Registration No. 333-72594
Registration No. 811-6217
Fiscal Year End December 31
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-6
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
OF SECURITIES OF UNIT
INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
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PRE-EFFECTIVE AMENDMENT NO. 2
POST-EFFECTIVE AMENDMENT NO.
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MONY VARIABLE ACCOUNT L
(Exact Name of Trust)
MONY LIFE INSURANCE COMPANY
(Name of Depositor)
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1740 Broadway
New York, New York 10019
(Address of Principal Executive Office)
HAROULA K. BALLAS, ESQ.
Counsel, Operations
MONY Life Insurance Company
1740 Broadway
New York, New York 10019
(Name and Address of Agent for Service)
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Approximate date of proposed public offering: It is proposed that this
filing will become effective: (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[_] on pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on pursuant to paragraph (a)(1) of rule 485.
If appropriate, check the following box:
[_]this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
TITLE OF SECURITIES BEING REGISTERED: Flexible Premium Last Survivor
Variable Universal Life Insurance Policies
Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall become effective in accordance with Section 8(a) of the Securities Act of
1933 or until this Registration Statement shall become effective on such date
as the Commission, acting pursuant to said Section 8(a), may determine.
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STATEMENT PURSUANT TO RULE 24f-2
The Registrant registers an indefinite number or amount of its variable life
insurance contracts under the Securities Act of 1933 pursuant to Rule 24f-2
under the Investment Company Act of 1940.
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CROSS REFERENCE TO ITEMS
REQUIRED BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption in Prospectus
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1 Cover Page
2 Cover Page
3 Not Applicable
4 DISTRIBUTION OF THE POLICY
5 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
6 Variable Account L
7 Not required
8 Not required
9 Legal Proceedings
10 THE POLICY; INFORMATION ABOUT THE COMPANY AND THE VARIABLE
ACCOUNT; CHARGES AND DEDUCTIONS; OTHER INFORMATION; VOTING OF
FUND SHARES; MORE ABOUT THE POLICY
11 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT; THE
FUNDS; PURCHASE OF PORTFOLIO SHARES BY THE VARIABLE ACCOUNT
12 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT; THE
FUNDS; PURCHASE OF PORTFOLIO SHARES BY THE VARIABLE ACCOUNT
13 THE POLICY; CHARGES AND DEDUCTIONS; THE FUNDS
14 THE POLICY
15 THE POLICY
16 THE FUNDS; THE POLICY; INFORMATION ABOUT THE COMPANY AND THE
VARIABLE ACCOUNT
17 THE POLICY
18 THE FUNDS; THE POLICY; INFORMATION ABOUT THE COMPANY AND THE
VARIABLE ACCOUNT
19 VOTING OF FUND SHARES; MORE ABOUT THE POLICY
20 Not applicable
21 THE POLICY
22 Not applicable
23 Not applicable
24 IMPORTANT POLICY TERMS; MORE ABOUT THE POLICY
25 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
26 Not applicable
27 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
28 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
29 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
30 Not applicable
31 Not applicable
32 Not applicable
33 Not applicable
34 Not applicable
35 MORE ABOUT THE POLICY
36 Not applicable
Item No. of
Form N-8B-2 Caption in Prospectus
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37 Not applicable
38 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT; MORE
ABOUT THE POLICY
39 MORE ABOUT THE POLICY
40 Not applicable
41 MORE ABOUT THE POLICY
42 Not applicable
43 Not applicable
44 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT; THE
POLICY; MORE ABOUT THE POLICY
45 Not applicable
46 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT; THE
POLICY; MORE ABOUT THE POLICY
47 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT; THE
POLICY; MORE ABOUT THE POLICY
48 Not applicable
49 Not applicable
50 INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
51 Cover Page; INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT;
THE POLICY; MORE ABOUT THE POLICY
52 OTHER INFORMATION
53 OTHER INFORMATION
54 Not applicable
55 Not applicable
56 Not required
57 Not required
58 Not required
59 FINANCIAL STATEMENTS
Prospectus
Dated January 14, 2002
Last Survivor Flexible Premium Variable
Universal Life Insurance Policy
Issued By
MONY Life Insurance Company
MONY Variable Account L
MONY Life Insurance Company (the "Company") issues the last survivor variable
universal life insurance policy described in this prospectus. Among the
policy's many terms are:
Allocation of Premium and Fund Values:
. You can tell us what to do with your premium payments. You can also tell us
what to do with the fund values your policy may create for you resulting from
those premium payments.
. You can tell us to place some or all of them into a separate account. That
separate account is called the MONY Variable Account L.
. If you do, you can also tell us to place your premium payments and fund
values into any of the 35 different subaccounts of MONY Variable Account
L. Each of these subaccounts seeks to achieve a different investment
objective. If you tell us to place your premium payments and fund values
into one or more subaccounts of the separate account, you bear the risk
that the investment objectives will not be met. That risk includes not
earning any money on your premium payments and fund values and also that
premium payments and fund values may lose some or all of their value.
. You can also tell us to place some or all of your premium payments and fund
values into our account. Our account is called the Guaranteed Interest
Account. If you do, we will guarantee that those premium payments will not
lose any value. We also guarantee that we will pay not less than 4.5%
interest annually. We may pay more than 4.5% if we choose. Premium payments
and fund values you place into the Guaranteed Interest Account become part
of our assets.
Death Benefit:
. We will pay a death benefit if the last surviving insured dies before
reaching age 100 while the Policy is in effect. That death benefit will never
be less than the amount specified in the Policy. It may be greater than the
amount specified if the policy's cash values increase.
Living Benefits:
. You may ask for some or all of the policy's cash value at any time. If you
do, we may deduct a surrender charge. You may borrow up to 90% of the
policy's cash value from us at any time. You will have to pay interest to us
on the amount borrowed.
Charges and Fees:
. The policy allows us to deduct certain charges from the cash value. These
charges are detailed in the policy and in this prospectus.
These are only some of the terms of the policy.
Please read the prospectus carefully for more complete details of the policy.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense. This prospectus comes with prospectuses for The Alger
American Fund, Enterprise Accumulation Trust, INVESCO Variable Investment
Funds, Inc., Janus Aspen Series, Lord Abbett Series Fund, MFS(R) Variable
Insurance Trust/SM/, MONY Series Fund, Inc., PBHG Insurance Series Fund, PIMCO
Variable Insurance Trust and The Universal Institutional Funds, Inc. You should
read these prospectuses carefully and keep them for future reference.
MONY Variable Account L
MONY Life Insurance Company
1740 Broadway, New York, New York 10019
1-800-487-6669
Table of Contents
Page
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Summary of the Policy...................................... 1
Important Policy Terms.................................... 1
Purpose of the Policy..................................... 1
Policy Premium Payments and Values........................ 1
Charges and Deductions.................................... 3
Fees and Expenses of the Funds............................ 4
The Death Benefit......................................... 9
Premium Features.......................................... 10
MONY Variable Account L................................... 10
Allocation Options........................................ 10
Transfer of Fund Value.................................... 10
Policy Loans.............................................. 11
Full Surrender............................................ 11
Partial Surrender......................................... 11
Right to Return Policy Period............................. 11
Grace Period and Lapse.................................... 11
Tax Treatment of Increases in Fund Value.................. 12
Tax Treatment of Death Benefit............................ 12
Riders.................................................... 12
Contacting the Company.................................... 12
Understanding the Policy.................................. 13
Information About the Company and MONY Variable Account L.. 14
MONY Life Insurance Company............................... 14
MONY Variable Account L................................... 14
The Funds.................................................. 20
The Alger American Fund................................... 20
Enterprise Accumulation Trust............................. 21
INVESCO Variable Investment Funds, Inc.................... 23
Janus Aspen Series........................................ 23
Lord Abbett Series Fund................................... 23
MFS(R) Variable Insurance Trust/SM/....................... 24
MONY Series Fund, Inc..................................... 24
PBHG Insurance Series Fund................................ 25
PIMCO Variable Insurance Trust............................ 25
The Universal Institutional Funds, Inc.................... 26
Purchase of Portfolio Shares by MONY Variable Account L... 26
Detailed Information About the Policy...................... 27
Application for a Policy.................................. 27
Right to Examine a Policy -- Right to Return Policy Period 29
Premiums.................................................. 29
Allocation of Net Premiums................................ 32
Death Benefits under the Policy........................... 32
Death Benefit Options..................................... 32
Changes in the Specified Amount........................... 35
Other Optional Insurance Benefits......................... 36
Option to Split Policy.................................... 37
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Page
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Benefits at Maturity...................................... 37
Policy Values............................................. 37
Determination of Fund Value............................... 37
Calculating Unit Values for Each Subaccount............... 39
Determining Fund Value.................................... 40
Transfer of Fund Value.................................... 41
Right to Exchange Policy.................................. 41
Option to Obtain Paid-Up Insurance........................ 41
Policy Loans.............................................. 42
Full Surrender............................................ 43
Partial Surrender......................................... 43
Grace Period and Lapse.................................... 44
Charges and Deductions..................................... 47
Deductions from Premiums.................................. 48
Daily Deduction from MONY Variable Account L.............. 48
Monthly Deductions from Fund Value........................ 49
Surrender Charge.......................................... 50
Corporate Purchasers...................................... 51
Transaction and Other Charges............................. 51
Guarantee of Certain Charges.............................. 51
Other Information.......................................... 52
Federal Income Tax Considerations......................... 52
Charge for Company Income Taxes........................... 56
Voting of Fund Shares..................................... 56
Disregard of Voting Instructions.......................... 57
Report to Policy Owners................................... 57
Substitution of Investments and Right to Change Operations 57
Changes to Comply with Law................................ 58
Performance Information.................................... 58
The Guaranteed Interest Account............................ 59
General Description....................................... 59
Death Benefit............................................. 60
Policy Charges............................................ 60
Transfers................................................. 60
Surrenders and Policy Loans............................... 61
More About the Policy...................................... 61
Ownership................................................. 61
Beneficiary............................................... 61
Notification and Claims Procedures........................ 62
Payments.................................................. 62
Payment Plan/Settlement Provisions........................ 62
Payment in Case of Suicide................................ 62
Assignment................................................ 63
Errors on the Application................................. 63
Incontestability.......................................... 63
Policy Illustrations...................................... 63
Distribution of the Policy................................ 63
ii
Page
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More About the Company......................... 64
Management.................................... 64
State Regulation.............................. 66
Telephone Transfer Privileges................ 66
Legal Proceedings............................ 67
Legal Matters................................ 67
Registration Statement....................... 67
Independent Accountants...................... 67
Financial Statements......................... 67
Index to Financial Statements.................. F-1
Appendix A..................................... A-1
Appendix B..................................... B-1
Appendix C..................................... C-1
iii
Summary of the Policy
This summary provides you with a brief overview of the more important
aspects of your policy. It is not intended to be complete. More detailed
information is contained in this prospectus on the pages following this Summary
and in your policy. This summary and the entire prospectus, will describe the
part of the policy involving MONY Variable Account L. The prospectus also
briefly will describe the Guaranteed Interest Account. The Guaranteed Interest
Account is also described in your policy. Before purchasing a policy, we urge
you to read the entire prospectus carefully.
Important Policy Terms
We are providing you with definitions for the following terms to make the
description of the policy provisions easier for you to understand.
Outstanding Debt -- The unpaid balance of any loan which you request on the
policy. The unpaid balance includes accrued loan interest which is due and has
not been paid by you.
Loan Account -- An account to which amounts are transferred from the
subaccounts of MONY Variable Account L and the Guaranteed Interest Account as
collateral for any loan you request. We will credit interest to the Loan
Account at a rate not less than 4.5%. The Loan Account is part of the Company's
General Account.
Fund Value -- The sum of the amounts under the policy held in each
subaccount of MONY Variable Account L and the Guaranteed Interest Account and
the loan account.
Cash Value -- The Fund Value of the policy less any surrender charge and any
Outstanding Debt.
Minimum Monthly Premium -- The amount the Company determines is necessary to
keep the policy in effect for the first three policy years, regardless of Cash
Values.
Guaranteed Interest Account -- This account is part of the general account
of MONY Life Insurance Company (the "Company"). You may allocate all or a part
of your net premium payments to this account. This account will credit you with
a fixed interest rate (which will not be less than 4.5%) declared by the
Company. (For more detailed information, see "The Guaranteed Interest Account,"
page 59.)
Specified Amount -- The death benefit requested by the policy owner.
Business Day -- Each day that the New York Stock Exchange is open for
trading.
Purpose of the Policy
The policy offers insurance protection on the lives of the insureds. If
either or both insureds are alive on the anniversary of the policy date when
the younger insured is (or would have been) age 100, a maturity benefit will be
paid instead of a death benefit. The policy provides a benefit equal to your
choice of (a) its Specified Amount (under Option 1) or (b) its Specified Amount
plus the Fund Value (under Option 2). The policy also provides surrender and
loan privileges. The policy offers a choice of investment alternatives and an
opportunity for the policy's Fund Value and its death benefit to grow based on
investment results. In addition, you, as the owner of the policy, choose the
amount and frequency of premium payments, within certain limits.
Policy Premium Payments and Values
The premium payments you make for the policy are received by the Company.
From those premium payments the Company makes deductions to pay premium and
other taxes imposed by state and local governments. The Company makes
deductions to cover the cost to the Company of a deferred acquisition tax
1
imposed by the United States government. The Company will also deduct a sales
charge to cover the costs of making the policies available to the public. After
deduction of these charges, the amount remaining is called the net premium
payment.
You may allocate net premium payments among the various subaccounts of MONY
Variable Account L and/or the Guaranteed Interest Account. As the owner of the
policy, you may give the right to allocate net premium payments to someone else.
The net premium payments you allocate among the various subaccounts of MONY
Variable Account L may increase or decrease in value on any day depending on
the investment experience of the subaccounts you select. Your death benefit may
or may not increase or decrease depending on several factors including the
death benefit option you chose. Except in certain circumstances described later
(see "Death Benefits under the Policy" at page 32), the death benefit will
never decrease below the Specified Amount of your policy.
Net premium payments you allocate to the Guaranteed Interest Account will be
credited with interest at a rate determined by the Company. That rate will not
be less than 4.5%.
The value of the net premium payments you allocate to MONY Variable Account
L and to the Guaranteed Interest Account are called the Fund Value. There is no
guarantee that the policy's Fund Value and death benefit will increase. You
bear the risk that the net premiums and Fund Value allocated to MONY Variable
Account L may be worth more or less while the policy remains in effect.
If you cancel the policy and return it to the Company during the Right to
Return Period, your premium payments will be returned by the Company. After the
Right to Return Period, you may cancel your policy by surrendering it to the
Company. The Company will pay you the Fund Value minus a charge if you cancel
your policy during the first ten years since the policy was issued or the
Specified Amount increased. The Company will also deduct any amount you have
borrowed from the amount it will pay you. The Fund Value minus surrender
charges and minus the amount of debt outstanding from loans you have received
is called the Cash Value of the policy.
Charges and fees such as the cost of insurance, administrative charges and
mortality and expense risk charges are imposed by the policy. These charges and
fees are deducted by the Company from the policy's Fund Value and are described
in further detail below.
The policy remains in effect until the earliest of:
. A grace period expires without the payment of sufficient additional
premium to cover policy charges or repayment of the Outstanding Debt;
. One or both insureds are alive on the date on which the younger insured
would have been age 100;
. Death of the last surviving insured; and
. Full surrender of the policy.
Generally, the policy remains in effect only as long as the Cash Value is
sufficient to pay all monthly deductions. However, during the first three years
the policy is in effect, the Company will determine an amount which if paid
monthly during those first three policy years will keep the policy and all
rider coverages in effect for the first three policy years even if the Cash
Value of the policy is zero. This amount is called the Minimum Monthly Premium.
If you increase the Specified Amount during the first three policy years, you
must pay the increased Minimum Monthly Premium for the remainder of the first
three policy years.
2
Charges and Deductions
The policy provides for the deduction of the various charges, costs, and
expenses from the Fund Value of the policy. These deductions are summarized in
the table below. Additional details can be found on pages 47-51.
Deductions from Premiums
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Sales Charge -- Varies based on First 10 policy years -- 6% of premiums
the policy year in paid up to target premium and 2% of
effect. It is a % of premium paid in excess of target
premium paid premium.
Years 11 and later -- 2% of all
premiums.
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Tax Charge State and local -- 0.8%
Federal -- 1.25%
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Daily Deduction from MONY Variable Account L
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Mortality & Expense Risk Charge -- .35% of subaccount value (0.000959%
Maximum Annual Rate daily)
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Monthly Deductions from Fund Value
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Cost of Insurance Charge Current cost of insurance rate x net
amount at risk at the beginning of the
policy month
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Administrative Charge -- Monthly $7.50
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Monthly per $1,000 Specified
Amount Charge Based on issue age See Appendix B. This charge applies for
of the younger insured, the first 10 policy years (or for 10
Specified Amount, and smoking years from the date of any increase in
Status Specified Amount)
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Optional Insurance Benefits Charge As applicable.
Monthly Deduction for any other
optional insurance Benefits added
by rider
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Transaction and Other Charges
- - Partial Surrender Fee
$10
- - Transfer of Fund Value
(at Company's Option) $25 maximum per transfer over 12/(1)/
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Surrender Charge See discussion of Surrender Charge on
Grades from 100% to 0 over 11 page 50 for grading schedule.
years based on a schedule. Factors
per $1,000 of Specified Amount
vary based on issue age, gender,
and underwriting class
/(1)/Currently no charge on any transfers.
MONY Variable Account L is divided into subdivisions called subaccounts.
Each subaccount invests exclusively in shares of a designated portfolio. Each
portfolio pays a fee to its investment adviser to manage the portfolio. Each
portfolio also incurs expenses in its operation. These fees and expenses are
also shown in the table below.
3
Fees and Expenses of the Funds
The Funds and each of their portfolios incur certain charges including the
investment advisory fee and certain operating expenses. These fees and expenses
vary by portfolio and are set forth below. Their Boards govern the Funds. The
advisory fees are summarized at pages 20-26. Fees and expenses of the Funds are
described in more detail in the Funds' prospectuses.
Information contained in the following table was provided by the respective
Funds and has not been independently verified by us.
Pro Forma Annual Expenses for the Year Ended December 31, 2000
(as a percentage of average net assets)
Management Other Distribution and Total
Fund/Portfolio Fees Expenses Service (12-b-1) Fee Expenses
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The Alger American
Fund
Alger American
Balanced Portfolio......................... 0.75% 0.13% 0% 0.88%
Alger American
Leveraged AllCap
Portfolio.................................. 0.85% 0.05% 0% 0.90%
Alger American
MidCap Growth
Portfolio.................................. 0.80% 0.04% 0% 0.84%
Enterprise
Accumulation
Trust/(1)/
Equity Income
Portfolio.................................. 0.75% 0.13% 0% 0.88%
Global Socially
Responsive
Portfolio/(2)/............................. 0.90% 0.40% 0% 1.30%
Growth Portfolio............................. 0.75% 0.08% 0% 0.83%
Growth and Income
Portfolio.................................. 0.75% 0.10% 0% 0.85%
Managed Portfolio............................ 0.80% 0.02% 0% 0.82%
Multi-Cap Growth
Portfolio.................................. 1.00% 0.10% 0% 1.10%
Small Company
Growth Portfolio........................... 1.00% 0.11% 0% 1.11%
Small Company Value
Portfolio.................................. 0.80% 0.09% 0% 0.89%
Total Return
Portfolio/(2)/............................. 0.40% 0.25% 0% 0.65%
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/(1)/ Enterprise Capital Management, Inc. has contractually agreed to limit the
portfolios' expenses through May 1, 2002, to the following expense ratios: Equity
Income -- 1.05%; Global Socially Responsive -- 1.30%; Growth -- 1.15%; Growth and
Income -- 1.05%; Managed -- 1.05%; Multi-Cap Growth -- 1.40%; Small Company Growth
-- 1.40%; Small Company Value -- 1.30%; and Total Return -- 0.65%.
/(2)/ The Global Socially Responsive and Total Return Portfolios were not in operation on
December 31, 2000. These are estimates of annual expenses.
INVESCO Variable
Investment Funds,
Inc.
INVESCO VIF --
Financial
Services Fund.............................. 0.75% 0.34% 0% 1.09%
INVESCO VIF --
Health Sciences
Fund....................................... 0.75% 0.32% 0% 1.07%
INVESCO VIF --
Telecommunications
Fund....................................... 0.75% 0.31% 0% 1.06%
Janus Aspen
Series-- Service
Shares
Capital
Appreciation
Portfolio.................................. 0.65% 0.02% 0.25% 0.92%
Flexible Income
Portfolio.................................. 0.65% 0.09% 0.25% 0.99%
International
Growth Portfolio........................... 0.65% 0.06% 0.25% 0.96%
Lord Abbett Series
Fund-- Class VC
Bond-Debenture
Portfolio.................................. 0.50% 0.35% 0% 0.85%
Growth and Income
Portfolio/(1)/............................. 0.50% 0.53% 0% 1.03%
Mid-Cap Value
Portfolio/(2)/............................. 0.75% 0.35% 0% 1.10%
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/(1)/ Excludes expense waivers. With these waivers total Expenses would have been 1.02%.
/(2)/ The Mid Cap Value Portfolio has established a non-12b-1 service fee arrangement
which is reflected under "Other Expenses." For the following reasons, the
information in the chart above relating to the Mid Cap Value Portfolio has been
restated to reflect the fees and expenses that will be applicable during 2001. For
the year 2000, Lord, Abbett & Co. voluntarily waived its management fees of 0.75%
of average daily net assets of the Mid Cap Value Portfolio and voluntarily
reimbursed all other expenses. Absent such waivers and reimbursements the "Total
Expenses" for Mid-Cap Value would have been 1.56%. For the year 2001, Lord, Abbett
& Co. does not intend to waive its management fees for the Mid Cap Value Portfolio
but has contractually agreed to continue to reimburse a portion of the Mid Cap
Value Portfolio's expenses to the extent necessary to maintain its "Other Expenses"
at an aggregate of 0.35% of its average daily net assets.
4
Pro Forma Annual Expenses for the Year Ended December 31, 2000
(as a percentage of average net assets)
Management Other Distribution and Total
Fund/Portfolio Fees Expenses Service (12-b-1) Fee Expenses
-------------- ---------- -------- -------------------- --------
MFS(R) Variable
Insurance
Trust/SM(1)/--
Initial Class
MFS Mid Cap Growth
Series/(2)/................................ 0.75% 0.15% 0% 0.90%
MFS New Discovery
Series/(2)/................................ 0.90% 0.15% 0% 1.05%
MFS Total Return
Series..................................... 0.75% 0.15% 0% 0.90%
MFS Utilities Series......................... 0.75% 0.16% 0% 0.91%
- ------------
/(1)/ Each series has an expense offset arrangement which reduces the series' custodian fee
based upon the amount of cash maintained by the series with its custodian and dividend
disbursing agent. Each series may enter into other such 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.
/(2)/ MFS has contractually agreed, subject to reimbursement, to bear expenses for these
series such that each such series' "Other Expenses" (after taking into account the
expense offset arrangement described above), do not exceed the following percentages of
the average daily net assets of the series during the current fiscal year: 0.15% for
both Mid Cap Growth and New Discovery Series. These contractual fee arrangements will
continue until at least May 1, 2002, unless changed with the consent of the board of
trustees which oversees the series. Had these fee reductions not been taken into
account, "Total Expenses" would be higher for certain series and would equal: 2.21% for
Mid Cap Growth Series; and 1.09% for New Discovery Series.
MONY Series Fund,
Inc./(1)/
Government
Securities
Portfolio.................................. 0.50% 0.11% 0% 0.61%
Long Term Bond
Portfolio/(2)/............................. 0.50% 0.10% 0% 0.60%
Money Market
Portfolio.................................. 0.40% 0.07% 0% 0.47%
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/(1)/ MONY Life Insurance Company of America has contractually agreed to limit expenses on
these portfolios to the following amounts: Long Term Bond -- 0.75%; Government
Securities -- 0.75%; Money Market -- 0.50% . This contractual limitation is in effect
until April 30, 2002.
/(2)/ Excludes expense reimbursements/reductions. With these reimbursements/reductions
total expenses would have been 0.59%.
PBHG Insurance
Series Fund/(1)/
PBHG Mid-Cap Value
Portfolio.................................. 0.85% 0.35% 0% 1.20%
PBHG Select Value
Portfolio.................................. 0.65% 0.32% 0% 0.97%
- ------------
/(1)/ For the fiscal year ended December 31, 2001, Pilgrim Baxter has contractually agreed
to waive that portion, if any, of the annual management fees payable by the portfolios
and to pay certain expenses of the portfolios to the extent necessary to ensure that
the total annual portfolio operating expenses do not exceed 1.20% and 1.00% for the
Mid-Cap Value Portfolio and the Select Value Portfolio, respectively. Without these
contractual expense waivers, "Other Expenses" and "Total Expenses" for the Mid-Cap
Value Portfolio would have been 3.32% and 4.52%, respectively. Pilgrim Baxter has
agreed to maintain this expense limitation agreement until December 31, 2002. In any
fiscal year in which the portfolios' total assets are greater than $75 million and its
total annual portfolio operating expenses are less than 1.20% and 1.00% for the Mid-Cap
Value Portfolio and the Select Value Portfolio, respectively, the portfolios' board of
trustees may elect to reimburse Pilgrim Baxter for any fees it waived or expenses it
reimbursed on the portfolios' behalf during the previous two fiscal years. In 2000, the
board elected to reimburse $36,853 in waived fees, which are included in the
calculation of "Other Expenses" above for the Select Value Portfolio. At the time of
the election, the Portfolio had total assets in excess of $93 million. To date, the
board has made no reimbursement election for the Mid-Cap Value Portfolio.
5
Pro Forma Annual Expenses for the Year Ended December 31, 2000
(as a percentage of average net assets)
Management Other Distribution and Total
Fund/Portfolio Fees Expenses Service (12-b-1) Fee Expenses
-------------- ---------- -------- -------------------- --------
PIMCO Variable
Insurance Trust--
Administrative Class
Global Bond
Portfolio/(1)/........................... 0.25% 0.65% 0% 0.90%
Real Return Bond
Portfolio................................ 0.25% 0.40% 0% 0.65%
StocksPLUS Growth
and Income
Portfolio/(1)/........................... 0.40% 0.25% 0% 0.65%
- ----------
/(1)/ PIMCO has contractually agreed to reduce total annual portfolio operating
expenses for the Administrative Class shares to the extent they would exceed,
due to the payment of organizational expenses and trustees' fees, 0.65% of
average daily net assets for the StockPLUS Growth and Income Portfolio and
0.90% of average daily net assets for the Global Bond Portfolio. Under the
Expense Reimbursement Agreement, PIMCO may recoup these waivers and
reimbursements in future periods, not exceeding three years, provided total
expenses, including such recoupment, do not exceed the annual expense limit.
Without these contractual expense limitations actual expenses would have been
0.66% for the the StockPlus Portfolio and 1.18% for the Global Bond Portfolio.
The Universal
Institutional
Funds, Inc./(1)/
Emerging Markets
Equity Portfolio......................... 1.25% 0.71% 0% 1.96%
Global Value Equity
Portfolio................................ 0.80% 0.63% 0% 1.43%
U.S. Real Estate
Portfolio................................ 0.80% 0.36% 0% 1.16%
- ----------
/(1)/ The Adviser has voluntarily agreed to reduce its management fee and/or
reimburse the portfolios to the amounts shown. With these reimbursements and/or
fee waivers the total expenses would have been 1.80%, 1.15% and 1.10% for the
Emerging Markets Equity Portfolio, Global Value Equity Portfolio, U.S. Real
Estate Portfolio, respectively. Fee waivers and/or expense reimbursements are
voluntary and the advisor reserves the right to terminate any waiver and/or
reimbursement at any time without notice.//
6
MONY Variable Account L is divided into subdivisions called subaccounts.
Each subaccount invests exclusively in shares of a designated portfolio. Each
portfolio pays a fee to its investment adviser to manage the portfolio. The
investment adviser fees for each portfolio are listed in the table below.
Fund Investment Adviser Fees
- -----------------------------------------------------------------------------------------
The Alger American Fund
- -----------------------------------------------------------------------------------------
Portfolio Investment Adviser Fee
- -----------------------------------------------------------------------------------------
Alger American Balanced Portfolio Annual rate of 0.75% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
Alger American MidCap Growth Portfolio Annual rate of 0.80% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
Enterprise Accumulation Trust
- -----------------------------------------------------------------------------------------
Portfolio Investment Adviser Fee
- -----------------------------------------------------------------------------------------
Equity Income Portfolio Annual rate of 0.75% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
Global Socially Responsive Portfolio Annual rate of 0.90% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
Growth Portfolio Annual rate of 0.75% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
Growth and Income Portfolio Annual rate of 0.75% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
Managed Portfolio Annual rate of 0.80% of the first $400 million,
0.75% of the next $400 million, and 0.70% in
excess of $800 million of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
Multi-Cap Growth Portfolio Annual rate of 1.00% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
Small Company Growth Portfolio Annual rate of 1.00% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
Small Company Value Portfolio Annual rate of 0.80% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
Total Return Portfolio Annual rate of 0.40% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
INVESCO Variable Investment Funds, Inc.
- -----------------------------------------------------------------------------------------
Portfolio Investment Adviser Fee
- -----------------------------------------------------------------------------------------
INVESCO VIF - Financial Services Fund Annual rate of 0.75% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
INVESCO VIF - Health Sciences Fund Annual rate of 0.75% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------------
INVESCO VIF - Telecommunications Fund Annual rate of 0.75
% of the portfolio's average daily net assets.
- -----------------------------------------------------------------------------------------
7
Janus Aspen Series
- --------------------------------------------------------------------------------
Portfolio Investment Adviser Fee
- --------------------------------------------------------------------------------
Capital Appreciation Portfolio Annual rate of 0.65% of the portfolio's average
daily net assets.
- --------------------------------------------------------------------------------
Flexible Income Portfolio Annual rate of 0.65% of the first $300 million;
and 0.55% in excess of $300 million of the
portfolio's average daily net assets.
- --------------------------------------------------------------------------------
International Growth Portfolio Annual rate of 0.65% of the portfolio's average
daily net assets.
- --------------------------------------------------------------------------------
Lord Abbett Series Fund
- --------------------------------------------------------------------------------
Portfolio Investment Adviser Fee
- --------------------------------------------------------------------------------
Bond-Debenture Portfolio Annual rate of 0.50% of the portfolio's average
daily net assets.
- --------------------------------------------------------------------------------
Growth and Income Portfolio Annual rate of 0.50% of the portfolio's average
daily net assets.
- --------------------------------------------------------------------------------
Mid-Cap Value Portfolio Annual rate of 0.75% of the portfolio's average
daily net assets.
- --------------------------------------------------------------------------------
MFS(R) Variable Insurance Trust/SM/
- --------------------------------------------------------------------------------
Portfolio Investment Adviser Fee
- --------------------------------------------------------------------------------
MFS Mid Cap Growth Series Annual rate of 0.75% of the portfolio's average
daily net assets.
- --------------------------------------------------------------------------------
MFS New Discovery Series Annual rate of 0.90% of the portfolio's average
daily net assets.
- --------------------------------------------------------------------------------
MFS Total Return Series Annual rate of 0.75% of the portfolio's average
daily net assets.
- --------------------------------------------------------------------------------
MFS Utilities Series Annual rate of 0.75% of the portfolio's average
daily net assets.
- --------------------------------------------------------------------------------
MONY Series Fund, Inc.
- --------------------------------------------------------------------------------
Portfolio Investment Adviser Fee
- --------------------------------------------------------------------------------
Government Securities Portfolio Annual rate of 0.50% of the first $400 million,
0.35% of the next $400 million, and 0.30% in
excess of $800 million of the portfolio's
aggregate average daily net assets.
- --------------------------------------------------------------------------------
Long Term Bond Portfolio Annual rate of 0.50% of the first $400 million,
0.35% of the next $400 million, and 0.30% in
excess of $800 million of the portfolio's
aggregate average daily net assets.
- --------------------------------------------------------------------------------
Money Market Portfolio Annual rate of 0.40% of the first $400 million,
0.35% of the next $400 million, and 0.30% in
excess of $800 million of the portfolio's
aggregate average daily net assets.
- --------------------------------------------------------------------------------
8
PBHG Insurance Series Fund
- ----------------------------------------------------------------------------------------
Portfolio Investment Adviser Fee
- ----------------------------------------------------------------------------------------
PBHG Mid-Cap Value Portfolio Annual rate of 0.85% of the portfolio's average
daily net assets.
- ----------------------------------------------------------------------------------------
PBHG Select Value Portfolio Annual rate of 0.65% of the portfolio's average
daily net assets.
- ----------------------------------------------------------------------------------------
PIMCO Variable Insurance Trust
- ----------------------------------------------------------------------------------------
Portfolio Investment Adviser Fee
- ----------------------------------------------------------------------------------------
Global Bond Portfolio Annual rate of 0.25% of the portfolio's average
daily net assets.
- ----------------------------------------------------------------------------------------
Real Return Bond Portfolio Annual rate of 0.25% of the portfolio's average
daily net assets.
- ----------------------------------------------------------------------------------------
StocksPLUS Growth and Income Portfolio Annual rate of 0.40% of the portfolio's average
daily net assets.
- ----------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc.
- ----------------------------------------------------------------------------------------
Portfolio Investment Adviser Fee
- ----------------------------------------------------------------------------------------
Emerging Markets Equity Portfolio Annual rate of 1.25% of the first $500 million;
1.20% from $500 million to $1 billion; and
1.15% in excess of $1 billion of the portfolio's
average daily net assets.
- ----------------------------------------------------------------------------------------
Global Value Equity Portfolio Annual rate of 0.80% of the first $500 million;
0.75% from $500 million to $1 billion; and
0.70% in excess of $1 billion of the portfolio's
average daily net assets.
- ----------------------------------------------------------------------------------------
U. S. Real Estate Portfolio Annual rate of 0.80% of the first $500 million;
0.75% from $500 million to $1 billion; and
0.70% in excess of $1 billion of the portfolio's
average daily net assets.
The Death Benefit
The minimum initial Specified Amount is $100,000. You may elect one of two
options to compute the amount of death benefit payable under the policy. Your
selection may increase the death benefit.
Option 1 -- The death benefit equals the greater of:
(a) The Specified Amount, or
(b) Fund Value multiplied by a death benefit percentage required by the
federal tax law definition of life insurance.
If you choose Option 1, favorable investment performance will reduce the
cost you pay for the death benefit. This reduction will decrease the deduction
from Fund Value.
Option 2 -- The death benefit equals the greater of:
(a) The Specified Amount of the policy, plus the Fund Value, or
(b) The Fund Value multiplied by a death benefit percentage required by
the federal tax law definition of life insurance.
9
If you choose Option 2, favorable investment performance will increase the
Fund Value of the policy which in turn increases insurance coverage.
The Fund Value used in these calculations is the value as of the date of the
last surviving insured's death.
You may change the death benefit option and increase or decrease the
Specified Amount, subject to certain conditions. See "Death Benefits Under the
Policy," page 32.
Premium Features
You must pay premiums equal to at least the amount necessary to keep the
policy in effect for the first three policy years. After that, subject to
certain limitations, you may choose the amount and frequency of premium
payments as your situation and needs change.
When you apply for a policy, you determine the level amount you intend to
pay at fixed intervals over a specified period of time. You elect to receive a
premium notice on an annual, semiannual, or quarterly basis. However, you may
choose to skip or stop making premium payments. Your policy continues in effect
until the Cash Value can no longer cover (1) the monthly deductions from the
Fund Value for your policy, and (2) any optional insurance benefits added by
rider. You may pay premiums under the electronic funds transfer program. Under
this program, you authorize the Company to withdraw the amount you determine
from your checking account each month.
The amount, frequency and period of time over which you pay premiums may
affect whether or not the policy will be classified as a modified endowment
contract. You will find more information on the tax treatment of life insurance
contracts, including modified endowment contracts under "Federal Income Tax
Considerations," page 52.
The payment of premiums you specified on the application will not guarantee
that your policy will remain in effect. See "Grace Period and Lapse," page 44.
If any premium payment would result in an immediate increase in the net amount
at risk, the Company may, (1) reject a part of the premium payment, or (2)
limit the premium payment, unless you provide satisfactory evidence of
insurability.
MONY Variable Account L
MONY Variable Account L is a separate investment account whose assets are
owned by the Company. See "MONY Variable Account L" on page 14.
Allocation Options
You may allocate premium payments and Fund Values among the various
subaccounts of MONY Variable Account L. Each of the subaccounts uses premium
payments and Fund Values to purchase shares of a designated portfolio of The
Alger American Fund, Enterprise Accumulation Trust, INVESCO Variable Investment
Funds, Inc., Janus Aspen Series, Lord Abbett Series Fund, MFS(R) Variable
Insurance Trust/SM/, MONY Series Fund, Inc., PBHG Insurance Series Fund, PIMO
Variable Insurance Trust, and The Universal Institutional Funds, Inc. (the
"Funds"). The subaccounts available to you and the investment objectives of
each available subaccount are described in detail beginning on page 15.
Transfer of Fund Value
You may transfer Fund Value among the subaccounts. Subject to certain
limitations, you may also transfer between the subaccounts and the Guaranteed
Interest Account. Transfers may be made by telephone if the proper form has
been completed, signed and filed at the Company's Syracuse Operations Center.
See Transfer of Fund Value," page 41.
10
Policy Loans
You may borrow up to 90% of your policy's Cash Value from the Company. Your
policy will be the only security required for a loan. See "Policy Loans," page
42.
The amount of Outstanding Debt is subtracted from your death benefit. Your
Outstanding Debt is repaid from the proceeds of a full surrender. See "Full
Surrender," page 43. Outstanding Debt may also affect the continuation of the
policy. See "Grace Period and Lapse," page 44. The Company charges interest on
policy loans. If you do not pay the interest due, the amount due will be
borrowed from the policy's Cash Value and will become part of the Outstanding
Debt.
Full Surrender
You can surrender the policy during the lifetime of either or both insureds
and receive its Cash Value, which equals (a) Fund Value, minus (b) any
surrender charge and minus (c) any Outstanding Debt. See "Full Surrender," page
43.
Partial Surrender
You may request a partial surrender if your Cash Value after the deduction
of the requested surrender amount and any fees is greater than $500. If the
requested amount exceeds the amount available, we will reject the request and
return it to you. A partial surrender will decrease the Specified Amount. See
"Partial Surrender," at page 43.
Partial surrenders must be for at least $500. A partial surrender fee of $10
will be assessed against the remaining Fund Value. There is no surrender charge
assessed on a partial surrender.
Right to Return Policy Period
You have the right to examine the policy when you receive it. You may return
the policy for any reason and obtain a full refund of the premium you paid if
you return your policy the later of: (a) 10 days (or longer in some states)
after you receive it; (b) 45 days after the date you sign the application for
the policy; or (c) 10 days after we mail or deliver a notice of withdrawal
right. During the Right to Return Policy Period, net premiums will be kept in
the general account of the Company and will earn interest at an annual rate of
4.5%. See "Right to Examine a Policy -- Right to Return Policy Period", page 29.
Grace Period and Lapse
Your policy will remain in effect as long as:
(1) it has a Cash Value greater than zero; or
(2) during the first three policy years if on each monthly anniversary
the sum of the premiums paid minus the sum of partial surrenders (excluding
related fees) and any Outstanding Debt, is greater than or equal to the
Minimum Monthly Premium for the period of time the policy has been in effect.
If you increase the Specified Amount during the first three policy years,
the Minimum Monthly Premium will be increased and you must continue paying the
Minimum Monthly Premium for the remainder of the first three policy years.
If the policy is about to terminate (or lapse), we will give you notice that
you must pay additional premiums. That notice will tell you what the minimum
amount you must pay is if the policy is to remain in effect. It will also tell
you the date by which we must receive that amount (this period is called the
"grace period").
You must understand that after the first three policy years, the policy can
lapse even if the scheduled premiums are made.
11
Tax Treatment of Increases in Fund Value
The federal income tax laws generally tie the taxation of Fund Values to
your receipt of those Fund Values. This policy is currently subject to the same
federal income tax treatment as fixed life insurance. Certain policy loans may
be taxable. You can find information on the tax treatment of the policy under
"Federal Income Tax Considerations," on page 52.
Tax Treatment of Death Benefit
Generally, the death benefit will be fully excludable from the gross income
of the beneficiary under the Internal Revenue Code. Thus the death benefit
received by the beneficiary at the death of the last surviving insured will not
be subject to federal income taxes when received by the beneficiary. Also, a
death benefit paid by this policy is currently subject to federal income tax
treatment as a death benefit paid by a fixed life insurance policy. See
"Federal Income Tax Considerations," page 52.
Riders
Additional optional insurance benefits may be added to the policy by an
addendum called a rider. As applicable, a charge is deducted monthly from the
Fund Value for each optional benefit added to your policy. There are two riders
available with this policy:
. Four Year Term Insurance Rider
. Waiver of Monthly Deduction Rider
Contacting the Company
All written requests, notices, and forms required by the policies, and any
questions or inquiries should be directed to the Company Operations Center at 1
MONY Plaza, Syracuse, New York 13202.
12
Understanding the Policy
The following chart may help you to understand how the policy works.
[FLOW CHART]
13
INFORMATION ABOUT THE COMPANY
AND MONY VARIABLE ACCOUNT L
MONY Life Insurance Company
MONY Life Insurance Company issues the policy. In this prospectus MONY Life
Insurance Company is called the "Company". The Company is a stock life
insurance company organized in the State of New York. The Company is currently
licensed to sell life insurance and annuities in all 50 states of the United
States, the District of Columbia, the U.S. Virgin Islands, and Puerto Rico.
The principal office of the Company is located at 1740 Broadway, New York,
New York 10019. The Company was founded in 1842 as The Mutual Life Insurance
Company of New York. In 1998, The Mutual Life Insurance Company of New York
converted to a stock company through demutualization and was renamed MONY Life
Insurance Company. The demutualization does not have any material effect on the
Company, MONY Variable Account L, or the policies.
On August 16, 1999, the rating assigned to the Company by A.M. Best Company,
Inc., an independent insurance company rating organization, was upgraded to A
(Excellent). This rating is based upon an analysis of financial condition and
operating performance. The A.M. Best rating of the Company should be considered
only as bearing on the ability of the Company to meet its obligations under the
policies.
MONY Securities Corporation, a wholly-owned subsidiary of the Company, is
the principal underwriter for the policies.
MONY Variable Account L
MONY Variable Account L is a separate investment account of the Company.
Presently, only premium payments and fund values of flexible premium variable
life insurance policies are permitted to be allocated to MONY Variable Account
L. The assets in MONY Variable Account L are kept separate from the general
account assets and other separate accounts of the Company.
The Company owns the assets in MONY Variable Account L. The Company is
required to keep assets in MONY Variable Account L that equal the total market
value of the policy liabilities funded by MONY Variable Account L. Realized or
unrealized income gains or losses of MONY Variable Account L are credited or
charged against MONY Variable Account L assets without regard to the other
income, gains or losses of the Company. Reserves and other liabilities under
the policies are assets of MONY Variable Account L. MONY Variable Account L
assets are not chargeable with liabilities of the Company's other businesses.
Fund Values of the policy during the Right to Return Period and Fund Values
allocated to the Guaranteed Interest Account are held in the Company's general
account. The Company's general account assets are subject to the liabilities
from the businesses the Company conducts. In addition, the Company may transfer
to its general account any assets that exceed anticipated obligations of MONY
Variable Account L. All obligations of the Company under the policy are general
corporate obligations of the Company. The Company may accumulate in MONY
Variable Account L proceeds from various policy charges and investment results
applicable to those assets.
MONY Variable Account L was authorized by the Board of Directors of the
Company and established under New York law on November 28, 1990. MONY Variable
Account L is registered with the SEC as a unit investment trust. The SEC does
not supervise the administration or investment practices or policies of MONY
Variable Account L.
MONY Variable Account L is divided into subdivisions called subaccounts.
Each subaccount invests exclusively in shares of a designated portfolio of the
Funds. For example, the Long Term Bond Subaccount
14
invests solely in shares of the MONY Series Fund, Inc. Long Term Bond
Portfolio. These portfolios serve only as the underlying investment for
variable annuity and variable life insurance contracts issued through separate
accounts of the Company or other life insurance companies. The portfolios may
also be available to certain pension accounts. The portfolios are not available
directly to individual investors. In the future, the Company may establish
additional subaccounts within MONY Variable Account L. Future subaccounts may
invest in other portfolios of the Funds or in other securities. Not all
subaccounts are available to you.
The following table lists the subaccounts of MONY Variable Account L that
are available to you, their respective investment objectives, and which Fund
portfolio shares are purchased:
Subaccount and Designated Portfolio Investment Objective
- -----------------------------------------------------------------------------------------------------------
Alger American Balanced Subaccount Seeks current income and long-term capital
appreciation. The portfolio focuses on stocks of
This subaccount purchases shares of The Alger companies with growth potential and fixed income
American Fund Alger American Balanced securities, with emphasis on income-producing
Portfolio. securities which appear to have some potential for
capital appreciation. Under normal circumstances,
the portfolio invests in common stocks and fixed-
income securities, which include commercial paper
and bonds rated within the 4 highest rating
categories by an established rating agency or if not
rated, which are determined by the Manager to be
of comparable quality. Ordinarily, at least 25% of
the Portfolio's net assets are invested in fixed-
income securities.
- -----------------------------------------------------------------------------------------------------------
Alger American MidCap Growth Subaccount Seeks long-term capital appreciation. The portfolio
focuses on midsize companies with promising
This subaccount purchases shares of The Alger growth potential. Under normal circumstances, the
American Fund Alger American MidCap Growth portfolio invests primarily in the equity securities of
Portfolio. companies having a market capitalization within the
range of companies in the S&P MidCap 400(TM)
Index.
- -----------------------------------------------------------------------------------------------------------
Enterprise Equity Income Subaccount Invests in a combination of growth and income.
Seeks to achieve an above average and consistent
This subaccount purchases shares of the Enterprise total return, primarily from investments in dividend
Accumulation Trust Equity Income Portfolio. paying U.S. common stocks.
- -----------------------------------------------------------------------------------------------------------
Enterprise Global Socially Responsive Seeks total return primarily from investments in
Subaccount common stocks of companies that the portfolio
manager believes are socially responsive and that
This subaccount purchases shares of the Enterprise are located in countries that are included in the
Accumulation Trust Global Socially Responsive MSCI World Index.
Portfolio.
- -----------------------------------------------------------------------------------------------------------
Enterprise Growth Subaccount Seeks capital appreciation, primarily from
investments in U.S. common stocks of large
This subaccount purchases shares of the Enterprise capitalization companies. Pursues goal by investing
Accumulation Trust Growth Portfolio. in companies with long-term earnings potential, but
which are currently selling at a discount to their
estimated long-term value.
15
Subaccount and Designated Portfolio Investment Objective
- ---------------------------------------------------------------------------------------------------------
Enterprise Growth and Income Subaccount Seeks total return through capital appreciation with
income as a secondary consideration by investing in
This subaccount purchases shares of the Enterprise a broadly diversified group of U.S. common stocks
Accumulation Trust Growth and Income Portfolio. of large capitalization companies.
- ---------------------------------------------------------------------------------------------------------
Enterprise Managed Subaccount Seeks growth of capital over time by investing in a
portfolio consisting of common stocks, bonds and
This subaccount purchases shares of the Enterprise cash equivalents, the percentages of which vary
Accumulation Trust Managed Portfolio. over time based on the investment manager's
assessment of economic and market trends and its
perception of the relative investment values
available from such types of securities at any given
time.
- ---------------------------------------------------------------------------------------------------------
Enterprise Multi-Cap Growth Subaccount Seeks long-term capital appreciation by primarily
investing in growth stocks. Companies will tend to
This subaccount purchases shares of the Enterprise fall into one of two categories: companies that offer
Accumulation Trust Multi-Cap Growth Portfolio. goods or services to a rapidly expanding
marketplace or companies experiencing a major
change that is expected to produce advantageous
results.
- ---------------------------------------------------------------------------------------------------------
Enterprise Small Company Growth Subaccount Seeks capital appreciation by investing primarily in
common stocks of small capitalization companies
This subaccount purchases shares of the Enterprise believed by the portfolio manager to have an
Accumulation Trust Small Company Growth outlook for strong earnings growth and potential for
Portfolio. significant capital appreciation.
