordinary expenses,
19 interest expenses and commitment fees on borrowings) do not exceed a
stated amount: 1.50% for Founders Discovery Portfolio, 1.50% for Founders
Passport Portfolio, 1.50% for Founders International Equity Portfolio, and
1.00% for Founders Growth Portfolio.
(4) The Funds' actual 'Other Expenses' and 'Total Annual Portfolio Expenses'
were reduced under an expense offset arrangement. Certain expenses of the
Funds were absorbed voluntarily by INVESCO pursuant to a commitment between
the Funds and INVESCO. This commitment may be changed at any time following
consultation with the board of directors. Before absorption of these
expenses, the Funds' 'Total Annual Portfolio Expenses' would have been as
follows: 2.88% for INVESCO VIF - Blue Chip Growth and 1.43% for INVESCO VIF
- Small Company Growth.
(5) Reflects an agreement by Morgan Guarantee Trust Company of New York, an
affiliate of J.P. Morgan, to reimburse certain portfolios, to the extent
that certain expenses exceed a stated amount of the portfolios' average
daily net assets during fiscal year 2001. That stated amount is 1.15% for
the Small Company Portfolio and 1.20% for the International Opportunities
Portfolio.
PART I
THE VARIABLE LIFE INSURANCE POLICY
The flexible premium adjustable variable life insurance policy ("Policy") is a
contract between you, the Owner, and Pan-American Assurance Company
("Pan-American"), a life insurance company. The Policy provides for life
insurance coverage on the person Insured and has Accumulated Values, a Death
Benefit, surrender rights, loan privileges and other characteristics associated
with traditional and universal life insurance. However, since the Policy is a
variable life insurance policy, the Accumulated Value, to the extent invested in
the Separate Account Funds, will increase or decrease depending upon the
investment experience of those Separate Account Funds selected. The duration or
amount of the Death Benefit may also vary based on the investment performance of
the underlying Separate Account Funds. To the extent you allocated Premium or
Accumulated Value to the Separate Account, you bear the investment risk. If the
Cash Surrender Value less any Indebtedness is insufficient to pay the Monthly
Deductions, the Policy may terminate.
Because the Policy is like traditional and universal life insurance, it provides
a Death Benefit which will be paid to your named Beneficiary. Upon the death of
the Insured, the Death Benefit, less any Indebtedness, is paid to your
Beneficiary. The proceeds should be excludable from the gross income of the
Beneficiary. The tax-free Death Benefit makes this an excellent way to
accumulate money you do not think that you will use in your lifetime and is a
tax-efficient way to provide for those you leave behind. If you need access to
your Cash Surrender Value, you can borrow from the Policy or make a total or
Partial Surrender.
You should consult your Policy for a further understanding of its terms and
conditions and for any state-specific provisions and variances that may apply to
your Policy.
PURCHASES
Payment of Premiums
Premiums are the monies you give us to buy the Policy. The Minimum Initial
Premium is the smallest initial Premium amount that you can submit to us. The
Minimum Initial Premium is equal to one Minimum Monthly Premium as set forth in
your Policy Schedule. The Policy will not take effect until it has been
delivered and the Minimum Initial Premium has been paid prior to death and prior
to any change in health as shown in the application. The Minimum Initial Premium
and all other Premiums are payable at our Home Office. Receipts will be
furnished upon request.
The Policy is a Flexible Premium Policy which allows you to make Premium
payments in any amount and at any time, subject of course to making sufficient
Premium payments to keep the Policy in force. Even though the Policy is
flexible, when you apply for coverage, you can establish a schedule of Planned
Premium Payments. The Planned Premium Payments are selected by you. Therefore,
they will differ from Policy to Policy. You should consult your Registered
Representative about your Planned Premium Payments. The amounts and frequency of
Planned Premium Payments are shown in your Policy Schedule.
The Planned Premium Payment amount and frequency is selected on the application.
The frequency may be quarterly, semi-annually, or annually. A monthly frequency
is available only through pre-authorized check or list bill (i.e., we will not
bill you more than once every three months). Planned Premium Payments may be
changed at any time, but we reserve the right to limit increases in Planned
Premium Payments. You will be sent reminder notices for Planned Premium
Payments. In the event Planned Premium Payments are not continued, insurance
coverage under the Policy and any benefits provided by rider will be continued
in force. Such coverage shall continue until your Cash Surrender Value is
insufficient, as described in the Grace Period section, below.
For any payment received which immediately increases the net amount at risk, we
reserve the right to return the payment until the Insured receives underwriting
approval from us. (Net amount at risk is equal to the difference between the
Death Benefit and the Accumulated Value.) All Premium payments must be at least
$25.
Allocation of Net Premiums
We will allocate your initial Net Premium to your Policy on the later of the
Policy Date or the Business Day following receipt of the Premium at our Home
Office. The Policy has a provision called the Right to Examine Policy which
allows you to cancel, for any reason, your Policy within 20 days (or the period
required in your state) after the Policy is first received. If you reside in a
state that requires us to return to you your Premium payment, then all Premium
payments will be directed into the Fixed Account during the Right to Examine
Policy Period. In these cases, at the end of the Right to Examine Policy Period,
the Accumulated Value will be reallocated in proportion to the Premium
allocation instructions on record.
Subsequent Net Premiums will be allocated according to the Premium allocation
instructions on record, and you may change the Premium allocation instructions
at any time by written notice in a form satisfactory to us at our Home Office.
Premium allocation instructions must be at least one-percent (1%) and must be
stated in whole percentages. Currently, each Policy can have only 25 Separate
Account Funds which includes both active and historical. For example, if you
initially chose the MFS Money Market Series but later transferred all of your
Accumulated Value to another Separate Account Fund, the MFS Money Market Series
would continue to be counted toward the 25. However, if you later elected to
allocate premium or to transfer Accumulated Value to the MFS Money Market
Series, it would still count as only one of your 25 fund allocations. There are
currently no other restrictions, but we reserve the right to further limit
availability of Separate Account Fund allocations as well as allocations to the
Fixed Account.
Grace Period
Your Policy will stay in effect as long as your Cash Surrender Value is
considered to be sufficient. The Cash Surrender Value would be considered
insufficient when the Cash Surrender Value less any Indebtedness on any Monthly
Anniversary Day is not sufficient to cover the Monthly Deduction for the next
month. If the Cash Surrender Value of your Policy is determined to be
insufficient, we will mail you a notice. A Grace Period will be granted for the
payment of a Premium sufficient to keep the Policy in force. The Grace Period
will last 65 days from the Monthly Anniversary Day that the Cash Surrender Value
became insufficient.
Notice of the Premium payment required to keep your Policy in force will be
mailed to your last known address. On each Monthly Anniversary Day, the Monthly
Deduction is made. On any Monthly Anniversary Day when there is insufficient
cash surrender value, a notice is produced and mailed as part of the normal
processing routine. If such Premium payment is not made within the Grace Period,
all coverage under your Policy will terminate without value at the end of the
Grace Period. If a death occurs during the Grace Period, the proceeds paid will
equal the Death Benefit at the start of the Grace Period, plus any applicable
benefits provided by rider, less any Indebtedness and less overdue Monthly
Deductions as of the date of death.
Insufficient Cash Surrender Value
During the Minimum Premium Period (which is usually 5 years, but may be less in
some states and may vary by Issue Age) the Cash Surrender Value should be
sufficient to keep the Policy in force if A - B - C is equal to or exceeds (D x
E), where:
A is the sum of the total Premiums paid to date:
B is all Partial Surrenders to date;
C is any Indebtedness;
D is the Minimum Monthly Premium (which is set for each Policy at the time of
issue and which is shown on your Policy Schedule); and
E is the number of months since the Policy Date, including the current month.
In this case, the Policy will remain in effect. If there is a change in riders
or in Specified Amount during the Minimum Premium Period, the minimum Premiums
will be recalculated.
In other circumstances, when the Premium requirements are not met and if the
Cash Surrender Value becomes insufficient, the Policy will terminate subject to
the Grace Period section. Once the policy is terminated there is no coverage
unless we specifically approve reinstatement.
Reinstatement
If your Policy terminates, as provided in the Grace Period section, it may be
reinstated at any time within five years after the date of termination and prior
to the Maturity Date. The reinstatement is subject to:
o receipt of evidence of insurability of the Insured satisfactory to us to
reinstate the base Policy; and
o receipt of evidence of insurability of any person covered by any rider to
reinstate the rider to the Policy; and
o payment of a Premium sufficient to keep the Policy in force for two months;
and
o payment or reinstatement of any Indebtedness against the Policy; and
o reinstatement of the Surrender Charge that was in effect at the time of the
lapse in the Policy.
The payments made to reinstate the Policy will be allocated according to the
last Premium allocation instructions on record. The effective date of the
reinstatement shall be the Monthly Anniversary Day on which we resume assessing
the Monthly Deduction. The Policy will not be allowed to be reinstated if it has
been surrendered for its full Cash Surrender Value.
Right To Refund
To receive the tax treatment accorded life insurance under Federal laws,
insurance under the Policy must initially qualify and continue to qualify as
life insurance under the Internal Revenue Code. To maintain qualification to the
maximum extent permitted by law, we reserve the right to return Premiums you
have paid which we determine will cause any coverage under the Policy to fail to
qualify as life insurance under applicable tax law and any changes in applicable
tax laws or will cause it to become a Modified Endowment Contract (MEC) as
defined in the Internal Revenue Code. Additionally, we reserve the right to make
changes in the Policy or to make distributions to the extent we determine it is
necessary to continue to qualify the Policy as life insurance and to comply with
applicable laws. We will provide you advance written notice of any change.
The Internal Revenue Code (Section 7702A) defines a MEC contract. You may desire
that your policy not be classified as a MEC. Certain premium payment patterns,
as well as other actions, will cause a policy to be so classified as a MEC. If
you have elected the Excess MEC Premium Refund Option, we will automatically
refund a premium payment that would make the policy a MEC. If you have made this
election, the Policy Schedule will show that the election is in effect. As long
as your policy is not classified as a MEC, you may elect this option at any time
by notifying us. You may also cancel this option at any time by submitting a
signed written notice to the Home Office in a format acceptable to us. There is
no charge for this option. By offering this option we are not warranting that
your policy will not become a MEC. Premium payment patterns are not the only
means by which a policy can become a MEC. Actions such as decreases in Specified
Amount may cause the policy to become a MEC. This option is only intended as a
means of automatically returning premiums that were unintended. We will not
examine unusual premium payment patterns or modifications to your policy for
purposes of determining whether or not such actions will make your policy a MEC.
By offering this option, we are not providing any tax advice. You should consult
your tax adviser for any questions regarding the status of your policy as a MEC
and before making any changes to your policy or changing the pattern of your
premium payments.
If you have not elected the Excess MEC Premium Refund Election, and subsequent
Premium payments will cause your Policy to become a MEC, we will NOT notify you
but will allocate your premium as directed. You should consult a tax adviser for
assistance in understanding the tax consequences of your Policy being
categorized as a MEC. (See "Taxes" below.)
THE SEPARATE ACCOUNT AND SEPARATE ACCOUNT FUND CHOICES
We have established a separate account, Pan-American Assurance Company Variable
Life Separate Account (Separate Account) to hold the assets that underlie the
Policies.
The assets of the Separate Account are being held in our name on behalf of the
Separate Account and legally belong to us. However, those assets that underlie
the Policies are not chargeable with liabilities arising out of any other
business we may conduct. All the income, gains and losses (realized and
unrealized) resulting from those assets are credited to or charged against the
Policies and not against any other policies or contracts we may issue.
The Policy offers Separate Account Funds as the underlying investment choices
for the Policy.
You should read this prospectus and the accompanying prospectuses for the
Separate Account Funds carefully before investing. Copies of these prospectuses
will be sent to you with your Policy. Certain portfolios described in the
Separate Account Fund prospectuses may not be available with your Policy. The
Separate Account Fund prospectuses contain more complete information, including
a description of the investment objective, policies, restrictions and risks of
each Separate Account Fund. There can be no assurance that the investment
objectives of these Separate Account Funds will be achieved.
Shares of the Separate Account Funds are offered in connection with certain
variable annuity contracts and variable life insurance policies of various life
insurance companies which are not affiliated with us. Certain portfolios are
also sold directly to qualified plans. The investment managers of the Separate
Account Funds believe that offering their shares in this manner will not be
disadvantageous to you.
The investment objective and policies of certain Separate Account Funds are
similar to the investment objectives and policies of other mutual funds that the
investment advisers manage. Although the objectives and policies may be similar,
the investment results of the investment options may be higher or lower than the
results of such other mutual funds. The investment advisers cannot guarantee,
and make no representation, that the investment results of similar funds will be
comparable even though the Separate Account Funds have the same advisers.
We may enter into certain arrangements under which we are reimbursed by the
Separate Account Funds' advisers, distributors, and/or affiliates for the
administrative services which we provide to the Separate Account Funds.
MFS VARIABLE INSURANCE TRUST
Advised by MFS Management, Inc.
MFS Money Market Series - Initial Class
MFS Total Return Series - Service Class
MFS Investors Trust Series - Service Class (growth with income)(formerly, MFS
Growth with Income Series - Service Class)
MFS Emerging Growth Series - Service Class
MFS Investors Growth Stock Series - Service Class (formerly, MFS Growth
Series - Service Class)
MFS Utilities Series - Service Class
MFS Mid Cap Growth Series - Service Class
INVESCO VARIABLE INVESTMENT FUNDS
Advised by Invesco Funds Group, Inc.
INVESCO Blue Chip Growth Fund
INVESCO Small Company Growth Fund
INVESCO Technology Fund
INVESCO Health Sciences Fund
INVESCO Financial Services Fund
INVESCO Dynamics Fund (mid cap growth)
INVESCO Equity Income Fund
BERGER INSTITUTIONAL PRODUCT TRUST
Advised by Berger, LLC
Berger IPT - Large Cap Growth Fund Berger IPT - Small Company Growth Fund
Berger IPT - International Fund
Berger IPT - New Generation Fund (mid cap growth)
J.P. MORGAN SERIES TRUST II
Advised by J.P. Morgan Investment Management, Inc.
J.P. Morgan Bond Portfolio
J.P. Morgan U.S. Disciplined Equity Portfolio
J.P. Morgan Small Company Portfolio
J.P. Morgan International Opportunities Portfolio
DREYFUS INVESTMENT PORTFOLIOS
Advised by Founder Assets Management, LLC
Dreyfus Investment Portfolios - Founders Growth Portfolio
Dreyfus Investment Portfolios - Founders Discovery Portfolio (small value)
Dreyfus Investment Portfolios - Founders Passport Portfolio (small cap growth)
Dreyfus Investment Portfolios - Founders International Equity Portfolio
(large cap growth)
Substitution and Limitations on Further Investments
We may substitute one of the Separate Account Funds you have selected with
another Separate Account Fund. We will not do this without the prior approval of
the Securities and Exchange Commission. We may also limit further investment in
a Separate Account Fund. We will give you notice of our intention to do this.
Transfers
You can make a transfer to or from the Separate Account Funds or to or from the
Fixed Account by providing us with written notice on a form acceptable to us. We
have the right to terminate or modify these transfer provisions. If your state
requires us to return to you your Premium in the event you exercise the Right to
Examine privilege, no transfer may be made before the end of the Right to
Examine Policy Period.
The following apply to any transfer:
o We reserve the right to limit the total amount of transfers from the Fixed
Account. However, you will always be allowed to transfer over the course of
a Policy Year the greater of $500 or 25% of the Fixed Account value as of
the beginning of the Policy Year.
o We reserve the right to assess a maximum charge of $25 per transfer after
the first twelve (12) transfers have been made in any Policy Year. If the
charge is applicable, it will be deducted from the Separate Account Fund
and from the Fixed Account from which the transfer is made on a pro-rata
basis. If there are insufficient funds in those accounts, the charge will
be deducted from the amount transferred. Pre-scheduled transfers will not
be counted in determining the applicability of the Transfer Fee.
o The minimum amount which you can transfer is $50 or your entire value in
the Separate Account Funds or Fixed Account, if it is less.
o The minimum amount you must leave in a Separate Account Fund, unless the
entire amount is being transferred, is $100.
o Your right to make transfers is subject to modification, if we determine,
in our sole opinion, that the exercise of the right by one or more Owners
is, or would be, to the disadvantage of the other Owners. Restrictions may
be applied in any manner reasonably designed to prevent any use of the
transfer right which is considered by us to be to the disadvantage of other
Owners. A modification could be applied to transfers to, or from, one or
more of the Separate Account Funds and could include, but is not limited
to:
1. the requirement of a minimum time period between each transfer;
2. not accepting a transfer request from a party or parties acting on behalf
of more than one Owner; or
3. limiting the dollar amount that may be transferred between Separate Account
Funds by an Owner at any one time. Transfers do not change the allocation
instructions for future Premiums.
The following are pre-scheduled transfers, and they do not count against the
twelve free transaction limit noted above:
1. at the end of the Right to Examine Policy Period to re-allocate your
Accumulated Value in accordance with your premium allocation
instructions on record;
2. pursuant to the Dollar Cost Averaging Option;
3. pursuant to the Asset Rebalancing Option.
Telephone Transfers
You may elect to make transfers by telephone. To elect this option, you must do
so in writing on a form acceptable to us and send it to our Home Office. If
there are Joint Owners, unless we are instructed to the contrary, instructions
will be accepted from either one of the Joint Owners. We will use reasonable
procedures to confirm that all instructions communicated by telephone are
genuine. We may tape record all telephone instructions.
Dollar Cost Averaging
Dollar Cost Averaging allows you to systematically transfer a set amount each
period you select from a source account to any of the Separate Account Funds or
the Fixed Account but not the source account. By allocating amounts on a
regularly scheduled basis as opposed to allocating the total amount at one
particular time, you may be less susceptible to the impact of market
fluctuations.
You must have at least $1,000 in the source account to start the program. You
may select the Money Market Fund or the Fixed Account as the source account.
Transfers will be done monthly, quarterly, semi-annually and annually on any
date selected (1st to 28th of the month only) for any period you select. You may
specify a fixed amount or a percentage to be transferred to one or more
accounts.
Dollar Cost Averaging is not available simultaneously with Asset Rebalancing
described below.
It is not available during the Right to Examine Policy Period (see "Right to
Examine Policy" above). You may terminate the program at any time. We reserve
the right to change the terms of the program, or assess a fee for the program,
at any time in the future.
Asset Rebalancing
Rebalancing will be done monthly, quarterly, semiannually or annually on a date
selected by you (1st through 28th of the month only). This feature automatically
readjusts the Accumulated Value in the Separate Account Funds requested. The
current Premium allocation election will determine the percentages for
rebalancing the investment portfolios.
Asset rebalancing is not available simultaneously with Dollar Cost Averaging.
Asset Rebalancing is not available during the Right to Examine Policy Period.
You may terminate the program at any time. We reserve the right to change the
terms of the program, or to assess a fee for the program, at any time in the
future.
Accumulation Unit Values
The value of your Policy that is invested in the Separate Account Funds will go
up or down depending upon the investment performance of the Separate Account
Fund(s) you choose. In order to keep track of the value of your Policy allocated
to the Separate Account, we use a unit of measure we call an Accumulation Unit.
(An Accumulation Unit works like a share of a mutual fund.)
Every Business Day we determine the value of an Accumulation Unit for each of
the Separate Account Funds. The value of your contract is affected by the
investment performance of the Separate Account Funds, and the deduction of
charges under the Policy. The value of an Accumulation Unit may go up without
limit and down as far as zero.
Initially, each Accumulation Unit Value for each account was arbitrarily set.
Every Business Day, we determine the value of an Accumulation Unit for each of
the Separate Account Funds by multiplying the Accumulation Unit Value for the
previous period by a factor for the current period. The factor is determined by
dividing the value of a Separate Account Fund share at the end of the current
period (reflecting charges for taxes and credits for dividends) by the value of
a Separate Account Fund share for the previous period and subtracting the Asset
Charge.
We credit and deduct amounts allocated to the Separate Account by increasing or
decreasing the number of Accumulation Units. The number of Accumulation Units to
be credited or deducted is determined by dividing:
1. the dollar amount credited to or deducted from the particular Separate
Account Fund; by
2. the Accumulation Unit Value for the particular Separate Account Fund
at the end of the Business Day during which the allocation is made.
Accumulation Units are credited when Net Premiums are allocated or amounts are
transferred into a Separate Account Fund. Accumulation Units are deducted when
the Monthly Deduction or other charges are assessed or when amounts are
partially surrendered or transferred out of a Separate Account Fund.
FIXED ACCOUNT
You may elect to allocate Net Premiums and Accumulated Values to our Fixed
Account. The Fixed Account forms a portion of our General Account. We guarantee
a minimum yield of 3 percent, compounded monthly. At our discretion, we may
declare a higher crediting rate to be applied to the Fixed Account.
DEATH BENEFIT
The primary purpose of the Policy is to provide Death Benefit protection on the
life of the Insured. While the Policy is in force, if the Insured dies, the
Beneficiary will receive the Death Benefit less any Indebtedness.
The amount of the Death Benefit depends upon:
1. the Specified Amount;
2. the Death Benefit Option in effect at the time of death;
3. under some circumstances, the Policy's Accumulated Value or the Premiums
paid less Partial Surrenders on the date of the Insured's death; and
4. under some circumstances, your Attained Age.
The Policy provides two Death Benefit Options:
1. Option 1; The Death Benefit is the Specified Amount and the Death Benefit
remains level.
2. Option 2; The Death Benefit at any time shall be equal to the Accumulated
Value plus the Specified Amount.
If the Death Benefit calculated above is less than the Accumulated Value
multiplied by the applicable percentage set forth below, then the Death Benefit
is increased to the Accumulated Value multiplied by the applicable percentage.
