485BPOS 1 file001.txt VISION NEW YORK 485B MAY 1, 2008 File Nos. 333-143195 811-05716 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( ) Pre-Effective Amendment No. ( ) Post-Effective Amendment No. 3 (X) REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ( ) Amendment No. 113 (X) (CHECK APPROPRIATE BOX OR BOXES.) ALLIANZ LIFE OF NY VARIABLE ACCOUNT C (EXACT NAME OF REGISTRANT) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK (NAME OF DEPOSITOR) ONE CHASE MANHATTAN PLAZA, 37TH FLOOR, NEW YORK, NEW YORK 10005-1423 (ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (212) 586-7733 (DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE) VINCENT VITIELLO ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK ONE CHASE MANHATTAN PLAZA, 37TH FLOOR NEW YORK, NEW YORK 10005-1423 (NAME AND ADDRESS OF AGENT FOR SERVICE) COPIES TO: STEWART D. GREGG, SENIOR SECURITIES COUNSEL ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA 5701 GOLDEN HILLS DRIVE MINNEAPOLIS, MN 55416 (763) 765-2913 T IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK THE APPROPRIATE BOX): ____ immediately upon filing pursuant to paragraph (b) of Rule 485 _X__ on May 1, 2008 pursuant to paragraph (b) of Rule 485 ____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485 ____ on (date) pursuant to paragraph (a)(1) of Rule 485 IF APPROPRIATE, CHECK THE FOLLOWING: ____ this post-effective amendment designates a new effective date for a previously filed post-effective amendment. APPROXIMATE DATE OF THE PROPOSED PUBLIC OFFERING: May 1, 2008 TITLES OF SECURITIES BEING REGISTERED: Individual Flexible Purchase Payment Variable Deferred Annuity Contracts PART A - PROSPECTUS 1 THE ALLIANZ VISION(SM) NEW YORK VARIABLE ANNUITY CONTRACT ISSUED BY ALLIANZ LIFE(R) OF NY VARIABLE ACCOUNT C AND ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK FOR YOUR CONVENIENCE WE HAVE PROVIDED A GLOSSARY (SEE SECTION 13) THAT DEFINES KEY, CAPITALIZED TERMS THAT ARE USED IN THIS PROSPECTUS. This prospectus describes an individual flexible purchase payment variable deferred annuity contract (Contract) issued by Allianz Life Insurance Company of New York (Allianz Life of New York, we, us, our). The Contract is a "flexible purchase payment" contract because you (the Owner) can make more than one Purchase Payment, subject to certain restrictions. The Contract is "variable" because the Contract Value and any variable Annuity Payments you receive will increase or decrease depending on the performance of the Investment Options you select (in this prospectus, the term "Investment Options" refers only to the variable Investment Options listed on the following page, and not to any fixed investment choices). The Contract is "deferred" because you do not have to begin receiving regular Annuity Payments immediately. THE BASIC CONTRACT (BASE CONTRACT) offers a variety of standard features including a number of different Investment Options, multiple annuitization options, a free withdrawal privilege, and a death benefit. THE CONTRACT ALSO OFFERS OPTIONAL BENEFITS (subject to certain restrictions) that are each AVAILABLE FOR AN ADDITIONAL CHARGE. You can select only one of the following optional benefits: the Bonus Option, the Short Withdrawal Charge Option, or the No Withdrawal Charge Option. You can also select only one of the following optional benefits: the Target Date Retirement Benefit or the Lifetime Plus Benefit. The optional Quarterly Value Death Benefit is available with all other optional benefits. For more details and additional information, please see section 11, Selection of Optional Benefits; section 11.a, The Target Date Retirement Benefit; section 11.b, The Lifetime Plus Benefit; and section 11.c, Other Optional Benefits. ANNUITY CONTRACTS THAT CREDIT A BONUS GENERALLY HAVE HIGHER FEES AND CHARGES THAN CONTRACTS THAT DO NOT CREDIT A BONUS. THEREFORE, THE AMOUNT OF CREDIT RECEIVED UNDER THE BONUS OPTION MAY BE MORE THAN OFFSET BY THE ADDITIONAL FEES AND CHARGES ASSOCIATED WITH IT. Additional information about the Separate Account has been filed with the Securities and Exchange Commission (SEC) and is available upon written or oral request without charge. A Statement of Additional Information (SAI) dated the same date as this prospectus includes additional information about the annuity offered by this prospectus. The SAI is incorporated by reference into this prospectus. The SAI is filed with the SEC and is available without charge by contacting us at the telephone number or address listed at the back of this prospectus. The table of contents of the SAI appears before the Privacy and Security Statement in this prospectus. The SEC also maintains a website (http://www.sec.gov). The prospectus, the SAI and other information about the Contract are available on the EDGAR database on the SEC's website. Please read this prospectus before investing and keep it for future reference. It contains important information about your annuity and Allianz Life of New York that you ought to know before investing. This prospectus is not an offering in any state, country, or jurisdiction in which we are not authorized to sell the Contracts. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different. THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION AND IS NOT FEDERALLY INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER FEDERAL GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. VARIABLE ANNUITY CONTRACTS ARE COMPLEX INSURANCE AND INVESTMENT VEHICLES. BEFORE YOU INVEST, BE SURE TO ASK YOUR REGISTERED REPRESENTATIVE ABOUT THE CONTRACT'S FEATURES, BENEFITS, RISKS AND FEES, AND WHETHER THE CONTRACT IS APPROPRIATE FOR YOU BASED UPON YOUR FINANCIAL SITUATION AND OBJECTIVES. Dated: May 1, 2008 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 2 We currently offer the Investment Options listed below. You can invest in up to 15 Investment Options at any one time. We may add, substitute or remove Investment Options in the future. WE DO NOT CURRENTLY OFFER A FIXED ACCOUNT. CONTRACTS WITH THE TARGET DATE RETIREMENT BENEFIT OR THE LIFETIME PLUS BENEFIT ARE SUBJECT TO RESTRICTIONS ON ALLOCATIONS AND TRANSFERS AMONG CERTAIN INVESTMENT OPTIONS. FOR MORE INFORMATION ON THE RESTRICTIONS, SEE THE "INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS AND QUARTERLY REBALANCING" DISCUSSIONS IN SECTION 11.A, THE TARGET DATE RETIREMENT BENEFIT; SECTION 11.B, THE LIFETIME PLUS BENEFIT; AND APPENDIX D. INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT ----------------------------------------------- AIM AZL(R) AIM International Equity Fund BLACKROCK AZL(R) Money Market Fund BlackRock Global Allocation V.I. Fund CLEARBRIDGE AZL(R) LMP Large Cap Growth Fund COLUMBIA AZL(R) Columbia Technology Fund DAVIS AZL(R) Davis NY Venture Fund Davis VA Financial Portfolio DREYFUS AZL(R) Dreyfus Founders Equity Growth Fund AZL(R) Dreyfus Premier Small Cap Value Fund AZL(R) S&P 500 Index Fund AZL(R) Small Cap Stock Index Fund FIRST TRUST AZL(R) First Trust Target Double Play Fund FRANKLIN TEMPLETON AZL(R) Franklin Small Cap Value Fund Franklin Global Communications Securities Fund Franklin High Income Securities Fund Franklin Income Securities Fund Franklin Templeton VIP Founding Funds Allocation Fund Franklin U.S. Government Fund Franklin Zero Coupon Fund 2010 Mutual Discovery Securities Fund Mutual Shares Securities Fund Templeton Global Income Securities Fund Templeton Growth Securities Fund FUSION PORTFOLIOS AZL(R) Fusion Balanced Fund AZL(R) Fusion Growth Fund AZL(R) Fusion Moderate Fund JENNISON AZL(R) Jennison 20/20 Focus Fund AZL(R) Jennison Growth Fund LEGG MASON AZL(R) Legg Mason Growth Fund AZL(R) Legg Mason Value Fund NEUBERGER BERMAN AZL(R) Neuberger Berman Regency Fund NICHOLAS-APPLEGATE AZL(R) NACM International Fund OPPENHEIMER CAPITAL AZL(R) OCC Opportunity Fund AZL(R) OCC Value Fund OpCap Mid Cap Portfolio(1) OPPENHEIMER FUNDS AZL(R) Oppenheimer Global Fund AZL(R) Oppenheimer International Growth Fund AZL(R) Oppenheimer Main Street Fund PIMCO AZL(R) PIMCO Fundamental IndexPLUS Total Return Fund PIMCO VIT All Asset Portfolio PIMCO VIT CommodityRealReturnTM Strategy Portfolio PIMCO VIT Emerging Markets Bond Portfolio PIMCO VIT Global Bond Portfolio (Unhedged) PIMCO VIT High Yield Portfolio PIMCO VIT Real Return Portfolio PIMCO VIT Total Return Portfolio SCHRODER AZL(R) Schroder Emerging Markets Equity Fund AZL(R) Schroder International Small Cap Fund TARGETPLUS PORTFOLIOS AZL TargetPLUSSM Balanced Fund AZL TargetPLUSSM Equity Fund AZL TargetPLUSSM Growth Fund AZL TargetPLUSSM Moderate Fund TURNER AZL(R) Turner Quantitative Small Cap Growth Fund VAN KAMPEN AZL(R) Van Kampen Comstock Fund AZL(R) Van Kampen Equity and Income Fund AZL(R) Van Kampen Global Franchise Fund AZL(R) Van Kampen Global Real Estate Fund AZL(R) Van Kampen Growth and Income Fund AZL(R) Van Kampen Mid Cap Growth Fund (1) A fund of the Premier VIT series. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 3 TABLE OF CONTENTS FEE TABLES............................................5 CONTRACT OWNER TRANSACTION EXPENSES...............5 CONTRACT OWNER PERIODIC EXPENSES..................6 ANNUAL OPERATING EXPENSES OF THE INVESTMENT OPTIONS..............................7 EXAMPLES..........................................8 1. THE VARIABLE ANNUITY CONTRACT.....................9 OWNERSHIP.........................................9 2. PURCHASE.........................................11 PURCHASE PAYMENTS................................11 AUTOMATIC INVESTMENT PLAN (AIP)..................11 ALLOCATION OF PURCHASE PAYMENTS..................12 TAX-FREE SECTION 1035 EXCHANGES..................12 FAXED APPLICATIONS...............................13 FREE LOOK/RIGHT TO EXAMINE.......................13 ACCUMULATION UNITS/COMPUTING THE CONTRACT VALUE..13 3. THE ANNUITY PHASE................................14 INCOME DATE......................................14 PARTIAL ANNUITIZATION............................14 ANNUITY OPTIONS..................................15 ANNUITY PAYMENTS.................................17 4. INVESTMENT OPTIONS...............................18 SUBSTITUTION AND LIMITATION ON FURTHER INVESTMENTS24 TRANSFERS........................................25 EXCESSIVE TRADING AND MARKET TIMING..............26 FLEXIBLE REBALANCING.............................28 FINANCIAL ADVISERS - ASSET ALLOCATION PROGRAMS...28 VOTING PRIVILEGES................................29 5. OUR GENERAL ACCOUNT..............................29 6. EXPENSES.........................................30 MORTALITY AND EXPENSE RISK (M&E) CHARGES.........30 CONTRACT MAINTENANCE CHARGE......................31 WITHDRAWAL CHARGE................................31 TRANSFER FEE.....................................33 PREMIUM TAXES....................................34 INCOME TAXES.....................................34 INVESTMENT OPTION EXPENSES.......................34 7. TAXES............................................34 ANNUITY CONTRACTS IN GENERAL.....................34 QUALIFIED CONTRACTS..............................34 MULTIPLE CONTRACTS...............................35 PARTIAL 1035 EXCHANGES...........................36 DISTRIBUTIONS - NON-QUALIFIED CONTRACTS..........36 DISTRIBUTIONS - QUALIFIED CONTRACTS..............37 ASSIGNMENTS, PLEDGES AND GRATUITOUS TRANSFERS....38 DEATH BENEFITS...................................38 WITHHOLDING......................................38 FEDERAL ESTATE TAXES.............................38 GENERATION-SKIPPING TRANSFER TAX.................38 FOREIGN TAX CREDITS..............................38 ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS.........................38 POSSIBLE TAX LAW CHANGES.........................39 DIVERSIFICATION..................................39 REQUIRED DISTRIBUTIONS...........................39 8. ACCESS TO YOUR MONEY.............................40 FREE WITHDRAWAL PRIVILEGE........................40 WAIVER OF WITHDRAWAL CHARGE BENEFIT..............41 SYSTEMATIC WITHDRAWAL PROGRAM....................41 THE MINIMUM DISTRIBUTION PROGRAM AND REQUIRED MINIMUM DISTRIBUTION (RMD) PAYMENTS 41 SUSPENSION OF PAYMENTS OR TRANSFERS..............42 9. ILLUSTRATIONS....................................42 10. DEATH BENEFIT....................................42 TRADITIONAL DEATH BENEFIT........................42 DEATH OF THE OWNER AND/OR ANNUITANT UNDER ALL OTHER CONTRACTS..........................44 DEATH BENEFIT PAYMENT OPTIONS....................47 11. SELECTION OF OPTIONAL BENEFITS...................48 11.A THE TARGET DATE RETIREMENT BENEFIT..............49 ADDING THE TARGET DATE RETIREMENT BENEFIT TO YOUR CONTRACT................................50 REMOVING THE TARGET DATE RETIREMENT BENEFIT FROM YOUR CONTRACT................................50 THE TARGET VALUE DATE............................51 CALCULATING THE TARGET VALUE.....................51 INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS AND QUARTERLY REBALANCING 52 TERMINATION OF THE TARGET DATE RETIREMENT BENEFIT53 11.B THE LIFETIME PLUS BENEFIT.......................53 ADDING THE LIFETIME PLUS BENEFIT TO YOUR CONTRACT54 REMOVING THE LIFETIME PLUS BENEFIT FROM YOUR CONTRACT................................55 WHO IS CONSIDERED A COVERED PERSON(S)?...........56 IF YOU EXERCISE THE LIFETIME PLUS BENEFIT........57 LIFETIME PLUS PAYMENTS UNDER THE LIFETIME PLUS BENEFIT........................58 AUTOMATIC ANNUAL PAYMENT INCREASES TO THE LIFETIME PLUS PAYMENTS.......................60 THE BENEFIT BASE.................................62 THE QUARTERLY ANNIVERSARY VALUE..................62 THE 5% ANNUAL INCREASE...........................62 RESETTING THE 5% ANNUAL INCREASE.................63 INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS AND QUARTERLY REBALANCING 64 TAXATION OF LIFETIME PLUS PAYMENTS...............65 TERMINATION OF THE LIFETIME PLUS BENEFIT.........65 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 4 11.C OTHER OPTIONAL BENEFITS.........................66 QUARTERLY VALUE DEATH BENEFIT....................66 BONUS OPTION.....................................67 SHORT WITHDRAWAL CHARGE OPTION...................68 NO WITHDRAWAL CHARGE OPTION......................68 12. OTHER INFORMATION................................69 ALLIANZ LIFE OF NEW YORK.........................69 THE SEPARATE ACCOUNT.............................69 DISTRIBUTION.....................................69 ADDITIONAL CREDITS FOR CERTAIN GROUPS............71 ADMINISTRATION/ALLIANZ SERVICE CENTER............71 LEGAL PROCEEDINGS................................71 FINANCIAL STATEMENTS.............................71 13. GLOSSARY.........................................72 14. TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION (SAI).....................74 15. PRIVACY AND SECURITY STATEMENT...................75 APPENDIX A - ANNUAL OPERATING EXPENSES FOR EACH INVESTMENT OPTION...........................76 APPENDIX B - CONDENSED FINANCIAL INFORMATION.........80 APPENDIX C - TARGET VALUE CALCULATION AND EXAMPLES...84 CALCULATING THE TARGET VALUE UNDER THE TARGET DATE RETIREMENT BENEFIT...............84 EXAMPLES OF THE TARGET VALUE CALCULATIONS........84 EXAMPLE OF THE EFFECT OF A PARTIAL WITHDRAWAL ON THE TARGET VALUE..........................85 APPENDIX D - INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS AND QUARTERLY REBALANCING..86 DETERMINING THE MAXIMUM ALLOWABLE AND MINIMUM REQUIRED GROUP ALLOCATION............88 DETERMINING THE REQUIRED GROUP ALLOCATION........89 EXAMPLES OF QUARTERLY REBALANCING................90 APPENDIX E - QUARTERLY ANNIVERSARY VALUE CALCULATION AND EXAMPLES ....................................93 CALCULATING THE QUARTERLY ANNIVERSARY VALUE UNDER THE LIFETIME PLUS BENEFIT....................93 CALCULATING THE QUARTERLY ANNIVERSARY VALUE UNDER THE QUARTERLY VALUE DEATH BENEFIT............94 EXAMPLES OF THE QUARTERLY ANNIVERSARY VALUE CALCULATIONS.................................94 EXAMPLE OF THE EFFECT OF A PARTIAL WITHDRAWAL ON THE QUARTERLY ANNIVERSARY VALUE..............95 APPENDIX F - CALCULATIONS AND EXAMPLES OF THE 5% ANNUAL INCREASE UNDER THE LIFETIME PLUS BENEFIT............................96 CALCULATING THE 5% ANNUAL INCREASE...............96 EXAMPLE OF THE 5% ANNUAL INCREASE CALCULATION....97 APPENDIX G - WITHDRAWAL CHARGE EXAMPLES..............98 FOR SERVICE OR MORE INFORMATION.....................100 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 5 FEE TABLES The following tables describe the fees and expenses that you will pay when purchasing, owning and taking a withdrawal from the Contract. For more information, see section 6, Expenses. The first tables describe the fees and expenses that you will pay if you take a withdrawal from the Contract during the Accumulation Phase, or if you make transfers. CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE DURING THE ACCUMULATION PHASE(1),(2) (as a percentage of each Purchase Payment withdrawn)
NUMBER OF COMPLETE YEARS SINCE WE RECEIVED YOUR PURCHASE PAYMENT WITHDRAWAL CHARGE AMOUNT CONTRACT WITH THE CONTRACT WITH THE CONTRACT WITH THE SHORT WITHDRAWAL NO WITHDRAWAL CHARGE BASE CONTRACT BONUS OPTION(3) CHARGE OPTION(3) OPTION(3),(4) 0 8.5% 8.5% 8.5% 0% 1 8.5% 8.5% 7.5% 0% 2 7.5% 8.5% 5.5% 0% 3 6.5% 8% 3% 0% 4 5% 7% 0% 0% 5 4% 6% 0% 0% 6 3% 5% 0% 0% 7 0% 4% 0% 0% 8 0% 3% 0% 0% 9 years or more 0% 0% 0% 0%
TRANSFER FEE(5)..........................................$25 PREMIUM TAXES(6)..................................0% to 3.5% (as a percentage of each Purchase Payment) (1) The free withdrawal privilege for each Contract Year is equal to 12% of your total Purchase Payments, less the total amount previously withdrawn under the free withdrawal privilege in the same Contract Year. We will not deduct a withdrawal charge from amounts withdrawn under the free withdrawal privilege. There is no free withdrawal privilege during the Annuity Phase or after you begin to receive Lifetime Plus Payments under the Lifetime Plus Benefit (if applicable). Any unused free withdrawal privilege in one Contract Year does not carry over to the next Contract Year. For more details and additional information on other penalty-free withdrawal options, please see the discussion of the free withdrawal privilege and other information that appears in section 8, Access to Your Money; and section 11.b, The Lifetime Plus Benefit. NOTE: No withdrawal charge applies if you select the No Withdrawal Charge Option at Contract issue. For more details and additional information, please see the discussion that appears in section 11.c, Other Optional Benefits - No Withdrawal Charge Option. (2) The total amount under your Contract that is subject to a withdrawal charge is the Withdrawal Charge Basis. The Withdrawal Charge Basis is equal to the total Purchase Payments, less any withdrawals from the Contract (including any withdrawal charges). (3) Some or all of the optional benefits may not be available to you; check with your registered representative. If the optional benefits are available, you can select ONLY ONE of the following at issue for an additional M&E charge: Bonus Option, Short Withdrawal Charge Option, or No Withdrawal Charge Option. For more information, see Separate Account Annual Expenses in this section and section 11, Selection of Optional Benefits; and section 11.c, Other Optional Benefits. (4) If you select the No Withdrawal Charge Option, you must also select either the Target Date Retirement Benefit or Lifetime Plus Benefit. (5) The first twelve transfers in a Contract Year are free. We do not count any transfers made under the flexible rebalancing program or the allocation and transfer restrictions for the Target Date Retirement Benefit or Lifetime Plus Benefit against any free transfers we allow. Currently, we deduct this fee only during the Accumulation Phase, but we reserve the right to deduct this fee during the Annuity Phase. For more information, please see section 6, Expenses - Transfer Fee. (6) Although New York does not currently impose a premium tax, we reserve the right to reimburse ourselves for any premium tax we have to pay if imposed by New York in the future. If your Contract is subject to a premium tax, it is our current practice not to make deductions from the Contract to reimburse ourselves for premium taxes that we pay until the earliest of: the Income Date that you take a Full Annuitization, the date of full withdrawal, or full distribution of the death benefit. For more information, please see section 6, Expenses - Premium Taxes. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 6 CONTRACT OWNER PERIODIC EXPENSES The next tables describe the fees and expenses that you will pay periodically during the time that you own your Contract, not including the Investment Options' fees and expenses. The Separate Account annual expenses include the mortality and expense risk (M&E) charge. DURING THE ACCUMULATION PHASE: CONTRACT MAINTENANCE CHARGE(7).............................$30 (per Contract per year) (7) We waive the contract maintenance charge if the Contract Value is at least $100,000 at the time we are to deduct the charge. If the total Contract Value for all your Contracts that are registered with the same social security number is at least $100,000, we waive the charge on all of your Contracts. For more information, please see section 6, Expenses - Contract Maintenance Charge.
SEPARATE ACCOUNT ANNUAL EXPENSES(8) (as a percentage of average daily assets invested in a subaccount on an annual basis) CURRENT MAXIMUM POTENTIAL M&E CHARGE M&E CHARGE BASE CONTRACT 1.40% 1.40% ADDITIONAL M&E CHARGE FOR OPTIONAL BENEFITS QUARTERLY VALUE DEATH BENEFIT(9) 0.30% 0.30% BONUS OPTION 0.50% 0.50% SHORT WITHDRAWAL CHARGE OPTION 0.25% 0.25% NO WITHDRAWAL CHARGE OPTION (requires selection of either the Target Date Retirement Benefit or Lifetime Plus Benefit) 0.35% 0.35% TARGET DATE RETIREMENT BENEFIT(10) 0.40% 0.40% LIFETIME PLUS BENEFIT(10) SINGLE LIFETIME PLUS PAYMENTS 0.70%(11) 1.50%(12) JOINT LIFETIME PLUS PAYMENTS 0.85%(13) 1.65%(14) ------------------------------------------------------------------------------------------------------------- MAXIMUM POTENTIAL M&E CHARGE FOR A CONTRACT WITH MULTIPLE OPTIONAL BENEFITS CONTRACT WITH THE QUARTERLY VALUE DEATH BENEFIT, BONUS OPTION AND THE LIFETIME PLUS BENEFIT (JOINT LIFETIME PLUS PAYMENTS) 3.85% -------------------------------------------------------------------------------------------------------------
DURING THE ANNUITY PHASE: SEPARATE ACCOUNT ANNUAL EXPENSES - IF YOU REQUEST VARIABLE ANNUITY PAYMENTS (as a percentage of average daily assets invested in a subaccount on an annual basis) M&E CHARGE(15) CONTRACT WITHOUT THE BONUS OPTION....................1.40% CONTRACT WITH THE BONUS OPTION.......................1.90% (8) Some or all of the optional benefits may not be available to you; check with your registered representative. The Quarterly Value Death Benefit is available with all other optional benefits. You can select only one of the three following optional benefits at issue: Bonus Option, Short Withdrawal Charge Option, or No Withdrawal Charge Option. For more information, see section 11, Selection of Optional Benefits. (9) The additional expenses associated with the Quarterly Value Death Benefit will continue until the earlier of the termination of the Quarterly Value Death Benefit, or your Contract Value is fully depleted. For more information, see section 11.c, Other Optional Benefits - Quarterly Value Death Benefit. (10) You can add either the Target Date Retirement Benefit or the Lifetime Plus Benefit to your Contract once. For more information, see section 11, Selection of Optional Benefits. If you select one of these benefits, the additional expenses associated with it will continue until the earlier of its termination, or your Contract Value is fully depleted. For more information, see the discussion of the termination of the benefit that appears in section 11.a, The Target Date Retirement Benefit and section 11.b, The Lifetime Plus Benefit. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 7 (11) These charges currently apply if you add the Lifetime Plus Benefit at issue, after issue, upon a reset of the 5% Annual Increase, if you remove a Covered Person, or on any fifth Benefit Anniversary if you receive an automatic increase to your Lifetime Plus Payments on the current Benefit Anniversary or any of the previous four Benefit Anniversaries. (See section 11.b, The Lifetime Plus Benefit.) (12) This is the maximum charge we could impose if you add the Lifetime Plus Benefit to your Contract after issue, upon a reset of the 5% Annual Increase, if you remove a Covered Person, or on any fifth Benefit Anniversary if you receive an automatic increase to your Lifetime Plus Payments on the current Benefit Anniversary or any of the previous four Benefit Anniversaries. (See section 11.b, The Lifetime Plus Benefit.) (13) These charges currently apply if you add the Lifetime Plus Benefit at issue, after issue, upon a reset of the 5% Annual Increase, or on any fifth Benefit Anniversary if you receive an automatic increase to your Lifetime Plus Payments on the current Benefit Anniversary or any of the previous four Benefit Anniversaries. (See section 11.b, The Lifetime Plus Benefit.) (14) This is the maximum charge we could impose if you add the Lifetime Plus Benefit to your Contract at issue, after issue, upon a reset of the 5% Annual Increase, or on any fifth Benefit Anniversary if you receive an automatic increase to your Lifetime Plus Payments on the current Benefit Anniversary or any of the previous four Benefit Anniversaries. (See section 11.b, The Lifetime Plus Benefit.) (15) Because the Contract allows Partial Annuitization, it is possible for different portions of the Contract to be in both the Accumulation and Annuity Phases at the same time. It is also possible to have different M&E charges on different portions of the Contract at the same time if you request variable Annuity Payments under a Partial Annuitization. For example, if you have a Contract with the Bonus Option and request a variable annuitization of a portion of your Contract Value, you will be assessed an annual fee of 1.90% on the portion that has been annuitized, but you may pay an annual fee of up to 3.85% on the portion that has not been annuitized. For more information, see section 3, The Annuity Phase - Partial Annuitization. ANNUAL OPERATING EXPENSES OF THE INVESTMENT OPTIONS This table describes the total annual operating expenses associated with the Investment Options and shows the minimum and maximum expenses for the period ended December 31, 2007, charged by any of the Investment Options before the effect of any contractual expense reimbursement or fee waiver. We show the expenses as a percentage of an Investment Option's average daily net assets.
MINIMUM MAXIMUM Total annual Investment Option operating expenses* (including management fees, distribution or 12b-1 fees, and other expenses) before fee waivers and expense reimbursements 0.65% 1.96%
* Some of the Investment Options or their affiliates may also pay service fees to us or our affiliates. The amount of these fees may be different for each Investment Option. The maximum current fee is 0.25%. The amount of these fees, if deducted from Investment Option assets, is reflected in the above table and is disclosed in Appendix A. Appendix A also contains more details regarding the annual operating expenses for each of the Investment Options, including the amount and effect of any waivers and/or reimbursements. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 8 EXAMPLES The expenses for your Contract may be different from those shown in the examples below depending upon which Investment Option(s) you select and the benefits that apply. These examples are intended to help you compare the cost of investing in a Contract with the cost of investing in other variable annuity contracts. These costs include Contract Owner transaction expenses, Contract Owner periodic expenses, and the annual operating expenses of the Investment Options before the effect of reimbursements and waivers. You should not consider the examples below as a representation of past or future expenses. Actual expenses may be greater or less than those shown. The $30 contract maintenance charge is included in the examples as a charge of 0.024% of the average daily assets invested in a subaccount based on an assumed average Contract size of $90,000. Please note that this is an average and some Owners may pay more or less than the average. Transfer fees and deductions we make to reimburse ourselves for premium taxes that we pay may apply, but are not reflected in these examples. For additional information, see section 6, Expenses. If you take a full withdrawal at the end of each time period, and assuming a $10,000 investment and a 5% annual return on your money, you may pay expenses as follows. (a) Maximum potential charges* for a Contract with the Quarterly Value Death Benefit, Bonus Option, and joint Lifetime Plus Payments (which carries the highest M&E charge of 3.85%). (b) Current charges for a Contract with the Quarterly Value Death Benefit, Bonus Option, and joint Lifetime Plus Payments under the Lifetime Plus Benefit (which carries an M&E charge of 3.05%). (c) The Base Contract (which carries the lowest M&E charge of 1.40%).
TOTAL ANNUAL INVESTMENT OPTION OPERATING EXPENSES BEFORE ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS OF: 1 YEAR 3 YEARS 5 YEARS 10 YEARS ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 1.96% (the maximum Investment Option operating expense) a) $1,431 a) $2,579 a) $3,559 a) $5,604 b) $1,353 b) $2,360 b) $3,216 b) $5,031 c) $1,191 c) $1,790 c) $2,262 c) $3,673 --------------------------------------------------------------- ------------ ------------ ------------ ------------ --------------------------------------------------------------- ------------ ------------ ------------ ------------ 0.65% (the minimum Investment Option operating expense) a) $1,304 a) $2,217 a) $2,990 a) $4,638 b) $1,225 b) $1,989 b) $2,623 b) $3,974 c) $1,060 c) $1,400 c) $1,615 c) $2,403 --------------------------------------------------------------- ------------ ------------ ------------ ------------ If you do not take a full withdrawal or if you take a Full Annuitization** of the Contract at the end of each time period, and assuming a $10,000 investment and a 5% annual return on your money, you may pay expenses as follows. TOTAL ANNUAL INVESTMENT OPTION OPERATING EXPENSES 1 YEAR 3 YEARS 5 YEARS 10 YEARS BEFORE ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS OF: ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 1.96% (the maximum Investment Option operating expense) a) $581 a) $1,729 a) $2,859 a) $5,604 b) $503 b) $1,510 b) $2,516 b) $5,031 c) $341 c) $1,040 c) $1,762 c) $3,673 --------------------------------------------------------------- ------------ ------------ ------------ ------------ --------------------------------------------------------------- ------------ ------------ ------------ ------------ 0.65% (the minimum Investment Option operating expense) a) $454 a) $1,367 a) $2,290 a) $4,638 b) $375 b) $1,139 b) $1,923 b) $3,974 c) $210 c) $650 c) $1,115 c) $2,403 --------------------------------------------------------------- ------------ ------------ ------------ ------------ * If you add the Lifetime Plus Benefit to your Contract after the Issue Date, upon a reset of the Enhanced 5% Annual Increase, or on any fifth Benefit Anniversary if you receive an automatic annual payment increase to your Lifetime Plus Payments on the current Benefit Anniversary or any of the previous four Benefit Anniversaries, your M&E charge may be less than this amount, but it cannot be greater than this amount. ** Annuity Payments are generally not available until 13 months after your Issue Date.