- ---------------------------------------------------------------------------------------------------------
Enterprise Small Company Value Subaccount Seeks maximum capital appreciation by investing
primarily in common stocks of small capitalization
This subaccount purchases shares of the Enterprise companies that the portfolio manager believes are
Accumulation Trust Small Company Value undervalued -- that is the stock's market price does
Portfolio. not fully reflect the company's value.
- ---------------------------------------------------------------------------------------------------------
Enterprise Total Return Subaccount Seeks total return primarily from investments in a
diversified portfolio of fixed income instruments of
This subaccount purchases shares of the Enterprise varying maturities.
Accumulation Trust Total Return Portfolio.
- ---------------------------------------------------------------------------------------------------------
INVESCO VIF -- Financial Services Subaccount Seeks to provide capital growth by investing
primarily in equity securities of companies involved
This subaccount purchases shares of the INVESCO in the financial services sector.
Variable Investment Funds, Inc. INVESCO VIF --
Financial Services Fund.
- ---------------------------------------------------------------------------------------------------------
INVESCO VIF -- Health Sciences Subaccount Seeks to provide capital growth by investing
primarily in equity securities of companies that
This subaccount purchases shares of the INVESCO develop, produce or distribute products or services
Variable Investment Funds, Inc. INVESCO VIF -- related to health care.
Health Sciences Fund.
16
Subaccount and Designated Portfolio Investment Objective
- --------------------------------------------------------------------------------------------------------
INVESCO VIF -- Telecommunications Seeks to provide capital growth and current income
Subaccount by investing primarily in the equity securities of
companies involved in the design, development,
This subaccount purchases shares of the INVESCO manufacture, distribution, or sale of
Variable Investment Funds, Inc. INVESCO VIF -- communications services and equipment, and
Telecommunications Fund. companies that are involved in supplying equipment
or services to such companies. Will invest primarily
in companies located in at least three different
countries, although U.S. issuers will often dominate
the portfolio.
- --------------------------------------------------------------------------------------------------------
Janus Aspen Series Capital Appreciation Seeks long-term growth of capital. It pursues its
Subaccount objective by investing primarily in common stocks
selected for their growth potential. The portfolio
This subaccount purchases shares of Janus Aspen may invest in companies of any size, from larger,
Series Capital Appreciation Portfolio. well-established companies to smaller, emerging
growth companies.
- --------------------------------------------------------------------------------------------------------
Janus Aspen Series Flexible Income Subacco-unt Seeks to obtain maximum total return, consistent
with preservation of capital. It pursues its objective
This subaccount purchases shares of the Janus by investing primarily in a wide variety of income-
Aspen Series Flexible Income Portfolio. producing securities such as corporate bonds and
notes, government securities and preferred stock.
As a fundamental policy, the portfolio will invest at
least 80% of its assets in income-producing
securities. The portfolio may own an unlimited
amount of high-yield/high-risk bonds.
- --------------------------------------------------------------------------------------------------------
Janus Aspen Series International Growth Seeks long-term growth of capital. It pursues its
Subaccount objective by investing at least 65% of its total assets
in securities of issuers from at least five different
This subaccount purchases shares of the Janus countries, excluding the United States. Although the
Aspen Series International Growth Portfolio. portfolio intends to invest substantially all of its
assets in issuers located outside the United States it
may at times invest in U.S. issuers and it may at
times invest all of its assets in fewer than five
countries, or even a single country.
- --------------------------------------------------------------------------------------------------------
Lord Abbett Bond-Debenture Subaccount Investment Objective and Strategy: seeks high
current income and the opportunity for capital
This subaccount purchases shares of the Lord appreciation to produce a high total return. It
Abbett Series Fund Bond-Debenture Portfolio. pursues its objective by investing in high yield and
investment grade debt securities, securities
convertible into common stock and preferred
stocks. The portfolio invests at least 65% of its total
assets in fixed income securities of various types.
At least 20% of the portfolio's assets must be
invested in any combination of investment grade
securities, U.S. Government securities and cash
equivalents.
- --------------------------------------------------------------------------------------------------------
17
Subaccount and Designated Portfolio Investment Objective
- ------------------------------------------------------------------------------------------------------------
Lord Abbett Growth and Income Subaccount Investment Objective and Strategy: seeks long-term
growth of capital and income without excessive
This subaccount purchases shares of the Lord fluctuations in market value. It pursues its objective
Abbett Series Fund Growth and Income Portfolio. by investing at least 65% of its total assets in large,
seasoned, U.S. and multinational companies.
- ------------------------------------------------------------------------------------------------------------
Lord Abbett Mid-Cap Value Subaccount Investment Objective and Strategy: seeks capital
appreciation. It pursues its objective by investing at
This subaccount purchases shares of the Lord least 65% of its total assets in equity securities of
Abbett Series Fund Mid-Cap Value Portfolio. mid-sized companies, with market capitalizations of
roughly $500 million to $10 billion.
- ------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Subaccount Seeks long-term growth of capital by investing at
least 65% of its total assets in companies with
This subaccount purchases shares of the MFS(R) medium market capitalization which are defined as
Variable Insurance Trust/SM/ MFS Mid Cap Growth companies with market capitalizations equaling or
Series. exceeding $250 million but not exceeding the top of
the Russell Midcap(TM) Growth Index range at the
time of purchase by the portfolio.
- ------------------------------------------------------------------------------------------------------------
MFS New Discovery Subaccount Seeks capital appreciation by investing at least 65%
of its total assets in equity securities of emerging
This subaccount purchases shares of the MFS(R) growth companies. Emerging growth companies are
Variable Insurance Trust/SM/ MFS New Discovery companies that are either: early in their life cycle
Series. but which have the potential to become major
enterprises or major enterprises whose rates of
earnings growth are expected to accelerate because
of special factors, such as rejuvenated management,
new products, changes in consumer demand, or
basic changes in the economic environment.
- ------------------------------------------------------------------------------------------------------------
MFS Total Return Subaccount Seeks mainly to provide above-average income
consistent with the prudent employment of capital
This subaccount purchases shares of the MFS(R) and secondarily to provide a reasonable opportunity
Variable Insurance Trust/SM/ MFS Total Return for growth of capital and income. It pursues its
Series. objective by investing at least 40%, but not more
than 75%, of its net assets in common stocks and
related securities and at least 25% of its net assets in
non-convertible fixed income securities.
- ------------------------------------------------------------------------------------------------------------
MFS Utilities Subaccount Seeks capital growth and current income by
investing at least 65% of its total assets in equity
This subaccount purchases shares of the MFS(R) and debt securities of domestic and foreign
Variable Insurance Trust/SM/ MFS Utilities Series. companies (including emerging markets) in the
utilities industry.
- ------------------------------------------------------------------------------------------------------------
MONY Government Securities Subaccount Seeks to maximize income and capital appreciation
by investing in bonds, notes and other obligations
This subaccount purchases shares of the MONY either issued or guaranteed by the U.S.
Series Fund, Inc. Government Securities Portfolio. Government, its agencies or instrumentalities,
together having a weighted average maturity of
between 4 to 8 year.
- ------------------------------------------------------------------------------------------------------------
18
Subaccount and Designated
Portfolio Investment Objective
- --------------------------------------------------------------------------------
MONY Long Term Bond Seeks to maximize income and capital appreciation
Subaccount over the longer term by investing in highly-rated
fixed income securities issued by a diverse mix of
This subaccount purchases corporations, the U.S. Government and its agencies
shares of the MONYSeries or instrumentalities, as well as mortgage-backed
Fund, Inc. Long Term Bond and asset-backed securities together having a dollar-
Portfolio. weighted average maturity of more than 8 years.
- --------------------------------------------------------------------------------
MONY Money Market Seeks to maximize current income consistent with
Subaccount preservation of capital and maintenance of liquidity
by investing primarily in high quality, short-term
This subaccount purchases money market instruments.
shares of the MONYSeries
Fund, Inc. Money Market
Portfolio.
- --------------------------------------------------------------------------------
Morgan Stanley Universal Seeks long-term capital appreciation by investing
InstitutionalEmerging primarily in growth-oriented equity securities of
Markets Equity Subaccount issuers in emerging market countries.
This subaccount purchases
shares of The
UniversalInstitutional
Funds, Inc. Emerging
Markets EquityPortfolio.
- --------------------------------------------------------------------------------
Morgan Stanley Universal Seeks long-term capital appreciation by investing
Institutional GlobalValue primarily in equity securities of issuers throughout
Equity Subaccount the world, including U.S. issuers.
This subaccount purchases
shares of The
UniversalInstitutional
Funds, Inc. Global Value
EquityPortfolio.
- --------------------------------------------------------------------------------
Morgan Stanley Universal
Institutional U.S.
RealEstate Subaccount
This subaccount purchases Seeks to provide above average current income and
shares of The long-term capital appreciation by investing
UniversalInstitutional primarily in equity securities of companies in the
Funds, Inc. U. S. Real U.S. real estate industry, including real estate
Estate Portfolio. investment trusts ("REITs").
- --------------------------------------------------------------------------------
PBHG Mid-Cap Value Seeks to provide above-average total return over a 3
Subaccount to 5 year market cycle by primarily investing in
value common stocks of companies with market
This subaccount purchases capitalizations within the range of the S&P
shares of the MidCap 400(TM) Index.
PBHGInsurance Series Fund
PBHG Mid-Cap
ValuePortfolio.
- --------------------------------------------------------------------------------
PBHG Select Value Seeks to provide long-term growth of capital and
Subaccount income by primarily investing in value common
stocks of no more than 30 companies with large
This subaccount purchases market capitalizations. Current income is a
shares of the secondary objective.
PBHGInsurance Series Fund
PBHG Select
ValuePortfolio.
- --------------------------------------------------------------------------------
PIMCO Global Bond Seeks to maximize total return, consistent with
Subaccount preservation of capital, by investing primarily in
Fixed Income Instruments of issuers located in at
This subaccount purchases least three countries (one of which may be the
shares of the United States).
PIMCOVariable Insurance
Trust Global Bond
Portfolio.
- --------------------------------------------------------------------------------
19
Subaccount and Designated Portfolio Investment Objective
- ----------------------------------------------------------------------------
PIMCO Real Return Bond Subaccount Seeks to maximize real
return, consistent
This subaccount purchases shares of the withpreservation of real
PIMCOVariable Insurance Trust Real Return capital, by investing
BondPortfolio. primarilyin
inflation-indexed bonds
of varying
maturitiesissued by the
U.S. and non-U.S.
governments,
theiragencies or
government-sponsored
enterprises
andcorporations.
- ----------------------------------------------------------------------------
PIMCO StocksPLUS Growth and IncomeSubaccount Seeks total return which
exceeds the total return
This subaccount purchases shares of the ofthe S&P 500 by
PIMCOVariable Insurance Trust StocksPLUS Growth investing primarily in
andIncome Portfolio. S&P 500derivatives,
backed by a portfolio of
Fixed IncomeInstruments.
- ----------------------------------------------------------------------------
The investment objectives of each portfolio (except for the Janus
portfolios) are fundamental and may not be changed without the approval of the
holders of a majority of the outstanding shares of the portfolio affected. For
each of the Funds a majority means the lesser of:
(1) 67% of the portfolio shares represented at a meeting at which more
than 50% of the outstanding portfolio shares are represented, or
(2) more than 50% of the outstanding portfolio shares.
The investment objectives of the Janus portfolios are non-fundamental and may
be changed by the Fund's Trustees without a shareholder vote.
THE FUNDS
Each available subaccount of MONY Variable Account L will invest only in the
shares of the Funds. The Funds (except for Janus Aspen Series Capital
Appreciation Portfolio) are diversified, open-end management investment
companies. The Janus Aspen Series Capital Appreciation Portfolio is a
non-diversified, open-end management investment company. The Funds are
registered with the SEC under the Investment Company Act of 1940. These
registrations do not involve supervision by the SEC of the management or
investment practices or policies of the Funds. The Funds, or any of them, may
withdraw from sale any or all the respective portfolios as allowed by
applicable law.
The Alger American Fund
Fred Alger Management, Inc., is each portfolio's investment adviser. The
investment adviser is responsible for managing each portfolio's assets
according to its goal and for placing orders with broker-dealers to purchase
and sell securities on behalf of each portfolio. The investment adviser fee for
each portfolio is shown in the table below.
Portfolio Investment Adviser Fee
- ----------------------------------------------------------------------------
Alger American Balanced Portfolio Annual rate of 0.75% of
the portfolio'saverage
daily net assets.
- ----------------------------------------------------------------------------
Alger American MidCap Growth Portfolio Annual rate of 0.80% of
the portfolio'saverage
daily net assets.
- ----------------------------------------------------------------------------
20
Enterprise Accumulation Trust
Enterprise Accumulation Trust has a number of portfolios. The shares of some
of the portfolios can be purchased by the subaccounts available to you.
Enterprise Capital Management, Inc. ("Enterprise Capital"), a wholly owned
subsidiary of MONY Life Insurance Company, is the investment adviser of
Enterprise Accumulation Trust. Enterprise Capital is responsible for the
overall management of the portfolios, including meeting the investment
objectives and policies of the portfolios. Enterprise Capital contracts with
sub-investment advisers to assist in managing the portfolios. For information
about the sub-advisers for each portfolio, see the Enterprise Accumulation
Trust prospectus included in this Prospectus Portfolio. Enterprise Accumulation
Trust pays an investment adviser fee to Enterprise Capital which in turn pays
the sub-investment advisers. Fees are deducted daily and paid to Enterprise
Capital on a monthly basis. The sub-investment adviser and daily investment
adviser fees and sub-investment adviser fees for each portfolio are shown in
the table below:
Portfolio and Sub-Investment Adviser Investment Adviser Fee Sub-Investment Adviser Fee
- -----------------------------------------------------------------------------------------------------
Equity Income Portfolio Annual rate of 0.75% of the Annual rate of 0.30% of the first
portfolio's average daily net $100 million, 0.25% of the next
1740 Advisers, Inc. (affiliate assets. $100 million, and 0.20% in
of MONY Life Insurance excess of $200 million of the
Company of America) is the portfolio's average daily net
sub-investment adviser. assets.
- -----------------------------------------------------------------------------------------------------
Global Socially Responsive Annual rate of 0.90% of the Annual rate of 0.45% of the first
Portfolio portfolio's average daily net $100 million; 0.40% of the next
assets. $100 million; and 0.30% in
Rockefeller & Co., Inc. is the excess of $200 million of the
sub-investment adviser. portfolio's average daily net
assets.
- -----------------------------------------------------------------------------------------------------
Growth Portfolio Annual rate of 0.75% of the Annual rate of 0.30% of the first
portfolio's average daily net $1 billion and 0.20% in excess of
Montag & Caldwell, Inc. is the assets. $1 billion of the portfolio's
sub-investment adviser. average daily net assets.
- -----------------------------------------------------------------------------------------------------
Growth and Income Portfolio Annual rate of 0.75% of the Annual rate of 0.30% of the first
portfolio's average daily net $100 million, 0.25% of the next
Retirement System Investors, assets. $100 million, and 0.20% in
Inc. is the sub-investment excess of $200 million of the
adviser. portfolio's average daily net
assets.
21
Portfolio and Sub-Investment Adviser Investment Adviser Fee Sub-Investment Adviser Fee
- ------------------------------------------------------------------------------------------------------------
Managed Portfolio Annual rate of 0.80% of the first Wellington Management
$400 million, 0.75% of the next Company's fee for the assets of the
Wellington Management $400 million and 0.70% in excess Portfolio it manages is an annual
Company, LLP and Sanford C. of $800 million of the portfolio's rate of 0.40% up to $500 million,
Bernstein & Co., LLC are the average daily net assets. 0.35% of the next $500 million,
sub-investment advisers. 0.30% of the next $1 billion, and
0.25% in excess of $2 billion of
the portfolio's average daily net
assets. Sanford C. Bernstein & Co.,
Inc.'s fee for the assets of the
Portfolio it manages is an annual
rate of 0.40% up to $10 million,
0.30% from $10 million to $50
million, 0.20% from $50 million to
$100 million, and 0.10% in excess
of $100 million of the portfolio's
average daily net assets.
- ------------------------------------------------------------------------------------------------------------
Multi-Cap Growth Portfolio Annual rate of 1.00% of the Annual rate of 0.40% of the
average daily net assets. average daily net assets.
Fred Alger Management Inc. is
the sub-investment adviser.
- ------------------------------------------------------------------------------------------------------------
Small Company Growth Annual rate of 1.00% of the Annual rate of 0.65% of the first
Portfolio portfolio's average daily net $50 million, 0.55% of the next
assets. $50 million and 0.45% in excess
William D. Witter, Inc. is the of $100 million of the portfolio's
sub-investment adviser. average daily net assets.
- ------------------------------------------------------------------------------------------------------------
Small Company Value Portfolio Annual rate of 0.80% of the first Annual rate of 0.40% of the first
$400 million, 0.75% of the next $1 billion and 0.30% in excess of
Gabelli Asset Management $400 million and 0.70% in excess $1 billion of the portfolio's
Company is the sub- of $800 million of the portfolio's average daily net assets.
investment adviser. average daily net assets.
- ------------------------------------------------------------------------------------------------------------
Total Return Portfolio Annual rate of 0.40% of the Annual rate of 0.25% of the
portfolio's average daily net portfolio's average daily net
Pactific Investment assets. assets.
Management Company, LLP is
the sub-investment adviser.
22
INVESCO Variable Investment Funds, Inc.
INVESCO Funds Group, Inc. is the investment adviser for each of the
portfolios. Together with affiliated companies, the investment adviser directs
all aspects of the management of the portfolios. The investment adviser fee for
each portfolio is shown in the table below.
Portfolio Investment Adviser Fee
- ---------------------------------------------------------------------------------------
INVESCO VIF -- Financial Services Fund Annual rate of 0.75% of the portfolio's average
daily net assets.
- ---------------------------------------------------------------------------------------
INVESCO VIF -- Health Sciences Fund Annual rate of 0.75% of the portfolio's average
daily net assets.
- ---------------------------------------------------------------------------------------
INVESCO VIF -- Telecommunications Fund Annual rate of 0.75% of the portfolio's average
daily net assets.
Janus Aspen Series
Janus Aspen Series has several portfolios. The shares of some of the
portfolios can be purchased by the subaccounts available to you. Janus Capital
is the investment adviser to each of the portfolios and is responsible for the
day-to-day management of the investment portfolios and other business affairs
of the portfolios. The daily investment adviser fee for each portfolio is shown
in the table below.
Portfolio Investment Adviser Fee
- -----------------------------------------------------------------------------------
Capital Appreciation Portfolio Annual rate of 0.65% of the portfolio's average
daily net assets.
- -----------------------------------------------------------------------------------
Flexible Income Portfolio Annual rate of 0.65% of the first $300 million; and
0.55% in excess of $300 million of the portfolio's
average daily net assets.
- -----------------------------------------------------------------------------------
International Growth Portfolio Annual rate of 0.65% of the portfolio's average
daily net assets.
Lord Abbett Series Fund
Lord Abbett Series Fund has several portfolios. The shares of the portfolios
listed in the table below can be purchased by the subaccounts available to you.
Lord, Abbett & Co. is the investment adviser to each of the portfolios and
manages the investments of each of the portfolios. The investment adviser fee
is shown in the table below.
Portfolio Investment Adviser Fee
- ----------------------------------------------------------------------------
Bond-Debenture Portfolio Annual rate of 0.50% of the portfolio's average
daily net assets.
- ----------------------------------------------------------------------------
Growth and Income Portfolio Annual rate of 0.50% of the portfolio's average
daily net assets.
- ----------------------------------------------------------------------------
Mid-Cap Value Portfolio Annual rate of 0.75% of the portfolio's average
daily net assets.
23
MFS(R) Variable Insurance Trust/SM/
MFS Variable Insurance Trust contains a number of portfolios. The shares of
some of the portfolios can be purchased by the subaccounts available through
our product. Massachusetts Financial Services Company is the investment adviser
to each of the portfolios and manages the investments of each of the
portfolios. The investment adviser fee is shown in the table below.
Portfolio Investment Adviser Fee
--------------------------------------------------------------------------
MFS Mid Cap Growth Series Annual rate of 0.75% of the portfolio's average
daily net assets.
--------------------------------------------------------------------------
MFS New Discovery Series Annual rate of 0.90% of the portfolio's average
daily net assets.
--------------------------------------------------------------------------
MFS Total Return Series Annual rate of 0.75% of the portfolio's average
daily net assets.
--------------------------------------------------------------------------
MFS Utilities Series Annual rate of 0.75% of the portfolio's average
daily net assets.
MONY Series Fund, Inc.
MONY Series Fund, Inc. has a number of portfolios. The shares of some of the
portfolios can be purchased by the subaccounts available to you. Each of the
portfolios has different investment objectives and policies. The Company is a
registered investment adviser under the Investment Advisers Act of 1940. The
Company, as investment adviser, currently pays the compensation of the Fund's
directors, officers, and employees who are affiliated in some way with the
Company. MONY Series Fund, Inc. pays for all other expenses including, for
example, the calculation of the net asset value of the portfolios. To carry out
its duties as an investment adviser, the Company has entered into a Services
Agreement with MONY to provide personnel, equipment, facilities and other
services. As the investment adviser to MONY Series Fund, Inc., the Company
receives a daily investment adviser fee for each portfolio (see chart below).
Fees are deducted daily and paid to the Company monthly.
The following table describes the portfolios available and the investment
advisory fees:
Portfolio Investment Adviser Fee
- ------------------------------------------------------------------------------------
Government Securities Portfolio Annual rate of 0.50% of the first $400 million,
0.35% of the next $400 million, and 0.30% in
excess of $800 million of the portfolio's aggregate
average daily net assets.
- ------------------------------------------------------------------------------------
Long Term Bond Portfolio Annual rate of 0.50% of the first $400 million,
0.35% of the next $400 million, and 0.30% in
excess of $800 million of the portfolio's aggregate
average daily net assets.
- ------------------------------------------------------------------------------------
Money Market Portfolio Annual rate of 0.40% of the first $400 million,
0.35% of the next $400 million, and 0.30% of assets
in excess of $800 million of the portfolio's
aggregate average daily net assets.
24
PBHG Insurance Series Fund
PBHG Insurance Series Fund has a number of portfolios. The shares of some of
the portfolios can be purchased by the subaccounts available to you. Pilgrim
Baxter & Associates, Ltd. is the investment adviser for each of the portfolios.
Pilgrim Baxter Value Investors, Inc., a wholly-owned subsidiary of Pilgrim
Baxter & Associates, Ltd., is the sub-investment adviser for the Mid-Cap and
Select Value Portfolios. The investment adviser fees and sub-investment adviser
fees for each portfolio are shown in the table below. The sub-investment
adviser fee for each portfolio is paid by Pilgrim Baxter & Associates, Ltd. and
not by the portfolios.
Portfolio and Investment
Sub-Adviser Investment Adviser Fee Sub-Investment Adviser Fee
- -------------------------------------------------------------------------------
PBHG Mid-Cap Annual rate of 0.85% of Annual rate of 0.50% of
ValuePortfolio theportfolio's average theportfolio's average
daily netassets. daily netassets.
Pilgrim Baxter Value
Investors,Inc. is the
sub-investment adviser.
- -------------------------------------------------------------------------------
PBHG Select Value Annual rate of 0.65% of Annual rate of 0.40% of
Portfolio theportfolio's average theportfolio's average
daily netassets. daily netassets.
Pilgrim Baxter Value
Investors,Inc. is the
sub-investment adviser.
PIMCO Variable Insurance Trust
PIMCO Variable Insurance Trust has a number of portfolios. The shares of
some of the portfolios can be purchased by the subaccounts available to you.
Pacific Investment Management Company LLC is the investment adviser for the
portfolios and is responsible for managing the investment activities of the
portfolios and the portfolios' business affairs and other administrative
matters. The investment adviser fee for each portfolio is shown in the table
below.
Portfolio Investment Adviser Fee
- -----------------------------------------------------------------------------
Global Bond Portfolio Annual rate of 0.25% of the portfolio's average
dailynet assets.
- -----------------------------------------------------------------------------
Real Return Bond Portfolio Annual rate of 0.25% of the portfolio's average
dailynet assets.
- -----------------------------------------------------------------------------
StocksPLUS Growth and Annual rate of 0.40% of the portfolio's average
Income Portfolio dailynet assets.
25
The Universal Institutional Funds, Inc.
Morgan Stanley Asset Management* is the investment adviser to each of the
portfolios and manages the investments of each of the portfolios. The
investment adviser fee is shown in the table below.
Portfolio Investment Adviser Fee
- ----------------------------------------------------------------------------
Emerging Markets Equity Annual rate of 1.25% of the first $500
Portfolio million;1.20% from $500 million to $1 billion;
and 1.15% inexcess of $1 billion of the
portfolio's average dailynet assets.
- ----------------------------------------------------------------------------
Global Value Equity Annual rate of 0.80% of the first $500
Portfolio million;0.75% from $500 million to $1 billion;
and 0.70% inexcess of $1 billion of the
portfolio's average dailynet assets.
- ----------------------------------------------------------------------------
U. S. Real Estate Annual rate of 0.80% of the first $500
Portfolio million;0.75% from $500 million to $1 billion;
and 0.70% inexcess of $1 billion of the
portfolio's average dailynet assets.
* Morgan Stanley Asset Management Inc. changed its name to Morgan Stanley
Investment Management Inc. but continues to do business in certain instances
using the name Morgan Stanley Asset Management.
Purchase of Portfolio Shares by MONY Variable Account L
The Company purchases shares of each portfolio for the corresponding
sub-account at net asset value, i.e. without a sales load. Generally, all
dividends and capital gains distributions received from a portfolio are
automatically reinvested in the portfolio at net asset value. The Company, on
behalf of MONY Variable Account L, may elect not to reinvest dividends and
capital gains distributions. The Company redeems Fund shares at net asset value
to make payments under the Policies.
Fund shares are offered only to insurance company separate accounts. The
insurance companies may or may not be affiliated with the Company or with each
other. This is called "shared funding." Shares may also be sold to separate
accounts to serve as the underlying investments for variable life insurance
policies, variable annuity policies and qualified plans. This is called "mixed
funding." Currently, the Company does not foresee any disadvantages to policy
owners due to mixed or shared funding. However, differences in tax treatment or
other considerations may at some time create conflict of interests between
owners of various contracts. The Company and the Boards of Directors of the
Funds, and any other insurance companies that participate in the Funds are
required to monitor events to identify material conflicts. If there is a
conflict because of mixed or shared funding, the Company might be required to
withdraw the investment of one or more of its separate accounts from the Funds.
This might force the Funds to sell securities at disadvantageous prices.
The investment objectives of each of the portfolios is substantially similar
to the investment objectives of the subaccount which purchases shares of that
portfolio. A summary of the investment objective of each of the subaccounts
available to you is found in the chart beginning on page 15. No portfolio can
assure you that its objective will be achieved. You will find more detailed
information in the prospectus of each Fund that you received with this
prospectus. The Funds' prospectuses include information on the risks of each
portfolio's investments and investment techniques.
The Funds' Prospectuses Accompany This Prospectus And Should Be
Read Carefully Before Investing
26
DETAILED INFORMATION ABOUT THE POLICY
The Fund Value in MONY Variable Account L and the Guaranteed Interest
Account provide many of the benefits of your policy. The information in this
section describes the benefits, features, charges, and other major provisions
of the policies and the extent to which those benefits depend upon the Fund
Value.
Application for a Policy
The policy design meets the needs of individuals by providing life insurance
coverage on two Insureds. A death benefit is payable when the last surviving
insured dies while the policy is in effect. A purchaser must complete an
application and personally deliver it to a licensed agent of the Company, who
is also a registered representative of MONY Securities Corporation ("MSC"). The
licensed agent submits the application to the Company. The policy may also be
sold through other broker-dealers authorized under the law and by MSC. A policy
can be issued on the lives of two insureds, each of whom is no older than age
85 with evidence of insurability that satisfies the Company. Each insured's age
is calculated as of his or her last birthday prior to the date of the policy.
The Company accepts the application subject to its underwriting rules, and may
request additional information or reject an application.
The minimum Specified Amount you may apply for is $100,000. Subsequent to
issue, the minimum Specified Amount is also $100,000. However, the Company
reserves the right to revise its rules at any time to require a different
minimum Specified Amount at issue for subsequently issued policies.
Each policy is issued with a policy date. The policy date is used to
determine the policy months and years, and policy monthly, quarterly,
semi-annual and annual anniversaries. The policy date is stated on page 1 of
the policy. The policy date will normally be the later of (1) the date that
delivery of the policy is authorized by the Company ("Policy Release Date"), or
(2) the policy date requested in the application. No premiums may be paid with
the application except under the temporary insurance procedures defined below.
Temporary Insurance Coverage
If you want insurance coverage before the Policy Release Date, and are more
than 15 days old and not more than 70 years old, you may be eligible for a
temporary insurance agreement. You must complete an application for the policy
and give it to the Company's licensed agent. The application contains a number
of questions about your health. Your eligibility for temporary coverage will
depend on your answers to those questions. In addition, you must complete and
sign the Temporary Insurance Agreement Form. You must also submit payment for
at least one Minimum Monthly Premium for the policy as applied for. Your
coverage under the Temporary Insurance Agreement starts on the date you sign
the form and pay the premium amount, or if later, the requested policy date.
See "Premiums -- Premium Flexibility," page 29.
Coverage under the Temporary Insurance Agreement ends on the earliest of:
. the Policy Release Date, if the policy is issued as applied for;
. the 15th day after the Policy Release Date or the date the policy takes
effect, if the policy is issued other than as applied for;
. no later than 90 days from the date the Temporary Insurance Agreement is
signed;
. the 45th day after the form is signed if the insureds have not finished
the last required medical exam;
. 5 days after the Company sends notice to you that it declines to issue any
policy; and
. the date you tell the Company that the policy will be refused.
27
If the date on which coverage under the Temporary Insurance Agreement ends
other than because the applicant has died or the policy applied for is issued
or refused; both insureds die during the period of temporary coverage, the
death benefit will be:
(1) The insurance coverage applied for (including any optional riders) up
to $500,000,
less
(2) The deductions from premium and the monthly deduction due prior to
the date of death of the last surviving insured.
Premiums paid for temporary insurance coverage are held in the Company's
general account until the Policy Release Date. Except as provided below,
interest is credited on the premium (less any deductions from premiums) held in
the Company's general account. The interest rate will be set by the Company,
but will not be less than 4.5 % per year. If the policy is issued and accepted,
these amounts will be applied to the policy. These premiums will be returned to
you (without interest) within 5 days after the earliest of:
(1) The date you tell the Company that the policy will be refused. Your
refusal must be (a) at or before the Policy Release Date, or (b) (if the
policy is authorized for delivery other than as applied for), on or before
the 15th day after the Policy Release Date; or
(2) The date on which coverage under the Temporary Insurance Agreement
ends other than because the applicant has died or the policy applied for is
issued or refused;
(3) The date the Company sends notice to you declining to issue any
policy on the insureds.
Initial Premium Payment
Once your application is approved and you are issued a policy, the balance
of the first scheduled premium payment is payable. The scheduled premium
payment is specified in your policy and must be paid in full when your policy
is delivered. Your policy is effective the later of (1) acceptance and payment
of the scheduled premium payment, or (2) the policy date requested in the
application. Any premium balance remitted by you earns interest until the Right
to Return Policy Period has ended. The policy premium credited with interest
equals amounts in the general account under the Temporary Insurance Agreement,
plus interest credited minus deductions from premiums. The monthly deduction
due prior to or on the Policy Release Date will be made. If you request a
policy date which is later than the Policy Release Date, your premium will be
held in the general account until the policy date. Premium held in the
Company's general account earns an interest rate set by the Company, but will
not be less than 4.5% per year. When the Right to Return Policy Period ends,
the premium, plus any interest credited by the Company, is allocated to the
subaccounts of MONY Variable Account L or the Guaranteed Interest Account
pursuant to your instructions. (See "Right to Examine a Policy -- Right to
Return Policy Period," on page 29.)
Policy Date
The Company may approve the backdating of a policy. The policy may backdated
for not more than 6 months (a shorter period is required in certain states)
prior to the date of the application. Backdating can be to your advantage if it
lowers the insured's issue age and results in lower cost of insurance rates. If
the policy is backdated, the initial scheduled premium payment will include
sufficient premium to cover the extra charges for the backdating period. Extra
charges equal the monthly deductions for the period that the policy date is
backdated.
Risk Classification
Each insured is assigned to an underwriting (risk) class. Risk classes are
used in calculating the cost of insurance and certain rider charges. In
assigning insureds to underwriting classes, the Company will normally use
28
the medical or paramedical underwriting method. This method may require a
medical examination of the proposed insured. The Company may use other forms of
underwriting when it is considered appropriate.
Right to Examine a Policy -- Right to Return Policy Period
The Right to Return Policy Period runs for the later of (a) 10 days (or
longer in certain states) after you receive the policy; (b) 45 days after the
application is signed; or (c) 10 days after we mail or deliver a notice of
withdrawal right. During this period, you may cancel the policy and receive a
refund of the full amount of the premium paid.
Premiums
The policy is a flexible premium policy. The policy provides considerable
flexibility, subject to the limitations described below, to pay premiums at
your discretion.
Premium Flexibility
The Company requires you to pay an amount equal to at least the Minimum
Monthly Premium to put the policy in effect. If you want to pay premiums less
often than monthly, the premium required to put the policy in effect is equal
to the Minimum Monthly Premium multiplied by 12 divided by the frequency of the
scheduled premium payments. This Minimum Monthly Premium will be based upon:
(1) The policy's Specified Amount,
(2) Any riders added to the policy, and
(3) Each insured's
(a) Age,
(b) Smoking status,
(c) Gender (unless unisex cost of insurance rates apply, see "Monthly
Deductions from Fund Value -- Cost of Insurance," page 49), and
(d) Underwriting class.
The Minimum Monthly Premium will be shown in the policy. Thereafter, subject
to the limitations described below, you may choose the amount and frequency of
premium payments to reflect your varying financial conditions.
The policy is guaranteed not to lapse during the first three policy years if
on each monthly anniversary the conditions previously described in "Summary of
the Policy" on page 1 are met. See also "Grace Period and Lapse," page 44.
Scheduled Premium Payments
When you apply for a policy, you determine a scheduled premium payment. This
scheduled premium payment provides for the payment of level premiums at fixed
intervals over a specified period of time. You will receive a premium reminder
notice for the scheduled premium payment amount on an annual, semiannual or
quarterly basis, at your option. The minimum scheduled premium payment equals
the Minimum Monthly Premium multiplied by 12 divided by the scheduled premium
payment frequency. Although reminder notices will be sent, you may not be
required to pay scheduled premium payments.
29
You must specify the subaccounts and/or Guaranteed Interest Account and the
percentage of scheduled premium payments to be allocated to those subaccounts
and/or Guaranteed Interest Account. If we do not receive a valid set of
allocation instructions from you, scheduled premiums will be allocated to the
Money Market Subaccount.
You may elect to make monthly premium payments by electronic funds transfer
program. Based on your policy date, up to two Minimum Monthly Premiums may be
required to be paid in cash before premiums may be paid by electronic funds
transfer to the Company. Paying premiums by electronic funds transfer requires
you to authorize the Company to withdraw premiums from your checking account
each month.
Payment of the scheduled premium payments will not guarantee that your
policy will remain in effect. (See "Grace Period and Lapse" in the Summary and
on page 44.)
Choice of Definition of Life Insurance
Your policy offers two death benefit qualification tests, which we use to
calculate the minimum death benefit. You choose one of these tests on your
application. Once you choose a test, you cannot change it.
In general, you should choose the Cash Value Accumulation Test if you do not
want to limit the amount of premiums you can pay into your policy. If you want
to pay a premium that increases the net amount at risk, however, you need to
provide us with satisfactory evidence of insurability before we can increase
the death benefit.
The minimum death benefit will generally be smaller under the Guideline
Premium/Cash Value Corridor Test than under the Cash Value Accumulation Test
resulting in a greater long-term Fund Value. The Guideline Premium/Cash Value
Corridor Test can result in lower cost of insurance deductions in later years
because the net amount at risk is lower.
Cash Value Accumulation Test
If you choose the Cash Value Accumulation Test, your policy's minimum death
benefit is the minimum death benefit for your policy to qualify as life
insurance under Section 7702 of the Internal Revenue Code.
This test determines what the death benefit should be in relation to your
policy's Fund Value. In general, as your policy's Fund Value increases, the
death benefit must also increase to ensure that your policy qualifies as life
insurance under the tax code.
Under the test, a policy's death benefit must be large enough to ensure that
its cash surrender value is never larger than the net single premium that's
needed to fund future benefits under the policy. The net single premium under
your policy varies according to the age, sex and risk class of the person
insured by your policy. It's calculated using the guaranteed mortality charges
and an interest rate that is the greater of 4% or the rate guaranteed in your
policy at the time of issue. If the Cash Value Accumulation Test is selected, a
table of death benefit percentages representing the net single premium will be
in your policy.
Guideline Premium/Cash Value Corridor Test
If you choose the Guideline Premium/Cash Value Corridor Test, we calculate
the minimum death benefit for your policy to qualify as life insurance (under
Section 7702 of the Internal Revenue Code) by multiplying your policy's Fund
Value by a death benefit percentage.
You'll find a table of death benefit percentages in Appendix A and in your
policy. The death benefit percentage is based on the age of the person insured
by the policy. It is 250% when the insured is age 40 or younger, and reduces as
the person gets older.
30
Under this test, the total premiums you pay less withdrawals cannot exceed
your policy's guideline premium limit. You'll find a more detailed discussion
of the guideline premium limit in "Federal Income Tax Considerations --
Definition of Life Insurance" on page 52.
Modified Endowment Contracts
The amount, frequency and period of time over which you pay premiums may
affect whether your policy will be classified as a modified endowment contract.
A modified endowment contract is a type of life insurance policy subject to
different tax treatment than that given to a conventional life insurance
policy. The difference in tax treatment occurs when you take certain pre-death
distributions from your policy. See "Federal Income Tax Considerations --
Modified Endowment Contracts," page 54.
Unscheduled Premium Payments
Generally, you may make premium payments at any time and in any amount.
However, if the premium payment you wish to make exceeds the Scheduled Premium
payments for the policy, the Company may reject or limit any unscheduled
premium payment that would result in an immediate increase in the death benefit
payable. An immediate increase would occur if the policy's death benefit
exceeds the Specified Amount for the policy. The policy's death benefit would
exceed the Specified Amount of the policy if your Fund Value multiplied by the
death benefit percentage determined in accordance with the federal income tax
law definition of life insurance exceeds the Specified Amount. See "Death
Benefits Under the Policy," page 32 and "Federal Income Tax Considerations --
Definition of Life Insurance," page 52. However, such a premium may be accepted
if you provide us with satisfactory evidence of insurability. If satisfactory
evidence of insurability is not received the payment or a part of it may be
returned. In addition, all or a part of a premium payment will be rejected and
returned to you if it would exceed the maximum premium limitations prescribed
by the federal income tax law definition of life insurance.
Payments you send to us will be treated as premium payments, and not as
repayment of Outstanding Debt, unless you request otherwise. If you request
that the payment be treated as a repayment of Outstanding Debt, any part of a
payment that exceeds the amount of Outstanding Debt will be treated as a
premium payment. Applicable taxes and sales charges are only deducted from any
payment that constitutes a premium payment.
Premium Payments Affect the Continuation of the Policy
If you skip or stop paying premiums, the policy will continue in effect
until the Cash Value can no longer cover (1) the monthly deductions from the
Fund Value for the policy, and (2) the charges for any optional insurance
benefits added by rider. See "Grace Period and Lapse." page 44.
Your policy is guaranteed to remain in effect as long as:
(a) The Cash Value is greater than zero, or
(b) During the first three policy years, the Minimum Monthly Premium
requirements are satisfied, and if you increase the Specified Amount during
the first three policy years the increased Minimum Monthly Premium
requirements are satisfied for the remainder of the first three policy years.
Generally, your policy remains in effect so long as your policy has Cash
Value. Charges that maintain your policy are deducted monthly from Fund Value.
The Cash Value of your policy is affected by,
(1) the investment experience of any amounts in the subaccounts of MONY
Variable Account L,
(2) the interest earned in the Guaranteed Interest Account, and
(3) the deduction from Fund Value of the various charges, costs, and
expenses imposed by the policy provisions.
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This in turn affects the length of time your policy remains in force without
the payment of additional premiums. Therefore, coverage will last as long as
the Cash Value of your policy is sufficient to pay these charges. See "Grace
Period and Lapse," page 44.
Allocation of Net Premiums
Net premiums may be allocated to any of the available subaccounts and to the
Guaranteed Interest Account. Allocations must be in whole percentages and no
allocation may be for less than 5% of a net premium. Allocation percentages
must sum to 100%.
You may change the allocation of net premiums at any time by submitting a
proper written request to the Company's home office at 1740 Broadway, New York,
New York, 10019. In addition, you may make changes in net premium allocation
instructions by telephone if a properly completed and signed telephone transfer
authorization form or a policy application with the telephone authorization
completed has been received by us at our Syracuse Operations Center at 1 MONY
Plaza, Syracuse, New York, 13202. The Company may stop making available the
ability to give net premium allocation instructions by telephone at any time,
but it will give you notice before doing so if we have received your telephone
transfer authorization form or a policy application with the telephone
authorization completed. See "Telephone Transfer Privileges," page 66. Whether
you give us instructions in writing or by telephone, the revised allocation
percentages will be effective within seven days from receipt of notification.
Unscheduled premium payments may be allocated either by percentage or by
dollar amount. If the allocation is expressed in dollar amounts, the 5% limit
on allocation percentages does not apply.
Death Benefits under the Policy
When your policy is issued, the initial amount of insurance ("Specified
Amount") is shown on the specification page of your policy. The minimum
Specified Amount is $100,000.
As long as the policy is in effect, the Company will, upon proof of death of
the surviving insured, pay death benefit proceeds to a named beneficiary. Death
benefit proceeds will consist of:
(1) The policy's death benefit, plus
(2) Any insurance proceeds provided by rider, less
(3) Any Outstanding Debt (and, if in the Grace Period, less any overdue
charges).
If the death benefit proceeds are not paid by the end of 30 days from the
date we receive proof of death of the last surviving insured, the Company will
pay interest on the proceeds. The interest will be at the rate specified by the
state in which the policy is delivered. Interest is payable from the date of
death to the date of payment.
Death Benefit Options
You may select one of two death benefit Options: Option 1 or Option 2.
Generally, you designate the death benefit option in your application. If no
option is designated, the Company assumes Option 2 has been selected. Subject
to certain restrictions, you can change the death benefit option selected. As
long as your policy is in effect, the death benefit under either option will
never be less than the Specified Amount of your policy.
Option 1 -- The death benefit equals the greater of:
(a) The Specified Amount, or
(b) Fund Value multiplied by a death benefit percentage.
The death benefit percentages vary according to the age of the younger
insured and will be at least equal to the percentage defined in the Internal
Revenue Code. The Internal Revenue Code addresses the definition of a
32
life insurance policy for tax purposes. See "Federal Income Tax Considerations
- -- Definition of Life Insurance," page 52. The death benefit percentage under
the Cash Value Accumulation Test is shown in the policy. The death benefit
percentage under the Guideline Premium/Cash Value Corridor Test is 250% for
insureds 40 or under, and it declines for older insureds. A table showing these
death benefit percentages is in Appendix A to this prospectus and in your
policy. If you seek to have favorable investment performance reflected in
increasing Fund Value, and not in increasing insurance coverage, you should
choose Option 1.
Option 2 -- The death benefit equals the greater of:
(a) The Specified Amount of the policy, plus the Fund Value, or
(b) The Fund Value multiplied by a death benefit percentage.
The Fund Value used in these calculations is determined as of the date of
the insured's death. The death benefit percentage is the same as that used for
Option 1 and is stated in Appendix A. The death benefit in Option 2 will always
vary as Fund Value varies. If you seek to have favorable investment performance
reflected in increased insurance coverage, you should choose Option 2.
The Fund Value used in these calculations is the value as of the date of the
surviving insured's death.
Examples of Options 1 and 2
The following examples demonstrate the determination of death benefits under
Options 1 and 2. The examples show three policies with the same Specified
Amount, but Fund Values that vary as shown. It is assumed that both insureds
are age 35, standard class, non-smoker at issue. It is also assumed that the
last surviving insured (also the youngest insured) is age 70 when he or she
dies and that there is no Outstanding Debt. The date of death is also assumed
to be on a monthly anniversary day.
Cash Value Accumulation Test
Policy 1 Policy 2 Policy 3
-------- -------- --------
Specified Amount.................................... $100,000 $100,000 $100,000
Fund Value on Date of Last Surviving Insured's Death $ 35,000 $ 60,000 $ 90,000
Death Benefit Percentage............................ 183.6% 183.6% 183.6%
Death Benefit under Option 1........................ $100,000 $110,160 $165,240
Death Benefit under Option 2........................ $135,000 $160,000 $190,000
Option 1, Policy 1: The death benefit equals $100,000 since the death benefit
is the greater of the Specified Amount ($100,000) or the
Fund Value multiplied by the death benefit percentage
($35,000 X 183.6% = $64,260).
Option 1, Policy 2 &
3: The death benefit is equal to the Fund Value multiplied by
the death benefit percentage since ($60,000 X 183.6% =
$110,160 for Policy 2; $90,000 X 183.6% = $165,240 for
Policy 3) is greater than the Specified Amount ($100,000).
Option 2, Policy 1: The death benefit equals $135,000 since the Specified
Amount plus the Fund Value ($100,000 + $35,000 = $135,000)
is greater than the Fund Value multiplied by the death
benefit percentage ($35,000 X 183.6% = $64,260).
Option 2, Policy 2: The death benefit equals the Specified Amount plus the
Fund Value ($100,000 + $60,000 = $160,000) since it is
greater than the Fund Value multiplied by the death
benefit percentage ($60,000 X 183.6% = $110,160).
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Option 2, Policy 3: The death benefit equals the Specified Amount plus the
Fund Value ($100,000 + $90,000 = $190,000) since it is
greater than the Fund Value multiplied by the death
benefit percentage ($90,000 X 183.6% = $165,240).
Guideline Premium/Cash Value Corridor Test
Policy 1 Policy 2 Policy 3
-------- -------- --------
Specified Amount.................................... $100,000 $100,000 $100,000
Fund Value on Date of Last Surviving Insured's Death $ 35,000 $ 60,000 $ 90,000
Death Benefit Percentage............................ 115% 115% 115%
Death Benefit under Option 1........................ $100,000 $100,000 $103,500
Death Benefit under Option 2........................ $135,000 $160,000 $190,000
Option 1, Policy 1 &
2: The death benefit equals $100,000 since the death benefit
is the greater of the Specified Amount ($100,000) or the
Fund Value multiplied by the death benefit percentage
($35,000 X 115% = $40,250 for Policy 1; $60,000 X 115% =
$69,000 for Policy 2).
Option 1, Policy 3: The death benefit is equal to the Fund Value multiplied by
the death benefit percentage since ($90,000 X 115% =
$103,500 for Policy 3) is greater than the Specified
Amount ($100,000).
Option 2, Policy 1: The death benefit equals $135,000 since the Specified
Amount plus the Fund Value ($100,000 + $35,000 = $135,000)
is greater than the Fund Value multiplied by the death
benefit percentage ($35,000 X 115% = $40,250).
Option 2, Policy 2: The death benefit equals the Specified Amount plus the
Fund Value ($100,000 + $60,000 = $160,000) since it is
greater than the Fund Value multiplied by the death
benefit percentage ($60,000 X 115% = $69,000).
Option 2, Policy 3: The death benefit equals the Specified Amount plus the
Fund Value ($100,000 + $90,000 = $190,000) since it is
greater than the Fund Value multiplied by the death
benefit percentage ($90,000 X 115% = $103,500).
The Company pays death benefit proceeds to a beneficiary in a lump sum or
under a payment plan offered under the policy. The policy should be consulted
for details.
Changes in Death Benefit Option
You may request that the death benefit option under your policy be changed
from Option 1 to Option 2, or Option 2 to Option 1. You may make a change by
sending a written request to the Company's administrative office. A change from
Option 2 to Option 1 is made without providing evidence of insurability. A
change from Option 1 to Option 2 will require that you provide satisfactory
evidence of insurability. The effective date of a change requested between
monthly anniversaries will be the next monthly anniversary day after the change
is accepted by the Company.