The applicable percentage is a percentage that is based on the Attained Age of
the Insured on the date that the Death Benefit is to be determined and is equal
to the following:
Attained Corridor Attained Corridor
Age Percentage Age Percentage
0-40 250% 60 130%
41 243% 61 128%
42 236% 62 126%
43 229% 63 124%
44 222% 64 122%
45 215% 65 120%
46 209% 66 119%
47 203% 67 118%
48 197% 68 117%
49 191% 69 116%
50 185% 70 115%
51 178% 71 113%
52 171% 72 111%
53 164% 73 109%
54 157% 74 107%
55 150% 75-90 105%
56 146% 91 104%
57 142% 92 103%
58 138% 93 102%
59 134% 94 101%
95-100 100%
Change in Death Benefit Option
After the first Policy Year, you may, by written request, change between Death
Benefit Options 1 and 2, subject to the following:
1. If the change is from Option 1 to Option 2, the Specified
Amount after such change shall be equal to the Specified
Amount prior to such change less the Accumulated Value on the
date of change.
2. If the change is from Option 2 to Option 1, the Specified
Amount after such change shall be equal to the Specified
Amount prior to such a change plus the Accumulated Value on
the date of the change.
Change in Specified Amount
After the first Policy Year, you may, by written request, change the Specified
Amount of the Policy, subject to the following:
1. In no event shall the Death Benefit be less than the percentage of the
Policy's Accumulated Value as shown in your Policy.
2. Any decrease shall reduce insurance in the following order:
o against insurance provided by the most recent increase;
o against the next most recent increases successively; and
o against insurance provided under the original application.
3. A charge will be made against the Accumulated Value if the decrease occurs
during the first five (5) Policy Years or within five (5) years after an
increase. The charge will be a portion of the Surrender Charge. The charge
will apply to Surrender Charges for increases and the original amount of
insurance in the same order as the reduction in insurance mentioned in (2)
above. The remaining Surrender Charge will be equal to the previous
Surrender Charge less the charge assessed because of the decrease. There
may be a recalculation of the minimum premium as a result of the charge.
4. The Specified Amount in effect after any requested decrease must be at
least as large as the Minimum Specified Amount shown on your Policy
Schedule.
5. Any request for an increase must be applied for on a supplemental
application. Such increase shall be subject to evidence of insurability
satisfactory to us. An increase shall also be subject to the sufficiency of
the Cash Surrender Value, less any Indebtedness, to cover the next Monthly
Deduction. Any increase will become effective on the effective date shown
on the Policy Schedule or the Policy contract amendment. For each increase
in Specified Amount, there is a corresponding schedule of Surrender Charges
which applies to that increase for a Surrender Charge Period stated in the
Policy contract amendment.
A decrease in Specified Amount reduces the Death Benefit, but may or may not
reduce the Accumulated Value. A partial withdrawal (surrender) directly reduces
the Accumulated Value and, in addition, reduces the Specified Amount for Option
1.
TAXES
Note: We have prepared the following information on Federal income taxes as a
general discussion of the subject. It is not intended as tax advice. You should
consult your tax adviser about your own circumstances. We have included an
additional discussion regarding taxes under the section "More Information."
Life Insurance in General
Life insurance, such as this Policy, is a means of providing for death
protection and setting aside money for future needs. Congress recognizes the
importance of such planning and provides special rules in the Internal Revenue
Code (Code) for life insurance.
Simply stated, these rules provide that you will not be taxed on the earnings on
the Cash Surrender Value held in your life insurance Policy until you access
your Cash Surrender Value. Beneficiaries generally are not taxed when they
receive the death proceeds upon the death of the Insured. However, estate taxes
may apply, and Qualified plans are typically an exception to this.
Taking a Distribution from Your Policy
You, as the Owner, will not be taxed on increases in the value of your Policy
until a distribution occurs either as a surrender or as a loan. If your Policy
is a MEC, any loans or surrenders from the Policy will be treated as first
coming from earnings and then from your investment in the Policy. Consequently,
these distributed earnings are included in taxable income.
The Code also provides that any amount received from a MEC which is included in
income may be subject to a 10% penalty. The penalty will not apply if the income
received is:
1. paid on or after the taxpayer reaches age 59 1/2;
2. paid if the taxpayer becomes totally disabled (as that term is defined in
the Code); or
3. in a series of substantially equal payments made annually (or more
frequently) for the life or life expectancy of the taxpayer.
If your Policy is not a MEC, any surrender proceeds will be treated first as a
recovery of the investment in the Policy and to that extent will not be included
in taxable income. Furthermore, any loan will be treated as Indebtedness under
the Policy and not as a taxable distribution. See "Federal Tax Status" in the
section "More Information" for more details including an explanation of whether
your Policy is a MEC.
Diversification
The Code provides that the underlying investments for a variable life Policy
must satisfy certain diversification requirements in order for the Policy to be
treated as a life insurance contract. We believe that the portfolios are being
managed so as to comply with such requirements.
Under current Federal tax law, it is unclear as to the circumstances under which
you, because of the degree of control you exercise over the underlying
investments, and not us, would be considered the owner of the shares of the
portfolios. If you are considered the owner of the investments, it will result
in the loss of the favorable tax treatment for the Policy. It is unknown to what
extent owners are permitted to select portfolios, to make transfers among the
portfolios or the number and type of portfolios from which owners may select
without being considered the owner of the shares. If guidance from the Internal
Revenue Service is provided which is considered a new position, the guidance
would generally be applied prospectively. However, if such guidance is
considered not to be a new position, it may be applied retroactively. This would
mean that you, as the Owner of the Policy, could be treated as the owner of the
portfolios. Due to the uncertainty in this area, we reserve the right to modify
the Policy in an attempt to maintain favorable tax treatment.
ACCESS TO YOUR CASH SURRENDER VALUE
Full Surrender
You may make a full surrender of your Policy at any time during the lifetime of
the Insured upon written request by you to us. The amount payable on surrender
of the Policy is the Accumulated Value, less any Indebtedness, as of the close
of business on the Business Day of surrender, less any Surrender Charge. The
amount may be paid as a lump sum or under an elected optional Method of
Settlement described below. We reserve the right to defer payments according to
the "Suspension of Payments or Transfers" section described below. If the Policy
is surrendered, coverage is terminated as of the date of surrender.
You may make a Partial Surrender at any time after the first Policy Anniversary
and during the lifetime of the Insured, by your request. There is no minimum
Partial Surrender amount. The maximum surrender amount is an amount not to
exceed the current Cash Surrender Value, less any Indebtedness. When you make a
Partial Surrender, the amount of the Partial Surrender will be deducted from the
Accumulated Value. The deduction will be made from the Separate Account Funds
and the Fixed Account in proportion to your Accumulated Value in each account,
unless you request that the deductions be made from specific Separate Account
Funds. You are restricted to no more than two (2) Partial Surrenders in any
Policy Year.
Effect of a Partial Surrender on Your Specified Amount
Under Death Benefit Option 1 (as discussed in the Death Benefits section above),
the Specified Amount will be reduced by the amount surrendered plus any
Surrender Charge. The remaining Specified Amount must be at least equal to the
Minimum Specified Amount shown on the Policy Schedule of the Contract. The
Partial Surrender will reduce insurance in the same order as shown in the Change
in the Specified Amount section for the decrease in Specified Amount. The
Specified Amount is not reduced for Option 2.
LOANS
You may obtain a loan at any time after the first Policy Anniversary while your
Policy is in force. There is no minimum loan amount. The amount of any loan with
interest to the next Policy Anniversary may not exceed the Cash Surrender Value,
less any Indebtedness, as of the date of the Policy loan. A loan will only be
made upon the proper assignment of your Policy to us with the Policy as the sole
security for the loan. If your total Indebtedness under the Policy exceeds the
Cash Surrender Value, the Policy may terminate without value and, as a result,
there may be Federal tax consequences.
Loan Interest (Charged)
The loan interest rate charged is currently 8%. However, we reserve the right to
adjust the rate charged if it would be tax advantageous to the majority of
Policyholders to do so.
Loan interest is due in arrears on each Policy Anniversary or when the loan is
repaid, if earlier. If loan interest is not paid when due, that amount is added
to your loan. We will make a transfer from the Separate Account and the Fixed
Account into the Loan Account as collateral for the interest due. The amount
transferred is the amount by which the interest due exceeds the interest that
has been credited to the Loan Account. The transfer is made pro-rata from the
Separate Account Funds and the Fixed Account based on your amounts in each of
these accounts.
Loan Interest (Credited)
We will credit interest to the Loan Account on a daily basis. There will be two
credited rates. The standard portion of a loan will have a credited rate of 6%.
The preferred portion will have a credited rate of 8%.
In Policy Years 1 through 5, we will apply the standard rate to the entire Loan
Account. In Policy Years 6 through 10, we will apply the preferred rate to the
value in the Loan Account up to 10% of the Accumulated Value. For the amount in
excess of 10% of the Accumulated Value, we will apply the standard rate. In
Policy Years 11 and later, we will apply the preferred rate to the entire Loan
Account.
Loan Repayment
A loan may be repaid in full or in part at any time while the Policy is in force
and the Insured is alive. When you repay part or all of a loan, we will transfer
an amount equal to the amount you repay from the Loan Account to the Separate
Account and Fixed Account based on the Premium allocation instructions on
record.
If you make a Premium payment which exceeds your Planned Premium Payment, and
your Policy has an outstanding loan balance, the payment will be divided into
two parts unless you instruct us to treat all or a different portion of the
payment as a loan repayment. The portion of the payment equal to the Planned
Premium Payment will be applied as a Premium payment. The portion of the payment
in excess of the Planned Premium Payment will be applied toward the repayment of
your loan.
Loans Involving a Policy That Was Exchanged
If a Policy was purchased through an exchange of another policy and there was a
loan outstanding at the time the policy was exchanged, the Company has
procedures available to allow the new Policy to continue to have a loan. When
the new policy is applied for, we automatically deem the Option 2 death benefit
to be requested and take out a withdrawal to repay the initial loan. The owner
can, if he or she so desires, switch to Option 1 death benefit. The premium for
the new Policy is the cash value plus the outstanding loan balance of the
exchanged policy. Owners who exchange policies with outstanding loans should
seek the advice of their registered representative or contact us.
OTHER INFORMATION
Pan-American
Pan-American Assurance Company ("Pan-American" or the "Company"), 601 Poydras
Street, P.O. Box 60219, New Orleans, LA 70130 was incorporated on May 18, 1981,
under the laws of the state of Louisiana. Pan-American is licensed to do
business in the District of Columbia, Puerto Rico, and all states except Alaska,
Idaho, Iowa, Maine, Massachusetts, New Hampshire, New York, Rhode Island, South
Dakota, Vermont, and Wyoming.
Riders
There are a number of riders that are available in conjunction with the Policy.
Some riders may not be available in your state. Ask your Registered
Representative for information on availability. While all riders are available
at any time, you may be subject to additional underwriting and issue
requirements if you request a rider at other than the time you apply for the
Policy.
Terminal Illness Accelerated Benefit Rider. If the Insured is terminally ill,
and you have elected the Terminal Illness Accelerated Benefit rider, we will
pre-pay a portion of the Death Benefit. You can only elect to have a
distribution made one time under the rider. There is no monthly charge for this
rider, but there is a charge upon acceleration.
You can choose an amount which is equal to the lesser of $250,000 or 50% of the
then determined Death Benefit, less any outstanding Indebtedness. This Benefit
is paid to the Owner in a lump sum or under one of the Settlement Options
described below.
The amount of the Terminal Illness Accelerated Benefit is accumulated at a
floating interest rate and is deducted from the Death Benefit paid and the
amount available for loans and withdrawals.
The receipt of a Terminal Illness Accelerated Benefit amount may adversely
affect the recipient's eligibility for Medicaid or other governmental benefits
or entitlements.
The reference to "Eligible Death Benefit" in the Terminal Illness Accelerated
Benefit Rider has the same meaning as the term "Death Benefit" as used in this
prospectus.
Additional Insured Rider. You can elect term insurance on the life of the
insured or another insured. If you have elected this rider, we will pay the
Additional Insured Amount upon proof that the additional insured died during the
term period. The proceeds will be paid to the beneficiary of the rider. There is
a charge for this rider shown on your Policy Schedule.
Dependent Children Insurance Rider. You can elect term insurance on your
dependent children. We will pay the dependent child's benefit upon proof that a
dependent child died before the dependent child's 25th birthday and termination
of the rider. The benefit is reduced for younger ages, as described in the
rider. There is a charge for this rider shown on your Policy Schedule.
Disability Benefit Payment Rider. If you elect this rider we will provide one of
the following after the Insured's total disability has continued for 6
consecutive months and a claim for total disability has been approved by us.
1. If total disability starts before age 60, we will credit the
disability benefit amount to the value of the Policy on each Monthly
Anniversary Day, as shown on your Policy Schedule, while total
disability continues.
2. If total disability starts on or after age 60 but before age 65, we
will credit the disability benefit amount to the value of the policy
on each Monthly Anniversary Day prior to age 70 while total disability
continues.
There is a charge for this rider shown on your Policy Schedule. The Disability
Benefit Payment Rider is not available simultaneously with the Waiver of Monthly
Deductions Rider.
Guaranteed Insurability Rider. If you elect this rider, we will allow you to
increase the Specified Amount in your Policy, subject to the terms of the rider.
No evidence of insurability will be required. There is a charge for this rider
shown on your Policy Schedule.
Waiver of Monthly Deductions Rider. If you elect this rider we will provide one
of the following after the Insured's total disability has continued for 6
consecutive months and a claim for total disability has been approved by us.
1. If total disability starts on or before age 60, we will waive the
monthly deductions while total disability continues.
2. If total disability starts after age 60 but before age 65, we will
waive the monthly deductions on each Monthly Anniversary Day prior to
age 70 while total disability continues.
There is a charge for this rider shown on your policy schedule. The Waiver of
Monthly Deductions Rider is not available simultaneously with the Disability
Benefit Payment Rider.
Paid-Up Insurance
At any time after the Right to Examine Policy Period, the Owner may request that
the Policy be converted into reduced paid-up insurance. Once the Policy is
converted, there is no further investment in the Separate Account. The election
of paid-up insurance is a permanent one. The paid-up insurance is payable on the
same conditions as the Insured's Death Benefit, but for a reduced amount. The
reduced amount is the amount the Cash Surrender Value, less any Indebtedness,
will buy as a single Premium at the attained age of the Insured. The Cash
Surrender Value of the paid-up insurance is based on the gender distinct 1980
CSO Smoker or Nonsmoker Mortality Table, Age Nearest Birthday, and interest at
3%.
Optional Methods of Settlement
Any proceeds payable under the Policy will be paid in one sum unless otherwise
elected. The following Settlement Options are available. Settlement Options are
only available out of our General Account.
1. Proceeds left at interest;
2. Payments for a Fixed Period;
3. Payments for a Fixed Amount;
4. Life Income Payments.
General Policy Provisions
The Policy contains a number of other Policy provisions. We have described some
but not all of them below. For more detail, refer to your Policy or ask your
representative.
Age and Gender. If there is a misstatement of age or gender of the Insured or
any person insured by rider, the amount of the Death Benefit shall be that which
would be purchased by the most recent cost of insurance at the correct age or
gender.
Suicide. Suicide of the Insured, while sane or insane, within two years of
issuance of the policy, is not covered by the Policy. The total liability shall
be the premiums paid prior to death, less any Indebtedness, less any prior
Partial Surrenders.
If the Insured commits suicide while sane or insane within two years of issuance
of any increase on insurance or any reinstatement, the total liability shall be
the cost of insurance of the increased coverage, or the cost of insurance from
the date of reinstatement to the date of death.
Contestability. We can challenge the validity of your Policy for two years from
the Effective Date of coverage based on any misrepresentation made in your
application to us. We can challenge an increase in benefits requiring evidence
of insurability for two years from the date of the increase. We can challenge a
reinstatement of the Policy until that reinstatement has been in force for two
years from its Effective Date.
Any increase in coverage or addition of a rider effective after the Policy Date
shall, in the absence of fraud, be incontestable only after such increase or
addition has been in force during the lifetime of the Insured for two years from
the issuance of such increase or addition.
Any reinstatement shall, in the absence of fraud, be incontestable only after
having been in force during the lifetime of the Insured for two years after the
issuance of the reinstatement.
Any contest of an increase in coverage or a reinstatement will be based on the
application for increase or reinstatement.
Extended Maturity Date. Policyholders are assumed to have made an election to
defer payment of proceeds at the Maturity Date. At any time, you may change this
election by completing the appropriate form.
With this election, you will be assessed a $100 administrative fee at the
Maturity Date. Upon assessment of this fee, the Death Benefit is continued. If
the Policy is Death Benefit Option 2, we will change it to Death Benefit Option
1. If the Adjustable Insurance Rider (currently not available) is attached to
the Policy for the Insured, the Specified Amount will increase by the Adjustable
Insurance Amount on the Insured. All other riders will lapse; this includes any
Additional Insurance Rider coverages on the Insured and other insureds as well
as any Adjustable Insurance Rider coverages on other insureds. No further
premiums are accepted and we will make no further deductions. Further, we
reserve the right to transfer all of the Accumulated Value into the Fixed
Account, restricting access to the Separate Account. Policy loans and Partial
Surrenders are available. There may be state-specific variations.
Termination.
All coverage under the Policy shall terminate when any one of the following
events occurs:
o You request that coverage terminate.
o The Insured dies.
o The Policy matures.
o The Grace Period ends.
o The Policy is surrendered.
Distributors
The Policy is sold by licensed insurance agents, where the Policy may be
lawfully sold, who are Registered Representatives of broker- dealers which are
registered under the Securities Act of 1934 and are members of the National
Association of Securities Dealers, Inc.
Pan-American Financial Services, Inc. serves as the distributor for the
Policies. Pan-American Financial Services, Inc. is located at Pan-American Life
Center, 601 Poydras Street, New Orleans, LA 70130. Registered Representatives
will be paid commissions upon the sale of the Policy.
Suspension of Payments or Transfers
We may be required to suspend or postpone any payments or transfers involving a
Separate Account Fund when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the Separate
Account Funds is not reasonably practicable or Pan-American cannot
reasonably value the shares of the Separate Account Funds; or
4. the Securities and Exchange Commission, by order, so permits for the
protection of Owners.
We may defer the portion of any transfer, amount payable or surrender, or Policy
loan from the Fixed Account for not more than six months.
Ownership
Control of Policy. The Owner shall be as shown in the application or subsequent
written endorsement. Subject to the rights of any irrevocable Beneficiary and
any assignee of record with us, all rights, options, and privileges belong to:
1. you, if living; otherwise
2. any contingent Owner or Owners, if living; otherwise
3. the Insured.
We reserve the right to require the Policy for endorsement of any assignment,
loan, change of Beneficiary or ownership designation, surrender, amendment or
modification.
Consistent with the terms of the Beneficiary designation and any assignment
during the Insured's lifetime, you may:
1. assign or surrender your Policy;
2. make or repay a loan;
3. amend or modify your Policy with our consent; and
4. exercise any right, receive any benefit, and enjoy any privilege provided
in the Policy.
If the Policy is owned jointly by two or more parties, all transactions require
the signature, consent or other necessary requirements of all such parties.
However, telephone transfers and Premium allocation instructions will be
accepted from any Owner unless otherwise directed.
Assignment. An assignment will be accepted by us only if it is made in writing
and filed with us at our Home Office. Assignments may require that the form be
executed before a notary, according to our then current processing standards.
Assignments require the consent of any irrevocable Beneficiaries and all
previous assignees.
Beneficiary
Designation. The application contains the Beneficiary(ies) and their designated
class. Any payments made to the Beneficiary(ies) will be made according to their
class. When there is more than one Beneficiary of the same class, payments will
be shared equally among them unless otherwise stated.
Death of a Beneficiary. If a Beneficiary dies before the Insured, the payments
will be made to:
1. any Beneficiary(ies) of that class, if living; otherwise
2. any Beneficiary(ies) of the next class, if living; otherwise
3. the Owner, if living; otherwise
4. any contingent Owner or Owners, if living otherwise
5. the estate of the last Owner to die.
If a Beneficiary dies within 15 days after the Insured but before proof of the
Insured's death is received by us, payments will be made as though the
Beneficiary had died before the Insured.
Change of Beneficiary. You may change any Beneficiary at any time during the
Insured's lifetime unless otherwise provided in the previous designation. The
new designation must be made by a signed notice in satisfactory form to our Home
Office. The change will take effect on the date the notice was signed subject to
any action taken by us before recording the change.
Executive Officers and Directors
Position(s)
Held With Principal Occupations During
Name and Address Age Pan-American Past Five Years
George Frank Purvis, Jr. 86 Senior President-Chairman Emeritus,
Pan-American Assurance Company Vice Pan-American Life Insurance Company
Pan-American Life Center President From 2/80 - 1/99; Chairman, Chief
Executive Office, 28th Floor Executive Officer, Pan-American Life
601 Poydras Street Life Insurance Company from 1974 - 1980
New Orleans, Louisiana 70130
Jan Sheridan Jobe 50 President, Director, President, Chief Executive
Pan-American Life Center Chief Officer, Pan-American Life Insurance
Executive Office, 28th Floor Executive Company from 8/99 - present;
601 Poydras Street Officer Director, President, Chief Operating Officer,
New Orleans, Louisiana 70130 Pan-American Life Insurance Company from 1/99 - 8/99;
President, Principal International, Principal
Financial Group from 1990 - 1/99;
Vice President of Group and Pension Sales, Principal
Financial Group from 1980 - 1990
Luis Isidro Ingles, Jr. 58 Vice Senior Vice President, Investments and Treasurer,
Pan-American Assurance Company President Pan-American Life Insurance Company from 1993 - present
Pan-American Life Center Investments Vice President, Securities, Pan-American Life
Executive Office, 28th Floor and Insurance Company from 1980 - 1993; Second Vice
601 Poydras Street Treasurer President, Securities, Pan-American Life
New Orleans, Louisiana 70130 Insurance Company from 1975 - 1980
Peggy Boudreaux Scott 49 Vice Senior Vice President, Chief Financial Officer, Pan-
Pan-American Assurance Company President American Assurance Company from 8/96-present; Executive
Pan-American Life Center Chief Vice President and Chief Financial Officer, Norvant
Executive Office, 28th Floor Financial Health, Inc., Winston-Salem, NC; Board of Directors,
601 Poydras Street Officer Partners Health Plan, Winston-Salem, NC; Board of
New Orleans, Louisiana 70130 Directors, Medical Diagnostic Services, Inc., Baton
Rouge, LA from 1998 - 1999
William Thiel Steen 50 Vice Senior Vice President, General Counsel and Corporate
Pan-American Assurance Company President, Secretary, Pan-American Life Insurance Company from
Pan-American Life Center General 8/96 - present; Vice President, Associate
Corporate Legal, 12th Floor Counsel and General Counsel, Pan-American Life Insurance Company
601 Poydras Street Corporate from 1993 - 1996; Second Vice President, Associate
New Orleans, Louisiana 70130 Secretary General Counsel, Taxation, Pan-American Life Insurance
Company from 1983 - 1993
Edward James Ray III 53 Vice Senior Vice President, Operations and Chief Actuary,
Pan-American Assurance Company President, Pan-American Life Insurance Company from 4/99- present;
Pan-American Life Center Operations Senior Vice President, Technical Services, Pan-American
Executive Office, 14th Floor and Chief Life Insurance Company from 1994 -1999; Vice President,
601 Poydras Street Actuary Actuary, Pan-American Life Insurance Company from
New Orleans, Louisiana 70130 1978 - 1994
Andrew Mark Erman 31 Vice Vice President and Actuary, Pan-American Life
Pan-American Assurance Company President Insurance Company from 8/00 - present; Director,
Pan-American Life Center and ING from 6/96 - 8/00
Entrepreneurial Team, 12th Floor Actuary
601 Poydras Street
New Orleans, Louisiana 70130
Voting
Pursuant to our view of present applicable law, we will vote the shares of the
Separate Account Funds at special meetings of shareholders in accordance with
instructions received from all Owners having a voting interest. We will vote
shares for which we have not received instructions and any shares that are ours
in the same proportion as the shares for which we have received instructions.