See Appendix B for condensed financial information regarding the Accumulation Unit Values (AUVs) for the highest and lowest M&E charges. See the appendix to the Statement of Additional Information regarding the AUVs for other M&E expense levels. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 9 1. THE VARIABLE ANNUITY CONTRACT An annuity is a contract between you (the Owner), and an insurance company (in this case Allianz Life of New York), where you make payments to us and, in turn, we promise to make regular periodic income payments (Annuity Payments) to the Payee. The Contract is tax deferred. You generally are not taxed on any earnings or appreciation on the assets in your Contract until you take money out of your Contract. FOR QUALIFIED CONTRACTS, THE TAX DEFERRAL IS PROVIDED THROUGH COMPLIANCE WITH SPECIALIZED TAX-QUALIFICATION RULES, AND YOU DO NOT RECEIVE ANY ADDITIONAL TAX BENEFIT BY PURCHASING THE CONTRACT. HOWEVER, THE CONTRACT MAY OFFER OTHER FEATURES THAT MEET YOUR NEEDS. ACCORDINGLY, IF YOU ARE PURCHASING A QUALIFIED CONTRACT, YOU SHOULD CONSIDER PURCHASING THIS CONTRACT FOR ITS DEATH BENEFIT, ANNUITY BENEFITS AND OTHER NON-TAX DEFERRAL RELATED BENEFITS. PLEASE CONSULT A TAX ADVISER FOR INFORMATION SPECIFIC TO YOUR CIRCUMSTANCES TO DETERMINE WHETHER A QUALIFIED CONTRACT IS AN APPROPRIATE INVESTMENT FOR YOU. The Contract has an Accumulation Phase and an Annuity Phase. You can take withdrawals from the Contract during the Accumulation Phase and, subject to certain restrictions, you can make additional Purchase Payments. The Accumulation Phase begins on the Issue Date and ends upon the earliest of the following. o The Business Day before the Income Date if you take a Full Annuitization. o The Business Day we process your request for a full withdrawal. o Upon the death of any Owner (or the Annuitant if the Contract is owned by a non-individual), it will terminate on the Business Day we receive in good order at our Service Center, both due proof of death and an election of the death benefit payment option, unless the spouse of the deceased continues the Contract. The Annuity Phase is the period during which we will make Annuity Payments from the Contract. Annuity Payments must begin on a designated date (the Income Date) that is at least 13 months after your Issue Date. If you apply the entire Contract Value to Annuity Payments, we call that a Full Annuitization, and if you apply only part of the Contract Value to Annuity Payments, we call that a Partial Annuitization. The maximum number of annuitizations you can have at any one time is five. Because the Contract allows Partial Annuitization, it is possible for different portions of the Contract to be in both the Accumulation and Annuity Phases at the same time. The Annuity Phase begins on the Income Date (or the first Income Date if you take any Partial Annuitizations) and ends when all portion(s) of the Contract that you apply to Annuity Payments have terminated, as indicated in section 3, The Annuity Phase. The amount of Contract Value you are able to accumulate in your Contract during the Accumulation Phase and the amount of any variable Annuity Payments we make during the Annuity Phase depends in large part upon the investment performance of any Investment Options you select. You cannot invest in more than 15 Investment Options at any one time. Contracts with the Target Date Retirement Benefit or Lifetime Plus Benefit will be subject to restrictions on allocations and transfers into certain Investment Options (see the "Investment Option Allocation and Transfer Restrictions" discussions in section 11.a, The Target Date Retirement Benefit and section 11.b, The Lifetime Plus Benefit). Depending upon market conditions, you can gain or lose value in the Contract based on the investment performance of the Investment Options. We will not make any changes to your Contract without your permission except as may be required by law. THE CONTRACT WILL TERMINATE WHEN: o the Accumulation Phase has terminated, o the Annuity Phase has terminated, and/or o all applicable death benefit payments have been made. OWNERSHIP OWNER You, as the Owner, have all the rights under the Contract. The Owner is designated at Contract issue. You can change Owners at any time subject to our approval. However, Qualified Contracts can only have one Owner and there may be Internal Revenue Service (IRS) or other restrictions on changing the ownership of a Qualified Contract. Upon our approval, any change will become effective as of the date you sign the request. Changing ownership may be a taxable event. You should consult with your tax adviser before doing this. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 10 JOINT OWNER A Non-Qualified Contract can be owned by up to two Owners. You can change Joint Owners under the same conditions as described for an Owner. If a Contract has Joint Owners, we require the signature of both Owners on any forms that are submitted to our Service Center, unless we allow otherwise. NOTE FOR PARTIAL ANNUITIZATIONS: Partial Annuitizations are not available to Joint Owners. There can be only one Owner, the Owner must be the Annuitant, and we will not allow the Owner to add a joint Annuitant. ANNUITANT The Annuitant is the individual on whose life we base Annuity Payments. Subject to our approval, you designate an Annuitant and you can add a joint Annuitant for the Annuity Phase if you take a Full Annuitization. You may change the Annuitant at any time before the Income Date unless the Contract is owned by a non-individual (for example, a qualified plan or trust). You cannot change the Annuitant if the Contract is owned by a non-individual, but you can add a joint Annuitant (subject to our approval) for the Annuity Phase if you take a Full Annuitization. For Qualified Contracts, the Owner must be the Annuitant unless the Contract is owned by a qualified plan or is part of a custodial arrangement. DESIGNATING DIFFERENT PERSONS AS OWNER(S) AND ANNUITANT(S) CAN HAVE IMPORTANT IMPACTS ON WHETHER A DEATH BENEFIT IS PAID, AND ON WHO WOULD RECEIVE IT. USE CARE WHEN DESIGNATING OWNERS AND ANNUITANTS, AND CONSULT YOUR REGISTERED REPRESENTATIVE IF YOU HAVE QUESTIONS. PAYEE The Payee is the person or entity you designate (subject to our approval) to receive Annuity Payments during the Annuity Phase. The Owner will receive tax reporting on those payments. For Non-Qualified Contracts, an Owner or Annuitant can be the Payee, but it is not required. For Qualified Contracts owned by a qualified plan, the qualified plan must be the Payee. For all other Qualified Contracts, the Owner is not required to be the Payee, but the Owner cannot transfer or assign his or her rights under the Contract to someone else. If you do not designate a Payee by the Income Date, we will make Annuity Payments to the Owner unless the Contract is a Qualified Contract owned by a qualified plan. The Owner can change the Payee at any time, subject to our approval, provided that designation of a Payee is consistent with federal and state laws and regulations. BENEFICIARY The Beneficiary is the person(s) or entity you designate at Contract issue to receive any death benefit. You can change the Beneficiary or contingent Beneficiary at any time before your death unless you name an irrevocable Beneficiary. If you do not designate a Beneficiary, any death benefit will be paid to your estate. NOTE FOR JOINT OWNERS: For jointly owned Contracts, the sole primary Beneficiary will be the surviving Joint Owner. Spousal Joint Owners may also appoint contingent Beneficiaries. If both spousal Joint Owners die before we pay the death benefit, we will pay the death benefit to the named contingent Beneficiaries, or to the estate of the Joint Owner who died last if there are no named contingent Beneficiaries. If both spousal Joint Owners die simultaneously, state law may dictate who receives the death benefit. However, for tax reasons, Joint Owners who are not spouses may not appoint any contingent Beneficiaries. If both Joint Owners who are not spouses die before we pay the death benefit, we will pay the death benefit to the estate of the Joint Owner who died last. ASSIGNMENT OF A CONTRACT An authorized request specifying the terms of an assignment of a Contract must be provided to our Service Center and approved by us. We will not be liable for any payment made or action taken before we record the assignment. An assignment may be a taxable event. We will not be responsible for the validity or tax consequences of any assignment. After the death benefit has become payable, an assignment can only be made with our consent. If the Contract is assigned, your rights may only be exercised with the consent of the assignee of record. Qualified Contracts generally cannot be assigned. NOTE FOR CONTRACTS WITH THE LIFETIME PLUS BENEFIT: If you assign the Contract, you cannot change the Covered Person(s). Any existing Contract assignment must be removed before you begin receiving Lifetime Plus Payments under the Lifetime Plus Benefit. Exceptions to the removal of a Contract assignment may be made in order to comply with applicable law. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 11 2. PURCHASE PURCHASE PAYMENTS A Purchase Payment is the money you put into the Contract. To purchase this Contract, all Owners and Annuitant(s) must be age 80 or younger on the Issue Date. The initial Purchase Payment is due on the Issue Date. The Purchase Payment requirements for this Contract are as follows. o If you select the No Withdrawal Charge Option, the minimum initial payment we will accept is $25,000. For all other Contracts, the minimum initial payment we will accept is $10,000. o You can make additional Purchase Payments of $50 or more during the Accumulation Phase before you begin receiving Lifetime Plus Payments under the Lifetime Plus Benefit (if applicable). In addition, if you select the Target Date Retirement Benefit, you can only make additional Purchase Payments during the first three Contract Years after you add the benefit to your Contract. o YOU CANNOT MAKE ANY ADDITIONAL PURCHASE PAYMENTS TO THE CONTRACT: - AFTER THE INCOME DATE THAT YOU TAKE A FULL ANNUITIZATION (INCLUDING A REQUIRED FULL ANNUITIZATION ON THE MAXIMUM PERMITTED INCOME DATE); - AFTER YOU BEGIN RECEIVING LIFETIME PLUS PAYMENTS UNDER THE LIFETIME PLUS BENEFIT; OR - IF YOU SELECT THE TARGET DATE RETIREMENT BENEFIT, ON OR AFTER THE THIRD CONTRACT ANNIVERSARY THAT OCCURS AFTER THE RIDER EFFECTIVE DATE. HOWEVER, IF YOU REMOVE THE TARGET DATE RETIREMENT BENEFIT FROM YOUR CONTRACT, THIS RESTRICTION WILL NO LONGER APPLY. o The maximum total amount we will accept without our prior approval is $1 million (including amounts already invested in other Allianz Life of New York variable annuities). PURCHASE PAYMENTS TO QUALIFIED CONTRACTS MUST NOT BE GREATER THAN ALLOWED UNDER FEDERAL LAW AND MUST BE FROM EARNED INCOME OR A QUALIFIED TRANSFER. PURCHASE PAYMENTS TO QUALIFIED CONTRACTS OTHER THAN FROM A QUALIFIED TRANSFER MAY BE RESTRICTED AFTER THE OWNER REACHES AGE 70 1/2. We may, at our sole discretion, waive the minimum Purchase Payment requirements. We reserve the right to decline any Purchase Payment in order to comply with state and/or federal law. AUTOMATIC INVESTMENT PLAN (AIP) The AIP is a program that allows you to make additional Purchase Payments to your Contract during the Accumulation Phase on a monthly or quarterly basis by electronic transfer of money from your savings, checking or brokerage account. You may participate in this program by completing the appropriate form. Our Service Center must receive your form by the first of the month in order for AIP to begin that same month. Investments will take place on the 20th of the month or the next Business Day if the 20th is not a Business Day. The minimum investment that you can make by AIP is $50. You may stop or change the AIP at any time you want. We must be notified by the first of the month in order to stop or change the AIP for that month. If the AIP is used for a Qualified Contract, you should consult your tax adviser for advice regarding maximum contributions. The AIP is not available if the Qualified Contract is funding a plan that is tax qualified under Section 401of the Internal Revenue Code. IF YOU SELECT THE TARGET DATE RETIREMENT BENEFIT, YOU CAN ONLY PARTICIPATE IN THE AIP DURING THE FIRST THREE CONTRACT YEARS AFTER YOU ADD THE BENEFIT TO YOUR CONTRACT. IN ADDITION, THE AIP WILL NO LONGER BE AVAILABLE TO YOU AFTER THE INCOME DATE ON WHICH YOU TAKE A FULL ANNUITIZATION OR AFTER THE BENEFIT DATE ON WHICH YOU BEGIN RECEIVING LIFETIME PLUS PAYMENTS UNDER THE LIFETIME PLUS BENEFIT. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 12 ALLOCATION OF PURCHASE PAYMENTS We do not currently accept allocation instructions from you via email, website, or other electronic communications. This service may be available to you in the future. When you purchase a Contract, we will allocate your initial Purchase Payment to the Investment Options you selected according to your instructions. We ask that you allocate your money in whole percentages. Transfers of Contract Value between Investment Options will not change the allocation instructions for any future additional Purchase Payments. You can instruct us how to allocate additional Purchase Payments you make. If you do not instruct us, we will allocate them according to your most recent allocation instructions. If you selected the Target Date Retirement Benefit, we will allocate any additional Purchase Payments according to your most recent allocation instructions if they comply with the current maximum allowable allocations; however, if they do not comply, we will instead allocate any additional Purchase Payments according to the current required allocation. (For more information, please see "Investment Option Allocation and Transfer Restrictions and Quarterly Rebalancing" in section 11.a, The Target Date Retirement Benefit; see also Appendix D.) In addition, if you selected the Lifetime Plus Benefit, your allocation instructions must always comply with the restrictions that are set out in section 11.b, The Lifetime Plus Benefit. You may provide us with new allocation instructions at any time without fee, penalty or other charge upon written notice or telephone instructions to our Service Center. The new allocation instructions will be effective for Purchase Payments received on or after the Business Day we receive your notice or instructions in good order at our Service Center. If you change your allocation instructions and you are participating in the automatic investment plan or the flexible rebalancing program, your allocation instructions must include directions for the plan/program. If you select the Bonus Option, we will allocate any applicable bonus in the same way as the corresponding Purchase Payment. We reserve the right to limit the number of Investment Options that you can invest in at any one time. Currently, you can invest in up to 15 of the Investment Options at any one time. We may change this in the future; however, we will always allow you to invest in at least five Investment Options. Once we receive your initial Purchase Payment and the necessary information, we will issue the Contract and allocate your initial Purchase Payment within two Business Days. If you do not give us all of the information we need, we will contact you or your registered representative to get it. If for some reason we are unable to complete this process within five Business Days, we will either send back your money or get your permission to keep it until we get all of the necessary information. If you make additional Purchase Payments, we will credit these amounts to the Contract within one Business Day. Our Business Day closes when regular trading on the New York Stock Exchange closes. If you submit a Purchase Payment and/or application to your registered representative, we will not begin processing the Purchase Payment until it is received at our Service Center. We consider a Purchase Payment to be "received" when it is received at our Service Center regardless of how or when you made the payment. If mandated under applicable law, we may be required to reject a Purchase Payment. We also may be required to provide information about you or your Contract to government regulators. In addition, we may be required to block an Owner's Contract and thereby refuse to pay any request for transfers, withdrawals (including Lifetime Plus Payments), surrenders, or death benefits until instructions are received from the appropriate regulator. TAX-FREE SECTION 1035 EXCHANGES Subject to certain restrictions, you can make a "tax-free" exchange under Section 1035 of the Internal Revenue Code for all or a portion of one annuity contract for another, or all or a portion of a life insurance policy for an annuity contract. Before making an exchange, you should compare both contracts carefully. Remember that if you exchange a life insurance policy or annuity contract for the Contract described in this prospectus: o you might have to pay a withdrawal charge on your previous contract, o there will be a new withdrawal charge period for this Contract, o other charges under this Contract may be higher (or lower), o the benefits may be different, and o you will no longer have access to any benefits from your previous contract. If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax, including a possible federal penalty tax, on the exchange. You should not exchange an existing life insurance policy or another -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 13 annuity contract for this Contract unless you determine that the exchange is in your best interest and not just better for the person trying to sell you the Contract (that person will generally earn a commission on each contract sale). IF YOU CONTEMPLATE SUCH AN EXCHANGE, YOU SHOULD CONSULT A TAX ADVISER TO DISCUSS THE POTENTIAL TAX EFFECTS OF SUCH A TRANSACTION. FAXED APPLICATIONS We will accept Contract applications delivered in writing, as well as via fax. It is important that you verify that we have received any faxed application you send. We are not liable for faxed transaction requests that were sent by you but not received by us. We will treat a manually signed faxed application as an application delivered in writing. Please note that fax communications may not always be available. Any fax system, whether it is ours, yours, your service provider's, or your registered representative's can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should submit your application in writing to our Service Center. We reserve the right to discontinue or modify the faxed application privilege at any time and for any reason. We do not currently accept applications delivered via email or our website. This may be available in the future. FREE LOOK/RIGHT TO EXAMINE If you change your mind about owning the Contract, you can cancel it within ten days after receiving it. When you cancel the Contract within this time period, we will not assess a withdrawal charge. You will receive your Contract Value (less any bonus) as of the day we receive your request. This may be more or less than your initial Purchase Payment. If you select the Bonus Option and cancel your Contract during the free look/right to examine period, you will forfeit your entire bonus. (See section 11.c, Other Optional Benefits - Bonus Option.) If you purchased this Contract as an IRA, we are required to refund your Purchase Payment (not including any bonus) less withdrawals if you decide to cancel your Contract within the free look period. In these instances, if you cancel your Contract you will receive the greater of Purchase Payments less withdrawals, or Contract Value. In cases where we are required to refund the Purchase Payment, we reserve the right to allocate your initial Purchase Payment (and any bonus if you select the Bonus Option) to the AZL Money Market Fund until the expiration of the free look period. At the end of that period, we will re-allocate your money as you selected. If we are required to refund the Purchase Payments and you cancel your Contract or we reject your application, you will receive the greater of Purchase Payments less withdrawals or Contract Value, regardless of how your Purchase Payments were allocated. The free look provision under the Contract is also called the right to examine. ACCUMULATION UNITS/COMPUTING THE CONTRACT VALUE The Contract Value in the subaccounts will go up or down based upon the investment performance of the Investment Option(s) you choose. Your Contract Value will also be affected by the charges of the Contract. In order to keep track of your Contract Value in the Separate Account, we use a measurement called an Accumulation Unit. If you request variable Annuity Payments during the Annuity Phase of the Contract, we call this measurement an Annuity Unit. When we receive a Purchase Payment, we credit your Contract with Accumulation Units for any portion of your Purchase Payment (and any bonus, if applicable) allocated to an Investment Option at the daily price next determined after receipt of the Purchase Payment at our Service Center. The daily purchase price is normally determined at the end of each Business Day, and any Purchase Payment received at or after the end of the current Business Day will receive the next Business Day's price. The Purchase Payments and bonus you allocate to the Investment Options are actually placed into subaccounts. Each subaccount invests exclusively in one Investment Option. We determine the number of Accumulation Units we credit to your Contract by dividing the amount of the Purchase Payment and bonus allocated to a subaccount by the value of the corresponding Accumulation Unit. Every Business Day, we determine the value of an Accumulation Unit for each subaccount by multiplying the Accumulation Unit value for the previous Business Day by the net investment factor for the current Business Day. We determine the net investment factor by: o dividing the net asset value of a subaccount at the end of the current Business Day by the net asset value of the subaccount for the previous Business Day, o adding any applicable dividends or capital gains, and o multiplying this result by one minus the amount of the M&E charge for the current Business Day and any charges for taxes. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 14 We calculate the value of each Accumulation Unit after regular trading on the New York Stock Exchange closes each Business Day. The value of an Accumulation Unit may go up or down from Business Day to Business Day. We calculate your Contract Value in the Separate Account by multiplying the Accumulation Unit value in each subaccount by the number of Accumulation Units for each subaccount and then adding those results together. (For example, the Contract Value on any Contract Anniversary will reflect the number and value of the Accumulation Units at the end of the previous Business Day.) EXAMPLE o On Wednesday, we receive at our Service Center an additional Purchase Payment of $3,000 from you before the end of the Business Day. o When the New York Stock Exchange closes on that Wednesday, we determine that the value of an Accumulation Unit based on the Investment Option you chose is $13.25. We then divide $3,000 by $13.25 and credit your Contract on Wednesday night with 226.41509 subaccount Accumulation Units for the Investment Option you chose. If the $3,000 payment had been received at or after the end of the current Business Day, it would have received the next Business Day's price. 3. THE ANNUITY PHASE You can apply your Contract Value to regular periodic income payments (Annuity Payments). A Full Annuitization occurs when you apply the entire Contract Value to Annuity Payments. A Partial Annuitization occurs when you apply only part of your Contract Value to Annuity Payments. The Payee will receive the Annuity Payments. You will receive tax reporting on those payments, however, whether or not you are the Payee. We may require proof of the Annuitant(s)'age before making any life contingent Annuity Payment. If the age or sex of the Annuitant(s) have been misstated, the amount payable will be the amount that would have been provided at the true age or sex. NOTE: YOU WILL BE REQUIRED TO TAKE A FULL ANNUITIZATION OF YOUR CONTRACT ON OR BEFORE THE MAXIMUM PERMITTED INCOME DATE. At our discretion, we may extend the maximum permitted Income Date subject to the requirements of applicable law. The maximum permitted Income Date may vary depending on the broker/dealer you purchase your Contract through and your state of residence. UPON FULL ANNUITIZATION YOU WILL NO LONGER HAVE A CONTRACT VALUE, OR ANY BENEFITS OR BENEFIT INCREASES BASED ON CONTRACT VALUE. IN ADDITION, THE DEATH BENEFIT WILL TERMINATE AND ANY PERIODIC WITHDRAWAL OR INCOME PAYMENTS OTHER THAN ANNUITY PAYMENTS WILL STOP. On the maximum permitted Income Date, if you were receiving Lifetime Plus Payments and you elect to apply the remaining Contract Value to fixed Annuity Payments under either Annuity Option 1 or Annuity Option 3, you will receive Annuity Payments equal to the greater of those fixed Annuity Payments or the current Lifetime Plus Payments. If you elect any other Annuity Option this guarantee will not apply. INCOME DATE The Income Date is the date Annuity Payments will begin. Your Income Date is specified in your Contract as the maximum permitted date allowed for your Contract, which is the first day of the calendar month following the Annuitant's 90th birthday. This limitation may not apply when the Contract is issued to a charitable remainder trust. You can make an authorized request for a different Income Date after the Issue Date, however, any such request is subject to our approval. Your Income Date must be the first day of a calendar month and must be at least 13 months after the Issue Date. The Income Date will never be later than what is permitted under applicable law. An earlier Income Date may be required to satisfy minimum required distribution rules under certain Qualified Contracts. PARTIAL ANNUITIZATION PARTIAL ANNUITIZATIONS ARE NOT AVAILABLE TO EVERYONE. THERE CAN BE ONLY ONE OWNER, THE OWNER MUST BE THE ANNUITANT, AND WE WILL NOT ALLOW THE OWNER TO ADD A JOINT ANNUITANT. You can take Partial Annuitizations after 13 months. However, if your Contract includes the Lifetime Plus Benefit, you cannot take a Partial Annuitization after you begin receiving Lifetime Plus Payments. Partial Annuitizations are also not available after you take a Full Annuitization. If you take a Full Annuitization, the Accumulation Phase of the Contract will end. You can take one Partial Annuitization every 12 months. THE MAXIMUM NUMBER OF ANNUITIZATIONS WE ALLOW AT ANY ONE TIME IS FIVE. We do not allow you to allocate additional Contract Value to an existing stream of Annuity Payments. You -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 15 also cannot transfer any amounts allocated to a stream of Annuity Payments to any other portion of the Contract. If you have four Partial Annuitizations and you would like to take a fifth, you must take a Full Annuitization and apply the entire remaining Contract Value to Annuity Payments, and the Accumulation Phase of the Contract will end. The amounts you apply to a Partial Annuitization and Annuity Payments we make under a Partial Annuitization are not subject to the withdrawal charge. A Partial Annuitization will decrease the Contract Value, the Withdrawal Charge Basis, and the death benefit. A Partial Annuitization will also decrease the Benefit Base for Contracts with the Lifetime Plus Benefit, and it will decrease the Target Value for Contracts with the Target Date Retirement Benefit. This will decrease the amounts available for withdrawals (including Lifetime Plus Payments), additional Annuity Payments, and payment of the death benefit. For more information, see section 11.a, The Target Date Retirement Benefit; 11.b, The Lifetime Plus Benefit; section 6, Expenses - Withdrawal Charge; and see the discussion of the death benefit that applies to your Contract in section 10, Death Benefit or section 11.c, Other Optional Benefits - Quarterly Value Death Benefit. FOR TAX PURPOSES, ANNUITY PAYMENTS WE MAKE UNDER A PARTIAL ANNUITIZATION WILL BE TREATED AS PARTIAL WITHDRAWALS AND NOT AS ANNUITY PAYMENTS. However, once the entire Contract Value has been applied to Annuity Payments, we intend to treat all Annuity Payments we make after that as annuity payments (and not withdrawals) for tax purposes. If you take a Partial Annuitization(s) and subsequently take a full withdrawal of the entire remaining Contract Value, all Annuity Payments we make on or after the Business Day you take the withdrawal, should be treated as annuity payments (and not withdrawals) for tax purposes. If the Annuity Payments we make are treated as withdrawals (and not annuity payments) for tax purposes, under Non-Qualified Contracts, any gains in the entire Contract will be considered to be distributed before Purchase Payments and will be subject to ordinary income tax. For Qualified Contracts, in most cases, the entire Annuity Payment we make under a Partial Annuitization will be subject to ordinary income taxes. If any Owner is younger than age 59 1/2, the taxable portion of the Annuity Payments we make under a Partial Annuitization may also be subject to a 10% federal penalty tax. Partial Annuitizations may also affect the tax treatment of any future Annuity Payments. We may also make deductions to reimburse ourselves for premium taxes that we pay from partially annuitized amounts. YOU SHOULD CONSULT A TAX ADVISER BEFORE REQUESTING A PARTIAL ANNUITIZATION. ANNUITY OPTIONS You can choose one of the income plans (Annuity Options) described below or any other payment option to which we agree. Before the Income Date, you can select and/or change the Annuity Option with at least 30 days written notice to us. After Annuity Payments begin, you cannot change the Annuity Option. Annuity Payments will usually be lower if you select an Annuity Option that requires us to make more frequent Annuity Payments or to make payments over a longer period of time. For example, the guaranteed initial monthly fixed payout rates under Annuity Option 4 with a guarantee period of 20 years or more are the lowest fixed rates we offer, and the guaranteed initial monthly fixed payout rates under Annuity Option 1 are the highest fixed rates we offer. Annuity Payments will also be lower if you request Annuity Payments at an early age (for example, when the Annuitant is age 50) as opposed to waiting until the Annuitant is older (for example, when the Annuitant is age 70). OPTION 1. LIFE ANNUITY. We will make Annuity Payments during the life of the Annuitant, and the last payment will be the one that is due before the Annuitant's death. If the Annuitant dies shortly after the Income Date, the Payee may receive less than your investment in the Contract. OPTION 2. LIFE ANNUITY WITH PAYMENTS OVER 5, 10, 15 OR 20 YEARS GUARANTEED. We will make Annuity Payments during the life of the Annuitant. If you take one single Full Annuitization and the Annuitant dies before the end of the selected guaranteed period, we will continue to make Annuity Payments to the Payee for the rest of the guaranteed period. Alternatively, the Owner may elect to receive a lump sum payment. Under a Partial Annuitization, if the Annuitant dies before the end of the selected guaranteed period, we will make a lump sum payment to the Beneficiary. The lump sum payment is equal to the present value of the remaining guaranteed variable Annuity Payments as of the date we receive proof of the Annuitant's death and a payment election form at our Service Center, using the selected assumed investment return as the interest rate for the present value calculation. This lump sum payment is not available under a fixed payout. We require proof of the Annuitant's death and return of the Contract before we will make any lump sum payment. There are no additional costs associated with a lump sum payment. Under a Partial Annuitization, this Annuity Option is only available for variable payouts; this Annuity option is not available for fixed Partial Annuitizations. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 16 OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. We will make Annuity Payments during the joint lifetime of the Annuitant and the joint Annuitant. Upon the death of one Annuitant, Annuity Payments to the Payee will continue during the lifetime of the surviving joint Annuitant, at a level of 100%, 75% or 50% of the previous amount, as selected by the Owner. Annuity Payments will stop with the last payment that is due before the last surviving joint Annuitant's death. If both Annuitants die shortly after the Income Date, the Payee may receive less than your investment in the Contract. This Annuity Option is not available to you under a Partial Annuitization. OPTION 4. JOINT AND LAST SURVIVOR ANNUITY WITH PAYMENTS OVER 5, 10, 15 OR 20 YEARS GUARANTEED. We will make Annuity Payments during the joint lifetime of the Annuitant and the joint Annuitant. Upon the death of one Annuitant, Annuity Payments will continue to the Payee during the lifetime of the surviving joint Annuitant at 100% of the amount that was paid when both Annuitants were alive. However, if both joint Annuitants die before the end of the selected guaranteed period, we will continue to make Annuity Payments to the Payee for the rest of the guaranteed period. Alternatively, the Owner may elect to receive a lump sum payment equal to the present value of the remaining guaranteed variable Annuity Payments as of the date we receive proof of the last surviving joint Annuitant's death and a payment election form at our Service Center, using the selected assumed investment return as the interest rate for the present value calculation. This lump sum payment is not available under a fixed payout. We require proof of death of both joint Annuitants and return of the Contract before we will make any lump sum payment. There are no additional costs associated with a lump sum payment. This Annuity Option is not available to you under a Partial Annuitization. OPTION 5. REFUND LIFE ANNUITY. We will make Annuity Payments during the lifetime of the Annuitant, and the last payment will be the one that is due before the Annuitant's death. After the Annuitant's death, the Payee may receive a lump sum refund. For a fixed payout, the amount of the refund will equal the amount applied to this Annuity Option minus the total of all Annuity Payments made under this option. For variable Annuity Payments, the amount of the refund will depend on the current Investment Option allocation and will be the sum of refund amounts attributable to each Investment Option. We calculate the refund amount for a given Investment Option using the following formula. (A) x {[(B) x (C) x (D)/(E)] - [(D) x (F)]} where: (A) = Annuity Unit value of the subaccount for that given Investment Option when due proof of the Annuitant's death is received at our Service Center. (B) = The amount applied to variable Annuity Payments on the Income Date. (C) = Allocation percentage in a given subaccount (in decimal form) when due proof of the Annuitant's death is received at our Service Center. (D) = The number of Annuity Units used in determining each variable Annuity Payment attributable to that given subaccount when due proof of the Annuitant's death is received at our Service Center. (E) = Dollar value of first variable Annuity Payment. (F) = Number of variable Annuity Payments made since the Income Date. We will base this calculation upon the allocation of Annuity Units actually in force at the time due proof of the Annuitant's death is received at our Service Center. We will not pay a refund if the total refund determined using the above calculation is less than or equal to zero. EXAMPLE o The Contract has one Owner who is a 65-year-old male. He selects variable Annuity Payments under Annuity Option 5 based on a Contract Value of $100,000 (item "B"). o The Owner/Annuitant allocates all the Contract Value to one Investment Option, so the allocation percentage in this subaccount is 100% (item "C"). o The purchase rate for the selected assumed investment rate is $6.15 per month per thousand dollars of Contract Value annuitized. Therefore, the first variable Annuity Payment is: $6.15 x ($100,000 / $1,000) = $615 (item "E"). o Assume the Annuity Unit value on the Income Date is $12, then the number of Annuity Units used in determining each Annuity Payment is: $615 / $12 = 51.25 (item "D"). o The Owner/Annuitant dies after receiving 62 Annuity Payments (item "F") and the Annuity Unit value for the subaccount on the date the Service Center receives due proof of death is $15 (item "A"). -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 17 WE CALCULATE THE REFUND AS FOLLOWS: (A) x {[(B) x (C) x (D)/(E)] - [(D) x (F)]} = 15 x {[100,000 x 1.00 x (51.25 / 615)] - [51.25 x 62]} = 15 x {[100,000 x 0.083333] - 3,177.50} = 15 x {8,333.33 - 3,177.50} = 15 x 5,155.83 = $77,337.50 ANNUITY PAYMENTS Annuity Payments offer a guaranteed income stream with certain tax advantages and are designed for Owners who are not concerned with continued access to Contract Value. You can request Annuity Payments under Annuity Options 1-5 as: o a variable payout, o a fixed payout, or o a combination of both. If you do not choose an Annuity Option before the Income Date, we will make variable Annuity Payments to the Payee under Annuity Option 2 with five years of guaranteed monthly payments. Under a fixed payout, all of the Annuity Payments will be the same dollar amount (equal installments) except as provided under Annuity Option 3. If you choose a variable payout, you can continue to invest in up to 15 of the available Investment Options. We may change this in the future, but we will always allow you to invest in at least five Investment Options. If you do not tell us otherwise, we will base variable Annuity Payments on the investment allocations that were in place on the Income Date. We will not allow you to apply amounts of less than $2,000 to an Annuity Option. If your Contract Value (less any deduction we make to reimburse ourselves for premium tax that we pay) is less than $2,000 on the Income Date, we will pay that amount to you. We may change the frequency of your Annuity Payments if the amount of the payment is less than $20. Guaranteed fixed Annuity Payments are based on an interest rate and mortality table specified in your Contract. The payout rates for fixed Annuity Payments provided by your Contract are guaranteed and in no event will we use lower fixed payout rates to calculate your fixed Annuity Payments. However, we may use higher fixed payout rates to calculate fixed Annuity Payments than the guaranteed rates provided by your Contract. If you choose to have any portion of the Annuity Payments based on the investment performance of the Investment Option(s), the dollar amount of the payments will depend upon the following factors. o The Contract Value (less any deduction we make to reimburse ourselves for premium tax that we pay) on the Income Date. o The age of the Annuitant and any joint Annuitant on the Income Date. o The sex of the Annuitant and any joint Annuitant, where permitted. o The Annuity Option you select. o The assumed investment rate (AIR) you select. o The mortality table specified in the Contract. o The future performance of the Investment Option(s) you select. You can choose an AIR of either 3% or 4.5%. Using a higher AIR results in a higher initial variable Annuity Payment, but later payments will increase more slowly when investment performance rises and decrease more rapidly when investment performance declines. If the actual performance of your Investment Options exceeds the AIR you selected, the variable Annuity Payments will increase. Similarly, if the actual performance is less than the AIR you selected, the variable Annuity Payments will decrease. EACH PORTION OF THE CONTRACT THAT YOU APPLY TO ANNUITY PAYMENTS WILL TERMINATE UPON THE EARLIEST OF THE FOLLOWING. o Under Annuity Options 1 and 3, the death of the last surviving Annuitant. o Under Annuity Options 2 and 4, the death of the last surviving Annuitant and expiration of the guaranteed period. If we make a lump sum payment of the remaining guaranteed Annuity Payments at the death of the last surviving Annuitant, this portion of the Contract will terminate upon payment of the lump sum. o Under Annuity Option 5, the death of the Annuitant and payment of any lump sum refund. o Contract termination. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 18 4. INVESTMENT OPTIONS The Contract offers the Investment Options listed in the following table. Each Investment Option has its own investment objective. In the future, we may add, eliminate or substitute Investment Options. Depending on market conditions, you can gain or lose value by investing in the Investment Options. YOU SHOULD READ THE INVESTMENT OPTIONS' PROSPECTUSES CAREFULLY. The Investment Options invest in different types of securities and follow varying investment strategies. There are potential risks associated with each of these types of securities and investment strategies. For example, an Investment Option's performance may be affected by risks specific to certain types of investments, such as foreign securities, derivative investments, non-investment grade debt securities, initial public offerings (IPOs) or companies with relatively small market capitalizations. IPOs and other investment techniques may have a magnified performance impact on an Investment Option with a small asset base. An Investment Option may not experience similar performance as its assets grow. The operation of the Investment Options and the various risks associated with the Investment Options are described in the Investment Options' prospectuses. TO OBTAIN A CURRENT PROSPECTUS FOR ANY OF THE INVESTMENT OPTIONS, CONTACT YOUR REGISTERED REPRESENTATIVE OR CALL US AT THE TOLL FREE TELEPHONE NUMBER LISTED AT THE BACK OF THIS PROSPECTUS. We will send copies of the Investment Options' prospectuses to you when we issue the Contract. Certain Investment Options issue two or more classes of shares and certain share classes may have Rule 12b-1 fees. The classes of shares currently offered by this Contract are listed in the table of annual operating expenses for each Investment Option that appears in Appendix A. For more information about share classes, see the Investment Options' prospectuses. Currently, the Investment Options are not publicly traded mutual funds. They are available only as investment options in variable annuity contracts or variable life insurance policies issued by life insurance companies or in some cases, through participation in certain qualified pension or retirement plans. The names, investment objectives and policies of certain Investment Options may be similar to the names, investment objectives and policies of other portfolios that the same investment advisers manage. Although the names, objectives and policies may be similar, the investment results of the Investment Options may be higher or lower than the results of such portfolios. The investment advisers cannot guarantee, and make no representation, that the investment results of similar funds will be comparable even though the Investment Options have the same names, investment advisers, objectives and policies. The AZL FusionPortfolios are offered by the Allianz Variable Insurance Products Fund of Funds Trust. Each of the AZL FusionPortfolios is a "fund of funds" and diversifies its assets by investing in the shares of several other affiliated mutual funds. The underlying funds may pay 12b-1 fees to the distributor of the Contracts, our affiliate, Allianz Life Financial Services, LLC, for distribution and/or administrative services. The underlying funds do not pay service fees or 12b-1 fees to the AZL FusionPortfolios, and the AZL FusionPortfolios do not pay service fees or 12b-1 fees. The underlying funds of the AZL FusionPortfolios or their advisers may pay service fees to us and our affiliates for providing customer service and other administrative services to Contract Owners. The amount of such service fees may vary depending on the underlying fund. We offer other variable annuity contracts that may invest in the same Investment Options. These contracts may have different charges and may offer different benefits more appropriate to your needs. For more information about these contracts, please contact our Service Center. The following advisers and subadvisers are affiliated with us: Allianz Investment Management LLC, Nicholas-Applegate Capital Management, Oppenheimer Capital LLC and Pacific Investment Management Company LLC. The following is a list of the Investment Options available under the Contract, the investment advisers and subadvisers for each Investment Option, the investment objectives for each Investment Option, and the primary investments of each Investment Option. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 19