If you change from Option 1 to Option 2 your policy's Specified Amount is
reduced by the amount of the policy's Fund Value at the date of the change.
This maintains the death benefit payable under Option 2 at the amount that
would have been payable under Option 1 immediately prior to the change. The
total death benefit will not change immediately. The change to Option 2 will
affect the determination of the death benefit from that point on. As of the
date of the change, the Fund Value will be added to the new specified Amount.
The death benefit will then vary with the Fund Value. This change will not be
permitted if it would result in a new Specified Amount of less than $100,000.
34
If you change from Option 2 to Option 1, the Specified Amount of the policy
will be increased by the amount of the policy's Fund Value at the date of the
change. This maintains the death benefit payable under Option 1 at the amount
that would have been payable under Option 2 immediately prior to the change.
The total death benefit will not change immediately. The change to Option 1
will affect the determination of the death benefit from that point on. The
death benefit will equal the Specified Amount (or if higher, the Fund Value
multiplied by the death benefit percentage). The change to Option 1 will
generally reduce the death benefit payable in the future.
A change in the death benefit option may affect the monthly cost of
insurance charge since this charge varies with the net amount at risk.
Generally, the net amount at risk is the amount by which the death benefit
exceeds Fund Value. See "Monthly Deductions from Fund Value -- Cost of
Insurance," page 49. If the policy's death benefit is not based on the death
benefit percentage under Option 1 or 2, changing from Option 2 to Option 1 will
generally decrease the net amount at risk. Therefore, this change may decrease
the cost of insurance charges. Changing from Option 1 to Option 2 will
generally result in a net amount at risk that remains level. However, such a
change will result in an increase in the cost of insurance charges over time.
This results because the cost of insurance rates increase with the insured's
age.
Changes in Specified Amount
You may request an increase or decrease in the Specified Amount under your
policy subject to Company approval. A change in the Specified Amount may be
made at any time after the policy is issued. Increases in Specified Amount are
not permitted on or after the older insured's age 85. Increasing the Specified
Amount will generally increase the policy's death benefit. Decreasing the
Specified Amount will generally decrease the policy's death benefit. The amount
of change in the death benefit depends on (1) the death benefit option chosen,
and (2) whether the death benefit under the policy is being computed using the
death benefit percentage at the time of change. Changing the Specified Amount
could affect the subsequent level of policy values. For example, an increase in
Specified Amount may increase the net amount at risk, which will increase your
cost of insurance charges over time. Conversely, a decrease in Specified Amount
may decrease the net amount at risk, which may decrease your cost of insurance
over time.
To increase or decrease the Specified Amount, send a written application to
the Company's administrative office. It will become effective on the monthly
anniversary day on or next following the Company's acceptance of your request.
If you are not the insured, the Company may also require the consent of the
insured before accepting a request.
Increases
An increase of Specified Amount requires that additional, satisfactory
evidence of insurability be provided to the Company. A request for an increase
cannot be made after the policy anniversary on which the older insured attains
age 85.
When you request an increase in Specified Amount, a new "coverage segment"
is created for which cost of insurance and other charges are computed
separately. See "Charges and Deductions," page 47. In addition, the surrender
charge associated with your policy will increase. The surrender charge for the
increase is computed in a similar way as for the original Specified Amount. The
Minimum Monthly Premium will also be adjusted. The adjustment will be done
prospectively to reflect the increase. If the Specified Amount is increased
when a premium payment is received, the increase will be processed before the
premium payment is processed.
If an increase creates a new coverage segment of Specified Amount, Fund
Value after the increase will be allocated, (1) first to the original coverage
segment, and (2) second to each coverage segment in order of the increases.
35
Decreases
Any decrease in Specified Amount (whether requested by you or resulting from
a partial surrender or a death benefit option change) will be applied:
(1) To reduce the coverage segments of Specified Amount associated with
the most recent increases, then
(2) To the next most recent increases successively, and last
(3) To the original Specified Amount.
A decrease will not be permitted if the Specified Amount would fall below
$100,000.
The Minimum Monthly Premium will not be adjusted for the decrease in the
Specified Amount. If the Specified Amount is decreased when a premium payment
is received, the decrease will be processed before the premium payment is
processed. Rider coverages may also be affected by a decrease in Specified
Amount.
The Company reserves the right to reject a requested decrease. Decreases
will not be permitted if:
(1) Compliance with the guideline premium limitations under federal tax
law resulting from the decrease would result in immediate termination of
your policy, or
(2) To effect the decrease, payments to you would have to be made from
Fund Value for compliance with the guideline premium limitations, and the
amount of the payments would exceed the Cash Value of your policy.
If a requested change is not approved, we will send you a written notice of
our decision. See "Federal Income Tax Considerations -- Definition of Life
Insurance," page 52.
Other Optional Insurance Benefits
Subject to certain requirements, you may elect to add one or more of the
optional insurance benefits described below. Optional insurance benefits are
added when you apply for your policy. These other optional benefits are added
to your policy by an addendum called a rider. As applicable, a charge is
deducted monthly from the Fund Value for each optional benefit added to your
policy. See "Charges and Deductions," page 47. You can cancel these benefits at
any time. Certain restrictions may apply and are described in the applicable
rider. In addition, adding or canceling these benefits may have an effect on
your policy's status as a modified endowment contract. See "Federal Income Tax
Considerations -- Modified Endowment Contracts," page 54. An insurance agent
authorized to sell the policy can describe these extra benefits further.
Samples of the provisions are available from the Company upon written request.
From time to time we may make available riders other than those listed
below. Contact an insurance agent authorized to sell the policy for a complete
list of the riders available.
Four Year Term Insurance Rider
This benefit provides non-renewable, non-convertible term insurance. The
insurance is payable if the second death occurs within the first four policy
years. If the policy owner makes any changes to the Specified Amount, the
amount of this rider will be adjusted.
Waiver of Monthly Deduction Rider
This rider provides for the waiver of certain charges while the insured has
a covered disability and the policy is in effect. While the insured is
disabled, no deductions are made for (1) monthly administrative charges, (2)
per $1,000 Specified Amount charges, (3) cost of insurance charges, and rider
charges. During this period the
36
charges are waived and therefore not deducted from the Fund Value. The Minimum
Monthly Premium requirement does not change during the covered disability. It
remains fixed at the level at the beginning of the disability.
Option to Split Policy
This benefit provides that the policy may be split into two other individual
life insurance policies within the 6 month period following business
dissolution (if the insureds are employees of one organization at the time the
policy is issued). Evidence of insurability at the time the option is exercised
will not be required if as a result of a tax law change, but will be required
in all other instances. Certain conditions, as described in the policy, must be
met before this option can be exercised. This benefit is guaranteed by the
Guaranteed Death Benefit Rider. There is no charge for this benefit. This
benefit is not available in all states.
Benefits at Maturity
If one or both of the insureds is living on the maturity date, the Company
will pay to the policy owner, as an endowment benefit, the Cash Value of the
policy. Ordinarily, the Company pays within seven days of the policy
anniversary. Payments may be postponed in certain circumstances. See
"Payments," page 62. Premiums will not be accepted, nor will monthly deductions
be made, after the maturity date.
Policy Values
Fund Value
The Fund Value is the sum of the amounts under the policy held in each
subaccount of MONY Variable Account L and any Guaranteed Interest Account. It
also includes the amount set aside in the Company's Loan Account, and any
interest, to secure Outstanding Debt.
On each Business Day, the part of the Fund Value allocated to any particular
subaccount is adjusted to reflect the investment experience of that subaccount.
On each monthly anniversary day, the Fund Value also is adjusted to reflect
interest on the Guaranteed Interest Account and the Loan Account and the
assessment of the monthly deduction. See "Determination of Fund Value," below.
No minimum amount of Fund Value allocated to a particular subaccount is
guaranteed. You bear the risk for the investment experience of Fund Value
allocated to the subaccounts.
Cash Value
The Cash Value of the policy equals the Fund Value less any surrender charge
less any Outstanding Debt. Thus, the Fund Value exceeds your policy's Cash
Value by the amount of the surrender charge and any Outstanding Debt. Once the
surrender charge expires, the Cash Value equals the Fund Value less any
Outstanding Debt.
Determination of Fund Value
Although the death benefit under a policy can never be less than the
policy's Specified Amount, the Fund Value will vary. The Fund Value varies
depending on several factors:
. Payment of premiums.
. Amount held in the Loan Account to secure any Outstanding Debt.
. Partial surrenders.
. The charges assessed in connection with the policy.
37
. Investment experience of the subaccounts.
. Amounts credited to the Guaranteed Interest Account.
There is no guaranteed minimum Fund Value (except to the extent that you
have allocated net premium payments and cash values to the Guaranteed Interest
Account) and you bear the entire risk relating to the investment performance of
Fund Value allocated to the subaccounts.
The Company uses amounts allocated to the subaccounts to purchase shares of
the corresponding portfolios of the Funds. The values of the subaccounts
reflect the investment experience of the corresponding portfolio. The
investment experience reflects:
. The investment income.
. Realized and unrealized capital gains and losses.
. Expenses of a portfolio including investment adviser fees.
. Any dividends or distributions declared by a portfolio.
Any dividends or distributions from any portfolio of the Funds are
reinvested automatically in shares of the same portfolio. However, the Company,
on behalf of MONY Variable Account L, may elect otherwise. The subaccount value
will also reflect the mortality and expense risk charges the Company makes each
day to the Variable Account.
Amounts allocated to the subaccounts are measured in terms of units. Units
are a measure of value used for bookkeeping purposes. The value of amounts
invested in each subaccount is represented by the value of units credited to
the policy for that subaccount. (See "Calculating Unit Values for Each
Subaccount," on page 39.) On any day, the amount in a subaccount of MONY
Variable Account L is equal to the unit value times the number of units in that
subaccount credited to the policy. The units of each subaccount will have
different unit values.
Units of a subaccount are purchased (credited) whenever premiums or amounts
transferred (including transfers from the Loan Account) are allocated to that
subaccount. Units are redeemed (debited) to:
. Make partial surrenders.
. Make full surrenders.
. Transfer amounts from a subaccount (including transfers to the loan
account).
. Pay the death benefit when the last surviving insured dies.
. Pay monthly deductions from the policy's Fund Value.
. Pay policy transaction charges.
. Pay surrender charges.
The number of units purchased or redeemed is determined by dividing the
dollar amount of the transaction by the unit value of the affected subaccount,
computed after the close of business that day. The number of units changes only
as a result of policy transactions or charges. The number of units credited
will not change because of later changes in unit value.
Transactions are processed when a premium or an acceptable written or
telephone request is received at the Company's administrative office. If the
premium or request reaches the administrative office on a day that is not a
Business Day, or after the close of business on a Business Day (after 4:00
Eastern Time), the transaction date will be the next Business Day. All policy
transactions are performed as of a Business Day. If a transaction date or
monthly anniversary day occurs on a day other than a Business Day (e.g.,
Saturday), the calculations will be done on the next day that the New York
Stock Exchange is open for trading.
38
Calculating Unit Values for Each Subaccount
To determine the unit value of a subaccount on any Business Day, the Company
takes the prior Business Day's Unit Value and multiplies it by the Net
Investment Factor for the current Business Day. The Net Investment Factor is
used to measure the investment performance of a subaccount from one Business
Day to the next. The Net Investment factor for each subaccount equals:
(1) the net asset value per share of each Fund held in the subaccount at
the end of the current Business Day divided by
(2) the net asset value per share of each Fund held in the subaccount at
the end of the prior Business Day, minus
(3) the daily mortality and expense risk charge and any other applicable
charges adjusted for the number of days in the period.
The unit value of each subaccount on its first Business Day was set at $10.00.
39
Determining Fund Value
[FLOW CHART]
40
Transfer of Fund Value
You may transfer Fund Value among the subaccounts after the Right to Return
Policy Period by sending a proper written request to the Company's
administrative office. Transfers may be made by telephone if you have proper
authorization. See "Telephone Transfer Privileges," page 66. Currently, there
are no limitations on the number of transfers between subaccounts. There is
also no minimum amount required: (1) to make a transfer, or (2) to remain in
the subaccount after a transfer. You may not make a transfer if your policy is
in the grace period and a payment required to avoid lapse is not paid. See
"Grace Period and Lapse," page 44. No charges are currently imposed upon these
transfers. However, the Company reserves the right to assess a $25 transfer
charge in the future on policy transfers over 12 during any policy year, and to
discontinue telephone transfers.
After the Right to Return Policy Period, Fund Value may also be transferred
from the subaccounts to the Guaranteed Interest Account. Transfers from the
Guaranteed Interest Account to the subaccounts will only be permitted in the
policy month following a policy anniversary as described in "The Guaranteed
Interest Account," page 59.
Right to Exchange Policy
During the first 24 months following the policy date, you may exchange your
policy for a policy where the investment experience is guaranteed. To
accomplish this, the entire amount in the subaccounts of MONY Variable Account
L is transferred to the Guaranteed Interest Account. All future premiums are
allocated to the Guaranteed Interest Account. This serves as an exchange of
your policy for the equivalent of a last survivor flexible premium universal
life policy. See "The Guaranteed Interest Account," page 59. No charge is
imposed on the transfer when you exercise the exchange privilege.
Option to Obtain Paid-Up Insurance
You may change to guaranteed paid-up insurance on a policy anniversary. At
that time, the Specified Amount will be reduced to an amount that the Cash
Value will maintain in effect until the maturity date when applied as a net
single premium. However, the maximum amount of Cash Value applied will not be
greater than necessary to provide an amount at risk equal to the amount at risk
immediately before this option becomes effective. Any Cash Value in excess of
the amount applied will be refunded to you.
The net single premium rates will be based on: (a) the 1980 CSO mortality
tables Frasierized at the Insureds' gender and attained ages and classes of
risk on the later of the policy date and the most recent increase in coverage
under the policy; and (b) 4.5% interest. On and after the effective date, the
Cash Value of the paid-up coverage will equal the present value of future
guaranteed benefits based on the net single premium rates described above
without regard to any loans.
In order to obtain paid-up insurance, the Company must receive a written
request 30 days prior to the policy anniversary date on which it becomes
effective. The endorsement issued to reflect the change to paid-up insurance
will show the reduced Specified Amount and the guaranteed Cash Value on the
effective date and each policy anniversary thereafter.
Once the paid-up insurance option is effective the following conditions
apply:
(1) It may not be revoked.
(2) The Company will not accept any further premium.
(3) No further optional policy changes may be made.
(4) The policy may not be split.
(5) Any surrender charge, loan balance and loan interest which existed
immediately before the effective date will be set to zero.
41
(6) Any partial surrender will result in a recalculation of the Specified
Amount and Cash Value.
(7) Any additional benefits provided by rider will terminate.
(8) The death benefit will equal the reduced Specified Amount.
Policy Loans
You may borrow money from the Company at any time using your policy as
security for the loan. You take a loan by submitting a proper written request
to the Company's administrative office. You may take a loan any time your
policy has a positive Cash Value. The maximum amount you may borrow at any time
is 90% of the Cash Value of your policy. (If you request a loan on a monthly
anniversary day, the maximum loan is reduced by the monthly deduction due on
that day.) The Outstanding Debt is the cumulative amount of outstanding loans
and loan interest payable to the Company at any time.
Loan interest is payable in arrears on each policy anniversary at an annual
rate which varies by the number of years since your policy was issued. For the
first ten policy years, the loan rate is 5.25%. After the tenth policy
anniversary, the loan rate is 4.75%. Interest on the full amount of any
Outstanding Debt is due on the policy anniversary, until the Outstanding Debt
is repaid. If interest is not paid when due, it will be added to the amount of
the Outstanding Debt.
You may repay all or part of the Outstanding Debt at any time while your
policy is in effect. Only payments shown as loan or interest payments will be
treated as such. If a loan repayment is made which exceeds the Outstanding
Debt, the excess will be applied as a scheduled premium payment. The payment
will be subject to the rules on acceptance of premium payments.
When you take a loan, an amount equal to the loan is transferred out of the
subaccounts and the Guaranteed Interest Account into the Loan Account to secure
the loan. Within certain limits, you may specify the amount or the percentage
of the loan amount to be deducted from the subaccounts and the Guaranteed
Interest Account. The request for a loan will not be accepted if (1) you do not
specify the source of the transfer, or (2) if the transfer instructions are
incorrect. On each policy anniversary, an amount equal to the loan interest due
and unpaid for the policy year will be transferred to the loan account. The
transfer is made from the subaccounts and the Guaranteed Interest Account on a
proportional basis.
The Fund Value in the Loan Account in excess of the Outstanding Debt will be
allocated to the Subaccounts and/or the Guaranteed Interest Account in a manner
determined by us.
The Loan Account is part of the Company's general account. Amounts held in
the Loan Account are credited monthly with an annual rate of interest not less
than 4.5%
Loan repayments release funds from the Loan Account. Unless you request
otherwise, amounts released from the Loan Account will be transferred into the
subaccounts and Guaranteed Interest Account pursuant to your most recent valid
allocation instructions for scheduled premium payments. In addition, Fund Value
in the Loan Account in excess of the outstanding loan is treated differently.
The treatment depends on (1) whether when the loan was made, Fund Values were
transferred from the subaccounts or the Guaranteed Interest Account, and (2)
whether or not loan interest due is paid when due or the amount of the interest
is added to the loan ("capitalized"). If the loan is from the subaccounts and
loan interest is capitalized, this excess offsets the amount that must be
transferred from the subaccounts to the Loan Account on the policy anniversary.
If the loan is from the Guaranteed Interest Account and loan interest is
capitalized, this excess is allocated back to the Guaranteed Interest Account.
The allocation back is on a monthly basis proportionately to all interest
crediting generations from which the loan was taken.
Amounts held in the Loan Account to secure Outstanding Debt forego the
investment experience of the subaccounts and the current interest rate of the
Guaranteed Interest Account. Thus Outstanding Debt, whether or
42
not repaid, has a permanent effect on your policy values and may have an effect
on the amount and duration of the death benefit. If not repaid, the Outstanding
Debt will be deducted from the amount of the death benefit upon the death of
the last surviving insured, or the value paid upon surrender or maturity.
Outstanding Debt may affect the length of time the policy remains in effect.
After the third policy anniversary, your policy will lapse when:
(1) Cash Value is insufficient to cover the monthly deduction against the
policy's Fund Value on any monthly anniversary day, and
(2) The minimum payment required is not made during the grace period.
Moreover, the policy may enter the grace period more quickly when
Outstanding Debt exists, because the Outstanding Debt is not available to cover
the monthly deduction. Additional payments or repayments of a part of
Outstanding Debt may be required to keep the Policy in effect. See "Grace
Period and Lapse," page 44.
A loan will not be treated as a distribution from your policy and will not
result in taxable income to you unless your policy is a modified endowment
contract. If your policy is a modified endowment contract, a loan will be
treated as a distribution that may give rise to taxable income. If your policy
lapses with an outstanding loan balance there could be adverse federal income
tax consequences depending on the particular facts and circumstances. For
example, if (1) your policy lapses with an outstanding loan balance, and (2) it
does not lapse under a non-forfeiture option, you can have ordinary income to
the extent the outstanding loan exceeds your investment in the policy (i.e.
generally premiums paid less prior non-taxable distributions). For more
information on the tax treatment of loans, see "Federal Income Tax
Considerations," page 52.
Full Surrender
You may fully surrender your policy at any time during the lifetime of
either or both insureds. The amount received for a full surrender is the
policy's Fund Value less (1) any surrender charge, and (2) any Outstanding Debt.
You may surrender your policy by sending a written request together with the
policy to the Company's administrative office. The proceeds will be determined
as of the end of the valuation period during which the request for surrender is
received. You may elect to (1) have the proceeds paid in cash, or (2) apply the
proceeds under a payment plan offered under your policy. See "Payment Plan
Settlement Provisions," page 62. For information on the tax effects of
surrender of a policy, see "Federal Income Tax Considerations," page 52.
Partial Surrender
With a partial surrender, you obtain a part of the Cash Value of your policy
without having to surrender the policy in full. You may request a partial
surrender at any time. The partial surrender will take effect on (1) the
business day that we receive your request at our administrative office, or (2)
on the next business day if that day is not a business day. There is currently
no limit on the number of partial surrenders allowed in a policy year.
A partial surrender must be for at least $500 (plus the applicable fee). In
addition, your policy's Cash Value must be at least $500 after the partial
surrender. If you have taken a loan on your policy, the amount of the partial
surrender is limited so that the loan amount, after the partial surrender, is
not greater than 90% of Cash Value after the partial surrender.
You may make a partial surrender by submitting a proper written request to
the Company's administrative office. As of the effective date of any partial
surrender, your Fund Value and Cash Value are reduced by the amount surrendered
(plus the applicable fee). You allocate an amount or percent of your Fund Value
in the subaccounts and the Guaranteed Interest Account for your partial
surrender. Allocations by percentage must be in whole percentages and the
minimum percentage is 10% against any subaccount or the Guaranteed Interest
43
Account. Percentages must total 100%. We will reject an allocation which does
not comply with the rules or if there is not enough Fund Value in a subaccount
or the Guaranteed Interest Account to provide its share of the allocation. If
the last surviving insured dies after the request for a partial surrender is
sent to the Company and prior to it being effected, the amount of the partial
surrender will be deducted from the death benefit proceeds. The death benefit
proceeds will be determined taking into account the amount surrendered.
When you make a partial surrender and you selected death benefit Option 1,
the Specified Amount of your policy is decreased by the amount of the partial
surrender (excluding its fee). If you selected death benefit Option 2, a
partial surrender will not change the Specified Amount of your policy. However,
if the death benefit is not equal to the Fund Value times a death benefit
percentage, the death benefit will be reduced by the amount of the partial
surrender. Under either death benefit Option, if the death benefit is based on
the Fund Value times the applicable death benefit percentage, the death benefit
may decrease by an amount greater than the partial surrender. See "Death
Benefits under the Policy," page 32.
There is a fee for each partial surrender of $10.
For information on the tax treatment of partial surrenders, see "Federal
Income Tax Considerations," page 52.
Grace Period and Lapse
Your policy will remain in effect as long as:
(1) It has a Cash Value greater than zero, and
(2) You make any required additional premium payments during the 61-day
Grace Period.
Special Rule for First Three Policy Years
During the first three policy years, your policy and any riders are
guaranteed not to lapse if on each monthly anniversary day either:
. Your policy's Cash Value is greater than zero, or
. The sum of the premiums paid minus all partial surrenders (excluding
related fees), minus any Outstanding Debt, is greater than or equal to
. The Minimum Monthly Premium times the number of months your policy has
been in effect.
If the insufficiency occurs at any other time, your policy may be at risk of
lapse.
To avoid lapse if the Cash value is insufficient to pay the current Monthly
Deduction, you must pay the necessary amount during the grace period. When an
insufficiency occurs, you may also be required to pay any unpaid, loan interest
accrued for the policy year. The interest amount will also have to be paid
prior to the end of the grace period.
We will reject any payment if it means your total premium payments will
exceed the maximum permissible premium for your policy's Specified Amount under
the Internal Revenue Code. This may happen when you have Outstanding Debt. In
this event, you could repay enough of the Outstanding Debt to avoid
termination. You may also wish to repay an additional part of the Outstanding
Debt to avoid recurrence of the potential lapse. If premium payments have not
exceeded the maximum permissible premiums, you may wish to make larger or more
frequent premium payments to avoid recurrence of the potential lapse. However,
we will not reject any premium payments necessary to prevent lapse of your
policy.
44
If the Cash Value of your policy will not cover the entire monthly deduction
on a monthly anniversary day, we will deduct the amount that is available. We
will notify you (and any assignee of record) of the payment necessary to keep
your policy in effect. You will then have a grace period of 61 days, from the
date the notice was sent, to make the payment. During the first three policy
years, if the Cash Value of the policy is less than zero, you must pay:
(1) The Minimum Monthly Premium not paid, plus
(2) One succeeding Minimum Monthly Premium.
After the third policy anniversary, the payment required is:
(1) The monthly deduction not paid, plus
(2) Two succeeding monthly deductions plus the amount of the deductions
from premiums for various taxes and sales charges.
(See "Charges and Deductions -- Deductions from Premiums," page 48). The
policy will remain in effect through the grace period. If you fail to make the
necessary payment within the grace period, your coverage under the policy will
end and your policy will lapse. Necessary premium payments made during the
grace period will be allocated among the subaccounts and the Guaranteed
Interest Account. The allocation is made in according to your current scheduled
premium payment allocation instructions. Any monthly deduction due will be
charged proportionately to the subaccounts and the Guaranteed Interest Account.
If the last surviving insured dies during the grace period, the death benefit
proceeds will equal:
(1) The amount of the death benefit immediately prior to the start of the
grace period, reduced by
(2) Any unpaid monthly deductions and any Outstanding Debt.
Reinstatement
We will reinstate a lapsed policy at any time:
(1) Before the maturity date, and
(2) Within five years after the monthly anniversary day which precedes
the start of the grace period.
To reinstate a lapsed policy we must also receive:
(1) A written application from you
(2) Evidence of insurability of both insureds that is satisfactory to us
(3) Payment of all monthly deductions that were due and unpaid during the
grace period
(4) Payment of an amount at least sufficient to keep your policy in
effect for one month after the reinstatement date
(5) Payment or reinstatement of any debt on the policy anniversary at the
start of the grace period
(6) Payment of interest on debt reinstated from the beginning of the
grace period to the end of the grace period at the rate that applies to
policy loans on the date of reinstatement
When your policy is reinstated, the Fund Value will be equal to the Fund
Value on the date of the lapse subject to the following:
(1) The surrender charge will be equal to the surrender charge that would
have existed had your policy been in effect since the original policy date.
(2) The Fund Value will be reduced by the decrease, if any, in the
surrender charge during the period that the policy was not in effect.
45
(3) Any Outstanding Debt on the date of lapse will be reinstated.
(4) Any net premium paid for reinstatement will also be reinstated.
(5) No interest on amounts held in our loan account to secure Outstanding
Debt will be paid or credited between lapse and reinstatement.
Reinstatement will be effective as of the monthly anniversary day on or
preceding the date of approval by us. At that time, the Fund Value minus, if
applicable, Outstanding Debt will be allocated among the subaccounts and the
Guaranteed Interest Account pursuant to your most recent scheduled premium
payment allocation instructions.
46
CHARGES AND DEDUCTIONS
The following chart summarizes the current charges and deductions under the
policy:
- ----------------------------------------------------------------------------------------------------------
Deductions from Premiums
- ----------------------------------------------------------------------------------------------------------
Sales Charge -- Varies based on policy year. It is a First 10 policy years -- 6% of premiums paid up to
% of premium paid target premium and 2% if premium paid in excess
of target premium.
Years 11 and later -- 2% of all premiums.
- ----------------------------------------------------------------------------------------------------------
Tax Charge State and local -- 0.8%
Federal -- 1.25%
- ----------------------------------------------------------------------------------------------------------
Daily Deduction from MONY Variable Account L
- ----------------------------------------------------------------------------------------------------------
Mortality & Expense Risk Charge -- Maximum
Annual Rate .35% of subaccount value (0.000959% daily)
- ----------------------------------------------------------------------------------------------------------
Monthly Deductions from Fund Value
- ----------------------------------------------------------------------------------------------------------
Cost of Insurance Charge Current cost of insurance rate x net amount at risk
at the beginning of the policy month
- ----------------------------------------------------------------------------------------------------------
Administrative Charge -- Monthly $7.50
- ----------------------------------------------------------------------------------------------------------
Monthly per $1,000 Specified Amount Charge See Appendix B. This charge applies for the first 10
Based on issue age of the younger insured, policy years (or for 10 years from the date of any
Specified Amount and smoking Status increase in Specified Amount)
- ----------------------------------------------------------------------------------------------------------
Optional Insurance Benefits Charge
Monthly Deduction for any other optional insurance As applicable.
Benefits added by rider
- ----------------------------------------------------------------------------------------------------------
Transactions and Other Charges
- - Partial Surrender Fee $10
- - Transfer of Fund Value (at Company's Option) $25 maximum per transfer over 12(1)
- ----------------------------------------------------------------------------------------------------------
Surrender Charge See discussion of Surrender Charge on page 50 for
Grades from 100% to 0 over 11 years based on a grading schedule.
schedule. Factors per $1,000 of Specified Amount
vary based on issue age, gender, and underwriting
class
- ----------------------------------------------------------------------------------------------------------
/(1)/ Currently no charge on any transfers.
47
The following provides additional details of the deductions from premium
payments under a policy prior to allocating net premium payments to the
subaccounts of MONY Variable Account L or to the Guaranteed Interest Account
and of the deductions from MONY Variable Account L and from the policy's Fund
Value.
Deductions from Premiums
Deductions are made from each premium payment prior to applying the net
premium payment to the Fund Value.
Sales Charge -- This charge varies based on a target premium. The target premium is
actuarially determined based upon the Specified Amount of the policy and
the age, gender, underwriting class and smoking status of each of the
insureds. The target premium is established at issue, and will be adjusted
if the Specified Amount is increased or decreased. The charge is a percent
of each premium paid.
First 10 policy years -- 6% of premiums paid up to target premium and
2% of premium paid in excess of target premium in that year.
Years 11 and later -- 2% of all premiums.
You should refer to your policy to determine the amount of the target
premium.
The sales charge compensates us for the cost of distributing the policies.
This charge is not expected to be enough to cover sales and distribution
expenses for the policies. To the extent that sales and distribution expenses
exceed sales charges, amounts derived from surrender charges will be used.
Expenses in excess of the sales and surrender charges may be recovered from
other charges, including amount indirectly derived from the charge for
mortality and expense risks and mortality gains.
Tax Charge -- State and local premium tax -- currently 0.8%; Federal tax for deferred
acquisition costs of the Company -- currently 1.25%
All states levy taxes on life insurance premium payments. These taxes vary
from state to state and may vary from jurisdiction to jurisdiction within a
state. For policyholders resident in New York, the Company currently deducts an
amount equal to 0.8% of each premium to pay applicable premium taxes.
Currently, these taxes range from 0% to 4%. The 0.8% current deduction is the
actual premium tax imposed by the State of New York. We do not expect to profit
from this charge.
The 1.25% current charge against each premium covers our estimated cost for
the Federal income tax treatment of deferred acquisition costs. This is
determined solely by the amount of life insurance premiums received. We believe
this charge is reasonable in relation to our increased federal tax burden under
IRC Section 848 resulting from the receipt of premium payments.
We reserve the right to increase or decrease the charge for taxes due to any
change in tax law or due to any change in the cost to us.
Daily Deduction From MONY Variable Account L
A charge is deducted daily from each subaccount of MONY Variable Account L
for the mortality and expense risks assumed by the Company.
Mortality and Expense Maximum of .000959% of the amount in the subaccount, which is
Risk Charge -- equivalent to an annual rate of .35% of subaccount value.
48
This charge compensates us for assuming mortality and expense risks under
the policies. The mortality risk assumed is that insureds, as a group, may live
for a shorter period of time than estimated. Therefore, the cost of insurance
charges specified in the policy will not be enough to meet our actual claims.
We assume an expense risk that other expenses incurred in issuing and
administering the policies and operating MONY Variable Account L will be
greater than the amount estimated when setting the charges for these expenses.
We will realize a profit from this fee to the extent it is not needed to
provide benefits and pay expenses under the policies. We may use this profit
for other purposes. These purposes may include any distribution expenses not
covered by the sales charge or surrender charge.
This charge is not assessed against the amount of the policy Fund Value that
is allocated to the Guaranteed Interest Account, nor to amounts in the Loan
Account.
Monthly Deductions from Fund Value
A charge called the Monthly Deduction is deducted from the Fund Value on
each monthly anniversary day. The Monthly Deduction consists of the following
items:
Cost of Insurance -- This charge compensates us for the anticipated cost of paying death
benefits in excess of Fund Value to insureds' beneficiaries. The amount of
the charge is equal to a current cost of insurance rate multiplied by the net
amount at risk under the policy at the beginning of each policy month.
Here, net amount at risk equals the death benefit payable at the beginning
of the policy month less the Fund Value at that time.
The policy contains guaranteed cost of insurance rates that may not be
increased. The guaranteed rates are based on the 1980 Commissioners Standard
Ordinary Smoker and Nonsmoker Mortality Tables. Where unisex cost of insurance
rates apply, the 1980 Commissioners Ordinary Smoker and Nonsmoker Mortality
Table D applies.) These rates are based on the age and underwriting class of
each insured. They are also based on the gender of the insured, but unisex
rates are used where appropriate under applicable law. As of the date of this
prospectus, we charge "current rates" that are lower (i.e., less expensive)
than the guaranteed rates. We may change current rates in the future. Like the
guaranteed rates, the current rates also vary with the age, gender, smoking
status, and underwriting class of each insured. In addition, they also vary
with the policy duration. The cost of insurance rate generally increases with
the age of each insured.
If there have been increases in the Specified Amount, then for purposes of
calculating the cost of insurance charge, the Fund Value will first be applied
to the initial Specified Amount. If the Fund Value exceeds the initial
Specified Amount, the excess will then be applied to any increase in Specified
Amount in the order of the increases. If the death benefit equals the Fund
Value multiplied by the applicable death benefit percentage, any increase in
Fund Value will cause an automatic increase in the death benefit. The
underwriting class and duration for such increase will be the same as that used
for the most recent increase in Specified Amount (that has not been eliminated
through a later decrease in Specified Amount).
Administrative Charge -- $7.50 per month
This charge reimburses us for expenses associated with administration and
maintenance of the policies. The charge is guaranteed never to exceed $7.50. We
do not expect to profit from this charge.
Monthly per $1,000 Specified This charge applies for the first 10 years following the issuance of the
Amount Charge -- policy or an increase in the Specified Amount. The charge is made per
$1,000 of Specified Amount based on issue age of the younger insured,
smoking status and Specified Amount. The monthly per $1,000 factors are
shown in Appendix B.
49
Optional Insurance Benefits A monthly deduction for any other optional insurance benefits added to
Charge -- the policy by rider.
Surrender Charge -- The Company will assess a surrender charge against Fund Value upon a
surrender of the policy. The surrender charge is based on a factor per
$1,000 of initial Specified Amount (or upon an increase in Specified
amount) and grades from 100% to zero over 11 years based on a schedule.
The factors per $1,000 vary by issue age, gender, and underwriting class.
The grading percentages (as shown below) vary based on number of full
years since the Policy was issued (or since the increase in Specified
Amount). The maximum level of surrender charge is $53.31 per $1,000 of
Specified Amount.
Policy Year Percent
- ----------------------------------------------------------
1 100%
- ----------------------------------------------------------
2 90
- ----------------------------------------------------------
3 80
- ----------------------------------------------------------
4 70
- ----------------------------------------------------------
5 60
- ----------------------------------------------------------
6 50
- ----------------------------------------------------------
7 40
- ----------------------------------------------------------
8 30
- ----------------------------------------------------------
9 20
- ----------------------------------------------------------
10 10
- ----------------------------------------------------------
11 and later 0
Surrender Charge
The surrender charge is a contingent deferred load. It is a contingent load
because it is assessed only if the policy is surrendered or if the policy
lapses. It is a deferred load because it is not deducted from the premiums
paid. The purpose of the surrender charge is to reimburse us for some of the
expenses of distributing the policies.
Effect of Changes in The surrender charge will increase when a new coverage segment of
Specified Amount on the Specified Amount is created due to a requested increase in coverage. The
Surrender Charge -- surrender charge related to the increase will be computed in the same
manner as the surrender charge for the original Specified Amount. It will
reduce over the 11-year period following the increase. The new surrender
charge for the policy will equal:
(1) The remaining part of the surrender charge for the original Specified
Amount, plus
(2) The surrender charge related to the increase.
Decreases in Specified Amount have no effect on surrender charges.
50
Corporate Purchasers
The policy is available for purchase by individuals, trusts, corporations
and other organizations. Corporate or other group or sponsored arrangements
purchasing one or more policies may receive a reduction in charges. The Company
may reduce the amount of the sales charge, surrender charge, or other charges
where the expenses associated with the policy or policies are reduced. Sales,
underwriting or other administrative expenses may be reduced for reasons such
as expected economies resulting from a corporate purchase or a group or
sponsored arrangement, from the amount of the initial premium payment or
payments, or the amount of projected premium payments.
Transaction and Other Charges
. Partial Surrender Fee -- $10
. Transfer of Fund Value -- $25 (at option of the Company) currently $0
The partial surrender fee is guaranteed not to exceed $10. Currently, we do
not charge for transfers of Fund Value between the subaccounts. However, we
reserve the right to assess a $25 charge on transfers over 12 during any policy
year. This would include telephone transfers, if we permit them.
We may charge the subaccounts for federal income taxes that are incurred by
us and are attributable to MONY Variable Account L and its subaccounts. No such
charge is currently assessed. See "Charge for Company Income Taxes," page 56.
We will bear the direct operating expenses of MONY Variable Account L. The
subaccounts purchase shares of the corresponding portfolio of the underlying
Fund. The Fund's expenses are not fixed or specified under the terms of the
policy.
Guarantee of Certain Charges
We guarantee that certain charges will not increase. This includes:
(1) Mortality and expense risk charge.
(2) Administrative charge.
(3) Per $1,000 Specified Amount charge.
(4) Sales charge.
(5) Guaranteed cost of insurance rates.
(6) Surrender charge.
(7) Partial surrender fee.
Any changes in the current cost of insurance charges or charges for optional
insurance benefits will be made based on the class of the insured. Changes will
be based on changes in:
(1) Future expectations with respect to investment earnings,
(2) Mortality,
(3) Length of time policies will remain in effect,
(4) Expenses, and
(5) Taxes.
In no event will they exceed the guaranteed rates defined in the policy.
51
OTHER INFORMATION
Federal Income Tax Considerations
The following provides a general description of the federal income tax
considerations relating to the policy. This discussion is based upon our
understanding of the present federal income tax laws as the Internal Revenue
Service ("IRS") currently interprets them. This discussion is not intended as
tax advice. Tax laws are very complex and tax results will vary according to
your individual circumstances. A person considering the purchase of the policy
may need tax advice. It should be understood that these comments on federal
income tax consequences are not an exhaustive discussion of all tax questions
that might arise under the policy. Special rules that are not discussed here
may apply in certain situations. We make no representation as to the likelihood
of continuation of federal income tax or estate or gift tax laws or of the
current interpretations of the IRS or the courts. Future legislation may
adversely affect the tax treatment of life insurance policies or other tax
rules that we describe here or that relate directly or indirectly to life
insurance policies. Our comments do not take into account any state or local
income tax considerations that may be involved in the purchase of the policy.
Definition of Life Insurance
Under section 7702 of the Internal Revenue Code (the "Code"), a policy will
be treated as a life insurance policy for federal tax purposes if (a) a policy
is considered to be life insurance under applicable law and (b) one of two
alternate tests are met. The two alternative tests are:
(1) "Cash Value Accumulation Test"
(2) "Guideline Premium/Cash Value Corridor Test"
When you apply for a policy you will irrevocably choose which of these two
tests will be applied to your policy.
If your policy is tested under the Guideline Premium/Cash Value Corridor
Test. This test provides for, among other things:
(1) A maximum allowable premium per thousand dollars of death benefit,
known as the "guideline annual premium," and
(2) A minimum ongoing "corridor" of death benefit in relation to the Fund
Value of the policy, known as the "death benefit percentage."
See Appendix A, for a table of the Guideline Premium/Cash Value Corridor Test
factors. If your policy is tested under the Cash Value Accumulation Test, a
table of factors will be shown in your policy.
We believe that the policy meets this statutory definition of life insurance
and hence will receive federal income tax treatment consistent with that of
fixed life insurance. Thus, the death benefit should be excludable from the
gross income of the beneficiary (whether the beneficiary is a corporation,
individual or other entity) under Section 101 (a) (1) of the Code for purposes
of the regular federal income tax. You generally should not be considered to be
in constructive receipt of the cash values under the policy until a full
surrender, maturity of the policy, or a partial surrender. In addition, certain
policy loans may be taxable in the case of policies that are modified endowment
contracts. Prospective policy owners that intend to use policies to fund
deferred compensation arrangements for their employees are urged to consult
their tax advisors with respect to the tax consequences of such arrangements.
Prospective corporate owners should consult their tax advisors about the
treatment of life insurance in their particular circumstances for purposes of
the alternative minimum tax applicable to corporations.
52
Tax Treatment of Policies
The Technical and Miscellaneous Revenue Act of 1988 established a new class
of life insurance contracts referred to as modified endowment contracts. A life
insurance contract becomes a "modified endowment contract" if, at any time
during the first seven contract years, the sum of actual premiums paid exceeds
the sum of the "seven-pay premium." Generally, the "seven-pay premium" is the
level annual premium, which if paid for each of the first seven years, will
fully pay for all future death and endowment benefits under a contract.
Example: "Seven-pay" premium = $1,000
Maximum premium to avoid "modified endowment" treatment =
First year -- $1,000
Through first two years -- $2,000
Through first three years -- $3,000 etc.
Under this test, a policy may or may not be a modified endowment contract. The
outcome depends on the amount of premiums paid during each of the policy's
first seven contract years. Changes in benefits may require testing to
determine if the policy is to be classified as a modified endowment contract. A
modified endowment contract is treated differently for tax purposes then a
conventional life insurance contract.
Conventional Life Insurance Policies
If a policy is not a modified endowment contract distributions are treated
as follows. Upon a full surrender or maturity of a policy for its Cash Value,
the excess if any, of the Cash Value plus Outstanding Debt minus the cost basis
under a policy will be treated as ordinary income for federal income tax
purposes. A policy's cost basis will usually equal the premiums paid less any
premiums previously recovered through partial surrenders. Under Section 7702 of
the Code, special rules apply to determine whether part or all the cash
received through partial surrenders in the first 15 policy years is paid out of
the income of the policy and therefore subject to income tax. Cash distributed
to a policy owner on partial surrenders occurring more than 15 years after the
policy date will be taxable as ordinary income to the policy owner to the
extent that it exceeds the cost basis under a policy.
We believe that loans received under policies that are not modified
endowment contracts will be treated as indebtedness of the owner. Thus, no part
of any loan under the policy will constitute income to the owner until the
policy matures, unless the policy is surrendered before it matures. Interest
paid (or accrued by an accrual basis taxpayer) on a loan under a policy that is
not a modified endowment contract may be deductible. Deductibility will be
subject to several limitations, depending upon (1) the use to which the
proceeds are put and (2) the tax rules applicable to the policy owner. If, for
example, an individual who uses the proceeds of a loan for business or
investment purposes, may be able to deduct all or part of the interest expense.
Generally, if an individual uses the policy loan for personal purposes, the
interest expense is not deductible. The deductibility of loan interest (whether
incurred under a policy loan or other indebtedness) also may be subject to
other limitations.
For example, the interest may be deductible to the extent that the interest
is attributable to the first $50,000 of the Outstanding Debt where:
. The interest is paid (or accrued by an accrual basis taxpayer) on a loan
under a policy, and
. The policy covers the life of an officer, employee, or person financially
interested in the trade or business of the policy owners.
Other tax law provisions may limit the deduction of interest payable on loan
proceeds that are used to purchase or carry certain life insurance policies.
53
Modified Endowment Contracts
Pre-death distributions from modified endowment contracts may result in
taxable income. Upon full surrender or maturity of the policy, the policy owner
would recognize ordinary income for federal income tax purposes. Ordinary
income will equal the amount by which the Cash Value plus Outstanding Debt
exceeds the investment in the policy. (The investment in the policy is usually
the premiums paid plus certain pre-death distributions that were taxable less
any premiums previously recovered that were excludable from gross income.) Upon
partial surrenders and policy loans the policy owner would recognize ordinary
income to the extent allocable to income (which includes all previously
non-taxed gains) on the policy. The amount allocated to income is the amount by
which the Fund Value of the policy exceeds investment in the policy immediately
before distribution. The tax law provides for aggregation of two or more
policies classified as modified endowment contracts if:
(1) The policies are purchased from any one insurance company (including
the Company), and
(2) The purchases take place during a calendar year.
The policies are aggregated for the purpose of determining the part of the
pre-death distributions allocable to income on the policies and the part
allocable to investment in the policies.
Amounts received under a modified endowment contract that are included in
gross income are subject to an additional tax. This additional tax is equal to
10% of the amount included in gross income, unless an exception applies. The
10% additional tax does not apply to any amount received:
(1) When the taxpayer is at least 59 1/2 years old;
(2) Which is attributable to the taxpayer becoming disabled; or
(3) Which is part of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy)
of the taxpayer or the joint lives (or joint life expectancies) of the
taxpayer and his or her beneficiary.
A contract may not be a modified endowment contract originally but may
become one later. Treasury Department regulations, yet to be prescribed, cover
pre-death distributions received in anticipation of the policy's failure to
meet the seven-pay premium test. These distributions are to be treated as
pre-death distributions from a modified endowment contract (and, therefore, are
to be taxed as described above). This treatment is applied even though the
policy was not yet a modified endowment contract. The Code defines a
distribution in anticipation of failing the test as one made within two years
of the policy being classified as a modified endowment contract.
It is unclear whether interest paid (or accrued by an accrual basis
taxpayer) on Outstanding Debt with respect to a modified endowment contract
constitutes interest for federal income tax purposes. If it does constitute
interest, its deductibility will be subject to the same limitations as
conventional life insurance contracts (see "Federal Income Tax Considerations
- -- Conventional Life Insurance Policies," page 53.)
Reasonableness Requirement for Charges
The tax law also deals with allowable mortality costs and other expenses
used in the calculations to determine whether a contract qualifies as life
insurance for income tax purposes. For policies entered into on or after
October 21, 1988, the calculations must be based upon, (1) reasonable mortality
charges, and (2) other charges reasonably expected to be paid. The Treasury
Department is expected to declare regulations governing reasonableness
standards for mortality charges. We believe our mortality costs and other
expenses used in these calculations meet the current requirements. It is
possible that future regulations will contain standards that would require us
to modify our mortality charges for these calculations. We reserve the right to
make modifications to retain the policy's qualification as life insurance for
federal income tax purposes.
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Riders, Policy Changes, and Transfers
Certain benefits permit the splitting of the policy into two other
individual policies upon business dissolution. The splitting of a policy could
have adverse tax consequences. Consequences include, but are not limited to,
the recognition of taxable income in an amount up to any gain in the policy at
the time of the split.
In order for the Beneficiary to receive certain tax treatment discussed in
the previous sections above, the policy must initially qualify and continue to
qualify as life insurance under Sections 7702 and 817(h) of the Code. To
qualify the policy as life insurance for tax purposes the Company may:
. Make changes in the policy or Riders, or
. Make distributions from the policy to the extent considered necessary.
Any such change will uniformly apply to all policies that are affected. The
policy owner will be given advance notice of such changes.
Special tax rules may apply to the transfer of ownership of a policy.
Consult a qualified tax adviser before any transfer of the policy.
Other Employee Benefit Programs
Complex rules may apply when a policy is held by an employer or a trust, or
acquired by an employee, to provide for employee benefits. These policy owners
also must consider whether the policy was applied for by or issued to a person
having an insurable interest under applicable state law. The lack of insurable
interest may, among other things, affect the qualification of the policy as
life insurance for federal income tax purposes. It may also affect the right of
the beneficiary to death benefits. Employers and employer-created trusts may be
subject to reporting, disclosure, and fiduciary obligations under the Employee
Retirement Income Security Act of 1974 (ERISA). The policy owner's legal
advisor should be consulted to address these issues.
Diversification Requirements
To comply with regulations under Section 817(h) of the Code, each portfolio
is required to diversify its investments. Generally, on the last day of each
quarter of a calendar year,
(1) No more than 55% of the value of the portfolio's assets can be
represented by any one investment,
(2) No more than 70% can be represented by any two investments,
(3) No more than 80% can be represented by any three investments, and
(4) No more than 90% can be represented by any four investments.
Securities of a single issuer generally are treated for purposes of Section
817(h) as a single investment. However, for this purpose, each U.S. Government
agency or instrumentality is treated as a separate issuer. Any security issued,
guaranteed, or insured (to the extent guaranteed and insured) by the U.S. or by
an agency or instrumentality of the U.S. is treated as a security issued by the
U.S. Government or its agency or instrumentality, as applicable.
Currently, for federal income tax purposes, the portfolio shares underlying
the policies are owned by the Company and not by you or any beneficiary.