If the Investment Company Act of 1940 or any regulation thereunder is amended or
if the present interpretation of the Act changes so as to permit us to vote the
shares in our own right, we may elect to do so.
Disregard of Voting Instructions
We may, when required to do so by state insurance authorities, vote shares of
the Separate Account Funds without regard to instructions from Owners. We will
do this if such instructions would require the shares to be voted to cause a
Separate Account Fund to make, or refrain from making, investments which would
result in changes in the sub-classification or investment objectives of the
Separate Account Fund. We may also disapprove changes in the investment policy
initiated by Owners or trustees/directors of the Separate Account Funds, if such
disapproval:
1. is reasonable and is based on a good faith determination by us that the
change would violate state or Federal law;
2. results from a change which would not be consistent with the investment
objectives of the Separate Account Fund; or
3. varies from the general quality and nature of investments and investment
techniques used by others with similar investment objectives underlying
other variable contracts offered by us or of an affiliated company.
In the event we do disregard voting instructions, a summary of this action and
the reasons for such action will be included in the next semi-annual report to
Owners.
Legal Opinions
Blazzard, Grodd & Hasenauer, P.C. of Westport, Connecticut and Fort Lauderdale,
Florida has provided advice on certain matters relating to the Federal
securities and income tax laws in connection with the Policies.
Federal Tax Status
Note: The following description is based upon our understanding of current
Federal income tax law applicable to life insurance in general. We cannot
predict the probability that any changes in such laws will be made. Purchasers
are cautioned to seek competent tax advice regarding the possibility of such
changes. Section 7702 of the Internal Revenue Code of 1986, as amended ("Code"),
defines the term "life insurance contract" for purposes of the Code. We believe
that the policies to be issued will qualify as "life insurance contracts" under
Section 7702. We do not guarantee the tax status of the Policies. Purchasers
bear the complete risk that the Policies may not be treated as "life insurance"
under Federal income tax laws. Purchasers should consult their own tax advisers.
It should be further understood that the following discussion is not exhaustive
and that special rules not described in this Prospectus may be applicable in
certain situations.
Introduction. The discussion contained herein is general in nature and is not
intended as tax advice. Each person concerned should consult a competent tax
adviser. No attempt is made to consider any applicable state or other tax laws.
Moreover, the discussion herein is based upon our understanding of current
Federal income tax laws as they are currently interpreted. No representation is
made regarding the likelihood of continuation of those current Federal income
tax laws or of the current interpretations by the Internal Revenue Service.
We are taxed as a life insurance company under the Code. For Federal income tax
purposes, the Separate Account is not a separate entity from us and its
operations form a part of us.
Diversification. Section 817(h) of the Code imposes certain diversification
standards on the underlying assets of variable life insurance policies. The Code
provides that a variable life insurance policy will not be treated as life
insurance for any period (and any subsequent period) for which the investments
are not, in accordance with regulations prescribed by the United States Treasury
Department ("Treasury Department"), adequately diversified. Disqualification of
the Policy as a life insurance contract would result in imposition of Federal
income tax to the Owner with respect to earnings allocable to the Policy prior
to the receipt of payments under the Policy. The Code contains a safe harbor
provision which provides that life insurance policies, such as these Policies,
will meet the diversification requirements if, as of the close of each quarter,
the underlying assets meet the diversification standards for a regulated
investment company and no more than fifty-five percent (55%) of the total assets
consist of cash, cash items, U.S. Government securities and securities of other
regulated investment companies. There is an exception for securities issued by
the U.S. Treasury in connection with variable life insurance policies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
Section 1.817-5), which established diversification requirements for the
investment portfolios underlying variable contracts such as the Policies. The
Regulations amplify the diversification requirements for variable contracts set
forth in the Code and provide an alternative to the safe harbor provision
described above. Under the Regulations, an investment portfolio will be deemed
adequately diversified if: (i) no more than 55% of the value of the total assets
of the portfolio is represented by any one investment; (ii) no more than 70% of
the value of the total assets of the portfolio is represented by any two
investments; (iii) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (iv) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments. For purposes of these Regulations, all securities of the same
issuer are treated as a single investment. The Code provides that, for purposes
of determining whether or not the diversification standards imposed on the
underlying assets of variable contracts by Section 817(h) of the Code have been
met, "each United States government agency or instrumentality shall be treated
as a separate issuer." We intend that each portfolio underlying the Policies
will be managed by the investment managers in such a manner as to comply with
these diversification requirements.
The Treasury Department has indicated that the diversification regulations do
not provide guidance regarding the circumstances in which owner control of the
investments of the Separate Account will cause the owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Policy. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of Owner control which may be exercised under the Policy is different
in some respects from the situations addressed in published rulings issued by
the Internal Revenue Service in which it was held that the policy owner was not
the owner of the assets of the separate account. It is unknown whether these
differences, such as the owner's ability to transfer among investment choices or
the number and type of investment choices available, would cause the owner to be
considered the owner of the assets of the Separate Account.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively, resulting in you being retroactively
determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, we reserve the right to modify the Policy
in an attempt to maintain favorable tax treatment.
Tax Treatment of the Policy. The Policy has been designed to comply with the
definition of "life insurance" contained in Section 7702 of the Code. Although
some interim guidance has been provided and proposed regulations have been
issued, final regulations have not been adopted. Section 7702 of the Code
requires the use of reasonable mortality and other expense charges. In
establishing these charges, we have relied on the interim guidance provided in
IRS Notice 88-128 and proposed regulations issued on July 5, 1991. Currently,
there is even less guidance as to a policy issued on a substandard risk basis
and thus it is even less clear whether a policy issued on such basis would meet
the requirements of Section 7702 of the Code.
While we have attempted to comply with Section 7702, the law in this area is
very complex and unclear. There is a risk, therefore, that the Internal Revenue
Service will not concur with our interpretations of Section 7702 that were made
in determining such compliance. In the event the Policy is determined not to so
comply, it would not qualify for the favorable tax treatment usually accorded
life insurance policies. You should consult your own tax advisers with respect
to the tax consequences of purchasing the Policy.
Policy Proceeds. The tax treatment accorded to loan proceeds and/or surrender
payments from the Policies will depend on whether the Policy is considered to be
a MEC. (See "Tax Treatment of Loans and Surrenders.") Otherwise, we believe that
the Policy should receive the same Federal income tax treatment as any other
type of life insurance. As such, the Death Benefit thereunder is generally
excludable from the gross income of the Beneficiary subject to the provisions of
Section 101(a) of the Code; however, Qualified plans are typically an exception
to this. Also, you are not deemed to be in constructive receipt of the Cash
Surrender Value under a Policy, including increments thereon, until there is a
distribution of such amounts.
Federal, state and local, estate, inheritance and other tax consequences of
ownership, or receipt of Policy proceeds, depend on the circumstances of each
Owner or Beneficiary.
Tax Treatment of Loans and Surrenders. Section 7702A of the Code sets forth the
rules for determining when a life insurance policy will be deemed to be a MEC. A
MEC is a contract which is entered into or materially changed on or after June
21, 1988 and fails to meet the 7-pay test. A policy fails to meet the 7-pay test
when the cumulative amount paid under the policy at any time during the first 7
policy years exceeds the sum of the net level premiums which would have been
paid on or before such time if the policy provided for paid-up future benefits
after the payment of seven (7) level annual premiums. A material change would
include any increase in the future benefits or addition of qualified additional
benefits provided under a policy unless the increase is attributable to: (1) the
payment of premiums necessary to fund the lowest death benefit and qualified
additional benefits payable in the first seven policy years; or (2) the
crediting of interest or other earnings (including policyholder dividends) with
respect to such premiums.
Furthermore, any policy received in exchange for a policy classified as a MEC
will be treated as a MEC regardless of whether it meets the 7-pay test. However,
an exchange under Section 1035 of the Code of a life insurance policy entered
into before June 21, 1988 for the policy will not cause the policy to be treated
as a MEC if no additional premiums are paid.
Due to the flexible premium nature of the Policy, the determination of whether
it qualifies for treatment as a MEC depends on the individual circumstances of
each Policy.
If the Policy is classified as a MEC, then surrenders and/or loan proceeds are
taxable to the extent of income in the Policy. Such distributions are deemed to
be on a last-in, first-out basis, which means the taxable income is distributed
first. Loan proceeds and/or surrender payments, including those resulting from
the lapse of the Policy, may also be subject to an additional 10% Federal income
tax penalty applied to the income portion of such distribution. The penalty
shall not apply, however, to any distributions: (1) made on or after the date on
which the taxpayer reaches age 59 1/2; (2) attributable to the taxpayer becoming
disabled (within the meaning of Section 72(m)(7) of the Code); or (3) which are
part of a series of substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy) of the taxpayer or
the joint lives (or joint life expectancies) of such taxpayer and his
Beneficiary.
If a Policy is not classified as a MEC, then any surrenders shall be treated
first as a recovery of the investment in the Policy which would not be received
as taxable income. However, if a distribution is the result of a reduction in
benefits under the Policy within the first fifteen years after the Policy is
issued in order to comply with Section 7702, such distribution may, under rules
set forth in Section 7702, be taxed as ordinary income to the extent of income
in the Policy.
Any loans from a policy which is not classified as a MEC will be treated as
Indebtedness of the owner and not a distribution. Upon complete surrender or
lapse of the policy, if the amount received plus loan indebtedness exceeds the
total premiums paid that are not treated as previously surrendered by the policy
owner, the excess generally will be treated as ordinary income.
Personal interest payable on a loan under a policy owned by an individual is
generally not deductible. Furthermore, no deduction will be allowed for interest
on loans under policies covering the life of any employee or officer of the
taxpayer or any person financially interested in the business carried on by the
taxpayer to the extent the indebtedness for such employee, officer or
financially interested person exceeds $50,000. The deductibility of interest
payable on policy loans may be subject to further rules and limitations under
Sections 163 and 264 of the Code.
Policy Owners should seek competent tax advice on the tax consequences of taking
loans, distributions, exchanging or surrendering any Policy.
Tax Treatment of Settlement Options. Under the Code, a portion of the settlement
option payments which are in excess of the death benefit proceeds are included
in the beneficiary's taxable income. Under a settlement option payable for the
lifetime of the beneficiary, the death benefit proceeds are divided by the
beneficiary's life expectancy and proceeds received in excess of these prorated
amounts are included in taxable income. The value of the death benefit proceeds
is reduced by the value of any period certain or refund guarantee. Under a fixed
payment or fixed period option, the death benefit proceeds are prorated by
dividing the proceeds over the payment period under the option. Any payments in
excess of the prorated amount will be included in taxable income.
Multiple Policies. The Code further provides that multiple MECs which are issued
within a calendar year period to the same owner by one company or its affiliates
are treated as one MEC for purposes of determining the taxable portion of any
loans or distributions. Such treatment may result in adverse tax consequences
including more rapid taxation of the loans or distributed amounts from such
combination of contracts. You should consult a tax adviser prior to purchasing
more than one MEC in any calendar year period.
Tax Treatment of Assignments. An assignment of a Policy or the change of
ownership of a Policy may be a taxable event. You should therefore consult a
competent tax adviser should you wish to assign or change the Owner of your
Policy.
Qualified Plans. The Policies may be used in conjunction with certain Qualified
Plans. Because the rules governing such use are complex, you should not do so
until you have consulted a competent Qualified Plans consultant.
Income Tax Withholding. All distributions or the portion thereof which is
includable in gross income of the Policy Owner are subject to Federal income tax
withholding. However, in most cases you may elect not to have taxes withheld.
You may be required to pay penalties under the estimated tax rules, if
withholding and estimated tax payments are insufficient.
Reports to Owners
We will at a minimum send to each Owner semi-annual and annual reports of the
Separate Account Funds. Following each Policy Anniversary, an annual statement
will be sent to each Owner. We may elect to send these more often. The statement
will show:
1. the current amount of Death Benefit payable under the Policy;
2. the current Accumulated Value;
3. the current Cash Surrender Value;
4. current Loans; and
5. all transactions previously confirmed.
The statement will also show Premiums paid and all charges deducted during the
Policy Year.
At the present time, it is our intent to provide you each month at the time we
deduct the monthly deduction a statement showing you certain information about
your policy. In the future we may send you this statement less frequently.
Confirmations will be mailed to Policy Owners within seven days of the
transaction of:
o the receipt of Premium;
o any transfer to or from any of the Separate Account Funds;
o any loan, interest repayment, or loan repayment;
o any surrender;
o exercise of the Right to Examine Policy privilege; and
o payment of the Death Benefit under the Policy.
Upon request you are entitled to a receipt of Premium payment.
Legal Proceedings
There are no legal proceedings to which the Separate Account or the Distributor
are a party or to which the assets of the Separate Accounts are subject. We are
not involved in any litigation that is of material importance in relation to our
total assets or that relates to the Separate Account.
Experts
The statutory basis financial statements of Pan-American Assurance Company as of
December 31, 2000 and 1999 and for each of the three years in the period ended
December 31, 2000, included in this Prospectus, which is part of the
registration statement, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing herein, and are included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
There are no financial statements for the Separate Account because as of the
date of this Prospectus, the Separate Account had not yet commenced operations.
Actuarial matters included in the Prospectus have been examined by Andrew M.
Erman, FSA, MAAA, Vice President and Actuary of the Company, whose opinion is
filed as an exhibit to the registration statement.
Financial Statements
Our financial statements included herein should be considered only as bearing
upon our ability to meet our obligations under the Policies.
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Pan-American Assurance Company
New Orleans, Louisiana
We have audited the accompanying statements of admitted assets, liabilities,
capital and surplus--statutory basis of Pan-American Assurance Company (the
"Company") (a wholly-owned subsidiary of Pan-American Life Insurance Company)
as of December 31, 2000 and 1999, and the related statements of operations--
statutory basis, changes in capital and surplus--statutory basis, and cash
flows--statutory basis for each of the three years in the period ended December
31, 2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
As described in Note 1 to the financial statements, these financial
statements were prepared in conformity with the accounting practices prescribed
or permitted by the Insurance Department of the State of Louisiana, which
practices differ from accounting principles generally accepted in the United
States of America. The effects on the financial statements of the variances
between the statutory basis of accounting and accounting principles generally
accepted in the United States of America, although not reasonably determinable,
are presumed to be material.
In our opinion, because of the effects of the matter discussed in the
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with accounting principles generally accepted in the
United States of America, the financial position of Pan-American Assurance
Company as of December 31, 2000 and 1999, or the results of its operations or
its cash flows for each of the three years in the period ended December 31,
2000.
In our opinion, such financial statements present fairly, in all material
respects, the admitted assets, liabilities, capital and surplus of Pan-American
Assurance Company as of December 31, 2000 and 1999, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000, on the basis of accounting described in Note 1.
Deloitte & Touche LLP
New Orleans, Louisiana
May 25, 2001
F-1
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
STATEMENTS OF ADMITTED ASSETS, LIABILITIES, CAPITAL AND SURPLUS (Statutory-
Basis)
December 31, 2000 and 1999
2000 1999
------------ ------------
ASSETS
Cash and invested assets:
Securities with fixed maturities (market
$10,837,000 and $7,778,000 in 2000 and 1999,
respectively)................................... $ 10,539,858 $ 7,757,619
Cash and short-term investments.................. 1,932,781 6,492,397
------------ ------------
Total cash and invested assets................. 12,472,639 14,250,016
Investment income due and accrued.................. 152,769 181,131
Receivable from parent, subsidiaries and
affiliates........................................ 279,589 --
Amounts recoverable from others.................... 596,247 339,145
------------ ------------
$ 13,501,244 $ 14,770,292
============ ============
LIABILITIES, CAPITAL AND SURPLUS
Life insurance policy reserves..................... $ 908,153 $ 935,358
Supplementary contracts without life
contingencies..................................... 1,808,825 1,973,544
Contract deposit funds............................. 459,880 590,532
Asset valuation reserve (AVR)...................... 46,003 40,124
Interest maintenance reserve (IMR)................. 10,421 12,540
Other liabilities and accrued expenses............. 268,235 1,792,529
------------ ------------
Total liabilities.............................. 3,501,517 5,344,627
------------ ------------
Commitments and Contingencies...................... -- --
Capital and surplus:
Common stock, $10 par value; authorized and
outstanding, 250,000 shares in 2000 and 1999.... 2,500,000 2,500,000
Contributed surplus.............................. 19,087,413 19,087,413
Unassigned deficit............................... (11,587,686) (12,161,748)
------------ ------------
Total capital and surplus...................... 9,999,727 9,425,665
------------ ------------
$ 13,501,244 $ 14,770,292
============ ============
See notes to financial statements-statutory basis.
F-2
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
STATEMENTS OF OPERATIONS (Statutory-Basis)
Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
------------ ------------ ------------
Income:
Premium income..................... $ 67,943,702 $ 68,218,261 $ 70,054,602
Less: Reinsurance ceded............ (67,933,283) (68,198,896) (70,038,747)
------------ ------------ ------------
10,419 19,365 15,855
Commissions and expense allowances
on reinsurance ceded.............. 16,743,178 16,870,120 18,735,562
Supplementary contracts without
life contingencies................ -- 722,009 1,070,511
Net investment income.............. 741,821 793,824 887,737
Amortization of interest
maintenance reserve............... 2,597 2,779 3,796
------------ ------------ ------------
17,498,015 18,408,097 20,713,461
------------ ------------ ------------
Policy benefits and expenses:
Payments on supplementary contracts
with life contingencies........... 49,437 50,807 51,702
Payments on supplementary contracts
without life contingencies........ 241,916 779,911 822,696
Interest on policy funds........... 85,593 89,892 143,991
(Decrease) increase in policy
reserves.......................... (27,205) 69,062 (14,026)
(Decrease) increase in reserve for
supplementary contracts without
life contingencies................ (164,719) 117,710 323,790
Commissions........................ 9,916,621 9,787,144 11,545,824
General insurance expenses......... 6,834,848 7,088,045 7,197,984
Insurance taxes, licenses and
fees.............................. 139,443 140,956 160,124
Miscellaneous expense.............. 20,500 75,000 8,999
------------ ------------ ------------
17,096,434 18,198,527 20,241,084
------------ ------------ ------------
Gain from operations before income
tax expense......................... 401,581 209,570 472,377
Income tax expense................... 139,644 70,076 164,003
------------ ------------ ------------
Net income........................... $ 261,937 $ 139,494 $ 308,374
============ ============ ============
See notes to financial statements-statutory basis.
F-3
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS (Statutory-Basis)
Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
---------- ----------- ----------
Balance at beginning of year............... $9,425,665 $ 9,541,509 $9,257,121
Net income................................. 261,937 139,494 308,374
Change in nonadmitted assets............... 318,005 (260,446) (16,152)
Change in asset valuation reserve.......... (5,880) 5,108 (7,834)
Paid-in capital............................ -- 1,000,000 --
Dividends to stockholders.................. -- (1,000,000) --
---------- ----------- ----------
Balance at end of year..................... $9,999,727 $ 9,425,665 $9,541,509
========== =========== ==========
See notes to financial statements-statutory basis.
F-4
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
STATEMENTS OF CASH FLOWS (Statutory-Basis)
Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Life insurance premiums............ $ 67,943,702 $ 68,218,261 $ 70,054,602
Supplementary contracts without
life contingencies................ -- 722,009 1,070,511
Allowances and reserve adjustments
received on reinsurance ceded..... 17,405,571 16,870,120 18,735,562
Investment income received......... 778,878 731,750 852,643
------------ ------------ ------------
Total cash received from
operations...................... 86,128,151 86,542,140 90,713,318
------------ ------------ ------------
Policyholder benefits and
surrenders paid................... (375,729) (931,763) (1,054,202)
Reinsurance premiums ceded......... (67,933,283) (68,198,896) (70,038,747)
Commissions, general insurance
expenses, taxes, licenses and fees
paid.............................. (17,553,305) (17,016,145) (18,898,987)
Income tax paid.................... -- (2,300) --
Other.............................. (2,035,252) 1,478,432 (842,225)
------------ ------------ ------------
Total cash paid from operations.. (87,897,569) (84,670,672) (90,834,161)
------------ ------------ ------------
Net cash (used in) provided by
operating activities............ (1,769,418) 1,871,468 (120,843)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold and
matured........................... 2,676,529 1,803,929 5,274,631
Cost of investments acquired....... (5,466,727) (1,753,114) (8,159,756)
------------ ------------ ------------
Net cash (used in) provided by
investing activities............ (2,790,198) 50,815 (2,885,125)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Paid-in capital.................... -- 1,000,000 --
Dividends to stockholders.......... -- (1,000,000) --
------------ ------------ ------------
Net cash provided by financing
activities...................... -- -- --
------------ ------------ ------------
NET (DECREASE) INCREASE IN CASH AND
SHORT-TERM INVESTMENTS.............. (4,559,616) 1,922,283 (3,005,968)
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF YEAR................... 6,492,397 4,570,114 7,576,082
------------ ------------ ------------
CASH AND SHORT-TERM INVESTMENTS AT
END OF YEAR......................... $ 1,932,781 $ 6,492,397 $ 4,570,114
============ ============ ============
See notes to financial statements-statutory basis.