INVESTMENT OPTIONS ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ---------------------- Name of Asset Objective(s) Primary Investments Investment Management Company and Investment Adviser/Subadviser Option Category (Normal market conditions) ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ AIM ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL AIM International Long-term At least 80% of its assets in a diversified Investment Management International Equity growth of portfolio of international equity LLC/Investco Aim Equity Fund capital securities whose issuers are considered by Capital Management, the fund's subadviser to have strong Inc. earnings momentum. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ BLACKROCK ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Money Cash Current income Invests in a broad range of short-term, Investment Management Market Fund Equivalent consistent with high quality U.S. dollar-denominated money LLC/BlackRock stability of market instruments, including government, Institutional principal U.S. and foreign bank, commercial and other Management Corporation obligations. During extended periods of low interest rates, and due in part to contract fees and expenses, the yield of the AZL Money Market Fund may also become extremely low and possibly negative. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by BlackRock BlackRock Specialty High total Invests in both equity and debt securities Advisors, Global investment of issuers located around the world to LLC/BlackRock Allocation V.I. return achieve a combination of capital growth and Investment Fund income. Management, LLC and BlackRock Asset Management U.K. Limited ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ CLEARBRIDGE ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL LMP Large Large Growth Long-term At least 80% of its net assets in equity Investment Management Cap Growth Fund growth of securities of U.S. companies with large LLC/ClearBridge capital market capitalizations, similar to Advisors, LLC companies in the Russell 1000(R) Growth Index. Also may invest in preferred stocks, warrants and convertible securities and up to 15% of its assets in securities of foreign issuers. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ COLUMBIA ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Columbia Specialty Capital At least 80% of its total net assets in Investment Management Technology Fund Appreciation common stocks of U.S and foreign technology LLC/Columbia companies that may benefit from Management Advisors, technological improvements, advancements or LLC developments. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ DAVIS ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Davis NY Large Value Long-term Invests the majority of assets in equity Investment Management Venture Fund growth of securities issued by large companies with LLC/Davis Selected capital market capitalizations of at least $10 Advisers, L.P. billion. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Davis Davis VA Specialty Long-term At least 80% of net assets in securities Advisors Financial growth of issued by companies principally engaged in Portfolio capital the financial services sector. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ DREYFUS ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Dreyfus Large Growth Long-term Primarily invests in common stocks of Investment Management Founders Equity growth of large, well-established and mature LLC/Founders Asset Growth Fund capital and companies. Normally invests at least 80% of Management LLC income its net assets in stocks that are included in a widely recognized index of stock market performance. May invest in non-dividend paying companies if they offer better prospects for capital appreciation. May invest up to 30% of its total assets in foreign securities. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Dreyfus Small Cap Seeks returns Normally invests at least 80% of its net Investment Management Premier Small that are assets in stocks of small U.S. companies LLC/The Dreyfus Cap Value Fund consistently with market capitalizations between $100 Corporation superior to the million and $3 billion at the time of Russell 2000(R) purchase. Value Index ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL S&P 500 Large Blend Match total Normally invests in all 500 stocks in the Index Fund return of the S&P 500(R) in proportion to their weighting S&P 500(R) in the index. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 20 ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Small Cap Small Cap Match Invests in a representative sample of Investment Management Stock Index Fund performance of stocks included in the S&P SmallCap 600 LLC/The Dreyfus the S&P Index(R), and in futures whose performance is Corporation SmallCap 600 related to the index, rather than attempt Index(R) to replicate the index. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ FIRST TRUST ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL First Trust Large Blend Total Return Invests primarily in common stocks of Investment Management Target Double companies that are identified by a model LLC/First Trust Play Fund based on an allocation of 50% in two Advisors L.P. separate strategies that seek to provide above-average total return. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ FRANKLIN TEMPLETON ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Franklin Small Cap Long-term total Under normal market conditions, invests at Investment Management Small Cap Value return least 80% of its net assets in investments LLC/Franklin Advisory Fund of small capitalization companies similar Services, LLC to those that comprise the Russell 2500(TM) Index at the time of investment. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Franklin Franklin Global Specialty Capital At least 80% of net assets in investments Advisers, Inc. Communications appreciation of communications companies anywhere in the Securities Fund and current world and normally invests primarily to income predominantly in equity securities. ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- Franklin High High-Yield High current Invests primarily to predominantly in debt Income Bonds income with securities offering high yield and expected Securities Fund capital total return. appreciation as a secondary goal ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- Franklin Income Specialty Maximize income Normally invests in debt and equity Securities Fund while securities, including corporate, foreign maintaining and U.S. Treasury bonds and stocks with prospects for dividend yields the manager believes are capital attractive. appreciation ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Administered by Franklin Specialty Capital Invests equal portions in Class 1 shares of Franklin Templeton Templeton VIP (Fund of appreciation the Franklin Income Securities Fund, Mutual Services, LLC Founding Funds Funds) with income as Shares Securities Fund, and Templeton Allocation Fund a secondary Growth Securities Fund. goal. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Franklin Franklin U.S. Short-Term Income At least 80% of its net assets in U.S. Advisers, Inc. Government Fund Bonds government securities and normally invests primarily in fixed and variable rate mortgage-backed securities. ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- Franklin Zero Intermediate-TeAs high an Normally invests at least 80% of its net Coupon Fund 2010 Bonds investment assets in zero coupon debt securities. The return as is fund will mature in December of 2010 and consistent with will then no longer be available as an capital Investment Option under the Contract. For preservation additional information regarding the maturity of the fund, please see the Franklin Zero Coupon Fund prospectus. ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Franklin Mutual International Capital Invests primarily in U.S. and foreign Mutual Advisers, LLC Discovery Equity appreciation equity securities that the manager believes Securities Fund are undervalued. The Fund also invests, to a lesser extent, in risk arbitrage securities and distressed companies. ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- Mutual Shares Large Value Capital Invests primarily in U.S. and foreign Securities Fund appreciation, equity securities that the manager believes with income as are undervalued. The fund also invests, to a secondary goal a lesser extent, in risk arbitrage securities and distressed companies. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Franklin Templeton Intermediate-TeHigh current Normally invests mainly in debt securities Advisers, Inc. Global Income Bonds income, of governments and their political Securities Fund consisent with subdivisions and agencies, supranational preservation of organizations and companies located capital, with anywhere in the world, including emerging capital markets. appreciation as a secondary consideration. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Templeton Templeton International Long-term Normally invests primarily in equity Global Advisors Growth Equity capital growth securities of companies located anywhere in Limited Securities Fund the world, including those in the U.S. and in emerging markets. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 21 ------------------------------------------------------------------------------------------------------------------------ FUSION PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Fusion A "Fund of Long-term Allocation among the underlying Investment Management Balanced Fund Funds" Model capital investments, to achieve a range generally LLC Portfolio appreciation from 45% to 55% of assets in equity funds with with the remaining balance invested in preservation of fixed income funds. capital as an important consideration ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Fusion A "Fund of Long-term Allocation among the underlying Growth Fund Funds" Model capital investments, to achieve a range generally Portfolio appreciation from 75% to 85% of assets in equity funds with the remaining balance invested in fixed income funds. ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Fusion A "Fund of Long-term Allocation among the underlying Moderate Fund Funds" Model capital investments, to achieve a range generally Portfolio appreciation from 60% to 70% of assets in equity funds with the remaining balance invested in fixed income funds. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ JENNISON ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Jennison Large Blend Long-term At least 80% of its total assets in Investment Management 20/20 Focus Fund growth of approximately 40 (which may range up to 45) LLC/Jennison capital equity and equity-related securities of Associates LLC companies that the subadviser believes have strong capital appreciation potential. ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Jennison Large Growth Long-term At least 65% of its total assets in equity Growth Fund growth of and equity-related securities of companies capital that exceed $1 billion in market capitalization at the time of investment and that the subadviser believes have above-average growth prospects. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ LEGG MASON ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Legg Mason Large Growth Maximum Invests primarily in common stocks or Investment Management Growth Fund long-term securities convertible into or exchangeable LLC/Legg Mason capital for common stock. May invest up to 25% of Capital Management, appreciation total assets in foreign securities. Inc. with minimum long-term risk to principal ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Legg Mason Large Blend Long-term Invests primarily in equity securities Value Fund growth of that, in the subadviser's opinion, offer capital the potential for capital growth. May invest up to 25% of total assets in long-term debt securities and up to 10% of total assets in debt securities rated below investment grade (junk bonds). ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ NEUBERGER BERMAN ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Neuberger Mid Cap Long-term Invests mainly in common stocks of mid-cap Investment Management Berman Regency growth of companies, with a total market LLC/Neuberger Berman Fund capital capitalization within the range of the Management Inc. Russell Midcap(R) Index. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ NICHOLAS-APPLEGATE ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL NACM International Maximum At least 80% of its net assets in Investment Management International Equity long-term securities of companies in developed LLC/Nicholas-Applegate Fund capital countries located outside the U.S., Capital Management, appreciation represented in the Morgan Stanley Capital LLC International Europe Australasia Far East ("MSCI EAFE") Index. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ OPPENHEIMER CAPITAL ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL OCC Small Cap Capital At least 65% of its assets in common stocks Investment Management Opportunity Fund appreciation of "growth" companies with market LLC/ Oppenheimer capitalizations of less than $2 billion at Capital LLC the time of investment. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL OCC Value Large Value Long-term At least 65% of its total assets in common Fund growth of stocks of companies with market capital and capitalizations of more than $5 billion at income the time of investment and prices below the subadviser's estimate of intrinsic value. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by OpCap OpCap Mid Cap Mid Cap Long-term Invests at least 80% of its net assets in Advisers LLC Portfolio capital equity securities of companies with market appreciation capitalizations between $500 million and $15 billion at the time of purchase that the adviser believes are undervalued in the marketplace. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 22 ------------------------------------------------------------------------------------------------------------------------ OPPENHEIMERFUNDS ------------------------------------------------------------------------------------------------------------------------ ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Oppenheimer International Capital Invests mainly in common stocks of mid and Investment Management Global Fund Equity appreciation large-cap companies in the U.S. and foreign LLC/ countries, including countries with OppenheimerFunds, Inc. developed and emerging markets. ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Oppenheimer International Long-term Common stocks of growth companies that are International Equity capital domiciled outside the U.S. or have their Growth Fund appreciation primary operations outside the U.S., including companies in emerging markets. ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Oppenheimer Large Blend High total Common stocks of U.S. companies of Main Street Fund return different capitalization ranges, currently focusing on large-capitalization issuers. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ PIMCO ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL PIMCO Specialty Exceed the Invests substantially all assets in Investment Management Fundamental total return of derivative instruments based on the LLC/Pacific IndexPLUS Total the FTSE Enhanced RAF(TM)1000, backed by a portfolio Investment Management Return Fund RAFI(TM)1000 Indexof short and intermediate term fixed income Company LLC instruments. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Pacific PIMCO VIT All Specialty Maximum real Invests in institutional class shares of Investment Management Asset Portfolio (Fund of return the underlying PIMCO Funds and does not Company LLC Funds) consistent with invest directly in stocks or bonds of other preservation of issuers. real capital and prudent investment management ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- PIMCO VIT Specialty Maximum real Invests in commodity linked derivative CommodityReal return instruments backed by a portfolio of ReturnTM consistent with inflation-indexed securities and other Strategy prudent fixed income securities. Portfolio investment management ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- PIMCO VIT Intermediate-TeMaximum total At least 80% of its assets in fixed income Emerging Bonds return, instruments of issuers that economically Markets Bond consistent with are tied to countries with emerging Portfolio preservation of securities markets. capital and prudent investment management ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- PIMCO VIT Intermediate-TeMaximum total At least 80% of its assets in fixed income Global Bond Bonds return, instruments of issuers in at least three Portfolio consistent with countries (one of which may be the U.S.), (Unhedged) preservation of which may be represented by futures capital and contracts. Invests primarily in securities prudent of issuers located in economically investment developed countries. management ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- PIMCO VIT High High-Yield Maximum total At least 80% of assets in a diversified Yield Portfolio Bonds return, portfolio of high-yield securities (junk consistent with bonds) rated below investment grade, but at preservation of least Caa by Moody's or equivalently rated capital and by S&P or Fitch. May invest up to 20% of prudent total asets in securities denominated in investment foreign currencies. management ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- PIMCO VIT Real Intermediate-TeMaximum real At least 80% of its net assets in Return Portfolio Bonds return, inflation-indexed bonds of varying consistent with maturities issued by the U.S. and non-U.S. preservation of governments, their agencies or real capital instrumentalities and corporations. and prudent investment management ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- PIMCO VIT Total Intermediate-TeMaximum total At least 65% of total assets in a Return Portfolio Bonds return, diversified portfolio of fixed income consistent with instruments of varying maturities. preservation of capital and prudent investment management ----------------------- ----------------- -------------- ----------------- --------------------------------------------- -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 23 ------------------------------------------------------------------------------------------------------------------------ SCHRODER ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Schroder Specialty Capital Invests at least 80% of its net assets in Investment Management Emerging appreciation equity securities of companies that the LLC/Schroder Markets Equity subadviser believes to be "emerging market" Investment Management Fund issuers. May invest remainder of assets in North America Inc. securities of issuers located anywhere in the world. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Schroder International Long-term At least 80% of net assets in equity International Equity capital securities of small capitalization Small Cap Fund appreciation companies located outside the U.S. (generally with market capitalizations of $3.5 billion or less at the time of investment) that it believes offer the potential for capital appreciation. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ TARGETPLUS PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------ ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL TargetPLUS Model Long-term capital Invests primarily in a diversified Investment Management Balanced Fund Portfolio appreciation with portfolio of equity and fixed income LLC/First Trust preservation of securities with 45% to 55% allocated to the Advisors L.P. and capital as an equity portfolio and the balance allocated Pacific Investment important to the fixed income portfolio. May invest a Management Company LLC consideration significant portion of its total assets in securities of non-U.S. companies. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL TargetPLUS Model Total return Invests at least 80% of net assets in Investment Management Equity Fund Portfolio common stocks of companies that are LLC/First Trust identified by a model based on an Advisors L.P. allocation of 20% of fund assets in each of five separate strategies that seek to provide above-average total return. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL TargetPLUS Model Long-term Invests primarily in a diversified Investment Management Growth Fund Portfolio capital portfolio of equity and fixed income LLC/First Trust appreciation securities with 75% to 85% allocated to the Advisors L.P. and equity portfolio and the balance allocated Pacific Investment to the fixed income portfolio. May invest a Management Company LLC significant portion of its total assets in securities of non-U.S. companies. ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL TargetPLUS Model Long-term Invests primarily in a diversified Moderate Fund Portfolio capital portfolio of equity and fixed income appreciation securities with 60% to 70% allocated to the equity portfolio and the balance allocated to the fixed income portfolio. May invest a significant portion of its total assets in securities of non-U.S. companies. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ TURNER ------------------------------------------------------------------------------------------------------------------------ ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Turner Small Cap Long-term At least 80% of its net assets in common Investment Management Quantitative growth of stocks and other equity securities of U.S. LLC/Turner Investment Small Cap capital companies with small market Partners, Inc. Growth Fund capitalizations that the subadviser believes, based on a quantitative model, have strong earnings growth potential. Small capitalization companies are defined as companies with market capitalizations, at the time of purchase, in the range of companies included in the Russell 2000(R) Growth Index. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN ------------------------------------------------------------------------------------------------------------------------ ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Van Kampen Large Value Capital growth Invests at least 80% of net assets in Investment Management Comstock Fund and income common stocks with the potential for LLC/Van Kampen Asset capital growth and income. May invest up Management to 25% of total assets in foreign securities. ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Van Kampen Specialty Highest Invests at least 65% of its total assets in Equity and possible income income-producing equity securities and also Income Fund consistent with invests in investment grade quality debt safety of securities. May invest up to 25% ot total principal with assets in foreign securities. long-term growth of capital as an important secondary objective ----------------------- ----------------- -------------- ----------------- --------------------------------------------- -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 24 ----------------------- ----------------- -------------- ----------------- --------------------------------------------- Managed by Allianz AZL Van Kampen International Long term Invests primarily in a portfolio of equity Investment Management Global Equity capital securities of issuers located throughout LLC/Van Kampen Asset Franchise Fund appreciation the world that it believes have, among Management other things, resilient business franchises and growth potential. Normally invests at least 65% of total assets in securities of issuers from at least three different countries, which may include the U.S. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Van Kampen Specialty Income and Invests at least 80% of assets in equity Global Real capital securities of companies in the real estate Estate Fund appreciation industry located throughout the world, including real estate investment trusts and real estate operating companies established outside the U.S. ----------------------- ----------------- -------------- ----------------- --------------------------------------------- ----------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Van Kampen Large Value Income and Invests at least 65% of total assets in Growth and long-term income-producing equity securities, Income Fund growth of including common stocks and convertible capital securities; also in non-convertible preferred stocks and debt securities rated "investment grade." May invest up to 25% of total assets in foreign securities. ----------------- -------------- ----------------- --------------------------------------------- ----------------- -------------- ----------------- --------------------------------------------- AZL Van Kampen Mid Cap Capital growth At least 80% of net assets in common stocks Mid Cap Growth and other equity securities of mid Fund capitalization growth companies. ----------------------- ----------------- -------------- ----------------- ---------------------------------------------
Shares of the Investment Options may be offered in connection with certain variable annuity contracts and variable life insurance policies of various insurance companies that may or may not be affiliated with us. Certain Investment Options may also be sold directly to pension and retirement plans that qualify under Section 401 of the Internal Revenue Code. As a result, a material conflict of interest may arise between insurance companies, owners of different types of contracts and retirement plans or their participants. Each Investment Option's Board of Directors will monitor for the existence of any material conflicts, and determine what action, if any, should be taken. We may enter into certain arrangements under which we, or our affiliate Allianz Life Financial Services, LLC, the principal underwriter for the Contracts, are compensated by the Investment Options' advisers, distributors and/or affiliates for the administrative services and benefits that we provide to the Investment Options. The amount of the compensation usually is based on the aggregate assets of the Investment Options or other investment portfolios that are attributable to contracts that we issue or administer. Some advisers may pay us more or less than others. The maximum fee that we currently receive is at the annual rate of 0.25% of the average aggregate amount invested by us in the Investment Options. In addition, our affiliate Allianz Life Financial Services, LLC, may receive Rule 12b-1 fees deducted from certain Investment Option assets attributable to the Contract for providing distribution and support services to some Investment Options. Because 12b-1 fees are paid out of an Investment Option's assets on an ongoing basis, over time they will increase the cost of an investment in the Investment Option. SUBSTITUTION AND LIMITATION ON FURTHER INVESTMENTS We may substitute another Investment Option for one of the Investment Options you selected for any reason in our sole discretion. Substitutions may be made with respect to existing investments, the investment of future Purchase Payments, or both. New or substitute Investment Options may have different fees and expenses, and their availability may be limited to certain classes of purchasers. We may limit further investment in, or transfers to, an Investment Option if marketing, tax or investment considerations warrant, or for any reason in our sole discretion. We also may close Investment Options to allocations of Purchase Payments and/or Contract Value, at any time and at our sole discretion. The fund companies that sell shares of the Investment Options to us, pursuant to participation agreements, may terminate those agreements and discontinue offering their shares to us. To the extent required by the Investment Company Act of 1940 or other applicable law, we will not substitute any shares without notice to you and prior approval of the SEC. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 25 TRANSFERS CONTRACTS WITH THE TARGET DATE RETIREMENT BENEFIT OR LIFETIME PLUS BENEFIT WILL BE SUBJECT TO RESTRICTIONS ON TRANSFERS INTO CERTAIN INVESTMENT OPTIONS. For more information, please see section 11.a, The Target Date Retirement Benefit and section 11.b, The Lifetime Plus Benefit. Also see Appendix D. You can make transfers among the Investment Options, subject to certain restrictions. Transfers may be subject to a transfer fee. For more information, see section 6, Expenses - Transfer Fee. We currently allow you to make as many transfers each Contract Year as you wish. We may change this practice in the future. This product is not designed for professional market timing organizations, other entities or persons using programmed, large, or frequent transfers, and excessive or inappropriate transfer activity may be restricted. The following applies to any transfer. o The minimum amount that you can transfer is $1,000 or the entire amount in the Investment Option, if less. We waive this requirement if the transfer is made under the flexible rebalancing program or the allocation and transfer restrictions for the Target Date Retirement Benefit or Lifetime Plus Benefit. o We may choose not to allow you to make transfers during the free look/right to examine period. o Your request for a transfer must clearly state: - which Investment Options are involved in the transfer; and - how much you wish to transfer. o After the Income Date, you cannot make a transfer from a fixed Annuity Payment stream to a variable Annuity Payment stream. o After the Income Date, you can make a transfer from a variable Annuity Payment stream to establish a new fixed Annuity Payment stream. o Your right to make transfers is subject to modification if we determine, in our sole discretion, that exercise of the right by one or more Owners is, or may be, to the disadvantage of other Owners. For more information, see the "Excessive Trading and Market Timing" discussion in this section. o Transfer instructions apply equally to the accumulation and annuitization portions of the Contract. You cannot make transfers selectively within different portions of the Contract. o Transfers of Contract Value between Investment Options will not change the allocation instructions for any future Purchase Payments. In addition, transfers of Contract Value between Investment Options will not change how we rebalance your Contract Value on each Quarterly Anniversary if you selected either the Target Date Retirement Benefit or Lifetime Plus Benefit. Under these optional benefits, in order to change the quarterly rebalancing of your Contract Value when you make a transfer, you must also change your allocation instructions. (For more information, please see "Investment Option Allocation and Transfer Restrictions and Quarterly Rebalancing" in section 11.a, The Target Date Retirement Benefit and section 11.b, The Lifetime Plus Benefit. Also, please see Appendix D.) When you make a transfer request, we will process the request based on the Accumulation Unit values and/or Annuity Unit values next determined after receipt of the request in good order at our Service Center. The Accumulation Unit values and Annuity Unit values are normally determined at the end of each Business Day and any transfer request received at or after the end of the current Business Day will receive the next Business Day's Accumulation Unit values and/or Annuity Unit values. The Investment Options may, in the future, add policies or change existing policies designed to restrict market timing activities. For example, Investment Options may impose restrictions on transfers between Investment Options in an affiliated group of Investment Options if the investment adviser to one or more of the Investment Options determines that the Owner or his or her designee requesting the transfer has engaged, or is engaging in, market timing or other abusive trading activities. In addition, an Investment Option may impose a short-term trading fee on purchases and sales within a specified period. You should review the Investment Options' prospectuses regarding any applicable transfer restrictions and the imposition of any fee to discourage short-term trading. The imposition of these restrictions would occur as a result of Investment Option restrictions and actions taken by the managers of the Investment Options. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 26 TELEPHONE AND OTHER ELECTRONIC TRANSFERS You can request transfers by telephone, fax, or by website at www.allianzlife.com. We may allow you to authorize someone else to request transfers by telephone, fax, or website on your behalf. We will accept instructions from either you or a Joint Owner unless we are instructed otherwise. We will use reasonable procedures to confirm that instructions given to us by telephone or by website are genuine. If we do not use such procedures, we may be liable for any losses due to unauthorized or fraudulent instructions. We record all telephone instructions and log all website instructions. We reserve the right to deny any transfer request submitted by telephone, website, or by fax, and to discontinue or modify the telephone, fax and/or website transfer privileges at any time and for any reason. We do not currently accept transfer instructions from you via email or via electronic communications other than by telephone, fax, or by website. This service may be available to you in the future. When you make a transfer request by telephone, fax, or by website, we will process the request based on the Accumulation Unit values next determined after receipt of the request at our Service Center. If you or your authorized representative have not given instructions to a Service Center representative before the end of the Business Day, even if due to our delay in answering your call or a delay caused by our telephone, fax and/or computer system, we will consider the request to be received at or after the end of the current Business Day and the request will receive the next Business Day's Accumulation Unit values. Please note that telephone, fax and/or the website may not always be available. Any telephone, fax and/or computer system, whether it is ours, yours, your service provider's, or your registered representative's, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your transfer by writing to our Service Center. By authorizing transfers by telephone or website, you authorize us to accept and act upon such instructions for transfers involving your Contract. There are risks associated with telephone and website transactions that do not occur if a written request is submitted. Anyone authorizing or making such requests bears those risks. You should protect your website password, because the website is available to anyone who provides your password; we will not be able to verify that the person providing electronic transfer instructions via the website is you or is authorized by you. EXCESSIVE TRADING AND MARKET TIMING We may restrict or modify your right to make transfers to prevent any use that we consider to be part of a market timing program. Frequent transfers, programmed transfers, transfers into and then out of an Investment Option in a short period of time, and transfers of large amounts at one time (collectively referred to as "potentially disruptive trading") may have harmful effects for other Owners, Annuitants and Beneficiaries. These risks and harmful effects include the following. o Dilution of the interests of long-term investors in an Investment Option, if market timers or others transfer into the Investment Option at prices that are below their true value or transfer out of the Investment Option at prices that are higher than their true value. o An adverse effect on portfolio management, such as causing the Investment Option to maintain a higher level of cash than would otherwise be the case, or causing the Investment Option to liquidate investments prematurely. o Increased brokerage and administrative expenses. In order to attempt to protect our Owners and the Investment Options from potentially disruptive trading, we have adopted certain excessive trading and market timing policies and procedures. Under our excessive trading and market timing policy, we could modify your transfer privileges for some or all of the Investment Options. Unless prohibited by the terms of the Contract or applicable state law, the modifications we may apply include (but are not limited to) the following. o Limiting the frequency of transfers (for example, prohibit more than one transfer a week, or more than two a month, etc.). o Restricting the method of making a transfer (for example, requiring that all transfers be sent by first class U.S. mail and rescinding the telephone, fax or website transfer privileges). -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 27 o Requiring a minimum time period between each transfer into or out of a particular Investment Option. Our current policy, which is subject to change without notice, prohibits "round trips" with Investment Options, other than the AZL Money Market Fund and the AZL FusionPortfolios, within 14 calendar days. Round trips are transfers into and back out of a particular Investment Option, or transfers out of and back into a particular Investment Option. o Not accepting transfer requests made on your behalf by an asset allocation and/or market timing service. o Limiting the dollar amount of any Purchase Payment or transfer request allocated to any Investment Option at any one time. o Imposing redemption fees on short-term trading (or implementing and administering redemption fees imposed by one or more of the Investment Options). o Prohibiting transfers into specific Investment Options. o Imposing other limitations or restrictions. We also reserve the right to reject any specific Purchase Payment allocation or transfer request from any person if in the investment adviser's, subadviser's or our judgment, an Investment Option may be unable to invest effectively in accordance with its investment objectives and policies. Currently, we attempt to DETER disruptive trading as follows. If a transfer(s) is/are identified as potentially disruptive trading, we may (but are not required to) send a warning letter. If the conduct continues and we determine that it constitutes disruptive trading, we will also impose transfer restrictions. Transfer restrictions may include refusing to take orders by fax, telephone or website and requiring the submission of all transfer requests via first-class U.S. mail. We do not enter into agreements permitting market timing and would not permit activities determined to be disruptive trading to continue. We also reserve the right to impose transfer restrictions on a Contract if we determine, in our sole discretion, that the transfers are disadvantageous to other Owners. We will notify the Owner in writing if we impose transfer restrictions on the Owner. We do not include automatic transfers made under any programs we provide, or automatic transfers made under any of the Contract features, when applying our market timing policy. We have adopted these policies and procedures as a preventative measure to protect all Owners from the potential effects of disruptive trading, while also abiding by the Owners' legitimate interest in diversifying their investment and making periodic asset re-allocations based upon their personal situations or overall market conditions. We attempt to protect the Owners' interests in making legitimate transfers by providing reasonable and convenient methods of making transfers that do not harm other Owners. We may make exceptions when imposing transfer restrictions if we determine a transfer is appropriate, although it may technically violate our policies and procedures that are discussed above. In determining whether a transfer is appropriate, we may, but are not required to, take into consideration the relative size of a transaction, whether the transaction was purely a defensive transfer into the AZL Money Market Fund, and whether the transaction involved an error or similar event. We may also reinstate telephone, fax or website transfer privileges after we have revoked them, but we will not reinstate these privileges if we have reason to believe that they might be used for disruptive trading purposes in the future. We cannot guarantee the following. o Our monitoring will be 100% successful in detecting all potentially disruptive trading activity. o Revoking telephone, fax or website transfer privileges will successfully deter all potentially disruptive trading. In addition, certain of the Investment Options are available to insurance companies other than us and we do not know whether those other insurance companies have adopted policies and procedures to detect and deter potentially disruptive trading, or what their policies and procedures might be. As a result of the fact that we may not be completely successful at detecting and preventing market timing activities, and other insurance companies that offer the Investment Options may not have adopted adequate market timing procedures, there is some risk that market timing activity may occur and negatively affect other Owners. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 28 We may, without prior notice to any party, take whatever action we deem appropriate to comply with or take advantage of any state or federal regulatory requirement. In addition, orders for the purchase of an Investment Option's shares are subject to acceptance by that Investment Option. We reserve the right to reject, without prior notice, any transfer request into an Investment Option or allocation of a Purchase Payment to an Investment Option if the order to purchase the Investment Option's shares is not accepted for any reason. We have entered into agreements required under SEC Rule 22c-2 (Rule 22c-2 agreements) whereby, upon request by an underlying fund or its designee, we are required to provide the underlying fund with information about you and your trading activities into or out of one or more Investment Options. This information will be provided to the underlying fund or its designee. Under the terms of the Rule 22c-2 agreements, we are required to: (1) provide details concerning every purchase, redemption, transfer, or exchange of Investment Options during a specified period; and (2) restrict your trading activity if the party receiving the information so requests. Under certain Rule 22c-2 agreements, if we fail to comply with a request to restrict trading activity, the underlying fund or its designee may refuse to accept transfers from us until we comply. We retain some discretion in determining what actions constitute potentially disruptive trading and in determining when and how to impose trading restrictions. Therefore, persons engaging in potentially disruptive trading may be subjected to some uncertainty as to when and in what form trading restrictions may be applied, and persons not engaging in potentially disruptive trading may not know precisely what actions will be taken against a person engaging in potentially disruptive trading. For example, if we determine a person is engaging in potentially disruptive trading, we may revoke that person's telephone, fax or website transfer privileges and require all future requests to be sent by first class U.S. mail. In the alternative, if the disruptive trading affects only a single Investment Option, we may prohibit transfers into or allocations of Purchase Payments to that Investment Option. We will notify the person or entity making the potentially disruptive trade when we revoke any transfer privileges. The retention of some level of discretion by us may result in disparate treatment among persons engaging in potentially disruptive trading, and it is possible that some persons could experience adverse consequences if other persons are able to engage in practices that may constitute disruptive trading, and that result in negative effects. FLEXIBLE REBALANCING THE FLEXIBLE REBALANCING PROGRAM IS NOT AVAILABLE TO YOU IF YOU SELECT THE TARGET DATE RETIREMENT BENEFIT OR LIFETIME PLUS BENEFIT. THESE BENEFITS PROVIDE THEIR OWN REBALANCING PROGRAM; SEE SECTION 11.A, THE TARGET DATE RETIREMENT BENEFIT, SECTION 11.B, THE LIFETIME PLUS BENEFIT AND APPENDIX D. If you were participating in the flexible rebalancing program and subsequently add either of these optional benefits to your Contract after the Issue Date, your participation in the flexible rebalancing program will end on the rider effective date. However, if you select either of these optional benefits and subsequently remove it from your Contract, you will be able to participate in the flexible rebalancing program after the rider termination date. You can choose to have us rebalance your account. Once your money has been invested, the performance of the Investment Options may cause your chosen allocation to shift. Flexible rebalancing is designed to help you maintain your specified allocation mix among the different Investment Options. You can direct us to automatically readjust your balance in the Investment Options on a quarterly, semi-annual or annual basis to return to your selected Investment Option allocations. Flexible rebalancing transfers will be made on the 20th day of the month or the previous Business Day if the 20th is not a Business Day. If you participate in the flexible rebalancing program, there are no fees for the transfers made under this program, we do not currently count these transfers against any free transfers that we allow, and you will not be charged additional fees for participating in or terminating from this program. We reserve the right to discontinue or modify the flexible rebalancing program at any time and for any reason. To participate in this program your request must be received in good order at our Service Center by the eighth of the month so that we may rebalance your account on the 20th of the month. To terminate your participation in this program, your request must also be received at our Service Center by the eighth of the month to terminate that month. FINANCIAL ADVISERS - ASSET ALLOCATION PROGRAMS If you have or establish a relationship with a personal financial adviser and the advisory agreement provides that you will pay all or a portion of your adviser's fees out of the Contract, we will, pursuant to written instructions from you in a form acceptable to us, make a partial withdrawal of the Contract Value to pay for the services of the financial adviser. We will treat any fee that is withdrawn as a withdrawal under the terms of this Contract. If the Contract is Non-Qualified, the withdrawal will be treated like any other distribution; it may be included in your gross income for federal tax purposes and, if any Owner is under age 59 1/2, it may be subject to a 10% federal penalty tax. If the Contract is Qualified, the -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 29 withdrawal for the payment of fees may not be treated as a taxable distribution if certain conditions are met. You should consult a tax adviser regarding the tax treatment of the payment of financial adviser fees from your Contract. We do not set the amount of the fees charged or receive any portion of the fees from your adviser. Any fee that is charged by your adviser is in addition to the fees and expenses that apply under your Contract. We are not party to the agreement you have with your adviser. You should ask your adviser for any details about the compensation he or she receives in connection with your Contract. Please note that the adviser you engage to provide advice and/or to make transfers for you is not acting on our behalf, but is acting on your behalf. We do not review or approve the actions of any adviser, and do not assume any responsibility for these actions. However, we do reserve the right to request and review prior transaction history of any adviser prior to granting your request to allow the adviser to act on your behalf. If, in our sole discretion, we believe the adviser's trading history indicates a pattern of excessive trading, we reserve the right to deny that adviser trading authority. If an adviser is granted trading authority, that adviser is subject to the same limitations applicable to contract owners as stated above. VOTING PRIVILEGES We are the legal owner of the Investment Option shares. However, when an Investment Option solicits proxies in conjunction with a shareholder vote that affects your investment, we will obtain from you and other affected Owners instructions as to how to vote those shares. When we receive those instructions, we will vote all of the shares we own including any shares that we own on our own behalf, in proportion to those instructions. Because of this proportional voting and because many Owners do not respond to our request for them to provide us with voting instructions, a small number of Owners may determine the outcome of the vote. Should we determine that we are no longer required to obtain your voting instructions, we will vote the shares in our own right. Only Owners have voting privileges under the Contract. Annuitants, Beneficiaries, Payees and other persons have no voting privileges unless they are also Owners. We determine your voting interest in an Investment Option as follows. o You are permitted to cast votes based on the dollar value of the Investment Option's shares that we hold for your Contract in the corresponding subaccount. We calculate this value based on the number of Accumulation/Annuity Units allocated to your Contract on the record date and the value of each unit on that date. We count fractional votes. o We will determine the number of shares that you can vote. o You will receive any proxy materials and a form to give us voting instructions as well as periodic reports relating to the Investment Options in which you have an interest. 5. OUR GENERAL ACCOUNT Our general account consists of all of our assets other than those in our separate accounts. We have complete ownership of all assets in our general account and we use these assets to support our insurance and annuity obligations other than those funded by our separate accounts. These assets are subject to our general liabilities from business operations. Subject to applicable law, we have sole discretion over the investment of the assets of our general account. We have not registered our general account as an investment company under the Investment Company Act of 1940, nor have we registered interests in our general account under the Securities Act of 1933. As a result, the SEC has not reviewed the disclosures in this prospectus relating to our general account. We do not currently offer any investment choices under our general account during the Accumulation Phase. Any amounts that you allocate to provide fixed Annuity Payments during the Annuity Phase become part of our general account. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 30 6. EXPENSES There are charges and other expenses associated with the Contract that will reduce your investment return. These charges and expenses are described in detail in this section. MORTALITY AND EXPENSE RISK (M&E) CHARGES Each Business Day during the Accumulation and Annuity Phases, we make a deduction from your Separate Account assets for the mortality and expense risk (M&E) charges. We do this as part of our calculation of the value of the Accumulation and Annuity Units. We calculate the M&E charges as a percentage of the average daily assets invested in a subaccount on an annual basis. The Quarterly Value Death Benefit is available at issue with all other optional benefits. However, you can select ONLY ONE of the three following optional benefits at issue: Bonus Option, Short Withdrawal Charge Option, or No Withdrawal Charge Option. Once you have selected one of these three optional benefits it cannot be removed from your Contract. You can also select ONLY ONE of the following optional benefits either at issue or on a Contract Anniversary: Target Date Retirement Benefit or Lifetime Plus Benefit. However, if you selected the No Withdrawal Charge Option you MUST also select ONE of these optional benefits at issue. The Target Date Retirement Benefit is available once before the older Owner's 81st birthday for Contracts issued on or after May 1, 2008. The Lifetime Plus Benefit is available once. For single Lifetime Plus Payments, the Covered Person must be at least age 55. For joint Lifetime Plus Payments, the younger Covered Person must be at least age 60. No Covered Person can be over age 80 at the time you select the Lifetime Plus Benefit. You can also remove either of these optional benefits subject to certain restrictions. If you remove either of these optional benefits, you may be able to make a ONE TIME REPLACEMENT as follows: o replace the Target Date Retirement Benefit with the Lifetime Plus Benefit; or o replace the Lifetime Plus Benefit with the Target Date Retirement Benefit. Replacements are only available to Contracts issued on or after May 1, 2008 and are subject to the age restrictions associated with the selection of the optional benefits. In addition, the Lifetime Plus Benefit cannot be replaced after Lifetime Plus Payments have begun. For more information on selection of the optional benefits, please see section 11, Selection of Optional Benefits. Each of the optional benefits carries an additional M&E charge. The amount of the current M&E charges during the Accumulation Phase is as follows. CURRENT M&E CHARGE BASE CONTRACT 1.40% ADDITIONAL M&E CHARGE FOR OPTIONAL BENEFITS* QUARTERLY VALUE DEATH BENEFIT 0.30% BONUS OPTION 0.50% SHORT WITHDRAWAL CHARGE OPTION 0.25% NO WITHDRAWAL CHARGE OPTION (requires selection of either the Target Date Retirement Benefit or Lifetime Plus Benefit) 0.35% TARGET DATE RETIREMENT BENEFIT 0.40% LIFETIME PLUS BENEFIT:** SINGLE LIFETIME PLUS PAYMENTS 0.70% JOINT LIFETIME PLUS PAYMENTS 0.85% * Some or all of the optional benefits may not be available to you; check with your registered representative. ** You select either single or joint Lifetime Plus Payments at the time you select the benefit. However, you can later change joint Lifetime Plus Payments to single Lifetime Plus Payments by removing a Covered Person. You can make this change only once. If we approve your request, we will change the M&E charge for this option to equal the M&E charge for single Lifetime Plus Payments that is in effect for a newly issued Contract as of the Contract Anniversary (or Benefit Anniversary, as applicable) after your request is received in good order at our Service Center, only if that amount differs from the current additional M&E charge on your Contract. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 31 During the Annuity Phase, if you request variable Annuity Payments, the M&E charge on an annual basis is equal to: 1.90% for Contracts with the Bonus Option, and 1.40% for Contracts without the Bonus Option. Because the Contract allows Partial Annuitization, it is possible for different portions of the Contract to be in both the Accumulation and Annuity Phases at the same time. It is also possible to have different M&E charges on different portions of the Contract at the same time if you take a variable Partial Annuitization. These charges compensate us for all the insurance benefits provided by your Contract, for example: o our contractual obligation to make Annuity Payments, o the death, income, and withdrawal benefits under the Contract, o certain expenses related to the Contract, and o for assuming the risk (expense risk) that the current charges will be insufficient in the future to cover the cost of administering the Contract. If the M&E charges are sufficient to cover such costs and risks, any excess will be profit to us. We anticipate making such a profit, and using it to cover distribution expenses as well as the cost of providing certain features under the Contract. CONTRACT MAINTENANCE CHARGE We deduct $30 from the Contract annually as a contract maintenance charge during the Accumulation Phase. The charge is for the expenses associated with the administration and maintenance of the Contract. We deduct this charge on the last day of each Contract Year and we deduct it proportionately from the Investment Options as set out in your Contract. This charge cannot be increased. We will not deduct this charge if the Contract Value is at least $100,000 at the time we are to deduct the charge. If you own more than one Contract offered under this prospectus, we will determine the total value of all your Contracts. If the total Contract Value of all Contracts registered under the same social security number is at least $100,000, we will not assess the contract maintenance charge. If you take a full withdrawal from your Contract (other than on a Contract Anniversary), we will deduct the full contract maintenance charge. We do not assess this charge against amounts paid out as death benefits or during the Annuity Phase. If the Contract is owned by a non-individual (for example, a qualified plan or trust), we will look to the Annuitant to determine if we will assess the charge. WITHDRAWAL CHARGE The Base Contract provides a seven-year withdrawal charge schedule. If you select the Bonus Option or Short Withdrawal Charge Option you will have a different withdrawal charge schedule. However, if you select the No Withdrawal Charge Option, you will not be subject to a withdrawal charge. THE BONUS OPTION, THE SHORT WITHDRAWAL CHARGE OPTION AND THE NO WITHDRAWAL CHARGE OPTION EACH CARRY AN ADDITIONAL M&E CHARGE. ONCE YOU SELECT ONE OF THESE OPTIONAL BENEFITS, YOU CANNOT CANCEL IT. CHECK WITH YOUR REGISTERED REPRESENTATIVE REGARDING AVAILABILITY OF THE OPTIONAL BENEFITS AND BE SURE TO DISCUSS WHETHER THE BENEFIT IS APPROPRIATE FOR YOUR SITUATION. You can take withdrawals from any portion of the Contract that is in the Accumulation Phase. A withdrawal charge applies if all or part of the amount withdrawn is from Purchase Payments we received within the withdrawal charge period. The withdrawal charge compensates us for expenses associated with selling the Contract. We do not assess the withdrawal charge for amounts paid out as Annuity Payments, as death benefits, under the waiver of withdrawal charge benefit, or as part of a required minimum distribution payment under our minimum distribution program. We also do not assess the withdrawal charge on Lifetime Plus Payments. (For more information, see section 11.b, The Lifetime Plus Benefit; and the discussions in section 8, Access to Your Money - Waiver of Withdrawal Charge Benefit and The Minimum Distribution Program and Required Minimum Distribution (RMD) Payments.) -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 32 The total amount under your Contract that is subject to a withdrawal charge is the Withdrawal Charge Basis. The Withdrawal Charge Basis is equal to the total Purchase Payments, less any withdrawals from the Contract (including any withdrawal charges). Amounts applied to Partial Annuitizations will reduce each Purchase Payment proportionately by the percentage of Contract Value you annuitize. We do not adjust the Withdrawal Charge Basis for any gains or losses on your Investment Options. THIS MEANS THAT ON A FULL WITHDRAWAL, IF THE CONTRACT VALUE HAS DECLINED DUE TO POOR PERFORMANCE OF YOUR SELECTED INVESTMENT OPTIONS, THE WITHDRAWAL CHARGE MAY BE GREATER THAN THE AMOUNT AVAILABLE FOR WITHDRAWAL. BECAUSE WE ASSESS THE WITHDRAWAL CHARGE AGAINST THE WITHDRAWAL CHARGE BASIS, IN SOME INSTANCES, THE CONTRACT VALUE MAY BE POSITIVE, BUT YOU WILL NOT RECEIVE A DISTRIBUTION DUE TO THE AMOUNT OF THE WITHDRAWAL CHARGE. For more information please see the examples in Appendix G. For purposes of calculating any withdrawal charge, we withdraw Purchase Payments on a "first-in-first-out" (FIFO) basis and we make withdrawals from your Contract in the following order. 1. First, we withdraw any Purchase Payments that are beyond the withdrawal charge period shown in your Contract (for example, if you have a Base Contract, Purchase Payments that we have had for seven or more complete years). We do not assess a withdrawal charge on these Purchase Payments. 2. Then, we withdraw any Purchase Payments that are under the free withdrawal privilege and we do not assess a withdrawal charge. For more information, see section 8, Access to Your Money - Free Withdrawal Privilege. 3. Next, on a FIFO basis, we withdraw Purchase Payments that are within the withdrawal charge period shown in your Contract. We do assess a withdrawal charge on these Purchase Payments, but we withdraw them on a FIFO basis, which may help reduce the total withdrawal charge you will pay because the withdrawal charge declines over time. We determine your total withdrawal charge by multiplying each of these payments by the applicable withdrawal charge percentage and then totaling the charges. 4. Finally, we withdraw any Contract earnings. Bonuses (if applicable) and any earnings thereon are treated as earnings under the Contract for purposes of the withdrawal charge. We do not assess a withdrawal charge on Contract earnings. We keep track of each Purchase Payment we receive. The amount of the withdrawal charge depends upon the length of time since we received your Purchase Payment. The charge as a percentage of each Purchase Payment withdrawn is as follows.
NUMBER OF COMPLETE YEARS SINCE WE RECEIVED YOUR PURCHASE PAYMENT WITHDRAWAL CHARGE AMOUNT ----------------------------------------------------------------------------------------------------------------------- CONTRACT WITH THE CONTRACT WITH THE CONTRACT WITH THE SHORT WITHDRAWAL NO WITHDRAWAL CHARGE BASE CONTRACT CHARGE BONUS OPTION CHARGE OPTION OPTION 0 8.5% 8.5% 8.5% 0% 1 8.5% 8.5% 7.5% 0% 2 7.5% 8.5% 5.5% 0% 3 6.5% 8% 3% 0% 4 5% 7% 0% 0% 5 4% 6% 0% 0% 6 3% 5% 0% 0% 7 0% 4% 0% 0% 8 0% 3% 0% 0% 9 years or more 0% 0% 0% 0%
There is no charge under the following circumstances: o for the Base Contract, when you withdraw a Purchase Payment that we have had for seven complete years, o for a Contract with the Bonus Option, when you withdraw a Purchase Payment that we have had for nine complete years, o for a Contract with the Short Withdrawal Charge Option, when you withdraw Purchase Payments we have had for four complete years, or o if you have a Contract with the No Withdrawal Charge. For a full withdrawal, we will deduct the withdrawal charge as a percentage of the amount withdrawn. For a partial withdrawal that is subject to a withdrawal charge, the amount we deduct from your Contract will be the amount you request, plus any applicable withdrawal charge. We apply the withdrawal charge to this total amount and we pay you the -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 33 amount you requested. For partial withdrawals, we deduct the charge from the remaining Contract Value and we deduct it proportionately from the Investment Options. EXAMPLE: You purchase a Base Contract with an initial Purchase Payment of $30,000 and make another Purchase Payment in the second Contract Year of $70,000. In the third Contact Year, your Contract Value is $110,000 and you request a withdrawal of $52,000. We would withdraw money from the Contract Value and compute the withdrawal charge as follows. 1) Purchase Payments that are beyond the withdrawal charge period. All payments are still within the withdrawal charge period so this does not apply. 2) Amounts available under the free withdrawal privilege. You have not taken any other withdrawals this year so you can withdraw up to 12% of your total payments (or $12,000) without incurring a withdrawal charge. 3) Purchase Payments on a FIFO basis. The total amount we deduct from the first Purchase Payment is $30,000, which is subject to a 7.5% withdrawal charge, and we pay you $27,750. We determine this amount as follows: (AMOUNT WITHDRAWN) X (1 - WITHDRAWAL CHARGE) = THE AMOUNT YOU RECEIVE, OR: $30,000 x 0.925 = $27,750. Next we determine how much we need to deduct from the second Purchase Payment. So far we have deducted $39,750 ($12,000 under the partial withdrawal privilege and $27,750 from the first Purchase Payment), so we would need to deduct $12,250 from the second Purchase Payment to get you the $52,000 you requested. The second Purchase Payment is subject to an 8.5% withdrawal charge. We calculate the total amount withdrawn and the withdrawal charge you pay on this amount as follows: (THE AMOUNT YOU RECEIVE) / (1 - WITHDRAWAL CHARGE) = AMOUNT WITHDRAWN, OR: $12,250 / 0.915 = $13,388 4) Contract earnings. As we have already withdrawn your requested amount, this does not apply. In total we withdrew $55,388 from your Contract, of which you received $52,000 and paid total withdrawal charges of $3,388. NOTE: WITHDRAWALS MAY HAVE TAX CONSEQUENCES AND, IF TAKEN BEFORE AGE 59 1/2, MAY BE SUBJECT TO A 10% FEDERAL PENALTY TAX. FOR TAX PURPOSES, UNDER NON-QUALIFIED CONTRACTS, WITHDRAWALS ARE CONSIDERED TO HAVE COME FROM THE LAST MONEY YOU PUT INTO THE CONTRACT. THUS, FOR TAX PURPOSES, EARNINGS ARE CONSIDERED TO COME OUT FIRST. REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE We may reduce or eliminate the amount of the withdrawal charge when the Contract is sold under circumstances that reduce its sales expenses. For example, if there is a large group of individuals that will be purchasing the Contract or if a prospective purchaser already has a relationship with us. We may choose not to deduct a withdrawal charge under a Contract issued to an officer, director, or employee of Allianz Life of New York or any of its affiliates. Also, we may reduce or waive the withdrawal charge when a Contract is sold by a registered representative appointed with Allianz Life of New York to any members of his or her immediate family and the commission is waived. We require our prior approval for any reduction or elimination of the withdrawal charge. TRANSFER FEE You can currently make 12 free transfers every Contract Year. If you make more than 12 transfers in a Contract Year, we will deduct a transfer fee of $25 for each additional transfer. Currently, we deduct this fee only during the Accumulation Phase, but we reserve the right to deduct it during the Annuity Phase. We will deduct the transfer fee from the Investment Option from which the transfer is made. If you transfer the entire amount in the Investment Option, then we will deduct the transfer fee from the amount transferred. If you are transferring from multiple Investment Options, we will treat the transfer as a single transfer and we will deduct any transfer fee proportionately from the Investment Options if you transfer less than the entire amount that is in the Investment Option. If the transfer is made under the flexible rebalancing program or the allocation and transfer restrictions for the Target Date Retirement Benefit or Lifetime Plus Benefit, there is no fee for the transfer and we currently do not count these transfers against any free transfers we allow. Transfer instructions apply equally to all accumulation and annuitization portions of the Contract. You cannot make transfers selectively within different portions of the Contract. We count transfers at the Contract level, and not by the number of portions in the Contract. For example, if you take a Partial Annuitization and your Contract is in both the Accumulation -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 34 and Annuity Phases and you request a transfer, we count that as one transfer even though we will make the transfer in both portions of the Contract. PREMIUM TAXES State premium taxes are not currently assessed in the state of New York. However, we reserve the right to make a deduction from your Contract Value to reimburse ourselves for premium taxes if the State of New York enacts legislation requiring us to pay premium taxes or if the Owner lives in a state where premium tax is applicable. Where premium taxes apply, it is our current practice not to make deductions from the Contract to reimburse ourselves for the premium taxes that we pay until the earliest of the following: upon the Income Date if you take a Full Annuitization, the date of full withdrawal from the Contract, or full distribution of the death benefit. We may change this practice in the future and deduct the charge when the tax is due. Premium taxes normally range from 0% to 3.5% of the Purchase Payment, depending on the state or governmental entity. INCOME TAXES We reserve the right to deduct from the Contract any income taxes that we may incur because of the Contract. Currently, we are not making any such deductions. INVESTMENT OPTION EXPENSES There are deductions from the assets of the various Investment Options for operating expenses (including management fees) that are described in the Fee Tables and in the table of annual operating expenses for each Investment Option in Appendix A in this prospectus and in the prospectuses for the Investment Options. These charges apply during the Accumulation and Annuity Phases if you make allocations to the Investment Options. These expenses will reduce the performance of the Investment Options and, therefore, will negatively affect your Contract Value and the amounts available for withdrawals and Annuity Payments. They may also negatively impact the death benefit proceeds. The investment advisers for the Investment Options provided the fee and expense information and we did not independently verify it. 7. TAXES NOTE: WE HAVE PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL DISCUSSION OF THE SUBJECT. THE CONTRACT OFFERS FLEXIBILITY REGARDING HOW DISTRIBUTIONS CAN BE TAKEN. NOT ALL OF THESE DISTRIBUTIONS (OR THEIR ATTENDANT TAX CONSEQUENCES) ARE DISCUSSED IN THIS SECTION. THIS INFORMATION IS NOT INTENDED AS TAX ADVICE. YOU SHOULD, THEREFORE, CONSULT YOUR OWN TAX ADVISER ABOUT YOUR OWN CIRCUMSTANCES. WE HAVE INCLUDED ADDITIONAL INFORMATION REGARDING TAXES IN THE STATEMENT OF ADDITIONAL INFORMATION. FOR MORE INFORMATION ON THE TAXATION OF ANNUITY PAYMENTS MADE UNDER A PARTIAL ANNUITIZATION, SEE SECTION 3, THE ANNUITY PHASE - PARTIAL ANNUITIZATION. FOR MORE INFORMATION ON THE TAXATION OF LIFETIME PLUS PAYMENTS, SEE SECTION 11.B, THE LIFETIME PLUS BENEFIT. ANNUITY CONTRACTS IN GENERAL Annuity contracts are a means of setting aside money for future needs - usually retirement. Congress recognized how important saving for retirement was and provided special rules in the Internal Revenue Code (Code) for annuities. These rules generally provide that you will not be taxed on any earnings on the money held in your annuity until you take the money out. This is called tax deferral. There are different rules regarding how you will be taxed, depending upon how you take the money out and whether the annuity is Qualified or Non-Qualified (see the following discussion in this section). If you do not purchase the Contract under a tax qualified retirement plan, the Contract is referred to as a Non-Qualified Contract. When a Non-Qualified Contract is owned by a non-individual (for example, a corporation or certain other entities other than a trust holding the Contract as an agent for an individual), the Contract will generally not be treated as an annuity for tax purposes. This means that the Contract may not receive the benefits of tax deferral and Contract earnings may be taxed as ordinary income every year. QUALIFIED CONTRACTS If you purchase the Contract under a pension or retirement plan that is qualified under the Code, the Contract is referred to as a Qualified Contract. Qualified Contracts are subject to special rules. Adverse tax consequences may result if contributions, distributions, and transactions in connection with the Qualified Contract do not comply with the law. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 35 A Qualified Contract will not provide any necessary or additional tax deferral if it is used to fund a qualified plan that is tax deferred. However, the Contract has features and benefits other than tax deferral that may make it an appropriate investment for a qualified plan. You should consult your tax adviser regarding these features and benefits before purchasing a Qualified Contract. We may issue the following types of Qualified Contracts. o TRADITIONAL INDIVIDUAL RETIREMENT ANNUITY. Section 408 of the Code permits eligible individuals to maintain Individual Retirement Annuities (IRAs). IRA contributions are limited each year to the lesser of a dollar amount specified in the Code or 100% of the amount of compensation included in the Owner's income. The limit on the amount contributed to an IRA does not apply to distributions from certain other types of qualified plans that are "rolled over" on a tax-deferred basis into an IRA. Purchasers of a Contract for use with IRAs will have the right to revoke their purchase within seven days of the earlier of the establishment of the IRA or their purchase. The Internal Revenue Service (IRS) has not reviewed the Contract for qualification as an IRA and has not issued a ruling as to whether a bonus benefit comports with IRA requirements. Consult your tax adviser before purchasing a Contract with a Bonus Option. o SIMPLIFIED EMPLOYEE PENSION (SEP) IRA. Employers may establish Simplified Employee Pension (SEP) IRAs under Code Section 408(k) to provide IRA contributions on behalf of their employees. In addition to all of the general rules governing IRAs, such plans are subject to additional requirements and different contribution limits. o ROTH IRA. Section 408A of the Code permits certain eligible individuals to contribute to a Roth IRA. Contributions to a Roth IRA are limited each year to the lesser of a dollar amount specified in the Code or 100% of the amount of compensation included in the Owner's income and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. Distributions from a Roth IRA generally are not taxed until after the total amount distributed from the Roth IRA exceeds the amount contributed to the Roth IRA. After that, income tax and a 10% federal penalty tax may apply to distributions made: (1) before age 59 1/2 (subject to certain exceptions), or (2) during the five tax years starting with the year in which the first contribution is made to any Roth IRA. o TSAS OR 403(B) CONTRACTS. Section 403(b) of the Code allows employees of certain Section 501(c)(3) organizations and public schools to exclude from their gross income the purchase payments made, within certain limits, on a contract that will provide an annuity for the employee's retirement. As a result of changes to the regulations regarding 403(b)/TSA contracts which requires information sharing agreements between the financial organization or insurance company and employers sponsoring 403(b)/TSA plans, these plans are no longer offered with this Contract. However, that may change in the future. o INHERITED IRA. The Code permits beneficiaries of investments that were issued under certain tax-qualified pension or retirement plans to directly transfer the death benefit from that investment into a variable annuity contract (Inherited IRA Contract). Inherited IRA contracts are not currently available under this Contract. However, that may change in the future. QUALIFIED PLANS. A qualified plan is a retirement or pension plan that meets the requirements for tax qualification under the Code. If the Contract is an investment for assets of a qualified plan under Section 401 of the Code, the plan is both the Owner and the Beneficiary. The authorized signatory or plan trustee for the plan must make representations to us that the plan is qualified under the Code on the Issue Date and is intended to continue to be qualified for the entire Accumulation Phase of the Contract, or as long as the qualified plan owns the Contract. The qualified plan may designate a third party administrator to act on its behalf. All tax reporting will be the responsibility of the plan. In the event the qualified plan instructs us to roll the plan assets into an IRA for the Annuitant under this Contract, we will change the qualification type of the Contract to an IRA and make the Annuitant the Owner. The qualified plan will be responsible for any reporting required for the rollover transactions. MULTIPLE CONTRACTS Section 72(e)(12) of the Code provides that multiple Non-Qualified deferred annuity contracts that are issued within a calendar year period to the same owner by one company or its affiliates are treated as one annuity contract for purposes of determining the tax consequences of any distribution. Such treatment may result in adverse tax consequences, including more rapid taxation of the distributed amounts from such combination of contracts. For purposes of this rule, contracts received in a Section 1035 exchange will be considered issued in the year of the exchange. You should consult a tax adviser before purchasing more than one Non-Qualified Contract in any calendar year period. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 36 PARTIAL 1035 EXCHANGES Section 1035 of the Code provides that an annuity contract may be exchanged in a tax-free transaction for another annuity contract. Historically, it was presumed that only the exchange of an entire contract (as opposed to a partial exchange) would be accorded tax-free status. Guidance from the IRS, however, confirmed that the direct transfer of a portion of an annuity contract into another annuity contract can qualify as a non-taxable exchange. IRS guidance provides that this direct transfer can go into an existing annuity contract as well as a new annuity contract. IRS guidance also provides that certain partial exchanges may not qualify as tax-free exchanges. Therefore, Owners should consult their own tax advisers before entering into a partial exchange of an annuity contract. DISTRIBUTIONS - NON-QUALIFIED CONTRACTS You, as the Owner, generally will not be taxed on increases in the value of the Contract until an actual or deemed distribution occurs - either as a withdrawal (including, if available, Partial Annuitizations, Lifetime Plus Payments before your Contract Value is fully depleted, and Excess Withdrawals) or as Annuity Payments under a Full Annuitization (including Lifetime Plus Payments on or after your Contract Value has been fully depleted). Section 72 of the Code governs treatment of distributions. When a withdrawal from a Non-Qualified Contract occurs, the amount received will generally be treated as ordinary income subject to tax up to an amount equal to the excess (if any) of the Contract Value immediately before the distribution over your investment in the Contract (generally, the Purchase Payments or other consideration paid for the Contract, reduced by any amount previously distributed from the Contract that was not subject to tax) at that time. Lifetime Plus Payments and amounts received as a result of a Partial Annuitization are treated as partial withdrawals. If you begin receiving Lifetime Plus Payments and the Benefit Base is greater than the Contract Value, it is possible that the IRS could assert that the amount you receive will be taxable as ordinary income up to an amount equal to the excess of the Benefit Base immediately before the withdrawal over your investment in the Contract at that time. In the case of a full withdrawal under a Non-Qualified Contract, the amount received generally will be taxable only to the extent it exceeds your investment in the Contract. If you take a Full Annuitization, different rules apply. Periodic installments scheduled to be received at regular intervals (for example, monthly) after you take a Full Annuitization should be treated as annuity payments (and not withdrawals) for tax purposes. (In this regard, we intend to make tax reporting on periodic installments scheduled to be received at regular intervals under a Partial Annuitization as annuity payments ONLY after a Contract's entire Contract Value has been applied to Annuity Payments, provided that such installments extend over a period of more than one full year from the time of the Full Annuitization. Due to the lack of guidance on whether this is the appropriate tax treatment for such payments, however, Owners should consult with a tax adviser on this issue.) After a Full Annuitization, a portion of each Annuity Payment may be treated as a partial return of your Purchase Payment and will not be taxed. The remaining portion of the payment will be treated as ordinary income. How the Annuity Payment is divided between taxable and non-taxable portions depends upon the period over which we expect to make the payments. Once we have paid out all of your Purchase Payment(s), the entire Annuity Payment is taxable as ordinary income. Section 72 of the Code further provides that any amount received under an annuity contract, which is included in income, may be subject to a federal penalty tax. The amount of the federal penalty tax is equal to 10% of the amount that is included in income. Some distributions will be exempt from the federal penalty tax. There is an exception to this 10% federal penalty tax for amounts: 1) paid on or after you reach age 59 1/2; 2) paid after you die; 3) paid if you become totally disabled (as that term is defined in Section 72(m)(7) of the Code); 4) paid in a series of substantially equal payments made annually (or more frequently) under a lifetime annuity; 5) paid as annuity payments under an immediate annuity; or 6) that come from Purchase Payments made before August 14, 1982. With respect to (4) above, if the series of substantially equal periodic payments is modified, as permitted by the Code, before the later of your attaining age 59 1/2 or the close of the five year period that began on the Income Date, then the tax for the year of the modification is increased by the 10% federal penalty tax, plus interest, for the tax years in which the exception was used. A partial withdrawal taken after a series of substantially equal periodic payments has begun may result in the modification of the series of substantially equal payments and therefore could result in the imposition of the 10% federal penalty tax and interest for the period as described above. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 37 DISTRIBUTIONS - QUALIFIED CONTRACTS Section 72 of the Code governs treatment of distributions from Qualified Contracts. Special rules may apply to withdrawals from certain types of Qualified Contracts, including Roth IRAs. You should consult with your qualified plan sponsor and tax adviser to determine how these rules affect the distribution of your benefits. Section 72(t) of the Code provides that any amount received under a Qualified Contract, which is included in income, may be subject to a federal penalty tax. The amount of the federal penalty tax is equal to 10% of the amount that is included in income. Some distributions will be exempt from the federal penalty tax. There is an exception to this 10% federal penalty tax for: 1) distributions made on or after the date you (or the Annuitant as applicable) reach age 59 1/2; 2) distributions following your death or disability (or the Annuitant as applicable) (for this purpose disability is as defined in Section 72(m)(7) of the Code); 3) after separation from service, paid in a series of substantially equal payments made annually (or more frequently) under a lifetime annuity; 4) distributions made to you to the extent such distributions do not exceed the amount allowed as a deduction under Code Section 213 for amounts paid during the tax year for medical care; 5) distributions made on account of an IRS levy upon the Qualified Contract; 6) distributions from an IRA for the purchase of medical insurance (as described in Section 213(d)(1)(D) of the Code) for you (or the Annuitant as applicable) and his or her spouse and dependents if you have received unemployment compensation for at least 12 weeks (this exception will no longer apply after you have been re-employed for at least 60 days); 7) distributions from an IRA made to you, to the extent such distributions do not exceed your qualified higher education expenses (as defined in Section 72(t)(7) of the Code) for the tax year; 8) distributions from an IRA which are qualified first-time homebuyer distributions (as defined in Section 72(t)(8) of the Code); 9) distributions made to an alternate Payee pursuant to a qualified domestic relations order (does not apply to an IRA); and 10) a reservist called to active duty during the period between September 11, 2001 and December 31, 2007, for a period in excess of 179 days (or for an indefinite period), distributions from IRAs or amounts attributable to elective deferrals under a 401(k) plan made during such active period. The exception stated in (3) above applies to an IRA without the requirement that there be a separation from service. With respect to (3) above, if the series of substantially equal periodic payments is modified as permitted by the Code, before the later of the Annuitant attaining age 59 1/2 or the close of the five year period that began on the Income Date, then the tax for the year of the modification is increased by the 10% federal penalty tax, plus interest for the tax years in which the exception was used. A partial withdrawal taken after a series of substantially equal periodic payments has begun may result in the modification of the series of substantially equal payments and therefore could result in the imposition of the 10% federal penalty tax and interest for the period as described above, unless another exception to the federal penalty tax applies. You should obtain competent tax advice before you take any partial withdrawals from your Contract. Distributions from a Qualified Contract must commence no later than the required beginning date. For IRAs, the required beginning date is April 1 of the calendar year following the year in which you attain age 70 1/2. Under a qualified plan, the required beginning date is generally April 1 of the calendar year following the later of the calendar year in which you reach age 70 1/2 or retire. Generally, required minimum distributions must be made over a period not exceeding the life or life expectancy of the individual or the joint lives or life expectancies of the individual and his or her designated Beneficiary. If the required minimum distributions are not made, a 50% federal penalty tax is imposed as to the amount not distributed. It is unclear whether a partial withdrawal taken after an Income Date will have an adverse impact on the determination of required minimum distributions. If you are attempting to satisfy these rules through partial withdrawals, the present value of future benefits provided under the Contract may need to be included in calculating the amount required to be distributed. If you are receiving Annuity Payments or are age 70 1/2 or older, you should consult with a tax adviser before taking a partial withdrawal. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 38 ASSIGNMENTS, PLEDGES AND GRATUITOUS TRANSFERS Other than in the case of Qualified Contracts (which generally cannot be assigned or pledged), any assignment or pledge of (or agreement to assign or pledge) the Contract Value is treated for federal income tax purposes as a full withdrawal. The investment in the Contract is increased by the amount includible as income with respect to such amount or portion, though it is not affected by any other aspect of the assignment or pledge (including its release). If an Owner transfers a Contract without adequate consideration to a person other than the Owner's spouse (or to a former spouse incidental to divorce), the Owner will be taxed on the difference between his or her Contract Value and the investment in the Contract at the time of transfer and for each subsequent year until the assignment is released. In such case, the transferee's investment in the Contract will be increased to reflect the increase in the transferor's income. The transfer or assignment of ownership of the Contract, the designation of an Annuitant, the selection of certain Income Dates, or the exchange of the Contract may result in certain other tax consequences that are not discussed here. An Owner contemplating any such transfer, assignment, or exchange should consult a tax adviser as to the tax consequences. DEATH BENEFITS Any death benefits paid under the Contract are taxable to the recipient as ordinary income. The rules governing the taxation of payments from an annuity contract generally apply to the payment of death benefits and depend on whether the death benefits are paid as a lump sum or as Annuity Payments. Estate taxes may also apply. WITHHOLDING Annuity distributions are generally subject to withholding for the recipient's federal income tax liability. Recipients can, however, generally elect not to have tax withheld from distributions unless they are subject to mandatory state withholding. "Eligible rollover distributions" from qualified plans are subject to a mandatory federal income tax withholding of 20%. An eligible rollover distribution is any distribution to an employee (or employee's spouse or former spouse as Beneficiary or alternate Payee) from such a plan, except certain distributions such as distributions required by the Code, distributions in a specified annuity form, or hardship distributions. The 20% withholding does not apply, however, to nontaxable distributions or if the employee chooses a "direct rollover" from the Contract plan to a qualified plan, IRA, TSA or 403(b) plan, or to a governmental Section 457 plan that agrees to separately account for rollover contributions. FEDERAL ESTATE TAXES While no attempt is being made to discuss the federal estate tax implications of the Contract, a purchaser should keep in mind that the value of an annuity contract owned by a decedent and payable to a Beneficiary by virtue of surviving the decedent is included in the decedent's gross estate. Depending on the terms of the annuity contract, the value of the annuity included in the gross estate may be the value of the lump sum payment payable to the designated Beneficiary or the actuarial value of the payments to be received by the Beneficiary. Consult an estate planning adviser for more information. GENERATION-SKIPPING TRANSFER TAX Under certain circumstances, the Code may impose a "generation-skipping transfer tax" when all or part of an annuity contract is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Owner. Regulations issued under the Code may require us to deduct the tax from your Contract, or from any applicable payment, and pay it directly to the IRS. FOREIGN TAX CREDITS We may benefit from any foreign tax credits attributable to taxes paid by certain funds to foreign jurisdictions to the extent permitted under the federal tax law. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS The preceding discussion provides general information regarding federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to federal withholding tax on taxable distributions from annuity contracts at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the purchaser's -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 39 country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax adviser regarding U.S. state, and foreign taxation with respect to an annuity contract purchase. In Revenue Ruling 2004-75, 2004-31 I.R.B. 109, the IRS announced that income received by residents of Puerto Rico under life insurance policies or annuity contracts issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States federal income tax. POSSIBLE TAX LAW CHANGES Although the likelihood of legislative or regulatory changes is uncertain, there is always the possibility that the tax treatment of the Contract could change by legislation, regulation or otherwise. Consult a tax adviser with respect to legislative or regulatory developments and their effect on the Contract. We have the right to modify the Contract in response to legislative or regulatory changes that could otherwise diminish the favorable tax treatment that annuity owners currently receive. We make no guarantee regarding the tax status of any contract and do not intend the above discussion as tax advice. DIVERSIFICATION The Code provides that the underlying investments for a Non-Qualified variable annuity must satisfy certain diversification requirements in order to be treated as an annuity contract. We believe that the Investment Options are being managed so as to comply with the requirements. In some circumstances, owners of variable annuities who retain excessive control over the investment of the underlying separate account assets may be treated as the owners of those assets and may be subject to tax on income produced by those assets. Although published guidance in this area does not address certain aspects of the policies, we believe that the Owner should not be treated as the owner of the Separate Account assets. We reserve the right to modify the Contract to bring it into conformity with applicable standards should such modification be necessary to prevent Owners from being treated as the owners of the underlying Separate Account assets. REQUIRED DISTRIBUTIONS Section 72(s) of the Code requires that, to be treated as an annuity contract for federal income tax purposes, a Non-Qualified Contract must contain certain provisions specifying how amounts will be distributed in the event of the death of an Owner of the Contract. Specifically, Section 72(s) requires that: (a) if any Owner dies on or after you take a Full Annuitization, but before the time the entire interest in the Contract has been distributed, the entire interest in the Contract must be distributed at least as rapidly as under the method of distribution being used as of the date of the Owner's death; and (b) if any Owner dies before you take a Full Annuitization, the entire interest in the Contract must be distributed within five years after the date of the Owner's death. These requirements will be considered satisfied as to any portion of an Owner's interest that is payable to or for the benefit of a designated Beneficiary and that is distributed over the life of such designated Beneficiary, or over a period not extending beyond the life expectancy of that Beneficiary, provided that such distributions begin within one year of the Owner's death. The designated Beneficiary refers to an individual designated by the Owner as a Beneficiary and to whom ownership of the Contract passes by reason of death. However, if the designated Beneficiary is the surviving spouse of the deceased Owner, the Contract may be continued with the surviving spouse as the new Owner. Non-Qualified Contracts contain provisions that are intended to comply with these Code requirements, although no regulations interpreting these requirements have yet been issued. When such requirements are clarified by regulation or otherwise, we intend to review such provisions and modify them, as necessary, to assure that they comply with the applicable requirements. Other rules may apply to Qualified Contracts. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 40 8. ACCESS TO YOUR MONEY The money in the Contract is available under the following circumstances: o by taking a withdrawal (including Lifetime Plus Payments); o by receiving Annuity Payments; or o when we pay a death benefit. You can only take withdrawals during the Accumulation Phase. When you make a withdrawal request, we will process the request based on the Accumulation Unit values next determined after receipt of the request at our Service Center. The Accumulation Unit values are normally determined at the end of each Business Day. Any withdrawal request received at or after the end of the current Business Day will receive the next Business Day's Accumulation Unit values. When you take a full withdrawal, we will process the withdrawal: o based upon the number of Accumulation Units held by the Contract on that Business Day and valued at the next available daily price established after receipt in good order of the withdrawal request at our Service Center, o less any applicable withdrawal charge, o less any deductions we make to reimburse ourselves for premium tax that we pay, and o less any contract maintenance charge. See the Fee Tables and section 6, Expenses for a discussion of the charges. Any partial withdrawal must be for at least $500.* The Contract Value after a partial withdrawal must be at least $2,000.* WE RESERVE THE RIGHT TO TREAT A REQUEST FOR A PARTIAL WITHDRAWAL THAT WOULD REDUCE THE CONTRACT VALUE BELOW THIS MINIMUM AS A REQUEST FOR A FULL WITHDRAWAL OF THE CONTRACT. We will deduct any partial withdrawal (including any withdrawal charge) proportionately from the Investment Options. However, for partial withdrawals, you may instead provide us with instructions regarding the deduction of your Contract Value from your selected Investment Options as long as you have NOT SELECTED either the Target Date Retirement Benefit or Lifetime Plus Benefit. You cannot take a partial withdrawal from specific Investment Options if you selected either of these optional benefits. * These limitations do not apply to Lifetime Plus Payments, systematic withdrawals or required minimum distributions. We will pay the amount of any withdrawal from the Investment Options within seven days of when we receive your request in good order, unless the suspension of payments or transfers provision is in effect (see the "Suspension of Payments or Transfers" discussion later in this section). Upon withdrawal, we assess the withdrawal charge against the Withdrawal Charge Basis. Any previous withdrawals from the Contract, including any previous withdrawal charges, will reduce the Withdrawal Charge Basis. However, when you request a withdrawal, we calculate the withdrawal charge based on the current Withdrawal Charge Basis (Purchase Payments less previous withdrawals and withdrawal charges) and we do not adjust the Withdrawal Charge Basis for any current withdrawal charges or any gains or losses on your Investment Options. THIS MEANS THAT IF YOU TAKE A FULL WITHDRAWAL WHILE THE WITHDRAWAL CHARGE APPLIES AND YOU HAVE HAD LOSSES IN YOUR INVESTMENT OPTIONS, YOU MAY BE ASSESSED A WITHDRAWAL CHARGE ON MORE THAN THE AMOUNT YOU ARE WITHDRAWING. IN SOME INSTANCES, YOU WILL NOT RECEIVE A DISTRIBUTION DUE TO THE AMOUNT OF THE WITHDRAWAL CHARGE. For more information, please see section 6, Expenses - Withdrawal Charge and the examples in Appendix G. ORDINARY INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL YOU TAKE. FREE WITHDRAWAL PRIVILEGE The free withdrawal privilege for each Contract Year is equal to 12% of your total Purchase Payments, less the total amount previously withdrawn under the free withdrawal privilege in the same Contract Year. We will not deduct a withdrawal charge from amounts withdrawn under the free withdrawal privilege. Any unused free withdrawal privilege in one Contract Year does not carry over to the next Contract Year. THERE IS NO FREE WITHDRAWAL PRIVILEGE AFTER YOU BEGIN LIFETIME PLUS PAYMENTS UNDER THE LIFETIME PLUS BENEFIT (IF APPLICABLE) OR DURING THE ANNUITY PHASE. HOWEVER, LIFETIME PLUS PAYMENTS ARE NOT SUBJECT TO A WITHDRAWAL CHARGE. EXCESS WITHDRAWALS (INCLUDING A FULL WITHDRAWAL OF THE CONTRACT VALUE) ARE AVAILABLE WHILE YOU ARE RECEIVING LIFETIME PLUS PAYMENTS, HOWEVER, THEY ARE SUBJECT TO A WITHDRAWAL CHARGE AS SET OUT IN SECTION 6, EXPENSES - WITHDRAWAL CHARGE. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 41 If you take a withdrawal of more than the free withdrawal privilege, the excess amount will be subject to the withdrawal charge. If you take a full withdrawal, the free withdrawal privilege will apply and you will receive any remaining free withdrawal privilege for that Contract Year without charge. All withdrawals (including withdrawal charges), will reduce the Withdrawal Charge Basis. The minimum distribution program allows you to take withdrawals without the deduction of the withdrawal charge under certain circumstances. For more information, see "The Minimum Distribution Program and Required Minimum Distribution (RMD) Payments" discussion later in this section. WAIVER OF WITHDRAWAL CHARGE BENEFIT Under certain circumstances, after the first Contract Year, we will permit you to take money out of the Contract without deducting a withdrawal charge if any Owner becomes confined to a nursing home for a period of at least 90 consecutive days and a physician certifies that continued confinement is necessary. The waiver will not apply if any Owner was confined to a nursing home on the Issue Date. If the Contract is owned by a non-individual, this benefit is available if the Annuitant becomes so confined for the required period. We require proof of confinement in a form satisfactory to us before we will waive the withdrawal charge. Amounts withdrawn under this benefit will reduce the Withdrawal Charge Basis. SYSTEMATIC WITHDRAWAL PROGRAM If your Contract Value is at least $25,000, the systematic withdrawal program provides automatic monthly or quarterly payments to you. The minimum amount you can withdraw under this program is $500. You may withdraw any amount you want under this program if your Purchase Payments are no longer subject to the withdrawal charge. While the withdrawal charge is in effect, the systematic withdrawal program is subject to the free withdrawal privilege. The total systematic withdrawals that you can take each Contract Year without incurring a withdrawal charge is limited to your free withdrawal privilege amount for that Contract Year. With the exception of payments under the minimum distribution program, any withdrawals in a Contract Year (including systematic withdrawals) that exceed the free withdrawal privilege, will be subject to any applicable withdrawal charge. For more information, see section 6, Expenses - Withdrawal Charge and the "Free Withdrawal Privilege" discussion that appears earlier in this section. All systematic withdrawals will be made on the ninth day of the month or the previous Business Day if the ninth is not a Business Day. You will not be charged additional fees for participating in or terminating this program. ORDINARY INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO SYSTEMATIC WITHDRAWALS. YOU CANNOT PARTICIPATE IN THE SYSTEMATIC WITHDRAWAL PROGRAM AND THE MINIMUM DISTRIBUTION PROGRAM AT THE SAME TIME. YOU ALSO CANNOT BEGIN RECEIVING LIFETIME PLUS PAYMENTS UNDER THE LIFETIME PLUS BENEFIT AND PARTICIPATE IN THE SYSTEMATIC WITHDRAWAL PROGRAM AT THE SAME TIME. THE MINIMUM DISTRIBUTION PROGRAM AND REQUIRED MINIMUM DISTRIBUTION (RMD) PAYMENTS If you own a Qualified Contract, you may participate in the minimum distribution program during the Accumulation Phase of the Contract. Under this program, we will make payments to you from your Contract that are designed to meet the applicable minimum distribution requirements imposed by the Code for this Qualified Contract. We can make payments to you on a monthly, quarterly, or annual basis. However, we will only make annual payments if your Contract Value is less than $25,000. RMD payments from this Contract will not be subject to a withdrawal charge, but they will reduce the Withdrawal Charge Basis and they will count against your free withdrawal privilege. You cannot aggregate RMD payments between this Contract and other qualified contracts that you own. Any RMD payments from this Contract that exceed the RMD amount calculated for this Contract will be subject to any applicable withdrawal charge. If you take any additional withdrawals while you are receiving RMD payments, and the annual total withdrawn exceeds the free withdrawal privilege, the amount of that excess that is attributable to the additional withdrawals will be subject to any applicable withdrawal charge. YOU CANNOT PARTICIPATE IN THE SYSTEMATIC WITHDRAWAL AND THE MINIMUM DISTRIBUTION PROGRAMS AT THE SAME TIME. WE ENCOURAGE PROSPECTIVE OWNERS WHO ARE CONSIDERING PURCHASING QUALIFIED CONTRACTS THAT ARE SUBJECT TO RMD PAYMENTS TO CONSULT A TAX ADVISER REGARDING THESE BENEFITS. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 42 SUSPENSION OF PAYMENTS OR TRANSFERS We may be required to suspend or postpone payments for withdrawals (including Lifetime Plus Payments if available) or transfers for any period when: o the New York Stock Exchange is closed (other than customary weekend and holiday closings); o trading on the New York Stock Exchange is restricted; o an emergency (as determined by the SEC) exists as a result of which disposal of the Investment Option shares is not reasonably practicable or we cannot reasonably value the Investment Option shares; or o during any other period when the SEC, by order, so permits for the protection of Owners. 9. ILLUSTRATIONS In order to help you understand how your Contract Values vary over time and under different sets of assumptions, we may provide you with certain personalized illustrations upon request and free of charge. These illustrations may provide hypothetical depictions of either the Accumulation Phase or the Annuity Phase. You can request an illustration free of charge by contacting your registered representative. 10. DEATH BENEFIT The death benefit provided by the Base Contract is the Traditional Death Benefit. If available, you may be able to instead select the Quarterly Value Death Benefit at Contract issue. DEATH BENEFITS ARE ONLY AVAILABLE DURING THE ACCUMULATION PHASE OF THE CONTRACT. For more information on the Quarterly Value Death Benefit please see section 11.c, Other Optional Benefits - Quarterly Value Death Benefit. BE SURE TO DISCUSS WITH YOUR REGISTERED REPRESENTATIVE WHETHER YOUR SELECTED DEATH BENEFIT IS APPROPRIATE FOR YOUR SITUATION. The use of the term "you" in this section refers to the Annuitant if the Contract is owned by a non-individual; otherwise it refers to the Owner. We will process the death benefit based on the Accumulation Unit values next determined after receipt in good order at our Service Center of both due proof of death and an election of the death benefit payment option. WE CONSIDER DUE PROOF OF DEATH TO BE ANY OF THE FOLLOWING: a copy of the certified death certificate, a decree of court of competent jurisdiction as to the finding of death, or any other proof that we consider to be satisfactory. The Accumulation Unit values are normally determined at the end of each Business Day and due proof of death and an election of the death benefit payment option received at or after the end of the current Business Day will receive the next Business Day's Accumulation Unit values. Any part of the death benefit amount that had been invested in the Investment Options remains in the Investment Options until distribution begins. From the time the death benefit is determined until we make a complete distribution, any amount in the Investment Options will continue to be subject to investment risk that will be borne by the recipient. TRADITIONAL DEATH BENEFIT Under the Traditional Death Benefit, the amount of the death benefit will be the greater of 1 or 2, less any deduction we make to reimburse ourselves for premium tax that we pay. 1. The Contract Value, determined as of the end of the Business Day during which we receive in good order at our Service Center both due proof of death and an election of the death benefit payment option. 2. The Traditional Death Benefit value, which is the total of all Purchase Payments received before you begin receiving Lifetime Plus Payments under the Lifetime Plus Benefit (if applicable), reduced proportionately by the percentage of Contract Value applied to a Partial Annuitization or withdrawn (including any withdrawal charge) for each annuitization and/or withdrawal taken. Withdrawals include Lifetime Plus Payments and Excess Withdrawals. NOTE FOR CONTRACTS WITH THE BONUS OPTION: BONUS AMOUNTS ARE INCLUDED IN THE CALCULATION OF THE PORTION OF THE DEATH BENEFIT THAT IS BASED ON CONTRACT VALUE, BUT WE DO NOT INCLUDE THE BONUS IN THE PORTION OF THE DEATH BENEFIT THAT IS BASED ON PURCHASE PAYMENTS. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 43 NOTE FOR CONTRACTS WITH THE LIFETIME PLUS BENEFIT: If you elect to receive Lifetime Plus Payments, then, on and after the Benefit Date: o the Traditional Death Benefit value will no longer increase because you can no longer make additional Purchase Payments, and each Lifetime Plus Payment and any Excess Withdrawal will reduce the Traditional Death Benefit value proportionately by the percentage of Contract Value withdrawn (including any withdrawal charge); and o the death benefit that is equal to your Contract Value will continue to fluctuate with market performance but it will decrease on a dollar for dollar basis with each Lifetime Plus Payment we make and any Excess Withdrawal you take (including any withdrawal charge). ANY AMOUNTS WITHDRAWN OR ANNUITIZED MAY REDUCE THE TRADITIONAL DEATH BENEFIT VALUE BY MORE THAN THE AMOUNT WITHDRAWN AND/OR ANNUITIZED. If the Contract Value at the time of withdrawal and/or annuitization is less than the Traditional Death Benefit value, we will deduct more than the amount withdrawn and/or annuitized from the Traditional Death Benefit value. EXAMPLE o You purchase a Base Contract with an initial Purchase Payment of $100,000. You make no additional Purchase Payments. o You take a partial withdrawal of $20,000 in the tenth Contract Year when the Contract Value on the date of (but before the partial withdrawal) is $160,000. The withdrawal charge period on the initial Purchase Payment has expired so there is no withdrawal charge on this partial withdrawal. You take no other partial withdrawals.
We calculate the death benefit on the tenth Contract Anniversary as the greater of: 1) Contract Value................................................................................$140,000 2) The Traditional Death Benefit value: Total Purchase Payments received.............................................................$100,000 Reduced proportionately by the percentage of Contract Value withdrawn: ($20,000 / $160,000) = 0.125 x $100,000 =..................................- 12,500 $ 87,500
Therefore, the death benefit that would be paid out on the tenth Contract Anniversary is the $140,000 Contract Value. THE TRADITIONAL DEATH BENEFIT WILL TERMINATE UPON THE EARLIEST OF THE FOLLOWING. o The Business Day before the Income Date that you take a Full Annuitization. o The Business Day that the Traditional Death Benefit value and Contract Value are both zero. o Contract termination. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 44 DEATH OF THE OWNER AND/OR ANNUITANT UNDER ALL OTHER CONTRACTS The following tables are intended to help you better understand what happens upon the death of any Owner and/or Annuitant under the different portions of the Contract. FOR QUALIFIED CONTRACTS, THERE CAN BE ONLY ONE OWNER AND THE OWNER MUST BE THE ANNUITANT, UNLESS THE CONTRACT IS A QUALIFIED CONTRACT OWNED BY A QUALIFIED PLAN OR IS PART OF A CUSTODIAL ARRANGEMENT. PARTIAL ANNUITIZATIONS ARE NOT AVAILABLE TO JOINT OWNERS. IF YOU TAKE A PARTIAL ANNUITIZATION, THERE CAN BE ONLY ONE OWNER; THE OWNER MUST BE THE ANNUITANT, AND WE WILL NOT ALLOW THE OWNER TO ADD A JOINT ANNUITANT. DESIGNATING DIFFERENT PERSONS AS OWNER(S) AND ANNUITANT(S) CAN HAVE AN IMPORTANT IMPACT ON WHETHER A DEATH BENEFIT IS PAID, AND ON WHO WOULD RECEIVE IT. USE CARE WHEN DESIGNATING OWNERS AND ANNUITANTS, AND CONSULT YOUR REGISTERED REPRESENTATIVE IF YOU HAVE QUESTIONS. UPON THE DEATH OF A SOLE OWNER ACTION UNDER THE PORTION OF THE CONTRACT THAT IS IN THE ACCUMULATION PHASE -------------------------------------------------------------------------------- o We will pay a death benefit to the Beneficiary.* For a description of the payout options, see the "Death Benefit Payment Options" discussion later in this section. o If the Contract includes the Lifetime Plus Benefit and you selected: - single Lifetime Plus Payments, the Lifetime Plus Benefit will terminate. - joint Lifetime Plus Payments, the Lifetime Plus Benefit will terminate unless the deceased Owner's spouse continues the Contract. If the surviving spouse continues the Contract and we have already begun making Lifetime Plus Payments, then joint Lifetime Plus Payments will continue at 100% of the amount that we were paying when both Covered Persons were alive. ACTION UNDER ANY PORTION OF THE CONTRACT APPLIED TO ANNUITY PAYMENTS -------------------------------------------------------------------------------- o The Beneficiary becomes the Owner. o If the deceased was not an Annuitant, Annuity Payments to the Payee will continue. No death benefit is payable. o If the deceased was the only surviving Annuitant, Annuity Payments to the Payee will continue until that portion of the Contract terminates and will be paid at least as rapidly as they were being paid at the Annuitant's death. For more information on when any portion of the Contract applied to Annuity Payments terminates, see section 3, The Annuity Phase - Annuity Payments. No death benefit is payable under Annuity Options 1 through 4. However, there may be a lump sum refund due to the Payee under Annuity Option 5. For more information, see section 3, The Annuity Phase - Annuity Options. o If the deceased was an Annuitant and there is a surviving joint Annuitant, Annuity Payments to the Payee will continue during the lifetime of the surviving joint Annuitant. No death benefit is payable. * If the Beneficiary is the spouse of the deceased Owner, the spouse/Beneficiary may be able to continue the Contract instead of receiving a death benefit payout. If the Contract continues, we will increase the Contract Value to equal the death benefit if that amount is greater than the Contract Value as of the Business Day we receive in good order at our Service Center both due proof of death and an election of the death benefit payment option on the death claim form. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 45 UPON THE DEATH OF A JOINT OWNER (NOTE: WE DO NOT ALLOW JOINT OWNERS TO TAKE PARTIAL ANNUITIZATIONS) ACTION UNDER THE PORTION OF THE CONTRACT THAT IS IN THE ACCUMULATION PHASE -------------------------------------------------------------------------------- o The surviving Joint Owner is the sole primary Beneficiary. If the Joint Owners were spouses there may also be contingent Beneficiaries. However, for tax reasons, we do not allow non-spousal Joint Owners to appoint contingent Beneficiaries. o We will pay a death benefit to the surviving Joint Owner.* For a description of the payout options available, see the "Death Benefit Payment Options" discussion later in this section. o If the Contract includes the Lifetime Plus Benefit and you selected: - single Lifetime Plus Payments and the Joint Owners were not spouses, the benefit will terminate even if the Covered Person is still alive; - single Lifetime Plus Payments and the Joint Owners were spouses, the benefit will terminate unless the surviving spouse/Joint Owner is the Covered Person and they elect to continue the Contract;** or - joint Lifetime Plus Payments, the benefit will terminate unless the surviving spouse/Joint Owner continues the Contract.** ACTION UNDER ANY PORTION OF THE CONTRACT APPLIED TO ANNUITY PAYMENTS -------------------------------------------------------------------------------- o The surviving Joint Owner becomes the sole Owner. o If the deceased was not an Annuitant, Annuity Payments to the Payee will continue. No death benefit is payable. o If the deceased was the only surviving Annuitant, Annuity Payments to the Payee will continue until that portion of the Contract terminates and will be paid at least as rapidly as they were being paid at the Annuitant's death. For more information on when any portion of the Contract applied to Annuity Payments terminates, see section 3, The Annuity Phase - Annuity Payments. No death benefit is payable under Annuity Options 1 through 4. However, there may be a lump sum refund due to the Payee under Annuity Option 5. For more information, see section 3, The Annuity Phase - Annuity Options. o If the deceased was an Annuitant and there is a surviving joint Annuitant, Annuity Payments to the Payee will continue during the lifetime of the surviving joint Annuitant. No death benefit is payable. * If the surviving Joint Owner is the spouse of the deceased Owner, the spouse/surviving Joint Owner may be able to continue the Contract instead of receiving a death benefit payout. If the Contract continues, we will increase the Contract Value to equal the death benefit if that amount is greater than the Contract Value as of the Business Day we receive in good order at our Service Center both due proof of death and an election of the death benefit payment option on the death claim form. If both spousal Joint Owners die before we pay the death benefit, we will pay any contingent Beneficiaries or the estate of the Joint Owner who died last if there are no contingent Beneficiaries. If the Joint Owners were not spouses and they both die before we pay the death benefit, for tax reasons, we will pay the estate of the Joint Owner who died last. ** If the surviving spouse/Joint Owner is a Covered Person and they continue the Contract after we have begun making Lifetime Plus Payments, then Lifetime Plus Payments will continue at 100% of the amount that we were paying before the death of their spouse. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 46 UPON THE DEATH OF THE ANNUITANT AND THERE IS NO SURVIVING JOINT ANNUITANT ACTION UNDER THE PORTION OF THE CONTRACT THAT IS IN THE ACCUMULATION PHASE -------------------------------------------------------------------------------- o If the Contract is owned by a non-individual (for example a qualified plan or a trust), we will treat the death of the Annuitant as the death of an Owner; we will pay the Beneficiary* a death benefit, and a new Annuitant cannot be named. If you selected single Lifetime Plus Payments, the Lifetime Plus Benefit will terminate. If you selected joint Lifetime Plus Payments, the Lifetime Plus Benefit will terminate unless the deceased Annuitant's spouse continues the Contract. o If the deceased Annuitant was not an Owner, and the Contract is owned only by an individual(s), no death benefit is payable. The Owner can name a new Annuitant subject to our approval. o If the deceased Annuitant was a sole Owner, we will pay the Beneficiary* a death benefit. o If the deceased Annuitant was a Joint Owner and there is a surviving Joint Owner, the surviving Joint Owner is the sole primary Beneficiary. If the Joint Owners were spouses, there may also be contingent Beneficiaries. However, for tax reasons, we do not allow non-spousal Joint Owners to appoint contingent Beneficiaries. We will pay a death benefit to the surviving Joint Owner.** o If the Contract includes the Lifetime Plus Benefit and you selected: - single Lifetime Plus Payments and the Contract is solely owned or owned by a non-individual, the benefit will terminate; - single Lifetime Plus Payments and the Contract is jointly owned by non-spouses, the benefit will terminate even if the Covered Person is still alive; - single Lifetime Plus Payments and the Contract is jointly owned by spouses, the benefit will terminate unless the surviving spouse is also the Covered Person and they elect to continue the Contract;*** or - joint Lifetime Plus Payments, the benefit will terminate unless the surviving spouse continues the Contract.*** o For a description of the payout options, see the "Death Benefit Payment Options" discussion later in this section. ACTION UNDER ANY PORTION OF THE CONTRACT APPLIED TO ANNUITY PAYMENTS -------------------------------------------------------------------------------- o Annuity Payments to the Payee will continue until that portion of the Contract terminates and will be paid at least as rapidly as they were being paid at the Annuitant's death. For more information on when any portion of the Contract applied to Annuity Payments terminates, see section 3, The Annuity Phase - Annuity Payments. No death benefit is payable under Annuity Options 1 through 4. However, there may be a lump sum refund due to the Payee under Annuity Option 5. For more information, see section 3, The Annuity Phase - Annuity Options. o If the deceased was a sole Owner, the Beneficiary will become the Owner if the Contract continues. o If the deceased was a Joint Owner, the surviving Joint Owner becomes the sole Owner if the Contract continues. * If the Beneficiary is the spouse of the deceased Owner, the spouse/Beneficiary may be able to continue the Contract instead of receiving a death benefit payout. If the Contract continues, we will increase the Contract Value to equal the death benefit if that amount is greater than the Contract Value as of the Business Day we receive in good order at our Service Center both due proof of death and an election of the death benefit payment option on the death claim form. ** If the surviving Joint Owner is the spouse of the deceased Owner, the spouse/surviving Joint Owner may be able to continue the Contract instead of receiving a death benefit payout. If the Contract continues, we will increase the Contract Value to equal the death benefit if that amount is greater than the Contract Value as of the Business Day we receive in good order at our Service Center both due proof of death and an election of the death benefit payment option on the death claim form. If both spousal Joint Owners die before we pay the death benefit, we will pay any contingent Beneficiaries or the estate of the Joint Owner who died last if there are no contingent Beneficiaries. If the Joint Owners were not spouses and they both die before we pay the death benefit, for tax reasons, we will pay the estate of the Joint Owner who died last. *** If the surviving spouse is a Covered Person and they continue the Contract after we have begun making Lifetime Plus Payments, then Lifetime Plus Payments will continue at 100% of the amount that we were paying before the death of their spouse. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 47 UPON THE DEATH OF THE ANNUITANT AND THERE IS A SURVIVING JOINT ANNUITANT (NOTE: WE DO NOT ALLOW JOINT ANNUITANTS UNDER A PARTIAL ANNUITIZATION AND WE DO NOT ALLOW JOINT ANNUITANTS DURING THE ACCUMULATION PHASE, SO THIS CAN ONLY OCCUR UNDER A FULL ANNUITIZATION) -------------------------------------------------------------------------------- o Only Annuity Options 3 and 4 allow joint Annuitants. Under Annuity Options 3 and 4, Annuity Payments to the Payee will continue during the lifetime of the surviving joint Annuitant and, for Annuity Option 4, during any remaining specified period of time. For more information, see section 3, The Annuity Phase - Annuity Options. o No death benefit is payable. o If the deceased was a sole Owner, the Beneficiary will become the Owner. o If the deceased was a Joint Owner, the surviving Joint Owner becomes the sole Owner. DEATH BENEFIT PAYMENT OPTIONS If you have not previously designated a death benefit payment option, a Beneficiary must request the death benefit be paid under one of the death benefit payment options below. If the Beneficiary is the spouse of the deceased Owner, he/she can choose to continue the Contract in his/her own name. An election by the spouse to continue the Contract must be made on the death claim form before we pay the death benefit. If the Contract continues, we will increase the Contract Value to equal the death benefit if that amount is greater than the Contract Value as of the Business Day we receive in good order at our Service Center both due proof of death and an election of the death benefit payment option. If a lump sum payment is requested, we will pay the amount within seven days of our receipt of proof of death and a valid election of a death benefit payment option, including any required governmental forms, unless the suspension of payments or transfers provision is in effect. Payment of the death benefit may be delayed, pending receipt of any applicable tax consents and/or state forms. We will pay interest as required by the state from the date of death when there is a delay in the payment of the death benefit. OPTION A: Lump sum payment of the death benefit. OPTION B: Payment of the entire death benefit within five years of the date of any Owner's death. OPTION C: If the Beneficiary is an individual, payment of the death benefit as an Annuity Payment under an Annuity Option over the lifetime of the Beneficiary or over a period not extending beyond the life expectancy of the Beneficiary. Distribution under this option must begin within one year of the date of any Owner's death. Any portion of the death benefit not applied to Annuity Payments within one year of the date of the Owner's death must be distributed within five years of the date of death. If the Contract is owned by a non-individual, then we treat the death of any Annuitant as the death of an Owner for purposes of the Internal Revenue Code's distribution at death rules, which are set forth in Section 72(s) of the Code. In all events, notwithstanding any provision to the contrary in the Contract or this prospectus, the Contract will be interpreted and administered in accordance with Section 72(s) of the Code. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 48 11. SELECTION OF OPTIONAL BENEFITS OPTIONAL BENEFIT OVERVIEW: o The QUARTERLY VALUE DEATH BENEFIT is designed for Owners who want the ability to lock in market gains to provide an increased death benefit for Beneficiaries. The death benefit provided by the Quarterly Value Death Benefit will never be less than the Traditional Death Benefit that is available under the Base Contract, but they may be equal. o The BONUS OPTION provides a 6% bonus on each Purchase Payment received before the older Owner's 81st birthday. The bonus may be more than offset by the additional M&E charge and longer withdrawal charge schedule associated with it, and it is not included in any guaranteed values that are based on Purchase Payments. o The SHORT WITHDRAWAL CHARGE OPTION shortens the withdrawal charge from seven to four years. It may not be appropriate if you do not intend to take a withdrawal during the fifth through seventh years after you make a Purchase Payment. o The NO WITHDRAWAL CHARGE OPTION eliminates the withdrawal charge altogether. This benefit requires a higher initial Purchase Payment and the selection of either the Lifetime Plus Benefit or the Target Date Retirement Benefit. It may not be appropriate if you do not intend to take a withdrawal during the first four years after you make a Purchase Payment. o The TARGET DATE RETIREMENT BENEFIT is intended to provide a level of protection for the principal you invest and to lock in any past investment gains at a future point (the Target Value Date) during the Accumulation Phase. The earliest available Target Value Date is seven years after you select the benefit. If you select this benefit we will restrict your ability to make additional Purchase Payments to the first three years after you select the benefit. We will also restrict your flexibility in allocating Contract Value among the Investment Options and we may transfer Contract Value between your selected Investment Options over time based on the length of time until the guarantee takes effect and the performance of your selected Investment Options. The Target Date Retirement Benefit does not provide any guarantee to your Contract Value before the Target Value Date and does not lock in any gains that occur between anniversaries. o The LIFETIME PLUS BENEFIT is designed for those who want lifetime income (called Lifetime Plus Payments) and continued access to Contract Value, and are not concerned that gains will be withdrawn first and taxed as ordinary income. If you select this benefit, we will restrict your flexibility in allocating Contract Value among, and transfers between, the Investment Options. This benefit does not guarantee the performance of any Investment Option. If you do not exercise the benefit during the eligibility period, it will no longer be available and you will have incurred higher Contract charges without receiving any benefit from selecting it. The Lifetime Plus Benefit has an automatic reset feature. Resets will cancel previous guarantees and may cause the additional M&E charge for this benefit to increase. If we increase the additional M&E charge for this benefit due to an automatic reset, you can cancel future automatic resets. However, manual resets will still be available to you. SOME OR ALL OF THE OPTIONAL BENEFITS MAY NOT BE AVAILABLE TO YOU; CHECK WITH YOUR REGISTERED REPRESENTATIVE. Each of the optional benefits carries an additional M&E charge. The Bonus Option also has a longer withdrawal charge schedule. For more information please see section 6, Expenses. The Quarterly Value Death Benefit is available for selection at issue. It is available with all other optional benefits, but once you select this benefit it cannot be removed from your Contract. The additional M&E charge associated with the Quarterly Value Death Benefit will continue until the benefit terminates. You can select ONLY ONE of the three following optional benefits at issue: Bonus Option, Short Withdrawal Charge Option, or No Withdrawal Charge Option. Once you have selected one of these three optional benefits, it cannot be removed from your Contract. The additional M&E charge associated with the Short Withdrawal Charge and the No Withdrawal Charge Option will continue until the earlier of the termination of the benefit, or your Contract Value is fully depleted. The additional M&E charge associated with the Bonus Option will continue until your Contract terminates. You can also select ONLY ONE of the following two optional benefits either at issue or on a Contract Anniversary: Target Date Retirement Benefit or Lifetime Plus Benefit. However, if you selected the No Withdrawal Charge Option you MUST also select ONE of these optional benefits at issue and you cannot remove this benefit without replacing it as discussed later in this section. The Target Date Retirement Benefit is available once before the older Owner's 81st birthday (or the Annuitant's 81st birthday if the Contract is owned by a non-individual) and the Lifetime Plus Benefit is available once -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 49 before the older Covered Person's 81st birthday. If you select one of these optional benefits, the additional M&E charge associated with it will continue until the earlier of its termination, or your Contract Value is fully depleted. Under the Lifetime Plus, you select either single or joint Lifetime Plus Payments at the time you select the benefit. However, you can later change joint Lifetime Plus Payments to a single Lifetime Plus Payment by removing a Covered Person. You can make this change only once. If we approve your request, we will change the M&E charge for this option to equal the M&E charge for single Lifetime Plus Payments that is in effect for a newly issued Contract as of the Contract Anniversary (or Benefit Anniversary, as applicable) after your request is received in good order at our Service Center, only if that amount differs from the current additional M&E charge on your Contract. If you did not select the No Withdrawal Charge Option, you can remove either of these optional benefits subject to certain restrictions. If you remove either of these optional benefits you may be able to make a ONE TIME REPLACEMENT as follows. o Replace the Target Date Retirement Benefit with the Lifetime Plus Benefit. o Replace the Lifetime Plus Benefit with the Target Date Retirement Benefit if your Contract was issued on or after May 1, 2008. THESE ARE THE ONLY REPLACEMENTS WE ALLOW FOR THESE OPTIONAL BENEFITS. In addition, if you selected the No Withdrawal Charge Option, you can only remove the Target Date Retirement Benefit or Lifetime Plus Benefit if you can replace it with the other benefit. Replacements are subject to the age restrictions associated with the selection of optional benefits. In addition, the Lifetime Plus Benefit cannot be replaced after Lifetime Plus Payments have begun. -------------------------------------------------------------------------------- 11.a THE TARGET DATE RETIREMENT BENEFIT Your Contract Value will increase and decrease depending on the performance of the underlying Investment Options you selected. Depending on market conditions, you can gain or lose value in the Investment Options, including your principal. However, the Target Date Retirement Benefit is intended to provide a level of protection for the principal you invest and to lock in any past investment gains at a future point during the Accumulation Phase that you select (the Target Value Date). There is an additional M&E charge for Target Date Retirement Benefit and that charge is guaranteed for the life of the benefit. We calculate the additional M&E charge based on the average daily assets in each subaccount. If you select the Target Date Retirement Benefit, we will restrict your allocations to the Investment Options and we may transfer Contract Value between your selected Investment Options over time based on the length of time until the guarantee takes effect and the performance of your selected Investment Options. If you select the Target Date Retirement Benefit, you can only make additional Purchase Payments to the Contract for the first three years after you select the benefit. If your Contract was issued on or after May 1, 2008, you can select the Target Date Retirement Benefit subject to certain age restrictions either at Contract issue or on a subsequent Contract Anniversary. You can also later remove it from your Contract. However, if you also selected the No Withdrawal Charge Option, you must then replace the Target Date Retirement Benefit with the Lifetime Plus Benefit. If you remove the Target Date Retirement Benefit you cannot reselect it in the future. YOU HAVE LIMITED PROTECTION UNDER THE TARGET DATE RETIREMENT BENEFIT UNLESS YOU HOLD THE CONTRACT UNTIL THE TARGET VALUE DATE. IF YOU THINK THAT YOU MAY DO ANY OF THE FOLLOWING BEFORE THE TARGET VALUE DATE YOU SHOULD CONSIDER WHETHER SELECTING THE TARGET DATE RETIREMENT BENEFIT IS IN YOUR BEST INTEREST: REMOVE THE TARGET DATE RETIREMENT BENEFIT FROM YOUR CONTRACT, TERMINATE THE CONTRACT, OR TAKE A FULL ANNUITIZATION. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 50 The Target Date Retirement Benefit guarantees that, beginning on your Target Value Date (and on each subsequent Contract Anniversary until the benefit terminates) your Contract Value will at least equal the Target Value. The Target Value is the highest Contract Value that occurred at issue or on any subsequent Contract Anniversary, adjusted for any subsequent additional Purchase Payments or partial withdrawals. The earliest available initial Target Value Date is seven years after you select the benefit and the latest available initial date is the Contract Anniversary before the older Owner's 91st birthday. For example, assume you purchase a Contract, select the Target Date Retirement Benefit with the earliest available Target Value Date, make one initial payment, and take no withdrawals. Then, on the seventh Contract Anniversary the Target Date Retirement Benefit guarantees that your Contract Value will be at least the initial Purchase Payment or the highest Contract Value on any Contract Anniversary up to and including the seventh Contract Anniversary. HOWEVER, THE TARGET DATE RETIREMENT BENEFIT DOES NOT PROVIDE ANY GUARANTEE TO YOUR CONTRACT VALUE BEFORE THE TARGET VALUE DATE AND IT DOES NOT LOCK IN ANY GAINS THAT OCCUR BETWEEN ANNIVERSARIES. If your Contract Value is less than this guaranteed amount on the Target Value Date and each subsequent Contract Anniversary, we will credit your Contract Value with the difference. We will allocate this amount to your Investment Options in proportion to the amount of Contract Value in each of the Investment Options on the date of the credit. ADDING THE TARGET DATE RETIREMENT BENEFIT TO YOUR CONTRACT For Contracts issued on or after May 1, 2008, the Target Date Retirement Benefit is available for selection at Contract issue, or on a Contract Anniversary, one time before the older Owner's 81st birthday. YOU CANNOT ADD THE TARGET DATE RETIREMENT BENEFIT TO A CONTRACT THAT WAS ISSUED BEFORE MAY 1, 2008, AFTER THE OLDER OWNER REACHES AGE 81, OR IF YOUR CONTRACT ALREADY INCLUDES THE LIFETIME PLUS Benefit. If the Contract is owned by a non-individual, we base the availability of the benefit on the age of the Annuitant. For Contracts issued on or after May 1, 2008, if you do not select the Target Date Retirement Benefit at Contract issue, you can select it later by completing the appropriate form. We must receive this form no later than 30 days before a Contract Anniversary in order to add the benefit on that anniversary (the rider effective date), and your Contract Value on the rider effective date must be at least $10,000, or $25,000 if you also selected the No Withdrawal Charge Option. On this form we will ask you to reallocate your Contract Value so that it complies with the Investment Option allocation and transfer restrictions discussed later in this section. We consider this reallocation of your Contract Value to be a "good order" issue. We will process your request to add the Target Date Retirement Benefit on the Contract Anniversary that occurs after your request is received in good order at our Service Center and the rider effective date will be that Contract Anniversary. If you add the Target Date Retirement Benefit to your Contract after the Issue Date, then, on the rider effective date, we will increase the M&E charge to equal the amount of the additional M&E charge for the Target Date Retirement Benefit. Because the total M&E charge for the Contract changes, we will adjust the number of Accumulation Units so that the Contract Value on the rider effective date will remain the same. Because the performance of the Investment Options causes the Accumulation Unit values to fluctuate, the adjustment to the number of Accumulation Units may be positive or negative. If you select the Target Date Retirement Benefit, the additional expenses associated with it will continue until the earlier of its termination, or your Contract Value is fully depleted. IF YOU SELECT THE TARGET DATE RETIREMENT BENEFIT, YOU CAN ONLY MAKE ADDITIONAL PURCHASE PAYMENTS AND PARTICIPATE IN THE AUTOMATIC INVESTMENT PLAN FOR THREE YEARS AFTER THE RIDER EFFECTIVE DATE. In addition, the flexible rebalancing program will not be available to you during the period that the Target Date Retirement Benefit is part of your Contract. However, if you remove the Target Date Retirement Benefit from your Contract, these restrictions will no longer apply on or after the rider termination date. NOTE: YOU WILL BE REQUIRED TO TAKE A FULL ANNUITIZATION OF YOUR CONTRACT ON OR BEFORE THE MAXIMUM PERMITTED INCOME DATE. (For more information see section 3, The Annuity Phase.) Upon such a Full Annuitization you will no longer have a Contract Value and, therefore, you will no longer receive any Contract Value increases under the Target Date Retirement Benefit. REMOVING THE TARGET DATE RETIREMENT BENEFIT FROM YOUR CONTRACT Once you have selected the Target Date Retirement Benefit, you can remove it from the Contract at any time. If you remove Target Date Retirement Benefit from your Contract it will not be available for future selection. In addition, if you also selected the No Withdrawal Charge Option, you can only remove the Target Date Retirement Benefit from your Contract if you can replace it with the Lifetime Plus Benefit, as discussed in section 11, Selection of Optional Benefits. You can request the removal of the Target Date Retirement Benefit by completing the appropriate form. We must receive -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 51 this form no later than 30 days before a Contract Anniversary in order to remove the benefit on that anniversary (the rider termination date). We will process your request on the Contract Anniversary that occurs immediately after your request is received in good order at our Service Center. If you remove the Target Date Retirement Benefit from your Contract, we will no longer assess the additional M&E charge associated with it as of the rider termination date. Because the total M&E charge for the Contract changes, we will adjust the number of Accumulation Units so that the Contract Value on the rider termination date will remain the same. Because the performance of the Investment Options causes the Accumulation Unit values to fluctuate, the adjustment to the number of Accumulation Units may be positive or negative. THE TARGET VALUE DATE We may apply a credit to your Contract Value on each Target Value Date. Each Target Value Date will occur on a Contract Anniversary. You select the initial Target Value Date when you add the Target Date Retirement Benefit to your Contract. The earliest initial Target Value Date you can select is seven Contract Years after the rider effective date and the latest initial Target Value Date you can select is the Contract Anniversary before the older Owner's 91st birthday. If the Contract is owned by a non-individual, the latest initial Target Value Date you can select is the Contract Anniversary before the Annuitant's 91st birthday. Additional Target Value Dates will then occur on each subsequent Contract Anniversary while the Target Date Retirement Benefit is in effect. If the Target Value Date does not fall on a Business Day, we will apply a credit to your Contract Value on the next Business Day. Before the older Owner's 81st birthday, you can reset the initial Target Value Date before it occurs as long as the Contract Value is at least equal to the Target Value. If the Contract is owned by a non-individual, the age restriction for resetting the initial Target Value Date is before the Annuitant's 81st birthday. The new initial Target Value Date must be on a Contract Anniversary that is at least seven Contract Years after we process your request for the reset and the latest Target Value Date is the Contract Anniversary before the older Owner's 91st birthday (or the Annuitant's 91st birthday if the Contract is owned by a non-individual). You can request a reset within 30 days following a Contract Anniversary by completing the appropriate form. We will process your reset request as of the immediately preceding Contract Anniversary (the reset anniversary) once your request is received in good order at our Service Center. If the reset anniversary does not fall on a Business Day, we will process your request on the next Business Day. Once we apply a credit to your Contract Value under the Target Date Retirement Benefit, the credit becomes part of your Contract Value and is available for immediate withdrawal. Also, the credit will be allocated proportionately to the Investment Options you chose, and will immediately begin to participate in the investment performance of those Investment Options. Because the credit increases your Contract Value, it will also increase the total dollar amount (but not the percentage) of the M&E charge you pay. We will apply the credit to your Contract before we do any quarterly rebalancing. For tax purposes, the credit will be treated as earnings under the Contract. However, if your Contract Value at the time of a credit is less than net Purchase Payments (total Purchase Payments received less any prior payments withdrawn) then we may treat some or all of the credit as a Purchase Payment when applying the withdrawal charge if the entire Contract Value is then withdrawn. This is similar to when the Contract Value is less than net Purchase Payments, but the Contract Value then experiences a gain immediately before you take a complete withdrawal. We assess withdrawal charges against Purchase Payments withdrawn in the manner described in section 6, Expenses - Withdrawal Charge. CALCULATING THE TARGET VALUE We only calculate the Target Value while the Target Date Retirement Benefit is in effect. If you select the Target Date Retirement Benefit at Contract issue, the Target Value is the greater of the Purchase Payments received on the Issue Date, or the highest Contract Value on any Contract Anniversary. If you select the Target Date Retirement Benefit after issue, the Target Value is the highest Contract Value on the rider effective date or on any subsequent Contract Anniversary. We adjust the Target Value for subsequent additional Purchase Payments, partial withdrawals and Partial Annuitizations. Additional Purchase Payments will increase the Target Value on a dollar-for-dollar basis, but partial withdrawals and Partial Annuitizations will decrease the Target Value proportionately based on the percentage of Contract Value withdrawn (including withdrawal charges) or annuitized. If your Contract Value is less than the Target Value on any Target Value Date, we will apply a credit your Contract Value to equal the Target Value. For more details and examples of how we calculate the Target Value, please see Appendix C. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 52 INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS AND QUARTERLY REBALANCING THESE RESTRICTIONS WILL APPLY ONLY TO CONTRACTS WITH THE TARGET DATE RETIREMENT BENEFIT WHILE THE BENEFIT IS IN EFFECT. BY SELECTING THIS BENEFIT, YOU ARE CONSENTING TO ALLOW US TO REBALANCE YOUR CONTRACT VALUE IN ACCORDANCE WITH THE PROCEDURES DESCRIBED HERE AND IN YOUR CONTRACT. We have put these restrictions in place to support the guarantees that we provide under the Target Date Retirement Benefit, and not to meet your investment objectives. To the extent these restrictions limit your investment flexibility, you may not be able to fully participate in any upside potential returns available from the Investment Options, and your Contract Value may be less than the Contract Value you would have had without the benefit. For more information on the Investment Option groups and the restrictions on allocations to these groups, please see Tables 1, 2 and 3 in Appendix D - Investment Option Allocation and Transfer Restrictions and Quarterly Rebalancing. We limit the amount of Contract Value you can allocate to the Investment Options in Group A to a maximum of between 30% and 5%, and we limit the amount of Contract Value you can allocate to the Investment Options in the combined Groups A, B and X to a maximum of between 95% and 35%. We require you to allocate a minimum of between 5% and 65% of your Contract Value to the Investment Options in Group Y. The minimum and maximum you can allocate to the groups depends on the number of years until the initial Target Value Date and the Contract Value as a percentage of Target Value. The maximums DECREASE and the minimum INCREASES as the number of years until the initial Target Value Date decreases and as the comparison of Contract Value as a percentage of Target Value decreases. However, we limit the amount by which the maximums can decrease in any twelve-month period. WE CANNOT REDUCE THE MAXIMUM PERCENTAGE OF CONTRACT VALUE WE ALLOW IN GROUP A BY MORE THAN 10% IN ANY ONE YEAR, AND WE CANNOT REDUCE THE MAXIMUM PERCENTAGE OF CONTRACT VALUE WE ALLOW IN THE COMBINED GROUPS A, B AND X BY MORE THAN 15% IN ANY ONE YEAR. IF YOU ALLOCATE LESS THAN THE MAXIMUM ALLOWABLE AMOUNT OF CONTRACT VALUE TO THE INVESTMENT OPTIONS IN THE COMBINED GROUPS A, B AND X, YOU MAY BE SUBJECT TO FEWER CHANGES TO THE ALLOCATION OF YOUR CONTRACT VALUE TO THE INVESTMENT OPTIONS OVER TIME AND AS THE COMPARISON OF CONTRACT VALUE AS A PERCENTAGE OF TARGET VALUE DECREASES. Once we reduce the maximum amount of Contract Value we allow in Group A, or in the combined Groups A, B and X, it will never increase unless you are able to reset the initial Target Value Date AND the new maximum allowable allocation is greater than your current required allocation. On each Quarterly Anniversary, we automatically rebalance the amount of Contract Value in each of the Investment Options as discussed in Appendix D. Quarterly rebalancing will continue until the termination of the Target Date Retirement Benefit. This rebalancing applies to all of your selected Investment Options, and not just the ones that are in Groups A, B or X. On each Quarterly Anniversary we will return you to your selected Investment Option allocation mix based on your most recent allocation instructions for future Purchase Payments if these instructions comply with the current maximum allowable allocation for Contract Value in Group A, and the combined Groups A, B and X. However, if your most recent allocation instructions for future Purchase Payments do not meet these maximum limitations, we will rebalance your Contract Value according to the required allocations as described in Appendix D. If you choose to allocate 5% or less of your Contract Value to the Investment Options in Group A; and 35% or less of your Contract Value to the Investment Options in the combined Groups A, B and X; we will never reduce the percentage of Contract Value you allocated to each group, but we will rebalance your Contract Value in your selected Investment Options on each Quarterly Anniversary according to your selected allocations. If you add the Target Date Retirement Benefit to your Contract after the Issue Date, we will ask you to reallocate your Contract Value to comply with the maximum allowable allocations. We will not allow you to add the Target Date Retirement Benefit to your Contract until you have reallocated your Contract Value to comply with the maximum allowable allocations. We will only allow you to make transfers to and from the Investment Option groups as long as you do not exceed the current maximum allowable allocations. However, transfers of Contract Value between Investment Options will not change the allocation instructions for any future Purchase Payments and will not change how we rebalance your Contract Value on each Quarterly Anniversary. In order to change the quarterly rebalancing of your Contract Value when you make a transfer, you must also change your allocation instructions. We will allocate any additional Purchase Payments according to your most recent allocation instructions if they comply with the current maximum allowable allocations; however, if they do not comply, we will instead allocate any additional Purchase Payments according to the current required allocation for each Investment Option that we established on the most recent -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 53 Quarterly Anniversary. (For more information, please see Appendix D.) THESE INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS WILL TERMINATE WHEN THE TARGET DATE RETIREMENT BENEFIT TERMINATES. We will not recategorize the groups to which we assigned the Investment Options currently available under the Contract, but we may add or remove Investment Options from your Contract in the future. If we do, we will provide written notice regarding additions or deletions to the Investment Option groups. TERMINATION OF THE TARGET DATE RETIREMENT BENEFIT The Target Date Retirement Benefit will terminate upon the earliest of the following. o The Business Day we process your request to remove the Target Date Retirement Benefit from the Contract (the rider termination date). o The date of death of any Owner (or Annuitant, if the Contract is owned by a non-individual), unless the surviving spouse elects to continue the Contract. However, if an Owner (or Annuitant, if the Contract is owned by a non-individual) dies and the surviving spouse elects to receive the death benefit, then Target Date Retirement Benefit will terminate as of the end of the Business Day during which we receive in good order at the Service Center, both due proof of death and an election of the death benefit payment option. o The Business Day before the Income Date that you take a Full Annuitization, INCLUDING A REQUIRED FULL ANNUITIZATION ON THE MAXIMUM PERMITTED INCOME DATE. o The Business Day we process your request for a full withdrawal. o Contract termination. -------------------------------------------------------------------------------- 11.b THE LIFETIME PLUS BENEFIT This benefit is designed for those who want lifetime income and continued access to Contract Value, and are not concerned that gains will be withdrawn first and taxed as ordinary income. The Lifetime Plus Benefit is available with the other optional benefits as discussed in section 11, Selection of Optional Benefits. The Lifetime Plus Benefit provides guaranteed lifetime income in the form of partial withdrawals (Lifetime Plus Payments) during the Accumulation Phase. Lifetime Plus Payments are annual payments that we initially base upon your "Benefit Base," your "age band," and whether you select single or joint Lifetime Plus Payments as described in this section of the prospectus. There is an additional M&E charge for the Lifetime Plus Benefit and this charge may increase or decrease in certain situations. We calculate the additional M&E charge based on the average daily assets in each subaccount. Your Lifetime Plus Payment, once established, can increase, but it cannot decrease unless you take an excess partial withdrawal (Excess Withdrawal). Your Lifetime Plus Payments will increase automatically each year based upon increases in your Contract Value, subject to adjustments for Excess Withdrawals. You can select the Lifetime Plus Benefit once, either at Contract issue or on a subsequent Contract Anniversary, subject to certain age restrictions. Once selected, you can remove the Lifetime Plus Benefit before you exercise it. However, if you selected the No Withdrawal Charge Option, you can only remove the Lifetime Plus Benefit if you replace it with the Target Date Retirement Benefit (for more information, see section 11, Selection of Optional Benefits). If you remove the Lifetime Plus Benefit, you cannot reselect it in the future. If you select the Lifetime Plus Benefit, you can exercise it and begin receiving Lifetime Plus Payments at anytime, subject to certain restrictions. If you select the Lifetime Plus Benefit, we will restrict the Investment Options to which you can allocate money under your Contract. If you select the Lifetime Plus Benefit, we will ask you to choose either single Lifetime Plus Payments for the lifetime of the Covered Person, or joint Lifetime Plus Payments for the lifetime of both Covered Persons. For joint Lifetime Plus Payments, the Covered Persons must qualify as spouses under federal law. You declare the Covered Person(s) at the time you add the Lifetime Plus Benefit to your Contract. On the date you exercise the Lifetime Plus Benefit (Benefit Date), for single Lifetime Plus Payments the Covered Person must be at least age 55, and for joint Lifetime Plus Payments the younger Covered Person must be at least age 60. No Covered Person can be over age 90 at the time you exercise the Lifetime Plus Benefit. The earliest possible Benefit Date you can select would be the 1st or 15th of a calendar month that occurs after we issue the Contract. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 54 THERE ARE SEVERAL IMPORTANT POINTS FOR YOU TO CONSIDER BEFORE SELECTING THE LIFETIME PLUS BENEFIT. o The Lifetime Plus Benefit does not create Contract Value or guarantee the performance of any Investment Option. o You cannot exercise the Lifetime Plus Benefit if a Covered Person is younger than age 55 for single Lifetime Plus Payments, or younger than age 60 for joint Lifetime Plus Payments, or if any Covered Person is older than age 90. If you do not exercise the Lifetime Plus Benefit during this eligibility period, it will no longer be available and you will have incurred higher Contract charges without receiving any benefit from it. o If you select the Lifetime Plus Benefit, you can later remove it from the Contract. However, you cannot remove the Lifetime Plus Benefit after you exercise it. If you remove the Lifetime Plus Benefit from your Contract, you may not reselect it. In addition, if you also selected the No Withdrawal Charge Option, you cannot remove this benefit from your Contract unless you replace it with the Target Date Retirement Benefit. o Contracts with the Lifetime Plus Benefit are subject to restrictions on the Investment Options available for allocations and transfers. We have put these restrictions in place to support the guarantees that we provide under the Lifetime Plus Benefit, and not to meet your investment objectives. To the extent that these restrictions limit your investment flexibility, you may not be able to fully participate in any upside potential returns available from the Investment Options, and your Contract Value may be less than the Contract Value you would have had without the Lifetime Plus Benefit. o ONCE LIFETIME PLUS PAYMENTS BEGIN, THEY CANNOT BE STOPPED UNLESS YOU TAKE AN EXCESS WITHDRAWAL OF THE ENTIRE CONTRACT VALUE OR YOU REQUEST A FULL ANNUITIZATION. - If you choose to stop Lifetime Plus Payments and instead take an Excess Withdrawal of the entire Contract Value, the Contract will terminate and you may receive less money than you would have received had you continued to receive Lifetime Plus Payments. - If you choose to stop Lifetime Plus Payments and instead request fixed Annuity Payments under a Full Annuitization, the Lifetime Plus Benefit will terminate and we will no longer assess the M&E charge on that portion of the Contract. If you request variable Annuity Payments under a Full Annuitization, the Lifetime Plus Benefit will terminate and we will reduce the M&E charge on that portion of the Contract. o If a surviving spouse is below the age of 59 1/2 and has joint Lifetime Plus Payments that will continue, the payments will be reported as a premature distribution according to the Code. BE SURE TO DISCUSS WITH YOUR REGISTERED REPRESENTATIVE AND YOUR TAX ADVISER WHETHER THE LIFETIME PLUS BENEFIT IS APPROPRIATE FOR YOUR SITUATION. ADDING THE LIFETIME PLUS BENEFIT TO YOUR CONTRACT You can add the Lifetime Plus Benefit to your Contract once, either at Contract issue or on a Contract Anniversary, subject to the following age restrictions. For single Lifetime Plus Payments, the Covered Person must be at least age 55. For joint Lifetime Plus Payments, the younger Covered Person must be at least age 60. No Covered Person can be over age 80 at the time you select the Lifetime Plus Benefit. YOU CANNOT ADD THE LIFETIME PLUS BENEFIT TO A CONTRACT BEFORE AGE 55 FOR SINGLE LIFETIME PLUS PAYMENTS, OR BEFORE THE YOUNGER COVERED PERSON REACHES AGE 60 FOR JOINT LIFETIME PLUS PAYMENTS, OR AFTER A COVERED PERSON REACHES AGE 81. THIS MEANS THAT JOINT LIFETIME PLUS PAYMENTS WILL NEVER BE AVAILABLE IF THERE IS MORE THAN A 20-YEAR AGE DIFFERENCE BETWEEN SPOUSES. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 55 If you do not select the Lifetime Plus Benefit at Contract issue, you can select it later by completing the appropriate form. However, you cannot select the Lifetime Plus Benefit if your Contract already includes the Target Date Retirement Benefit. We must receive this form no later than 30 days before a Contract Anniversary in order to add the benefit on that anniversary (the rider effective date), and your Contract Value on the rider effective date must be at least either $25,000 if you also selected the No Withdrawal Charge Option, or $10,000. On this form we will ask you to reallocate your Contract Value so that it complies with the Investment Option allocation and transfer restrictions discussed later in this section. We consider the reallocation of your Contract Value to comply with these restrictions to be a "good order" issue. We will process your request to add the Lifetime Plus Benefit after the Issue Date on the Contract Anniversary (or the next Business Day if the Contract Anniversary is not a Business Day) that occurs after your request is received in good order at our Service Center and the rider effective date will be that Contract Anniversary. If you add the Lifetime Plus Benefit to your Contract after the Issue Date, then, on the rider effective date, we will increase the M&E charge to equal the amount of the additional M&E charge for the Lifetime Plus Benefit and the payment type (single life or joint life) that is in effect for a newly issued Contract as of the rider effective date. We guarantee that this additional M&E charge will not exceed the maximum additional M&E charge set forth in the Fee Table for Contracts with the Lifetime Plus Benefit and payment type that you select. Because the total M&E charge for the Contract changes, we will adjust the number of Accumulation Units so that the Contract Value on the rider effective date will remain the same. Because the performance of the Investment Options causes the Accumulation Unit values to fluctuate, the adjustment to the number of Accumulation Units may be positive or negative. If you select the Lifetime Plus Benefit, the additional expenses associated with it will continue until the earlier of its termination or your Contract Value is fully depleted. If you add the Lifetime Plus Benefit to your Contract, the flexible rebalancing program will not be available to you during the period that the Lifetime Plus Benefit is part of your Contract. REMOVING THE LIFETIME PLUS BENEFIT FROM YOUR CONTRACT Once you select the Lifetime Plus Benefit, you can remove it from the Contract at any time before you exercise it. However, if you remove this benefit from your Contract, it will not be available for future selection. In addition, if you also selected the No Withdrawal Charge Option, you can only remove the Lifetime Plus Benefit from your Contract if you replace it with the Target Date Retirement Benefit, as discussed in section 11, Selection of Optional Benefits. You can request the removal of the Lifetime Plus Benefit by completing the appropriate form. We must receive this form no later than 30 days before a Contract Anniversary in order to remove the benefit on that anniversary (the rider termination date). We will process your request on the Contract Anniversary (or the next Business Day if the Contract Anniversary is not a Business Day) that occurs immediately after your request is received in good order at our Service Center. If you remove the Lifetime Plus Benefit from your Contract, we will no longer assess the additional M&E charge associated with it as of the rider termination date. Because the total M&E charge for the Contract changes, we will adjust the number of Accumulation Units so that the Contract Value on the rider termination date will remain the same. Because the performance of the Investment Options causes the Accumulation Unit values to fluctuate, the adjustment to the number of Accumulation Units may be positive or negative. Although you cannot remove the Lifetime Plus Benefit from your Contract after you exercise it, you can terminate it any time after you exercise it by electing to stop Lifetime Plus Payments and instead: o take an Excess Withdrawal of the entire Contract Value, less any withdrawal charge and any deduction we make to reimburse ourselves for premium tax that we pay, or o request Annuity Payments under a Full Annuitization based on the entire Contract Value, less any deduction we make to reimburse ourselves for premium tax that we pay. NOTE: If you do elect to stop Lifetime Plus Payments: o your Lifetime Plus Benefit will terminate and will not be available for future selection, o the Accumulation Phase of the Contract will end, o the death benefit will terminate, and o if you request Annuity Payments, all annuitized portions of the Contract will terminate as indicated in section 3, The Annuity Phase. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 56 WHO IS CONSIDERED A COVERED PERSON(S)? For single Lifetime Plus Payments and for: o solely owned Contracts, the Covered Person is the Owner. o Contracts owned by a non-individual, the Covered Person is the Annuitant. o jointly owned Contracts, you can choose which Owner is the Covered Person subject to the age restriction for adding the Lifetime Plus Benefit to your Contract (must be at least age 55 and cannot be over age 80 at the time you select the benefit). For joint Lifetime Plus Payments, Covered Persons must be spouses and: o the younger Covered Person must be at least age 60 and no Covered Person can be over age 80 at the time you select the benefit. o for Non-Qualified Contracts: - spouses must be Joint Owners; or - one spouse must be the Annuitant and the other spouse must be the sole primary Beneficiary if the sole Owner is a non-individual; or - one spouse must be the sole Owner and Annuitant and the other spouse must be the sole primary Beneficiary. o for Qualified Contracts: - one spouse must be both the sole Owner and Annuitant and the other spouse must be the sole primary Beneficiary; or - if the Contract is owned by a non-individual, then one spouse must be the Annuitant and the other spouse must be the sole primary Beneficiary. However, if we require a non-individual Owner to also be the sole primary Beneficiary, then one spouse must be the Annuitant and the other spouse must be the sole contingent Beneficiary solely for the purpose of determining the Lifetime Plus Payment. After we issue the Lifetime Plus Benefit, you cannot add a Covered Person to your Contract or change Covered Persons. However, you can remove a Covered Person after we issue the Lifetime Plus Benefit if you selected joint Lifetime Plus Payments. YOU CAN MAKE THIS CHANGE ONLY ONCE. If you have not exercised your Lifetime Plus Benefit, you can request the removal of a joint Covered Person within 30 days before a Contract Anniversary by completing the appropriate form. If you exercised your Lifetime Plus Benefit, you can request the removal of a joint Covered Person within 30 days before a Benefit Anniversary by completing the appropriate form. We will process your request on the Contract Anniversary* (or Benefit Anniversary*, as applicable) that occurs immediately after your request is received in good order at our Service Center. If you remove a joint Covered Person from your Contract, we will change the M&E charge for the Lifetime Plus Benefit to equal the M&E charge for single Lifetime Plus Payments that is in effect for a newly issued Contract as of that anniversary ONLY IF THAT AMOUNT DIFFERS FROM THE CURRENT ADDITIONAL M&E CHARGE ON YOUR CONTRACT. If we change the M&E charge, we will adjust the number of Accumulation Units so that the Contract Value on the anniversary that we process your request will remain the same. Because the performance of the Investment Options causes the Accumulation Unit values to fluctuate, the adjustment to the number of Accumulation Units may be positive or negative. * Or on the next Business Day if the Contract Anniversary or Benefit Anniversary is not a Business Day. If you remove a joint Covered Person after you have begun to receive Lifetime Plus Payments, we will compare your current Lifetime Plus Payment to a payment based on the appropriate percentage for the remaining Covered Person's current age and the current Contract Value as of the Benefit Anniversary that we process your removal request (see the age band table in the "Lifetime Plus Payments" discussion later in this section). If the payment based on the appropriate percentage for the remaining Covered Person's current age and Contract Value is greater, we will increase your Lifetime Plus Payment to this new amount. We will not reduce your Lifetime Plus Payment if you remove a Covered Person from your Contract. NOTE: A PERSON WILL NO LONGER QUALIFY AS A COVERED PERSON AND WILL BE REMOVED FROM THE CONTRACT IF THAT PERSON IS NO LONGER AN OWNER, JOINT OWNER, ANNUITANT, SOLE PRIMARY BENEFICIARY, OR SOLE CONTINGENT BENEFICIARY AS REQUIRED ABOVE. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 57 NOTE: If you select joint Lifetime Plus Payments, the Covered Persons must continue to qualify as spouses under federal law until the Lifetime Plus Benefit terminates. Once you declare the Covered Persons, if at any time before the Lifetime Plus Benefit terminates you are no longer spouses, you must send us notice and remove a Covered Person from the Contract. IF ONE COVERED PERSON DIES BEFORE WE RECEIVE NOTICE THAT THE COVERED PERSONS ARE NO LONGER SPOUSES, THEN THE LIFETIME PLUS BENEFIT WILL TERMINATE AND ANY LIFETIME PLUS PAYMENTS WE WERE MAKING WILL STOP. NOTE FOR JOINT OWNERS SELECTING SINGLE LIFETIME PLUS PAYMENTS: If the Joint Owners are not spouses, Lifetime Plus Payments will stop with the death of any Owner. If the Joint Owners are spouses, Lifetime Plus Payments will stop with the death of any Owner unless the surviving spouse Joint Owner is the Covered Person and chooses to continue the Contract. THIS MEANS THAT IF YOU SELECT SINGLE LIFETIME PLUS PAYMENTS ON A JOINTLY OWNED CONTRACT, LIFETIME PLUS PAYMENTS COULD STOP EVEN IF THE COVERED PERSON IS STILL ALIVE. IF YOU EXERCISE THE LIFETIME PLUS BENEFIT o You can no longer remove the Lifetime Plus Benefit from the Contract. o You cannot add a Covered Person, or change Covered Persons. o Partial Annuitizations are no longer available. o You can no longer make additional Purchase Payments to the Contract and the automatic investment plan (AIP) will no longer be available to you. If you are participating in the AIP, your participation will stop. o The free withdrawal privilege will no longer be available to you. However, Lifetime Plus Payments are not subject to a withdrawal charge but they will reduce the Withdrawal Charge Basis. o Excess Withdrawals (including a full withdrawal of the Contract Value) are available while you are receiving Lifetime Plus Payments, are subject to a withdrawal charge and will reduce the Withdrawal Charge Basis, as set out in section 6, Expenses - Withdrawal Charge. o Any Excess Withdrawal will reduce your Lifetime Plus Payment proportionately by the percentage of Contract Value withdrawn (including any withdrawal charge). EXCESS WITHDRAWALS MAY CAUSE LIFETIME PLUS PAYMENTS TO STOP AND THE LIFETIME PLUS BENEFIT TO TERMINATE. o The systematic withdrawal program will no longer be available to you. If you are participating in this program, your participation will stop. o You can only change the ownership of this Contract if you selected joint Lifetime Plus Payments and: - an Owner dies and the spouse continues the Contract, or - you remove a joint Covered Person who is also a Joint Owner from the Contract. In this case, the remaining Covered Person must become the new sole Owner. o The additional M&E charge for the Lifetime Plus Benefit will continue until the earlier of its termination or the total depletion of your Contract Value. o If you have the Quarterly Value Death Benefit, the additional M&E charge for the Quarterly Value Death Benefit will continue as long as the Quarterly Value Death Benefit value is greater than zero. o The portion of the Traditional Death Benefit value that is based on Purchase Payments will no longer increase. o Each Lifetime Plus Payment and any Excess Withdrawal will reduce the portion of the Traditional Death Benefit value that is based on Purchase Payments (or the portion of the Quarterly Value Death Benefit value that is based on the Quarterly Anniversary Value, if applicable) proportionately by the percentage of Contract Value withdrawn (including any withdrawal charge). For more information, please see section 10, Death Benefit - Traditional Death Benefit, and Appendix E, Quarterly Anniversary Value Calculation and Examples - Calculating the Quarterly Anniversary Value under the Quarterly Value Death Benefit. o The Contract Value will continue to fluctuate as a result of market performance, and it will decrease on a dollar for dollar basis with each Lifetime Plus Payment and any Excess Withdrawal. o The 5% Annual Increase can no longer be reset. o We will no longer calculate the Quarterly Anniversary Value or the 5% Annual Increase that are available under the Lifetime Plus Benefit and they will cease to exist. However, if you selected the Quarterly Value Death Benefit, we will continue to calculate it. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 58 o We may apply an annual payment increase to your Lifetime Plus Payment on every Benefit Anniversary after you exercise your Lifetime Plus Benefit and before the older Covered Person's 91st birthday. If you receive an increase to your Lifetime Plus Payment, we reserve the right to change the additional M&E charge for the Lifetime Plus Benefit on every fifth anniversary after you exercise the benefit. This change will take effect 60 days after that fifth Benefit Anniversary if we increased your Lifetime Plus Payments on that Benefit Anniversary or any of the previous four Benefit Anniversaries. o Once Lifetime Plus Payments begin, they cannot be stopped unless you take an Excess Withdrawal of the entire Contract Value or you request a Full Annuitization. LIFETIME PLUS PAYMENTS UNDER THE LIFETIME PLUS BENEFIT To begin receiving Lifetime Plus Payments under the Lifetime Plus Benefit you must submit a payment election form to our Service Center. Lifetime Plus Payments will begin on the Benefit Date, which must be the 1st or 15th of a calendar month. The Benefit Date will be at least 15 calendar days after your request has been received in good order at our Service Center. The last available Benefit Date you can select is the one that occurs before the older Covered Person's 91st birthday. YOU CANNOT EXERCISE THE LIFETIME PLUS BENEFIT IF ANY COVERED PERSON IS OLDER THAN AGE 90. IF YOU HAVE NOT EXERCISED THE LIFETIME PLUS BENEFIT SIX MONTHS BEFORE THE OLDER COVERED PERSON'S 91ST BIRTHDAY, WE WILL SEND YOU WRITTEN NOTICE THAT THE LIFETIME PLUS BENEFIT IS ABOUT TO TERMINATE. IF THE LIFETIME PLUS BENEFIT TERMINATES BEFORE YOU BEGIN RECEIVING LIFETIME PLUS PAYMENTS, YOU WILL HAVE INCURRED HIGHER CONTRACT EXPENSES WITHOUT RECEIVING ANY EXPLICIT ADVANTAGE FROM SELECTING IT. NOTE: IF YOU ADD THE LIFETIME PLUS BENEFIT TO YOUR CONTRACT WHEN THE OLDER COVERED PERSON IS AGE 80, THEN WE WILL EXTEND THE LATEST AVAILABLE BENEFIT DATE BY 30 CALENDAR DAYS IN ORDER TO ALLOW YOU TO RECEIVE THE MAXIMUM BENEFIT FROM THE 5% ANNUAL INCREASE. Keep in mind that the Benefit Date must occur on either the 1st or the 15th of a calendar month. You can elect to receive Lifetime Plus Payments on an annual, semi-annual, quarterly, monthly or semi-monthly basis. Monthly and semi-monthly payments are only available through an electronic transfer of funds. Each Lifetime Plus Payment amount will equal the annual Lifetime Plus Payment divided by the number of payments we will make during the Benefit Year. If the scheduled Lifetime Plus Payment date does not fall on a Business Day, we will make payment to you on the next Business Day. If you exercise the Lifetime Plus Benefit, we will begin making Lifetime Plus Payments as of the Benefit Date based on the Benefit Base (for more information, see "The Benefit Base" discussion later in this section) and the age band of the Covered Person (or younger Covered Person if you select joint Lifetime Plus Payments) as follows: SINGLE LIFETIME PLUS PAYMENTS - ANNUAL LIFETIME PLUS AGE BAND OF THE COVERED PERSON PAYMENT PERCENTAGE ---------------------------------------- ---------------------- ---------------------------------------- ---------------------- 55 to 59 4% 60 to 69 5% 70 to 79 6% 80 or older 7% JOINT LIFETIME PLUS PAYMENTS - ANNUAL LIFETIME PLUS AGE BAND OF THE YOUNGER COVERED PERSON PAYMENT PERCENTAGE ---------------------------------------- ---------------------- 60 to 69 5% 70 to 74 5.5% 75 to 79 6% 80 or older 7% Future Lifetime Plus Payments may increase if there are any gains in the Contract Value or when a Covered Person crosses an age band (for more information see "Automatic Annual Payment Increases to the Lifetime Plus Payments" next in this section). Future Lifetime Plus Payments may decrease if you take an Excess Withdrawal. AN EXCESS WITHDRAWAL WILL REDUCE YOUR LIFETIME PLUS PAYMENT PROPORTIONATELY BY THE PERCENTAGE OF CONTRACT VALUE WITHDRAWN. TAKING EXCESS WITHDRAWALS MAY CAUSE LIFETIME PLUS PAYMENTS TO STOP, AND YOUR BENEFIT WILL TERMINATE. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 59 The percentage of the annual Lifetime Plus Payment is set on the rider effective date and will not change for an age band during the life of the Contract. However, we may use different percentages and age bands for newly issued Contracts in the future. The initial Lifetime Plus Payment must be at least $100. If we are unable to structure the initial Lifetime Plus Payment so that it is at least $100 for the payment frequency you selected, Lifetime Plus Payments will not be available to you and we will contact you to discuss alternate arrangements. For Qualified Contracts, as a courtesy at the end of each calendar year, we will distribute a Lifetime Plus Payment equal to any remaining required minimum distribution that may be due based on the value in this Contract. This distribution will not be subject to a withdrawal charge, and we will not treat it as an Excess Withdrawal. AN EXCESS WITHDRAWAL WILL REDUCE YOUR LIFETIME PLUS PAYMENT PROPORTIONATELY BY THE PERCENTAGE OF CONTRACT VALUE WITHDRAWN. TAKING EXCESS WITHDRAWALS MAY CAUSE LIFETIME PLUS PAYMENTS TO STOP AND THE LIFETIME PLUS BENEFIT TO TERMINATE. IF YOU TAKE AN EXCESS WITHDRAWAL THAT REDUCES YOUR LIFETIME PLUS PAYMENT TO A LEVEL AT WHICH WE ARE UNABLE TO STRUCTURE THE LIFETIME PLUS PAYMENT SO THAT IT IS AT LEAST $100, YOU MUST TAKE AN EXCESS WITHDRAWAL OF THE ENTIRE CONTRACT VALUE, LIFETIME PLUS PAYMENTS WILL STOP, AND THE LIFETIME PLUS BENEFIT WILL TERMINATE. Once each Benefit Year, you can change the frequency of Lifetime Plus Payments for the following Benefit Year. You must provide notice of any requested change to the frequency of your Lifetime Plus Payment to our Service Center at least 30 days before the Benefit Anniversary. We will change the payment frequency on the Benefit Anniversary and the change will remain in effect until the benefit terminates or you request another change. We will deduct each Lifetime Plus Payment proportionately from the Investment Options. We will continue to allocate the Contract Value among the Investment Options according to your instructions while the Lifetime Plus Benefit is in effect. You can also continue to make transfers between the Investment Options while the Lifetime Plus Benefit is in effect (subject to certain restrictions set out in section 4, Investment Options - Transfers and the "Investment Option Allocation and Transfer Restrictions" discussion later in this section). If you fully deplete your Contract Value, you will continue to receive Lifetime Plus Payments until the Lifetime Plus Benefit terminates. If you do not take an Excess Withdrawal of the entire Contract Value while the Lifetime Plus Benefit is in effect, then Lifetime Plus Payments will continue as follows: o For single Lifetime Plus Payments where the Contract is solely owned or owned by a non-individual, Lifetime Plus Payments continue until the death of the Covered Person. o For single Lifetime Plus Payments where the Contract is jointly owned and the Joint Owners are not spouses, Lifetime Plus Payments continue until the death of any Joint Owner. o For single Lifetime Plus Payments where the Contract is jointly owned by spouses, Lifetime Plus Payments continue until the death of any Joint Owner unless the surviving spouse is the Covered Person and elects to continue the Contract. If the surviving spouse is the Covered Person and elects to continue the Contract, Lifetime Plus Payments continue at 100% of the amount that we were paying when both Owners were alive until the death of the Covered Person. o For joint Lifetime Plus Payments, Lifetime Plus Payments continue until the deaths of both Covered Persons so long as the Covered Persons are married at the time of the first Covered Persons death. Upon the death of an Owner (or the Annuitant if the Contract is owned by a non-individual) who is also a Covered Person, if the surviving spouse continues the Contract, joint Lifetime Plus Payments will continue at 100% of the amount that we were paying when both Covered Persons were alive. However, if the surviving spouse elects to receive the death benefit, then Lifetime Plus Payments will stop. NOTE: YOU WILL BE REQUIRED TO TAKE A FULL ANNUITIZATION OF YOUR CONTRACT ON OR BEFORE THE MAXIMUM PERMITTED INCOME DATE. (For more information see section 3, The Annuity Phase.) If you were receiving Lifetime Plus Payments on the maximum permitted Income Date and you elect to apply the remaining Contract Value to fixed Annuity Payments under either Annuity Option 1 or Annuity Option 3, you will receive Annuity Payments equal to the greater of those fixed Annuity Payments or the current Lifetime Plus Payments. If you elect any other Annuity Option, or if you request variable Annuity Payments, this guarantee will not apply. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 60 AUTOMATIC ANNUAL PAYMENT INCREASES TO THE LIFETIME PLUS PAYMENTS On each Benefit Anniversary after you exercise the Lifetime Plus Benefit and before the older Covered Person's 91st birthday, we will increase your Lifetime Plus Payment if there is any gain in the Contract Value since the previous Benefit Anniversary. You will automatically receive an annual payment increase to your Lifetime Plus Payment if the Contract Value on the current Benefit Anniversary is greater than the Contract Value from one year ago on the previous Benefit Anniversary (or in the case of the first Benefit Anniversary, on the Benefit Date). If the Contract Value has increased, we calculate the percentage of growth between these two Contract Values and increase your Lifetime Plus Payment by this percentage. For example, if your Contract Value increases 5%, your annual Lifetime Plus Payment will increase 5%. You may also receive an annual payment increase if the Covered Person (or younger Covered Person in the case of joint Lifetime Plus Payments) has crossed an age band on a Benefit Anniversary and the new Lifetime Plus Payment percentage for that new age band, when applied to the Contract Value as of the Benefit Anniversary, results in a higher Lifetime Plus Payment. In this case, we will increase your Lifetime Plus Payment to this new value as of the Benefit Anniversary you crossed an age band. AUTOMATIC ANNUAL PAYMENT INCREASES TO THE LIFETIME PLUS PAYMENTS ARE NO LONGER AVAILABLE AFTER THE OLDER COVERED PERSON'S 91ST BIRTHDAY OR AFTER YOU FULLY DEPLETE YOUR CONTRACT VALUE. IF WE APPLY AN ANNUAL PAYMENT INCREASE TO YOUR LIFETIME PLUS PAYMENT, WE RESERVE THE RIGHT TO CHANGE THE ADDITIONAL M&E CHARGE FOR THE LIFETIME PLUS BENEFIT TO EQUAL THE CHARGE FOR A NEWLY ISSUED CONTRACT AS OF THE NEXT FIFTH BENEFIT ANNIVERSARY. This change will take effect 60 days after that fifth Benefit Anniversary (for example, on the fifth, tenth and fifteenth Benefit Anniversaries) if we increased your Lifetime Plus Payments on the current Benefit Anniversary or any of the previous four Benefit Anniversaries. If you have not received an increase to your Lifetime Plus Payment on any of these five Benefit Anniversaries, we will not change the additional M&E charge for the Lifetime Plus Benefit. If you have received an increase to your Lifetime Plus Payment on any of these five Benefit Anniversaries, we will change the additional M&E charge for the Lifetime Plus Benefit and payment type (single life or joint life) to the additional M&E charge that is in effect for a newly issued Contract as of the current fifth Benefit Anniversary ONLY IF THIS AMOUNT DIFFERS FROM THE CURRENT ADDITIONAL M&E CHARGE ON YOUR CONTRACT. We will make any change as of the 60th day after the current fifth Benefit Anniversary, or on the next Business Day if the 60th day is not a Business Day. If we change the additional M&E charge, then we will adjust the number of Accumulation Units so that the Contract Value on the 60th day will remain the same. Because the performance of the Investment Options causes the Accumulation Unit values to fluctuate, the adjustment to the number of Accumulation Units may be positive or negative. If this change reduces the additional M&E charge for the Lifetime Plus Benefit, then we will make the change and send you a confirmation letter. IF THIS CHANGE INCREASES THE ADDITIONAL M&E CHARGE FOR THE LIFETIME PLUS BENEFIT, WE WILL SEND YOU WRITTEN NOTICE OF THE INTENDED INCREASE AND PROVIDE YOU AT LEAST A 30-DAY NOTICE PERIOD TO DECLINE THE INCREASE. If you decline the increase to the additional M&E charge, you will no longer be eligible to receive future annual payment increases to your Lifetime Plus Payments, but you will keep the most recent annual payment increase. Also, your annual Lifetime Plus Payment amount will be equal to the annual amount that we established on the current fifth Benefit Anniversary, and it will remain fixed at this level until the Lifetime Plus Benefit terminates, unless you take an Excess Withdrawal. IF YOU DO NOT NOTIFY US OF YOUR INTENTION TO DECLINE THE INCREASE TO THE ADDITIONAL M&E CHARGE FOR THE LIFETIME PLUS BENEFIT DURING THE 30-DAY NOTICE PERIOD, WE WILL ASSUME THAT YOU HAVE ACCEPTED THE INCREASE AND WE WILL MAKE THE CHANGE. We guarantee that, if we increase the additional M&E charge associated with the Lifetime Plus Benefit, that charge will not exceed the maximum additional M&E charge for Contracts with the Lifetime Plus Benefit and payment type (single life or joint life) that is set forth in the Fee Tables. If you accept an increase to the additional M&E charge associated with the Lifetime Plus Benefit, then you continue to be eligible to receive future annual payment increases. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 61 EXAMPLE OF THE ANNUAL PAYMENT INCREASE o You select single Lifetime Plus Payments under the Lifetime Plus Benefit when you are age 57. You are the only Owner and are also the Covered Person. Your initial Lifetime Plus Payment percentage is 4% and your Benefit Base is $105,000. You select annual Lifetime Plus Payments.
ANNUAL LIFETIME PLUS ANNUAL PAYMENT AGE CONTRACT VALUE PAYMENT PERCENTAGE Benefit Date 57 $100,000 $4,200 4% First Benefit Anniversary 58 $102,000 $4,284 4% Second Benefit Anniversary 59 $98,000 $4,284 4% Third Benefit Anniversary 60 $100,000 $5,000 5% o On the first Benefit Anniversary the current Contract Value is greater than the Contract Value on the Benefit Date. The percentage of the increase is ($102,000 - $100,000) / $100,000 = 2%. We then apply a 2% annual payment increase to the Lifetime Plus Payment ($4,200 x 1.02 = $4,284). o On the second Benefit Anniversary the current Contract Value is less than the Contract Value on the first Benefit Anniversary so there is no annual payment increase due to an increase in the Contract Value. On the second Benefit Anniversary you are age 59 and there is also no annual payment increase as a result of your crossing an age band. o On the third Benefit Anniversary the current Contract Value is greater than the Contract Value on the second Benefit Anniversary. The percentage of the increase is ($100,000 - $98,000) / $98,000 = 2%. We then apply a 2% annual payment increase to the Lifetime Plus Payment ($4,284 x 1.02 = $4,370). However, on this Benefit Anniversary you have also crossed an age band and your Lifetime Plus Payment percentage has increased to 5%. We then compare the payment based on the new Lifetime Plus Payment percentage and current Contract Value ($100,000 x 0.05 = $5,000) to the current payment (which has been increased to $4,370 as a result of the growth in Contract Value during the past year). Because the Lifetime Plus Payment based on the new percentage and current Contract Value is greater than the payment based on the growth in Contract Value, we will increase the payment to $5,000. EXAMPLE OF THE EFFECT OF AN EXCESS WITHDRAWAL ON THE LIFETIME PLUS PAYMENT o Continuing the example above, assume that during the fourth Benefit Year you take an Excess Withdrawal of $8,820 at a time when the Contract Value is $98,000. ANNUAL LIFETIME PLUS ANNUAL PAYMENT CONTRACT VALUE PAYMENT PERCENTAGE Third Benefit Anniversary $100,000 $5,000 5% Immediately After Withdrawal $89,180 $4,550 Fourth Benefit Anniversary $99,000 $4,550 5%
o As a percentage of Contract Value, the Excess Withdrawal represents 9.0% of Contract Value ($8,820 / $98,000 = 9.0%). Immediately after the Excess Withdrawal, we reduce the Contract Value by the amount of the Excess Withdrawal ($98,000 - $8,820 = $89,180) and we reduce the Annual Lifetime Plus Payment by the percentage of Contract Value withdrawn ($5,000 - (9.0% x $5,000) = $4,550). o On the fourth Benefit Anniversary the current Contract Value is less than the Contract Value on the third Benefit Anniversary and there is no annual payment increase as a result of growth in the Contract Value. On the fourth Benefit Anniversary you are age 62 and there is also no annual payment increase as a result of your crossing an age band. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 62 THE BENEFIT BASE We base the initial Lifetime Plus Payments on the Benefit Base and the age band of the Covered Person(s). YOU CAN ACCESS THE BENEFIT BASE ONLY BY TAKING LIFETIME PLUS PAYMENTS. On the date you exercise the Lifetime Plus Benefit and Lifetime Plus Payments begin (the Benefit Date), the Benefit Base is equal to the greatest of: o the Contract Value, or o the Quarterly Anniversary Value, or o the 5% Annual Increase. NOTE: The greater the Benefit Base, the greater the Lifetime Plus Payment you will receive. Beginning on the Benefit Date, your Lifetime Plus Payment will only increase through the automatic annual payment increase feature (which is only available before the older Covered Person's 91st birthday). NOTE: UNDER THE LIFETIME PLUS BENEFIT, WE NO LONGER CALCULATE THE QUARTERLY ANNIVERSARY VALUE OR THE 5% ANNUAL INCREASE BEGINNING ON THE EARLIER OF THE OLDER COVERED PERSON'S 91ST BIRTHDAY OR THE BENEFIT DATE. If you have not exercised the Lifetime Plus Benefit as of the older Covered Person's 91st birthday, these values will cease to exist and the Lifetime Plus Benefit will no longer be available to you. However, if you selected the Quarterly Value Death Benefit, we will continue to calculate it. NOTE FOR CONTRACTS WITH THE BONUS OPTION: YOU WILL NOT RECEIVE THE AMOUNT OF THE BONUS CREDITED IN THE PORTIONS OF THE QUARTERLY ANNIVERSARY VALUE AND THE 5% ANNUAL INCREASE THAT ARE BASED ON PURCHASE PAYMENTS. THE QUARTERLY ANNIVERSARY VALUE If you select the Lifetime Plus Benefit at Contract issue, the Quarterly Anniversary Value is the greater of the Purchase Payments received on the Issue Date, or the highest Contract Value on any Quarterly Anniversary. If you select the Lifetime Plus Benefit after issue, the Quarterly Anniversary Value is the highest Contract Value on the rider effective date or on any subsequent Quarterly Anniversary. We adjust the Quarterly Anniversary Value for subsequent additional Purchase Payments, partial withdrawals and Partial Annuitizations. For more details and examples of how we calculate the Quarterly Anniversary Value, please see Appendix E. THE 5% ANNUAL INCREASE Under the 5% Annual Increase we guarantee that, IF YOU SELECT THE LIFETIME PLUS BENEFIT AT ISSUE AND ALL PURCHASE PAYMENTS ARE RECEIVED WITHIN 90 DAYS OF THE ISSUE DATE, then the Benefit Base will at least equal total Purchase Payments plus 5% of those payments on each of the next ten Contract Anniversaries. Under the 5% Annual Increase we guarantee that, IF YOU SELECT THE LIFETIME PLUS BENEFIT AFTER THE ISSUE DATE, OR IF YOU RESET THE 5% ANNUAL INCREASE, AND YOU MAKE NO ADDITIONAL PURCHASE PAYMENTS AFTER THE RIDER EFFECTIVE DATE OR AFTER THE RESET ANNIVERSARY, then the Benefit Base will at least equal the Contract Value as of the rider effective date or reset anniversary plus 5% of that initial Contract Value from the rider effective date or the reset anniversary on each of the next ten Contract Anniversaries. IF ANY PURCHASE PAYMENTS ARE RECEIVED MORE THAN 90 DAYS AFTER THE ISSUE DATE - OR IF THEY ARE RECEIVED AFTER THE RIDER EFFECTIVE DATE OR RESET ANNIVERSARY - then we will add these Purchase Payments to the 5% Annual Increase on the Business Day we receive them, and we will add 5% of these payments to the 5% Annual Increase on each of the second through eleventh Contract Anniversaries after we receive the payments. We adjust the 5% Annual Increase proportionately for each partial withdrawal and Partial Annuitization. For more details and examples of how we calculate the 5% Annual Increase, please see Appendix F. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 63 RESETTING THE 5% ANNUAL INCREASE Before the older Covered Person's 81st birthday and before you exercise the Lifetime Plus Benefit, we automatically reset the 5% Annual Increase to equal the Contract Value if that amount is greater than 5% Annual Increase on the Contract Anniversary. If we automatically reset the 5% Annual Increase, we will change the additional M&E charge for the Lifetime Plus Benefit and payment type (single life or joint life) to equal the additional M&E charge that is in effect for a newly issued Contract as of the reset anniversary IF THIS AMOUNT DIFFERS FROM THE CURRENT ADDITIONAL M&E CHARGE ON YOUR CONTRACT. We will notify you of any pending increase in the additional M&E charge and give you 30 days to accept the higher additional M&E charge or opt out of future automatic resets. If you accept the higher additional M&E charge, then we will increase the charge 60 days after the reset anniversary, or the next Business Day if the 60th day is not a Business Day. If instead you "opt out" of future automatic resets, we will not adjust the additional M&E charge and you will no longer receive any automatic resets, but we do not cancel the last automatic reset you received. However, if you opt out of the automatic resets before the older Covered Person's 81st birthday and before you exercise the Lifetime Plus Benefit, you will still be able to request a manual reset. You can request a manual reset within 30 days following a Contract Anniversary by completing the appropriate form. We will process your manual reset request as of the immediately preceding Contract Anniversary (the reset anniversary) once your request is received in good order at our Service Center. If the reset anniversary does not fall on a Business Day, we will process your request on the next Business Day. When we process your manual reset request, we will change the 5% Annual Increase to equal the Contract Value as of the reset anniversary. If you request a manual reset of the 5% Annual Increase, we will also change the M&E charge for the Lifetime Plus Benefit and payment type (single life or joint life) to equal the additional M&E charge that is in effect for a newly issued Contract as of the reset anniversary IF THIS AMOUNT DIFFERS FROM THE CURRENT M&E CHARGE ON YOUR CONTRACT. We will change the additional M&E charge on the 30th day following the reset anniversary, or the next Business Day if the 30th day is not a Business Day. We guarantee that the new additional M&E charge for the Lifetime Plus Benefit will not be more than the maximum additional M&E charge for Contracts with the Lifetime Plus Benefit and payment type (single life or joint life) that is set forth in the Fee Tables. If we change the additional M&E charge we will adjust the number of Accumulation Units so that the Contract Value on the 30th day will remain the same. Because the performance of the Investment Options causes the Accumulation Unit values to fluctuate, the adjustment to the number of Accumulation Units may be positive or negative. If the 5% Annual Increase is reset, we guarantee that the new additional M&E charge for the Lifetime Plus Benefit will not be more than the maximum additional M&E charge for Contracts with the Lifetime Plus Benefit and payment type (single life or joint life) that is set forth in the Fee Tables. If we change the additional M&E charge, then we will adjust the number of Accumulation Units so that the Contract Value on the 30th day will remain the same. Because the performance of the Investment Options causes the Accumulation Unit values to fluctuate, the adjustment to the number of Accumulation Units may be positive or negative. NOTE: You cannot request a reset: o if the Contract Value is less than the 5% Annual Increase, o on or after the older Covered Person's 81st birthday, o on or after the Benefit Date that you exercise the Lifetime Plus Benefit, or o on or after the Income Date that you take a Full Annuitization. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 64 INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS AND QUARTERLY REBALANCING THESE RESTRICTIONS WILL APPLY ONLY TO CONTRACTS WITH THE LIFETIME PLUS BENEFIT. BY SELECTING THE LIFETIME PLUS BENEFIT, YOU ARE CONSENTING TO HAVE US REBALANCE YOUR CONTRACT VALUE IN ACCORDANCE WITH THE PROCEDURES DESCRIBED HERE AND IN YOUR CONTRACT. We have put these restrictions in place to support the guarantees that we provide under this benefit, and not to meet your investment objectives. To the extent these restrictions limit your investment flexibility, you may not be able to fully participate in any upside potential returns available from the Investment Options, and your Contract Value may be less than the Contract Value you would have had without the benefit. Under Contracts with the Lifetime Plus Benefit, we will restrict your selection of certain Investment Options and the percentage of Contract Value that you can have in certain Investment Options as follows. o YOU CANNOT HAVE MORE THAN 25% OF YOUR TOTAL CONTRACT VALUE IN THE GROUP A INVESTMENT OPTIONS. o YOU CANNOT HAVE MORE THAN 70% OF YOUR TOTAL CONTRACT VALUE IN BOTH GROUP A AND GROUP B INVESTMENT OPTIONS. o WE DO NOT LIMIT THE AMOUNT OF CONTRACT VALUE THAT YOU CAN HAVE IN THE GROUP C INVESTMENT OPTIONS.