However, no representation is or can be made regarding the likelihood of the
continuation of current interpretations by the IRS.
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Other
Federal estate and gift and state and local estate, inheritance, and other
tax consequences of ownership or receipt of policy proceeds depend on the
jurisdiction and the circumstances of each owner or beneficiary.
For complete information on federal, state, local and other tax
considerations, a qualified tax advisor should be consulted.
The Company Does Not Make Any Guarantee Regarding
The Tax Status Of Any Policy
Charge for Company Income Taxes
For federal income tax purposes, variable life insurance generally is
treated in a manner consistent with fixed life insurance. The Company will
review the question of a charge to the Variable Account for the Company's
federal income taxes periodically. A charge may be made for any federal income
taxes incurred by the Company that are attributable to the Variable Account.
This might become necessary if:
(1) The tax treatment of the Company is ultimately determined to be other
than what the Company currently believes it to be,
(2) There are changes made in the federal income tax treatment of
variable life insurance at the insurance company level, or
(3) There is a change in the Company's tax status.
Under current laws, the Company may incur state and local taxes (in addition
to premium taxes imposed by the states) in several states. At present, these
taxes are not significant. If there is a material change in applicable state or
local tax laws or in the cost to the Company, the Company reserves the right to
charge the Account for any such taxes attributable to the Account.
Voting of Fund Shares
Based on its view of present applicable law, the Company will exercise
voting rights attributable to the shares of each portfolio of the Funds held in
the subaccounts. We will exercise such rights at any regular and special
meetings of the shareholders of the Funds on matters requiring shareholder
voting under the Investment Company Act of 1940. Our exercise of these voting
rights will be based on instructions received from persons having the voting
interest in corresponding subaccounts of MONY Variable Account L. We may elect
to vote the shares of the Funds in our own right if:
(1) The Investment Company Act of 1940 or any regulations thereunder is
amended, or
(2) The present interpretation of the Act should change, and
(3) As a result we determine that it is permitted to vote the shares of
the Funds in our own right.
The person having the voting interest under a policy is the policy owner.
Unless otherwise required by applicable law, a policy owner will have the right
to instruct for the number of votes of any portfolio determined by dividing his
or her Fund Value in the subaccount that corresponds to the portfolio by $100.
Fractional votes will be counted. The number policy owner votes will be
determined as of the date set by the Company. However, such date will not be
more than 90 days prior to the date established by the corresponding Fund for
determining shareholders eligible to vote at that Fund's meeting. If required
by the Securities and Exchange Commission, the Company reserves the right to
determine the voting rights in a different fashion. Voting instructions may be
cast in person or by proxy.
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If the Company does not receive voting instructions from the policy owner on
time, the Company will vote his or her votes. The Company will vote in the same
proportion as voting instructions received on time for all policies
participating in that subaccount. The Company will also exercise the voting
rights from assets in each subaccount, which are not otherwise attributable to
policy owners. These votes will be exercised in the same proportion as the
voting instructions that are received on time for all policies participating in
that subaccount. Generally, the Company will vote any voting rights
attributable to shares of portfolios of the Funds held in its General Account.
These votes will be exercised in the same proportion as the aggregate votes
cast with respect to shares of portfolios of the Funds held by MONY Variable
Account L and other separate accounts of the Company.
Disregard of Voting Instructions
The Company may disregard voting instructions when required by state
insurance regulatory authorities, if, (1) the instructions require that voting
rights be exercised so as to cause a change in the subclassification or
investment objective of a Portfolio, or (2) to approve or disapprove an
investment advisory contract. In addition, the Company itself may disregard
voting instructions of changes initiated by policy owners in the investment
policy or the investment adviser (or portfolio manager) of a portfolio. The
Company's disapproval of such change must be reasonable and must be based on a
good faith determination that the change would be contrary to state law or
otherwise inappropriate, considering the portfolio's objectives and purpose,
and considering the effect the change would have on the Company. If Company
does disregard voting instructions; a summary of that action and the reasons
for such action will be included in the next report to policy owners.
Report to Policy Owners
A statement will be sent at least annually to each policy owner setting
forth:
(1) A summary of the transactions which occurred since the last
statement, and
(2) Indicating the death benefit, Specified Amount, Fund Value, Cash
Value, and any Outstanding Debt.
In addition, the statement will indicate the allocation of Fund Value among
the Guaranteed Interest Account, the Loan Account and the subaccounts, and any
other information required by law. Confirmations will be sent out upon premium
payments, transfers, loans, loan repayments, withdrawals, and surrenders.
Each policy owner will also receive an annual and a semiannual report
containing financial statements for MONY Variable Account L and the Funds. The
Funds' statement will include a list of the portfolio securities of the Funds,
as required by the Investment Company Act of 1940, and/or such other reports as
may be required by federal securities laws.
Substitution of Investments and Right to Change Operations
The Company reserves the right, subject to compliance with the law as then
in effect, to make additions to, deletions from, or substitutions for the
securities that are held by or may be purchased by MONY Variable Account L or
any of its other separate accounts. The Company may substitute shares of
another portfolio of the Funds or of a different fund for shares already
purchased, or to be purchased in the future under the policies if:
(1) Shares of any or all of the portfolios of the Funds should no longer
be available for investment or,
(2) In the judgment of the Company's management, further investment in
shares of any or all portfolios of the Funds should become inappropriate in
view of the purposes of the policies.
Where required, the Company will not substitute any shares attributable to a
policy owner's interest in MONY Variable Account L without notice, policy owner
approval, or prior approval of the Securities and
57
Exchange Commission. The Company will also follow the filing or other
procedures established by applicable state insurance regulators. Applicable
state insurance regulators include the Superintendent of Insurance of the State
of New York.
The Company also reserves the right to establish additional subaccounts of
MONY Variable Account L. Each additional subaccount would invest in (1) a new
portfolio of the Funds, or (2) in shares of another investment company, a
portfolio thereof, or (3) another suitable investment vehicle, with a specified
investment objective. New subaccounts may be established when, in the sole
discretion of the Company, marketing needs or investment conditions warrant,
and any new Subaccounts will be made available to existing Policy Owners on a
basis to be determined by the Company. The Company may also eliminate one or
more subaccounts if, in its sole discretion, marketing, tax, or investment
conditions so warrant.
If a substitution or change is made, the Company may make changes in this
and other policies as may be necessary or appropriate to reflect such
substitution or change. If the Company considers it to be in the best interests
of persons having voting rights under the policies, MONY Variable Account L may:
(1) Be operated as a management investment company under the Investment
Company Act of 1940 or any other form permitted by law,
(2) Be deregistered under that Act if such registration is no longer
required, or
(3) Be combined with other separate accounts of the Company or an
affiliate thereof.
Subject to compliance with applicable law, the Company also may combine one
or more Subaccounts and may establish a committee, board, or other group to
manage one or more aspects of the operation of MONY Variable Account L.
Changes to Comply with Law
The Company reserves the right to make any change without consent of policy
owners to the provisions of the policy to comply with, or give policy owners
the benefit of, any Federal or State statute, rule, or regulation. Federal and
State laws include but not limited to requirements for life insurance contracts
under the Internal Revenue Code, and regulations of the United States Treasury
Department or any state.
PERFORMANCE INFORMATION
We may advertise the performance of MONY Variable Account L subaccounts. We
will also report performance to policy owners and may make performance
information available to prospective purchasers. This information will be
presented in compliance with applicable law.
Performance information may show the change in a policy owner's Fund Value
in one or more subaccounts, or as a change in a policy owner's death benefit.
Performance information may be expressed as a change in a policy owner's Fund
Value over time or in terms of the average annual compounded rate of return on
the policy owner's Fund Value. Such performance is based upon a hypothetical
policy in which premiums have been allocated to a particular subaccount of the
MONY Variable Account L over certain periods of time that will include one,
five and ten years, or from the commencement of operation of the subaccount of
the MONY Variable Account L if less than one, five, or ten years. Any such
quotation may reflect the deduction of all applicable charges to the policy
including premium load, the cost of insurance, the administrative charge, and
the mortality and expense risk charge. The quotation may also reflect the
deduction of the surrender charge, if applicable, by assuming surrender at the
end of the particular period. However, other quotations may simultaneously be
given that do not assume surrender and do not take into account deduction of
the surrender charge.
58
Performance information for MONY Variable Account L may be compared, in
advertisements, sales literature, and reports to policy owners to:
(1) Other variable life separate accounts or investment products tracked
by research firms, ratings services, companies, publications, or persons who
rank separate accounts or investment products on overall performance or
other criteria, and
(2) The Consumer Price Index (measure for inflation) to assess the real
rate of return from the purchase of a policy.
Reports and promotional literature may also contain the Company's rating or
a rating of the Company's claim paying ability as determined by firms that
analyze and rate insurance companies and by nationally recognized statistical
rating organizations.
Performance information for any subaccount of MONY Variable Account L
reflects only the performance of a hypothetical policy whose Fund Value is
allocated to MONY Variable Account L during a particular time period on which
the calculations are based. Performance information should be considered in
light of the investment objectives and policies, characteristics and quality of
the portfolios of the Funds in which MONY Variable Account L invests. The
market conditions during the given period of time should not be considered as a
representation of what may be achieved in the future.
We may also use non-standard performance in cases where we add new
subaccounts which purchase shares of underlying funds in existence prior to the
formation of such subaccounts. In such cases we will use the historical
performance of the underlying fund with the current expenses of the applicable
subaccount under the policy.
THE GUARANTEED INTEREST ACCOUNT
You may allocate all or a portion of your net premiums and transfer Fund
Value to the Guaranteed Interest Account of the Company. Amounts allocated to
the Guaranteed Interest Account become part of the "General Account" of the
Company, which supports insurance and annuity obligations. The amounts
allocated to the General Account of the Company are subject to the liabilities
arising from the business the Company conducts. Descriptions of the Guaranteed
Interest Account are included in this Prospectus for the convenience of the
purchaser. The Guaranteed Interest Account and the General Account of the
Company have not been registered under the Securities Act of 1933 and the
Investment Company Act of 1940. Accordingly, neither the Guaranteed Interest
Account nor any interest therein is generally subject to the provisions of
these Acts and, as a result, the staff of the Securities and Exchange
Commission has not reviewed the disclosure in this prospectus relating to the
Guaranteed Interest Account. Disclosures regarding the Guaranteed Interest
Account may, however, be subject to certain generally applicable provisions of
the federal securities laws relating to the accuracy and completeness of
statements made in the prospectus. For more details regarding the Guaranteed
Interest Account, see the policy.
General Description
Amounts allocated to the Guaranteed Interest Account become part of the
General Account of Company which consists of all assets owned by the Company
other than those in MONY Variable Account L and other separate accounts of the
Company. Subject to applicable law, the Company has sole discretion over the
investment of the assets of its General Account.
You may elect to allocate net premiums to the Guaranteed Interest Account,
MONY Variable Account L, or both. You may also transfer Fund Value from the
subaccounts of MONY Variable Account L to the Guaranteed Interest Account or
from the Guaranteed Interest Account to the subaccounts. The Company guarantees
that the Fund Value in the Guaranteed Interest Account will be credited with a
minimum interest rate of 0.0121% daily,
59
compounded daily, for a minimum effective annual rate of 4.5%. Such interest
will be paid regardless of the actual investment experience of the Guaranteed
Interest Account. In addition, Company may in its sole discretion declare
current interest in excess of the 4.5% annual rate. (The portion of a Policy
Owner's Fund Value that has been used to secure Outstanding Debt will be
credited with a guaranteed interest rate of 0.0121% daily, compounded daily,
for a minimum effective annual rate of 4.5%.) Prior to the beginning of each
calendar month, an interest rate will be declared. The declared rate will apply
to premium payments and transfers into the Guaranteed Interest Account made
during the calendar month. The calendar year and month the payment or transfer
is made determines the "generation" of such monies. The current interest will
be credited from the date of the payment or transfer for a period of 12 months
beginning the first day of the monthly generation to which the payment or
transfer is assigned. After the first 12 months, a renewal interest rate will
be declared for a new 12-month period. At the end of the renewal period all
monies will earn an interest rate which is declared monthly and applies for a
one-month period.
The Company bears the full investment risk for the Fund Value allocated to
the Guaranteed Interest Account.
Death Benefit
The death benefit under the policy will be determined in the same fashion if
you have Fund Value in the Guaranteed Interest Account or Fund Value in the
subaccounts. The death benefit under Option 1 will be equal to the Specified
Amount of the Policy or, if greater, Fund Value on the date of death of the
last surviving insured multiplied by a death benefit percentage. Under Option
2, the Death Benefit will be equal to the Specified Amount of the Policy plus
the Fund Value or, if greater, Fund Value on the date of death of the last
surviving insured multiplied by a death benefit percentage. See "Death Benefits
under the Policy," page 32.
Policy Charges
Deductions from premium, monthly deductions from the Fund Value, and
surrender charges will be the same if you allocate net premiums or transfer
Fund Value to the Guaranteed Interest Account or allocate net premiums to the
subaccounts. These charges include the sales and tax charges; the charges for
the cost of insurance, administrative charge, per $1,000 of Specified Amount
charge, the charge for any optional insurance benefits added by Rider, and the
surrender charge. Fees for partial surrenders and, if applicable, transfer
charges, will also be deducted from the Guaranteed Interest Account.
You will not directly or indirectly pay charges applicable to the
portfolios, including the operating expenses of the portfolios, and the
investment advisory fee charged by the portfolio managers if your Fund Value is
allocated to the Guaranteed Interest Account. Likewise, the mortality and
expense risk charge applicable to the Fund Value allocated to the subaccounts
is not deducted from Fund Value allocated to the Guaranteed Interest Account.
Any amounts that the Company pays for income taxes allocable to the subaccounts
will not be charged against the Guaranteed Interest Account. However, it is
important to remember that you will not participate in the investment
experience of the subaccounts to the extent that Fund Values are allocated to
the Guaranteed Interest Account.
Transfers
Amounts may be transferred after the Right to Return Policy Period from the
subaccounts to the Guaranteed Interest Account and from the Guaranteed Interest
Account to the subaccounts, subject to the following limitations.
. Transfers to the Guaranteed Interest Account may be made at any time and
in any amount.
. Transfers from the Guaranteed Interest Account to the subaccounts are
limited to one in any policy year.
. Transfers from the Guaranteed Interest Account may only be made during the
time period which begins on the policy anniversary and which ends 30 days
after the policy anniversary.
60
If the transfer request is received on the policy anniversary, it will be
processed as of the policy anniversary. If the transfer request is received
within 30 days after the policy anniversary, the transfer will be effective as
of the close of business on the day received if it is a Business Day. If it is
not a Business Day, then at the close of business on the next day which is a
Business Day. Any request received within 10 days before the policy anniversary
will be considered received on the policy anniversary. Any transfer requests
received at other times will not be honored, and will be returned to the policy
owner.
Currently there is no charge imposed upon transfers; however, the Company
reserves the right to assess such a charge in the future on transfers over 12
during any policy year.
Surrenders and Policy Loans
You may also make full surrenders and partial surrenders from the Guaranteed
Interest Account to the same extent as if you had invested in the subaccounts.
See "Full Surrender," page 43 and "Partial Surrender", page 43. Transfers and
surrenders payable from the Guaranteed Interest Account, and the payment of
policy loans allocated to the Guaranteed Interest Account, may be delayed for
up to six months. However, the Company will not delay payment of surrenders or
loans, the proceeds of which will be used to pay premiums on the policy.
MORE ABOUT THE POLICY
Ownership
The policy owner is the individual named as such in the application or in
any later change shown in the Company's records. While either or both of the
insureds is living, the policy owner alone has the right to receive all
benefits and exercise all rights that the policy grants or the Company allows.
Joint Owners
If more than one person is named as policy owner, they are joint owners. Any
policy transaction requires the signature of all persons named jointly. Unless
otherwise provided, if a joint owner dies, ownership passes to the surviving
joint owner(s). When the last joint owner dies, ownership passes through that
person's estate, unless otherwise provided.
Beneficiary
The beneficiary is the individual named as such in the application or any
later change shown in the Company's records. The policy owner may change the
beneficiary at any time during the life of the insured by written request on
forms provided by the Company. The Company must receive the request at its
administrative office. The change will be effective as of the date this form is
signed. Contingent and/or concurrent beneficiaries may be designated. The
policy owner may designate a permanent beneficiary, whose rights under the
policy cannot be changed without his or her consent. Unless otherwise provided,
if no designated beneficiary is living upon the death of the last surviving
insured, the policy owner or the policy owner's estate is the beneficiary.
The Company will pay the death benefit proceeds to the beneficiary. Unless
otherwise provided, the beneficiary must be living when the last surviving
insured dies to receive the proceeds.
The Policy
This Policy is a contract between the policy owner and the Company. The
entire contract consists of the policy, a copy of the initial application, all
subsequent applications to change the policy, any endorsements, all riders, and
all additional policy information sections (specification pages) added to the
policy.
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Notification and Claims Procedures
Any election, designation, change, assignment, or request made by you must
be in writing on a form acceptable to the Company. The Company is not liable
for any action taken before such written notice is received and recorded. The
Company may require that the policy be returned for any policy change or upon
its surrender.
If the last surviving insured dies while the policy is in effect, notice
should be given to the Company as soon as possible. Claim procedure
instructions will be sent immediately. As due proof of death, the Company may
require proof of age and a certified copy of a death certificate. The Company
may also require the beneficiary and the last surviving insured's next of kin
to sign authorizations as part of this process. These authorization forms allow
the Company to obtain information about the insured, including but not limited
to medical records of physicians and hospitals used by the insured.
Payments
Within seven days after the Company receives all the information needed for
processing a payment, the Company will:
(1) Pay death benefit proceeds,
(2) Pay the Cash Value on surrender, partial surrenders and loan proceeds
based on allocations made to the subaccounts, and
(3) Effect a transfer between subaccounts or from the Variable Account to
the Guaranteed Interest Account.
However, the Company can postpone the calculation or payment of such a
payment or transfer of amounts based on investment performance of the
subaccounts if:
. The New York Stock Exchange is closed on other than customary weekend and
holiday closing or trading on the New York Stock Exchange is restricted as
determined by the SEC; or
. An emergency exists, as determined by the SEC, as a result of which
disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of the Account's net assets.
Payment Plan/Settlement Provisions
Maturity or surrender benefits may be used to purchase a payment plan
providing monthly income for the lifetime of the Insured. Death benefit
proceeds may be used to purchase a payment plan providing monthly income for
the lifetime of the beneficiary. The monthly payments consisting of proceeds
plus interest will be paid in equal installments for at least ten years. The
purchase rates for the payment plan are guaranteed not to exceed those shown in
the policy, but current rates that are lower (i.e., providing greater income)
may be established by the Company from time to time. This benefit is not
available if the income would be less than $25 per payment or if the proceeds
are less than $1,000. Maturity or surrender benefits or death benefit proceeds
may be used to purchase any other payment plan that the Company makes available
at that time.
Payment in Case of Suicide
If either insured dies by suicide, (1) while sane or insane, (2) within two
years from the policy date or reinstatement date, the Company will limit the
death benefit proceeds to the premium payments less any partial surrender
amounts (and their fees) and any Outstanding Debt. If an insured dies by
suicide, (1) while sane or insane, (2) within two years of the effective date
of any increase in the Specified Amount, the Company will refund the cost of
insurance charges made with respect to such increase.
This provision may not be applicable in all states.
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Assignment
You may assign your policy as collateral security for a loan or other
obligation. No assignment will bind the Company unless the original, or a copy,
is received at the Company's administrative office. The assignment will be
effective only when recorded by the Company. An assignment does not change the
ownership of the policy. However, after an assignment, the rights of any policy
owner or beneficiary will be subject to the assignment. The entire policy,
including any attached payment option or rider, will be subject to the
assignment. The Company will rely solely on the assignee's statement as to the
amount of the assignee's interest. The Company will not be responsible for the
validity of any assignment. Unless otherwise provided, the assignee may
exercise all rights this policy grants except (a) the right to change the
policy owner or beneficiary, and (b) the right to elect a payment option.
Assignment of a policy that is a modified endowment contract may generate
taxable income. (See "Federal Income Tax Considerations", page 52.)
Errors on the Application
If the age or gender of an insured has been misstated, the death benefit
under this policy will be the greater of:
(1) What would be purchased by the most recent cost of insurance charge
at the correct age and gender, or
(2) The death benefit derived by multiplying the Fund Value by the death
benefit percentage for the correct age and gender. If unisex cost of
insurance rates apply, no adjustment will be made for a misstatement of
gender. See "Monthly Deductions from Fund Value -- Cost of Insurance," page
49.
Incontestability
The Company may contest the validity of this policy if any material
misstatements are made in the application. However, the policy will be
incontestable as follows:
(1) The initial Specified Amount cannot be contested after the policy has
been in force during an insured's lifetime for two years from the policy
date; and
(2) An increase in the Specified Amount or any reinstatement cannot be
contested after the increase or the reinstated policy has been in force
during an insured's lifetime for two years from its effective date.
This provision may not be applicable in all states.
Policy Illustrations
Upon request, the Company will send you an illustration of future benefits
under the policy based on both guaranteed and current cost assumptions.
Distribution of the Policy
MONY Securities Corporation ("MSC"), a wholly owned subsidiary of MONY Life
Insurance Company, is principal underwriter (distributor) of the policies. MSC
is a New York corporation organized on September 26, 1969. MSC is registered as
a broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers. The policies are sold by
individuals who are registered representatives of MSC and who are also licensed
as life insurance agents for the Company. The policies may also be sold through
other broker/dealers authorized by MSC and applicable law to do so.
Except where MSC has authorized other broker/dealers to sell the policies
(as described in the preceding paragraph), compensation payable for the sale of
the policies will be based upon the following schedule. After issue of the
Contract, commissions will equal at most 50 percent of premiums paid up to a
maximum amount.
63
Thereafter, commissions will equal at most 3.0 percent of any additional
premiums plus, on the sixth and each succeeding quarterly anniversary for so
long as the policy shall remain in effect, an annualized rate of 0.15 percent
of the Fund Value of the policy (excluding the Loan Account). Upon any
subsequent increase in Specified Amount, commissions will equal at most 50
percent of premiums paid on or after the increase up to a maximum amount.
Thereafter, commissions will return to no more than the 3.0 percent level.
Further, registered representatives may be eligible to receive certain bonuses
and other benefits based on the amount of earned commissions.
In addition, registered representatives who meet specified production levels
may qualify, under sales incentive programs adopted by Company, to receive
non-cash compensation such as expense-paid trips, expense-paid educational
seminars and merchandise. Company makes no separate deductions, other than
previously described, from premiums to pay sales commissions or sales expenses.
MORE ABOUT THE COMPANY
Management
The directors and officers of the Company are listed below. The business
address for all directors and officers of MONY Life Insurance Company is 1740
Broadway, New York, New York 10019.
Current Officers and Directors are:
Name Position and Offices with Depositor
- ---- -----------------------------------
Tom H. Barrett..... Director since 1990. Partner in American Industrial Partners, a
private investment partnership since 1992.
David L. Call...... Director since 1993. Ronald P. Lynch Dean Emeritus, Cornell
University, College of Agriculture and Life Sciences since 1995 and
Dean of said College prior to that time.
G. Robert Durham... Director since 1990. Retired from Walter Industries, Inc., a home
building and financing, natural resources and industrial
manufacturing company in 1996 after serving as Chairman of the
Board and Chief Executive Officer since 1991.
James B. Farley.... Director since 1988. Retired from MONY Life Insurance Company
in 1994 after serving as Chairman of the Board from 1993 and
Chairman of the Board and Chief Executive Officer since 1991.
Robert Holland, Jr. Director since 1990. President and Chief Executive Officer of
WorkPlace Integrators, an office furniture manufacturing company,
since 1996. Chief Executive Officer of Ben & Jerry's Homemade,
Inc., an ice cream company from 1995. Chairman of the Board of
Gilreath Manufacturing Company, a plastic injection molding
manufacturing company from 1990 to 1991.
James L. Johnson... Director since 1986. Chairman Emeritus of GTE Corporation, a
telecommunications company, having served as Chairman and Chief
Executive Officer from 1988 to 1992.
Frederick W. Kanner Director since March 2000. Partner at Dewey Ballantine LLP since
1979, and an Associate of said firm prior to that time.
Robert R. Kiley.... Director since 1995. President and Chief Executive Officer of the
New York City Partnership and Chamber of Commerce, Inc. since
1995. Principal of Kohlberg & Co. since 1994.
64
Name Position and Offices with Depositor
- ---- -----------------------------------
Jane C. Pfeiffer.. Director since 1988. Ms. Pfeiffer is an independent management
consultant.
Thomas C. Theobald Director since 1990. Managing director, William Blair Capital
Partners, L.L.C., an investment firm since 1994. Chairman of the
Board of Continental Bank from 1987 to 1994.
All of the officers have held their respective positions listed below for
five or more years. Current Officer -- Directors of the Company are:
Name Position and Offices with Depositor
- ---- -----------------------------------
Michael I. Roth..... Director, Chairman and Chief Executive Officer
Samuel J. Foti...... Director, President and Chief Operating Officer
Kenneth M. Levine... Director, Executive Vice President and Chief Investment Officer
Lee M. Smith........ Corporate Secretary and Vice President, Government Relations
Richard E. Connors.. Senior Vice President
Richard Daddario.... Executive Vice President and Chief Financial Officer
Phillip A. Eisenberg Senior Vice President and Chief Actuary
David V. Weigel..... Treasurer
No officer or director listed above receives any compensation from MONY
Variable Account L. The Company or any of its affiliates has paid no separately
allocable compensation to any person listed for services rendered to the
Account.
Mr. Roth is Chairman of the Board and Chief Executive Officer (since August
1998) and Director (since September 1997) of The MONY Group, Inc. Chairman of
the Board and Chief Executive Officer (since July 1991) and Director (since
June 1991) of MONY Life Insurance Company of America. Director of MONY
subsidiaries: 1740 Advisers, Inc. (since December 1992), MONY Benefits
Management Corp. (since March 1999). Serves on the board of directors of the
American Council of Life Insurance, The Life Insurance Council of New York,
Enterprise Foundation (a charitable foundation which develops housing not
affiliated with the Enterprise Group of Funds), Metropolitan Development
Association of Syracuse and Central New York, Enterprise Group of Funds, Inc.,
Enterprise Accumulation Trust, Pitney Bowes, Inc., Lincoln Center for the
Performing Arts Leadership Committee, Life Office Management Association, New
York City Partnership and Chamber of Commerce, and Committee for Economic
Development. Also serves as Chairman of the Board of Insurance Marketplace
Standards Association.
Mr. Foti is President and Chief Operating Officer (since August 1998) and
Director (since September 1997) of The MONY Group, Inc. President and Chief
Operating Officer of MONY Life Insurance Company of America (since February
1994) and Director (since September 1989). Director of MONY subsidiaries: MONY
Brokerage, Inc. (since January 1990), MONY International Holdings, Inc. (since
October 1994), MONY Life Insurance Company of the Americas, Ltd. (since
December 1994). Serves on the board of directors of Enterprise Group of Funds,
Inc., Enterprise Accumulation Trust and The American College of which he is
Chairman.
Mr. Levine is Executive Vice President and Chief Investment Officer (since
August 1998) and Director (since September 1997) of The MONY Group Inc.
Chairman of the Board (since December 1991) and President (since June 1992) of
MONY Series Fund, Inc. Director of MONY subsidiaries: MONY Life Insurance
Company of America (since July 1991), 1740 Advisers, Inc. (since December
1989), MONY Benefits Management Corp. (since October 1991), MONY Realty
Partners, Inc. (since October 1991) and 1740 Ventures, Inc. (since October
1991).
65
Mr. Daddario is Executive Vice President and Chief Financial Officer (since
August 1998) of The MONY Group, Inc. Vice President and Controller of MONY Life
Insurance Company of America (since September 1989). Director of MONY
subsidiaries: MONY International Holdings, Inc. (since 1998), MONY Brokerage,
Inc. (since June 1997) and MONY Life Insurance Company of the Americas, Ltd.
(since December 1997).
Mr. Eisenberg is Vice President and Actuary (since November 1992) and
Director of MONY Life Insurance Company of America. Director of MONY
subsidiary: MONY Benefits Management Corp. (since March 1999).
Mr. Smith is Vice President and Secretary (since September 1999) of The MONY
Group Inc. Vice President -- Government Relations and Industry Affairs.
Mr. Connors is Director of MONY Life Insurance Company of America (since
June 1994). Director of MONY subsidiary: MONY Brokerage, Inc. (since May 1994).
Mr. Weigel is Vice President -- Treasurer of The MONY Group Inc. (since
August 1998). Treasurer of MONY Life Insurance Company of America (since July
1991).
State Regulation
The Company is subject to the laws of the State of New York governing
insurance companies and to regulation by the Superintendent of Insurance of New
York. In addition, it is subject to the insurance laws and regulations of the
other states and jurisdictions in which it is licensed or may become licensed
to operate. An annual statement in a prescribed form must be filed with the
Superintendent of Insurance of New York and with regulatory authorities of
other states on or before March 1st in each year. This statement covers the
operations of the Company for the preceding year and its financial condition as
of December 31st of that year. The Company's affairs are subject to review and
examination at any time by the Superintendent of Insurance or his agents, and
subject to full examination of Company's operations at periodic intervals.
Telephone Transfer Privileges
You may request a transfer of Fund Value or change allocation instructions
for future premiums by telephone if an authorization for telephone transfer
form has been completed, signed, and received at the Company's Syracuse
Operations Center. The telephone allocation and transfer privileges may also be
elected by completing the telephone authorization section on the policy
application. The Company may record all or part of any telephone conversation
with respect to transfer and allocation instructions. Telephone instructions
received by the Company by 4:00 p.m. Eastern time on any valuation date will be
effected as of the end of that valuation date in accordance with your
instructions, subject to the limitations stated in this prospectus (presuming
that the Right to Return Policy Period has expired). The Company reserves the
right to deny any telephone transfer or allocation request. If all telephone
lines are busy (which might occur, for example, during periods of substantial
market fluctuations), you might not be able to request transfers by telephone
and would have to submit written requests. Telephone transfer and allocation
instructions will only be accepted if complete and correct.
The Company has adopted guidelines (which it believes to be reasonable)
relating to telephone transfers and allocation instructions. These guidelines,
among other things, outline procedures to be followed which are designed to
prevent unauthorized instructions. If these procedures are followed, the
Company shall not be liable for, and you will therefore bear the entire risk
of, any loss as a result of the Company's following telephone instructions if
such instructions prove to be fraudulent. A copy of the guidelines and the
Company's form for electing telephone transfer privileges is available from
licensed agents of the Company who are also registered representatives of MSC
or by calling 1-800-487-6669. The Company's form or a policy application with
the telephone authorization completed must be signed and received at the
Company's Syracuse Operations Center before telephone transfers will be
accepted.
66
Legal Proceedings
There are no legal proceedings pending to which MONY Variable Account L is a
party, or which would materially affect MONY Variable Account L.
Legal Matters
Legal matters have been passed on by Arthur D. Woods, Vice
President-Variable Products and Broker-Dealer Operations Counsel of MONY Life
Insurance Company, in connection with:
(1) The issue and sale of the policies described in this prospectus,
(2) The organization of the Company,
(3) The Company's authority to issue the policies under New York law, and
(4) The validity of the forms of the policies under New York law.
Robert Levy, Vice President -- Chief Tax and Benefits Counsel of MONY Life
Insurance Company has passed upon legal matters relating to the federal income
tax laws.
Registration Statement
A Registration Statement under the Securities Act of 1933 has been filed
with the SEC relating to the offering described in this Prospectus. This
Prospectus does not include all of the information set forth in the
Registration Statement, as portions have been omitted pursuant to the rules and
regulations of the SEC. The omitted information may be obtained at the SEC's
principal office in Washington, D.C., upon payment of the SEC's prescribed fees.
Independent Accountants
The audited financial statements for the Company included in this Prospectus
and in the Registration Statement have been audited by PricewaterhouseCoopers
LLP, independent accountants, as indicated in their reports herein. The audited
financial statements are included in reliance upon the authority of said firm
as experts in accounting and auditing. PricewaterhouseCoopers LLP's office is
located at 1177 Avenue of the Americas, New York, New York, 10036.
Financial Statements
The audited financial statements of the Company are set forth herein.
The financial statements of the Company have been audited by
PricewaterhouseCoopers LLP. The financial statements of the Company should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Policies.
67
FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
Page
----
With respect to MONY Variable Account L:
No financial statements for MONY Variable Account L are included because although the MONY Variable
Account L commenced operations in 1990, the subaccounts available to policyholders had not commenced
operations as of December 31, 2001.
With respect to MONY Life Insurance Company:
Unaudited interim condensed consolidated balance sheets as of September 30, 2001 and December 31, 2000......... F-2
Unaudited interim condensed consolidated statements of income and comprehensive income for the three-month
periods ended September 30, 2001 and 2000.................................................................... F-3
Unaudited interim condensed consolidated statements of income and comprehensive income for the nine-month
periods ended September 30, 2001 and 2000.................................................................... F-4
Unaudited interim condensed consolidated statement of changes in shareholder's equity for the nine-month period
ended September 30, 2001..................................................................................... F-5
Unaudited interim condensed consolidated statements of cash flows for the nine-month periods ended September
30, 2001 and 2000............................................................................................ F-6
Notes to unaudited interim condensed consolidated financial statements......................................... F-7
Report of Independent Accountants.............................................................................. F-18
Consolidated balance sheets as of December 31, 2000 and 1999................................................... F-19
Consolidated statements of income and comprehensive income for the years ended December 31, 2000,
1999 and 1998................................................................................................ F-20
Consolidated statements of changes in shareholder's equity for the years ended December 31, 2000,
1999 and 1998................................................................................................ F-21
Consolidated statements of cash flows for the years ended December 31, 2000, 1999 and 1998..................... F-22
Notes to consolidated financial statements..................................................................... F-23
F-1
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2001 and December 31, 2000
September 30, December 31,
2001 2000
------------- ------------
($ in millions)
ASSETS
Investments:
Fixed maturity securities available-for-sale, at fair value............... $ 6,787.5 $ 6,693.0
Equity securities available-for-sale, at fair value....................... 308.7 328.6
Mortgage loans on real estate............................................. 1,814.5 1,754.7
Policy loans.............................................................. 1,244.8 1,264.6
Real estate to be disposed of............................................. 167.7 171.3
Real estate held for investment........................................... 56.1 40.7
Other invested assets..................................................... 142.1 100.0
--------- ---------
10,521.4 10,352.9
--------- ---------
Cash and cash equivalents.................................................. 436.3 499.5
Accrued investment income.................................................. 193.1 188.8
Amounts due from reinsurers................................................ 591.5 598.0
Premiums receivable........................................................ 12.6 13.6
Deferred policy acquisition costs.......................................... 1,152.8 1,209.7
Other Assets............................................................... 552.6 544.0
Assets transferred in Group Pension Transaction (Note 5)................... 4,811.8 4,927.7
Separate account assets.................................................... 4,767.0 5,868.1
--------- ---------
Total assets........................................................ $23,039.1 $24,202.3
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Future policy benefits..................................................... $ 7,844.6 $ 7,794.5
Policyholders' account balances............................................ 2,265.2 2,191.3
Other policyholders' liabilities........................................... 302.7 295.9
Amounts due to reinsurers.................................................. 74.6 85.6
Accounts payable and other liabilities..................................... 572.4 631.6
Short term debt............................................................ 52.3
Long term debt............................................................. 216.9 217.0
Current federal income taxes payable....................................... 105.4 120.4
Deferred Federal Income Taxes.............................................. 147.0 24.7
Liabilities transferred in Group Pension Transaction (Note 4).............. 4,742.3 4,897.2
Separate account liabilities............................................... 4,764.3 5,865.3
--------- ---------
Total liabilities................................................... 21,035.4 22,175.8
--------- ---------
Commitments and contingencies (Note 5)
Common stock, $1.0 par value; 2.5 million shares authorized and outstanding 2.5 2.5
Capital in excess of par................................................... 1,628.6 1,628.6
Retained earnings.......................................................... 310.7 382.4
Accumulated other comprehensive income..................................... 61.9 13.0
--------- ---------
Total shareholders' equity.......................................... 2,003.7 2,026.5
--------- ---------
Total liabilities and shareholders' equity.......................... $23,039.1 $24,202.3
========= =========
See accompanying notes to unaudited interim condensed consolidated financial
statements.
F-2
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
For the Three-month Periods Ended September 30, 2001 and 2000
2001 2000
------ ------
($ in millions)
Revenues:
Premiums................................................ $162.0 $162.5
Universal life and investment-type product policy fees.. 50.1 51.2
Net investment income................................... 169.6 225.5
Net realized gains on investments....................... 0.5 22.9
Group Pension Profits (Note 4).......................... 8.0 10.8
Other income............................................ 31.3 52.3
------ ------
421.5 525.2
------ ------
Benefits and Expenses:
Benefits to policyholders............................... 203.9 194.0
Interest credited to policyholders' account balances.... 27.9 28.9
Amortization of deferred policy acquisition costs....... 32.9 30.7
Dividends to policyholders.............................. 54.5 61.0
Other operating costs and expenses...................... 100.6 109.4
------ ------
419.8 424.0
------ ------
(Loss)/Income before income taxes and extraordinary item 1.7 101.2
Income tax benefit/(expense)............................ (2.3) (33.6)
------ ------
(Loss)/Income before extraordinary item................. (0.6) 67.6
Extraordinary loss, net of tax.......................... -- 1.0
------ ------
Net (loss)/income....................................... (0.6) 66.6
Other comprehensive income, net......................... 52.9 34.7
------ ------
Comprehensive income.................................... $ 52.3 $101.3
====== ======
See accompanying notes to unaudited interim condensed consolidated financial
statements.
F-3
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
For the Nine-month Periods Ended September 30, 2001 and 2000
2001 2000
-------- --------
($ in millions, except share data
and per share amounts)
Revenues:
Premiums.............................................. $ 500.5 $ 504.0
Universal life and investment-type product policy fees 152.1 157.0
Net investment income................................. 534.7 808.3
Net realized gains on investments..................... 6.0 32.6
Group Pension Profits (Note 4)........................ 27.2 29.0
Other income.......................................... 125.7 174.0
-------- --------
1,346.2 1,704.9
-------- --------
Benefits and Expenses:
Benefits to policyholders............................. 596.1 577.1
Interest credited to policyholders' account balances.. 83.2 83.1
Amortization of deferred policy acquisition costs..... 98.4 105.4
Dividends to policyholders............................ 169.7 170.9
Other operating costs and expenses.................... 332.4 383.0
-------- --------
1,279.8 1,319.5
-------- --------
Income before income taxes and extraordinary item..... 66.4 385.4
Income tax expense.................................... 23.1 131.3
-------- --------
Income before extraordinary item...................... 43.3 254.1
Extraordinary loss, net of tax........................ -- (37.7)
-------- --------
Net income............................................ 43.3 216.4
Other comprehensive income, net....................... 48.9 8.9
-------- --------
Comprehensive income.................................. $ 92.2 $ 225.3
======== ========
See accompanying notes to Unaudited interim condensed consolidated financial
statements.
F-4
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
Nine-month Period Ended September 30, 2001
Accumulated
Capital In Other Total
Common Excess of Retained Comprehensive Shareholders'
Stock Par Earnings Income Equity
------ ---------- -------- ------------- -------------
($ in millions)
Balance, December 31, 2000.... $2.5 $1,628.6 $ 382.4 $13.0 $2,026.5
Dividend Payable.............. (115.0) (115.0)
Comprehensive income:
Net income................... 43.3 43.3
Other comprehensive income(1) 48.9 48.9
----- --------
Comprehensive income.......... 92.2
---- -------- ------- ----- --------
Balance, September 30, 2001... $2.5 $1,628.6 $ 310.7 $61.9 $2,003.7
==== ======== ======= ===== ========
See accompanying notes to unaudited interim condensed consolidated financial
statements.
F-5
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine-month Periods Ended September 30, 2001 and 2000
2001 2000
-------- ---------
($ in millions)
Net cash (used in)/provided by operating activities............................................. $ (38.6) $ (26.8)
Cash flows from investing activities:
Sales, maturities or repayment of:
Fixed maturities securities.................................................................... 1,027.9 815.9
Equity securities.............................................................................. 36.8 318.2
Mortgage loans on real estate.................................................................. 201.1 418.5
Real estate.................................................................................... 15.9 102.8
Policy loans, net.............................................................................. 19.8 8.2
Other invested assets.......................................................................... 3.3 1.6
Acquisitions of investments:
Fixed maturities securities.................................................................... (877.4) (783.7)
Equity securities.............................................................................. (25.0) (98.2)
Mortgage loans on real estate.................................................................. (271.3) (329.3)
Real estate.................................................................................... (63.7) (38.4)
Other invested assets.......................................................................... (36.8) (37.9)
Other, net..................................................................................... -- (150.0)
Property, plant and equipment, net............................................................. (27.9) (28.9)
-------- ---------
Net cash provided by/(used in) investing activities............................................. $ 2.7 $ 198.8
-------- ---------
Cash flows from financing activities:
Issuance of debt................................................................................ -- --
Repayments of debt.............................................................................. (0.1) (284.3)
Receipts from annuity and universal life policies credited to policyholder's account balances(1) 889.2 1,870.6
Return of policyholder account balances on annuity and universal life policies(1)............... (775.6) (1,883.6)
Capital Contribution............................................................................ (25.8) 65.0
Dividends Payable............................................................................... (115.0) (75.0)
Long Term Borrowing............................................................................. -- 215.0
-------- ---------
Net cash (used in) financing activities......................................................... (27.3) (92.3)
-------- ---------
Net (decrease)/increase in cash and cash equivalents............................................ (63.2) 79.7
Cash and cash equivalents, beginning of period.................................................. 499.5 343.8
-------- ---------
Cash and cash equivalents, end of period........................................................ $ 436.3 $ 423.5
======== =========
- ----------
(1)Includes exchanges to a new FPVA product series.
See accompanying notes to unaudited interim condensed consolidated financial
statements.
F-6
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Description of Business:
On November 16, 1998, pursuant to its Plan of Reorganization (the "Plan")
which was approved by the New York Superintendent of Insurance on the same day
(the "Plan Effective Date"), The Mutual Life Insurance Company of New York
("MONY") converted from a mutual life insurance company to a stock life
insurance company (the "Demutualization") and became a wholly owned subsidiary
of The MONY Group Inc. ("MONY Group"), a Delaware corporation organized on June
24, 1997. In connection with the Plan, MONY established a Closed Block ("Closed
Block") to fund the guaranteed benefits and dividends of certain participating
insurance policies, and eligible policyholders received cash, policy credits,
or shares of common stock of the MONY Group in exchange for their membership
interests in MONY. Also, on November 16, 1998, the MONY Group consummated an
initial public offering (the "Offering") of approximately 12.9 million shares
of its common stock and MONY changed its name to MONY Life Insurance Company.
The shares of common stock issued in the Offering are in addition to
approximately 34.3 million shares of common stock of the MONY Group distributed
to the aforementioned policyholders. As used in these financial statements, the
"Company" shall be a reference to MONY Life and its direct and indirect
subsidiaries; and the "Transaction" shall be a collective reference to the Plan
and Offerings.
The Company provides life insurance, annuities, mutual funds, brokerage,
asset management, business and estate planning, and trust services to
individual and institutional clients.
The Company distributes its products and services primarily through its
career agency sales force and various complementary distribution channels.
Complementary distribution includes: (i) sales of mutual funds by Enterprise
Capital Management, a Company subsidiary, through third-party broker dealers,
(ii) sales of Protection Products sold by U.S. Financial Life Insurance Company
("USFL"), also a Company subsidiary, through brokerage general agencies, (iii)
sales of corporate-owned life insurance ("COLI") products by the Company's
corporate marketing team and (iv) sales of a variety of financial products and
services through the Company's Trusted Securities Advisors Corp. subsidiary.
The Company primarily sells its products in all 50 of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.
2. Summary of Significant Accounting Policies:
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial
statements have been prepared in conformity with generally accepted accounting
principles in the United States ("GAAP"). The preparation of financial
statements in conformity with GAAP requires management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. In the opinion of management these statements include all
normal recurring adjustments necessary to present fairly the financial
position, results of operations and cash flows of the Company for the periods
presented in conformity with GAAP. These statements should be read in
conjunction with the consolidated financial statements of the MONY Group for
the year ended December 31, 2000, which are presented in MONY Group's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000 ("MONY Group's
2000 Annual Report"). The results of operations for the three-month and
nine-month period ended September 30, 2001 are not necessarily indicative of
the results to be expected for the full year. Certain reclassifications have
been made in the amounts presented for the comparative prior periods to conform
those periods to the current presentation.
New Accounting Pronouncements
On December 26, 2000 the American Institute of Certified Public Accountants
issued Statement of Position 00-3, Accounting by Insurance Enterprises for
Demutualizations and Formations of Mutual Insurance Holding Companies and For
Certain Long-Duration Participating Contracts ("SOP 00-3"). SOP 00-3 provides
guidance with respect to accounting for Demutualizations and requires, among
other things, that (i) Closed Block assets, liabilities, revenues, and expenses
should be displayed in financial statements combined with all other assets,
liabilities, revenues, and expenses outside the Closed Block, and (ii)
Demutualization
F-7
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
expenses be classified as a single line item within income from continuing
operations. The guidance in SOP 00-3 requires restatement of financial
statements presented for years prior to its issuance and is effective for
fiscal years beginning after December 15, 2000, except as it pertains to
demutualization expenses which was effective immediately upon its issuance. The
financial statements herein reflect the adoption of SOP 00-3. Accordingly, the
consolidated statements of income and comprehensive income and balance sheets
presented herein for the three-month and nine-month periods ended September 30,
2000 have been restated from those previously reported in the prior year to
conform the presentation thereof to that required by SOP 00-3.
In the first quarter of 2001, the Company adopted SFAS 133, Accounting for
Derivative Instruments and Hedging Activities ("SFAS 133"). SFAS 133 requires
all derivatives to be recognized in the statement of financial position as
either assets or liabilities and measured at fair value. The corresponding
derivative gains and losses should be reported based on the hedge relationship,
if any, that exists. Changes in the fair value of derivatives that are not
designated as hedges or that do not meet the hedge accounting criteria in SFAS
133, are required to be reported in earnings. SFAS 133, is effective for all
fiscal quarters of the fiscal years beginning after June 15, 2000. SFAS 133 did
not have a significant affect on the Company's financial position or results of
operations.
In September 2000, the FASB issued SFAS No. 140 Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities, a replacement
of SFAS No. 125 ("SFAS 140"). SFAS No. 140 specifies the accounting and
reporting requirements for securitizations and other transfers of financial
assets and collateral, recognition and measurement of servicing assets and
liabilities and the extinguishment of liabilities. SFAS No. 140 is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001 and is to be applied prospectively
with certain exceptions. This statement is effective for recognition and
reclassification of collateral and for disclosures relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000.
Adoption of the new requirements did not have a significant impact on the
Company's consolidated financial position or results of operations.
In July 2001, the FASB issued SFAS No. 141, Business Combinations ("SFAS
141"). SFAS 141 addresses the financial accounting and reporting for all
business combinations. This statement requires that all business combinations
be accounted for under the purchase method of accounting and abolishes the use
of the pooling-of-interest method, requires separate recognition of intangible
assets that can be identified and named, and expands required disclosures. All
of the Company's past business combinations have been accounted for under the
purchase accounting method. The provisions of this statement apply to all
business combinations initiated after June 30, 2001. This statement has no
effect on the financial position or results of operations of the Company.
In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets ("SFAS 142"). This statement addresses (i) how intangible assets that
are acquired individually or with a group of other assets (but not those
acquired in a business combination) should be accounted for in financial
statements upon their acquisition and (ii) how goodwill and other intangible
assets should be accounted for after they have been initially recognized in the
financial statements. Under SFAS 142, Company's will no longer amortize
goodwill on a straight-line basis over a predetermined period of time. SFAS 142
requires companies to evaluate recoverability of goodwill at least annually,
and more frequently if events and circumstances indicate that goodwill may not
be recoverable. FAS 142 requires amortization of identified intangibles with
finite useful lives over their expected useful lives. This statement is
effective for fiscal years beginning after December 15, 2001. The Company is in
the process of evaluating the effect of SFAS 142 on its financial position and
results of operations, but does not expect it to have an adverse material
effect.