F-5
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
NOTES TO FINANCIAL STATEMENTS (Statutory-Basis)
Years Ended December 31, 2000 and 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared in accordance with
insurance accounting practices prescribed or permitted by the Insurance
Department of the State of Louisiana and the National Association of Insurance
Commissioners (NAIC). Prescribed statutory accounting practices include a
variety of publications of the NAIC, as well as state laws, regulations and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. These practices differ
from accounting principles generally accepted in the United States of America,
hereinafter referred to as "generally accepted accounting principles" (GAAP).
The significant differences from GAAP include: (1) policy acquisition costs
are charged to expense as incurred rather than deferred and amortized over the
related premium-paying period; (2) policy reserves are based on statutory
mortality, morbidity, and interest requirements without consideration of
withdrawals and Company experience; (3) certain assets designated as
"nonadmitted assets" are excluded from the balance sheet by direct charges to
surplus; (4) reinsurance recoverables are netted against reserves and claim
liabilities rather than reflected as an asset; (5) bonds held as available-for-
sale are recorded at amortized cost or market value as determined by the NAIC
rather than at fair value; (6) an Asset Valuation Reserve and Interest
Maintenance Reserve as prescribed by the NAIC are not calculated under GAAP.
Under GAAP, realized capital gains and losses are reported in the income
statement on a pretax basis as incurred and investment valuation allowances are
provided when there has been a decline in value deemed other than temporary;
(7) investments in affiliates are carried at their net equity value with
changes in value being recorded directly to surplus rather than consolidated in
the financial statements; (8) no provision is made for the deferred income tax
effects of temporary differences between book and tax basis reporting; and (9)
certain items, including modifications to required policy reserves resulting
from changes in actuarial assumptions are recorded directly to surplus rather
than being reflected in income The effects of the foregoing variances from GAAP
have not been determined, but are presumed to be material.
In March 1998, the National Association of Insurance Commissioners adopted
the Codification of Statutory Accounting Principles (Codification).
Codification, which is intended to standardize regulatory accounting and
reporting to state insurance departments, is effective January 1, 2001.
However, statutory accounting principles will continue to be established by
individual state laws and permitted practices. The state of Louisiana has
required adoption of Codification (with certain modifications) for the
preparation of statutory financial statements effective January 1, 2001. The
Company's adoption of Codification (as modified by Louisiana) did not have a
material effect on statutory capital and surplus.
The significant accounting policies follow:
Ownership and Business
The Company is wholly-owned by Pan-American Life Insurance Company (PALIC)
which sells or markets interest sensitive/universal life insurance policies.
The Company and PALIC have entered into a reinsurance agreement whereby
substantially all of the business written by the Company is automatically ceded
to PALIC.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles prescribed or permitted by the Insurance Department of Louisiana
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the
F-6
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
NOTES TO FINANCIAL STATEMENTS (Statutory-Basis)--(Continued)
Years Ended December 31, 2000 and 1999
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Cash Equivalents
For purposes of the statements of cash flows, the Company considers cash
equivalents to be all short-term highly liquid investments, both readily
convertible to known amounts of cash and so near maturity that there is
insignificant risk of changes in value.
Investments
Bond, notes, and other securities with fixed maturities eligible for
amortization are stated at amortized cost. Short-term investments are stated at
cost which, together with accrued interest thereon, approximates their market
values. Investment income, which is reported net of investment expense, is
recognized as earned.
Future Policy Benefits, Losses and Claims
Policy reserves on individual lives are based on statutory mortality and
interest requirements without consideration of withdrawals. The majority of the
Universal Life Insurance Policies are reserved using the 1958 and 1980 CSO
4.50% CRVM mortality tables and continuous functions. Additional reserves are
established on policies whose cash surrender values exceed the reserves
required using the respective mortality tables.
Investment Valuation Reserves
The NAIC mandates certain valuation reserves for possible losses on
investments and a reserve that spreads interest-related gains and losses over
time, which are carried as liabilities. These reserves are the Asset Valuation
Reserve (AVR) and the Interest Maintenance Reserve (IMR). The AVR is designed
to mitigate the effect of valuation losses for various classes of assets.
Additionally, the formula and methodology utilized includes a default and
equity component for each class of asset. Reserve percentages are calculated
using both Company experience and predetermined percentages. The IMR is a
single component reserve established for interest related realized gains and
losses from fixed income investments. These gains and losses are then amortized
into investment income over the remaining life of the investment sold.
Revenue Recognition and Related Expenses
Traditional life premiums are recognized as income over the premium paying
period of the related policies. Universal life premiums are recognized as
revenue when received. Unearned premium reserves are established to cover the
unexpired portion of premiums written. Such reserves are computed by pro-rata
methods. Premium ceded to other companies have been reported as a reduction of
premium income.
Expenses incurred in connection with acquiring new insurance business,
including such acquisition costs as sales commissions, are charged to
operations as incurred.
Income Taxes
The Company is included in the consolidated federal income tax returns filed
by PALIC under the terms of a tax-sharing agreement between the companies. The
provision for income taxes reported in the financial statements is computed on
a separate return basis as if it were filing a return by itself. Deferred
income taxes
F-7
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
NOTES TO FINANCIAL STATEMENTS (Statutory-Basis)--(Continued)
Years Ended December 31, 2000 and 1999
resulting from temporary differences between statutory basis financial
statements and tax basis of assets and liabilities are not provided for in the
statutory accounts.
Fair Value Disclosure of Financial Instruments
Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosure
about Fair Value of Financial Instruments," requires disclosure of fair value
information about certain financial instruments, whether or not recognized in
the statement of financial position, for which it is practicable to estimate
the value. In situations where quoted market prices are not available, fair
values are based on estimates using present value or other valuation
techniques. SFAS No. 107 excluded certain financial instruments and all
nonfinancial instruments from its disclosure requirements. Therefore, the
aggregate fair value amounts presented do not represent the underlying value of
the Company (see Note 12).
Reclassifications
Certain reclassifications have been made to the 1998 and 1999 financial
statements in order to conform to the classifications adopted for reporting in
the 2000 financial statements.
2. RESTRICTED ASSETS AND SPECIAL DEPOSITS
The admitted values of bonds on deposit with regulatory authorities at
December 31, 2000 and 1999 were approximately $1,960,000 and $1,764,000,
respectively. Compensating balances of $450,000 and $870,000 at December 31,
2000 and 1999, were on deposit with several banking institutions for banking
services rendered.
3. INVESTMENTS
The amortized cost and estimated market value of investments in securities
with fixed maturities at December 31 are as follows:
2000
----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ---------- -----------
U. S. Government and
agencies.................. $ 1,614,000 $ 56,000 $ -- $ 1,670,000
Corporate bonds............ 3,506,000 54,000 (104,000) 3,456,000
Mortgage-backed
securities................ 5,420,000 319,000 (28,000) 5,711,000
----------- -------- --------- -----------
$10,540,000 $429,000 $(132,000) $10,837,000
=========== ======== ========= ===========
1999
----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ---------- -----------
U. S. Government and
agencies.................. $ 1,417,000 $ 1,000 $ (5,000) $ 1,413,000
Corporate bonds............ 3,533,000 190,000 (2,000) 3,721,000
Mortgage-backed
securities................ 2,808,000 1,000 (165,000) 2,644,000
----------- -------- --------- -----------
$ 7,758,000 $192,000 $(172,000) $ 7,778,000
=========== ======== ========= ===========
F-8
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
NOTES TO FINANCIAL STATEMENTS (Statutory-Basis)--(Continued)
Years Ended December 31, 2000 and 1999
The market values for the marketable bonds and other securities with fixed
maturities are determined based upon the quoted market prices for securities
actively traded. With respect to bonds without an active market, the Company
subscribes to several commercial pricing services which provide the estimated
market values. Market values for privately placed bonds are determined
utilizing a commercially available pricing model. The model considers the
current level of risk-free interest rates, current corporate spreads, the
credit quality of the issuer, and cash flow characteristics of the security.
Utilizing this data, the model generates market values which the Company
considers reflective of the current market value of each privately placed
bond.
The amortized cost and estimated market value of fixed maturity securities
at December 31, 2000, by contractual maturity, are as shown below (in
thousands). Debt securities not due at a single maturity date, including
mortgage-backed securities, are included in a separate category. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
Estimated
Amortized Market
Cost Value
--------- ---------
Due in one year or less.................................. $ -- $ --
Due after one year through five years.................... 2,114 2,169
Due after five years through ten years................... 2,127 2,098
Due after ten years...................................... 879 859
------- -------
5,120 5,126
Mortgage-backed securities............................... 5,420 5,711
------- -------
$10,540 $10,837
======= =======
Proceeds from the sale and maturity of investments during 2000 were
$2,677,000. Gross gains of $2,000 and gross losses of $1,000 were realized on
these sales. Proceeds from the sale and maturity of investments during 1999
were $1,804,000. Gross gains of $10,000 were realized on these sales. Proceeds
from the sale and maturity of investments during 1998 were $5,275,000. Gross
gains of $1,800 were realized on these sales.
4. LIABILITY FOR UNPAID POLICY AND CONTRACT CLAIMS
Activity in the liability for unpaid policy and contract claims is
summarized as follows (in thousands):
2000 1999
------ ------
Balance at January 1.......................................... $2,353 $2,155
Less reinsurance recoverables................................. 2,353 2,155
------ ------
Net balance at January 1...................................... -- --
------ ------
Total incurred................................................ 291 831
------ ------
Total paid.................................................... 291 831
------ ------
Net balance at December 31.................................... -- --
Plus reinsurance recoverables................................. 6,064 2,353
------ ------
Balance at December 31........................................ $6,064 $2,353
====== ======
F-9
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
NOTES TO FINANCIAL STATEMENTS (Statutory-Basis)--(Continued)
Years Ended December 31, 2000 and 1999
5. OTHER LIABILITIES AND ACCRUED EXPENSES
Other liabilities and accrued expenses are comprised of the following at
December 31:
2000 1999
--------- ----------
Surrender values on cancelled policies............... $ 1,000 $ 1,000
Federal income taxes accrued......................... 235,000 95,000
Amounts withheld or retained by Company as agent or
trustee............................................. 91,000 62,000
Agents' credit balances.............................. 76,000 83,000
Remittances and items not allocated.................. (135,000) 349,000
Payable to parent.................................... -- 1,203,000
--------- ----------
$ 268,000 $1,793,000
========= ==========
6. RELATED PARTY TRANSACTIONS
The Company and PALIC have entered into a service agreement whereby PALIC
furnishes administrative services to the Company. These services include the
research, development, marketing and sales of insurance products, the
establishment and maintenance of accounting and other records, and the
furnishing of other technical, investment and management services as required
by the Company. In accordance with this service agreement, PALIC charges the
Company for services performed, with these charges being subject to review by
the Company. Substantially all general insurance expenses and certain
investment expenses incurred by the Company in 2000, 1999 and 1998, were the
result of charges under this service agreement. In 2000, 1999 and 1998 the
Company was charged $6,827,000, $7,083,000 and $7,190,000, respectively, for
services provided by PALIC.
Approximately $229,000, $355,000 and $367,000 of gross premium income for
2000, 1999 and 1998, respectively, resulted from conversions, at the request of
the policyholders, of policies previously issued by PALIC into the Company's
universal life product. Interest computed on the intercompany receivable
created pursuant to these conversions was not significant.
The reserves for life insurance policy benefits are net of reinsurance ceded
in the amounts of $643,010,000 in 2000 and $617,972,000 in 1999 to PALIC.
Policy and contract claims are net of reinsurance ceded in the amounts of
$6,064,000 in 2000, $2,353,000 in 1999 and $2,155,000 in 1998 to PALIC.
Policyholders' benefits are net of reinsurance ceded in the amounts of
$26,815,000 in 2000, $20,320,000 in 1999, and $21,435,000 in 1998 to PALIC.
However, the Company is contingently liable for reinsurance amounts in the
event PALIC is unable to pay its portion of claims.
7. REINSURANCE
Pan-American Assurance Company participates in reinsurance to reduce overall
risks, including exposure to large losses and to effect business-sharing
arrangements. The liabilities for policy reserves and policy contract claims
are stated after deduction for reinsurance ceded to other companies; however,
the Company remains primarily liable as the direct insurer on all risks
reinsured. All of the reinsurance ceded is assumed by Pan-American Life
Insurance Company.
F-10
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
NOTES TO FINANCIAL STATEMENTS (Statutory-Basis)--(Continued)
Years Ended December 31, 2000 and 1999
The approximate amounts of premiums and reserves relating to reinsurance
assumed and ceded as of and during the years ended December 31 are as follows
(in thousands):
2000
------------------------------------
Ceded Assumed
Direct to Other From Other Net
Amount Companies Companies Amount
-------- --------- ---------- ------
Premiums:
Life................................... $ 67,944 $ 67,933 $ -- $ 11
======== ======== ===== ======
Policy reserves:
Life................................... $643,918 $643,010 $ -- $ 908
Supplementary contracts without
life contingencies.................... 1,809 -- -- 1,809
-------- -------- ----- ------
$645,727 $643,010 $ -- $2,717
======== ======== ===== ======
Policyholders' benefits................. $ 27,106 $ 26,815 $ -- $ 291
======== ======== ===== ======
1999
------------------------------------
Ceded Assumed
Direct to Other From Other Net
Amount Companies Companies Amount
-------- --------- ---------- ------
Premiums:
Life................................... $ 68,218 $ 68,199 $ -- $ 19
======== ======== ===== ======
Policy reserves:
Life................................... $618,907 $617,972 $ -- $ 935
Supplementary contracts without
life contingencies.................... 1,974 -- -- 1,974
-------- -------- ----- ------
$620,881 $617,972 $ -- $2,909
======== ======== ===== ======
Policyholders' benefits................. $ 21,150 $ 20,320 $ -- $ 830
======== ======== ===== ======
1998
------------------------------------
Ceded Assumed
Direct to Other From Other Net
Amount Companies Companies Amount
-------- --------- ---------- ------
Premiums:
Life................................... $ 70,055 $ 70,039 $ -- $ 16
======== ======== ===== ======
Policy reserves:
Life................................... $591,310 $590,444 $ -- $ 866
Supplementary contracts without
life contingencies.................... 1,856 -- -- 1,856
-------- -------- ----- ------
$593,166 $590,444 $ -- $2,722
======== ======== ===== ======
Policyholders' benefits................. $ 22,309 $ 21,434 $ -- $ 875
======== ======== ===== ======
F-11
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
NOTES TO FINANCIAL STATEMENTS (Statutory-Basis)--(Continued)
Years Ended December 31, 2000 and 1999
8. INVESTMENT INCOME
Investment income for the years ended December 31 consists of:
2000 1999 1998
-------- -------- --------
Bonds.......................................... $542,000 $590,000 $743,000
Cash and short-term investments................ 203,000 222,000 149,000
Other securities with fixed maturities......... 48,000 53,000 55,000
-------- -------- --------
793,000 865,000 947,000
Less investment expenses....................... (51,000) (71,000) (59,000)
-------- -------- --------
Net investment income.......................... $742,000 $794,000 $888,000
======== ======== ========
9. INCOME TAXES
The Company is included in the consolidated federal income tax return filed
by PALIC under the terms of a tax-sharing agreement between the companies. The
income tax provision is computed by applying the current federal corporate tax
rate of 35% to gain from operations, adjusted as follows:
2000 1999 1998
-------- -------- --------
Computed "expected" tax expense................ $ 92,000 $ 73,000 $165,000
Capital gains.................................. -- 4,000 1,000
Other.......................................... 48,000 (7,000) (2,000)
-------- -------- --------
$140,000 $ 70,000 $164,000
======== ======== ========
10. DIVIDEND LIMITATION
Dividends to stockholders are limited by laws applicable to insurance
companies. Under Louisiana law, the Company may pay a dividend without prior
consent of the Louisiana Insurance Commissioner if the dividend does not exceed
15% of statutory surplus at the end of the preceding year. The Company paid
dividends of $1,000,000 in 1999. No dividends were paid in 1998 or 2000.
11. COMMITMENTS AND CONTINGENCIES
The Company has outstanding lawsuits and other claims arising in the
ordinary course of business which, in management's opinion, will not result in
any material impact on the financial condition of the Company.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each financial instrument for which it is practicable to estimate that
value:
Securities with Fixed Maturities--For bonds, and other securities with fixed
maturities fair value equals quoted market prices, if available. If a quoted
market price is not available, fair value is estimated using quoted market
prices for similar securities.
Cash and Short-Term Investments--For those short-term instruments, the
carrying amount is a reasonable estimate of fair value.
F-12
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
NOTES TO FINANCIAL STATEMENTS (Statutory-Basis)--(Continued)
Years Ended December 31, 2000 and 1999
Other Assets--The carrying amounts reported in the balance sheet for these
financial instruments (primarily due from reinsurers) approximate those assets'
fair values because of the short duration of time before conversion to cash.
Investment Contracts--The fair value for supplementary contracts without
life contingencies were estimated using discounted cash flow analyses.
Contract Deposit Funds--The fair value of contract deposit funds was
estimated as the cash surrender value of these contracts.
Other Liabilities--The carrying amounts reported in the balance sheet for
other financial instruments (primarily payables of a short-term nature)
approximate those liabilities' fair values.
The carrying amounts and estimated fair values of the Company's financial
instruments as of December 31, 2000 and 1999 are as follows (in thousands):
2000 1999
---------------- ---------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- ------
Financial Assets:
Securities with fixed maturities......... $10,540 $10,837 $7,758 $7,778
Cash and short-term investments.......... 1,933 1,933 6,492 6,492
Other assets............................. 1,029 1,029 520 520
Financial Liabilities:
Investment contracts:
Supplementary contracts without life
contingencies......................... 1,809 1,798 1,974 1,962
Contract deposit funds................... 460 433 591 556
Other liabilities........................ 32 32 1,793 1,793
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's holdings of a particular financial
instrument. Because no market exists for a significant portion of the Company's
financial instruments, fair values are based upon judgments regarding future
expected loss experience, current economic conditions, risk characteristics of
various financial instruments, and other factors. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgment and, therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
******
F-13
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
CONDENSED STATEMENTS OF ADMITTED ASSETS, LIABILITIES, CAPITAL AND SURPLUS
(Statutory-Basis)
March 31, 2001 and December 31, 2000
2001 2000
------------ ------------
(Unaudited)
ASSETS
Cash and invested assets:
Bonds........................................... $ 10,818,690 $ 10,539,858
Cash and short-term investments................. 964,061 1,932,781
------------ ------------
Total cash and invested assets................ 11,782,751 12,472,639
Federal income tax recoverable.................... 17,132 --
Investment income due and accrued................. 109,208 152,769
Amounts recoverable from others................... 178,516 875,838
Deposits clearing................................. 5,982,705 --
------------ ------------
$ 18,070,312 $ 13,501,246
============ ============
LIABILITIES AND CAPITAL AND SURPLUS
Life insurance policy reserves.................... $ 904,269 $ 908,153
Supplementary contracts without life
contingencies.................................... 1,961,290 1,808,825
Contract deposit funds............................ 410,124 459,880
Asset valuation reserve (AVR)..................... 45,986 46,003
Interest maintenance reserves (IMR)............... 9,924 10,421
Remittances and items not allocated............... 4,201,258 --
Other liabilities and accrued expenses............ 455,001 268,235
------------ ------------
Total liabilities............................. 7,987,852 3,501,517
------------ ------------
Commitments and Contingencies
Capital and surplus:
Common stock.................................... 2,500,000 2,500,000
Contributed surplus............................. 19,087,413 19,087,413
Unassigned deficit.............................. (11,504,953) (11,587,685)
------------ ------------
Total Capital and Surplus..................... 10,082,460 9,999,728
------------ ------------
$ 18,070,312 $ 13,501,245
============ ============
- --------
* The condensed statement of admitted assets, liabilities, capital and surplus
(statutory-basis) at December 31, 2000 has been taken from the audited
statements at that date.
See note to condensed financial statements.
F-14
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
CONDENSED STATEMENTS OF OPERATIONS (Statutory-Basis)
Three Months Ended March 31, 2001 and 2000
2001 2000
------------ ------------
(Unaudited) (Unaudited)
Income:
Premium income................................... $ 15,935,060 $ 16,714,717
Less: Reinsurance ceded.......................... (15,667,445) (16,513,995)
------------ ------------
267,615 200,722
Commissions and expense allowances on reinsurance
ceded........................................... 2,663,095 4,200,240
Net investment income............................ 200,544 169,442
Amortization of interest maintenance reserve..... 688 666
------------ ------------
3,131,942 4,571,070
Policy benefits and expenses:
Payments on supplementary contracts with life
contingencies................................... 11,504 12,830
Payments on supplementary contracts without life
contingencies................................... 125,605 205,396
Interest on policy funds......................... 44,868 7,249
Increase (decrease) in reserve for supplementary
contract without life contingencies............. 148,581 (6,656)
Commisions....................................... 1,928,140 2,384,649
General insurance expenses....................... 780,840 1,871,812
Taxes, licenses and fees......................... 65,459 68,591
Miscellaneous (income) expense................... (1,784) 8,889
------------ ------------
3,103,213 4,552,760
Gain from operations before income tax expense..... 28,729 18,310
Income tax (benefit) expense....................... (2,507) 6,176
------------ ------------
Net income......................................... $ 31,236 $ 12,134
============ ============
See note to condensed financial statements.
F-15
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
CONDENSED STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS (Statutory-Basis)
Three Months Ended March 31, 2001 and 2000
2001 2000
----------- -----------
(Unaudited) (Unaudited)
Balance at beginning of period.......................... $ 9,999,734 $9,425,668
Net income............................................ 31,236 12,134
Change in nonadmitted assets.......................... 51,473 223,017
Change in asset valuation reserve..................... 17 13,180
----------- ----------
Balance at end of period................................ $10,082,460 $9,673,999
=========== ==========
See note to condensed financial statements.
F-16
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary of Pan-American Life Insurance Company)
CONDENSED STATEMENTS OF CASH FLOWS (Statutory-Basis)
Three Months Ended March 31, 2001 and 2000
2001 2000
------------ ------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Life insurance premiums.......................... $ 15,935,060 $ 16,714,717
Supplementary contracts without life
contingencies................................... -- 200,722
Allowances and reserve adjustments received on
reinsurance ceded............................... 2,663,095 4,200,240
Investment income received....................... 200,544 156,125
------------ ------------
Total cash received from operations............ 18,798,699 21,271,804
------------ ------------
Policyholder benefits and surrenders paid........ (181,976) (222,636)
Reinsurance premiums ceded....................... (15,667,445) (16,714,717)
Commissions, general insurance expenses, taxes,
licenses and fees paid.......................... (2,774,439) (4,325,052)
Income tax paid.................................. 2,507 --
Other............................................ (862,941) (5,211,062)
------------ ------------
Total cash paid from operations................ (19,484,294) (26,473,467)
------------ ------------
Net cash used in operating activities.......... (685,595) (5,201,663)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold and matured....... 55,432 674,553
Cost of investments acquired..................... (338,557) --
------------ ------------
Net cash (used in) provided by investing
activities.................................... (283,125) 674,553
------------ ------------
NET DECREASE IN CASH AND SHORT-TERM INVESTMENTS.... (968,720) (4,527,110)
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF
PERIOD............................................ 1,932,781 6,492,397
------------ ------------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD... $ 964,061 $ 1,965,287
============ ============
See note to condensed financial statements.
F-17
PAN-AMERICAN ASSURANCE COMPANY
(A Wholly-Owned Subsidiary Of Pan-American Life Insurance Company)
NOTE TO CONDENSED FINANCIAL STATEMENTS (Statutory Basis)
(Unaudited)
At and For the Three Months Ended March 31, 2001 and 2000
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed financial statements have been prepared
in accordance with insurance accounting practices prescribed or permitted by
the Insurance Department of the State of Louisiana and the National Association
of Insurance Commissioners (NAIC) and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes normally included in complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for interim periods are not necessarily indicative
of the results that may be expected for the entire year. For further
information, refer to the financial statements and notes thereof of Pan-
American Assurance Company for the years ended December 31, 2000 and 1999
included elsewhere herein.
F-18
PAN-AMERICAN ASSURANCE COMPANY
(A WHOLLY- OWNED SUBSIDIARY OF
PAN-AMERICAN LIFE INSURANCE COMPANY)
CONDENSED STATEMENTS OF ADMITTED ASSETS, LIABILITIES, CAPITAL AND SURPLUS
(STATUTORY-BASIS)
June 30, 2001 and December 31, 2000
- --------------------------------------------------------------------------------
(Unaudited)
2001 2000*
ASSETS
- ------
Cash and invested assets:
Bonds $ 10,770,819 $ 10,539,858
Cash and short-term investments 1,964,485 1,932,781
------------ ------------
Total cash and invested assets 12,735,304 12,472,639
Federal income tax recoverable 17,275 -
Investment income due and accrued 130,602 152,769
Amounts recoverable from others 175,346 596,247
Receivable from parent, subsidiaries and affiliates - 279,589
Deposits clearing 882,074 -
------------ ------------
$ 13,940,601 $ 13,501,244
============ ============
LIABILITIES AND CAPITAL AND SURPLUS
- -----------------------------------
Life insurance policy reserves $ 898,471 $ 908,153
Supplementary contracts without life contingencies 1,961,950 1,808,825
Contract deposit funds 597,395 459,880
Asset valuation reserve (AVR) 51,693 46,003
Interest maintenance reserve (IMR) 9,252 10,421
Other liabilities and accrued expenses 283,267 268,235
------------ ------------
Total liabilities 3,802,028 3,501,517
------------ ------------
Commitments and Contingencies
Capital and surplus:
Common stock 2,500,000 2,500,000
Contributed surplus 19,087,413 19,087,413
Unassigned deficit (11,448,840) (11,587,686)
------------ ------------
Total capital and surplus 10,138,573 9,999,727
------------ ------------
$ 13,940,601 $ 13,501,244
============ ============
*The condensed statement of admitted assets, liabilities, capital and surplus
(statutory-basis) at December 31, 2000 has been taken from the audited
statements at that date.
See note to condensed financial statements.
PAN-AMERICAN ASSURANCE COMPANY
(A WHOLLY- OWNED SUBSIDIARY OF
PAN-AMERICAN LIFE INSURANCE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS (STATUTORY- BASIS)
Six Months Ended June 30, 2001 and 2000
- --------------------------------------------------------------------------------
(Unaudited) (Unaudited)
2001 2000
Income:
Premium income $ 32,503,096 $ 34,699,281
Less: Reinsurance ceded (32,235,481) (34,498,559)
------------ ------------
267,615 200,722
Commissions and expense allowances on
reinsurance ceded 7,479,302 8,066,645
Net investment income 410,046 287,489
Amortization of interest maintenance reserve 1,391 1,332
------------ ------------
8,158,354 8,556,188
Policy benefits and expenses:
Payments on supplementary contracts with life contingencies 23,080 25,160
Payments on supplementary contracts without life contingencies 238,404 431,350
Interest and adjustments on policy funds 207,338 23,524
Increase (decrease) in policy reserves 143,443 (11,433)
Commisions 4,368,550 4,693,051
General insurance expenses 3,191,932 3,475,980
Taxes, licenses and fees 145,716 113,094
Miscellaneous (income) expense (196,905) 14,203
------------ ------------
8,121,558 8,764,929
Gain (loss) from operations before income tax expense 36,796 (208,741)
Income tax benefit (68,569) (73,525)
------------ ------------
Net income (loss) $ 105,365 $ (135,216)
============ ============
See note to condensed financial statements.
PAN-AMERICAN ASSURANCE COMPANY
(A WHOLLY- OWNED SUBSIDIARY OF
PAN-AMERICAN LIFE INSURANCE COMPANY)
CONDENSED STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS (STATUTORY-BASIS)
Six Months Ended June 30, 2001 and 2000
- ------------------------------------------------------------------------------
(Unaudited) (Unaudited)
2001 2000
Balance at beginning of period $ 9,999,727 $9,425,665
Net income (loss) 105,365 (135,216)
Change in nonadmitted assets 39,171 180,198
Change in asset valuation reserve (5,690) (1,072)
----------- ----------
Balance at end of period $10,138,573 $9,469,575
=========== ==========
See note to condensed financial statements.
PAN-AMERICAN ASSURANCE COMPANY
(A WHOLLY- OWNED SUBSIDIARY OF
PAN-AMERICAN LIFE INSURANCE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS (STATUTORY-BASIS)
Six Months Ended June 30, 2001 and 2000
- --------------------------------------------------------------------------------
(Unaudited) (Unaudited)
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Life insurance premiums $ 32,503,096 $ 34,699,281
Allowances and reserve adjustments received on
reinsurance ceded 7,479,302 8,066,645
Investment income received 410,046 352,276
Income tax refund 65,739 -
------------ ------------
Total cash received from operations 40,458,183 43,118,202
------------ ------------
Policyholder benefits and surrenders paid (468,822) (476,792)
Reinsurance premiums ceded (32,235,481) (34,498,559)
Commissions, general insurance expenses,
taxes, licenses and fees paid (7,851,014) (8,350,763)
Other 364,594 (132,384)
------------ ------------
Total cash paid from operations (40,190,723) (43,458,498)
------------ ------------
Net cash provided by (used in) operating activities 267,460 (340,296)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold and matured 168,215 1,409,840
Cost of investments acquired (403,971) (3,985,375)
------------ ------------
Net cash used in investing activities (235,756) (2,575,535)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS 31,704 (2,915,831)
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF PERIOD 1,932,781 6,492,397
------------ ------------
CASH AND SHORT-TERM INVESTMENTS AT
END OF PERIOD $ 1,964,485 $ 3,576,566
============ ============
See note to condensed financial statements.
PAN-AMERICAN ASSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF
PAN-AMERICAN LIFE INSURANCE COMPANY)
NOTE TO CONDENSED FINANCIAL STATEMENTS (STATUTORY-BASIS)
(UNAUDITED)
AT AND FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------
The accompanying unaudited condensed financial statements have been prepared in
accordance with insurance accounting practices prescribed or permitted by the
Insurance Department of the State of Louisiana and the National Association of
Insurance Commissioners (NAIC) and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes normally included in complete financial statements. In the opinion
of management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for interim periods are not necessarily indicative of the results that
may be expected for the entire year. For further information, refer to the
financial statements and notes thereof of Pan-American Assurance Company for the
years ended December 31, 2000 and 1999 included elsewhere herein.
APPENDIX A
ILLUSTRATIONS OF POLICY VALUES
The following tables have been prepared to illustrate hypothetically how certain
values under a Policy change with investment performance over an extended period
of time. The tables illustrate how Accumulated Values, Cash Surrender Values and
Death Benefits under a Policy covering an insured of a given age on the Policy
Date, would vary over time if the Planned Premium Payments were paid annually
and the return on the assets in each portfolio were an assumed uniform gross
annual rates of 0%, 6% and 12% (net annual rates of -1.89%, 4.07% and 10.02% for
the first ten policy years and -1.54%, 4.43% and 10.41% thereafter). The values
would be different from those shown if the gross returns averaged 0%, 6% or 12%,
but fluctuated over and under those averages throughout the years shown. The
tables also show Planned Premium Payments accumulated at 5% interest compounded
annually. The hypothetical investment rates of return are illustrative only and
should not be considered a representation of past or future investment rates of
return. Actual rates of return for a particular Policy may be more or less than
the hypothetical investment rates of return illustrated and will depend on a
number of factors including the investment allocations you make and prevailing
rates. These illustrations assume that the Premiums are allocated equally among
the Separate Account Funds available under the Policy, and that no amounts are
allocated to the Fixed Account.
The illustrations reflect the fact that the net investment returns on the assets
held in the Separate Account Funds is lower than the gross after tax return of
the selected underlying Portfolios. The tables assume a simple arithmetic
average annual expense ratio of 1.15% of the average daily net assets of the
portfolios available. The tables also assumes that the waivers and/or
reimbursements, if any, for the available portfolios will continue for the
periods shown.
The illustrations also reflect the deduction of the Premium Expense and Monthly
Deduction for the hypothetical Insured. The Surrender Charge is reflected in the
Cash Surrender Value column. Our current cost of insurance charges and the
guaranteed maximum cost of insurance charges that we have a contractual right to
charge are reflected in separate illustrations on each of the following pages.
All the illustrations reflect the fact that no charges for Federal or state
income taxes are currently made against the Separate Account and assume no loan
amount or partial withdrawals/surrenders or charges for supplemental and/or
rider benefits.
The illustrations are based on our Preferred Plus rating class. Upon request,
you will be furnished with a comparable illustration based on the proposed
Insured's individual circumstances. Such illustrations may assume different
hypothetical rates of return than those illustrated in the following tables.
Because the Death Benefit values vary depending on the Death Benefit Option in
effect, benefit options are illustrated separately.
The illustrations show Accumulated Values that would result based upon the
hypothetical investment rates of return if Premiums are paid as indicated and
all Net Premiums are allocated to Separate Account Funds.
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JOHN DOE ISSUE AGE : 35
GENDER : MALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT: $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM : $ 3,000.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 0.00% (NET -1.89% FOR THE FIRST TEN YEARS AND -1.54%
THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- ------- CURRENT CHARGES----
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- -------- --------------------------- ------- --------------------------------------
36 1 3,000 3,150 1,331 0 250,000 1,558 0 250,000
37 2 3,000 6,458 3,656 0 250,000 4,060 60 250,000
38 3 3,000 9,930 5,955 1,955 250,000 6,453 2,453 250,000
39 4 3,000 13,577 8,230 4,230 250,000 8,763 4,763 250,000
40 5 3,000 17,406 10,481 6,481 250,000 11,003 7,003 250,000
41 6 3,000 21,426 12,708 9,108 250,000 13,182 9,582 250,000
42 7 3,000 25,647 14,884 11,684 250,000 15,286 12,086 250,000
43 8 3,000 30,080 17,037 14,237 250,000 17,315 14,515 250,000
44 9 3,000 34,734 19,141 16,741 250,000 19,266 16,866 250,000
45 10 3,000 39,620 21,196 19,196 250,000 21,174 19,174 250,000
46 11 3,000 44,751 23,203 21,603 250,000 23,117 21,517 250,000
47 12 3,000 50,139 25,163 23,963 250,000 25,022 23,822 250,000
48 13 3,000 55,796 27,076 26,276 250,000 26,887 26,087 250,000
49 14 3,000 61,736 28,917 28,517 250,000 28,715 28,315 250,000
50 15 3,000 67,972 30,687 30,687 250,000 30,505 30,505 250,000
51 16 3,000 74,521 32,387 32,387 250,000 32,259 32,259 250,000
52 17 3,000 81,397 33,992 33,992 250,000 33,977 33,977 250,000
53 18 3,000 88,617 35,502 35,502 250,000 35,660 35,660 250,000
54 19 3,000 96,198 36,894 36,894 250,000 37,308 37,308 250,000
55 20 3,000 104,158 38,168 38,168 250,000 38,922 38,922 250,000
56 21 3,000 112,516 39,299 39,299 250,000 40,503 40,503 250,000
57 22 3,000 121,291 40,263 40,263 250,000 42,009 42,009 250,000
58 23 3,000 130,506 41,060 41,060 250,000 43,436 43,436 250,000
59 24 3,000 140,181 41,665 41,665 250,000 44,779 44,779 250,000
60 25 3,000 150,340 42,053 42,053 250,000 46,032 46,032 250,000
61 26 3,000 161,007 42,220 42,220 250,000 47,187 47,187 250,000
62 27 3,000 172,208 42,116 42,116 250,000 48,238 48,238 250,000
63 28 3,000 183,968 41,686 41,686 250,000 49,176 49,176 250,000
64 29 3,000 196,317 40,899 40,899 250,000 49,998 49,998 250,000
65 30 3,000 209,282 39,696 39,696 250,000 50,695 50,695 250,000
66 31 3,000 222,896 38,038 38,038 250,000 51,258 51,258 250,000
67 32 3,000 237,191 35,859 35,859 250,000 51,677 51,677 250,000
68 33 3,000 252,201 33,083 33,083 250,000 51,937 51,937 250,000
69 34 3,000 267,961 29,654 29,654 250,000 52,026 52,026 250,000
70 35 3,000 284,509 25,483 25,483 250,000 51,927 51,927 250,000
71 36 3,000 301,884 20,438 20,438 250,000 51,623 51,623 250,000
72 37 3,000 320,129 14,202 14,202 250,000 51,099 51,099 250,000
73 38 3,000 339,285 6,818 6,818 250,000 50,337 50,337 250,000
74 39 3,000 359,399 49,317 49,317 250,000
75 40 3,000 380,519 48,011 48,011 250,000
76 41 3,000 402,695 46,383 46,383 250,000
77 42 3,000 425,980 44,394 44,394 250,000
78 43 3,000 450,429 41,997 41,997 250,000
79 44 3,000 476,100 39,139 39,139 250,000
80 45 3,000 503,055 35,765 35,765 250,000
81 46 3,000 531,358 31,811 31,811 250,000
82 47 3,000 561,076 27,209 27,209 250,000
83 48 3,000 592,280 21,886 21,886 250,000
84 49 3,000 625,044 15,754 15,754 250,000
85 50 3,000 659,446 8,684 8,684 250,000
86 51 3,000 695,568 523 523 250,000
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JANE DOE ISSUE AGE : 35
GENDER : FEMALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT: $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM : $ 2,600.00
PAYMENT MODE : (ANNUALLY)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- --- -------- --------------------------- ------- --------------------------------------
36 1 2,600 2,730 1,013 0 250,000 1,208 0 250,000
37 2 2,600 5,597 3,019 219 250,000 3,377 577 250,000
38 3 2,600 8,606 4,998 2,198 250,000 5,466 2,666 250,000
39 4 2,600 11,767 6,951 4,151 250,000 7,467 4,667 250,000
40 5 2,600 15,085 8,880 6,080 250,000 9,390 6,590 250,000
41 6 2,600 18,569 10,783 8,263 250,000 11,238 8,718 250,000
42 7 2,600 22,228 12,633 10,393 250,000 13,014 10,774 250,000
43 8 2,600 26,069 14,459 12,499 250,000 14,723 12,763 250,000
44 9 2,600 30,103 16,233 14,553 250,000 16,373 14,693 250,000
45 10 2,600 34,338 17,984 16,584 250,000 17,994 16,594 250,000
46 11 2,600 38,785 19,685 18,565 250,000 19,643 18,523 250,000
47 12 2,600 43,454 21,336 20,496 250,000 21,270 20,430 250,000
48 13 2,600 48,356 22,965 22,405 250,000 22,874 22,314 250,000
49 14 2,600 53,504 24,546 24,266 250,000 24,457 24,177 250,000
50 15 2,600 58,909 26,051 26,051 250,000 26,018 26,018 250,000
51 16 2,600 64,585 27,510 27,510 250,000 27,558 27,558 250,000
52 17 2,600 70,544 28,895 28,895 250,000 29,077 29,077 250,000
53 18 2,600 76,801 30,233 30,233 250,000 30,576 30,576 250,000
54 19 2,600 83,371 31,473 31,473 250,000 32,053 32,053 250,000
55 20 2,600 90,270 32,642 32,642 250,000 33,511 33,511 250,000
56 21 2,600 97,514 33,713 33,713 250,000 34,962 34,962 250,000
57 22 2,600 105,119 34,688 34,688 250,000 36,359 36,359 250,000
58 23 2,600 113,105 35,566 35,566 250,000 37,699 37,699 250,000
59 24 2,600 121,490 36,374 36,374 250,000 38,981 38,981 250,000
60 25 2,600 130,295 37,086 37,086 250,000 40,201 40,201 250,000
61 26 2,600 139,540 37,676 37,676 250,000 41,360 41,360 250,000
62 27 2,600 149,247 38,144 38,144 250,000 42,456 42,456 250,000
63 28 2,600 159,439 38,439 38,439 250,000 43,486 43,486 250,000
64 29 2,600 170,141 38,509 38,509 250,000 44,449 44,449 250,000
65 30 2,600 181,378 38,326 38,326 250,000 45,342 45,342 250,000
66 31 2,600 193,177 37,861 37,861 250,000 46,160 46,160 250,000
67 32 2,600 205,566 37,084 37,084 250,000 46,899 46,899 250,000
68 33 2,600 218,574 35,988 35,988 250,000 47,553 47,553 250,000
69 34 2,600 232,233 34,564 34,564 250,000 48,117 48,117 250,000