3. Segment Information:
For management and reporting purposes, the Company's business is organized
in two principal operating segments, the "Protection Products" segment and the
"Accumulation Products" segment. Substantially all of the Company's other
business activities are combined and reported in the "Other Products" segment.
F-8
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Products comprising the Protection Products segment primarily include a wide
range of insurance products, including: whole life, term life, universal life,
variable universal life, corporate-owned life insurance, last survivor whole
life, last survivor universal life, last survivor variable universal life,
group universal life and special-risk products. In addition, included in the
protection products segment are: (i) the assets and liabilities transferred
pursuant to the Group Pension Transaction, as well as the Group Pension Profits
derived therefrom (see Note 4), (ii) the Closed Block assets and liabilities,
as well as all the related revenues and expenses relating thereto.
The Accumulation Products segment primarily includes flexible premium
variable annuities, single premium deferred annuities, single premium immediate
annuities, proprietary mutual funds, investment management services, and
certain other financial services products.
The Company's Other Products segments primarily consists of an insurance
brokerage operation, a securities broker-dealer and certain lines of insurance
business no longer written by the Company (the "run-off businesses"). The
insurance brokerage operation provides the Company's career agency sales force
with access to variable life, annuity, small group health and specialty
insurance products written by other carriers to meet the insurance and
investment needs of its customers. MSC is a securities broker dealer that
transacts customer trades primarily in securities and mutual funds. In addition
to selling the Company's Protection and Accumulation Products, MSC provides the
Company's career agency distribution system access to other non-proprietary
investment products (including stocks, bonds, limited partnership interests,
tax-exempt unit investment trusts and other investment securities). The run off
businesses primarily consist of group life and health business as well as group
pension business that was not included in the Group Pension Transaction (see
Note 4).
Amounts reported as "reconciling amounts" in the table below primarily
relate to: (i) contracts issued by the Company relating to its employee benefit
plans and, (ii) assets, liabilities, revenues and expenses of the MONY Group.
Set forth in the following table is certain financial information with
respect to the Company's operating segments as well as amounts not allocated to
the segments as of September 30, 2001 and December 31, 2000 and for each of the
three-month and nine-month periods ended September 30, 2001 and 2000.
F-9
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Segment Summary Financial Information
For the For the
Three-month Nine-month
Periods Ended Periods Ended
September 30, September 30,
-------------- -------------
2001 2000 2001 2000
------ ------ ------ ------
($ in millions)
Premiums:
Protection Products.................................................. $159.1 $160.3 $490.5 $497.2
Accumulation Products................................................ 1.0 -- 3.4 0.4
Other Products....................................................... 1.9 2.2 6.6 6.4
------ ------ ------ ------
$162.0 $162.5 $500.5 $504.0
====== ====== ====== ======
Universal life and investment-type product policy fees:
Protection Products.................................................. $ 38.4 $ 33.8 $110.0 $102.3
Accumulation Products................................................ 12.5 17.3 42.0 53.8
Other Products....................................................... (0.8) 0.1 0.1 0.9
------ ------ ------ ------
$ 50.1 $ 51.2 $152.1 $157.0
====== ====== ====== ======
Net investment income and net realized gains (losses) on investments:
Protection Products.................................................. $139.4 $197.9 $442.9 $657.6
Accumulation Products................................................ 18.7 30.4 59.2 106.6
Other Products....................................................... 4.0 17.7 17.3 63.9
Reconciling amounts.................................................. 8.0 6.9 21.3 12.8
------ ------ ------ ------
$170.1 $252.9 $540.7 $840.9
====== ====== ====== ======
Other income: (1)
Protection Products.................................................. $ 2.3 $ 15.6 $ 27.9 $ 46.7
Accumulation Products................................................ 23.5 29.8 76.7 92.5
Other Products....................................................... 12.9 16.2 43.9 60.3
Reconciling amounts.................................................. 0.6 1.5 4.4 3.5
------ ------ ------ ------
$ 39.3 $ 63.1 $152.9 $203.0
====== ====== ====== ======
Amortization of deferred policy acquisition costs:
Protection Products.................................................. $ 25.7 $ 23.9 $ 80.9 $ 84.0
Accumulation Products................................................ 7.2 6.8 17.5 21.4
------ ------ ------ ------
$ 32.9 $ 30.7 $ 98.4 $105.4
====== ====== ====== ======
Benefits to policyholders: (2)
Protection Products.................................................. $206.8 $196.8 $604.2 $581.6
Accumulation Products................................................ 17.7 16.4 50.1 53.4
Other Products....................................................... 5.7 7.8 18.6 19.5
Reconciling amounts.................................................. 1.6 1.9 6.4 5.7
------ ------ ------ ------
$231.8 $222.9 $679.3 $660.2
====== ====== ====== ======
F-10
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
For the For the
Three-month Nine-month
Periods Ended Periods Ended
September 30, September 30,
------------- --------------
2001 2000 2001 2000
----- ------ ------ ------
($ in millions)
(Loss)/Income before income taxes:
Protection Products............... $ 8.6 $ 68.1 $ 56.0 $262.2
Accumulation Products............. 0.7 27.7 25.6 90.2
Other Products.................... (8.5) 3.5 (15.1) 32.9
Reconciling amounts............... 0.9 1.9 (0.1) 0.1
----- ------ ------ ------
$ 1.7 $101.2 $ 66.4 $385.4
===== ====== ====== ======
As of As of
September 30, December 31,
2001 2000
------------- ------------
($ in millions)
Assets: (3)
Protection Products (4)........... $16,316.9 $16,239.1
Accumulation Products............. 4,716.1 5,593.5
Other Products.................... 961.6 1,060.7
Reconciling amounts............... 1,044.5 1,309.0
--------- ---------
$23,039.1 $24,202.3
========= =========
Deferred policy acquisition costs:
Protection Products............... $ 1,013.7 $ 1,064.3
Accumulation Products............. 139.1 145.4
--------- ---------
$ 1,152.8 $ 1,209.7
========= =========
Policyholders liabilities:
Protection Products (5)........... $10,368.4 $10,290.7
Accumulation Products............. 1,075.3 1,060.0
Other Products.................... 370.4 381.4
Reconciling amounts............... 17.4 17.7
--------- ---------
$11,831.5 $11,749.8
========= =========
Separate account liabilities: (3)
Protection Products (6)........... $ 3,809.5 $ 3,939.5
Accumulation Products............. 3,161.2 4,072.9
Other Products.................... 429.9 499.5
Reconciling amounts............... 661.0 770.1
--------- ---------
$ 8,061.6 $ 9,282.0
========= =========
F-11
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
- ----------
(1)Includes Group Pension Profits revenues and other income.
(2)Includes benefits to policyholders and interest credited to policyholders'
account balances.
(3)Each segment includes separate account assets in an amount equal to the
corresponding liability reported.
(4)Includes assets transferred in the Group Pension Transaction of $4,811.8
million and $4,927.7 million as of September 30, 2001 and December 31, 2000,
respectively (see Note 4).
(5)Includes policyholder liabilities transferred in the Group Pension
Transaction of $1,418.9 million and $1,468.1 million as of September 30,
2001 and December 31, 2000, respectively (see Note 4).
(6)Includes separate account liabilities transferred in the Group Pension
Transaction of $3,297.2 million and $3,416.7 million as of September 30,
2001 and December 31, 2000 respectively (see Note 4).
The following is a summary of premiums and universal life and
investment-type product policy fees by product for the three and nine-month
periods ended September 30, 2001 and 2000, respectively.
Three-month Period Nine-month Period
Ended September 30, Ended September 30,
------------------- -------------------
2001 2000 2001 2000
------ ------ ------ ------
($ in millions)
Premiums:
Individual life........................................ $159.0 $160.2 $490.2 $496.8
Group insurance........................................ 1.9 2.2 6.6 6.4
Disability income insurance............................ 0.1 0.1 0.3 0.4
Other.................................................. 1.0 0.0 3.4 0.4
------ ------ ------ ------
Total........................................... $162.0 $162.5 $500.5 $504.0
====== ====== ====== ======
Universal life and investment-type product policy fees:
Universal life......................................... $ 18.1 $ 16.9 $ 53.8 $ 50.8
Variable universal life................................ 17.9 14.3 49.1 43.2
Group universal life................................... 2.4 2.6 7.1 8.3
Individual variable annuities.......................... 12.5 17.3 42.0 53.8
Individual fixed annuities............................. (0.8) 0.1 0.1 0.9
------ ------ ------ ------
Total........................................... $ 50.1 $ 51.2 $152.1 $157.0
====== ====== ====== ======
4. The Group Pension Transaction:
The following sets forth certain summarized financial information relating
to the Group Pension Transaction (as defined in the notes to the audited
consolidated financial statements included in MONY Group's 2000 Annual Report)
as of and for the periods indicated, including information regarding: (i) the
general account assets transferred to support the existing deposits in the
Group Pension Transaction (such assets hereafter referred to as the "AEGON
Portfolio"), (ii) the transferred separate account assets and liabilities, and
(iii) the components of revenue and expense comprising the Group Pension
Profits (as defined in the notes to the audited consolidated financial
statements included in MONY Group's 2000 Annual Report):
F-12
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
As of As of
September 30, December 31,
2001 2000
------------- ------------
($ in millions)
Assets:
General Account
Fixed Maturities: available for sale, at estimated fair value (amortized cost; $1,375.4 million
and $1,420.8 million, respectively).......................................................... $1,413.9 $1,419.0
Mortgage loans on real estate.................................................................. 28.7 47.5
Cash and cash equivalents...................................................................... 49.9 18.5
Accrued investment income...................................................................... 22.1 26.0
-------- --------
Total general account assets................................................................. 1,514.6 1,511.0
Separate account assets......................................................................... 3,297.2 3,416.7
-------- --------
Total assets............................................................................. $4,811.8 $4,927.7
======== ========
Liabilities:
General Account (1)
Policyholders' account balances................................................................ $1,418.9 $1,468.1
Other liabilities.............................................................................. 26.2 12.4
-------- --------
Total general account liabilities............................................................ $1,445.1 $1,480.5
Separate account liabilities (2)................................................................ $3,297.2 $3,416.7
-------- --------
Total Liabilities........................................................................ $4,742.3 $4,897.2
======== ========
- ----------
(1)Includes general account liabilities transferred in connection with the
Group Pension Transaction pursuant to indemnity reinsurance of $72.2 million
and $74.2 million as of September 30, 2001 and December 31, 2000,
respectively.
(2)Includes separate account liabilities transferred in connection with the
Group Pension Transaction pursuant to indemnity reinsurance of $11.4 million
and $14.7 million as of September 30, 2001 and December 31, 2000,
respectively.
For the Three-month For the Nine-month
Periods Ended Periods Ended
September 30, September 30,
------------------- ------------------
2001 2000 2001 2000
----- ----- ----- ------
($ in millions)
Revenues:
Product policy fees................................ $ 4.8 $ 7.4 $14.3 $ 19.4
Net investment income.............................. 25.0 27.8 78.0 86.2
Net realized gains (losses) on investments......... 1.3 1.0 4.9 1.6
----- ----- ----- ------
Total Revenues.................................. 31.1 36.2 97.2 107.2
----- ----- ----- ------
Benefits and Expenses:
Interest Credited to policyholders account balances 19.1 21.7 56.2 64.9
Other operating costs and expenses................. 4.0 3.7 13.8 13.3
----- ----- ----- ------
Total benefits and expenses..................... 23.1 25.4 70.0 78.2
----- ----- ----- ------
Group Pension Profits........................... $ 8.0 $10.8 $27.2 $ 29.0
===== ===== ===== ======
F-13
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
5. Commitments and Contingencies:
Since late 1995 a number of purported class actions have been commenced in
various state and federal courts against the Company alleging that it engaged
in deceptive sales practices in connection with the sale of whole and universal
life insurance policies from the early 1980s through the mid 1990s. Although
the claims asserted in each case are not identical, they seek substantially the
same relief under essentially the same theories of recovery (i.e., breach of
contract, fraud, negligent misrepresentation, negligent supervision and
training, breach of fiduciary duty, unjust enrichment and violation of state
insurance and/or deceptive business practice laws). Plaintiffs in these cases
seek primarily equitable relief (e.g., reformation, specific performance,
mandatory injunctive relief prohibiting the Company from canceling policies for
failure to make required premium payments, imposition of a constructive trust
and creation of a claims resolution facility to adjudicate any individual
issues remaining after resolution of all class-wide issues) as opposed to
compensatory damages, although they also seek compensatory damages in
unspecified amounts. The Company has answered the complaints in each action
(except for one being voluntarily held in abeyance). The Company has denied any
wrongdoing and has asserted numerous affirmative defenses.
On June 7, 1996, the New York State Supreme Court certified one of those
cases, Goshen v. The Mutual Life Insurance Company of New York and MONY Life
Insurance Company of America (now known as DeFilippo, et al v. The Mutual Life
Insurance Company of New York and MONY Life Insurance Company of America), the
first of the class actions filed, as a nationwide class consisting of all
persons or entities who have, or at the time of the policy's termination had,
an ownership interest in a whole or universal life insurance policy issued by
MONY and sold on an alleged "vanishing premium" basis during the period January
1, 1982 to December 31, 1995. On March 27, 1997, MONY filed a motion to dismiss
or, alternatively, for summary judgment on all counts of the complaint. All of
the other putative class actions have been consolidated and transferred by the
Judicial Panel on Multidistrict Litigation to the United States District Court
for the District of Massachusetts and/or are being held in abeyance pending the
outcome of the Goshen case.
On October 21, 1997, the New York State Supreme Court granted MONY's motion
for summary judgment and dismissed all claims filed in the Goshen case against
MONY. On December 20, 1999, the New York State Court of Appeals affirmed the
dismissal of all but one of the claims in the Goshen case (a claim under New
York's General Business Law), which has been remanded back to the New York
State Supreme Court for further proceedings consistent with the opinion. The
New York State Supreme Court has subsequently reaffirmed that, for purposes of
the remaining New York General Business Law claim, the class is now limited to
New York purchasers only, and has further held that the New York General
Business Law claims of all class members whose claims accrued prior to November
29, 1992 are barred by the applicable statute of limitations. MONY intends to
defend itself vigorously against the sole remaining claim. There can be no
assurance, however, that the present litigation relating to sales practices
will not have a material adverse effect on MONY.
On November 16, 1999, The MONY Group Inc. and MONY Life Insurance Company
were served with a complaint in an action entitled Calvin Chatlos, M.D., and
Alvin H. Clement, On Behalf of Themselves And All Others Similarly Situated v.
The MONY Life Insurance Company, The MONY Group Inc., and Neil D. Levin,
Superintendent, New York Department of Insurance, filed in the United States
District Court for the Southern District of New York. The action purports to be
brought as a class action on behalf of all individuals who had an ownership
interest in one or more in-force life insurance policies issued by MONY Life
Insurance Company as of November 16, 1998. The complaint alleges that (i) the
New York Superintendent of Insurance, Neil D. Levin, violated Section 7312 of
the New York Insurance Law by approving the plan of demutualization, which
plaintiffs claim was not fair and adequate, primarily because it allegedly
failed to provide for sufficient assets for the mechanism established under the
plan to preserve reasonable dividend expectations of the Closed Block, and (ii)
MONY violated Section 7312 by failing to develop and submit to the
Superintendent a plan of demutualization that was fair and adequate. The
plaintiffs seek equitable relief in the form of an order vacating and/or
modifying the Superintendent's order approving the plan of demutualization
and/or directing the Superintendent to order MONY to increase the assets in the
Closed Block, as well as unspecified monetary damages, attorneys' fees and
other relief.
In early January 2000, MONY and the New York Superintendent wrote to the
District Court seeking a pre-motion conference preliminary to the filing of a
motion to dismiss the federal complaint on jurisdictional, federal abstention
and timeliness grounds
F-14
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
and for failure to state a claim. Following receipt of those letters,
plaintiffs' counsel offered voluntarily to dismiss their complaint, and a
stipulation and order to that effect was thereafter filed and approved by the
court.
On March 27, 2000, plaintiffs filed a new action in New York State Supreme
Court bearing the same caption and naming the same defendants as the previously
filed federal action. The state court complaint differs from the complaint
previously filed in federal court in two primary respects. First, it no longer
asserts a claim for damages against the Superintendent, nor does its prayer for
relief seek entry of an order vacating or modifying the Superintendent's
decision or requiring the Superintendent to direct MONY to place additional
assets into the Closed Block. Rather, it seeks an accounting and an order from
the Court directing MONY to transfer additional assets to the Closed Block.
Second, the new complaint contains claims for breach of contract and
fiduciary duty, as well as new allegations regarding the adequacy of the
disclosures contained in the Policyholder Information Booklet distributed to
policyholders soliciting their approval of the plan of demutualization (which
plaintiffs claim violated both the Insurance Law and MONY's fiduciary duties).
In order to challenge successfully the New York Superintendent's approval of
the plan, plaintiffs would have to sustain the burden of showing that such
approval was arbitrary and capricious or an abuse of discretion, made in
violation of lawful procedures, affected by an error of law or not supported by
substantial evidence. In addition, Section 7312 provides that MONY may ask the
court to require the challenging party to give security for the reasonable
expenses, including attorneys' fees, which may be incurred by MONY or the
Superintendent or for which MONY may become liable, to which security MONY
shall have recourse in such amount as the court shall determine upon the
termination of the action.
MONY and the Superintendent moved to dismiss the state court complaint in
its entirety on a variety of grounds. On April 20, 2001, the New York Supreme
Court granted both motions and dismissed all claims against MONY and the
Superintendent. On June 29, 2001 plaintiffs filed a Notice of Appeal with the
New York Appellate Division, appealing the dismissal of the claims against MONY
and the Superintendent. MONY intends to defend itself vigorously against
plaintiffs' appeal. There can be no assurance, however, that the present
litigation will not have a material adverse effect on MONY.
In addition to the matters discussed above, the Company is involved in
various other legal actions and proceedings (some of which involve demands for
unspecified damages) in connection with its business. In the opinion of
management of the Company, resolution of contingent liabilities, income taxes
and other matters will not have a material adverse effect on the Company's
consolidated financial position or results of operations.
At September 30, 2001, the Company had commitments to contribute capital to
its equity partnership investments of $119.4 million and commitments to
purchase $76.7 million of private fixed and floating rate maturity securities
with interest rates ranging from 4.53% to 8.16%.
At September 30, 2001, the Company had commitments to issue $6.1 million of
fixed rate agricultural loans with periodic interest rate reset dates. The
initial interest rates on such loans range from approximately 6.25% to 7.50%.
In addition, the Company had commitments to issue $137.5 million of fixed rate
and floating rate commercial mortgage loans with interest rates ranging from
5.39% to 8.65%.
At September 30, 2001, the Company had commitments to issue $14.2 million of
mezzanine financing with pay rates ranging from 8.26% to 10.00%.
In addition, MONY Group maintains a syndicated credit facility with domestic
banks aggregating $150.0 million, with a scheduled renewal date in June 2002.
In accordance with certain covenants of the facilities, MONY Group is required
to maintain a certain statutory tangible net worth and debt to capitalization
ratio. The purpose of this facility is to provide additional liquidity for any
unanticipated short-term cash needs MONY Group might experience and also to
serve as support for MONY Group's $150.0 million commercial paper program which
was activated in the third quarter of 2000. MONY Group has complied with all
covenants of the facilities, has not borrowed against these lines of credit
since their inception, and does not have any commercial paper outstanding as of
September 30, 2001.
F-15
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. Closed Block:
The following tables set forth certain summarized financial information
relating to the Closed Block, as of and for the periods indicated:
September 30, December 31,
2001 2000
------------- ------------
($ in millions)
Assets:
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost; $3,625.9 and $3,535.8 respectively) $3,770.5 $3,543.1
Mortgage loans on real restate.................................................................. 596.1 566.0
Policy loans.................................................................................... 1,162.3 1,183.9
Cash and cash equivalents....................................................................... 171.3 167.8
Premiums receivable............................................................................. 10.1 13.6
Deferred policy acquisition costs............................................................... 433.9 552.6
Other assets.................................................................................... 233.5 224.2
-------- --------
Total Closed Block assets..................................................................... $6,377.7 $6,251.2
======== ========
Liabilities:
Future policy benefits........................................................................... $6,853.0 $6,826.8
Policyholders' account balances.................................................................. 291.9 293.3
Other Policyholders' liabilities................................................................. 182.9 173.5
Other liabilities................................................................................ 103.0 22.2
-------- --------
Total Closed Block liabilities................................................................ $7,430.8 $7,315.8
======== ========
For the Three-month For the Nine-month
Period Ended Periods Ended
September 30, September 30,
------------------- -----------------
2001 2000 2001 2000
------ ------ ------ ------
($ in millions)
Revenues:
Premiums............................................ $129.8 $136.0 $397.3 $419.6
Net investment income............................... 100.0 99.2 299.0 294.2
Net realized gains (losses) on investments.......... 2.7 2.6 4.7 (4.3)
Other income........................................ 0.5 0.6 1.5 1.7
------ ------ ------ ------
Total revenues................................... 233.0 238.4 702.5 711.2
------ ------ ------ ------
Benefits and Expenses:
Benefits to policyholders........................... $151.7 $148.0 $445.1 $450.2
Interest credited to policyholders' account balances 2.3 2.2 6.5 6.5
Amortization of deferred policy acquisition cost.... 13.9 14.7 46.1 46.6
Dividends to policyholders.......................... 53.9 60.4 167.3 169.1
Other operating costs and expenses.................. 1.6 2.4 5.7 6.7
------ ------ ------ ------
Total benefits and expenses...................... 223.4 227.7 670.7 679.1
------ ------ ------ ------
Contribution from the Closed Block............... $ 9.6 $ 10.7 $ 31.8 $ 32.1
====== ====== ====== ======
For the three-month periods ended September 30, 2001 and 2000, there were
$0.0 million and $5.6 million in charges for other than temporary impairments
on fixed maturities in the Closed Block. For the nine-month period ended
September 30, 2001
F-16
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
and 2000, there were $4.7 million and $10.1 million, respectively, in charges
for other than temporary impairments on fixed maturity securities in the Closed
Block.
7. Extraordinary Item and Other Items:
On March 8, 2000, the MONY Group issued $300.0 million principal amount of
senior notes (the "Senior Notes"). The Senior Notes mature on March 15, 2010
and bear interest at 8.35% per annum. The principal amount of the Senior Notes
is payable at maturity and interest is payable semi-annually. The net proceeds
to the MONY Group from the issuance of the Senior Notes, after deducting
underwriting commissions and other expenses (primarily legal and accounting
fees), were approximately $296.6 million. Approximately $280.0 million of the
net proceeds from the issuance of the Senior Notes was used by the MONY Group
to finance the repurchase, on March 8, 2000, by MONY Life of all of its
outstanding $115.0 million face amount 9.5% coupon surplus notes, and $116.5
million face amount of its $125.0 million face amount 11.25% coupon surplus
notes (hereafter referred to as the "9.5% Notes" and "11.25% Notes",
respectively), which were outstanding at December 31, 1999. The balance of the
net proceeds from the issuance of the Senior Notes will be used by the MONY
Group for general corporate purposes.
As a result of the repurchase of the 9.5% Notes and substantially all of the
11.25% Notes, the Company recorded a before tax loss of $56.5 million ($36.7
million after tax) during the first quarter of 2000 and $1.6 million ($1.0
million after tax) during the third quarter of 2000. The loss resulted from the
premium paid by MONY Life to the holders of the 9.5% Notes and the 11.25% Notes
reflecting the excess of their fair value over their carrying value on the
Company's books at the date of the transaction of approximately $7.0 million
and $51.1 million, respectively. This loss is reported, net of tax, as an
extraordinary item on the Company's income statement for the nine-month period
ended September 30, 2000.
F-17
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
MONY Life Insurance Company.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and comprehensive income, changes in
shareholders' equity and cash flows present fairly, in all material respects,
the financial position of The MONY Life Insurance Company and Subsidiaries (the
"Company"), formerly known as The Mutual Life Insurance Company of New York and
subsidiaries, at December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 8, 2001
F-18
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999
2000 1999
--------- ---------
($ in millions)
ASSETS
Investments:
Fixed maturity securities available-for-sale, at fair value (Note 12)................... $ 3,149.9 $ 3,066.7
Equity securities available-for-sale, at fair value (Note 12)........................... 328.6 519.8
Mortgage loans on real estate (Note 13)................................................. 1,188.7 1,270.4
Policy loans............................................................................ 80.7 69.1
Real estate to be disposed of (Note 13)................................................. 171.3 300.9
Real estate held for investment (Note 13)............................................... 40.7 46.2
Other invested assets................................................................... 99.3 37.9
--------- ---------
$ 5,059.2 $ 5,311.0
========= =========
Cash and cash equivalents................................................................ 331.7 232.6
Accrued investment income................................................................ 71.7 74.6
Amounts due from reinsurers.............................................................. 491.6 488.0
Deferred policy acquisition costs........................................................ 657.1 558.3
Other assets............................................................................. 544.0 365.4
Assets transferred in Group Pension Transaction (Note 10)................................ 4,927.7 5,109.8
Separate account assets.................................................................. 5,868.1 6,398.3
Closed Block assets (Note 20)............................................................ 6,251.2 6,182.1
--------- ---------
Total assets...................................................................... $24,202.3 $24,720.1
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Future policy benefits................................................................... $ 967.7 $ 954.3
Policyholders' account balances.......................................................... 1,898.0 1,942.9
Other policyholders' liabilities......................................................... 122.4 120.4
Amounts due to reinsurers................................................................ 87.3 83.8
Accounts payable and other liabilities................................................... 628.1 581.1
Short term debt (Note 16)................................................................ 52.3 53.4
Long term debt (Note 16)................................................................. 217.0 245.4
Current federal income taxes payable..................................................... 124.7 147.4
Liabilities transferred in Group Pension Transaction (Note 10)........................... 4,897.2 5,099.1
Separate account liabilities............................................................. 5,865.3 6,396.2
Closed Block liabilities (Note 20)....................................................... 7,315.8 7,303.3
--------- ---------
Total liabilities................................................................. $22,175.8 $22,927.3
========= =========
Commitments and contingencies (Notes 9 and 18)
Common stock, $0.01 par value; 400 million shares authorized; 47.2 million shares issued,
46.2 million shares outstanding........................................................ $ 2.5 $ 2.5
Capital in excess of par................................................................. 1,628.6 1,563.6
Retained earnings........................................................................ 382.4 256.1
Accumulated other comprehensive income................................................... 13.0 (29.4)
--------- ---------
Total shareholders' equity........................................................ 2,026.5 1,792.8
--------- ---------
Total liabilities and shareholders' equity........................................ $24,202.3 $24,720.1
========= =========
See accompanying notes to consolidated financial statements.
F-19
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Years Ended December 31, 2000, 1999, and 1998
1998
Pro Forma*
2000 1999 1998 (Unaudited)
-------- -------- -------- -----------
($ in millions)
Revenues:
Premiums.............................................. $ 118.1 $ 96.3 $ 621.7 $ 77.9
Universal life and investment-type product policy fees 205.8 196.3 151.6 151.6
Net investment income (Note 11)....................... 575.2 524.9 688.3 361.1
Net realized gains on investments (Note 11)........... 44.5 122.2 168.7 160.9
Group Pension Profits (Note 10)....................... 37.1 63.0 56.8 56.8
Other income.......................................... 221.1 195.8 162.6 161.3
Contribution from the Closed Block.................... 42.8 44.8 5.7 52.2
-------- -------- -------- --------
1,244.6 1,243.3 1,855.4 1,021.8
-------- -------- -------- --------
Benefits and expenses:
Benefits to policyholders............................. 166.9 147.0 679.8 124.4
Interest credited to policyholders' account balances.. 101.8 106.6 112.7 105.0
Amortization of deferred policy acquisition costs..... 78.7 70.3 122.0 52.2
Dividends to policyholders............................ 2.6 1.9 195.8 3.3
Other operating costs and expenses.................... 495.8 536.6 451.7 443.5
Demutualization Expenses.............................. -- 2.0 27.2 --
-------- -------- -------- --------
845.8 864.4 1,589.2 728.4
-------- -------- -------- --------
Income before income taxes & extraordinary item....... 398.8 378.9 266.2 293.4
-------- -------- -------- --------
Income tax expense.................................... 134.8 131.4 102.7 102.7
-------- -------- -------- --------
Income before extraordinary item...................... 264.0 247.5 163.5 190.7
-------- -------- -------- --------
Extraordinary item (Note 4)........................... 37.7 -- -- --
-------- -------- -------- --------
Net income............................................ 226.3 247.5 163.5 190.7
-------- -------- -------- --------
Other comprehensive income, net (Note 11)............. 42.4 (181.8) 34.3
-------- -------- --------
Comprehensive income.................................. $ 268.7 $ 65.7 $ 197.8
======== ======== ========
- ----------
* The pro forma information gives effect to the transactions referred to in
Notes 1 and 22.
See accompanying notes to consolidated financial statements.
F-20
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years Ended December 31, 2000, 1999, and 1998
Accumulated
Capital In Other Total
Common Excess of Retained Comprehensive Shareholders'
Stock Par Earnings Income Equity
------ ---------- --------- ------------- -------------
($ in millions)
Balance, December 31, 1997.................... 1,202.5 118.1 1,320.6
Demutualization transaction................... 1,344.2 (1,357.4) (13.2)
Capital Contribution.......................... 2.0 219.9 221.9
Comprehensive income:
Net income before demutualization............ 154.9 154.9
Net income after demutualization............. 8.6 8.6
---- -------- --------- ------- --------
Net income for the year................ 163.5 163.5
Other comprehensive income:
Unrealized losses on investments, net of
unrealized gains, reclassification
adjustments, and taxes (Note 11)......... 31.4 31.4
Minimum pension liability adjustment....... 2.9 2.9
------- --------
Other comprehensive income................... 34.3 34.3
--------
Comprehensive Income.......................... 197.8
---- -------- --------- ------- --------
Balance, December 31, 1998.................... 2.0 1,564.1 8.6 152.4 1,727.1
Comprehensive income
Net income................................... 247.5 247.5
Other comprehensive income:
Unrealized gains on investments, net of
unrealized losses, reclassification
adjustments, and taxes (Note 11)......... (181.8) (181.8)
Change in number of authorized and outstanding
shares...................................... 0.5 (0.5)
Comprehensive income/(loss)................... 65.7
---- -------- --------- ------- --------
Balance, December 31, 1999.................... 2.5 1,563.6 256.1 (29.4) 1,792.8
Dividends Payable............................. (100.0) (100.0)
Capital Contribution.......................... 65.0 65.0
Comprehensive income:
Net income................................... 226.3 226.3
Other comprehensive income:
Unrealized losses on investment, net of
unrealized gains, reclassifications and
adjustments, and taxes (Note 11)......... 46.2 46.2
Minimum pension liability adjustment.......... (3.8) (3.8)
---- -------- --------- ------- --------
Other Comprehensive Income.................... 42.4 42.4
--------
Comprehensive income.......................... 268.7
---- -------- --------- ------- --------
Balance, December 31, 2000.................... $2.5 $1,628.6 $ 382.4 $ 13.0 $2,026.5
==== ======== ========= ======= ========
See accompanying notes to consolidated financial statements.
F-21
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
--------- --------- ---------
($ in millions)
Cash flows from operating activities (see Note 4):
Net income................................................................................... $ 226.4 $ 247.5 $ 163.5
Adjustments to reconcile net income to net cash provided by operating activities:............
Interest credited to policyholders' account balances....................................... 93.1 105.0 110.6
Universal life and investment-type product policy fee income............................... (127.4) (143.5) (123.6)
Capitalization of deferred policy acquisition costs........................................ (175.0) (148.8) (124.5)
Amortization of deferred policy acquisition costs.......................................... 78.7 70.3 122.0
Provision for depreciation and amortization................................................ 33.2 31.5 41.4
Provision for deferred federal income taxes................................................ 63.4 57.4 11.4
Net realized gains on investments.......................................................... (44.4) (122.2) (168.7)
Non-cash distributions from investments.................................................... (226.7) (172.8) (35.1)
Change in other assets and accounts payable and other liabilities.......................... (45.4) (26.4) (32.7)
Change in future policy benefits........................................................... 13.3 (3.7) 136.2
Change in other policyholders' liabilities................................................. 2.0 15.6 32.9
Change in current federal income taxes payable............................................. 2.3 103.8 (14.9)
Initial cash transferred to the Closed Block............................................... -- -- (46.9)
Extraordinary loss on extinguishment of debt............................................... 56.8
Contribution from the Closed Block......................................................... (42.8) (44.8) (5.7)
--------- --------- ---------
Net cash (used in)/provided by operating activities........................................... $ (92.5) $ (31.4) $ 65.9
--------- --------- ---------
Cash flows from investing activities:
Sales, maturities or repayments of:
Fixed maturities........................................................................... $ 603.0 $ 689.4 $ 887.3
Equity securities.......................................................................... 514.2 328.1 177.4
Mortgage loans on real estate.............................................................. 377.7 132.9 424.4
Real estate................................................................................ 149.0 350.7 578.3
Other invested assets...................................................................... 1.6 18.7 46.0
Acquisitions of investments:
Fixed maturities........................................................................... (629.3) (830.0) (1,479.7)
Equity securities.......................................................................... (127.6) (152.0) (230.5)
Mortgage loans on real estate.............................................................. (251.6) (412.0) (422.4)
Real estate................................................................................ (43.0) (44.5) (39.5)
Other invested assets...................................................................... (53.8) (20.6) (2.1)
Policy loans, net.......................................................................... (11.7) (7.8) (17.8)
Other, net................................................................................. (150.0) 60.3 8.8
Property & equipment, net.................................................................. (54.8) (22.5) (30.9)
Acquisition of subsidiaries, net of cash acquired.......................................... -- -- (46.0)
--------- --------- ---------
Net cash provided by/(used in) investing activities........................................... $ 323.7 $ 90.7 $ (146.7)
========= ========= =========
Cash flows from financing activities:
Issuance of debt............................................................................. $ 215.0 $ -- $ --
Repayments of debt........................................................................... (301.3) (84.8) (61.3)
Receipts from annuity and universal life policies credited to policyholders' account balances 2,265.1 1,851.5 1,254.0
Return of policyholders' account balances on annuity policies and universal life policies.... (2,275.9) (1,863.6) (1,377.0)
Capital Contribution......................................................................... 65.0 -- 22.19
Dividends paid to shareholders............................................................... (100.0) -- --
Net cash provided/(used in) by financing activities.......................................... (132.1) (96.9) 37.6
--------- --------- ---------
Net increase/(decrease) in cash and cash equivalents......................................... 99.1 (37.6) (43.2)
Cash and cash equivalents, beginning of year................................................. 232.6 270.2 313.4
--------- --------- ---------
Cash and cash equivalents, end of year........................................................ $ 331.7 $ 232.6 $ 270.2
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:.............................................................
Income taxes............................................................................... $ 93.3 $ 20.1 $ 97.4
Interest................................................................................... $ 25.6 $ 20.3 $ 20.3
See accompanying notes to consolidated financial statements.
F-22
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Description of Business:
On November 16, 1998, pursuant to its Plan of Reorganization (the "Plan")
which was approved by the New York Superintendent of Insurance on the same day
(the "Plan Effective Date"), The Mutual Life Insurance Company of New York
("MONY") converted from a mutual life insurance company to a stock life
insurance company (the "Demutualization") and became a wholly owned subsidiary
of The MONY Group Inc., (the "MONY Group" or the "Holding Company"), a Delaware
corporation organized on June 24, 1997 for the purpose of becoming the parent
holding company of MONY. In connection with the Plan, MONY established a closed
block, as more fully discussed in Note 3, to fund the guaranteed benefits and
dividends of certain participating insurance policies and eligible
policyholders received cash, policy credits, or shares of common stock of the
MONY Group in exchange for their membership interests in MONY (see Note 4).
Also, on November 16, 1998, the MONY Group consummated an initial public
offering (the "Offerings") of approximately 12.9 million shares of its common
stock (see Note 4) and MONY changed its name to MONY Life Insurance Company
(MONY Life Insurance Company and its subsidiaries are hereafter collectively
referred to as "MONY Life"). The shares of common stock issued in the Offerings
are in addition to approximately 34.3 million shares of common stock of the
MONY Group distributed to the aforementioned eligible policyholders. The Plan
and the Offerings are hereafter collectively referred to as the "Transaction."
See Note 4. During 1999, the Company increased its number of shares authorized
and outstanding from 2.0 million to 2.5 million in order to comply with
statutory requirement.
MONY Life and its subsidiaries (hereafter collectively referred to as the
"Company"), is primarily engaged in the business of providing a wide range of
life insurance, annuity, and investment products to higher income individuals,
particularly family builders, pre-retirees, and small business owners (see Note
5). The Company distributes its products primarily through its career agency
sales force and various complementary distribution channels. These include
sales of mutual funds sold by Enterprise Capital Management through third-party
broker dealers, sales of protection products through brokerage general
agencies, sales of corporate-owned life insurance ("COLI") products by the
Company's corporate marketing team and sales of a variety of financial products
and services through the Company's Trusted Securities Advisors Corp.
subsidiary. The Company primarily sells its products in all 50 of the United
States, the District of Columbia, the U.S. Virgin Islands, Guam and the
Commonwealth of Puerto Rico.
In 2001, the MONY Group Inc. acquired two new subsidiaries, Advest Group
Inc. ("Advest") and Matrix Capital Markets Group ("Matrix").
2. Investment Agreement:
On December 30, 1997, affiliates of Goldman, Sachs & Co. (the "Investors"),
one of the underwriters for the Offerings, entered into an investment agreement
with MONY (the "Investment Agreement"), pursuant to which: (i) the Investors
purchased, for $115.0 million (the "Consideration"), Surplus Notes issued by
MONY (the "MONY Notes") with an aggregate principal amount equal to the
Consideration (see Note 16), and (ii) the Investors purchased, for $10.0
million, warrants (the "Warrants") to purchase from the Holding Company (after
giving effect to the initial public offering) in the aggregate 7.0% of the
fully diluted Common Stock as of the first date following such effectiveness on
which shares of Common Stock were first issued to Eligible Policyholders
(December 24, 1998).
3. The Closed Block:
On November 16, 1998, the Company established a closed block (the "Closed
Block") of certain participating insurance policies as defined in the Plan (the
"Closed Block Business"). In conjunction therewith, the Company allocated
assets to the Closed Block expected to produce cash flows which, together with
anticipated revenues from the Closed Block Business, are reasonably expected to
be sufficient to support the Closed Block Business, including but not limited
to, provision for payment of claims and surrender benefits, certain expenses
and taxes, and for continuation of current payable dividend scales in effect at
the date of Demutualization, assuming the experience underlying such dividend
scales continues, and for appropriate adjustments in such scales if the
experience changes. The assets allocated to the Closed Block and the
aforementioned revenues inure solely to the benefit of the owners of policies
included in the Closed Block.
F-23
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The assets and liabilities allocated to the Closed Block are recorded in the
Company's financial statements at their historical carrying values. The
carrying value of the assets allocated to the Closed Block are less than the
carrying value of the Closed Block liabilities at the Plan Effective Date. The
excess of the Closed Block liabilities over the Closed Block assets at the Plan
Effective Date represents the total estimated future post-tax contribution
expected to emerge from the operation of the Closed Block, which will be
recognized in the Company's income over the period the policies and the
contracts in the Closed Block remain in force.
To the extent that the actual cash flows, subsequent to the Plan Effective
Date, from the assets allocated to the Closed Block and the Closed Block
Business are, in the aggregate, more favorable than assumed in establishing the
Closed Block, total dividends paid to the Closed Block policyholders in future
years will be greater than the total dividends that would have been paid to
such policyholders if the current payable dividend scales had been continued.
Conversely, to the extent that the actual cash flows, subsequent to the Plan
Effective Date, from the assets allocated to the Closed Block and the Closed
Block Business are, in the aggregate, less favorable than assumed in
establishing the Closed Block, total dividends paid to the Closed Block
policyholders in future years will be less than the total dividends that would
have been paid to such policyholders if the current payable dividend scales had
been continued. Accordingly, the recognition of the aforementioned estimated
future post-tax contribution expected to emerge from the operation of the
Closed Block is not affected by the aggregate actual experience of the Closed
Block assets and the Closed Block Business subsequent to the Plan Effective
Date, except in the unlikely event that the Closed Block assets and the actual
experience of the Closed Block Business subsequent to the Plan Effective Date
are not sufficient to pay the guaranteed benefits on the Closed Block Policies,
in which case the Company will be required to fund any such deficiency from its
general account assets outside of the Closed Block.
In addition, MONY has undertaken to reimburse the Closed Block from its
general account assets outside the Closed Block for any reduction in principal
payments due on the Series A Notes (which have been allocated to the Closed
Block) pursuant to the terms thereof, as described in Note 10. Since the Closed
Block has been funded to provide for payment of guaranteed benefits and the
continuation of current payable dividends on the policies included therein, it
will not be necessary to use general funds to pay guaranteed benefits unless
the Closed Block Business experiences very substantial ongoing adverse
experience in investment, mortality, persistency or other experience factors.
The Company regularly (at least quarterly) monitors the experience from the
Closed Block and may make changes to the dividend scale, when appropriate, to
ensure that the profits are distributed to the Closed Block policyholders in a
fair and equitable manner. In addition, periodically the New York Insurance
Department requires the filing of an independent auditor's report on the
operations of the Closed Block.
The results of the Closed Block are presented as a single line item in the
Company's statements of income entitled, "Contribution from the Closed Block."
Prior to the establishment of the Closed Block the results of the assets and
policies comprising the Closed Block were reported in various line items in the
Company's income statements, including: premiums, investment income, net
realized gains and losses on investments, benefits, amortization of deferred
policy acquisition costs, etc. In addition, all assets and liabilities
allocated to the Closed Block will be reported in the Company's balance sheet
separately under the captions "Closed Block assets" and "Closed Block
liabilities", respectively. Accordingly, certain line items in the Company's
financial statements subsequent to the establishment of the Closed Block
reflect material reductions in reported amounts, as compared to years prior to
the establishment of the Closed Block, while having no effect on net income.
See Note 4, New Accounting Pronouncements.
The pre-tax Contribution from the Closed Block includes only those revenues,
benefit payments, dividends, premium taxes, state guaranty fund assessments,
and investment expenses considered in funding the Closed Block. However, many
expenses associated with operating the Closed Block and administering the
policies included therein were excluded from and, accordingly, are not funded
in the Closed Block. These expenses are reported in the Company's statement of
operations, outside of the Contribution from the Closed Block, consistent with
how they are funded. Such expenses are reported in the separate line items to
which they apply based on the nature of such expenses. Federal income taxes
applicable to the Closed Block, which are funded in the Closed Block, are
reflected as a component of federal income tax expense in the Company's
statement of operations. Since many expenses related to the Closed Block are
funded outside the Closed Block, operating costs and expenses outside the
Closed Block are disproportionate to the level of business outside the Closed
Block.
F-24
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
4. Summary of Significant Accounting Policies:
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States
("GAAP"). The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. In the opinion of management
these statements include all normal recurring adjustments necessary to present
fairly the financial position, results of operations and cash flows of the
Company for the periods presented. Actual results could differ significantly
from those estimates. The most significant estimates made in conjunction with
the preparation of the Company's financial statements include those used in
determining (i) deferred policy acquisition costs, (ii) the liability for
future policy benefits, and (iii) valuation allowances for mortgage loans and
real estate to be disposed of, and impairment writedowns for real estate held
for investment and other invested assets. Certain reclassifications have been
made in the amounts presented for prior periods to conform those periods to the
current presentation.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and those partnerships in which the Company has a majority voting
interest. All significant intercompany accounts and transactions have been
eliminated.
Minority interest related to partnerships that are consolidated, which is
included in Accounts Payable and Other Liabilities, amounted to $0.0 million
and $17.4 million at December 31, 2000 and 1999, respectively.
Transaction
Net proceeds from the Offerings totaled $282.5 million. Approximately $60.6
million of the net proceeds were retained by the MONY Group and the balance of
approximately $221.9 million was contributed to MONY Life.
Of the net proceeds contributed by the MONY Group to MONY Life,
approximately $168.2 million is for use by MONY Life in its general operations,
approximately $13.2 million was used to fund policy credits required to be
credited to Eligible Policyholders pursuant to the Plan, and $40.5 million
represents a reimbursement for the estimated after-tax cost of expenses
incurred by MONY Life to effect the Demutualization, as required by the New
York Insurance Law.
Of the net proceeds retained by the MONY Group, approximately $2.5 million
was used to pay cash to Eligible Policyholders who received cash as described
in the Plan (other than pursuant to an expression of a preference to receive
cash), $10.0 million is for working capital for the MONY Group, $30.0 million
is to be used to pay dividends on the MONY Group's common stock and $18.1
million was used by the MONY Group to pay cash to eligible policyholders
pursuant to an expression of a preference to receive cash in accordance with
the Plan.
In connection with the Demutualization on the Plan Effective Date, eligible
policyholders received, in the aggregate, approximately $20.6 million of cash,
$13.2 million of policy credits and 34.3 million shares of common stock of the
MONY Group in exchange for their membership interests in MONY. In conjunction
with the Offerings, approximately 12.9 million shares of the common stock of
MONY Group were issued at an initial public offering of $23.50 per share. The
Demutualization was accounted for as a reorganization. Accordingly, the
Company's retained earnings at the Plan Effective Date (net of the
aforementioned cash payments and policy credits which were charged directly to
retained earnings) were reclassified to "Common stock" and "Capital in excess
of par."
In addition, the capital of the MONY Group includes $10.0 million relating
to the Warrants (see Note 2), which as a subsidiary of MONY prior to the Plan
Effective Date, was recorded in MONY's consolidated financial statements as
minority interest.
F-25
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Valuation of Investments and Realized Gains and Losses
All of the Company's fixed maturity securities are classified as
available-for-sale and are reported at estimated fair value. The Company's
equity securities are comprised of investments in common stocks and limited
partnership interests. The Company's investments in common stocks are
classified as available-for-sale and are reported at estimated fair value. The
Company accounts for its investments in limited partnership interests in
accordance with the equity method of accounting or the cost method of
accounting depending upon the Company's percentage of ownership of the
partnership and the date it was acquired. In general, partnership interests
acquired after May 18, 1995 are accounted for in accordance with the equity
method of accounting if the Company's ownership interest exceeds 3 percent,
whereas, if the partnership was acquired prior to May 18, 1995, the equity
method would be applied only if the Company's ownership interest exceeded 20
percent. In all other circumstances the Company accounts for its investment in
limited partnership interests in accordance with the cost method. Unrealized
gains and losses on fixed maturity securities and common stocks are reported as
a separate component of other comprehensive income, net of deferred income
taxes and an adjustment for the effect on deferred policy acquisition costs
that would have occurred if such gains and losses had been realized. The cost
of fixed maturity securities and common stock is adjusted for impairments in
value deemed to be other than temporary. These adjustments are reflected as
realized losses on investments. Realized gains and losses on sales of
investments are determined on the basis of specific identification.
Mortgage loans on real estate are stated at their unpaid principal balances,
net of valuation allowances. Valuation allowances are established for the
excess of the carrying value of a mortgage loan over its estimated fair value
when the loan is considered to be impaired. Mortgage loans are considered to be
impaired when, based on current information and events, it is probable that the
Company will be unable to collect all amounts due according to the contractual
terms of the loan agreement. Estimated fair value is based on either the
present value of expected future cash flows discounted at the loan's original
effective interest rate, or the loan's observable market price (if considered
to be a practical expedient), or the fair value of the collateral if the loan
is collateral dependent and if foreclosure of the loan is considered probable.
The provision for loss is reported as a realized loss on investment. Loans in
foreclosure and loans considered to be impaired, other than restructured loans,
are placed on non-accrual status. Interest received on non-accrual status
mortgage loans is included in investment income in the period received.
Interest income on restructured mortgage loans is accrued at the restructured
loans' interest rate.
Real estate held for investment, as well as related improvements, are
generally stated at cost less depreciation. Depreciation is determined using
the straight-line method over the estimated useful life of the asset (which may
range from 5 to 40 years). Cost is adjusted for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not
be recoverable. In performing the review for recoverability, management
estimates the future cash flows expected from real estate investments,
including the proceeds on disposition. If the sum of the expected undiscounted
future cash flows is less than the carrying amount of the real estate, an
impairment loss is recognized. Impairment losses are based on the estimated
fair value of the real estate, which is generally computed using the present
value of expected future cash flows from the real estate discounted at a rate
commensurate with the underlying risks. Real estate acquired in satisfaction of
debt is recorded at estimated fair value at the date of foreclosure. Real
estate that management intends to sell is classified as "to be disposed of."