70 35 2,600 246,574 32,777 32,777 250,000 48,583 48,583 250,000
71 36 2,600 261,633 30,560 30,560 250,000 48,940 48,940 250,000
72 37 2,600 277,445 27,818 27,818 250,000 49,176 49,176 250,000
73 38 2,600 294,047 24,417 24,417 250,000 49,271 49,271 250,000
74 39 2,600 311,479 20,185 20,185 250,000 49,206 49,206 250,000
75 40 2,600 329,783 14,929 14,929 250,000 48,954 48,954 250,000
76 41 2,600 349,003 8,458 8,458 250,000 48,485 48,485 250,000
77 42 2,600 369,183 550 550 250,000 47,766 47,766 250,000
78 43 2,600 390,372 46,756 46,756 250,000
79 44 2,600 412,620 45,412 45,412 250,000
80 45 2,600 435,981 43,685 43,685 250,000
81 46 2,600 460,510 41,524 41,524 250,000
82 47 2,600 486,266 38,874 38,874 250,000
83 48 2,600 513,309 35,675 35,675 250,000
84 49 2,600 541,705 31,858 31,858 250,000
85 50 2,600 571,520 27,348 27,348 250,000
86 51 2,600 602,826 22,058 22,058 250,000
87 52 2,600 635,697 15,890 15,890 250,000
88 53 2,600 670,212 8,730 8,730 250,000
89 54 2,600 706,453 445 445 250,000
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JOHN DOE ISSUE AGE : 35
GENDER : MALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT: $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM: $ 3,000.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 6.00% (NET 4.07% FOR THE FIRST TEN YEARS AND
4.43% THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- -------- -------- --------------------------- ------- --------------------------------------
36 1 3,000 3,150 1,413 0 250,000 1,687 0 250,000
37 2 3,000 6,458 3,900 0 250,000 4,448 448 250,000
38 3 3,000 9,930 6,462 2,462 250,000 7,258 3,258 250,000
39 4 3,000 13,577 9,104 5,104 250,000 10,142 6,142 250,000
40 5 3,000 17,406 11,830 7,830 250,000 13,120 9,120 250,000
41 6 3,000 21,426 14,644 11,044 250,000 16,199 12,599 250,000
42 7 3,000 25,647 17,522 14,322 250,000 19,372 16,172 250,000
43 8 3,000 30,080 20,496 17,696 250,000 22,638 19,838 250,000
44 9 3,000 34,734 23,544 21,144 250,000 26,001 23,601 250,000
45 10 3,000 39,620 26,670 24,670 250,000 29,497 27,497 250,000
46 11 3,000 44,751 29,985 28,385 250,000 33,246 31,646 250,000
47 12 3,000 50,139 33,406 32,206 250,000 37,156 35,956 250,000
48 13 3,000 55,796 36,938 36,138 250,000 41,236 40,436 250,000
49 14 3,000 61,736 40,564 40,164 250,000 45,492 45,092 250,000
50 15 3,000 67,972 44,290 44,290 250,000 49,935 49,935 250,000
51 16 3,000 74,521 48,125 48,125 250,000 54,572 54,572 250,000
52 17 3,000 81,397 52,051 52,051 250,000 59,415 59,415 250,000
53 18 3,000 88,617 56,078 56,078 250,000 64,473 64,473 250,000
54 19 3,000 96,198 60,190 60,190 250,000 69,758 69,758 250,000
55 20 3,000 104,158 64,398 64,398 250,000 75,279 75,279 250,000
56 21 3,000 112,516 68,689 68,689 250,000 81,049 81,049 250,000
57 22 3,000 121,291 73,051 73,051 250,000 87,046 87,046 250,000
58 23 3,000 130,506 77,497 77,497 250,000 93,279 93,279 250,000
59 24 3,000 140,181 82,017 82,017 250,000 99,757 99,757 250,000
60 25 3,000 150,340 86,605 86,605 250,000 106,492 106,492 250,000
61 26 3,000 161,007 91,273 91,273 250,000 113,493 113,493 250,000
62 27 3,000 172,208 95,999 95,999 250,000 120,774 120,774 250,000
63 28 3,000 183,968 100,763 100,763 250,000 128,350 128,350 250,000
64 29 3,000 196,317 105,563 105,563 250,000 136,237 136,237 250,000
65 30 3,000 209,282 110,383 110,383 250,000 144,456 144,456 250,000
66 31 3,000 222,896 115,228 115,228 250,000 153,028 153,028 250,000
67 32 3,000 237,191 120,087 120,087 250,000 161,976 161,976 250,000
68 33 3,000 252,201 124,951 124,951 250,000 171,326 171,326 250,000
69 34 3,000 267,961 129,833 129,833 250,000 181,109 181,109 250,000
70 35 3,000 284,509 134,731 134,731 250,000 191,361 191,361 250,000
71 36 3,000 301,884 139,633 139,633 250,000 202,122 202,122 250,000
72 37 3,000 320,129 144,454 144,454 250,000 213,440 213,440 250,000
73 38 3,000 339,285 149,293 149,293 250,000 225,373 225,373 250,164
74 39 3,000 359,399 154,069 154,069 250,000 237,927 237,927 259,340
75 40 3,000 380,519 158,766 158,766 250,000 251,072 251,072 268,647
76 41 3,000 402,695 163,398 163,398 250,000 264,850 264,850 278,092
77 42 3,000 425,980 167,973 167,973 250,000 279,200 279,200 293,160
78 43 3,000 450,429 172,516 172,516 250,000 294,143 294,143 308,851
79 44 3,000 476,100 177,079 177,079 250,000 309,699 309,699 325,184
80 45 3,000 503,055 181,696 181,696 250,000 325,886 325,886 342,180
81 46 3,000 531,358 186,389 186,389 250,000 342,725 342,725 359,861
82 47 3,000 561,076 191,195 191,195 250,000 360,236 360,236 378,248
83 48 3,000 592,280 196,156 196,156 250,000 378,440 378,440 397,362
84 49 3,000 625,044 201,342 201,342 250,000 397,357 397,357 417,225
85 50 3,000 659,446 206,864 206,864 250,000 417,005 417,005 437,856
86 51 3,000 695,568 212,906 212,906 250,000 437,401 437,401 459,271
87 52 3,000 733,497 219,739 219,739 250,000 458,561 458,561 481,489
88 53 3,000 773,322 227,745 227,745 250,000 480,500 480,500 504,525
89 54 3,000 815,138 237,467 237,467 250,000 503,233 503,233 528,394
90 55 3,000 859,045 248,273 248,273 260,687 526,774 526,774 553,112
91 56 3,000 905,147 259,242 259,242 272,204 551,139 551,139 578,696
92 57 3,000 953,554 270,999 270,999 281,839 576,765 576,765 599,836
93 58 3,000 1,004,382 283,693 283,693 292,203 603,790 603,790 621,904
94 59 3,000 1,057,751 297,497 297,497 303,447 632,371 632,371 645,018
95 60 3,000 1,113,789 312,623 312,623 315,749 662,687 662,687 669,314
96 61 3,000 1,172,628 329,368 329,368 329,368 694,946 694,946 694,946
97 62 3,000 1,234,410 346,855 346,855 346,855 728,634 728,634 728,634
98 63 3,000 1,299,280 365,117 365,117 365,117 763,814 763,814 763,814
99 64 3,000 1,367,394 384,189 384,189 384,189 800,554 800,554 800,554
100 65 3,000 1,438,914 404,106 404,106 404,106 838,922 838,922 838,922
101 66 0 1,510,859 416,126 416,126 416,126 863,986 863,986 863,986
102 67 0 1,586,402 428,610 428,610 428,610 889,906 889,906 889,906
103 68 0 1,665,723 441,468 441,468 441,468 916,603 916,603 916,603
104 69 0 1,749,009 454,712 454,712 454,712 944,101 944,101 944,101
105 70 0 1,836,459 468,353 468,353 468,353 972,424 972,424 972,424
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JANE DOE ISSUE AGE : 35
GENDER : FEMALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT: $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM : $ 2,600.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 6.00% (NET 4.07% FOR THE FIRST TEN YEARS AND 4.43%
THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- -- -------- --------------------------- ------- --------------------------------------
36 1 2,600 2,730 1,081 0 250,000 1,315 0 250,000
37 2 2,600 5,597 3,221 421 250,000 3,699 899 250,000
38 3 2,600 8,606 5,421 2,621 250,000 6,141 3,341 250,000
39 4 2,600 11,767 7,685 4,885 250,000 8,632 5,832 250,000
40 5 2,600 15,085 10,016 7,216 250,000 11,184 8,384 250,000
41 6 2,600 18,569 12,416 9,896 250,000 13,801 11,281 250,000
42 7 2,600 22,228 14,862 12,622 250,000 16,487 14,247 250,000
43 8 2,600 26,069 17,385 15,425 250,000 19,250 17,290 250,000
44 9 2,600 30,103 19,960 18,280 250,000 22,101 20,421 250,000
45 10 2,600 34,338 22,619 21,219 250,000 25,072 23,672 250,000
46 11 2,600 38,785 25,429 24,309 250,000 28,256 27,136 250,000
47 12 2,600 43,454 28,317 27,477 250,000 31,587 30,747 250,000
48 13 2,600 48,356 31,316 30,756 250,000 35,072 34,512 250,000
49 14 2,600 53,504 34,406 34,126 250,000 38,719 38,439 250,000
50 15 2,600 58,909 37,565 37,565 250,000 42,534 42,534 250,000
51 16 2,600 64,585 40,826 40,826 250,000 46,525 46,525 250,000
52 17 2,600 70,544 44,170 44,170 250,000 50,701 50,701 250,000
53 18 2,600 76,801 47,628 47,628 250,000 55,071 55,071 250,000
54 19 2,600 83,371 51,158 51,158 250,000 59,643 59,643 250,000
55 20 2,600 90,270 54,791 54,791 250,000 64,426 64,426 250,000
56 21 2,600 97,514 58,513 58,513 250,000 69,441 69,441 250,000
57 22 2,600 105,119 62,330 62,330 250,000 74,659 74,659 250,000
58 23 2,600 113,105 66,252 66,252 250,000 80,088 80,088 250,000
59 24 2,600 121,490 70,311 70,311 250,000 85,736 85,736 250,000
60 25 2,600 130,295 74,493 74,493 250,000 91,614 91,614 250,000
61 26 2,600 139,540 78,790 78,790 250,000 97,732 97,732 250,000
62 27 2,600 149,247 83,211 83,211 250,000 104,104 104,104 250,000
63 28 2,600 159,439 87,730 87,730 250,000 110,741 110,741 250,000
64 29 2,600 170,141 92,320 92,320 250,000 117,657 117,657 250,000
65 30 2,600 181,378 96,976 96,976 250,000 124,868 124,868 250,000
66 31 2,600 193,177 101,695 101,695 250,000 132,388 132,388 250,000
67 32 2,600 205,566 106,475 106,475 250,000 140,234 140,234 250,000
68 33 2,600 218,574 111,335 111,335 250,000 148,423 148,423 250,000
69 34 2,600 232,233 116,293 116,293 250,000 156,975 156,975 250,000
70 35 2,600 246,574 121,355 121,355 250,000 165,913 165,913 250,000
71 36 2,600 261,633 126,513 126,513 250,000 175,258 175,258 250,000
72 37 2,600 277,445 131,747 131,747 250,000 185,036 185,036 250,000
73 38 2,600 294,047 137,030 137,030 250,000 195,276 195,276 250,000
74 39 2,600 311,479 142,325 142,325 250,000 206,011 206,011 250,000
75 40 2,600 329,783 147,605 147,605 250,000 217,279 217,279 250,000
76 41 2,600 349,003 152,861 152,861 250,000 229,128 229,128 250,000
77 42 2,600 369,183 158,091 158,091 250,000 241,607 241,607 253,687
78 43 2,600 390,372 163,324 163,324 250,000 254,644 254,644 267,376
79 44 2,600 412,620 168,574 168,574 250,000 268,227 268,227 281,639
80 45 2,600 435,981 173,874 173,874 250,000 282,376 282,376 296,494
81 46 2,600 460,510 179,221 179,221 250,000 297,107 297,107 311,963
82 47 2,600 486,266 184,639 184,639 250,000 312,441 312,441 328,063
83 48 2,600 513,309 190,138 190,138 250,000 328,396 328,396 344,816
84 49 2,600 541,705 195,757 195,757 250,000 344,991 344,991 362,241
85 50 2,600 571,520 201,578 201,578 250,000 362,245 362,245 380,357
86 51 2,600 602,826 207,718 207,718 250,000 380,176 380,176 399,185
87 52 2,600 635,697 214,367 214,367 250,000 398,804 398,804 418,744
88 53 2,600 670,212 221,778 221,778 250,000 418,146 418,146 439,053
89 54 2,600 706,453 230,326 230,326 250,000 438,220 438,220 460,131
90 55 2,600 744,505 240,489 240,489 252,514 459,044 459,044 481,996
91 56 2,600 784,461 251,202 251,202 263,762 480,636 480,636 504,668
92 57 2,600 826,414 262,591 262,591 273,095 503,295 503,295 523,427
93 58 2,600 870,464 274,797 274,797 283,041 527,126 527,126 542,940
94 59 2,600 916,718 287,988 287,988 293,748 552,251 552,251 563,296
95 60 2,600 965,284 302,382 302,382 305,406 578,807 578,807 584,595
96 61 2,600 1,016,278 318,280 318,280 318,280 606,954 606,954 606,954
97 62 2,600 1,069,822 334,882 334,882 334,882 636,349 636,349 636,349
98 63 2,600 1,126,043 352,220 352,220 352,220 667,047 667,047 667,047
99 64 2,600 1,185,075 370,326 370,326 370,326 699,104 699,104 699,104
100 65 2,600 1,247,059 389,235 389,235 389,235 732,583 732,583 732,583
101 66 0 1,309,411 400,809 400,809 400,809 754,457 754,457 754,457
102 67 0 1,374,882 412,833 412,833 412,833 777,091 777,091 777,091
103 68 0 1,443,626 425,218 425,218 425,218 800,404 800,404 800,404
104 69 0 1,515,807 437,975 437,975 437,975 824,416 824,416 824,416
105 70 0 1,591,598 451,114 451,114 451,114 849,148 849,148 849,148
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JOHN DOE ISSUE AGE : 35
GENDER : MALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT: $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM: $ 3,000.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 12.00% (NET 10.02% FOR THE FIRST TEN YEARS AND 10.41%
THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- --- -------- --------------------------- ------- --------------------------------------
36 1 3,000 3,150 1,535 0 250,000 1,816 0 250,000
37 2 3,000 6,458 4,270 270 250,000 4,852 852 250,000
38 3 3,000 9,930 7,255 3,255 250,000 8,126 4,126 250,000
39 4 3,000 13,577 10,514 6,514 250,000 11,689 7,689 250,000
40 5 3,000 17,406 14,078 10,078 250,000 15,585 11,585 250,000
41 6 3,000 21,426 17,978 14,378 250,000 19,854 16,254 250,000
42 7 3,000 25,647 22,220 19,020 250,000 24,519 21,319 250,000
43 8 3,000 30,080 26,871 24,071 250,000 29,620 26,820 250,000
44 9 3,000 34,734 31,947 29,547 250,000 35,199 32,799 250,000
45 10 3,000 39,620 37,492 35,492 250,000 41,340 39,340 250,000
46 11 3,000 44,751 43,715 42,115 250,000 48,266 46,666 250,000
47 12 3,000 50,139 50,556 49,356 250,000 55,916 54,716 250,000
48 13 3,000 55,796 58,088 57,288 250,000 64,367 63,567 250,000
49 14 3,000 61,736 66,364 65,964 250,000 73,707 73,307 250,000
50 15 3,000 67,972 75,473 75,473 250,000 84,031 84,031 250,000
51 16 3,000 74,521 85,511 85,511 250,000 95,445 95,445 250,000
52 17 3,000 81,397 96,568 96,568 250,000 108,067 108,067 250,000
53 18 3,000 88,617 108,768 108,768 250,000 122,028 122,028 250,000
54 19 3,000 96,198 122,232 122,232 250,000 137,471 137,471 250,000
55 20 3,000 104,158 137,118 137,118 250,000 154,557 154,557 250,000
56 21 3,000 112,516 153,591 153,591 250,000 173,461 173,461 260,191
57 22 3,000 121,291 171,843 171,843 250,891 194,314 194,314 283,699
58 23 3,000 130,506 192,019 192,019 272,666 217,306 217,306 308,575
59 24 3,000 140,181 214,210 214,210 295,609 242,658 242,658 334,867
60 25 3,000 150,340 238,625 238,625 319,758 270,614 270,614 362,623
61 26 3,000 161,007 265,513 265,513 345,167 301,449 301,449 391,884
62 27 3,000 172,208 295,053 295,053 377,668 335,435 335,435 429,357
63 28 3,000 183,968 327,498 327,498 412,648 372,895 372,895 469,848
64 29 3,000 196,317 363,142 363,142 450,296 414,186 414,186 513,591
65 30 3,000 209,282 402,302 402,302 490,809 459,705 459,705 560,840
66 31 3,000 222,896 445,345 445,345 534,414 509,890 509,890 611,868
67 32 3,000 237,191 492,558 492,558 586,144 565,183 565,183 672,567
68 33 3,000 252,201 544,334 544,334 642,314 626,100 626,100 738,798
69 34 3,000 267,961 601,118 601,118 703,308 693,211 693,211 811,056
70 35 3,000 284,509 663,392 663,392 769,535 767,142 767,142 889,885
71 36 3,000 301,884 731,677 731,677 841,428 848,587 848,587 975,875
72 37 3,000 320,129 806,783 806,783 911,665 938,432 938,432 1,060,428
73 38 3,000 339,285 889,617 889,617 987,475 1,037,587 1,037,587 1,151,722
74 39 3,000 359,399 981,047 981,047 1,069,342 1,147,077 1,147,077 1,250,314
75 40 3,000 380,519 1,082,174 1,082,174 1,157,926 1,268,053 1,268,053 1,356,817
76 41 3,000 402,695 1,194,329 1,194,329 1,254,046 1,401,817 1,401,817 1,471,908
77 42 3,000 425,980 1,317,373 1,317,373 1,383,242 1,549,232 1,549,232 1,626,694
78 43 3,000 450,429 1,452,292 1,452,292 1,524,906 1,711,661 1,711,661 1,797,244
79 44 3,000 476,100 1,600,168 1,600,168 1,680,176 1,890,598 1,890,598 1,985,128
80 45 3,000 503,055 1,762,146 1,762,146 1,850,253 2,087,678 2,087,678 2,192,062
81 46 3,000 531,358 1,939,420 1,939,420 2,036,391 2,304,693 2,304,693 2,419,927
82 47 3,000 561,076 2,133,261 2,133,261 2,239,924 2,543,604 2,543,604 2,670,784
83 48 3,000 592,280 2,344,975 2,344,975 2,462,224 2,806,561 2,806,561 2,946,889
84 49 3,000 625,044 2,575,930 2,575,930 2,704,727 3,095,913 3,095,913 3,250,708
85 50 3,000 659,446 2,827,549 2,827,549 2,968,927 3,414,205 3,414,205 3,584,915
86 51 3,000 695,568 3,101,364 3,101,364 3,256,432 3,764,210 3,764,210 3,952,421
87 52 3,000 733,497 3,399,032 3,399,032 3,568,983 4,148,947 4,148,947 4,356,394
88 53 3,000 773,322 3,722,296 3,722,296 3,908,411 4,571,697 4,571,697 4,800,282
89 54 3,000 815,138 4,073,056 4,073,056 4,276,708 5,036,029 5,036,029 5,287,830
90 55 3,000 859,045 4,453,239 4,453,239 4,675,900 5,545,833 5,545,833 5,823,125
91 56 3,000 905,147 4,864,885 4,864,885 5,108,129 6,105,364 6,105,364 6,410,632
92 57 3,000 953,554 5,322,766 5,322,766 5,535,677 6,724,159 6,724,159 6,993,126
93 58 3,000 1,004,382 5,834,407 5,834,407 6,009,439 7,409,548 7,409,548 7,631,834
94 59 3,000 1,057,751 6,408,956 6,408,956 6,537,135 8,169,973 8,169,973 8,333,372
95 60 3,000 1,113,789 7,057,605 7,057,605 7,128,181 9,015,192 9,015,192 9,105,344
96 61 3,000 1,172,628 7,795,192 7,795,192 7,795,192 9,956,516 9,956,516 9,956,516
97 62 3,000 1,234,410 8,609,543 8,609,543 8,609,543 10,995,809 10,995,809 10,995,809
98 63 3,000 1,299,280 9,508,649 9,508,649 9,508,649 12,143,269 12,143,269 12,143,269
99 64 3,000 1,367,394 10,501,330 10,501,330 10,501,330 13,410,151 13,410,151 13,410,151
100 65 3,000 1,438,914 11,597,326 11,597,326 11,597,326 14,808,885 14,808,885 14,808,885
101 66 0 1,510,859 11,945,143 11,945,143 11,945,143 15,253,049 15,253,049 15,253,049
102 67 0 1,586,402 12,303,497 12,303,497 12,303,497 15,710,640 15,710,640 15,710,640
103 68 0 1,665,723 12,672,602 12,672,602 12,672,602 16,181,959 16,181,959 16,181,959
104 69 0 1,749,009 13,052,780 13,052,780 13,052,780 16,667,418 16,667,418 16,667,418
105 70 0 1,836,459 13,444,363 13,444,363 13,444,363 17,167,441 17,167,441 17,167,441
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JANE DOE ISSUE AGE : 35
GENDER : FEMALE
INITIAL DEATH BENEFIT: $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM : $ 2,600.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 12.00% (NET 10.02% FOR THE FIRST TEN YEARS AND 10.41%
THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- --- -------- --------------------------- ------- --------------------------------------
36 1 2,600 2,730 1,182 0 250,000 1,423 0 250,000
37 2 2,600 5,597 3,528 728 250,000 4,035 1,235 250,000
38 3 2,600 8,606 6,083 3,283 250,000 6,870 4,070 250,000
39 4 2,600 11,767 8,868 6,068 250,000 9,937 7,137 250,000
40 5 2,600 15,085 11,907 9,107 250,000 13,271 10,471 250,000
41 6 2,600 18,569 15,228 12,708 250,000 16,900 14,380 250,000
42 7 2,600 22,228 18,830 16,590 250,000 20,858 18,618 250,000
43 8 2,600 26,069 22,773 20,813 250,000 25,181 23,221 250,000
44 9 2,600 30,103 27,066 25,386 250,000 29,917 28,237 250,000
45 10 2,600 34,338 31,773 30,373 250,000 35,136 33,736 250,000
46 11 2,600 38,785 37,043 35,923 250,000 41,019 39,899 250,000
47 12 2,600 43,454 42,825 41,985 250,000 47,526 46,686 250,000
48 13 2,600 48,356 49,205 48,645 250,000 54,724 54,164 250,000
49 14 2,600 53,504 56,222 55,942 250,000 62,687 62,407 250,000
50 15 2,600 58,909 63,925 63,925 250,000 71,494 71,494 250,000
51 16 2,600 64,585 72,418 72,418 250,000 81,236 81,236 250,000
52 17 2,600 70,544 81,769 81,769 250,000 92,012 92,012 250,000
53 18 2,600 76,801 92,100 92,100 250,000 103,932 103,932 250,000
54 19 2,600 83,371 103,483 103,483 250,000 117,117 117,117 250,000
55 20 2,600 90,270 116,064 116,064 250,000 131,701 131,701 250,000
56 21 2,600 97,514 129,969 129,969 250,000 147,841 147,841 250,000
57 22 2,600 105,119 145,359 145,359 250,000 165,676 165,676 250,000
58 23 2,600 113,105 162,414 162,414 250,000 185,387 185,387 263,249
59 24 2,600 121,490 181,348 181,348 250,260 207,139 207,139 285,851
60 25 2,600 130,295 202,314 202,314 271,101 231,138 231,138 309,725
61 26 2,600 139,540 225,436 225,436 293,066 257,621 257,621 334,907
62 27 2,600 149,247 250,899 250,899 321,150 286,833 286,833 367,146