Real estate to be disposed of is reported at the lower of its current carrying
value or estimated fair value less estimated sales costs. Changes in reported
values relating to real estate to be disposed of and impairments of real estate
held for investment are reported as realized gains or losses on investments.
Policy loans are carried at their unpaid principal balances. Cash and cash
equivalents include cash on hand, amounts due from banks and highly liquid debt
instruments with an original maturity of three months or less.
Recognition of Insurance Revenue and Related Benefits
Premiums from participating and non-participating traditional life, health
and annuity policies with life contingencies are recognized as premium income
when due. Benefits and expenses are matched with such income so as to result in
the recognition of profits over the life of the contracts. This match is
accomplished by means of the provision for liabilities for future policy
benefits and the deferral and subsequent amortization of policy acquisition
costs.
F-26
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Premiums from universal life and investment-type contracts are reported as
deposits to policyholders' account balances. Revenue from these types of
products consist of amounts assessed during the period against policyholders'
account balances for policy administration charges, cost of insurance and
surrender charges and mortality and expense charges on variable contracts.
Policy benefits charged to expense include benefit claims incurred in the
period in excess of the related policyholders' account balance.
Deferred Policy Acquisition Costs ("DAC")
The costs of acquiring new business, principally commissions, underwriting,
agency, and policy issue expenses, all of which vary with and are primarily
related to the production of new business, are deferred.
For participating traditional life policies, DAC is amortized over the
expected life of the contracts (30 years) as a constant percentage based on the
present value of estimated gross margins expected to be realized over the life
of the contracts using the expected investment yield. At December 31, 2000, the
expected investment yield for the Closed Block was 7.29% for the year 2000 with
subsequent years grading down to an ultimate aggregate yield of 7.12% in year
2013. The expected investment yield was 7.50% for participating traditional
life policies issued subsequent to the creation of the Closed Block. Estimated
gross margins include anticipated premiums and investment results less claims
and administrative expenses, changes in the net level premium reserve and
expected annual policyholder dividends.
For universal life products and investment-type products, DAC is amortized
over the expected life of the contracts (ranging from 15 to 30 years) as a
constant percentage based on the present value of estimated gross profits
expected to be realized over the life of the contracts using the initial locked
in discount rate. For non-participating term policies, DAC is amortized over
the expected life of the contracts (ranging from 10 to 20 years) in proportion
to premium revenue recognized. The discount rate for all products is 8%.
Estimated gross profits arise principally from investment results, mortality
and expense margins and surrender charges.
DAC is subject to recoverability testing at the time of policy issuance and
loss recognition testing at the end of each accounting period. The effect on
the amortization of DAC of revisions in estimated experience is reflected in
earnings in the period such estimates are revised. In addition, the effect on
the DAC asset that would result from the realization of unrealized gains
(losses) is recognized through an offset to Other Comprehensive Income as of
the balance sheet date.
Future Policy Benefits and Policyholders' Account Balances
Future policy benefit liabilities for participating traditional life
policies are calculated using a net level premium method on the basis of
actuarial assumptions equal to guaranteed mortality and dividend fund interest
rates. The liability for annual dividends represents the accrual of annual
dividends earned. Dividend fund interest assumptions range from 2.0 percent to
5.5 percent.
Policyholders' account balances for universal life and investment-type
contracts represent an accumulation of gross premium payments plus credited
interest less expense and mortality charges and withdrawals. The weighted
average interest crediting rate for universal life products was approximately
5.9%, 5.6% and 6.0% for the years ended December 31, 2000, 1999, and 1998,
respectively. The weighted average interest crediting rate for investment-type
products was approximately 4.9%, 5.1% and 5.2% for the years ended December 31,
2000, 1999, and 1998, respectively.
Dividends to Policyholders
Dividends to policyholders, which are substantially all on the Closed Block
Business (see Note 3) are determined annually by the Board of Directors of MONY
Life. The aggregate amount of policyholders' dividends is related to actual
interest, mortality and morbidity for the year.
F-27
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Participating Business
At December 31, 2000 and 1999, participating business, substantially all of
which is in the Closed Block, represented approximately 53.3% and 63.5% of the
Company's life insurance in force, and 74.4% and 81.2% of the number of life
insurance policies in force, respectively. For each of the years ended December
31, 2000 and 1999, participating business, represented approximately 91.6% and
95.9%, respectively, of life insurance premiums.
Property, Equipment, and Leasehold Improvements
Property, equipment and leasehold improvements, which are reported in Other
Assets, are stated at cost less accumulated depreciation and amortization.
Depreciation is determined using the straight-line method over the estimated
useful lives of the related assets which generally range from 3 to 40 years.
Amortization of leasehold improvements is determined using the straight-line
method over the lesser of the unexpired lease term or the estimated useful life
of the improvement.
Accumulated depreciation of property and equipment and amortization of
leasehold improvements was $46.7 million and $38.4 million at December 31, 2000
and 1999, respectively. Related depreciation and amortization expense was $18.1
million, $16.6 million, and $11.4 million for the years ended December 31,
2000, 1999, and 1998, respectively.
Federal Income Taxes
The Company files a consolidated federal income tax return with its life and
non-life affiliates except Sagamore Financial Corporation and its subsidiaries.
Deferred income tax assets and liabilities are recognized based on the
difference between financial statement carrying amounts and income tax bases of
assets and liabilities using enacted income tax rates and laws.
Reinsurance
The Company has reinsured certain of its life insurance and investment
contracts with other insurance companies under various agreements. Amounts due
from reinsurers are estimated based on assumptions consistent with those used
in establishing the liabilities related to the underlying reinsured contracts.
Policy and contract liabilities are reported gross of reserve credits. Gains on
reinsurance are deferred and amortized into income over the remaining life of
the underlying reinsured contracts.
In determining whether a reinsurance contract qualifies for reinsurance
accounting, Statement of Financial Accounting Standards ("SFAS") No. 113
"Accounting and reporting for reinsurance of short-duration and long-duration
contracts" requires that there be a "reasonable possibility" that the reinsurer
may realize a "significant loss" from assuming insurance risk under the
contract. In making this assessment, the Company projects the results of the
policies reinsured under the contract under various scenarios and assesses the
probability of such results actually occurring. The projected results represent
the present value of all the cash flows under the reinsurance contract. The
Company generally defines a "reasonable possibility" as having a probability of
at least 10%. In assessing whether the projected results of the reinsured
business constitute a "significant loss", the Company considers: (i) the ratio
of the aggregate projected loss, discounted at an appropriate rate of interest
(the "aggregate projected loss"), to an estimate of the reinsurer's investment
in the contract, as hereafter defined, and (ii) the ratio of the aggregate
projected loss to an estimate of the total premiums to be received by the
reinsurer under the contract discounted at an appropriate rate of interest.
The reinsurer's investment in a reinsurance contract consists of amounts
paid to the ceding company at the inception of the contract (e.g. expense
allowances and the excess of liabilities assumed by the reinsurer over the
assets transferred to the reinsurer under the contract) plus the amount of
capital required to support such business consistent with prudent business
practices, regulatory requirements, and the reinsurer's credit rating. The
Company estimates the capital required to support such business based on what
it considers to be an appropriate level of risk-based capital in light of
regulatory requirements and prudent business practices.
F-28
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Separate Accounts
Separate accounts are established in conformity with insurance laws and are
generally not chargeable with liabilities that arise from any other business of
the Company. Separate account assets are subject to general account claims only
to the extent that the value of such assets exceeds the separate account
liabilities. Investments held in separate accounts and liabilities of the
separate accounts are reported separately as assets and liabilities.
Substantially all separate account assets are reported at estimated fair value.
Investment income and gains or losses on the investments of separate accounts
accrue directly to contractholders and, accordingly, are not reflected in the
Company's consolidated statements of income and cash flows. Fees charged to the
separate accounts by the Company (including mortality charges, policy
administration fees and surrender charges) are reflected in the Company's
revenues.
Consolidated Statements of Cash Flows -- Non-cash Transactions
For the years ended December 31, 2000, 1999, and 1998, respectively, real
estate of $0.5 million, $27.0 million, and $5.0 million was acquired in
satisfaction of debt (including the Closed Block of $22.0 million). At December
31, 2000 and 1999, the Company owned real estate acquired in satisfaction of
debt of $41.5 million and $121.0 million, respectively. Other non-cash
transactions, which are reflected in the statement of cash flows as a
reconciling item from net income to net cash provided by operating activities,
consisted primarily of stock distributions from the Company's partnership
investments and payment-in-kind for interest due on certain fixed maturity
securities.
Extraordinary Item Repurchase of Surplus Notes
For the year ended December 31, 2000, the Company reported an extraordinary
charge of $37.7 after tax ($58.1 million pre-tax) million. The charge in 2000
represents the cost incurred by the company in connection with the repurchase
of the $115.0 million face amount 9.5% coupon surplus notes, and $123.0 million
face amount of its $125.0 million face amount 11.25% coupon surplus notes that
were outstanding at December 31, 1999.
Demutualization Expenses
The charge reflected in 1999 represented expenses incurred in connection
with the Company's commission-free sale and purchase program (the "Program")
offered to shareholders pursuant to the Plan. The Program commenced August 17,
1999 and ended on November 17, 1999. Pursuant to the Program, shareholders who
owned fewer than 100 shares could sell all of their shares or purchase
additional shares to round up to 100 shares without incurring commissions. The
costs incurred in 1998 primarily included the fees of financial, legal,
actuarial and accounting advisors to the Company and to the New York Insurance
Department, as well as printing and postage for communication with
policyholders incurred in connection with the Demutualization.
New Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 requires all derivatives to be
recognized in the statement of financial position as either assets or
liabilities and measured at fair value. The corresponding derivative gains and
losses should be reported based on the hedge relationship that exists, if there
is one. Changes in the fair value of derivatives that are not designated as
hedges or that do not meet the hedge accounting criteria in SFAS 133, are
required to be reported in earnings. SFAS 133, as amended by SFAS 137, is
effective for all fiscal quarters of the fiscal years beginning after June 15,
2000. SFAS 137 delayed the effective date of SFAS 133 by one year. Adoption of
this standard will have no material effect on the Company's earnings or
financial position.
On December 26, 2000 the American Institute of Certified Public Accountants
issued Statement of Position 00-3, "Accounting by Insurance Enterprises for
Demutualizations and Formations of Mutual Insurance Holding Companies for
Certain Long-Duration Participating Contracts" (SOP 00-3). SOP 00-3 provides
guidance with respect to accounting for demutualizations and requires, among
other things, that, (i) Closed Block assets, liabilities, revenues, and
expenses should be displayed in financial
F-29
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
statements combined with all other assets, liabilities, revenues, and expenses
outside the Closed Block, and (ii) demutualization expenses be classified as a
single line item within income from continuing operations. The guidance in
SOP-03 requires restatement of financial statements presented for years prior
to its issuance and is effective for fiscal years beginning after December 15,
2000, except as it pertains to demutualization expenses which is effective
immediately. Accordingly, the consolidated statements of income and
comprehensive income and related per share amounts for 1999 and 1998 have been
restated from those reported in the Company's prior year to reflect the
reclassification of demutualization expenses and related tax effects of $2.0
million in 1999 and $34.3 million in 1998 from extraordinary items to a
separate line item entitled "Demutualization expenses." The adoption of the
remaining provisions of this SOP will not have any impact on the Company's
financial position or results of operations.
In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, a
replacement of SFAS No. 125." SFAS No. 140 specifies the accounting and
reporting requirements for securitizations and other transfers of financial
assets and collateral, recognition and measurement of servicing assets and
liabilities and the extinguishment of liabilities. SFAS No. 140 is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001 and is to be applied prospectively
with certain exceptions. This statement is effective for recognition and
reclassification of collateral and for disclosures relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000.
Adoption of the new requirements is not expected to have a significant impact
on the Company's consolidated financial position or earnings.
In December 1999, the staff of the Securities and Exchange Commission (the
"SEC") issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition
in Financial Statements," which was effective fourth quarter 2000. SAB No. 101
addresses revenue recognition issues; its implementation did not have a
material impact on the Company's consolidated financial position or statement
of earnings.
5. Segment Information:
The Company's business activities consist of the following: protection
product operations, accumulation product operations, mutual fund operations,
securities broker-dealer operations, insurance brokerage operations, and
certain insurance lines of business no longer written by the Company (the
"run-off businesses"). These business activities represent the Company's
operating segments. Except as discussed below, these segments are managed
separately because they either provide different products or services, are
subject to different regulation, require different strategies, or have
different technology requirements.
Management considers the Company's mutual fund operations to be an integral
part of the products offered by the Company's accumulation products segment,
since substantially all the mutual funds sold by the Company are offered
through, and in conjunction with, the products marketed by the accumulation
products segment. Accordingly, for management purposes (including, performance
assessment and making decisions regarding the allocation of resources), the
Company aggregates its mutual fund operations with its accumulation products
segment.
Of the aforementioned segments, only the protection products segment and the
accumulation products segment qualify as reportable segments in accordance with
FASB Statement No. 131. All of the Company's other segments are combined and
reported in an other products segment.
Products comprising the protection products segment primarily include a wide
range of insurance products, including: whole life, term life, universal life,
variable universal life, corporate-owned life insurance, last survivor variable
universal life, last survivor universal life, group universal life and
special-risk products. In addition, included in the protection products segment
are: (i) the assets and liabilities transferred pursuant to the Group Pension
Transaction, as well as the Group Pension Profits (see Note 10), (ii) the
Closed Block assets and liabilities, as well as the Contribution from the
Closed Block and (iii) the Company's
F-30
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
disability income insurance business. Products comprising the accumulation
products segment primarily include flexible premium variable annuities, single
premium deferred annuities, immediate annuities, proprietary mutual funds,
investment management services, and certain other financial services products.
The Company's other products segment primarily consists of the securities
broker-dealer operation, the insurance brokerage operation, and the run-off
businesses. The securities broker-dealer operation markets the Company's
proprietary investment products and, in addition, provides customers of the
Company's protection and accumulation products access to other non-proprietary
investment products (including stocks, bonds, limited partnership interests,
tax-exempt unit investment trusts and other investment securities). The
insurance brokerage operation provides the Company's field agency force with
access to life, annuity, small group health and specialty insurance products
written by other carriers to meet the insurance and investment needs of its
customers. The run-off businesses primarily consist of group life and health
business, as well as group pension business that was not included in the Group
Pension Transaction (see Note 10).
Set forth in the table below is certain financial information with respect
to the Company's operating segments as of and for each of the years ended
December 31, 2000, 1999 and 1998, as well as amounts not allocated to the
segments. Except for various allocations discussed below, the accounting
policies of the segments are the same as those described in the summary of
significant accounting policies. The Company evaluates the performance of each
operating segment based on profit or loss from operations before income taxes
and nonrecurring items (e.g. items of an unusual or infrequent nature). The
Company does not allocate certain non-recurring items to the segments. In
addition, substantially all segment revenues are from external sources.
Assets have been allocated to the segments in amounts sufficient to support
the associated liabilities of each segment. In addition, capital is allocated
to each segment in amounts sufficient to maintain a targeted regulatory
risk-based capital ("RBC") level for each segment (see Note 19). Allocations of
net investment income and net realized gains on investments were based on the
amount of assets allocated to each segment. Other costs and operating expenses
were allocated to each of the segments based on: (i) a review of the nature of
such costs, (ii) time studies analyzing the amount of employee compensation
costs incurred by each segment, and (iii) cost estimates included in the
Company's product pricing. Substantially all non-cash transactions and impaired
real estate (including real estate acquired in satisfaction of debt) have been
allocated to the Protection Products segment (see Note 4).
Amounts reported as "reconciling amounts" in the table below primarily
relate to: (i) contracts issued by MONY Life relating to its employee benefit
plans, (ii) a one-time restructuring charge in 1999 of $59.7 million pre-tax
relating to the Company's early retirement program (see Note 22) and (iii)
demutualization expenses incurred in 1999 and 1998.
Segment Summary Financial Information
2000 1999 1998
------ ------ ------
($ in millions)
Premiums:
Protection Products................................... $103.3 $ 82.0 $602.2
Accumulation Products................................. 1.3 0.9 2.6
Other Products........................................ 13.5 13.4 16.9
------ ------ ------
$118.1 $ 96.3 $621.7
====== ====== ======
Universal life and investment-type product policy fees:
Protection Products................................... $134.8 $122.3 $ 86.2
Accumulation Products................................. 70.0 73.3 64.1
Other Products........................................ 1.0 0.7 1.3
------ ------ ------
$205.8 $196.3 $151.6
====== ====== ======
F-31
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2000 1999 1998
--------- --------- ---------
($ in millions)
Net investment income and net realized gains (losses) on investments:
Protection Products.................................................. $ 408.0 $ 445.1 $ 655.5
Accumulation Products................................................ 124.9 132.4 136.3
Other Products....................................................... 68.9 67.3 63.0
Reconciling amounts.................................................. 17.9 2.3 2.2
--------- --------- ---------
$ 619.7 $ 647.1 $ 857.0
========= ========= =========
Other income:
Protection Products (1) (7).......................................... $ 98.3 $ 123.0 $ 85.5
Accumulation Products................................................ 120.2 95.1 72.8
Other Products....................................................... 77.4 80.7 61.1
Reconciling amounts.................................................. 5.1 4.8 5.7
--------- --------- ---------
$ 301.0 $ 303.6 $ 225.1
========= ========= =========
Amortization of deferred policy acquisition costs:
Protection Products.................................................. $ 50.4 $ 39.6 $ 92.4
Accumulation Products................................................ 28.3 30.7 29.6
--------- --------- ---------
$ 78.7 $ 70.3 $ 122.0
========= ========= =========
Benefits to policyholders: (2)
Protection Products.................................................. $ 161.4 $ 141.7 $ 663.4
Accumulation Products................................................ 68.2 73.7 79.6
Other Products....................................................... 31.5 33.7 41.6
Reconciling amounts.................................................. 7.6 4.5 7.9
--------- --------- ---------
$ 268.7 $ 253.6 $ 792.5
========= ========= =========
Other operating costs and expenses:
Protection Products.................................................. $ 262.2 $ 277.4 $ 287.1
Accumulation Products................................................ 120.0 105.7 84.4
Other Products....................................................... 100.3 93.1 80.2
Reconciling amounts (11)............................................. 13.3 62.4 27.2
--------- --------- ---------
$ 495.8 $ 538.6 $ 478.9
========= ========= =========
Income before income taxes:
Protection Products.................................................. $ 278.1 $ 315.0 $ 193.7
Accumulation Products................................................ 98.4 89.6 80.5
Other Products....................................................... 27.7 34.1 19.2
Reconciling amounts.................................................. (5.4) (59.8) (27.2)
--------- --------- ---------
$ 398.8 $ 378.9 $ 266.2
========= ========= =========
Assets:
Protection Products (3) (8).......................................... $16,239.0 $16,181.4 $16,580.9
Accumulation Products................................................ 5,593.5 6,175.0 6,171.3
Other Products....................................................... 1,060.8 1,187.6 1,256.2
Reconciling amounts.................................................. 1,309.0 1,176.1 890.9
--------- --------- ---------
$24,202.3 $24,720.1 $24,889.3
========= ========= =========
F-32
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2000 1999 1998
--------- --------- ---------
($ in millions)
Deferred policy acquisition costs:
Protection Products (9)........... $ 1,064.3 $ 1,094.9 $ 857.6
Accumulation Products............. 145.4 153.3 136.7
--------- --------- ---------
$ 1,209.7 $ 1,248.2 $ 994.3
========= ========= =========
Policyholders' liabilities:
Protection Products (4) (10)...... $10,290.7 $10,231.7 $10,267.0
Accumulation Products............. 1,060.0 1,236.3 1,318.6
Other Products.................... 381.4 418.9 455.6
Reconciling amounts............... 17.7 17.4 17.4
--------- --------- ---------
$11,749.8 $11,904.3 $12,058.6
========= ========= =========
Separate account liabilities: (5)
Protection Products (6)........... $ 3,939.5 $ 3,843.5 $ 4,056.8
Accumulation Products............. 4,072.9 4,548.9 4,452.6
Other Products.................... 499.5 604.2 621.9
Reconciling amounts............... 770.1 832.3 776.4
--------- --------- ---------
$ 9,282.0 $ 9,828.9 $ 9,907.7
========= ========= =========
- ----------
(1)Includes Group Pension Profits of $37.1 million, $63.0 million and $56.8
million for the years ended December 31, 2000, 1999 and 1998, respectively.
(See Note 10).
(2)Includes interest credited to policyholders' account balances.
(3)Includes assets transferred in the Group Pension Transaction of $4,927.7
million, $5,109.8 million and $5,751.8 million as of December 31, 2000, 1999
and 1998, respectively.
(4)Includes policyholder liabilities transferred in the Group Pension
Transaction of $1,468.1 million, $1,645.7 million and $1,824.9 million as of
December 31, 2000, 1999 and 1998 respectively.
(5)Each segment includes separate account assets in an amount not less than the
corresponding liability reported.
(6)Includes separate account liabilities transferred in the Group Pension
Transaction of $3,416.7 million, $3,432.7 million and $3,829.6 million as of
December 31, 2000, 1999 and 1998, respectively.
(7)Includes $42.8 million, $44.8 million and $5.7 million relating to the
Contribution from the Closed Block for the years ended December 31, 1999 and
for period from November 16, 1998 through December 31, 1998 ended December
31, 2000 and 1999, respectively (see Note 3 and Note 20).
(8)Includes Closed Block assets of $6,251.2 million, $6,182.1 million and
$6,161.2 million as of December 31, 2000, 1999 and 1998, respectively (see
Note 3 and Note 20).
(9)Includes deferred policy acquisition costs allocated to the Closed Block of
$552.6 million, $689.9 million and $554.6 million as of December 31, 2000,
1999 and 1998, respectively (see Note 3 and Note 20).
(10)Includes Closed Block policyholders' liabilities of $7,293.6 million and
$7,241.0 million and $7,177.1 million as of December 31, 2000, 1999 and
1998, respectively (see Note 3 and Note 20).
(11)Includes demutualization expenses for the years ended December 31, 1999 and
1998 of $2.0 million and $27.2 million, respectively.
F-33
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Substantially all of the Company's revenues are derived in the United
States. Revenue derived from outside the United States is not material and
revenue derived from any single customer does not exceed 10 percent of total
consolidated revenues.
Following is a summary of revenues by product for the years ended December
31, 2000, 1999 and 1998:
2000 1999 1998
------ ------ ------
($ in millions)
Premiums:
Individual life (1)................................... $102.8 $ 81.9 $602.5
Disability income insurance........................... 0.5 0.6 0.2
Group insurance....................................... 13.5 13.4 16.9
Other................................................. 1.3 0.4 2.1
------ ------ ------
Total........................................... $118.1 $ 96.3 $621.7
====== ====== ======
Universal life and investment-type product policy fees:
Universal life......................................... $ 69.0 $ 73.2 $ 55.4
Variable universal life................................ 54.7 37.6 20.4
Group universal life................................... 11.1 11.5 10.4
Individual variable annuities.......................... 69.7 72.8 63.4
Individual fixed annuities............................. 1.3 1.2 2.0
------ ------ ------
Total........................................... $205.8 $196.3 $151.6
====== ====== ======
- ----------
(1)Excludes revenues from individual life in the Closed Block of $582.4
million, $620.8 million and $100.1 million for the year ended December 31,
2000, 1999 and 1998 respectively.
6. Deferred Policy Acquisition Costs:
Policy acquisition costs deferred and amortized in 2000, 1999 and 1998 are
as follows:
2000 1999 1998
------ ------ --------
($ in millions)
Balance, beginning of year.................................. $558.3 $439.7 $1,007.1
Balance transferred to the Closed Block at November 16, 1998 -- -- (562.3)
------ ------ --------
558.3 439.7 444.8
------ ------ --------
Cost deferred during the year............................... 190.8 148.7 124.7
Amortized to expense during the year........................ (78.7) (70.3) (122.0)
Effect on DAC from unrealized (gains) losses (see Note 4)... (13.3) 40.2 (7.8)
------ ------ --------
Balance, end of the year............................. $657.1 $558.3 $ 439.7
====== ====== ========
7. Pension Plans and Other Postretirement Benefits:
Pension Plans--
The Company has a qualified pension plan covering substantially all of its
salaried employees. The provisions of the plan provide both (a) defined benefit
accruals based on (i) years of service, (ii) the employee's final average
annual compensation and (iii) wage bases or benefits under Social Security and
(b) defined contribution accruals based on a Company matching contribution
equal to 100% of the employee's elective deferrals under the incentive savings
plan for employees up to 3% of the employee's
F-34
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
eligible compensation and an additional 2% of eligible compensation for each
active participant. Effective June 15, 1999, prospective defined contribution
accruals in the defined benefit plan ceased and were redirected to the
Investment Plan Supplement for Employees. The Company did not make any
contribution in the current year or prior year under Section 404 of the
Internal Revenue Code ("IRC") because the plan was fully funded under Section
412 of the IRC.
During 1999, the Company amended its Qualified Pension plan which reduced
certain benefit liabilities payable thereunder. The amendment resulted in a
decrease of $27.0 million in the plan's projected benefit obligation.
In July 1999, the Company offered special benefits to its employees who
elected by August 15, 1999, voluntary termination of employment (special
termination benefits). The special termination benefits represented benefits in
excess of that which would normally be due to employees electing to retire
early. These excess benefits were calculated based on grants of additional
years of service and age used in the benefit calculation. All of the special
termination benefits relating to the Company's qualified plan, which aggregated
$30.6 million, will be paid from the Plan's assets. All the benefits paid
relating to the Company's non-qualified plan, which aggregated $19.4 million,
will be paid directly from the Company's assets. As a result of the
aforementioned early retirement offer, the Company recorded a charge of $59.7
million in 1999 which included the aforementioned expenses in addition to
severance and other related expenses and reflected this amount in Other
Operating Costs and Expenses.
The assets of the qualified pension plan are primarily invested in MONY
Pooled Accounts which include common stock, real estate, private placement debt
securities and bonds. At December 31, 2000 and 1999, $466.4 million and $495.7
million were invested in the MONY Pooled Accounts. Benefits of $33.9 million,
$40.4 million and $26.3 million were paid by this plan for the years ended
December 31, 2000, 1999, and 1998, respectively.
The Company also sponsors a non-qualified employee excess pension plan,
which provides both defined benefits and defined contribution accruals in
excess of Internal Revenue Service limits to certain employees. The benefits
are based on years of service and the employees final average annual
compensation. Pension benefits are paid from Company's general accounts.
Postretirement Benefits--
The Company provides certain health care and life insurance benefits for
retired employees and field underwriters. The Company amortizes its
postretirement transition obligation over a period of twenty years.
Assumed health care cost trend rates typically have a significant effect on
the amounts reported for health care plans. However, under the Company's
postretirement healthcare plan, there is a per capita limit on the Company's
healthcare costs, as a result, a one-percentage point change in the assumed
healthcare cost trend rates would have an immaterial affect on amounts reported.
F-35
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following presents the change in the benefit obligation, change in plan
assets and other information with respect to the Company's qualified and
non-qualified defined benefit pension plans and other benefits which represents
the Company's postretirement benefit obligation:
Pension Benefits Other Benefits
--------------- ---------------
2000 1999 2000 1999
------ ------ ------- ------
($ in millions)
Change in benefit obligation:
Benefit obligation at beginning of year.............................. $373.3 $398.3 $ 97.7 $100.0
Service cost......................................................... 6.1 11.7 1.2 2.0
Interest cost........................................................ 29.4 27.3 7.3 7.2
Curtailment gain..................................................... (2.0) (3.8) -- --
Terminated benefits.................................................. -- 50.0 -- --
Plan amendment....................................................... -- (27.0) -- --
Actuarial loss/(gain)................................................ 18.9 (38.8) 5.8 (4.0)
Benefits paid........................................................ (39.6) (44.4) (8.1) (7.5)
------ ------ ------- ------
Benefit obligation at end of year.................................... 386.1 373.3 103.9 97.7
------ ------ ------- ------
Change in plan assets:
Fair value of plan assets at beginning of year....................... $498.0 $459.8 $ -- $ --
Actual return on plan assets......................................... 9.1 77.4 -- --
Employer contribution................................................ 8.6 6.7 8.1 7.5
Benefits and expenses paid........................................... (45.8) (45.9) (8.1) (7.5)
------ ------ ------- ------
Fair value of plan assets at end of year............................. 469.9 498.0 -- --
------ ------ ------- ------
Funded status........................................................ 83.8 124.7 (103.9) (97.7)
Unrecognized actuarial loss/(gain)................................... 5.8 (57.2) 12.6 7.4
Unamortized transition obligation.................................... (5.5) (13.0) 36.7 39.4
Unrecognized prior service cost...................................... (14.0) (15.6) (0.9) (1.0)
------ ------ ------- ------
Net amount recognized................................................ $ 70.1 $ 38.9 $ (55.5) $(51.9)
====== ====== ======= ======
Amounts recognized in the statement of financial position consist of:
Prepaid benefit cost................................................. $123.0 $ 93.8 $ -- $ --
Accrued benefit liability............................................ (52.9) (55.0) (55.5) (51.9)
Intangible asset..................................................... 2.4 0.1 -- --
Accumulated other comprehensive income............................... (2.4) -- -- --
------ ------ ------- ------
Net amount recognized................................................ $ 70.1 $ 38.9 $ (55.5) $(51.9)
====== ====== ======= ======
The Company's qualified plan had assets of $469.9 million and $498.0 million
at December 31, 2000 and 1999, respectively. The projected benefit obligation
and accumulated benefit obligation for the qualified plan were $318.3 million
and $292.2 million at December 31, 2000 and $311.0 million and $285.4 million
at December 31, 1999, respectively.
F-36
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The projected benefit obligation and accumulated benefit obligation for the
non-qualified defined benefit pension plan, which is unfunded, were $67.8
million and $59.0 million at December 31, 2000 and $62.3 million and $55.0
million at December 31, 1999, respectively.
Pension Benefits Other Benefits
--------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
($ in millions)
Weighted-average assumptions as of December 31:
Discount rate.................................. 7.5% 8.0% 7.5% 8.0%
Expected return on plan assets................. 10.0% 10.0% -- --
Rate of compensation increase.................. 5.0% 5.0% 5.0% 5.0%
For measurements purposes, a 10% percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 2001. The rate was
assumed to decrease gradually to 6% percent for 2010 and remain at that level
thereafter.
Components of net periodic benefit cost for the pension and other
post-retirement plans are as follows:
Pension Benefits Other Benefits
---------------------- -------------------
2000 1999 1998 2000 1999 1998
------ ------ ------ ----- ----- -----
($ in millions)
Components of net periodic benefit cost
Service cost........................... $ 6.1 $ 11.7 $ 14.4 $ 1.2 $ 2.0 $ 1.3
Interest cost.......................... 29.4 27.3 26.3 6.5 7.2 6.4
Expected return on plan assets......... (46.9) (44.2) (41.8) -- -- --
Amortization of prior service cost..... (1.5) (0.8) 1.0 (0.1) (0.1) --
Curtailment gain....................... (2.0) (3.8) -- -- -- --
Special termination benefits........... -- 50.0 -- -- -- --
Recognized net actuarial loss.......... (0.2) -- -- -- 1.1 0.1
Amortization of transition items....... (7.9) (7.5) (7.5) 3.1 3.1 3.1
------ ------ ------ ----- ----- -----
Net periodic benefit cost.............. $(23.0) $ 32.7 $ (7.6) $10.7 $13.3 $10.9
====== ====== ====== ===== ===== =====
The Company also has a qualified money purchase pension plan covering
substantially all career field underwriters. Company contributions of 5% of
earnings plus an additional 2% of such earnings in excess of the social
security wage base are made each year. In addition, after-tax voluntary field
underwriter contribution of up to 10% of earnings are allowed. At December 31,
2000 and 1999, the fair value of plan assets was $231.2 million and $250.3
million, respectively. For the years ended December 31, 2000, 1999, and 1998,
the Company contributed $3.2 million, $3.1 million and $3.2 million to the
plan, respectively, which amounts are reflected in Other Operating Costs and
Expenses.
The Company has a non-qualified defined contribution plan, which is
unfunded. The non-qualified defined contribution plan projected benefit
obligation which equaled the accumulated benefit obligation was $61.0 million
and $62.2 million as of December 31, 2000 and 1999, respectively. The
non-qualified defined contribution plan's net periodic expense was $7.2
million, $9.3 million and $6.6 million for the years ended December 31, 2000,
1999 and 1998, respectively.
The Company also has incentive savings plans in which substantially all
employees and career field underwriters are eligible to participate. The
Company matches field underwriter contributions up to 2% of eligible
compensation and may also make an additional profit sharing contribution for
non-officer employees. As with the Employee Excess Plan, the Company also
sponsors non-qualified excess defined contribution plans for both the field
underwriter retirement plan and the incentive savings plan for field
underwriters.
F-37
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
8. Income Taxes:
The Holding Company files a consolidated income tax return with its life and
non-life affiliates, except Sagamore Financial Corporation and its subsidiaries.
Income taxes have been calculated in accordance with the provisions of the
Internal Revenue Code of 1986, as amended. A summary of the income tax expense
(benefit) is presented below:
2000 1999 1998
------ ------ ------
($ in millions)
Income tax (benefit) expense:
Current................................................. $ 82.1 $ 73.9 $ 84.6
Deferred................................................ 52.7 57.5 18.1
------ ------ ------
Income tax (benefit) expense before extraordinary item.... $134.8 $131.4 $102.7
Extraordinary item........................................ (20.3) -- --
------ ------ ------
Total.............................................. $114.5 $131.4 $102.7
====== ====== ======
Income taxes reported in the consolidated statements of income are different
from the amounts determined by multiplying the earnings before income taxes by
the statutory federal income tax rate of 35%. The sources of the difference and
the tax effects of each are as follows:
2000 1999 1998
------ ------ ------
($ in millions)
Tax at statutory rate.................................... $139.6 $133.3 $102.7
Dividends received deduction............................. (2.5) (1.7) (1.4)
Other.................................................... (2.3) (0.2) 1.4
------ ------ ------
Income tax expense before extraordinary item............. $134.8 $131.4 $102.7
Extraordinary item....................................... (20.3) -- --
------ ------ ------
Provision for income taxes........................ $114.5 $131.4 $102.7
====== ====== ======
The Company's income tax returns for years through 1993 have been examined
by the Internal Revenue Service ("IRS"). No material adjustments were proposed
by the IRS as a result of these examinations. In the opinion of management,
adequate provision has been made for any additional taxes which may become due
with respect to open years.
F-38
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The components of deferred tax liabilities and assets at December 31, 2000
and 1999 are reported in Accounts Payable and Other Liabilities in the balance
sheet and are as follows:
2000 1999
------ ------
($ in millions)
Deferred policy acquisition costs............ $163.3 $145.0
Fixed maturities and equity securities....... 25.3 34.5
Other, net(1)................................ 67.8 56.4
Nonlife subsidiaries......................... 17.2 17.2
------ ------
Total deferred tax liabilities............... 273.6 253.1
------ ------
Policyholder and separate account liabilities 129.7 155.6
Accrued expenses............................. 48.6 50.8
Deferred compensation and benefits........... 38.2 38.3
Real estate and mortgages.................... (2.3) 25.3
------ ------
Total deferred tax assets.................... 214.2 270.0
------ ------
Net deferred tax (liability) asset........... $(59.4) $ 16.9
====== ======
- ----------
(1)Includes $10.7 million and $3.8 million at December 31, 2000 and 1999 of
deferred taxes relating to net unrealized gains on fixed maturity securities
in the AEGON Portfolio (see Note 10).
The Company is required to establish a valuation allowance for any portion
of the deferred tax asset that management believes will not be realized. In the
opinion of management, it is more likely than not that it will realize the
benefit of the deferred tax assets and, therefore, no such valuation allowance
has been established.
9. Leases:
The Company has entered into various operating lease agreements for office
space, furniture and equipment. These leases have remaining non-cancelable
lease terms in excess of one year. Total rental expense for these operating
leases amounted to $29.7 million in 2000, $29.6 million in 1999, and $24.5
million in 1998. The future minimum rental obligations for the next five years
and thereafter under these leases are: $34.3 million for 2001, $33.2 million
for 2002, $30.6 million for 2003, $27.6 million for 2004, $25.6 million for
2005, and $154.2 million for the years thereafter.
10. The Group Pension Transaction:
On December 31, 1993 (the "Group Pension Transaction Date"), the Company
entered into an agreement (the "Agreement") with AEGON USA, Inc. ("AEGON")
under which the Company transferred a substantial portion of its group pension
business (hereafter referred to as the "Group Pension Transaction"), including
its full service group pension contracts, consisting primarily of tax-deferred
annuity, 401(k) and managed funds lines of business, to AEGON's wholly-owned
subsidiary, AUSA Life Insurance Company, Inc. ("AUSA"). The Company also
transferred to AUSA the corporate infrastructure supporting the group pension
business, including data processing systems, facilities and regional offices.
AUSA was newly formed by AEGON solely for the purpose of facilitating this
transaction. In connection with the transaction, the Company and AEGON have
entered into certain service agreements. These agreements, among other things,
provide that the Company will continue to manage the transferred assets, and
that AUSA will continue to provide certain administrative services to the
Company's remaining group pension contracts not included in the transfer.
Pursuant to the Agreement, MONY agreed to make a $200 million capital
investment in AEGON by purchasing $150 million face amount of Series A Notes
and $50 million face amount of Series B Notes (hereinafter referred to as the
"Notes"). The Series A Notes pay interest at 6.44 percent per annum and the
Series B Notes pay interest at 6.24 percent per annum. Both the Series A Notes
and the Series B Notes mature on December 31, 2002. MONY's investment in the
Series A Notes was intended to provide AEGON with the funding necessary to
capitalize AUSA.
F-39
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In accordance with GAAP, the transaction did not constitute a sale because
the Company retained substantially all the risks and rewards associated with
the Existing Deposits. Accordingly, the Company continues to reflect the
transferred assets and liabilities on its balance sheet under separate captions
entitled "Assets transferred in Group Pension Transaction" and "Liabilities
transferred in Group Pension Transaction." In addition, the Company reports in
its GAAP earnings the profits from the Existing Deposits as discussed below.
Pursuant to the Agreement, MONY receives from AUSA (i) payments on an annual
basis through December 31, 2002 (the "Group Pension Payments") equal to all of
the earnings from the Existing Deposits, (ii) a final payment (the "Final Value
Payment") at December 31, 2002 based on the remaining fair value of the
Existing Deposits, and (iii) a contingent payment (the "New Business Growth
Payment") at December 31, 2002 based on new business growth subsequent to the
Transaction Date. However, the level of new business growth necessary for MONY
to receive the New Business Growth Payment makes it unlikely that MONY will
ever receive any such payment.
With respect to the Group Pension Payments, the annual results from the
Existing Deposits are measured on a basis in accordance with the Agreement
(such basis hereafter referred to as the "Earnings Formula") which is
substantially the same as GAAP, except that: (i) asset impairments on fixed
maturity securities are only recognized when such securities are designated
with an NAIC rating of "6", and (ii) no impairment losses are recognized on
mortgage loans until such loans are disposed of or at the time, and in the
calculation, of the Final Value Payment.
Earnings which emerge from the Existing Deposits pursuant to the application
of the Earnings Formula are recorded in the Company's financial statements only
after adjustments (primarily to recognize asset impairments in accordance with
SFAS Nos. 114 and 115) to reflect such earnings on a basis entirely in
accordance with GAAP (such earnings hereafter referred to as the "Group Pension
Profits"). Losses which arise from the application of the Earnings Formula for
any annual period will be reflected in the Company's results of operations
(after adjustments to reflect such losses in accordance with GAAP) only up to
the amount for which the Company is at risk (as described below), which at any
time is equal to the then outstanding principal amount of the Series A Notes.
Operating losses reported in any annual period pursuant to the Earnings
Formula are carried forward to reduce any earnings in subsequent years reported
pursuant to the Earnings Formula. Any resultant deficit remaining at December
31, 2002 will be deducted from the Final Value Payment and New Business Growth
Payment, if any, due to the Company. If a deficit still remains, it will be
applied (as provided for in the Agreement) as an offset against the principal
payment due to the Company upon maturity of the Series A Notes.
For the years ended December 31, 2000, 1999 and 1998, AUSA reported earnings
to the Company pursuant to the application of the Earnings Formula of $26.9
million, $35.7 million, and $49.8 million, respectively, and the Company
recorded Group Pension Profits of $37.1 million, $63.0 million and $56.8
million, respectively. In addition, the Company earned $12.8 million, $12.8
million, and $12.8 million of interest income on the Notes during the
aforementioned years.
F-40
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following sets forth certain summarized financial information relating
to the Group Pension Transaction as of and for the periods indicated, including
information regarding: (i) the general account assets transferred to support
the Existing Deposits in the Group Pension Transaction (such assets hereafter
referred to as the "AEGON Portfolio"), (ii) the transferred separate account
assets and liabilities, and (iii) the components of revenue and expense
comprising the Group Pension Profits:
As of December 31,
------------------
2000 1999
-------- --------
($ in millions)
Assets:
General Account
Fixed maturities: available for sale, at estimated fair value (amortized cost; $1,420.8 and $1,532.4,
respectively)....................................................................................... $1,419.0 $1,510.0
Mortgage loans on real estate......................................................................... 47.5 98.5
Real estate to be disposed of......................................................................... -- 16.8
Cash and cash equivalents............................................................................. 18.5 25.3
Accrued investment income............................................................................. 26.0 26.5
-------- --------
Total general account assets.......................................................................... 1,511.0 1,677.1
Separate account assets.................................................................................. 3,416.7 3,432.7
-------- --------
Total assets.......................................................................................... $4,927.7 $5,109.8
======== ========
Liabilities:
General Accounts (1)
Policyholders' account balances....................................................................... $1,468.1 $1,645.7
Other liabilities..................................................................................... 12.2 20.7
-------- --------
Total general account liabilities..................................................................... 1,480.3 1,666.4
Separate account liabilities (2)......................................................................... 3,416.7 3,432.7
-------- --------
Total liabilities..................................................................................... $4,897.0 $5,099.1
======== ========
- ----------
(1)Includes general account liabilities transferred in connection with the
Group Pension Transaction pursuant to indemnity reinsurance of $74.2 million
and $88.9 million as of December 31, 2000 and 1999, respectively.
(2)Includes separate account liabilities transferred in connection with the
Group Pension Transaction pursuant to indemnity reinsurance of $14.7 million
and $20.3 million as of December 31, 2000 and 1999, respectively.
For the Year Ended December 31,
-------------------------------
2000 1999 1998
--------- ---------- ---------
($ in millions)
Revenues:
Product policy fees................................. $ 26.3 $ 24.0 $ 23.3
Net investment income............................... 113.5 128.4 154.7
Net realized gains on investments................... (1.2) 18.9 7.2
--------- ---------- ---------
Total revenues................................... 138.6 171.3 185.2
Benefits and Expenses:
Interest credited to policyholders' account balances 84.6 88.4 108.7
Other operating costs and expenses.................. 16.9 19.9 19.7
--------- ---------- ---------
Total benefits and expenses...................... 101.5 108.3 128.4
--------- ---------- ---------
Group Pension Profits............................ $ 37.1 $ 63.0 $ 56.8
========= ========== =========
F-41
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Fixed Maturity Securities
At December 31, 2000 and 1999, there were $2.4 million and $0.0 million of
fixed maturity securities in the AEGON Portfolio deemed to have other than
temporary impairments in value. In addition, there were no fixed maturity
securities at such dates which have been non-income producing for the preceding
twelve months.
At December 31, 2000 and 1999, there were $2.4 million and $0.0 million of
problem fixed maturities (as hereafter defined--see Note 12) held in the AEGON
Portfolio. In addition, at such dates the carrying value of potential problem
fixed maturities held in the AEGON Portfolio were $0.0 million and $3.7
million. Also, none of the fixed maturity securities held in the AEGON
Portfolio at December 31, 2000 and 1999 or prior thereto had been restructured.
The amortized cost and estimated fair value of fixed maturity securities
held in the AEGON Portfolio, by contractual maturity dates, (excluding
scheduled sinking funds), as of December 31, 2000 are as follows:
Amortized Estimated
Cost Fair Value
--------- ----------
($ in millions)
Due in one year or less............... $ 175.0 $ 175.4
Due after one year through five years. 841.5 838.3
Due after five years through ten years 146.6 148.7
Due after ten years................... 26.5 26.7
-------- --------
Subtotal.............................. 1,189.6 1,189.1
Mortgage and asset backed securities.. 231.2 229.9
-------- --------
Total.............................. $1,420.8 $1,419.0
======== ========
Fixed maturity securities that are not due at a single maturity date have
been included in the preceding table in the year of final maturity. Actual
maturities may differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
The percentage of fixed maturities with a credit quality of Aaa, Aa or A was
72.6% and 73.0% at December 31, 2000 and 1999, respectively. The percentage of
fixed maturities rated Baa was 24.5% and 24.6% at December 31, 2000 and 1999,
respectively. The percentage of fixed maturities that were below Investment
Grade was 2.9% and 2.4% at December 31, 2000 and 1999, respectively. There were
no fixed maturities in or near default.
The net change in unrealized investment gains (losses) represents the only
component of other comprehensive income generated by the AEGON Portfolio for
the years ended December 31, 2000, 1999, 1998 and prior thereto. The net change
in unrealized investment gains (losses) was $25.7 million, $(77.9) million and
$(4.0) million for the years ended December 31, 2000, 1999 and 1998,
respectively (see Note 11):
Mortgage Loans on Real Estate
Mortgage loans on real estate in the AEGON Portfolio at December 31, 2000
and 1999 consist of the following:
As of December 31,
-----------------
2000 1999
------- ------
($ in millions)
Mortgage loans............................ $50.0 $102.8
Valuation allowances...................... (2.5) (4.3)
------- ------
Mortgage loans, net of valuation allowance $47.5 $ 98.5
======= ======
F-42
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
An analysis of the valuation allowances with respect to the AEGON Portfolio
for 2000, 1999 and 1998 is as follows:
For the Year Ended
December 31,
-------------------
2000 1999 1998
----- ----- -----
($ in millions)
Balance, beginning of year.......................................... $ 4.3 $16.0 $13.6
Increase (decrease) in allowance.................................... 0.2 (6.7) 2.9
Reduction due to pay downs and pay offs............................. (2.0) (1.0) (0.5)
Transfers to real estate............................................ 0.0 (4.0) --
----- ----- -----
Balance, end of year................................................ $ 2.5 $ 4.3 $16.0
===== ===== =====
Impaired mortgage loans along with related valuation allowances with respect
to the AEGON Portfolio at December 31, 2000, 1999 and 1998 are as follows:
As of December 31,
--------------------
2000 1999 1998
----- ----- ------
($ in millions)
Investment in impaired mortgage loans (before valuation allowances):
Loans that have valuation allowances............................... $19.1 $34.3 $ 71.1
Loans that do not have valuation allowances........................ -- 4.4 4.4
----- ----- ------
Subtotal......................................................... 19.1 38.7 75.5
Valuation allowances................................................ (1.8) (2.7) (11.4)
----- ----- ------
Impaired mortgage loans, net of valuation allowances................ $17.3 $36.0 $ 64.1
===== ===== ======
Impaired mortgage loans that do not have valuation allowances are loans
where the net present value of the expected future cash flows related to the
loan or the fair value of the collateral equals or exceeds the recorded
investment in the loan. Such loans primarily consist of restructured loans.
During the years ended December 31, 2000 and 1999, the average recorded
investment in impaired mortgage loans with respect to the AEGON Portfolio was
approximately $26.7 million, and $50.0 million, respectively. For the years
ended December 31, 2000, 1999, and 1998 approximately $2.1 million, $2.9
million, and $4.5 million, respectively, of interest income on impaired loans
with respect to the AEGON Portfolio was earned.
At December 31, 2000 and 1999, there were no mortgage loans which were
non-income producing for the twelve months preceding such dates with respect to
the AEGON Portfolio.
At December 31, 2000 and 1999 the AEGON Portfolio held restructured mortgage
loans of $15.3 million and $36.0 million, respectively. Interest income of $1.6
million, $2.9 million, and $4.0 million was recognized on restructured mortgage
loans for the years ended December 31, 2000, 1999, and 1998, respectively.
Gross interest income on these loans that would have been recorded in
accordance with the original terms of such loans amounted to approximately $1.5
million, $3.9 million, and $6.9 million for the years ended December 31, 2000,
1999, and 1998, respectively.
F-43
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table presents the maturity distribution of mortgage loans
held in the AEGON Portfolio as of December 31, 2000 ($ in millions):
December 31, 2000
----------------
Carrying % of
Value Total
-------- -----
Due in one year or less............... $13.3 28.1%
Due after one year through five years. 17.2 36.2
Due after five years through ten years 17.0 35.7
----- -----
Total.............................. $47.5 100.0%
===== =====
Total problem, potential problem and restructured commercial mortgages as a
percentage of commercial mortgages were 36.4%, 36.6% and 29.9% at December 31,
2000, 1999 and 1998, respectively. Total valuation allowances as a percentage
of problem, potential problem and restructured commercial mortgages at carrying
value before valuation allowances were 9.4%, 7.0% and 15.1% as of December 31,
2000, 1999 and 1998, respectively.
11. Investment Income, Realized and Unrealized Investment Gains (Losses), and
Comprehensive Income:
Net investment income for the years ended December 31, 2000, 1999 and 1998
was derived from the following sources:
2000 1999 1998
------ ------ ------
($ in millions)
Net Investment Income
Fixed maturities................................. $235.3 $226.1 $418.1
Equity securities................................ 239.4 194.2 53.6
Mortgage loans................................... 98.6 87.1 118.7
Real estate...................................... 19.1 34.1 44.4
Policy loans..................................... 5.1 4.4 72.5
Other investments (including cash and short-term) 22.8 14.4 23.1
------ ------ ------
Total investment income.......................... 620.3 560.3 730.4
Investment expenses.............................. 45.1 35.4 42.1
------ ------ ------
Net investment income............................ $575.2 $524.9 $688.3
====== ====== ======
Net realized gains (losses) on investments for the years ended December 31,
2000, 1999 and 1998 are summarized as follows:
2000 1999 1998
------ ------ ------
($ in millions)
Net Realized Gains (Losses) on Investments
Fixed maturities.......................... $(11.4) $ (8.5) $ 8.3
Equity securities......................... 21.5 76.0 6.9
Mortgage loans............................ 11.7 (2.2) 5.4
Real estate............................... 23.0 52.1 127.6
Other investments assets.................. (0.3) 4.8 20.5
------ ------ ------
Net realized gains on investments......... $ 44.5 $122.2 $168.7
====== ====== ======
F-44
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Following is a summary of the change in unrealized investment gains
(losses), net of related deferred income taxes and adjustment for deferred
policy acquisition costs (see Note 4), which are reflected in Accumulated Other
Comprehensive Income for the periods presented. The net change in unrealized
investment gains (losses) and the change in the Company's minimum pension
liability represent the only components of other comprehensive income for the
years ended December 31, 2000, 1999 and 1998 as presented below:
2000 1999 1998
------ ------- ------
($ in millions)
Other Comprehensive Income
Change in unrealized gains (losses):
Fixed maturities................................................... $196.7 $(458.9) $ 66.8
Equity securities.................................................. (59.9) (25.3) 24.2
Other.............................................................. 0.0 (3.6) (1.8)
------ ------- ------
Subtotal........................................................... 136.8 (487.8) 89.2
AEGON Portfolio (See Note 10)...................................... 20.6 (77.9) (4.0)
------ ------- ------
Subtotal........................................................... 157.4 (565.7) 85.2
Effect on unrealized gains (losses) on investments attributable to:
DAC............................................................... (93.1) 241.6 (6.7)
Deferred federal income taxes..................................... (20.6) 114.1 (28.4)
Net unrealized gains and DAC transferred to the Closed Block....... 2.5 28.2 (18.7)
------ ------- ------
Change in unrealized gains (losses) on investments, net............ 46.2 (181.8) 31.4
Minimum pension liability adjustment (See Note 7).................. (3.8) -- 2.9
------ ------- ------
Other comprehensive income......................................... $ 42.4 $(181.8) $ 34.3
====== ======= ======
The following table sets forth the reclassification adjustments required for
the years ended December 31, 2000, 1999, and 1998 to avoid double-counting in
comprehensive income items that are included as part of net income for a period
that also had been part of other comprehensive income in earlier periods:
2000 1999 1998
----- ------- -----
($ in millions)
Reclassification Adjustments
Unrealized gains (losses) on investments arising during period....... $48.7 $(135.3) $39.3
Reclassification adjustment for gains included in net income......... (6.3) (46.5) (7.9)
----- ------- -----
Unrealized gains (losses) on investments, net of reclassification
adjustments........................................................ $42.4 $(181.8) $31.4
===== ======= =====
Unrealized gains (losses) on investments, (excluding net unrealized gains
(losses) and DAC on assets allocated to the Closed Block), reported in the
above table for the years ended December 31, 2000, 1999 and 1998 are net of
income tax expense (benefit) of $17.2 million, $(139.2) million, and $24.1
million, respectively, and $(95.5) million, $242.0 million, and $0.8 million,
respectively, relating to the effect of such unrealized gains (losses) on DAC.
Reclassification adjustments, (excluding net unrealized gains (losses) and
DAC on assets allocated to the Closed Block), reported in the above table for
the years ended December 31, 2000, 1999 and 1998 are net of income tax expense
of $3.3 million, $25.1 million and $4.3 million, respectively, and $2.5
million, $(0.4) million and $(7.5) million, respectively, relating to the
effect of such amounts on DAC.
F-45
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
12. Fixed Maturity and Equity Securities:
Fixed Maturity Securities Available-for-Sale:
The amortized cost, gross unrealized gains and losses, and estimated fair
value of fixed maturity securities available-for-sale as of December 31, 2000
and 1999 are as follows:
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
----------------- ----------- ------------ -----------------
2000 1999 2000 1999 2000 1999 2000 1999
-------- -------- ----- ----- ----- ------ -------- --------
($ in millions)
US Treasury securities and Obligations of US
Government agencies....................... $ 97.1 $ 110.1 $ 4.2 $ -- $ 0.1 $ 3.2 $ 101.2 $ 106.9
Collateralized mortgage obligations:
Government agency-backed................... 117.9 147.2 1.2 0.5 0.4 2.1 118.7 145.6
Non-agency backed.......................... 101.2 101.0 2.9 0.9 -- 2.0 104.1 99.9
Other asset-backed securities:
Government agency-backed................... 14.7 16.4 0.5 0.3 0.1 0.2 15.1 16.5
Non-agency backed.......................... 300.4 402.2 4.5 1.5 5.3 13.0 299.6 390.7
Foreign governments......................... 28.5 20.9 1.5 3.7 0.5 0.2 29.5 24.4
Utilities................................... 277.9 347.3 5.7 2.6 5.8 14.4 277.8 335.5
Corporate bonds............................. 2,201.8 1,995.5 31.6 9.4 55.4 78.4 2,178.0 1,926.5
-------- -------- ----- ----- ----- ------ -------- --------
Total bonds.......................... 3,139.5 3,140.6 52.1 18.9 67.6 113.5 3,124.0 3,046.0
Redeemable preferred stocks................. 27.4 22.4 -- -- 1.6 1.7 25.8 20.7
-------- -------- ----- ----- ----- ------ -------- --------
Total................................ $3,166.9 $3,163.0 $52.1 $18.9 $69.2 $115.2 $3,149.8 $3,066.7
======== ======== ===== ===== ===== ====== ======== ========
The carrying value of the Company's fixed maturity securities at December
31, 2000 and 1999 is net of adjustments for impairments in value deemed to be
other than temporary of $15.1 million and $16.2 million, respectively.
At December 31, 2000 and 1999, there was $0.2 million and $1.6 million,
respectively of fixed maturity securities which had been non-income producing
for the twelve months preceding such dates.
The Company classifies fixed maturity securities which (i) are in default as
to principal or interest payments, or (ii) are to be restructured pursuant to
commenced negotiations, (iii) went into bankruptcy subsequent to acquisition,
or (iv) are deemed to have other than temporary impairments to value as
"problem fixed maturity securities." At December 31, 2000 and 1999, the
carrying value of problem fixed maturities held by the Company were $42.4
million and $33.9 million, respectively. The Company defines potential problem
securities in the fixed maturity category as securities that are deemed to be
experiencing significant operating problems or difficult industry conditions.
At December 31, 2000 and 1999, the carrying value of potential problem fixed
maturities held by the Company was $2.7 million and $12.4 million,
respectively. In addition, at December 31, 2000 and 1999, the Company held $0.0
million and $0.0 million of fixed maturity securities which had been
restructured. Gross interest income that would have been recorded in accordance
with the original terms of restructured fixed maturity securities amounted to
$0.0 million and $0.0 million for the years ended December 31, 2000 and 1999,
respectively. Gross interest income on these fixed maturity securities included
in net investment income aggregated $0.0 million and $0.0 million for the years
ended December 31, 2000 and 1999, respectively.
F-46
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The amortized cost and estimated fair value of fixed maturity securities, by
contractual maturity dates (excluding scheduled sinking funds) as of December
31, 2000, are as follows:
2000
--------------------
Amortized Estimated
Cost Fair Value
--------- ----------
($ in millions)
Due in one year or less........................................ $ 12.1 $ 12.1
Due after one year through five years.......................... 595.2 594.2
Due after five years through ten years......................... 1,271.2 1,264.5
Due after ten years............................................ 646.2 629.8
-------- --------
Subtotal................................................ 2,524.7 2,500.6
Mortgage- and asset-backed securities.......................... 642.2 649.2
-------- --------
Total................................................... $3,166.9 $3,149.8
======== ========
Fixed maturity securities that are not due at a single maturity date have
been included in the preceding table in the year of final maturity. Actual
maturities may differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
Proceeds from sales of fixed maturity securities including those in the
Closed Block during 2000, 1999 and 1998 were $441.3 million, $632.8 million and
$396.9 million, respectively. Gross gains of $7.2 million, $6.9 million, and
$10.6 million and gross losses of $16.3 million, $19.4 million, and $2.9
million were realized on these sales, respectively.
Equity Securities
The cost, gross unrealized gains and losses, and estimated fair value of
marketable and nonmarketable equity securities at December 31, 2000 and 1999
are as follows:
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
------------- ------------ ---------- -------------
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ----- ------ ---- ----- ------ ------
($ in millions)
Marketable equity securities... $ 40.1 $217.5 $ 6.7 $ 63.3 $2.2 $ 9.3 $ 44.6 $271.5
Nonmarketable equity securities 226.2 178.5 63.6 84.4 5.8 14.6 284.0 248.3
------ ------ ----- ------ ---- ----- ------ ------
$266.3 $396.0 $70.3 $147.7 $8.0 $23.9 $328.6 $519.8
====== ====== ===== ====== ==== ===== ====== ======
Proceeds from sales of equity securities during 2000, 1999 and 1998 were
$499.2 million, $302.7 million and $165.0 million, respectively. Gross gains of
$81.2 million, $90.0 million, and $24.4 million and gross losses of $57.8
million, $12.4 million, and $17.2 million were realized on these sales,
respectively.
F-47
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
13. Mortgage Loans On Real Estate and Real Estate:
Mortgage loans on real estate at December 31, 2000 and 1999 consist of the
following:
2000 1999
-------- --------
($ in millions)
Commercial mortgage loans...................................... $ 943.6 $ 777.8
Agricultural and other loans................................... 262.4 515.6
-------- --------
Total loans............................................. 1,206.0 1,293.4
Less: valuation allowances..................................... (17.3) (23.0)
-------- --------
Mortgage loans, net of valuation allowances............. $1,188.7 $1,270.4
======== ========
An analysis of the valuation allowances for 2000, 1999 and 1998 is as
follows:
2000 1999 1998
----- ----- ------
($ in millions)
Balance, beginning of year................................... $23.0 $23.2 $ 54.9
(Decrease)/Increase in allowance............................. (5.5) 3.2 11.9
Reduction due to pay downs and pay offs...................... (0.2) (1.2) (16.0)
Transfers to real estate..................................... -- (2.2) (4.0)
Transfers to the Closed Block................................ -- -- (23.6)
----- ----- ------
Balance, end of year......................................... $17.3 $23.0 $ 23.2
===== ===== ======
Impaired mortgage loans along with related valuation allowances as of
December 31, 2000 and 1999 were as follows:
2000 1999
------ ------
($ in millions)
Investment in impaired mortgage loans (before valuation allowances):
Loans that have valuation allowances.............................. $ 61.0 $109.1
Loans that do not have valuation allowances....................... 44.5 30.1
------ ------
Subtotal..................................................... 105.5 139.2
Valuation allowances................................................ (6.5) (17.5)
------ ------
Impaired mortgage loans, net of valuation allowances......... $ 99.0 $121.7
====== ======
Impaired mortgage loans that do not have valuation allowances are loans
where the net present value of the expected future cash flows related to the
loan or the fair value of the collateral equals or exceeds the recorded
investment in the loan. Such loans primarily consist of restructured loans or
loans on which impairment writedowns were taken prior to the adoption of SFAS
No. 114, "Accounting by Creditors for Impairment of a Loan."
During 2000 and 1999, the average recorded investment in impaired mortgage
loans was approximately $219.0 million and $262.6 million, respectively
including Closed Block mortgages. During 2000, 1999, and 1998, the Company
recognized $19.5 million, $19.8 million, and $24.2 million, respectively, of
interest income on impaired loans (see Note 20.)
At December 31, 2000 and 1999, the carrying values of mortgage loans which
were non-income producing for the twelve months preceding such dates were $13.3
million and $21.0 million, respectively.
At December 31, 2000 and 1999, the Company had restructured mortgage loans
of $68.7 million (excluding the Closed Block) and $100.1 million, respectively.
Interest income of $5.5 million, $6.3 million and $13.0 million was recognized
on
F-48
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
restructured mortgage loans in 2000, 1999, and 1998, respectively. Gross
interest income on these loans that would have been recorded in accordance with
the original terms of such loans amounted to approximately $7.5 million, $11.6
million, and $18.1 million in 2000, 1999 and 1998, respectively.
The following table summarizes the Company's real estate at December 31,
2000 and 1999:
As of December 31,
-----------------
2000 1999
------ ------
($ in millions)
Real estate to be disposed of (1)....................... $196.0 $375.6
Impairment writedowns................................... (20.2) (52.7)
Valuation allowance..................................... (4.5) (22.0)
------ ------
Carrying value of real estate to be disposed of......... $171.3 $300.9
------ ------
Real estate held for investment (2)..................... $ 51.5 $ 57.0
Impairment writedowns................................... (10.8) (10.8)
------ ------
Carrying value of real estate held for income production $ 40.7 $ 46.2
------ ------
Total real estate................................ $212.0 $347.1
====== ======
- ----------
(1)Amounts presented as of December 31, 2000 and 1999 are net of $16.6 million
and $42.1 million, respectively, relating to impairments taken upon
foreclosure of mortgage loans.
(2)Amounts presented as of December 31, 2000 and 1999 are net of $5.9 million
and $5.9 million, respectively, relating to impairments taken upon
foreclosure of mortgage loans.
An analysis of the valuation allowances relating to real estate classified
as to be disposed of for the years ended December 31, 2000, 1999 and 1998 is as
follows:
2000 1999 1998
------ ------ ------
($ in millions)
Balance, beginning of year....................... $ 22.0 $ 30.6 $ 82.7
Increase due to transfers of properties to real
estate to be disposed of during the year....... 0.5 11.0 1.7
Increases (decreases) in valuation allowances
from the end of the prior period on properties
to be disposed of.............................. 0.2 1.1 5.0
Decrease as a result of transfers of valuation
allowances to held for income production....... -- -- (13.5)
Decrease as a result of sale..................... (18.2) (20.7) (45.3)
------ ------ ------
Balance, end of year...................... $ 4.5 $ 22.0 $ 30.6
====== ====== ======
Real estate is net of accumulated depreciation of $86.0 million and $138.6
million for 2000 and 1999, respectively, and depreciation expense recorded was
$2.2 million, $8.5 million and $26.6 million for the years ended December 31,
2000, 1999 and 1998, respectively.
At December 31, 2000 and 1999, the carrying value of real estate which was
non-income producing for the twelve months preceding such dates was $14.9
million and $16.9 million, respectively. Approximately 57.7% of such real
estate at December 31, 2000 consisted of land and the balance consisted of
vacant buildings.
The carrying value of impaired real estate as of December 31, 2000 and 1999
was $29.4 million and $84.2 million, respectively. The depreciated cost of such
real estate as of December 31, 2000 and 1999 was $60.4 million and $147.7
million
F-49
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
before impairment writedowns of $31.0 million and $63.5 million, respectively.
The aforementioned impairments occurred primarily as a result of low occupancy
levels and other market related factors. Losses recorded during 2000, 1999, and
1998 related to impaired real estate aggregated $0.0 million, $0.0 million, and
$5.9 million, respectively, and are included as a component of net realized
gains on investments. Substantially all impaired real estate is allocated to
the Protection Products segment.
14. Estimated Fair Value of Financial Instruments:
The estimated fair values of the Company's financial instruments approximate
their carrying amounts except for long-term debt as described below. The
methods and assumptions utilized in estimating the fair values of the Company's
financial instruments are summarized as follows:
Fixed Maturities and Equity Securities
The estimated fair values of fixed maturity securities are based upon quoted
market prices, where available. The fair values of fixed maturity securities
not actively traded and other non-publicly traded securities are estimated
using values obtained from independent pricing services or, in the case of
private placements, by discounting expected future cash flows using a current
market interest rate commensurate with the credit quality and term of the
investments. Equity securities primarily consist of investments in common
stocks and limited partnership interests. The fair values of the Company's
investment in common stocks are determined based on quoted market prices, where
available. The fair value of the Company's investments in limited partnership
interests are based on amounts reported by such partnerships to the Company.
Mortgage Loans
The fair values of mortgage loans are estimated by discounting expected
future cash flows, using current interest rates for similar loans to borrowers
with similar credit risk. Loans with similar characteristics are aggregated for
purposes of the calculations. The fair value of mortgages in process of
foreclosure is the estimated fair value of the underlying collateral.
Policy Loans
Policy loans are an integral component of insurance contracts and have no
maturity dates. Management has determined that it is not practicable to
estimate the fair value of policy loans.
Long-term Debt
The fair value of long-term debt at December 31, 2000 was $603.3 million and
is determined based on contractual cash flows discounted at market rates. The
estimated fair values for non-recourse mortgage debt are determined by
discounting contractual cash flows at a rate which takes into account the level
of current market interest rates and collateral risk.
Separate Account Assets and Liabilities
The estimated fair value of assets held in Separate Accounts is based on
quoted market prices. The fair value of liabilities related to Separate
Accounts is the amount payable on demand, which includes surrender charges.
Investment-Type Contracts
The fair values of annuities are based on estimates of the value of payments
available upon full surrender. The fair values of the Company's liabilities
under guaranteed investment contracts are estimated by discounting expected
cash outflows using interest rates currently offered for similar contracts with
maturities consistent with those remaining for the contracts being valued.
F-50
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
15. Reinsurance:
Life insurance business is primarily ceded on a yearly renewable term basis
under various reinsurance contracts except for the level term product which
utilizes a coinsurance agreement. The Company's general practice is to retain
no more than $4.0 million of risk on any one person for individual products and
$6.0 million for last survivor products.
The Company has entered into coinsurance agreements with other insurers
related to a portion of its extended term insurance, guaranteed interest
contract and long-term disability claim liabilities and reinsures approximately
50% of its block of paid-up life insurance policies.
The following table summarizes the effect of reinsurance for the years
indicated:
2000 1999 1998
------ ------ -------
($ in millions)
Direct premiums (includes $70.9, $74.4 and $78.4 of accident and health premiums for 2000,
1999, and 1998, respectively).............................................................. $204.4 $181.6 $ 728.7
Reinsurance assumed.......................................................................... 5.3 5.0 5.3
Reinsurance ceded (includes $(70.4), $(73.8), and $(78.2) of accident and health premiums for
2000, 1999, and 1998, respectively)........................................................ (91.6) (90.3) (112.3)
------ ------ -------
Net premiums (1)...................................................................... $118.1 $ 96.3 $ 621.7
====== ====== =======
Universal life and investment type product policy fee income ceded........................... $ 23.1 $ 14.4 $ 8.9
====== ====== =======
Policyholders' benefits ceded (2)............................................................ $ 79.2 $ 82.2 $ 107.3
====== ====== =======
Interest credited to policyholders' account balances ceded................................... $ 3.6 $ 4.5 $ 6.5
====== ====== =======
- ----------
(1)Excludes Closed Block direct premiums of $601.6 and $639.9 and reinsurance
ceded of $19.2 and $19.0 at December 31, 2000 and 1999, respectively.
(2)Excludes $28.7 million of Closed Block benefits ceded at December 31, 2000.
The Company is contingently liable with respect to ceded insurance should
any reinsurer be unable to meet its obligations under these agreements. To
limit the possibility of such losses, the Company evaluates the financial
condition of its reinsurers and monitors concentration of credit risk.
16. Debt:
The Company's debt at December 31, 2000 and 1999 consists of the following:
2000 1999
------ ------
($ in millions)
Surplus notes.................... $ 2.0 $240.0
Real estate mortgage encumbrances 52.3 58.8
Senior Notes..................... 569.1 --
------ ------
$623.4 $298.8
====== ======
Surplus Notes
On December 31, 1997, the Company issued the MONY Notes in connection with
the Investment Agreement (see Note 2). The MONY Notes have a face amount of
$115.0 million, a coupon rate of interest of 9.5% per annum, and mature on
December 30, 2012. Interest on the MONY Notes is payable semi-annually and
principal is payable at maturity. Payment of interest on the
F-51
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
MONY Notes may only be made upon the prior approval of the New York State
Superintendent of Insurance. For each of the years in the period ended December
31, 2000, 1999 and 1998, the Company recorded interest expense of $2.1 million,
$10.9 million and $10.9 million related the MONY Notes, respectively.
On August 15, 1994, the Company issued Surplus Notes due August 15, 2024
with a face amount of $125.0 million. The notes were issued at a discount of
approximately 42.1% from the principal amount payable at maturity, resulting in
net proceeds after issuance expenses of approximately $70.0 million. The amount
of such original issue discount represents a yield of 11.25% per annum for the
period from August 15, 1994 until August 15, 1999. Interest on the notes did
not accrue until August 15, 1999; thereafter, interest on the notes is
scheduled to be paid on February 15 and August 15 of each year, commencing
February 15, 2000, at a rate of 11.25% per annum. The Company amortizes the
discount using the interest method. The Company recorded interest expense
(including discount accretion) of $3.1 million, $13.5 million and $12.1 million
for the years ended December 31, 2000, 1999 and 1998, respectively.
Payment of interest on the Surplus Notes may only be made upon the prior
approval of the New York State Superintendent of Insurance.
On January 12, 2000, the Holding Company filed a registration statement on
Form S-3 with the Securities and Exchange Commission (the "SEC") to register
certain securities. This registration, known as a "Shelf Registration",
provides the Company with the ability to offer various securities to the
public, when it deems appropriate, to raise proceeds up to an amount not to
exceed $1.0 billion in the aggregate for all issuances of securities
thereunder. It is the intention of the Company to use this facility to raise
proceeds for mergers and acquisitions and for other general corporate matters,
as it considers necessary.
On March 8, 2000, the Holding Company issued $300.0 million principal amount
of senior notes (the "$300 million Senior Notes") pursuant to the
aforementioned Shelf Registration. The $300 million Senior Notes mature on
March 15, 2010 and bear interest at 8.35% per annum. The principal amount of
the $300 million Senior Notes is payable at maturity and interest is payable
semi-annually. The net proceeds to the Company from the issuance of the $300
million Senior Notes, after deducting underwriting commissions and other
expenses (primarily legal and accounting fees), were approximately $296.6
million. Approximately $280.0 million of the net proceeds from the issuance of
the Senior Notes was used by the Holding Company to finance the repurchase, on
March 8, 2000, by MONY Life of all of its outstanding $115.0 million face
amount 9.5% coupon surplus notes, and $116.5 million face amount of its $125.0
million face amount 11.25% coupon surplus notes (hereafter referred to as the
"9.5% Notes" and "11.25% Notes", respectively), which were outstanding at
December 31, 1999. The balance of the net proceeds from the issuance of the
Senior Notes was retained by the Holding Company for general corporate
purposes. In the third quarter of 2000, the Company repurchased another $6.5
million face amount of the 11.25% notes.
To finance MONY Life's repurchase of the 9.5% Notes and the 11.25% Notes,
the Holding Company, on March 8, 2000: (i) purchased two surplus notes from
MONY Life (hereafter referred to as the "Inter-company Surplus Notes") to
replace the 9.5% Notes and the 11.25% Notes. The terms of the Inter-company
Surplus Notes are identical to the 9.5% Notes and the 11.25% notes, except that
the Inter-company Surplus Notes were priced to yield a current market rate of
interest and the inter-company surplus note issued to replace the $116.5
million face amount of the 11.25% Notes was issued at a face amount of $100.0
million and (ii) contributed capital to MONY Life in the amount of $65.0
million.
As a result of the repurchase of the 9.5% Notes and substantially all of the
11.25% Notes, the Company recorded a pre-tax tax loss of $58.1 million ($37.7
million after tax) during 2000. The loss resulted from the premium paid by MONY
Life to the holders of the 9.5% Notes and the 11.25% Notes reflecting the
excess of their fair value over their carrying value on the Company's books at
the date of the transaction of approximately $7.0 million and $51.1 million,
respectively. This loss is reported, net of tax, as an extraordinary item on
the Company's income statement for the year ended December 31, 2000.
On December 7, 2000, The MONY Group Inc. issued $275 million principal
amount of senior notes (the "$275 million Senior Notes") pursuant to the
aforementioned Shelf Registration. The $275 million Senior Notes mature on
December 15, 2005 and bear
F-52
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
interest at 7.45% per annum. The principal amount of the $275 million Senior
Notes is payable at maturity and interest is payable semi-annually. The net
proceeds, after deducting underwriting commissions and other expenses were used
to fund the acquisition of Advest. See Note 4--Extraordinary Items.
Real Estate Mortgage Encumbrances
The Company has one mortgage loan on one of its estate properties. The
interest rates in this loan is 8.85% and the loan matures in June 2001, with
the option to extend the maturity. For the years ended December 31, 2000, 1999
and 1998, interest expense on mortgage loans aggregated $5.3 million, $5.0
million, and $9.0 million, respectively.
Other
During 1989, the Company entered into a transaction which is accounted for
as a financing arrangement involving certain real estate properties held for
investment. Pursuant to the terms of the agreement, the Company effectively
pledged the real estate properties as collateral for a loan of approximately
$35.0 million bearing simple interest at a rate of 8% per annum. The remaining
obligation of $44.1 was paid in full on December 1, 1999. Interest expense on
the obligation of $0.0 million, $3.4 million and $3.1 million, is reflected in
Other Operating Costs and Expenses on the statements of income for the years
ended December 31, 2000, 1999 and 1998 respectively.
In 1988, the Company financed one of its real estate properties under a
sales/leaseback arrangement. The facility was sold for $66.0 million, $56.0
million of which was in the form of an interest bearing note receivable and
$10.0 million in cash. The note was originally due January 1, 2009, however, on
December 1, 1999, the remaining balance of the interest bearing note of $44.2
was paid in full as part of the sale of the property to a third party. The
transaction continues to be accounted for as a sale/leaseback arrangement, with
the proceeds received from the sale, amortized into income over the life of the
lease. The lease has a term of 20 years beginning December 21, 1988 and
requires minimum annual rental payments of $7.4 million in 2001, $7.6 million
in 2002, $7.7 million in 2003, $7.9 million in 2004, $8.0 million in 2005 and
$25.1 million for 2006 and thereafter. The Company has the option to renew the
lease at the end of the lease term.
Aggregate contractual debt service payments on the Company's debt at
December 31, 2000 for 2001 and the succeeding four years are $46.6 million,
$45.8 million, $45.8 million, $45.8 million and $320.8 million, respectively,
and $417.4 million thereafter.
17. Off-Balance Sheet Risk and Concentration of Credit Risk:
Financial Instruments with Off-Balance Sheet Risk:
Pursuant to a securities lending agreement with a major financial
institution, the Company from time to time lends securities to approved
borrowers. At December 31, 2000 and 1999, securities loaned by the Company
under this agreement had a fair value of approximately $160.9 million and $61.5
million, respectively. The minimum collateral on securities loaned is 102
percent of the market value of the loaned securities. Such securities are
marked to market on a daily basis and the collateral is correspondingly
increased or decreased.
Concentration of Credit Risk:
At December 31, 2000 and 1999, the Company had no single investment or
series of investments with a single issuer (excluding U.S. Treasury securities
and obligations of U.S. government agencies) exceeding 1.0% and 0.5%,
respectively, of total cash and invested assets.
The Company's fixed maturity securities are diversified by industry type.
The industries that comprise 10% or more of the carrying value of the fixed
maturity securities at December 31, 2000 are Consumer goods of $555.5 million
(17.6%), Non-Government Asset/Mortgage Backed of $470.1 million (14.9%), and
Public Utilities of $325.4 million (10.3%).
F-53
MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
At December 31, 1999 the industries that comprise 10% or more of the
carrying value of the fixed maturity securities were Non-Government
Asset/Mortgage-Backed of $490.6 million (16.0%), Consumer Goods and Services of
$462.0 million (15.1%), Public Utilities of $335.5 million (10.9%), Other
Manufacturing of $305.4 million (10.0%).
The Company holds below investment grade fixed maturity securities with a
carrying value of $390.7 million at December 31, 2000. These investments
consist mostly of privately issued bonds which are monitored by the Company
through extensive internal analysis of the financial condition of the issuers
and which generally include protective debt covenants. At December 31, 1999,
the carrying value of the Company's investments in below investment grade fixed
maturity securities amounted to $308.3 million.
The Company has significant investments in commercial and agricultural
mortgage loans and real estate (including joint ventures and partnerships). The
locations of property collateralizing mortgage loans and real estate investment
carrying values at December 31, 2000 and 1999 are as follows:
2000 1999
-------------- --------------
($ in millions)
Geographic Region
Mountain......... $ 331.5 23.7% $ 319.7 19.8%
Southeast........ 281.1 20.0 307.3 19.0
Midwest.......... 250.9 17.9 290.4 17.9
West............. 249.5 17.8 323.3 20.0
Northeast........ 208.6 14.9 234.7 14.5
Southwest........ 79.1 5.7 142.1 8.8
-------- ----- -------- -----
Total........... $1,400.7 100.0% $1,617.5 100.0%
======== ===== ======== =====
F-54
APPENDIX A
DEATH BENEFIT PERCENTAGE FOR
GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST
Applicable
Attained Age Percentage
- ------------ ----------
40 and Under 250%
41.......... 243
42.......... 236
43.......... 229
44.......... 222
45.......... 215
46.......... 209
47.......... 203
48.......... 197
49.......... 191
50.......... 185
51.......... 178
52.......... 171
53.......... 164
54.......... 157
55.......... 150
56.......... 146
57.......... 142
58.......... 138
59.......... 134
60.......... 130
61.......... 128
62.......... 126
63.......... 124
64.......... 122
65.......... 120
66.......... 119
67.......... 118
68.......... 117
69.......... 116
70.......... 115
71.......... 113
72.......... 111
73.......... 109
74.......... 107
75-90....... 105
91.......... 104
92.......... 103
93.......... 102
94-100...... 101
A-1
Appendix B
MONTHLY PER $1,000 SPECIFIED AMOUNT FACTORS
Preferred NonSmoker Preferred Smoker
--------------------------- ---------------------------
Specified Amount Specified Amount
--------------------------- ---------------------------
Issue Age
of Younger 100,000- 500,000- 1 million 100,000- 500,000- 1 million
Insured 499,999 999,999 and over 499,999 999,999 and over
- ---------- -------- -------- --------- -------- -------- ---------
18 0.050 0.050 0.040 0.060 0.050 0.040
- -------------------------------------------------------------------
20 0.050 0.050 0.040 0.060 0.050 0.040
25 0.060 0.050 0.040 0.060 0.050 0.050
- -------------------------------------------------------------------
30 0.060 0.050 0.050 0.070 0.060 0.050
35 0.070 0.060 0.050 0.070 0.060 0.060
- -------------------------------------------------------------------
40 0.060 0.070 0.060 0.060 0.070 0.060
45 0.090 0.080 0.070 0.090 0.090 0.080
- -------------------------------------------------------------------
50 0.110 0.100 0.090 0.120 0.110 0.100
55 0.140 0.130 0.110 0.140 0.130 0.120
- -------------------------------------------------------------------
60 0.170 0.160 0.140 0.180 0.170 0.150
65 0.220 0.210 0.180 0.230 0.220 0.190
- -------------------------------------------------------------------
70 0.270 0.270 0.240 0.270 0.270 0.250
75 0.310 0.300 0.280 0.310 0.300 0.280
- -------------------------------------------------------------------
80 0.360 0.350 0.340 0.360 0.350 0.340
85 0.360 0.350 0.340 0.360 0.350 0.340
Standard NonSmoker Standard Smoker
--------------------------- ---------------------------
Specified Amount Specified Amount
--------------------------- ---------------------------
Issue Age
of Younger 100,000- 500,000- 1 million 100,000- 500,000- 1 million
Insured 499,999 999,999 and over 499,999 999,999 and over
- ---------- -------- -------- --------- -------- -------- ---------
18 0.060 0.050 0.040 0.060 0.050 0.040
- -------------------------------------------------------------------
20 0.060 0.050 0.040 0.060 0.050 0.040
25 0.060 0.060 0.050 0.060 0.050 0.050
- -------------------------------------------------------------------
30 0.070 0.060 0.050 0.070 0.060 0.050
35 0.070 0.060 0.060 0.070 0.060 0.060
- -------------------------------------------------------------------
40 0.080 0.070 0.060 0.080 0.070 0.060
45 0.090 0.090 0.080 0.090 0.080 0.080
- -------------------------------------------------------------------
50 0.120 0.110 0.100 0.120 0.110 0.100
55 0.140 0.140 0.120 0.150 0.140 0.130
- -------------------------------------------------------------------
60 0.180 0.170 0.150 0.190 0.180 0.160
65 0.230 0.220 0.190 0.250 0.240 0.210
- -------------------------------------------------------------------
70 0.270 0.270 0.250 0.300 0.290 0.260
75 0.310 0.300 0.280 0.310 0.310 0.300
- -------------------------------------------------------------------
80 0.360 0.350 0.340 0.370 0.360 0.350
85 0.360 0.350 0.340 0.370 0.360 0.350
Factors for interim ages are available upon request.
B-1
Appendix C
ILLUSTRATIONS OF DEATH PROCEEDS, FUND VALUES AND
CASH VALUES, AND PREMIUM OUTLAYS
The following tables illustrate how the key financial elements of the Policy
work, specifically, how the death benefits, Fund Values and Cash Values could
vary over an extended period of time. In addition, each table compares these
values with premiums paid accumulated with interest.
The Policies illustrated include the following:
Death
Benefit Specified See
Sex Age Underwriting Class Sex Age Underwriting Class Option Amount Page
- ---- --- -------------------- ------ --- -------------------- ------- --------- ----
Male 45 Preferred Non-smoker Female 45 Preferred Non-smoker 1 $200,000 C-4
Male 45 Preferred Non-smoker Female 45 Preferred Non-smoker 2 $200,000 C-14
The tables show how Death Proceeds, Fund Values and Cash Values of a
hypothetical Policy could vary over an extended period of time if the
Subaccounts of the Variable Account had constant hypothetical gross annual
investment returns of 0%, 6% or 12% over the periods indicated in each table.
The values will differ from those shown in the tables if the annual investment
returns are not absolutely constant. That is, the death benefits, Fund Values
and Cash Values will be different if the returns averaged 0%, 6% or 12% over a
period of years but went above or below those figures in individual Policy
years. These illustrations assume that no Policy Loan has been taken. The
amounts shown would differ if unisex rates were used.
The amounts shown for Death Proceeds, Fund Values and Cash Values reflect
the fact the net investment return on the Policy is lower than the gross
investment return on the Subaccounts of the Variable Account. This results from
the charges levied against the Subaccounts of the Variable Account (i.e., the
mortality and expense risk charge) as well as the premium loads, administrative
charges and Surrender Charges. The difference between the Fund Value and the
Cash Value in the first 14 years is the Surrender Charge.
The tables illustrate cost of insurance and expense charges at both current
rates (which are described under Cost of Insurance) and at the maximum rates
guaranteed in the Policies. The amounts shown at the end of each Policy year
reflect a daily charge against the Funds as well as those assessed against the
Subaccounts. These charges include the charge against the Subaccounts for
mortality and expense risks and the effect on each Subaccount's investment
experience of the charge to Portfolio assets for investment management and
direct expenses. The mortality and expense risk fee is .35% annually on a
guaranteed basis.
The tables also reflect a deduction for a daily investment advisory fee and
for other expenses of the Portfolio at a rate equivalent to an annual rate of
0.93% of the aggregate average daily net assets of the Portfolio. This
hypothetical rate is representative of the average maximum investment advisory
fee and other expenses of the Portfolios applicable to the Subaccounts of the
Variable Account. Actual fees and other expenses vary by Portfolio and may be
subject to agreements by the sponsor to waive or otherwise reimburse each
Portfolio for operating expenses which exceed certain limits. For a detailed
description of actual expenses and expense reimbursements, see page 3. There
can be no assurance that the expense reimbursement arrangements will continue
in the future, and any unreimbursed expenses would be reflected in the values
included on the tables.
The effect of these investment management and direct expenses on a 0% gross
rate of return would result in a net rate of return of -0.93%, on 6% it would
be 5.07%, and on 12% it would be 11.07%.
The tables assume the deduction of charges including administrative and
sales charges. There are tables for the Policies listed in the chart above for
death benefit Options 1 or 2 and each option is illustrated using current
C-1
and guaranteed policy cost factors. The tables reflect the fact that the
Company does not currently make any charge against the Variable Account for
state or federal taxes. If such a charge is made in the future, it will take a
higher rate of return to produce after-tax returns of 0%, 6% or 12%.
The following are descriptions of Table columns and key terms:
Age: Younger Insured's attained age at the end of the policy year
Premium Outlay: The annualized out-of-pocket premium payments for each
policy year including scheduled and any anticipated unscheduled premium
payments. Premium payments are assumed to be paid at the beginning of each
premium paying period. Amounts of surrenders and loans plus loan interest if
any, are shown on the pages captioned "Premiums, Full Surrender and Policy
Loans".
Premium Accumulated at 5%: is equal to the premiums compounded at an annual
effective rate of 5% and is shown at the end of the year.
Guaranteed Charges at 0.00%, 6.00% or 12.00%
Cash Value: The value of the subaccounts at the end of each policy year
assuming a 0.00%, 6.00% or 12.00% hypothetical rate of return on the Funds,
less all charges, fees and deductions at their guaranteed maximum. The cash
value also takes into account any loans illustrated, as well as, the applicable
surrender charges that would apply if the policy were surrendered prior to the
end of the first ten years.
Fund Value: The value of the subaccounts at the end of each policy year
assuming a 0.00%, 6.00% or 12.00% hypothetical rate of return on the Funds,
less all charges, fees and deductions at their guaranteed maximum. The Fund
Value DOES NOT take into account the applicable surrender charges that would
apply if the policy were surrendered prior to the end of the first ten years.
Death Proceeds: The benefit payable if the insured's death occurs at the end
of the policy year, assuming a 0.00%, 6.00% or 12,00% hypothetical rate of
return on the Funds, less all charges, fees and deductions at their guaranteed
maximums.
Current charges at 0.00%, 6.00% or 12.00%
Cash Value: The value of the subaccounts at the end of each policy year
assuming a 0.00%, 6.00% or 12.00% hypothetical rate of return on the Funds,
less all charges, fees and deductions at the current, non-guaranteed rates. The
cash value also takes into account any loans illustrated, as well as, the
applicable surrender charges that would apply if the policy were surrendered
prior to the end of the first ten years.
Fund Value: The value of the subaccounts at the end of each policy year
assuming a 0.00%, 6.00% or 12.00% hypothetical rate of return on the Funds,
less all charges, fees and deductions at the current, non-guaranteed rates. The
Fund Value DOES NOT take into account the applicable surrender charges that
would apply if the policy were surrendered prior to the end of the first ten
years.
Death Proceeds: The benefit payable if the insured's death occurs at the end
of the policy year assuming a 0.00%, 6.00% or 12.00% hypothetical rate of
return on the Funds, less all charges, fees and deductions at the current,
non-guaranteed rates.
The Company will furnish, upon request, a comparable illustration based on
the age and sex of the proposed Insured, standard Premium Class assumptions and
an initial Specified Amount and Scheduled Premium Payments of the applicant's
choice. If a Policy is purchased, an individualized illustration will be
delivered reflecting the Scheduled Premium Payment chosen and the Insured's
actual risk class. After issuance, the Company will provide upon request an
illustration of future Policy benefits based on both guaranteed and current
cost factor assumptions and actual Account Value.
The following is the page of supplemental footnotes to each of the flexible
premium variable life to age 100 numeric summary and standard ledger statements
which follow and which begin on pages C-4.
C-2
STANDARD LEDGER STATEMENT -- SUPPLEMENTAL FOOTNOTE PAGE
MONY Custom Estate Master
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
MONY Life Insurance Company
Additional Information
These policies have been tested for the possibility of classification as a
modified endowment. This test is not a guarantee that a policy will not be
classified as a modified endowment.
This illustration has been checked against federal tax laws relating to
their definition of life insurance and is in compliance based on proposed
premium payments and coverages. Any decrease in specified amount and/or a
change in death benefit option 2 to death benefit option 1 and/or surrenders
occurring in the first 15 years may cause a taxable event. In addition, if the
policy is defined as a modified endowment policy, a loan, surrender, or
assignment or pledge (unless such assignment or pledge is for burial expenses
and the maximum death benefit is not in excess of $25,000) may be considered a
taxable distribution and a ten percent penalty may be added to any tax on the
distribution. Please consult your tax advisor for advice.
GUIDELINE PREMIUMS
Death
Benefit Specified Initial Guideline Initial Guideline
Sex Age Underwriting Class Sex Age Option Amount Single Premium Annual Premium
- ---- --- --------------------- ------ --- ------- --------- ----------------- -----------------
Male 45 Preferred, Non-Smoker Female 45 1 $200,000 $27,638.77 $2,354.33
Male 45 Preferred, Non-Smoker Female 45 2 $200,000 $27,638.77 $9,194.28
Values shown on these illustrations are based on a specified amount of
$200,000 and on a policyowner tax bracket of 0%.
Premiums are assumed to be paid at the beginning of the payment period.
Policy values and ages are shown as of the end of the policy year and reflect
the effect of all loans and surrenders. The death proceeds, fund value and
value upon surrender will differ if premiums are paid in different amounts,
frequencies, or not on the due date.
The policy's cash value is net of any applicable surrender charge.
Premiums less the following deductions are added to the fund value:
1. A premium tax charge of 0.8% of gross premiums in all policy years.
2. A sales charge on the gross premiums. The sales charges equal 6% of
each premium dollar paid up to the Target Premium in years 1-10, 2% of
premium paid in excess of Target Premium in years 1-10, and 2% of all
premiums after the tenth Policy year.
3. A DAC tax charge of 1.25% of gross premiums in all policy years. No
charge will be deducted where premiums received are not subject to this tax.
Those columns assuming guaranteed charges use the current monthly mortality
charges, current monthly administrative charges, current charges for mortality
and expense risks, current charges for rider benefits, if any, and current
premium sales charge ("current charges" for the first year) as well as the
assumed hypothetical gross annual investment return indicated. Thereafter these
columns use guaranteed monthly mortality charges, guaranteed monthly
administrative charges, guaranteed charges for mortality and expense risks,
guaranteed charges for rider benefits if any, guaranteed maximum premium sales
charge, and the assumed hypothetical gross annual investment return indicated.
Those columns assuming current charges are based upon "current charges" and the
assumed hypothetical gross annual investment return indicated.
The current charges declared by MONY Life Insurance Company are guaranteed
for the first policy year and apply to policies issued as of the illustration
preparation date and could change between the preparation date and the date the
policy is issued. After the first policy year, current charges are not
guaranteed, and may be changed at the discretion of MONY Life Insurance Company.
C-3
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Numeric Summary The following table shows how differences in investment returns and policy charges
would affect policy cash value and death benefit.
Guaranteed Charges* Guaranteed Charges** Current Charges***
---------------------- ---------------------- ----------------------
0.00% (-0.93% Net) 0.00% (-0.93% Net) 0.00% (-0.93% Net)
Policy Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,000 0 716 200,000 0 716 200,000
5 1,124 2,750 3,424 200,000 2,750 3,424 200,000 2,801 3,475 200,000
10 1,124 6,255 6,367 200,000 6,255 6,367 200,000 6,539 6,651 200,000
20 1,124 11,348 11,348 200,000 11,348 11,348 200,000 13,559 13,559 200,000
@ Age 70 1,124 9,003 9,003 200,000 9,003 9,003 200,000 14,965 14,965 200,000
@ Age 85 0 LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED
@ Age 90 0 LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED
* Policy lapses in policy year 30 based on guaranteed charges and a gross
investment return of 0.00%.
** Policy lapses in policy year 30 based on guaranteed charges and a gross
investment return of 0.00%.
***Policy lapses in policy year 37 based on current charges and a gross
investment return of 0.00%.
Applicant's or We have received a copy of this illustration and understand that any not-guaranteed
Policyowner's elements are subject to change and could be either higher or lower. The agent has
Acknowledgement told us that they are not guaranteed.
-------------------------------------------------------- ----------------
Signature of Applicant or Policyowner Date
-------------------------------------------------------- ----------------
Signature of Applicant or Policyowner Date
Representative's I certify that this illustration has been presented to the applicant and that I have
Acknowledgement explained that any not-guaranteed elements illustrated are subject to change. I have
made no statements that are inconsistent with the illustration.
-------------------------------------------------------- ----------------
Signature of Representative Date
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
1 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-4
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement
Guaranteed Charges Current Charges
--------------------------------------------- ----------------------
0.00% (-0.93% Net) 0.00% (-0.93% Net) 0.00% (-0.93% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,000 0 716 200,000 0 716 200,000
2 1,124 405 1,416 200,000 405 1,416 200,000 410 1,422 200,000
3 1,124 1,203 2,101 200,000 1,203 2,101 200,000 1,218 2,117 200,000
4 1,124 1,985 2,771 200,000 1,985 2,771 200,000 2,015 2,802 200,000
5 1,124 2,750 3,424 200,000 2,750 3,424 200,000 2,801 3,475 200,000
6 1,124 3,497 4,059 200,000 3,497 4,059 200,000 3,575 4,137 200,000
7 1,124 4,223 4,673 200,000 4,223 4,673 200,000 4,337 4,787 200,000
8 1,124 4,927 5,264 200,000 4,927 5,264 200,000 5,086 5,423 200,000
9 1,124 5,606 5,830 200,000 5,606 5,830 200,000 5,821 6,045 200,000
10 1,124 6,255 6,367 200,000 6,255 6,367 200,000 6,539 6,651 200,000
11 1,124 7,130 7,130 200,000 7,130 7,130 200,000 7,497 7,497 200,000
12 1,124 7,853 7,853 200,000 7,853 7,853 200,000 8,318 8,318 200,000
13 1,124 8,532 8,532 200,000 8,532 8,532 200,000 9,109 9,109 200,000
14 1,124 9,162 9,162 200,000 9,162 9,162 200,000 9,868 9,868 200,000
15 1,124 9,736 9,736 200,000 9,736 9,736 200,000 10,592 10,592 200,000
16 1,124 10,245 10,245 200,000 10,245 10,245 200,000 11,277 11,277 200,000
17 1,124 10,678 10,678 200,000 10,678 10,678 200,000 11,921 11,921 200,000
18 1,124 11,019 11,019 200,000 11,019 11,019 200,000 12,518 12,518 200,000
19 1,124 11,249 11,249 200,000 11,249 11,249 200,000 13,066 13,066 200,000
20 1,124 11,348 11,348 200,000 11,348 11,348 200,000 13,559 13,559 200,000
21 1,124 11,292 11,292 200,000 11,292 11,292 200,000 13,996 13,996 200,000
22 1,124 11,058 11,058 200,000 11,058 11,058 200,000 14,363 14,363 200,000
23 1,124 10,620 10,620 200,000 10,620 10,620 200,000 14,647 14,647 200,000
24 1,124 9,949 9,949 200,000 9,949 9,949 200,000 14,849 14,849 200,000
25 1,124 9,003 9,003 200,000 9,003 9,003 200,000 14,965 14,965 200,000
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 0.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option:
Specified Amount for Option 1 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-5
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement continued
Guaranteed Charges Current Charges
--------------------------------------------- ----------------------
0.00% (-0.93% Net) 0.00% (-0.93% Net) 0.00% (-0.93% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
26 1,124 7,727 7,727 200,000 7,727 7,727 200,000 14,976 14,976 200,000
27 1,124 6,045 6,045 200,000 6,045 6,045 200,000 14,865 14,865 200,000
28 1,124 3,854 3,854 200,000 3,854 3,854 200,000 14,610 14,610 200,000
29 1,124 1,030 1,030 200,000 1,030 1,030 200,000 14,155 14,155 200,000
30 1,124 LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED 13,457 13,457 200,000
31 1,124 12,488 12,488 200,000
32 1,124 11,198 11,198 200,000
33 1,124 9,521 9,521 200,000
34 1,124 7,445 7,445 200,000
35 1,124 5,173 5,173 200,000
36 1,124 2,730 2,730 200,000
37 0 LAPSED LAPSED LAPSED
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 0.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
1 TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-6
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Numeric Summary The following table shows how differences in investment returns and policy charges
would affect policy cash value and death benefit.