63 28 2,600 159,439 278,930 278,930 351,452 319,056 319,056 402,011
64 29 2,600 170,141 309,780 309,780 384,127 354,603 354,603 439,708
65 30 2,600 181,378 343,736 343,736 419,358 393,819 393,819 480,460
66 31 2,600 193,177 381,117 381,117 457,341 437,086 437,086 524,503
67 32 2,600 205,566 422,220 422,220 502,441 484,804 484,804 576,917
68 33 2,600 218,574 467,419 467,419 551,555 537,431 537,431 634,168
69 34 2,600 232,233 517,134 517,134 605,047 595,470 595,470 696,700
70 35 2,600 246,574 571,816 571,816 663,306 659,479 659,479 764,995
71 36 2,600 261,633 631,953 631,953 726,746 730,068 730,068 839,579
72 37 2,600 277,445 698,239 698,239 789,010 807,970 807,970 913,006
73 38 2,600 294,047 771,338 771,338 856,186 893,958 893,958 992,293
74 39 2,600 311,479 852,010 852,010 928,691 988,893 988,893 1,077,894
75 40 2,600 329,783 941,141 941,141 1,007,021 1,093,742 1,093,742 1,170,303
76 41 2,600 349,003 1,039,785 1,039,785 1,091,775 1,209,586 1,209,586 1,270,065
77 42 2,600 369,183 1,148,216 1,148,216 1,205,627 1,337,335 1,337,335 1,404,202
78 43 2,600 390,372 1,267,361 1,267,361 1,330,729 1,478,190 1,478,190 1,552,100
79 44 2,600 412,620 1,398,208 1,398,208 1,468,118 1,633,466 1,633,466 1,715,140
80 45 2,600 435,981 1,541,839 1,541,839 1,618,931 1,804,606 1,804,606 1,894,836
81 46 2,600 460,510 1,699,373 1,699,373 1,784,341 1,993,190 1,993,190 2,092,850
82 47 2,600 486,266 1,872,014 1,872,014 1,965,615 2,200,951 2,200,951 2,310,999
83 48 2,600 513,309 2,060,998 2,060,998 2,164,048 2,429,786 2,429,786 2,551,276
84 49 2,600 541,705 2,267,624 2,267,624 2,381,006 2,681,770 2,681,770 2,815,859
85 50 2,600 571,520 2,493,280 2,493,280 2,617,944 2,959,174 2,959,174 3,107,133
86 51 2,600 602,826 2,739,403 2,739,403 2,876,373 3,264,479 3,264,479 3,427,703
87 52 2,600 635,697 3,007,539 3,007,539 3,157,916 3,600,396 3,600,396 3,780,416
88 53 2,600 670,212 3,299,267 3,299,267 3,464,230 3,969,886 3,969,886 4,168,380
89 54 2,600 706,453 3,616,278 3,616,278 3,797,092 4,376,178 4,376,178 4,594,987
90 55 2,600 744,505 3,960,263 3,960,263 4,158,277 4,822,794 4,822,794 5,063,933
91 56 2,600 784,461 4,332,945 4,332,945 4,549,593 5,313,570 5,313,570 5,579,248
92 57 2,600 826,414 4,746,058 4,746,058 4,935,900 5,855,989 5,855,989 6,090,228
93 58 2,600 870,464 5,206,115 5,206,115 5,362,299 6,456,224 6,456,224 6,649,911
94 59 2,600 916,718 5,721,124 5,721,124 5,835,546 7,121,356 7,121,356 7,263,783
95 60 2,600 965,284 6,301,151 6,301,151 6,364,163 7,859,533 7,859,533 7,938,128
96 61 2,600 1,016,278 6,959,593 6,959,593 6,959,593 8,680,165 8,680,165 8,680,165
97 62 2,600 1,069,822 7,686,562 7,686,562 7,686,562 9,586,204 9,586,204 9,586,204
98 63 2,600 1,126,043 8,489,191 8,489,191 8,489,191 10,586,541 10,586,541 10,586,541
99 64 2,600 1,185,075 9,375,355 9,375,355 9,375,355 11,690,989 11,690,989 11,690,989
100 65 2,600 1,247,059 10,353,748 10,353,748 10,353,748 12,910,383 12,910,383 12,910,383
101 66 0 1,309,411 10,664,257 10,664,257 10,664,257 13,297,592 13,297,592 13,297,592
102 67 0 1,374,882 10,984,185 10,984,185 10,984,185 13,696,520 13,696,520 13,696,520
103 68 0 1,443,626 11,313,711 11,313,711 11,313,711 14,107,415 14,107,415 14,107,415
104 69 0 1,515,807 11,653,122 11,653,122 11,653,122 14,530,638 14,530,638 14,530,638
105 70 0 1,591,598 12,002,716 12,002,716 12,002,716 14,966,557 14,966,557 14,966,557
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JOHN DOE ISSUE AGE : 45
GENDER : MALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT : $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM : $ 4,800.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 0.00% (NET -1.89% FOR THE FIRST TEN YEARS AND -1.54%
THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- --- -------- --------------------------- ------- --------------------------------------
46 1 4,800 5,040 2,616 0 250,000 3,166 0 250,000
47 2 4,800 10,332 6,204 0 250,000 7,172 422 250,000
48 3 4,800 15,889 9,748 2,998 250,000 10,985 4,235 250,000
49 4 4,800 21,723 13,220 6,470 250,000 14,644 7,894 250,000
50 5 4,800 27,849 16,622 9,872 250,000 18,165 11,415 250,000
51 6 4,800 34,282 19,958 13,883 250,000 21,560 15,485 250,000
52 7 4,800 41,036 23,201 17,801 250,000 24,834 19,434 250,000
53 8 4,800 48,128 26,354 21,629 250,000 28,012 23,287 250,000
54 9 4,800 55,574 29,394 25,344 250,000 31,089 27,039 250,000
55 10 4,800 63,393 32,323 28,948 250,000 34,108 30,733 250,000
56 11 4,800 71,602 35,118 32,418 250,000 37,148 34,448 250,000
57 12 4,800 80,222 37,757 35,732 250,000 40,088 38,063 250,000
58 13 4,800 89,273 40,243 38,893 250,000 42,931 41,581 250,000
59 14 4,800 98,777 42,554 41,879 250,000 45,681 45,006 250,000
60 15 4,800 108,756 44,667 44,667 250,000 48,340 48,340 250,000
61 16 4,800 119,234 46,586 46,586 250,000 50,911 50,911 250,000
62 17 4,800 130,235 48,264 48,264 250,000 53,395 53,395 250,000
63 18 4,800 141,787 49,653 49,653 250,000 55,796 55,796 250,000
64 19 4,800 153,917 50,729 50,729 250,000 58,116 58,116 250,000
65 20 4,800 166,652 51,444 51,444 250,000 60,356 60,356 250,000
66 21 4,800 180,025 51,770 51,770 250,000 62,519 62,519 250,000
67 22 4,800 194,066 51,652 51,652 250,000 64,534 64,534 250,000
68 23 4,800 208,810 51,031 51,031 250,000 66,389 66,389 250,000
69 24 4,800 224,290 49,867 49,867 250,000 68,075 68,075 250,000
70 25 4,800 240,545 48,091 48,091 250,000 69,580 69,580 250,000
71 26 4,800 257,612 45,599 45,599 250,000 70,893 70,893 250,000
72 27 4,800 275,532 42,126 42,126 250,000 72,001 72,001 250,000
73 28 4,800 294,349 37,729 37,729 250,000 72,895 72,895 250,000
74 29 4,800 314,106 32,076 32,076 250,000 73,559 73,559 250,000
75 30 4,800 334,852 24,914 24,914 250,000 73,974 73,974 250,000
76 31 4,800 356,634 15,996 15,996 250,000 74,112 74,112 250,000
77 32 4,800 379,506 4,992 4,992 250,000 73,946 73,946 250,000
78 33 4,800 403,521 73,439 73,439 250,000
79 34 4,800 428,737 72,556 72,556 250,000
80 35 4,800 455,214 71,255 71,255 250,000
81 36 4,800 483,015 69,492 69,492 250,000
82 37 4,800 512,206 67,217 67,217 250,000
83 38 4,800 542,856 64,381 64,381 250,000
84 39 4,800 575,039 60,921 60,921 250,000
85 40 4,800 608,831 56,743 56,743 250,000
86 41 4,800 644,312 51,736 51,736 250,000
87 42 4,800 681,568 45,772 45,772 250,000
88 43 4,800 720,686 38,702 38,702 250,000
89 44 4,800 761,761 30,349 30,349 250,000
90 45 4,800 804,889 20,518 20,518 250,000
91 46 4,800 850,173 8,995 8,995 250,000
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JANE DOE ISSUE AGE : 45
GENDER : FEMALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT: $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM : $ 4,100.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 0.00% (NET -1.89% FOR THE FIRST TEN YEARS AND -1.54%
THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM Y AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- ---- -------- --------------------------- ------- --------------------------------------
46 1 4,100 4,305 2,043 0 250,000 2,528 0 250,000
47 2 4,100 8,825 5,055 0 250,000 5,935 685 250,000
48 3 4,100 13,572 8,048 2,798 250,000 9,204 3,954 250,000
49 4 4,100 18,555 10,994 5,744 250,000 12,338 7,088 250,000
50 5 4,100 23,788 13,865 8,615 250,000 15,340 10,090 250,000
51 6 4,100 29,282 16,692 11,967 250,000 18,211 13,486 250,000
52 7 4,100 35,051 19,448 15,248 250,000 20,959 16,759 250,000
53 8 4,100 41,109 22,161 18,486 250,000 23,603 19,928 250,000
54 9 4,100 47,469 24,780 21,630 250,000 26,146 22,996 250,000
55 10 4,100 54,148 27,332 24,707 250,000 28,642 26,017 250,000
56 11 4,100 61,160 29,794 27,694 250,000 31,194 29,094 250,000
57 12 4,100 68,523 32,165 30,590 250,000 33,701 32,126 250,000
58 13 4,100 76,254 34,450 33,400 250,000 36,164 35,114 250,000
59 14 4,100 84,372 36,673 36,148 250,000 38,584 38,059 250,000
60 15 4,100 92,896 38,812 38,812 250,000 40,961 40,961 250,000
61 16 4,100 101,846 40,843 40,843 250,000 43,296 43,296 250,000
62 17 4,100 111,243 42,767 42,767 250,000 45,589 45,589 250,000
63 18 4,100 121,110 44,536 44,536 250,000 47,843 47,843 250,000
64 19 4,100 131,470 46,103 46,103 250,000 50,058 50,058 250,000
65 20 4,100 142,349 47,445 47,445 250,000 52,233 52,233 250,000
66 21 4,100 153,771 48,538 48,538 250,000 54,371 54,371 250,000
67 22 4,100 165,765 49,357 49,357 250,000 56,418 56,418 250,000
68 23 4,100 178,358 49,901 49,901 250,000 58,369 58,369 250,000
69 24 4,100 191,581 50,168 50,168 250,000 60,222 60,222 250,000
70 25 4,100 205,465 50,128 50,128 250,000 61,969 61,969 250,000
71 26 4,100 220,043 49,727 49,727 250,000 63,604 63,604 250,000
72 27 4,100 235,351 48,885 48,885 250,000 65,114 65,114 250,000
73 28 4,100 251,423 47,491 47,491 250,000 66,485 66,485 250,000
74 29 4,100 268,299 45,399 45,399 250,000 67,700 67,700 250,000
75 30 4,100 286,019 42,452 42,452 250,000 68,737 68,737 250,000
76 31 4,100 304,625 38,497 38,497 250,000 69,574 69,574 250,000
77 32 4,100 324,161 33,358 33,358 250,000 70,181 70,181 250,000
78 33 4,100 344,675 26,880 26,880 250,000 70,528 70,528 250,000
79 34 4,100 366,213 18,821 18,821 250,000 70,578 70,578 250,000
80 35 4,100 388,829 8,921 8,921 250,000 70,294 70,294 250,000
81 36 4,100 412,575 69,637 69,637 250,000
82 37 4,100 437,509 68,565 68,565 250,000
83 38 4,100 463,690 67,030 67,030 250,000
84 39 4,100 491,179 64,983 64,983 250,000
85 40 4,100 520,043 62,364 62,364 250,000
86 41 4,100 550,350 59,111 59,111 250,000
87 42 4,100 582,173 55,147 55,147 250,000
88 43 4,100 615,586 50,387 50,387 250,000
89 44 4,100 650,671 44,730 44,730 250,000
90 45 4,100 687,509 38,060 38,060 250,000
91 46 4,100 726,190 30,237 30,237 250,000
92 47 4,100 766,804 21,099 21,099 250,000
93 48 4,100 809,449 10,448 10,448 250,000
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JOHN DOE ISSUE AGE : 45
GENDER : MALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT : $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM : $ 4,800.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 6.00% (NET 4.07% FOR THE FIRST TEN YEARS AND 4.43%
THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- --- -------- --------------------------- ------- --------------------------------------
46 1 4,800 5,040 2,759 0 250,000 3,394 0 250,000
47 2 4,800 10,332 6,624 0 250,000 7,856 1,106 250,000
48 3 4,800 15,889 10,601 3,851 250,000 12,379 5,629 250,000
49 4 4,800 21,723 14,670 7,920 250,000 17,004 10,254 250,000
50 5 4,800 27,849 18,837 12,087 250,000 21,750 15,000 250,000
51 6 4,800 34,282 23,110 17,035 250,000 26,631 20,556 250,000
52 7 4,800 41,036 27,469 22,069 250,000 31,659 26,259 250,000
53 8 4,800 48,128 31,922 27,197 250,000 36,863 32,138 250,000
54 9 4,800 55,574 36,453 32,403 250,000 42,247 38,197 250,000
55 10 4,800 63,393 41,070 37,695 250,000 47,860 44,485 250,000
56 11 4,800 71,602 45,922 43,222 250,000 53,849 51,149 250,000
57 12 4,800 80,222 50,857 48,832 250,000 60,068 58,043 250,000
58 13 4,800 89,273 55,887 54,537 250,000 66,532 65,182 250,000
59 14 4,800 98,777 61,003 60,328 250,000 73,257 72,582 250,000
60 15 4,800 108,756 66,197 66,197 250,000 80,259 80,259 250,000
61 16 4,800 119,234 71,485 71,485 250,000 87,558 87,558 250,000
62 17 4,800 130,235 76,841 76,841 250,000 95,172 95,172 250,000
63 18 4,800 141,787 82,243 82,243 250,000 103,123 103,123 250,000
64 19 4,800 153,917 87,690 87,690 250,000 111,432 111,432 250,000
65 20 4,800 166,652 93,165 93,165 250,000 120,123 120,123 250,000
66 21 4,800 180,025 98,673 98,673 250,000 129,221 129,221 250,000
67 22 4,800 194,066 104,203 104,203 250,000 138,706 138,706 250,000
68 23 4,800 208,810 109,746 109,746 250,000 148,604 148,604 250,000
69 24 4,800 224,290 115,318 115,318 250,000 158,944 158,944 250,000
70 25 4,800 240,545 120,917 120,917 250,000 169,762 169,762 250,000
71 26 4,800 257,612 126,533 126,533 250,000 181,099 181,099 250,000
72 27 4,800 275,532 132,072 132,072 250,000 193,004 193,004 250,000
73 28 4,800 294,349 137,648 137,648 250,000 205,532 205,532 250,000
74 29 4,800 314,106 143,174 143,174 250,000 218,747 218,747 250,000
75 30 4,800 334,852 148,636 148,636 250,000 232,724 232,724 250,000
76 31 4,800 356,634 154,056 154,056 250,000 247,475 247,475 259,848
77 32 4,800 379,506 159,451 159,451 250,000 262,843 262,843 275,986
78 33 4,800 403,521 164,857 164,857 250,000 278,850 278,850 292,793
79 34 4,800 428,737 170,343 170,343 250,000 295,516 295,516 310,292
80 35 4,800 455,214 175,960 175,960 250,000 312,864 312,864 328,507
81 36 4,800 483,015 181,754 181,754 250,000 330,915 330,915 347,460
82 37 4,800 512,206 187,794 187,794 250,000 349,691 349,691 367,175
83 38 4,800 542,856 194,163 194,163 250,000 369,215 369,215 387,675
84 39 4,800 575,039 200,991 200,991 250,000 389,509 389,509 408,985
85 40 4,800 608,831 208,475 208,475 250,000 410,594 410,594 431,124
86 41 4,800 644,312 216,920 216,920 250,000 432,489 432,489 454,113
87 42 4,800 681,568 226,765 226,765 250,000 455,211 455,211 477,971
88 43 4,800 720,686 238,628 238,628 250,560 478,778 478,778 502,717
89 44 4,800 761,761 251,415 251,415 263,986 503,206 503,206 528,366
90 45 4,800 804,889 264,441 264,441 277,664 528,512 528,512 554,937
91 46 4,800 850,173 277,690 277,690 291,574 554,713 554,713 582,449
92 47 4,800 897,722 291,835 291,835 303,508 582,254 582,254 605,544
93 48 4,800 947,648 307,042 307,042 316,253 611,276 611,276 629,614
94 49 4,800 1,000,070 323,508 323,508 329,978 641,944 641,944 654,783
95 50 4,800 1,055,114 341,470 341,470 344,885 674,446 674,446 681,190
96 51 4,800 1,112,910 361,265 361,265 361,265 708,997 708,997 708,997
97 52 4,800 1,173,595 381,938 381,938 381,938 745,079 745,079 745,079
98 53 4,800 1,237,315 403,526 403,526 403,526 782,760 782,760 782,760
99 54 4,800 1,304,221 426,072 426,072 426,072 822,111 822,111 822,111
100 55 4,800 1,374,472 449,616 449,616 449,616 863,206 863,206 863,206
101 56 0 1,443,195 463,001 463,001 463,001 888,999 888,999 888,999
102 57 0 1,515,355 476,891 476,891 476,891 915,669 915,669 915,669
103 58 0 1,591,123 491,198 491,198 491,198 943,139 943,139 943,139
104 59 0 1,670,679 505,934 505,934 505,934 971,434 971,434 971,434
105 60 0 1,754,213 521,112 521,112 521,112 1,000,577 1,000,577 1,000,577
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JANE DOE ISSUE AGE : 45
GENDER : FEMALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT :$ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM : $ 4,100.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 6.00% (NET 4.07% FOR THE FIRST TEN YEARS AND 4.43%
THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- --- -------- --------------------------- ------- --------------------------------------
46 1 4,100 4,305 2,161 0 250,000 2,717 0 250,000
47 2 4,100 8,825 5,400 150 250,000 6,502 1,252 250,000
48 3 4,100 13,572 8,752 3,502 250,000 10,366 5,116 250,000
49 4 4,100 18,555 12,194 6,944 250,000 14,312 9,062 250,000
50 5 4,100 23,788 15,703 10,453 250,000 18,347 13,097 250,000
51 6 4,100 29,282 19,312 14,587 250,000 22,473 17,748 250,000
52 7 4,100 35,051 23,000 18,800 250,000 26,700 22,500 250,000
53 8 4,100 41,109 26,801 23,126 250,000 31,051 27,376 250,000
54 9 4,100 47,469 30,668 27,518 250,000 35,536 32,386 250,000
55 10 4,100 54,148 34,633 32,008 250,000 40,211 37,586 250,000
56 11 4,100 61,160 38,818 36,718 250,000 45,237 43,137 250,000
57 12 4,100 68,523 43,112 41,537 250,000 50,491 48,916 250,000
58 13 4,100 76,254 47,527 46,477 250,000 55,983 54,933 250,000
59 14 4,100 84,372 52,097 51,572 250,000 61,726 61,201 250,000
60 15 4,100 92,896 56,809 56,809 250,000 67,733 67,733 250,000
61 16 4,100 101,846 61,653 61,653 250,000 74,018 74,018 250,000
62 17 4,100 111,243 66,642 66,642 250,000 80,594 80,594 250,000
63 18 4,100 121,110 71,744 71,744 250,000 87,477 87,477 250,000
64 19 4,100 131,470 76,933 76,933 250,000 94,682 94,682 250,000
65 20 4,100 142,349 82,204 82,204 250,000 102,226 102,226 250,000
66 21 4,100 153,771 87,554 87,554 250,000 110,127 110,127 250,000
67 22 4,100 165,765 92,984 92,984 250,000 118,364 118,364 250,000
68 23 4,100 178,358 98,513 98,513 250,000 126,956 126,956 250,000
69 24 4,100 191,581 104,165 104,165 250,000 135,923 135,923 250,000
70 25 4,100 205,465 109,946 109,946 250,000 145,285 145,285 250,000
71 26 4,100 220,043 115,851 115,851 250,000 155,066 155,066 250,000
72 27 4,100 235,351 121,861 121,861 250,000 165,290 165,290 250,000
73 28 4,100 251,423 127,948 127,948 250,000 175,986 175,986 250,000
74 29 4,100 268,299 134,080 134,080 250,000 187,185 187,185 250,000
75 30 4,100 286,019 140,231 140,231 250,000 198,926 198,926 250,000
76 31 4,100 304,625 146,399 146,399 250,000 211,252 211,252 250,000
77 32 4,100 324,161 152,593 152,593 250,000 224,219 224,219 250,000
78 33 4,100 344,675 158,853 158,853 250,000 237,894 237,894 250,000
79 34 4,100 366,213 165,208 165,208 250,000 252,224 252,224 264,835
80 35 4,100 388,829 171,712 171,712 250,000 267,152 267,152 280,509
81 36 4,100 412,575 178,387 178,387 250,000 282,699 282,699 296,834
82 37 4,100 437,509 185,290 185,290 250,000 298,885 298,885 313,829
83 38 4,100 463,690 192,479 192,479 250,000 315,731 315,731 331,517
84 39 4,100 491,179 200,056 200,056 250,000 333,256 333,256 349,919
85 40 4,100 520,043 208,193 208,193 250,000 351,482 351,482 369,056
86 41 4,100 550,350 217,135 217,135 250,000 370,429 370,429 388,950
87 42 4,100 582,173 227,238 227,238 250,000 390,116 390,116 409,622
88 43 4,100 615,586 238,997 238,997 250,947 410,565 410,565 431,093
89 44 4,100 650,671 251,545 251,545 264,122 431,793 431,793 453,383
90 45 4,100 687,509 264,328 264,328 277,544 453,822 453,822 476,513
91 46 4,100 726,190 277,319 277,319 291,185 476,669 476,669 500,502
92 47 4,100 766,804 291,099 291,099 302,743 500,634 500,634 520,660
93 48 4,100 809,449 305,827 305,827 315,001 525,827 525,827 541,601
94 49 4,100 854,227 321,696 321,696 328,130 552,370 552,370 563,417
95 50 4,100 901,243 338,955 338,955 342,345 580,406 580,406 586,210
96 51 4,100 950,610 357,950 357,950 357,950 610,101 610,101 610,101
97 52 4,100 1,002,446 377,787 377,787 377,787 641,112 641,112 641,112
98 53 4,100 1,056,873 398,502 398,502 398,502 673,497 673,497 673,497
99 54 4,100 1,114,022 420,136 420,136 420,136 707,317 707,317 707,317
100 55 4,100 1,174,028 442,728 442,728 442,728 742,635 742,635 742,635
101 56 0 1,232,729 455,907 455,907 455,907 764,811 764,811 764,811
102 57 0 1,294,366 469,584 469,584 469,584 787,756 787,756 787,756
103 58 0 1,359,084 483,672 483,672 483,672 811,388 811,388 811,388
104 59 0 1,427,038 498,182 498,182 498,182 835,730 835,730 835,730
105 60 0 1,498,390 513,128 513,128 513,128 860,802 860,802 860,802
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JOHN DOE ISSUE AGE : 45
GENDER : MALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT: $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM : $ 4,800.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 12.00% (NET 10.02% FOR THE FIRST TEN YEARS AND 10.41%
THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- --- -------- --------------------------- ------- --------------------------------------
46 1 4,800 5,040 2,968 0 250,000 3,623 0 250,000
47 2 4,800 10,332 7,260 510 250,000 8,568 1,818 250,000
48 3 4,800 15,889 11,938 5,188 250,000 13,886 7,136 250,000
49 4 4,800 21,723 17,017 10,267 250,000 19,655 12,905 250,000
50 5 4,800 27,849 22,541 15,791 250,000 25,938 19,188 250,000
51 6 4,800 34,282 28,562 22,487 250,000 32,796 26,721 250,000
52 7 4,800 41,036 35,110 29,710 250,000 40,298 34,898 250,000
53 8 4,800 48,128 42,246 37,521 250,000 48,534 43,809 250,000
54 9 4,800 55,574 50,017 45,967 250,000 57,577 53,527 250,000
55 10 4,800 63,393 58,499 55,124 250,000 67,552 64,177 250,000
56 11 4,800 71,602 67,998 65,298 250,000 78,786 76,086 250,000
57 12 4,800 80,222 78,411 76,386 250,000 91,185 89,160 250,000
58 13 4,800 89,273 89,862 88,512 250,000 104,884 103,534 250,000
59 14 4,800 98,777 102,471 101,796 250,000 120,033 119,358 250,000
60 15 4,800 108,756 116,378 116,378 250,000 136,802 136,802 250,000
61 16 4,800 119,234 131,769 131,769 250,000 155,378 155,378 250,000
62 17 4,800 130,235 148,825 148,825 250,000 175,972 175,972 250,000
63 18 4,800 141,787 167,770 167,770 250,000 198,823 198,823 250,516
64 19 4,800 153,917 188,888 188,888 250,000 224,101 224,101 277,886
65 20 4,800 166,652 212,480 212,480 259,226 251,983 251,983 307,420
66 21 4,800 180,025 238,516 238,516 286,219 282,742 282,742 339,290
67 22 4,800 194,066 267,081 267,081 317,826 316,634 316,634 376,794
68 23 4,800 208,810 298,413 298,413 352,128 353,974 353,974 417,690
69 24 4,800 224,290 332,782 332,782 389,355 395,114 395,114 462,283
70 25 4,800 240,545 370,480 370,480 429,756 440,436 440,436 510,905
71 26 4,800 257,612 411,821 411,821 473,594 490,366 490,366 563,921
72 27 4,800 275,532 457,288 457,288 516,735 545,442 545,442 616,350
73 28 4,800 294,349 507,421 507,421 563,238 606,223 606,223 672,908
74 29 4,800 314,106 562,745 562,745 613,392 673,335 673,335 733,935
75 30 4,800 334,852 623,918 623,918 667,592 747,480 747,480 799,804
76 31 4,800 356,634 691,739 691,739 726,326 829,456 829,456 870,928
77 32 4,800 379,506 766,154 766,154 804,462 919,800 919,800 965,790
78 33 4,800 403,521 847,761 847,761 890,149 1,019,349 1,019,349 1,070,316
79 34 4,800 428,737 937,216 937,216 984,076 1,129,017 1,129,017 1,185,468
80 35 4,800 455,214 1,035,212 1,035,212 1,086,973 1,249,809 1,249,809 1,312,300
81 36 4,800 483,015 1,142,476 1,142,476 1,199,600 1,382,824 1,382,824 1,451,965
82 37 4,800 512,206 1,259,778 1,259,778 1,322,767 1,529,263 1,529,263 1,605,726
83 38 4,800 542,856 1,387,912 1,387,912 1,457,307 1,690,445 1,690,445 1,774,967
84 39 4,800 575,039 1,527,708 1,527,708 1,604,093 1,867,810 1,867,810 1,961,201
85 40 4,800 608,831 1,680,031 1,680,031 1,764,033 2,062,921 2,062,921 2,166,067
86 41 4,800 644,312 1,845,813 1,845,813 1,938,104 2,277,477 2,277,477 2,391,351
87 42 4,800 681,568 2,026,060 2,026,060 2,127,363 2,513,329 2,513,329 2,638,996
88 43 4,800 720,686 2,221,828 2,221,828 2,332,920 2,772,492 2,772,492 2,911,116
89 44 4,800 761,761 2,434,271 2,434,271 2,555,985 3,057,152 3,057,152 3,210,009
90 45 4,800 804,889 2,664,560 2,664,560 2,797,788 3,369,697 3,369,697 3,538,182
91 46 4,800 850,173 2,913,932 2,913,932 3,059,628 3,712,736 3,712,736 3,898,372
92 47 4,800 897,722 3,191,260 3,191,260 3,318,911 4,092,094 4,092,094 4,255,778
93 48 4,800 947,648 3,501,087 3,501,087 3,606,120 4,512,261 4,512,261 4,647,629
94 49 4,800 1,000,070 3,848,940 3,848,940 3,925,919 4,978,408 4,978,408 5,077,976
95 50 4,800 1,055,114 4,241,575 4,241,575 4,283,991 5,496,511 5,496,511 5,551,476
96 51 4,800 1,112,910 4,687,954 4,687,954 4,687,954 6,073,497 6,073,497 6,073,497
97 52 4,800 1,173,595 5,180,789 5,180,789 5,180,789 6,710,535 6,710,535 6,710,535
98 53 4,800 1,237,315 5,724,917 5,724,917 5,724,917 7,413,872 7,413,872 7,413,872
99 54 4,800 1,304,221 6,325,675 6,325,675 6,325,675 8,190,411 8,190,411 8,190,411
100 55 4,800 1,374,472 6,988,958 6,988,958 6,988,958 9,047,768 9,047,768 9,047,768
101 56 0 1,443,195 7,198,524 7,198,524 7,198,524 9,319,098 9,319,098 9,319,098
102 57 0 1,515,355 7,414,479 7,414,479 7,414,479 9,598,671 9,598,671 9,598,671
103 58 0 1,591,123 7,636,914 7,636,914 7,636,914 9,886,631 9,886,631 9,886,631
104 59 0 1,670,679 7,866,021 7,866,021 7,866,021 10,183,230 10,183,230 10,183,230
105 60 0 1,754,213 8,102,002 8,102,002 8,102,002 10,488,727 10,488,727 10,488,727
PAN-AMERICAN ASSURANCE COMPANY - A LIFE INSURANCE COMPANY~
PAN-AMERICAN VUL BAND 2
ILLUSTRATION FOR : JANE DOE ISSUE AGE : 45
GENDER : FEMALE
RISK CLASS : PREF PLUS
INITIAL DEATH BENEFIT: $ 250,000 INITIAL OPTION : 1 (LEVEL)
INITIAL PREMIUM : $ 4,100.00
PAYMENT MODE : (ANNUALLY)
GROSS INTEREST RATE : 12.00% (NET 10.02% FOR THE FIRST TEN YEARS AND 10.41%
THEREAFTER)
PREMIUM ---- GUARANTEED CHARGES--- -------- CURRENT CHARGES-------
PAID ACCUM ACCUM CASH SURR DEATH ACCUM CASH SURR DEATH
AGE YEAR PREMIUM AT 5 % VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----- ----- ------- --- -------- --------------------------- ------- --------------------------------------
46 1 4,100 4,305 2,334 0 250,000 2,907 0 250,000
47 2 4,100 8,825 5,923 673 250,000 7,093 1,843 250,000
48 3 4,100 13,572 9,855 4,605 250,000 11,621 6,371 250,000
49 4 4,100 18,555 14,136 8,886 250,000 16,529 11,279 250,000
50 5 4,100 23,788 18,774 13,524 250,000 21,857 16,607 250,000
51 6 4,100 29,282 23,840 19,115 250,000 27,648 22,923 250,000
52 7 4,100 35,051 29,354 25,154 250,000 33,959 29,759 250,000
53 8 4,100 41,109 35,392 31,717 250,000 40,862 37,187 250,000
54 9 4,100 47,469 41,962 38,812 250,000 48,425 45,275 250,000
55 10 4,100 54,148 49,151 46,526 250,000 56,765 54,140 250,000
56 11 4,100 61,160 57,209 55,109 250,000 66,191 64,091 250,000
57 12 4,100 68,523 66,066 64,491 250,000 76,622 75,047 250,000
58 13 4,100 76,254 75,819 74,769 250,000 88,168 87,118 250,000
59 14 4,100 84,372 86,599 86,074 250,000 100,950 100,425 250,000
60 15 4,100 92,896 98,511 98,511 250,000 115,104 115,104 250,000
61 16 4,100 101,846 111,676 111,676 250,000 130,781 130,781 250,000
62 17 4,100 111,243 126,253 126,253 250,000 148,148 148,148 250,000
63 18 4,100 121,110 142,393 142,393 250,000 167,390 167,390 250,000
64 19 4,100 131,470 160,279 160,279 250,000 188,714 188,714 250,000
65 20 4,100 142,349 180,145 180,145 250,000 212,343 212,343 259,058
66 21 4,100 153,771 202,268 202,268 250,000 238,448 238,448 286,137
67 22 4,100 165,765 226,863 226,863 269,967 267,239 267,239 318,015
68 23 4,100 178,358 253,924 253,924 299,631 298,993 298,993 352,812
69 24 4,100 191,581 283,691 283,691 331,919 334,013 334,013 390,795
70 25 4,100 205,465 316,434 316,434 367,063 372,635 372,635 432,257
71 26 4,100 220,043 352,445 352,445 405,312 415,229 415,229 477,514
72 27 4,100 235,351 392,134 392,134 443,112 462,234 462,234 522,325
73 28 4,100 251,423 435,899 435,899 483,847 514,116 514,116 570,669
74 29 4,100 268,299 484,190 484,190 527,767 571,395 571,395 622,821
75 30 4,100 286,019 537,538 537,538 575,166 634,653 634,653 679,078
76 31 4,100 304,625 596,568 596,568 626,397 704,541 704,541 739,768
77 32 4,100 324,161 661,461 661,461 694,534 781,613 781,613 820,694
78 33 4,100 344,675 732,772 732,772 769,411 866,593 866,593 909,923
79 34 4,100 366,213 811,095 811,095 851,649 960,277 960,277 1,008,290
80 35 4,100 388,829 897,077 897,077 941,931 1,063,533 1,063,533 1,116,710
81 36 4,100 412,575 991,391 991,391 1,040,960 1,177,318 1,177,318 1,236,183
82 37 4,100 437,509 1,094,759 1,094,759 1,149,497 1,302,675 1,302,675 1,367,809
83 38 4,100 463,690 1,207,924 1,207,924 1,268,321 1,440,752 1,440,752 1,512,789
84 39 4,100 491,179 1,331,668 1,331,668 1,398,251 1,592,800 1,592,800 1,672,440
85 40 4,100 520,043 1,466,822 1,466,822 1,540,163 1,760,190 1,760,190 1,848,199
86 41 4,100 550,350 1,614,252 1,614,252 1,694,964 1,944,420 1,944,420 2,041,641
87 42 4,100 582,173 1,774,886 1,774,886 1,863,630 2,147,127 2,147,127 2,254,483
88 43 4,100 615,586 1,949,672 1,949,672 2,047,156 2,370,097 2,370,097 2,488,602
89 44 4,100 650,671 2,139,628 2,139,628 2,246,609 2,615,281 2,615,281 2,746,045
90 45 4,100 687,509 2,345,768 2,345,768 2,463,057 2,884,804 2,884,804 3,029,044
91 46 4,100 726,190 2,569,130 2,569,130 2,697,587 3,180,983 3,180,983 3,340,032
92 47 4,100 766,804 2,816,691 2,816,691 2,929,358 3,508,319 3,508,319 3,648,652
93 48 4,100 809,449 3,092,342 3,092,342 3,185,113 3,870,535 3,870,535 3,986,651
94 49 4,100 854,227 3,400,869 3,400,869 3,468,886 4,271,900 4,271,900 4,357,338
95 50 4,100 901,243 3,748,285 3,748,285 3,785,768 4,717,327 4,717,327 4,764,501
96 51 4,100 950,610 4,142,595 4,142,595 4,142,595 5,212,491 5,212,491 5,212,491
97 52 4,100 1,002,446 4,577,943 4,577,943 4,577,943 5,759,190 5,759,190 5,759,190
98 53 4,100 1,056,873 5,058,601 5,058,601 5,058,601 6,362,787 6,362,787 6,362,787
99 54 4,100 1,114,022 5,589,283 5,589,283 5,589,283 7,029,204 7,029,204 7,029,204
100 55 4,100 1,174,028 6,175,197 6,175,197 6,175,197 7,764,979 7,764,979 7,764,979
101 56 0 1,232,729 6,360,350 6,360,350 6,360,350 7,997,826 7,997,826 7,997,826
102 57 0 1,294,366 6,551,161 6,551,161 6,551,161 8,237,760 8,237,760 8,237,760
103 58 0 1,359,084 6,747,695 6,747,695 6,747,695 8,484,893 8,484,893 8,484,893
104 59 0 1,427,038 6,950,126 6,950,126 6,950,126 8,739,440 8,739,440 8,739,440
105 60 0 1,498,390 7,158,630 7,158,630 7,158,630 9,001,623 9,001,623 9,001,623
APPENDIX B
EXAMPLES OF CALCULATION OF SURRENDER CHARGE
Charges for $3,000 Partial Surrender
Consider a Policy with $200,000 Specified Amount, with $10,000 in Accumulated
Value, with a $6,000 Surrender Charge, and with no previous Partial Surrenders.
If this Owner were to take a $3,000 Partial Surrender, the values would be as
follows:
Before Surrender After Surrender
- --------------------------------------- -------------------------- ------------
Specified Amount $200,000 $195,500
Accumulated Value $10,000 $5,500
Surrender Charge $6,000 (a) $4,500
Sum of all Previous Partial
Surrenders $0 $3,000
Partial Surrender Amount $3,000 N/A
Sum of the Partial Surrender Amount
and all Previous Partial Surrenders
$3,000 (b) $3,000
Exclusion Percentage 50% 50%
Cash Surrender Value $4,000 (d) $1,000
Exclusion Percentage multiplied by
the Cash Surrender Value $2,000 (c) $500
Charge Assessed on Surrender $1,500 (see below) N/A
- --------------------------------------- -------------------------- ------------
The Charge Assessed on Surrender is calculated, in symbols, as (a) x [(b) - (c)]
/ (d) = $6,000 x [$3,000 - $2,000] / $4,000 = $1,500. The charge will always be
at least $25 but will never otherwise exceed the full Surrender Charge. The
Specified Amount is reduced by the sum of the $3,000 Partial Surrender Amount
and the $1,500 Charge Assessed on Surrender. The new Specified Amount is
$200,000 - ($3,000 + $1,500) = $195,500.
The Accumulated Value is also reduced by the sum of the $3,000 Partial Surrender
Amount and the $1,500 Charge Assessed on Surrender. The new Accumulated Value is
$10,000 - ($3,000 + $1,500) = $5,500. The Surrender Charge is reduced by the
$1,500 Charge Assessed on Surrender, $6,000 - $1,500 = $4,500. All future
Surrender Charges are the Surrender Charges shown on the schedule page, reduced
by the $1,500 assessed, but never less than zero. The Cash Surrender Value is
always calculated as the Accumulated Value less the Surrender Charge. After the
surrender, this would be $5,500 - $4,500 = $1,000.
Charges for $50,000 Decrease in Specified Amount Consider a Policy with $200,000
Specified Amount, with $10,000 in Accumulated Value, and with a $6,000 Surrender
Charge. If this Owner were to decrease his Specified Amount by $50,000, the
values would be as follows:
Before Decrease After Decrease
- -------------------------------- -------------------------- -------------------
Specified Amount $200,000 $150,000
Accumulated Value $10,000 $8,500
Surrender Charge $6,000 $4,500
Cash Surrender Value $4,000 $4,000
Charge Assessed on Decrease $1,500 (see below) N/A
- -------------------------------- -------------------------- -------------------
The Surrender Charge assessed on a decrease in Specified Amount made within five
years of the insurance segment is the pro-rata portion of surrender penalties in
effect at the time of the decrease. For this $50,000 decrease on a $200,000
Specified Amount, we will assess a surrender charge of $50,000 (decrease amount)
/ $200,000 (Specified Amount) * $6,000 (Surrender Charge) = $1,500. The
Specified Amount after the decrease is the Specified Amount before the decrease
($200,000) reduced by the amount of the decrease ($50,000) = $150,000. The
Accumulated Value after the decrease is the $10,000 Accumulated Value before the
decrease reduced by the $1,500 charge assessed = $10,000 - $1,500 = $8,500. The
Surrender Charge after the decrease is the $6,000 Surrender Charge before the
decrease reduced, pro-rata, by the 25% amount of the decrease = $6,000 - 25% *
$6,000 = $4,500. All future Surrender Charges are reduced by the same 25%. The
Cash Surrender Value is always calculated as the Accumulated Value less the
Surrender Charge. After the decrease, this would be $8,500 - $4,500 = $4,000. As
the charge reduces both the accumulated value and surrender charge in equal
amounts, the Cash Surrender Value is designed not to change after a decrease in
the Specified Amount.
PART II
UNDERTAKING TO FILE REPORTS
a. Subject to the terms and conditions of Section 15(d) of the Securities and
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant
to authority confined in that section.
b. Pursuant to Investment Company Act Section 26(e), Pan-American Assurance
Company ("Company") hereby represents that the fees and charges deducted
under the Policy described in the Prospectus, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to
be incurred, and the risks assumed by the Company.
INDEMNIFICATION
Company shall indemnify and hold harmless any director, officer, and employee
now or hereafter serving the Company who was or is a party or is threatened to
be made a party to any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, including any action by or in the right of the
Company, by reason of fact that he is or was a director, officer, employee,
trustee, or is or was serving at the request of the Company as a director,
officer, employee, trustee, or agent of another business, foreign or nonprofit
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise, from and against all liability and expenses, including attorneys'
fees, judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding, to the full
extent permitted by applicable law. Such indemnification may, in the discretion
of such action, suit, or proceeding, subject to the provisions of any applicable
statute. CONTENTS OF REGISTRATION STATEMENT
The Registration Statement comprises the following papers and documents:
The facing sheet.
The Prospectus consisting of 85 pages.
Undertakings to file reports.
The signatures.
The following exhibits.
A. Copies of all exhibits required by paragraph A of instructions for Exhibits
in Form N-8B-2.
1. Resolution of the Board of Directors of Pan-American Assurance Company (the
"Company") establishing Pan-American Variable Life Separate Account.*
2. Not applicable.
3.(a) Not applicable.
(b) Form of Underwriting/Distribution Agreement between the Company and
Pan-American Financial Services, Inc.**
(c) Schedule of Sales Commissions.**
4. Not applicable.
5.(a) Flexible Premium Adjustable Variable Life Insurance Policy.**
(b) Form of Terminal Illness Accelerated Benefit Rider.*
(c) Form of Additional Insured Rider.*
(d) Form of Disability Benefit Payment Rider.*
(e) Form of Guaranteed Insurability Rider.*
(f) Form of Dependent Children Insurance Rider.*
(g) Form of Waiver of Monthly Deduction Rider.**
6.(a) Articles of Incorporation of the Company.*
(b) By-laws of the Company.*
7. Not applicable.
8.(a) Form of participation agreement among MFS Variable Insurance Trust,
Pan-American Assurance Company and Massachusetts Financial Services Company.**
(b) Form of participation agreement between Pan-American Assurance Company,
J.P. Morgan Series Trust II and J.P. Morgan Investment Management, Inc.**
(c) Form of participation agreement among Pan-American Assurance Company,
INVESCO Variable Investment Funds, Inc. and INVESCO Distributors, Inc.**
(d) Form of participation agreement among Berger Institutional Products Trust,
Berger LLC and Pan-American Assurance Company.**
(e) Form of participation agreement between Pan-American Assurance Company and
Dreyfus Investment Portfolios.**
9. Not applicable.
10. Form of Policy Application.**
11. Not applicable.
B. Not applicable.
C. Not applicable.
2. Opinion and Consent of Counsel.**
3. Not applicable.
4. Not applicable.
5. Not Applicable.
6. Consent of Actuary.**
7. Consent of Independent Auditors.**
* Incorporated by reference to Registrant's initial Registration Statement on
Form S-6 (File No. 333-55230) filed electronically on February 8, 2001.
** Incorporated by reference to Registrant's Pre-Effective Amendment No. 1 on
Form S-6 (File No. 333-55230) filed electronically on July 12, 2001.
SIGNATURES
As required by the Securities Act of 1933, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized in the in the City of New Orleans, State of Louisiana, on this
28th day of August, 2001.
PAN-AMERICAN ASSURANCE COMPANY VARIABLE LIFE
SEPARATE ACCOUNT
(Registrant)
By:/s/ JAN SHERIDAN JOBE
-----------------------------
JAN SHERIDAN JOBE
PAN-AMERICAN ASSURANCE COMPANY
Attest: /s/ WILLIAM T. STEEN
--------------------------
WILLIAM T. STEEN
Title: VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
------------------------------------------------------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/S/GEORGE FRANK PURVIS, JR Senior Vice-President 8/28/01
- -------------------------------- --------
George Frank Purvis, Jr.
/S/JAN SHERIDAN JOBE President, Chief 8/28/01
- ------------------------------ Executive Officer --------
Jan Sheridan Jobe
/S/LUIS ISIDRO INGLES, JR. Vice-President, Investments
and Treasurer 8/28/01
- ------------------------------ --------
Luis Isidro Ingles, Jr.
/S/PEGGY BOUDREAUX SCOTT Vice-President,
Chief Financial Officer 8/28/01
- --------------------- --------
Peggy Boudreaux Scott
/S/WILLIAM THIEL STEEN Vice-President,
General Counsel and 8/28/01
- ----------------------- Corporate Secretary --------
William Thiel Steen
/S/ EDWARD JAMES RAY III Vice-President,
Operations and Chief Actuary 8/28/01
- ----------------------- --------
Edward James Ray III
/S/ANDREW MARK ERMAN Vice-President
and Actuary 8/28/01
- ----------------------- --------
Andrew Mark Erman