Guaranteed Charges* Guaranteed Charges** Current Charges***
---------------------- ---------------------- ----------------------
0.00% (-0.93% Net) 6.00% (5.07% Net) 6.00% (5.07% Net)
Policy Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,000 0 768 200,000 0 768 200,000
5 1,124 2,750 3,424 200,000 3,472 4,146 200,000 3,528 4,202 200,000
10 1,124 6,255 6,367 200,000 8,950 9,062 200,000 9,285 9,397 200,000
20 1,124 11,348 11,348 200,000 23,082 23,082 200,000 25,969 25,969 200,000
@ Age 70 1,124 9,003 9,003 200,000 28,056 28,056 200,000 35,769 35,769 200,000
@ Age 85 1,124 LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED 51,868 51,868 200,000
@ Age 90 1,124 LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED 28,031 28,031 200,000
* Policy lapses in policy year 30 based on guaranteed charges and a gross
investment return of 0.00%.
** Policy lapses in policy year 35 based on guaranteed charges and a gross
investment return of 6.00%.
***Policy lapses in policy year 48 based on current charges and a gross
investment return of 6.00%.
Applicant's or We have received a copy of this illustration and understand that any not-guaranteed
Policyowner's elements are subject to change and could be either higher or lower. The agent has
Acknowledgement told us that they are not guaranteed.
-------------------------------------------------------- ----------------
Signature of Applicant or Policyowner Date
-------------------------------------------------------- ----------------
Signature of Applicant or Policyowner Date
Representative's I certify that this illustration has been presented to the applicant and that I have
Acknowledgement explained that any not-guaranteed elements illustrated are subject to change. I have
made no statements that are inconsistent with the illustration.
-------------------------------------------------------- ----------------
Signature of Representative Date
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option:
Specified Amount for Option 1 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-7
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement
Guaranteed Charges Current Charges
--------------------------------------------- ----------------------
0.00% (-0.93% Net) 6.00% (5.07% Net) 6.00% (5.07% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,000 0 768 200,000 0 768 200,000
2 1,124 405 1,416 200,000 554 1,565 200,000 559 1,571 200,000
3 1,124 1,203 2,101 200,000 1,495 2,393 200,000 1,511 2,410 200,000
4 1,124 1,985 2,771 200,000 2,467 3,254 200,000 2,500 3,287 200,000
5 1,124 2,750 3,424 200,000 3,472 4,146 200,000 3,528 4,202 200,000
6 1,124 3,497 4,059 200,000 4,509 5,070 200,000 4,596 5,158 200,000
7 1,124 4,223 4,673 200,000 5,576 6,026 200,000 5,705 6,155 200,000
8 1,124 4,927 5,264 200,000 6,673 7,010 200,000 6,856 7,193 200,000
9 1,124 5,606 5,830 200,000 7,799 8,023 200,000 8,049 8,274 200,000
10 1,124 6,255 6,367 200,000 8,950 9,062 200,000 9,285 9,397 200,000
11 1,124 7,130 7,130 200,000 10,392 10,392 200,000 10,831 10,831 200,000
12 1,124 7,853 7,853 200,000 11,754 11,754 200,000 12,317 12,317 200,000
13 1,124 8,532 8,532 200,000 13,146 13,146 200,000 13,854 13,854 200,000
14 1,124 9,162 9,162 200,000 14,563 14,563 200,000 15,443 15,443 200,000
15 1,124 9,736 9,736 200,000 15,999 15,999 200,000 17,080 17,080 200,000
16 1,124 10,245 10,245 200,000 17,448 17,448 200,000 18,767 18,767 200,000
17 1,124 10,678 10,678 200,000 18,898 18,898 200,000 20,500 20,500 200,000
18 1,124 11,019 11,019 200,000 20,333 20,333 200,000 22,280 22,280 200,000
19 1,124 11,249 11,249 200,000 21,735 21,735 200,000 24,103 24,103 200,000
20 1,124 11,348 11,348 200,000 23,082 23,082 200,000 25,969 25,969 200,000
21 1,124 11,292 11,292 200,000 24,350 24,350 200,000 27,876 27,876 200,000
22 1,124 11,058 11,058 200,000 25,513 25,513 200,000 29,816 29,816 200,000
23 1,124 10,620 10,620 200,000 26,542 26,542 200,000 31,776 31,776 200,000
24 1,124 9,949 9,949 200,000 27,405 27,405 200,000 33,761 33,761 200,000
25 1,124 9,003 9,003 200,000 28,056 28,056 200,000 35,769 35,769 200,000
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 6.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
1 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-8
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement continued
Guaranteed Charges Current Charges
--------------------------------------------- ----------------------
0.00% (-0.93% Net) 6.00% (5.07% Net) 6.00% (5.07% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
26 1,124 7,727 7,727 200,000 28,436 28,436 200,000 37,783 37,783 200,000
27 1,124 6,045 6,045 200,000 28,465 28,465 200,000 39,793 39,793 200,000
28 1,124 3,854 3,854 200,000 28,034 28,034 200,000 41,778 41,778 200,000
29 1,124 1,030 1,030 200,000 27,012 27,012 200,000 43,692 43,692 200,000
30 1,124 LAPSED LAPSED LAPSED 25,244 25,244 200,000 45,499 45,499 200,000
31 1,124 22,551 22,551 200,000 47,173 47,173 200,000
32 1,124 18,724 18,724 200,000 48,673 48,673 200,000
33 1,124 13,513 13,513 200,000 49,943 49,943 200,000
34 1,124 6,601 6,601 200,000 50,968 50,968 200,000
35 1,124 LAPSED LAPSED LAPSED 51,910 51,910 200,000
36 1,124 52,785 52,785 200,000
37 1,124 53,322 53,322 200,000
38 1,124 53,455 53,455 200,000
39 1,124 53,025 53,025 200,000
40 1,124 51,868 51,868 200,000
41 1,124 49,870 49,870 200,000
42 1,124 46,808 46,808 200,000
43 1,124 42,419 42,419 200,000
44 1,124 36,308 36,308 200,000
45 1,124 28,031 28,031 200,000
46 1,124 17,007 17,007 200,000
47 1,124 2,463 2,463 200,000
48 0 LAPSED LAPSED LAPSED
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 6.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
1 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123 . Premium Mode: Annual . Riders: None
C-9
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Numeric Summary The following table shows how differences in investment returns and policy charges
would affect policy cash value and death benefit.
Guaranteed Charges* Guaranteed Charges** Current Charges***
---------------------- ------------------------ ------------------------
0.00% (-0.93% Net) 12.00% (11.07% Net) 12.00% (11.07% Net)
Policy Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,000 0 820 200,000 0 820 200,000
5 1,124 2,750 3,424 200,000 4,322 4,996 200,000 4,383 5,058 200,000
10 1,124 6,255 6,367 200,000 12,844 12,957 200,000 13,242 13,355 200,000
20 1,124 11,348 11,348 200,000 49,035 49,035 200,000 52,902 52,902 200,000
@ Age 70 1,124 9,003 9,003 200,000 82,355 82,355 200,000 92,413 92,413 200,000
@ Age 85 1,124 LAPSED LAPSED LAPSED 368,941 368,941 387,388 447,897 447,897 470,292
@ Age 90 1,124 LAPSED LAPSED LAPSED 597,063 597,063 626,916 742,286 742,286 779,400
* Policy lapses in policy year 30 based on guaranteed charges and a gross
investment return of 0.00%.
** Policy continues to age 100 based on guaranteed charges and a gross
investment return of 12.00%.
***Policy continues to age 100 based on current charges and a gross investment
return of 12.00%.
Applicant's or We have received a copy of this illustration and understand that any not-
Policyowner's guaranteed elements are subject to change and could be either higher or lower.
Acknowledgement The agent has told us that they are not guaranteed.
-------------------------------------------------------- ----------------
Signature of Applicant or Policyowner Date
-------------------------------------------------------- ----------------
Signature of Applicant or Policyowner Date
Representative's I certify that this illustration has been presented to the applicant and that I have
Acknowledgement explained that any not-guaranteed elements illustrated are subject to change. I
have made no statements that are inconsistent with the illustration.
-------------------------------------------------------- ----------------
Signature of Representative Date
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
1 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-10
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement
Guaranteed Charges Current Charges
--------------------------------------------- ----------------------
0.00% (-0.93% Net) 12.00% (11.07% Net) 12.00% (11.07% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,000 0 820 200,000 0 820 200,000
2 1,124 405 1,416 200,000 709 1,720 200,000 715 1,726 200,000
3 1,124 1,203 2,101 200,000 1,812 2,711 200,000 1,829 2,728 200,000
4 1,124 1,985 2,771 200,000 3,013 3,800 200,000 3,048 3,835 200,000
5 1,124 2,750 3,424 200,000 4,322 4,996 200,000 4,383 5,058 200,000
6 1,124 3,497 4,059 200,000 5,748 6,310 200,000 5,846 6,408 200,000
7 1,124 4,223 4,673 200,000 7,302 7,752 200,000 7,448 7,898 200,000
8 1,124 4,927 5,264 200,000 8,995 9,332 200,000 9,205 9,542 200,000
9 1,124 5,606 5,830 200,000 10,838 11,063 200,000 11,131 11,356 200,000
10 1,124 6,255 6,367 200,000 12,844 12,957 200,000 13,242 13,355 200,000
11 1,124 7,130 7,130 200,000 15,305 15,305 200,000 15,834 15,834 200,000
12 1,124 7,853 7,853 200,000 17,875 17,875 200,000 18,564 18,564 200,000
13 1,124 8,532 8,532 200,000 20,686 20,686 200,000 21,567 21,567 200,000
14 1,124 9,162 9,162 200,000 23,760 23,760 200,000 24,871 24,871 200,000
15 1,124 9,736 9,736 200,000 27,118 27,118 200,000 28,504 28,504 200,000
16 1,124 10,245 10,245 200,000 30,786 30,786 200,000 32,500 32,500 200,000
17 1,124 10,678 10,678 200,000 34,786 34,786 200,000 36,895 36,895 200,000
18 1,124 11,019 11,019 200,000 39,144 39,144 200,000 41,728 41,728 200,000
19 1,124 11,249 11,249 200,000 43,884 43,884 200,000 47,047 47,047 200,000
20 1,124 11,348 11,348 200,000 49,035 49,035 200,000 52,902 52,902 200,000
21 1,124 11,292 11,292 200,000 54,631 54,631 200,000 59,350 59,350 200,000
22 1,124 11,058 11,058 200,000 60,710 60,710 200,000 66,451 66,451 200,000
23 1,124 10,620 10,620 200,000 67,320 67,320 200,000 74,270 74,270 200,000
24 1,124 9,949 9,949 200,000 74,515 74,515 200,000 82,893 82,893 200,000
25 1,124 9,003 9,003 200,000 82,355 82,355 200,000 92,413 92,413 200,000
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 12.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
1 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-11
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement continued
Guaranteed Charges Current Charges
----------------------------------------------- -----------------------------
0.00% (-0.93% Net) 12.00% (11.07% Net) 12.00% (11.07% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
26 1,124 7,727 7,727 200,000 90,906 90,906 200,000 102,927 102,927 200,000
27 1,124 6,045 6,045 200,000 100,242 100,242 200,000 114,551 114,551 200,000
28 1,124 3,854 3,854 200,000 110,454 110,454 200,000 127,413 127,413 200,000
29 1,124 1,030 1,030 200,000 121,656 121,656 200,000 141,655 141,655 200,000
30 1,124 LAPSED LAPSED LAPSED 134,006 134,006 200,000 157,455 157,455 200,000
31 1,124 147,717 147,717 200,000 175,033 175,033 200,000
32 1,124 163,077 163,077 200,000 194,645 194,645 204,377
33 1,124 180,468 180,468 200,000 216,401 216,401 227,221
34 1,124 200,300 200,300 210,315 240,443 240,443 252,465
35 1,124 222,263 222,263 233,376 267,022 267,022 280,373
36 1,124 246,421 246,421 258,742 296,406 296,406 311,226
37 1,124 272,964 272,964 286,612 328,863 328,863 345,306
38 1,124 302,091 302,091 317,196 364,705 364,705 382,940
39 1,124 334,011 334,011 350,711 404,262 404,262 424,476
40 1,124 368,941 368,941 387,388 447,897 447,897 470,292
41 1,124 407,110 407,110 427,466 496,011 496,011 520,812
42 1,124 448,756 448,756 471,194 549,032 549,032 576,484
43 1,124 494,127 494,127 518,833 607,421 607,421 637,792
44 1,124 543,477 543,477 570,651 671,662 671,662 705,245
45 1,124 597,063 597,063 626,916 742,286 742,286 779,400
46 1,124 655,133 655,133 687,890 819,857 819,857 860,850
47 1,124 719,700 719,700 748,488 905,744 905,744 941,974
48 1,124 791,900 791,900 815,657 1,001,055 1,001,055 1,031,087
49 1,124 873,161 873,161 890,624 1,107,164 1,107,164 1,129,308
50 1,124 965,362 965,362 975,015 1,225,625 1,225,625 1,237,881
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 12.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company,The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
1 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-12
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement continued
Guaranteed Charges Current Charges
-------------------------------------------------- -----------------------------
0.00% (-0.93% Net) 12.00% (11.07% Net) 12.00% (11.07% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
51 1,124 1,066,720 1,066,720 1,077,387 1,356,534 1,356,534 1,370,099
52 1,124 1,177,708 1,177,708 1,189,485 1,501,149 1,501,149 1,516,160
53 1,124 1,298,111 1,298,111 1,311,092 1,660,924 1,660,924 1,677,533
54 1,124 1,428,838 1,428,838 1,443,127 1,837,425 1,837,425 1,855,800
55 1,124 1,572,621 1,572,621 1,588,347 2,032,386 2,032,386 2,052,709
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 12.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
1 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-13
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Numeric Summary The following table shows how differences in investment returns and policy charges
would affect policy cash value and death benefit.
Guaranteed Charges* Guaranteed Charges** Current Charges***
---------------------- ---------------------- ----------------------
0.00% (-0.93% Net) 0.00% (-0.93% Net) 0.00% (-0.93% Net)
Policy Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,716 0 716 200,716 0 716 200,716
5 1,124 2,749 3,423 203,423 2,749 3,423 203,423 2,801 3,475 203,475
10 1,124 6,244 6,356 206,356 6,244 6,356 206,356 6,536 6,648 206,648
20 1,124 11,141 11,141 211,141 11,141 11,141 211,141 13,460 13,460 213,460
@ Age 70 1,124 8,435 8,435 208,435 8,435 8,435 208,435 14,667 14,667 214,667
@ Age 85 0 LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED
@ Age 90 0 LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED
* Policy lapses in policy year 30 based on guaranteed charges and a gross
investment return of 0.00%.
** Policy lapses in policy year 30 based on guaranteed charges and a gross
investment return of 0.00%.
***Policy lapses in policy year 37 based on current charges and a gross
investment return of 0.00%.
Applicant's or We have received a copy of this illustration and understand that any not-
Policyowner's guaranteed elements are subject to change and could be either higher or lower.
Acknowledgement The agent has told us that they are not guaranteed.
-------------------------------------------------------- ----------------
Signature of Applicant or Policyowner Date
-------------------------------------------------------- ----------------
Signature of Applicant or Policyowner Date
Representative's I certify that this illustration has been presented to the applicant and that I have
Acknowledgement explained that any not-guaranteed elements illustrated are subject to change. I
have made no statements that are inconsistent with the illustration.
-------------------------------------------------------- ----------------
Signature of Representative Date
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
2 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-14
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement
Guaranteed Charges Current Charges
--------------------------------------------- ----------------------
0.00% (-0.93% Net) 0.00% (-0.93% Net) 0.00% (-0.93% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,716 0 716 200,716 0 716 200,716
2 1,124 405 1,416 201,416 405 1,416 201,416 410 1,422 201,422
3 1,124 1,202 2,101 202,101 1,202 2,101 202,101 1,218 2,117 202,117
4 1,124 1,984 2,771 202,771 1,984 2,771 202,771 2,015 2,802 202,802
5 1,124 2,749 3,423 203,423 2,749 3,423 203,423 2,801 3,475 203,475
6 1,124 3,495 4,057 204,057 3,495 4,057 204,057 3,575 4,137 204,137
7 1,124 4,220 4,670 204,670 4,220 4,670 204,670 4,337 4,786 204,786
8 1,124 4,923 5,260 205,260 4,923 5,260 205,260 5,085 5,422 205,422
9 1,124 5,598 5,823 205,823 5,598 5,823 205,823 5,818 6,043 206,043
10 1,124 6,244 6,356 206,356 6,244 6,356 206,356 6,536 6,648 206,648
11 1,124 7,115 7,115 207,115 7,115 7,115 207,115 7,492 7,492 207,492
12 1,124 7,831 7,831 207,831 7,831 7,831 207,831 8,310 8,310 208,310
13 1,124 8,501 8,501 208,501 8,501 8,501 208,501 9,097 9,097 209,097
14 1,124 9,120 9,120 209,120 9,120 9,120 209,120 9,851 9,851 209,851
15 1,124 9,679 9,679 209,679 9,679 9,679 209,679 10,569 10,569 210,569
16 1,124 10,170 10,170 210,170 10,170 10,170 210,170 11,245 11,245 211,245
17 1,124 10,579 10,579 210,579 10,579 10,579 210,579 11,877 11,877 211,877
18 1,124 10,892 10,892 210,892 10,892 10,892 210,892 12,459 12,459 212,459
19 1,124 11,086 11,086 211,086 11,086 11,086 211,086 12,988 12,988 212,988
20 1,124 11,141 11,141 211,141 11,141 11,141 211,141 13,460 13,460 213,460
21 1,124 11,032 11,032 211,032 11,032 11,032 211,032 13,869 13,869 213,869
22 1,124 10,734 10,734 210,734 10,734 10,734 210,734 14,204 14,204 214,204
23 1,124 10,224 10,224 210,224 10,224 10,224 210,224 14,449 14,449 214,449
24 1,124 9,470 9,470 209,470 9,470 9,470 209,470 14,604 14,604 214,604
25 1,124 8,435 8,435 208,435 8,435 8,435 208,435 14,667 14,667 214,667
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 0.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
2 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-15
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement continued
Guaranteed Charges Current Charges
--------------------------------------------- ----------------------
0.00% (-0.93% Net) 0.00% (-0.93% Net) 0.00% (-0.93% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
26 1,124 7,066 7,066 207,066 7,066 7,066 207,066 14,616 14,616 214,616
27 1,124 5,291 5,291 205,291 5,291 5,291 205,291 14,435 14,435 214,435
28 1,124 3,021 3,021 203,021 3,021 3,021 203,021 14,099 14,099 214,099
29 1,124 148 148 200,148 148 148 200,148 13,550 13,550 213,550
30 1,124 LAPSED LAPSED LAPSED LAPSED LAPSED LAPSED 12,743 12,743 212,743
31 1,124 11,655 11,655 211,655
32 1,124 10,235 10,235 210,235
33 1,124 8,424 8,424 208,424
34 1,124 6,221 6,221 206,221
35 1,124 3,851 3,851 203,851
36 1,124 1,345 1,345 201,345
37 0 LAPSED LAPSED LAPSED
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 0.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
2 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-16
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Numeric Summary The following table shows how differences in investment returns and policy charges
would affect policy cash value and death benefit.
Guaranteed Charges* Guaranteed Charges** Current Charges***
---------------------- ---------------------- ----------------------
0.00% (-0.93% Net) 6.00% (5.07% Net) 6.00% (5.07% Net)
Policy Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,716 0 768 200,768 0 768 200,768
5 1,124 2,749 3,423 203,423 3,471 4,145 204,145 3,528 4,202 204,202
10 1,124 6,244 6,356 206,356 8,933 9,046 209,046 9,280 9,393 209,393
20 1,124 11,141 11,141 211,141 22,644 22,644 222,644 25,765 25,765 225,765
@ Age 70 1,124 8,435 8,435 208,435 26,475 26,475 226,475 35,021 35,021 235,021
@ Age 85 1,124 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 36,581 36,581 236,581
@ Age 90 0 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed
* Policy lapses in policy year 30 based on guaranteed charges and a gross
investment return of 0.00%.
** Policy lapses in policy year 34 based on guaranteed charges and a gross
investment return of 6.00%.
***Policy lapses in policy year 45 based on current charges and a gross
investment return of 6.00%.
Applicant's or We have received a copy of this illustration and understand that any not-guaranteed
Policyowner's elements are subject to change and could be either higher or lower. The agent has
Acknowledgement told us that they are not guaranteed.
----------------------------------------------------------- ------------------------
Signature of Applicant or Policyowner Date
----------------------------------------------------------- ------------------------
Signature of Applicant or Policyowner Date
Representative's I certify that this illustration has been presented to the applicant and that I have
Acknowledgement explained that any not-guaranteed elements illustrated are subject to change. I have
made no statements that are inconsistent with the illustration.
----------------------------------------------------------- ------------------------
Signature of Representative Date
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
2 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-17
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement
Guaranteed Charges Current Charges
--------------------------------------------- ----------------------
0.00% (-0.93% Net) 6.00% (5.07% Net) 6.00% (5.07% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,716 0 768 200,768 0 768 200,768
2 1,124 405 1,416 201,416 554 1,565 201,565 559 1,571 201,571
3 1,124 1,202 2,101 202,101 1,494 2,393 202,393 1,511 2,410 202,410
4 1,124 1,984 2,771 202,771 2,467 3,253 203,253 2,500 3,287 203,287
5 1,124 2,749 3,423 203,423 3,471 4,145 204,145 3,528 4,202 204,202
6 1,124 3,495 4,057 204,057 4,506 5,068 205,068 4,596 5,157 205,157
7 1,124 4,220 4,670 204,670 5,572 6,022 206,022 5,704 6,153 206,153
8 1,124 4,923 5,260 205,260 6,667 7,004 207,004 6,854 7,191 207,191
9 1,124 5,598 5,823 205,823 7,788 8,013 208,013 8,046 8,271 208,271
10 1,124 6,244 6,356 206,356 8,933 9,046 209,046 9,280 9,393 209,393
11 1,124 7,115 7,115 207,115 10,368 10,368 210,368 10,823 10,823 210,823
12 1,124 7,831 7,831 207,831 11,719 11,719 211,719 12,306 12,306 212,306
13 1,124 8,501 8,501 208,501 13,095 13,095 213,095 13,836 13,836 213,836
14 1,124 9,120 9,120 209,120 14,491 14,491 214,491 15,415 15,415 215,415
15 1,124 9,679 9,679 209,679 15,900 15,900 215,900 17,041 17,041 217,041
16 1,124 10,170 10,170 210,170 17,312 17,312 217,312 18,710 18,710 218,710
17 1,124 10,579 10,579 210,579 18,713 18,713 218,713 20,420 20,420 220,420
18 1,124 10,892 10,892 210,892 20,086 20,086 220,086 22,168 22,168 222,168
19 1,124 11,086 11,086 211,086 21,404 21,404 221,404 23,951 23,951 223,951
20 1,124 11,141 11,141 211,141 22,644 22,644 222,644 25,765 25,765 225,765
21 1,124 11,032 11,032 211,032 23,773 23,773 223,773 27,607 27,607 227,607
22 1,124 10,734 10,734 210,734 24,759 24,759 224,759 29,464 29,464 229,464
23 1,124 10,224 10,224 210,224 25,568 25,568 225,568 31,319 31,319 231,319
24 1,124 9,470 9,470 209,470 26,158 26,158 226,158 33,173 33,173 233,173
25 1,124 8,435 8,435 208,435 26,475 26,475 226,475 35,021 35,021 235,021
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 6.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option:
Specified Amount for Option 2 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-18
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement continued
Guaranteed Charges Current Charges
--------------------------------------------- ----------------------
0.00% (-0.93% Net) 6.00% (5.07% Net) 6.00% (5.07% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
26 1,124 7,066 7,066 207,066 26,448 26,448 226,448 36,839 36,839 236,839
27 1,124 5,291 5,291 205,291 25,983 25,983 225,983 38,607 38,607 238,607
28 1,124 3,021 3,021 203,021 24,962 24,962 224,962 40,297 40,297 240,297
29 1,124 148 148 200,148 23,241 23,241 223,241 41,841 41,841 241,841
30 1,124 LAPSED LAPSED LAPSED 20,665 20,665 220,665 43,186 43,186 243,186
31 1,124 17,065 17,065 217,065 44,292 44,292 244,292
32 1,124 12,268 12,268 212,268 45,094 45,094 245,094
33 1,124 6,091 6,091 206,091 45,512 45,512 245,512
34 1,124 LAPSED LAPSED LAPSED 45,521 45,521 245,521
35 1,124 45,329 45,329 245,329
36 1,124 44,956 44,956 244,956
37 1,124 44,032 44,032 244,032
38 1,124 42,464 42,464 242,464
39 1,124 40,047 40,047 240,047
40 1,124 36,581 36,581 236,581
41 1,124 31,959 31,959 231,959
42 1,124 25,951 25,951 225,951
43 1,124 18,333 18,333 218,333
44 1,124 8,775 8,775 208,775
45 0 LAPSED LAPSED LAPSED
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 6.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option:
Specified Amount for Option 2 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-19
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Numeric Summary The following table shows how differences in investment returns and policy charges
would affect policy cash value and death benefit.
Guaranteed Charges* Guaranteed Charges** Current Charges***
---------------------- ------------------------ ------------------------
0.00% (-0.93% Net) 12.00% (11.07% Net) 12.00% (11.07% Net)
Policy Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,716 0 820 200,820 0 820 200,820
5 1,124 2,749 3,423 203,423 4,321 4,995 204,995 4,383 5,057 205,057
10 1,124 6,244 6,356 206,356 12,821 12,933 212,933 13,235 13,348 213,348
20 1,124 11,141 11,141 211,141 48,073 48,073 248,073 52,467 52,467 252,467
@ Age 70 1,124 8,435 8,435 208,435 77,867 77,867 277,867 90,417 90,417 290,417
@ Age 85 1,124 LAPSED LAPSED LAPSED 150,906 150,906 350,906 372,957 372,957 572,957
@ Age 90 1,124 LAPSED LAPSED LAPSED 52,751 52,751 252,751 564,270 564,270 764,270
* Policy lapses in policy year 30 based on guaranteed charges and a gross
investment return of 0.00%.
** Policy lapses in policy year 47 based on guaranteed charges and a gross
investment return of 12.00%.
***Policy continues to age 100 based on current charges and a gross investment
return of 12.00%.
Applicant's or We have received a copy of this illustration and understand that any not-guaranteed
Policyowner's elements are subject to change and could be either higher or lower. The agent has told
Acknowledgement us that they are not guaranteed.
----------------------------------------------------------- --------------------------
Signature of Applicant or Policyowner Date
----------------------------------------------------------- --------------------------
Signature of Applicant or Policyowner Date
Representative's I certify that this illustration has been presented to the applicant and that I have
Acknowledgement explained that any not-guaranteed elements illustrated are subject to change. I have
made no statements that are inconsistent with the illustration.
----------------------------------------------------------- --------------------------
Signature of Representative Date
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
2 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-20
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement
Guaranteed Charges Current Charges
--------------------------------------------- ----------------------
0.00% (-0.93% Net) 12.00% (11.07% Net) 12.00% (11.07% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
1 1,124 0 716 200,716 0 820 200,820 0 820 200,820
2 1,124 405 1,416 201,416 709 1,720 201,720 715 1,726 201,726
3 1,124 1,202 2,101 202,101 1,812 2,711 202,711 1,829 2,728 202,728
4 1,124 1,984 2,771 202,771 3,012 3,799 203,799 3,048 3,835 203,835
5 1,124 2,749 3,423 203,423 4,321 4,995 204,995 4,383 5,057 205,057
6 1,124 3,495 4,057 204,057 5,745 6,307 206,307 5,845 6,407 206,407
7 1,124 4,220 4,670 204,670 7,297 7,747 207,747 7,447 7,896 207,896
8 1,124 4,923 5,260 205,260 8,986 9,323 209,323 9,203 9,540 209,540
9 1,124 5,598 5,823 205,823 10,823 11,048 211,048 11,127 11,351 211,351
10 1,124 6,244 6,356 206,356 12,821 12,933 212,933 13,235 13,348 213,348
11 1,124 7,115 7,115 207,115 15,268 15,268 215,268 15,823 15,823 215,823
12 1,124 7,831 7,831 207,831 17,819 17,819 217,819 18,546 18,546 218,546
13 1,124 8,501 8,501 208,501 20,603 20,603 220,603 21,538 21,538 221,538
14 1,124 9,120 9,120 209,120 23,637 23,637 223,637 24,825 24,825 224,825
15 1,124 9,679 9,679 209,679 26,942 26,942 226,942 28,435 28,435 228,435
16 1,124 10,170 10,170 210,170 30,534 30,534 230,534 32,396 32,396 232,396
17 1,124 10,579 10,579 210,579 34,431 34,431 234,431 36,742 36,742 236,742
18 1,124 10,892 10,892 210,892 38,646 38,646 238,646 41,509 41,509 241,509
19 1,124 11,086 11,086 211,086 43,190 43,190 243,190 46,736 46,736 246,736
20 1,124 11,141 11,141 211,141 48,073 48,073 248,073 52,467 52,467 252,467
21 1,124 11,032 11,032 211,032 53,304 53,304 253,304 58,751 58,751 258,751
22 1,124 10,734 10,734 210,734 58,893 58,893 258,893 65,633 65,633 265,633
23 1,124 10,224 10,224 210,224 64,848 64,848 264,848 73,158 73,158 273,158
24 1,124 9,470 9,470 209,470 71,174 71,174 271,174 81,396 81,396 281,396
25 1,124 8,435 8,435 208,435 77,867 77,867 277,867 90,417 90,417 290,417
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 12.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
2 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-21
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement continued
Guaranteed Charges Current Charges
----------------------------------------------- -------------------------
0.00% (-0.93% Net) 12.00% (11.07% Net) 12.00% (11.07% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
26 1,124 7,066 7,066 207,066 84,905 84,905 284,905 100,282 100,282 300,282
27 1,124 5,291 5,291 205,291 92,247 92,247 292,247 111,062 111,062 311,062
28 1,124 3,021 3,021 203,021 99,822 99,822 299,822 122,827 122,827 322,827
29 1,124 148 148 200,148 107,537 107,537 307,537 135,618 135,618 335,618
30 1,124 LAPSED LAPSED LAPSED 115,278 115,278 315,278 149,495 149,495 349,495
31 1,124 122,920 122,920 322,920 164,545 164,545 364,545
32 1,124 130,321 130,321 330,321 180,836 180,836 380,836
33 1,124 137,327 137,327 337,327 198,435 198,435 398,435
34 1,124 143,752 143,752 343,752 217,473 217,473 417,473
35 1,124 149,354 149,354 349,354 238,340 238,340 438,340
36 1,124 153,816 153,816 353,816 261,262 261,262 461,262
37 1,124 156,736 156,736 356,736 286,084 286,084 486,084
38 1,124 157,611 157,611 357,611 312,946 312,946 512,946
39 1,124 155,874 155,874 355,874 341,883 341,883 541,883
40 1,124 150,906 150,906 350,906 372,957 372,957 572,957
41 1,124 142,054 142,054 342,054 406,336 406,336 606,336
42 1,124 128,615 128,615 328,615 442,092 442,092 642,092
43 1,124 109,830 109,830 309,830 480,316 480,316 680,316
44 1,124 84,863 84,863 284,863 521,016 521,016 721,016
45 1,124 52,751 52,751 252,751 564,270 564,270 764,270
46 1,124 12,376 12,376 212,376 610,156 610,156 810,156
47 1,124 LAPSED LAPSED LAPSED 658,752 658,752 858,752
48 1,124 710,133 710,133 910,133
49 1,124 764,934 764,934 964,934
50 1,124 823,429 823,429 1,023,429
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 12.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
2 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-22
[LOGO] MONY
LIFE INSURANCE ILLUSTRATION
MONY Survivorship Variable Universal Life
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY POLICY
Standard Ledger Statement continued
Guaranteed Charges Current Charges
----------------------------------------- -----------------------------
0.00% (-0.93% Net) 12.00% (11.07% Net) 12.00% (11.07% Net)
End
of Premium Cash Fund Death Cash Fund Death Cash Fund Death
Year Outlay Value Value Proceeds Value Value Proceeds Value Value Proceeds
51 1,124 885,554 885,554 1,085,554
52 1,124 950,862 950,862 1,150,862
53 1,124 1,020,420 1,020,420 1,220,420
54 1,124 1,094,561 1,094,561 1,294,561
55 1,124 1,173,758 1,173,758 1,373,758
This is an illustration, not a policy.
The maximum loan value is equal to 90% of the Cash Value. Loan interest at an
annual rate of 5.25% will be charged in arrears on new or outstanding loans
during the first 10 policy years. In policy years 11 and later, interest will
be charged at the annual rate of 4.75% in arrears. These loan interest rates
are guaranteed in the policy.
Borrowed funds are credited at 4.50% interest. Premiums are assumed to be paid
at the beginning of the year or month. All other values and ages are at the end
of the year and reflect any loans and surrenders. The current cost of insurance
rates are not guaranteed and subject to change.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown, and will depend on a number of
factors, including the investment allocations by policyowners, and the
different investment rates of return for The Alger American Fund, Enterprise
Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen
Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY
Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust,
or The Universal Institutional Funds, Inc. portfolios. The Cash Value, Fund
Value and Death Proceeds for a policy would be different from those shown if
the actual rates of investment return applicable to the policy averaged 0.00%
or 12.00% over a period of years, but also fluctuated above or below those
averages for individual policy years. No representations can be made by MONY
Life Insurance Company, The Alger American Fund, Enterprise Accumulation Trust,
INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series
Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG
Insurance Series Fund, PIMCO Variable Insurance Trust, or The Universal
Institutional Funds, Inc., that these hypothetical rates of return can be
achieved for any one year, or sustained over any period of time.
Age 45 Male Non-Smoker Preferred Prepared on: 10/11/2001
Age 45 Female Non-Smoker Preferred Version 01.2002
Specified Amount: $200,000 . Death Benefit Option: Specified Amount for Option
2 . TP: $1,123.67 . GPT Form # C1-98
Initial Modal Premium: $1,123.67 . Premium Mode: Annual . Riders: None
C-23
The complete registration statement and other filed documents for MONY
Variable Account L can be reviewed and copied at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. You may get information
on the operation of the public reference room by calling the Securities
Exchange Commission at 1-800-SEC-0330. The registration statement and other
filed documents for MONY Variable Account L are available on the Securities and
Exchange Commission's Internet site at http://www.sec.gov. You may get copies
of this information by paying a duplicating fee, and writing the Public
Reference Section of the Securities and Exchange Commission, Washington, D.C.
20549-6009.
PART II
(INFORMATION NOT REQUIRED IN A PROSPECTUS)
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the 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
conferred in that Section.
RULE 484 UNDERTAKING
The Amended and Restated By-Laws of MONY Life Insurance Company ("MONY")
provide, in Article XV as follows:
Each person (and the heirs, executors and administrators of such person)
made or threatened to be made a party to any action, civil or criminal, by
reason of being or having been a trustee, officer, or employee of the
corporation (or by reason of serving any other organization at the request
of the corporation) shall be indemnified to the extent permitted by the law
of the State of New York and in the manner prescribed therein. To this end,
and as authorized by Section 722 of the Business Corporation Law of the
State of New York, the Board may adopt all resolutions, authorize all
agreements and take all actions with respect to the indemnification of
directors and officers, and the advance payment of their expenses in
connection therewith.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification for
such liabilities (other than the payment by the Registrant of expense incurred
or paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant, will (unless in the opinion of its counsel the
matter has been settled by controlling precedent) submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
REPRESENTATIONS RELATING TO SECTION 26 OF THE INVESTMENT COMPANY ACT OF 1940
The Registrant and MONY Life Insurance Company represent that the fees and
charges deducted under the Contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and
the risks assumed by MONY Life Insurance Company.
II-1
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The Facing Sheet.
Cross-Reference to items required by Form N-8B-2.
Prospectus.
The Undertaking to file reports.
The signatures.
Written consents of the following persons:
a. PricewaterhouseCoopers LLP, Independent Accountants
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of
the instructions as exhibits to Form N-8B2:
(1) Resolution of the Board of Trustees of The Mutual Life Insurance
Company of New York authorizing establishment of MONY Variable
Account L, filed as Exhibit 1(1) to Pre-Effective Amendment No. 1
to Registration Statement on Form S-6, dated December 17, 1990
(Registration Nos. 33-37719 and 811-6217), is incorporated herein
by reference.
(2) Not applicable.
(3) (a)Underwriting Agreement between The Mutual Life Insurance
Company of New York, MONY Series Fund, Inc., and MONY
Securities Corp., filed as Exhibit 1 (3)(a) to Registration
Statement on Form S-6, dated November 9, 1990 (Registration
Nos. 33-37719 and 811-6217), is incorporated by referenced
herein.
(b)Proposed specimen agreement between MONY Securities Corp. and
registered representatives, filed as Exhibit 3(b) of
Pre-Effective Amendment No. 1, dated December 17, 1990, to
Registration Statement on Form N-4 (Registration Nos.
33-37722 and 811-6126) is incorporated herein by reference.
(c)Specimen commission schedule (Career Contract Schedule) filed
as Exhibit 1.(3)(c) to Pre-Effective Amendment No. 1 dated
December 7, 2001 to Registration Statement on Form S-6
(Registration Nos. 333-72596 and 811-4235), is incorporated
herein by reference.
(4) Not applicable.
(5) Specimen form of policy filed as Exhibit 1.(5) to Pre-Effective
Amendment No. 1 to Registration Statement on Form S-6, dated
December 7, 2001 (Registration Nos. 333-72594 and 811-6217), is
incorporated herein by reference.
(6) Amended and Restated Charter and Amended and Restated By-Laws of
MONY Life Insurance Company filed as Exhibit 1.(6) to
Registration Statement on Form S-6, dated January 29, 1999
(Registration Nos. 333-71417 and 811-6217), is incorporated
herein by reference.
(7) Not applicable.
(8) (a)Amended Investment Advisory Agreement between MONY Life
Insurance Company of America and MONY Series Fund, Inc. filed
as Exhibit 5(i) to Post-Effective amendment No. 14 to
Registration Statement (Registration Nos. 2-95501 and
811-4209) dated February 27, 1998, is incorporated herein by
reference.
(b)Services Agreement between The Mutual Life Insurance Company
of New York and MONY Life Insurance Company of America filed
as Exhibit 5(ii) to Pre-Effective Amendment to Registration
Statement (Registration Nos. 2-95501 and 811-4209) dated July
19, 1985, is incorporated herein by reference.
II-2
(c)Fund Participation Agreement among Enterprise Accumulation
Trust, MONY Life Insurance Company of America and MONY Life
Insurance Company, filed as Exhibit 8(a) to Post-Effective
Amendment No. 7 to Registration Statement on Form N-4 dated
April 18, 2001 (Registration Nos. 333-72259 and 811-6216), is
incorporated herein by reference.
(d)Investment Advisory Agreement between Enterprise Capital
Management, Inc. ("Enterprise Capital") and The Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and Retirement System Investors Inc., as sub-adviser,
filed as Exhibit (d)(iii) to Post-Effective Amendment No. 17
to Registration Statement (Registration Nos. 33-21534 and
811-05543) dated May 3, 1999.
(e)Investment Advisory Agreement between Enterprise Capital
Management, Inc. ("Enterprise Capital") and The Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and 1740 Advisers, Inc., as sub-adviser, filed as
Exhibit (d)(v) to Post-Effective Amendment No. 17 to
Registration Statement (Registration Nos. 33-21534 and
811-05543) dated May 3, 1999.
(f)Investment Advisory Agreement between Enterprise Capital
Management, Inc. ("Enterprise Capital") and The Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and Marsico Capital Management, LLC, as sub-adviser,
filed as Exhibit (d)(vi) to Post-Effective Amendment No. 20 to
Registration Statement (Registration Nos. 33-21534 and
811-05543) dated April 27, 2000.
(g)Investment Advisory Agreement between Enterprise Capital
Management, Inc., ("Enterprise Capital") and The Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and Montag & Caldwell, Inc., as sub-adviser, filed as
Exhibit (d)(ii) to Post-Effective Amendment No. 17 to
Registration Statement (Registration Nos. 33-21534 and
811-05543) dated May 3, 1999.
(h)Investment Advisory Agreement between Enterprise Capital
Management, Inc., ("Enterprise Capital") and The Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and TCW Investment Management Company, as sub-adviser,
filed as Exhibit (d)(iv) to Post-Effective Amendment No. 20 to
Registration Statement (Registration Nos. 33-21534 and
811-05543) dated April 27, 2000.
(i)Investment Advisory Agreement between Enterprise Capital
Management, Inc., ("Enterprise Capital") and The Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and William D. Witter, Inc., as sub-adviser, filed as
Exhibit (d)(vii) to Post-Effective Amendment No. #17 to
Registration Statement (Registration Nos. 33-21534 and
811-05543) dated May 3, 1999.
(j)Investment Advisory Agreement between Enterprise Capital
Management, Inc., ("Enterprise Capital") and The Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and GAMCO Investors, Inc., as sub-adviser, filed as
Exhibit (d)(viii) to Post-Effective Amendment No. #17 to
Registration Statement (Registration Nos. 33-21534 and
811-05543) dated May 3, 1999.
(k)Investment Advisory Agreement between Enterprise Capital
Management, Inc. ("Enterprise Capital") and the Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and Vontobel USA Inc., as sub-adviser, filed as Exhibit
(d)(ix) to Post-Effective Amendment No. 17 to Registration
Statement (Registration Nos. 33-21534 and 811-05543) dated May
3, 2000.
II-3
(l)Investment Advisory Agreement between Enterprise Capital
Management, Inc. ("Enterprise Capital") and the Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and Caywood-Scholl Capital Management, as sub-adviser,
filed as Exhibit (d)(xi) to Post-Effective Amendment No. 17 to
Registration Statement (Registration Nos. 33-21534 and
811-05543) dated May 3, 1999.
(m)Investment Advisory Agreement between Enterprise Capital
Management, Inc. ("Enterprise Capital") and the Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and OpCap Advisors, as sub-adviser, filed as Exhibit
(d)(xv) to Post-Effective Amendment No. 20 to Registration
Statement (Registration Nos. 33-21534 and 811-05543) dated
April 27, 2000.
(n)Investment Advisory Agreement between Enterprise Capital
Management, Inc. ("Enterprise Capital") and the Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and Sanford C. Bernstein & Co., Inc., as sub-adviser,
filed as Exhibit (d)(xvi) to Post-Effective Amendment No. 20
to Registration Statement (Registration Nos. 33-21534 and
811-05543) dated April 27, 2000.
(o)Investment Advisory Agreement between Enterprise Capital
Management, Inc. ("Enterprise Capital") and the Enterprise
Accumulation Trust ("Trust"), and Enterprise Capital, the
Trust, and Fred Alger Management, Inc., as sub-adviser, filed
as Exhibit (d)(xiii) to Post-Effective Amendment No. 18 to
Registration Statement (Registration Nos. 33-21534 and
811-05543) dated May 28, 1999.
(9) Not applicable.
(10)Specimen application form for Flexible Premium Variable Universal
Life Insurance Policy filed as Exhibit 1. (10) to Pre-Effective
Amendment No. 1 to Registration Statement on Form S-6, dated
December 7, 2001 (Registration Nos. 333-72594 and 811-6217), is
incorporated herein by reference.
(11)Code of Ethics for Operation of MONY Life Insurance Company and
its Subsidiaries, filed as Exhibit (11) to Post-Effective
Amendment No. 12 to Registration Statement on Form S-6, dated
February 27, 2001 (Registration Nos. 33-82570 and 811-4235) is
incorporated herein by reference.
2. Opinion and consent of Arthur D. Woods, Vice President-Variable
Products and Broker-Dealer Operations Counsel, MONY Life Insurance Company,
as to legality of the securities being registered filed as Exhibit 2 on
November 1, 2001 to Registration Statement (Registration Nos. 333-72594 and
811-6217) is incorporated herein by reference.
3. Not applicable.
4. Not applicable.
5. Consent of PricewaterhouseCoopers LLP as to financial statements of
MONY Life Insurance Company.
6. Opinion and consent of Pamela Duffy, Vice President, Product
Development, MONY Life Insurance Company, as to actuarial matters filed as
Exhibit 6 to Pre-Effective Amendment No. 1 to Registration Statement on Form
S-6, dated December 7, 2001 (Registration Nos. 333-72594 and 811-6217), is
incorporated herein by reference.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
MONY Variable Account L of MONY Life Insurance Company, has duly caused this
Pre-Effective Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and the State of New York, on this 4th day of January, 2002. Registrant hereby
certifies that the requirements of Rule 485 have been met.
MONY VARIABLE ACCOUNT L OF
MONY LIFE INSURANCE COMPANY
/s/ MICHAEL I. ROTH
By: _________________________________
Michael I. Roth, Director,
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to the Registration Statement has been duly
signed below by the following persons in the capacities and on the date
indicated.
Signature Date
--------- ----
/S/ MICHAEL I. ROTH January 4, 2002
--------------------------------------
Michael I. Roth
Director, Chairman and
Chief Executive Officer
/S/ SAMUEL J. FOTI January 4, 2002
--------------------------------------
Samuel J. Foti
Director, President and
Chief Operating Officer
/S/ KENNETH M. LEVINE January 4, 2002
--------------------------------------
Kenneth M. Levine
Director, Executive Vice President and
Chief Investment Officer
/S/ RICHARD DADDARIO January 4, 2002
--------------------------------------
Richard Daddario
Executive Vice President and
Chief Financial Officer
/S/ LEE M. SMITH January 4, 2002
--------------------------------------
Lee M. Smith
Corporate Secretary and
Vice President, Government Relations
* January 4, 2002
--------------------------------------
Tom H. Barrett
Director
Signature Date
--------- ----
* January 4, 2002
-------------------------
David L. Call
Director
* January 4, 2002
-------------------------
G. Robert Durham
Director
* January 4, 2002
-------------------------
James B. Farley
Director
* January 4, 2002
-------------------------
Robert Holland, Jr.
Director
* January 4, 2002
-------------------------
James L. Johnson
Director
* January 4, 2002
-------------------------
Frederick W. Kanner
Director
* January 4, 2002
-------------------------
Robert R. Kiley
Director
* January 4, 2002
-------------------------
Jane C. Pfeiffer
Director
* January 4, 2002
-------------------------
Thomas C. Theobald
Director
/S/ LEE M. SMITH January 4, 2002
*By: --------------------
Lee M. Smith
Attorney-In-Fact
2
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
5. Consent of PricewaterhouseCoopers LLP, Independent Accountants
1