Group A Investment Options AZL Columbia Technology Fund AZL Small Cap Stock Index Fund AZL Turner Quantitative Small Cap Growth Fund AZL Dreyfus Premier Small Cap Value Fund AZL Van Kampen Global Real Estate Fund AZL Franklin Small Cap Value Fund Davis VA Financial Portfolio AZL OCC Opportunity Fund Franklin Global Communications Securities Fund AZL Schroder Emerging Markets Equity Fund PIMCO VIT CommodityRealReturn Strategy Portfolio AZL Schroder International Small Cap Fund Group B Investment Options AZL AIM International Equity Fund AZL Oppenheimer International Growth Fund AZL Oppenheimer Main Street Fund AZL Davis NY Venture Fund AZL PIMCO Fundamental IndexPLUS Total Return Fund AZL Dreyfus Founders Equity Growth Fund AZL S&P 500 Index Fund AZL First Trust Target Double Play Fund AZL TargetPLUS Equity Fund AZL Jennison 20/20 Focus Fund AZL Van Kampen Comstock Fund AZL Jennison Growth Fund AZL Van Kampen Global Franchise Fund AZL Legg Mason Growth Fund AZL Van Kampen Growth and Income Fund AZL Legg Mason Value Fund AZL Van Kampen Mid Cap Growth Fund AZL LMP Large Cap Growth Fund Mutual Discovery Securities Fund AZL NACM International Fund Mutual Shares Securities Fund AZL Neuberger Berman Regency Fund OpCap Mid Cap Portfolio AZL OCC Value Fund Templeton Growth Securities Fund AZL Oppenheimer Global Fund Group C Investment Options AZL Fusion Balanced Fund Franklin Templeton VIP Founding Funds Allocation Fund Franklin U.S. Government Fund AZL Fusion Growth Fund Franklin Zero Coupon Fund 2010 AZL Fusion Moderate Fund PIMCO VIT All Asset Portfolio AZL Money Market Fund PIMCO VIT Emerging Markets Bond Portfolio AZL TargetPLUS Balanced Fund PIMCO VIT Global Bond Portfolio (Unhedged) AZL TargetPLUS Growth Fund PIMCO VIT High Yield Portfolio AZL TargetPLUS Moderate Fund PIMCO VIT Real Return Portfolio AZL Van Kampen Equity and Income Fund PIMCO VIT Total Return Portfolio BlackRock Global Allocation V.I. Fund Templeton Global Income Securities Fund Franklin High Income Securities Fund Franklin Income Securities Fund
-------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 65 We will only allow you to make allocations and transfers to and from Group A and Group B Investment Options as long as you do not exceed these limitations. If you add the Lifetime Plus Benefit to your Contract after the Issue Date, we will ask you to reallocate your Contract Value to comply with these restrictions. We will not allow you to add the Lifetime Plus Benefit rider to your Contract until you have reallocated your Contract Value to comply with these restrictions. THESE INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS WILL TERMINATE WHEN THE LIFETIME PLUS BENEFIT TERMINATES. In addition, on each Quarterly Anniversary we will automatically rebalance the amount of Contract Value in each of your selected Investment Options to return you to your selected Investment Option allocation mix based on your most recent allocation instructions for future Purchase Payments. Once your money has been invested, the performance of the Investment Options may cause your chosen allocation to shift. Quarterly rebalancing helps you maintain your specified allocation mix among the different Investment Options. There are no fees for the quarterly rebalancing transfers we make, and we do not currently count these transfers against any free transfers that we allow. This rebalancing applies to all of your selected Investment Options and not just the ones that are in Group A or Group B. Keep in mind the transfers of Contract Value between the Investment Options will not change the allocation instructions for any future Purchase Payments and will not change how we rebalance your Contract Value on each Quarterly Anniversary. In order to change the quarterly rebalancing of your Contract Value when you make a transfer, you must change your allocation instructions. We will not recategorize the Investment Options currently available under the Contract, but we may add or remove Investment Options from your Contract in the future. If we do, we will provide written notice regarding additions or deletions to the Investment Option groups. TAXATION OF LIFETIME PLUS PAYMENTS Lifetime Plus Payments that you receive before your Contract Value is fully depleted will be treated as withdrawals for tax purposes. This means that for Non-Qualified Contracts, Contract gains from the entire Contract are considered to be distributed first and are subject to ordinary income tax. Purchase Payments are distributed after gains have been paid out and are generally considered to be a return of your investment and are not subject to income tax. While tax law is not entirely clear as to the proper tax treatment, we intend to treat Lifetime Plus Payments that you receive on or after your Contract Value has been fully depleted as Annuity Payments under a Full Annuitization. For Qualified Contracts, the entire Lifetime Plus Payment will most likely be subject to ordinary income tax. In addition, Lifetime Plus Payments may be subject to premium taxes and, if any Owner is younger than age 59 1/2, may also be subject to a 10% federal penalty tax. Lifetime Plus Payments are not subject to a withdrawal charge. If you are taking withdrawals from the Contract under Section 72(t) or 72(q) of the Code and you begin Lifetime Plus Payments before the required series of withdrawals is complete, you may incur a 10% federal penalty tax. TERMINATION OF THE LIFETIME PLUS BENEFIT BEFORE YOU EXERCISE THE LIFETIME PLUS BENEFIT (THE BENEFIT DATE), THE BENEFIT WILL TERMINATE UPON THE EARLIEST OF THE FOLLOWING. o The Business Day we process your request to remove the Lifetime Plus Benefit from the Contract (the rider termination date). o The date of death of all Covered Persons. o The older Covered Person's 91st birthday. o The Business Day before the Income Date that you take a Full Annuitization, INCLUDING A REQUIRED FULL ANNUITIZATION ON THE MAXIMUM PERMITTED INCOME DATE. o The Business Day we process your request for a full withdrawal. o Contract termination. ON AND AFTER THE BENEFIT DATE THAT YOU EXERCISE THE LIFETIME PLUS BENEFIT, IT WILL TERMINATE UPON THE EARLIEST OF THE FOLLOWING. o The Business Day you take an Excess Withdrawal of the entire Contract Value. (If you take an Excess Withdrawal that reduces Lifetime Plus Payments to a level at which we are unable to structure the Lifetime Plus Payment so that it is at least $100, then you must take an Excess Withdrawal of the entire Contract Value.) o The Business Day before the Income Date that you take a Full Annuitization, INCLUDING A REQUIRED FULL ANNUITIZATION ON THE MAXIMUM PERMITTED INCOME DATE. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 66 o For single Lifetime Plus Payments when the Contract is solely owned or owned by a non-individual, the date of death of the Covered Person. o For single Lifetime Plus Payments when the Contract is jointly owned and the Joint Owners are not spouses, the date of death of any Joint Owner. o For single Lifetime Plus Payments when the Contract is jointly owned by spouses, the date of death of any Joint Owner unless the surviving spouse is the Covered Person and elects to continue the Contract. If the surviving spouse who is also the Covered Person continues the Contract, the Lifetime Plus Benefit will terminate on the date of death of the Covered Person. o For joint Lifetime Plus Payments, the date of death of both Covered Persons. However, if an Owner (or Annuitant, if the Contract is owned by a non-individual) dies and the surviving spouse, who is also a Covered Person, elects to receive the death benefit payout instead of continuing the Contract, then Lifetime Plus Payments will stop and the Lifetime Plus Benefit will terminate as of the end of the Business Day during which we receive in good order at the Service Center, both due proof of death and an election of the death benefit payment option. o Contract termination. -------------------------------------------------------------------------------- 11.c OTHER OPTIONAL BENEFITS QUARTERLY VALUE DEATH BENEFIT The Quarterly Value Death Benefit is designed for Owners who want the ability to lock in market gains to provide an increased death benefit for Beneficiaries. It provides a death benefit during the Accumulation Phase based on the greater of the Purchase Payments received on the Issue Date, or the highest Contract Value that occurred on any Quarterly Anniversary before age 91, adjusted for subsequent additional Purchase Payments, partial withdrawals and Partial Annuitizations. The Quarterly Value Death Benefit is only available at issue and it carries an additional M&E charge. We calculate the additional M&E charge based on the average daily assets in each subaccount. The Quarterly Value Death Benefit is available with all other optional benefits. THE DEATH BENEFIT PROVIDED BY THE QUARTERLY VALUE DEATH BENEFIT WILL NEVER BE LESS THAN THE TRADITIONAL DEATH BENEFIT THAT IS AVAILABLE UNDER THE BASE CONTRACT, BUT THEY MAY BE EQUAL. ONCE YOU SELECT THE QUARTERLY VALUE DEATH BENEFIT YOU CANNOT CANCEL IT. CHECK WITH YOUR REGISTERED REPRESENTATIVE REGARDING AVAILABILITY OF THE QUARTERLY VALUE DEATH BENEFIT AND BE SURE TO DISCUSS WHETHER THIS BENEFIT IS APPROPRIATE FOR YOUR SITUATION. Under the Quarterly Value Death Benefit the amount of the death benefit will be the greater of 1 or 2, less any deduction we make to reimburse ourselves for premium tax that we pay. 1. The Contract Value, determined as of the end of the Business Day during which we receive in good order at our Service Center both due proof of death* and an election of the death benefit payment option. 2. The Quarterly Anniversary Value. We determine the Quarterly Anniversary Value as of the end of the Business Day during which we receive in good order at our Service Center both due proof of death* and an election of the death benefit payment option. For more details and examples of how we calculate the Quarterly Anniversary Value, please see Appendix E. * Please see section 10, Death Benefit for details on what we consider to be due proof of death. NOTE FOR CONTRACTS WITH THE BONUS OPTION: BONUS AMOUNTS ARE INCLUDED IN THE CALCULATION OF THE PORTION OF THE DEATH BENEFIT THAT IS BASED ON CONTRACT VALUE. WE DO NOT INCLUDE THE BONUS IN THE PORTION OF THE DEATH BENEFIT THAT IS BASED ON PURCHASE PAYMENTS. NOTE FOR CONTRACTS WITH THE LIFETIME PLUS BENEFIT: If you begin receiving Lifetime Plus Payments, then on and after the Benefit Date: o we will no longer calculate the Benefit Base or the associated Quarterly Anniversary Value or 5% Annual Increase and they will all cease to exist; o the Quarterly Anniversary Value under the Quarterly Anniversary Value Death Benefit will decrease proportionately by the percentage of Contract Value withdrawn (including any withdrawal charge) for each Lifetime Plus Payment and any Excess Withdrawal; -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 67 o the death benefit that is equal to your Contract Value will continue to fluctuate with market performance but it will decrease on a dollar for dollar basis with each Lifetime Plus Payment we make and any Excess Withdrawal you take; and o the additional M&E charge associated with the Quarterly Value Death Benefit will continue as long as the Quarterly Anniversary Value is greater than zero. THE QUARTERLY VALUE DEATH BENEFIT WILL TERMINATE UPON THE EARLIEST OF THE FOLLOWING. o The Business Day before the Income Date that you take a Full Annuitization, INCLUDING A REQUIRED FULL ANNUITIZATION ON THE MAXIMUM PERMITTED INCOME DATE. For more information, see section 3, The Annuity Phase. o The Business Day that the Quarterly Anniversary Value and Contract Value are both zero. o Contract termination. BONUS OPTION The Bonus Option is designed for Owners who believe that the return on the investment of the bonus in the Investment Options will at least offset the additional costs associated with the Bonus Option. This option provides a 6% bonus on each Purchase Payment we receive before the older Owner's 81st birthday (or the Annuitant's 81st birthday if the Contract is owned by a non-individual). After a withdrawal of Purchase Payments, a bonus is only applicable to additional Purchase Payment amounts in excess of all previous Purchase Payments withdrawn. The Bonus Option is only available at issue and it carries an additional M&E charge and a higher and longer withdrawal charge schedule. We calculate the additional M&E charge based on the average daily assets in each subaccount. ONCE YOU SELECT THE BONUS OPTION, YOU CANNOT CANCEL IT. THE BONUS OPTION IS AVAILABLE WITH ONE OF THE FOLLOWING OPTIONAL BENEFITS: TARGET DATE RETIREMENT BENEFIT OR LIFETIME PLUS BENEFIT. IT IS NOT AVAILABLE IF YOU SELECT EITHER THE SHORT WITHDRAWAL CHARGE OPTION OR THE NO WITHDRAWAL CHARGE OPTION. FOR MORE INFORMATION, PLEASE SEE SECTION 11, SELECTION OF OPTIONAL BENEFITS. THE BONUS MAY BE MORE THAN OFFSET BY THE ADDITIONAL FEES AND CHARGES ASSOCIATED WITH THE BONUS OPTION. CHECK WITH YOUR REGISTERED REPRESENTATIVE REGARDING AVAILABILITY OF THE BONUS OPTION AND BE SURE TO DISCUSS WHETHER THIS BENEFIT IS APPROPRIATE FOR YOUR SITUATION. The IRS has not reviewed the Contract for qualification as an IRA and has not issued a ruling as to whether a bonus benefit comports with IRA requirements. Consult your tax adviser before purchasing a Contract with a Bonus Option. We will credit the bonus to your Contract subject to the following terms. 1) We treat all bonus amounts and any gains or losses attributable to such amounts as earnings under the Contract and are treated as such for purposes of the withdrawal charge as well as for tax purposes. 2) All gains and losses attributable to the bonus are part of your Contract Value. 3) If the Contract is owned by a non-individual, then we use the age of the Annuitant to determine whether a bonus applies. The bonus is not included in any of the guaranteed benefits that are based on Purchase Payments, but it is included in the guaranteed benefits that are based on Contract Value. We pay all bonus amounts from the general account assets of Allianz Life of New York. Your Contract incurs expenses on the total Contract Value, which includes the bonus. If you cancel your Contract during the free look/right to examine period, you will forfeit your bonus. It is possible upon withdrawal, particularly in a declining market and since charges will have been assessed against the Contract Value (which includes the bonus), that you will receive less money back than you would have if you had not received the bonus or had not selected the Bonus Option. We expect to profit from certain charges assessed under the Contract (for example, the withdrawal charge and the M&E charge) associated with the Bonus Option. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 68 SHORT WITHDRAWAL CHARGE OPTION The Short Withdrawal Charge Option is designed for Owners who are concerned with short-term liquidity. This option shortens the withdrawal charge period for your Contract from seven years to four years (for more information, see section 6, Expenses - Withdrawal Charge). The Short Withdrawal Charge Option is only available at issue, it only applies during the Accumulation Phase of the Contract and it carries an additional M&E charge. We calculate the additional M&E charge based on the average daily assets in each subaccount. ONCE YOU SELECT THE SHORT WITHDRAWAL CHARGE OPTION, YOU CANNOT CANCEL IT. THE SHORT WITHDRAWAL CHARGE OPTION IS AVAILABLE WITH ONE OF THE FOLLOWING OPTIONAL BENEFITS: TARGET DATE RETIREMENT BENEFIT OR LIFETIME PLUS BENEFIT. IT IS NOT AVAILABLE IF YOU SELECT EITHER THE BONUS OPTION OR NO WITHDRAWAL CHARGE OPTION. FOR MORE INFORMATION, PLEASE SEE SECTION 11, SELECTION OF OPTIONAL BENEFITS. BECAUSE THE SHORT WITHDRAWAL CHARGE OPTION CARRIES AN ADDITIONAL CHARGE, IT MAY NOT BE APPROPRIATE IF YOU DO NOT INTEND TO TAKE A WITHDRAWAL DURING THE FIFTH THROUGH SEVENTH COMPLETE YEARS FOLLOWING OUR RECEIPT OF YOUR PURCHASE PAYMENT. CHECK WITH YOUR REGISTERED REPRESENTATIVE REGARDING THE AVAILABILITY OF THE SHORT WITHDRAWAL CHARGE OPTION AND BE SURE TO DISCUSS WHETHER THIS OPTION IS APPROPRIATE FOR YOUR SITUATION. NO WITHDRAWAL CHARGE OPTION Owners can eliminate withdrawal charges under their Contract by selecting the No Withdrawal Charge Option at issue. This option carries an additional M&E charge. We calculate the additional M&E charge based on the average daily assets in each subaccount. Contracts with the No Withdrawal Charge Option require a higher initial Purchase Payment than all other types of Allianz Vision Contracts (for example, $25,000 rather than $10,000). The No Withdrawal Charge Option is not available if you select either the Bonus Option or Short Withdrawal Charge Option. ONCE YOU SELECT THE NO WITHDRAWAL CHARGE OPTION, YOU CANNOT CANCEL IT. If you select the No Withdrawal Charge Option you must also select either Target Date Retirement Benefit or Lifetime Plus Benefit. If you select the No Withdrawal Charge Option, you may be able to remove the Target Date Retirement Benefit if you can replace it with the Lifetime Plus Benefit and vice versa. Replacements are subject to the age restrictions associated with the selection of the optional benefits and the Lifetime Plus Benefit cannot be replaced after Lifetime Plus Payments have begun. For more information, please see section 11, Selection of Optional Benefits. NOTE: YOU CANNOT SELECT THE TARGET DATE RETIREMENT BENEFIT IF THE OLDER OWNER IS AGE 81 (OR IF THE ANNUITANT IS AGE 81 FOR CONTRACTS OWNED BY A NON-INDIVIDUAL) AND YOU CANNOT SELECT THE LIFETIME PLUS BENEFIT IF THE OLDER COVERED PERSON IS AGE 81 OR OLDER. THEREFORE, IF YOU ARE UNABLE TO MEET THESE AGE RESTRICTIONS, THE NO WITHDRAWAL CHARGE OPTION WILL NOT BE AVAILABLE TO YOU. BECAUSE THE NO WITHDRAWAL CHARGE OPTION CARRIES AN ADDITIONAL CHARGE, IT MAY NOT BE APPROPRIATE IF YOU DO NOT INTEND TO WITHDRAW A PURCHASE PAYMENT DURING THE FIRST SEVEN YEARS AFTER WE RECEIVE IT. ALSO, BECAUSE THE NO WITHDRAWAL CHARGE OPTION REQUIRES YOU TO SELECT AN ADDITIONAL OPTIONAL BENEFIT, IT MAY NOT BE APPROPRIATE IF YOU DO NOT INTEND TO EXERCISE THIS REQUIRED BENEFIT. CHECK WITH YOUR REGISTERED REPRESENTATIVE REGARDING THE AVAILABILITY OF THE NO WITHDRAWAL CHARGE OPTION, AND TO DISCUSS WHETHER THIS OPTION IS APPROPRIATE FOR YOUR SITUATION. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 69 12. OTHER INFORMATION ALLIANZ LIFE OF NEW YORK Allianz Life of New York is a stock life insurance company organized under the laws of the state of New York on September 21, 1982. Our address is One Chase Manhattan Plaza, 37th Floor, New York, NY 10005-1423. We offer fixed and variable annuities, individual and group life insurance, and long-term care insurance. We are licensed to do direct business in six states, including New York and the District of Columbia. We are a subsidiary of Allianz SE, a provider of integrated financial services. THE SEPARATE ACCOUNT We established Allianz Life of NY Variable Account C (the Separate Account, formerly Preferred Life Variable Account C), as a separate account under New York insurance law on February 26, 1988. The Separate Account is registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940. The SEC does not supervise our management of the Separate Account. The Separate Account holds the assets that underlie the Contracts, except assets allocated to our general account. We keep the Separate Account assets separate from the assets of our general account and other separate accounts. The Separate Account is divided into subaccounts, each of which invests exclusively in a single Investment Option. We own the assets of the Separate Account. We credit gains to or charge losses against the Separate Account, whether or not realized, without regard to the performance of other investment accounts. The Separate Account's assets may not be used to pay any of our liabilities, other than those arising from the Contracts. If the Separate Account's assets exceed the required reserves and other liabilities, we may transfer the excess to our general account. Amounts transferred to our general account will represent seed money invested by us or earned fees and charges. The obligations of the Separate Account are not generalized obligations of Allianz Life of New York. The obligations under the Contracts are obligations of Allianz Life of New York. DISTRIBUTION Allianz Life Financial Services, LLC (Allianz Life Financial), a wholly-owned subsidiary of Allianz Life Insurance Company of North America, serves as principal underwriter for the Contracts. Allianz Life Financial, a limited liability company organized in Minnesota, is located at 5701 Golden Hills Drive, Minneapolis, MN 55416. Allianz Life Financial is registered as a broker/dealer with the SEC under the Securities Exchange Act of 1934 (the 1934 Act), as well as with the securities commissions in the states in which it operates, and is a member of the Financial Industry Regulatory Authority (FINRA). Allianz Life Financial is not a member of Securities Investors Protection Corporation. More information about Allianz Life Financial is available at http://www.finra.org or by calling 1-800-289-9999. You also can obtain an investor brochure from FINRA describing its Public Disclosure Program. We have entered into a distribution agreement with our affiliate Allianz Life Financial for the distribution and sale of the Contracts. Allianz Life Financial does not itself sell the Contracts on a retail basis. Rather, Allianz Life Financial enters into selling agreements with other broker/dealers registered under the 1934 Act (selling firms) for the sale of the Contracts. These selling firms include third party broker/dealers and Questar Capital Corporation, an affiliated broker/dealer. We pay sales commissions to the selling firms and their registered representatives. Investment Options that assess Rule 12b-1 fees make payments of the fees to Allianz Life Financial as consideration for providing certain services and incurring certain expenses permitted under the Investment Option's plan. These payments typically equal 0.25% of an Investment Option's average daily net assets for the most recent calendar year. The investment adviser and/or subadviser (and/or their affiliates) of an Investment Option may from time to time make payments for administrative services to Allianz Life Financial or its affiliates. The maximum commission payable to the selling firms for Contract sales is expected not to exceed 7% of Purchase Payments. Sometimes, we enter into an agreement with a selling firm to pay commissions as a combination of a certain amount of the commission at the time of sale and a trail commission which, when totaled, could exceed 7% of Purchase Payments. We may fund Allianz Life Financial's operating and other expenses, including: overhead; legal and accounting fees; registered representative training; compensation for the Allianz Life Financial management team; and other expenses associated with the Contracts. Registered representatives and their managers are also eligible for various benefits, such as -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 70 production incentive bonuses, insurance benefits, and non-cash compensation items that we may provide jointly with Allianz Life Financial. Non-cash items include conferences, seminars and trips (including travel, lodging and meals in connection therewith), entertainment, awards, merchandise and other similar items. Selling firms and their registered representatives and managers may receive other payments from us for services that do not directly involve the sale of the Contracts, including payments made for the recruitment and training of personnel, production of promotional literature and similar services. In addition, certain firms and their representatives may receive compensation for distribution and administrative services when acting in a wholesaling capacity and working with retail firms. We and/or Allianz Life Financial may pay certain selling firms additional marketing support allowances for: o marketing services and increased access to registered representatives; o sales promotions relating to the Contracts; o costs associated with sales conferences and educational seminars for their registered representatives; o the cost of client meetings and presentations; and o other sales expenses incurred by them. We retain substantial discretion in determining whether to grant a marketing support payment to a particular broker/dealer firm and the amount of any such payment. However, we do consider a number of specific factors in determining marketing support payments, which may include a review of the following: o the level of existing sales and assets held in contracts issued by us that are sold through the broker/dealer firm and the potential for new or additional sales; o the organizational "fit" between the broker/dealer firm and the type of wholesaling and marketing force we operate; o whether the broker/dealer firm's operational, IT, and support services structure and requirements are compatible with our method of operation; o whether the broker/dealer firm's product mix is oriented toward our core markets; o whether the broker/dealer firm has a structure facilitating a marketing support arrangement, such as frequent registered representative meetings and training sessions; o the potential return on investment of investing in a particular firm's system; o our potential ability to obtain a significant level of the market share in the broker/dealer firm's distribution channel; o the broker/dealer firm's registered representative and customer profiles; and o the prominence and reputation of the broker/dealer firm in its marketing channel. We may also make payments for marketing and wholesaling support to broker/dealer affiliates of Investment Options that are available through the variable annuities we offer. Additional information regarding marketing support payments can be found in the Distributor section of the Statement of Additional Information. We and/or Allianz Life Financial may make bonus payments to certain selling firms based on aggregate sales of our variable insurance contracts (including this Contract) or persistency standards, or as part of a special promotion. These additional payments are not offered to all selling firms, and the terms of any particular agreement governing the payments may vary among selling firms. In some instances, the amount paid may be significant. A portion of the payments made to selling firms may be passed on to their registered representatives in accordance with their internal compensation programs. Those programs may also include other types of cash and non-cash compensation and other benefits. Ask your registered representative for further information about what your registered representative and the selling firm for which he or she works may receive in connection with your purchase of a Contract. We intend to recover commissions and other sales expenses through fees and charges imposed under the Contract. Commissions paid on the Contract, including other incentives or payments, are not charged directly to the Owners or the Separate Account. We offer the Contracts to the public on a continuous basis. We anticipate continuing to offer the Contracts but reserve the right to discontinue the offering. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 71 ADDITIONAL CREDITS FOR CERTAIN GROUPS We may credit additional amounts to a Contract instead of modifying charges because of special circumstances that result in lower sales or administrative expenses or better than expected mortality or persistency experience. ADMINISTRATION/ALLIANZ SERVICE CENTER Delaware Valley Financial Services, LLC (DVFS or the Allianz Service Center) performs certain administrative services regarding the Contracts. DVFS is a wholly owned subsidiary of Allianz Life Insurance Company of North America, and is located at 300 Berwyn Park, Berwyn, Pennsylvania. The administrative services performed by our Service Center include: o issuance and maintenance of the Contracts, o maintenance of Owner records, o processing and mailing of account statements and other mailings to Owners, and o routine customer service including: - responding to Owner correspondence and inquiries, - processing of Contract changes, - processing withdrawal requests (both partial and total) and - processing annuitization requests. Historically, we have compensated DVFS based on a specified fee per transaction and an additional negotiated fee for enhancements to computer systems used to process our business. Currently, we are on a cost basis. For the past three calendar years, Allianz Life Financial has paid DVFS $71,889,235.98 for performing administrative services regarding the Contracts. To reduce expenses, only one copy of most financial reports and prospectuses, including reports and prospectuses for the Investment Options, will be mailed to your household, even if you or other persons in your household have more than one contract issued by us or our affiliate. Call us at the toll-free number listed at the back of this prospectus if you need additional copies of financial reports, prospectuses, or annual and semiannual reports, or if you would like to receive one copy for each contract in future mailings. LEGAL PROCEEDINGS We and our subsidiaries, like other life insurance companies, from time to time are involved in legal proceedings of various kinds, including regulatory proceedings and individual and class action lawsuits. In some legal proceedings involving insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any such proceedings cannot be predicted with certainty, we believe that, at the present time, there are no pending or threatened legal proceedings to which we, the Separate Account, or Allianz Life Financial is a party that are reasonably likely to materially affect the Separate Account, our ability to meet our obligations under the Contracts, or Allianz Life Financial's ability to perform its obligations. FINANCIAL STATEMENTS The financial statements of Allianz Life of New York and the financial statements of the Separate Account have been included in the Statement of Additional Information. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 72 13. GLOSSARY This prospectus is written in plain English to make it as understandable as possible. However, there are some technical words or terms that are defined below and are capitalized in the prospectus. 5% ANNUAL INCREASE - an amount used to determine the Benefit Base under the optional Lifetime Plus Benefit. ACCUMULATION PHASE - the period of time before you apply the entire Contract Value to Annuity Payments. Subject to certain restrictions, you can make additional Purchase Payments during this time. The Accumulation Phase may occur at the same time as the Annuity Phase if you take Partial Annuitizations. ACCUMULATION UNIT - the units into which we convert amounts invested in the subaccounts that invest in the Investment Options during the Accumulation Phase. ANNUITANT - the individual upon whose life we base the Annuity Payments. Subject to our approval, the Owner designates the Annuitant and can add a joint Annuitant for the Annuity Phase if they take a Full Annuitization. ANNUITY OPTIONS - the income options available to you under the Contract. ANNUITY PAYMENTS - payments made by us to the Payee pursuant to the Annuity Option chosen. Annuity Payments may be variable, fixed, or a combination of both variable and fixed. ANNUITY PHASE - the phase the Contract is in once Annuity Payments begin. This may occur at the same time as the Accumulation Phase if you take a Partial Annuitization. ANNUITY UNIT - the units into which we convert amounts invested in the subaccounts that invest in the Investment Options during the Annuity Phase. BASE CONTRACT - the Contract corresponding to this prospectus that does not include any optional benefits. BENEFICIARY - unless otherwise required by the Contract, the person(s) or entity the Owner designates to receive any death benefit. BENEFIT ANNIVERSARY - a 12-month anniversary of the Benefit Date under Lifetime Plus Benefit. If the Benefit Anniversary does not occur on a Business Day, we will consider it to occur on the next Business Day. BENEFIT BASE - the amount we use to calculate the initial Lifetime Plus Payment under the Lifetime Plus Benefit. BENEFIT DATE - the date you begin receiving Lifetime Plus Payments under the Lifetime Plus Benefit. This date must be the 1st or 15th of a calendar month. BENEFIT YEAR - any period of 12 months commencing with the Benefit Date and each Benefit Anniversary thereafter. BONUS OPTION - an optional benefit that may be available under this Contract for selection at issue. If you select the Bonus Option, you will receive a 6% bonus on Purchase Payments we receive before the older Owner's 81st birthday. The Bonus Option carries an additional M&E Charge and a higher and longer withdrawal charge schedule. The bonus amounts are included in the calculation of the portions of any guaranteed benefits that is based on Contract Value, but we do not include the bonus in the portion of any guaranteed benefits that is based on Purchase Payments. BUSINESS DAY - each day on which the New York Stock Exchange is open for trading, except when an Investment Option does not value its shares. Allianz Life of New York is open for business on each day that the New York Stock Exchange is open. Our Business Day closes when regular trading on the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern Time. CONTRACT - the deferred annuity contract described by this prospectus that allows you to accumulate money tax deferred by making one or more Purchase Payments. It provides for lifetime or other forms of Annuity Payments beginning on the Income Date. CONTRACT ANNIVERSARY - a 12-month anniversary of the Issue Date of your Contract. If the Contract Anniversary does not occur on a Business Day, we will consider it to occur on the next Business Day. CONTRACT VALUE - on any Business Day it is equal to the sum of the values in your selected Investment Options. It does not include amounts applied to Annuity Payments. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 73 CONTRACT YEAR - any period of 12 months commencing on the Issue Date and on each Contract Anniversary thereafter. COVERED PERSON(S) - the person(s) upon whose age and lifetime(s) we base Lifetime Plus Payments under the Lifetime Plus Benefit. EXCESS WITHDRAWAL - for Contracts with the Lifetime Plus Benefit, this is an additional withdrawal you take while you are receiving Lifetime Plus Payments. FULL ANNUITIZATION - the application of the entire Contract Value to Annuity Payments. YOU WILL BE REQUIRED TO TAKE A FULL ANNUITIZATION OF YOUR CONTRACT ON OR BEFORE THE MAXIMUM PERMITTED INCOME DATE. Upon Full Annuitization you will no longer have a Contract Value, and the death benefit will terminate. In addition, any periodic withdrawal or income payments other than Annuity Payments will stop, with the possible exception of Lifetime Plus Payments. INCOME DATE - the date we begin making Annuity Payments to the Payee from the Contract. This date must be the first day of a calendar month. Because the Contract allows for Partial Annuitizations, there may be multiple Income Dates. INVESTMENT OPTIONS - the variable Investment Options available under the Separate Account. You may invest in up to 15 of the Investment Options at any one time. ISSUE DATE - the date shown on the Contract that starts the first Contract Year. Contract Anniversaries and Contract Years are measured from the Issue Date. JOINT OWNERS - two Owners who own a Non-Qualified Contract. We do not allow Joint Owners to take Partial Annuitizations. LIFETIME PLUS BENEFIT - an optional benefit that may be available under this Contract for selection at issue or after issue. The Lifetime Plus Benefit is intended to provide a payment stream in the form of partial withdrawals for life, and carries an additional M&E charge. LIFETIME PLUS PAYMENT - the payment we make to you under the Lifetime Plus Benefit. Lifetime Plus Payments are based on the Benefit Base, the age(s) of the Covered Person(s), and whether you selected single or joint Lifetime Plus Payments. NON-QUALIFIED CONTRACT - a Contract that is not purchased under a pension or retirement plan qualified under sections of the Internal Revenue Code. NO WITHDRAWAL CHARGE OPTION - an optional benefit that may be available under this Contract for selection at issue. The No Withdrawal Charge Option eliminates the seven-year withdrawal charge period on the Base Contract. The No Withdrawal Charge Option requires a minimum initial Purchase Payment of $25,000 and carries an additional M&E Charge. If you select the No Withdrawal Charge Option you must also select either the Target Date Retirement Benefit or Lifetime Plus Benefit. OWNER - "you," "your" and "yours." The person or entity (or persons or entities if there are Joint Owners) named in the Contract who may exercise all rights granted by the Contract. The Owner is designated at Contract issue. PARTIAL ANNUITIZATION - the application of only part of the Contract Value to Annuity Payments. If you take a Partial Annuitization, the Accumulation Phase and Annuity Phase of the Contract may occur at the same time. You can take one Partial Annuitization every 12 months. The maximum number of annuitizations we allow at any one time is five. Partial Annuitizations are not available to Joint Owners. If you take a Partial Annuitization, there can be only one Owner, the Owner must be the Annuitant, and we will not allow the Owner to designate a joint Annuitant. PAYEE - the person or entity you designate (subject to our approval) to receive Annuity Payments during the Annuity Phase. If you do not designate a Payee by the Income Date, we will make Annuity Payments to the Owner. PURCHASE PAYMENT - the money you put in the Contract. If you have a Contract with the Bonus Option, references to Purchase Payments do not include any bonus. QUALIFIED CONTRACT - a Contract purchased under a pension or retirement plan qualified under sections of the Internal Revenue Code (for example, 401(k) and H.R. 10 plans), Individual Retirement Annuities (IRAs), or Tax-Sheltered Annuities (referred to as TSA or 403(b) contracts). Currently, we may issue Qualified Contracts that may include, but are not limited to, Roth IRAs, Traditional IRAs and Simplified Employee Pension (SEP) IRAs. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 74 QUARTERLY ANNIVERSARY VALUE - a calculation used in determining the Quarterly Value Death Benefit and the Benefit Base under the Lifetime Plus Benefit. QUARTERLY ANNIVERSARY - the day that occurs three, six, and nine calendar months after the Issue Date or on any Contract Anniversary. If the Quarterly Anniversary does not occur on a Business Day, we will consider it to occur on the next Business Day. QUARTERLY VALUE DEATH BENEFIT - an optional benefit that may be available under this Contract for selection at Contract issue. The Quarterly Value Death Benefit is intended to provide an increased death benefit and it carries an additional M&E Charge. SEPARATE ACCOUNT - Allianz Life of NY Variable Account C is the Separate Account that issues your Contract. It is a separate investment account of Allianz Life of New York. The Separate Account holds the assets invested in the Investment Options that underlie the Contracts. The Separate Account is divided into subaccounts, each of which invests exclusively in a single Investment Option. SERVICE CENTER - the Allianz Service Center. Our Service Center address and telephone number are listed at the back of this prospectus. SHORT WITHDRAWAL CHARGE OPTION- an optional benefit that may be available under this Contract for selection at Contract issue. The Short Withdrawal Charge Option shortens the withdrawal charge period on the Base Contract from seven years to four years and it carries an additional M&E Charge. TARGET DATE RETIREMENT BENEFIT - an optional benefit that may be available under this Contract for selection at or after Contract issue. The Target Date Retirement Benefit is intended to provide a level of protection for the principal you invest and to lock in any past investment gains at a future point during the Accumulation Phase called the Target Value Date. If you select this benefit we will restrict your ability to make additional Purchase Payments to the first three years after you select the benefit, we will restrict your flexibility in allocating Contract Value among the Investment Options, and we will transfer Contract Value between your selected Investment Options over time based on the length of time until the guarantee takes effect and the performance of your selected Investment Options. TARGET VALUE - a calculation used in determining whether your Contract will receive a credit on the Target Value Date under the Target Date Retirement Benefit. TARGET VALUE DATE - the date on which we may apply a credit to your Contract Value under the Target Date Retirement Benefit. The Target Value Date will always occur on a Contract Anniversary. TRADITIONAL DEATH BENEFIT - the death benefit provided by the Base Contract. WITHDRAWAL CHARGE BASIS - the total amount under your Contract that is subject to a withdrawal charge. -------------------------------------------------------------------------------- 14. TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION (SAI) ALLIANZ LIFE OF NEW YORK..............................2 EXPERTS...............................................2 LEGAL OPINIONS........................................2 DISTRIBUTOR...........................................2 REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE.....3 FEDERAL TAX STATUS....................................3 General...........................................3 Diversification...................................4 Owner Control.....................................4 Contracts Owned by Non-Individuals................5 Income Tax Withholding............................5 Required Distributions............................5 Qualified Contracts...............................6 ANNUITY PROVISIONS....................................7 Annuity Units/Calculating Annuity Payments........7 MORTALITY AND EXPENSE RISK GUARANTEE..................7 FINANCIAL STATEMENTS..................................7 APPENDIX - CONDENSED FINANCIAL INFORMATION............8 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 75 15. PRIVACY AND SECURITY STATEMENT JANUARY 2008 PRIVACY NOTICE REVISIONS: Your privacy is a high priority for Allianz Life(R) of NY. Our pledge to protect your privacy is reflected in our Privacy and Security Statement. This statement outlines our principles for collecting, using and protecting your personal information. Allianz Life of NY does not sell your personal information to anyone. We do not share your personal information with anyone for their own marketing purposes. For this reason no "opt-in," "opt-out" or authorization is required. We also do not share your personal information with any of our affiliated companies, except for the purpose of servicing your policy. PERSONAL INFORMATION ABOUT YOU ALLIANZ LIFE OF NY COLLECTS Allianz Life of NY collects personal information about you so that we can process the insurance transactions you request. We limit the amount of personal information collected to what we feel is needed to maintain your account. We may collect your personal information from the following sources: o From you, either directly or through your agent. This may include information on your insurance application or other forms you may complete, such as your name, address and telephone number. o From others, through the process of handling a claim. This may include information from medical or accident reports. o From your doctor or during a home visit by a health assessment professional. This may include medical information about you gathered with your written authorization. o From your relationship with us. Such as the number of years you have been a customer or the types of insurance products you purchased. o From a consumer reporting agency. Such as a credit or motor vehicle report. The information in these reports may be kept by the consumer reporting agency and shared with others. If you visit one of our websites, we may use "cookies" (small text files sent from our site to your hard drive). These cookies help us to recognize repeat visitors and allow easy access to and use of the site. We do not use cookies to gather personal information. The cookies only enable you to use our website more easily. PERSONAL INFORMATION ABOUT YOU ALLIANZ LIFE OF NY SHARES Allianz Life of NY does not share personal information about current or former customers to anyone, except as "allowed by law." "Allowed by law" means that we may share your personal information, such as your name, address and policy information, as follows: o To consumer reporting agencies to obtain a credit report or motor vehicle report. These reports are used to determine eligibility for coverage or to process your requested transactions. o To your insurance agent so that they can perform services for you. o To medical professionals in order to process your claim. o To a state Department of Insurance in order to examine our records or business practices. o To state or federal law enforcement agency, as required by law or to report suspected fraud activities. o To research groups to conduct studies on claims results. No individual is identified in any study or report. We advise the vendors with whom we legally share your personal information, of our privacy policy. We make every effort to use vendors whose privacy policy reflects our own. ALLIANZ LIFE OF NY'S POLICIES AND PRACTICES REGARDING SECURITY OF PERSONAL INFORMATION Allianz Life of NY uses computer hardware and software tools to maintain physical and electronic safeguards. These safeguards comply with applicable federal and state regulations. We restrict access to personal information about you to those employees who need the information to service your policy. Allianz Life of NY works hard to ensure that our websites are secure. We use state of the art technology to protect the personal information that may be shared over these sites. NOTIFICATION OF CHANGE Your trust is one of our most important assets. If we revise our privacy practices in the future, we will notify you prior to introducing any changes. FOR MORE INFORMATION OR IF YOU HAVE QUESTIONS If you have further questions regarding our privacy policy, please call us at 212.586.7733 or write to us at the following address. Allianz Life Insurance Company of New York Home Office: New York, NY Administrative Office PO Box 1431 Minneapolis, MN 55440-1431 M40018-NY (R-2/2008) -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 76 APPENDIX A - ANNUAL OPERATING EXPENSES FOR EACH INVESTMENT OPTION This table describes, in detail, the annual expenses for each of the Investment Options. We show the expenses as a percentage of an Investment Option's average daily net assets for the most recent calendar year. Except for the AZL Funds, the PIMCO VIT portfolios, and the Premier VIT OpCap Mid Cap Portfolio, neither the Investment Options nor their advisers are affiliated with Allianz Life. Expenses may vary in current and future years. The investment advisers for the Investment Options provided the fee and expense information and we did not independently verify it. See the Investment Options' prospectuses for further information regarding the expenses you may expect to pay.
TOTAL ANNUAL OPERATING EXPENSES AMOUNT OF AFTER CONTRACTUAL CONTRACTUAL FEE WAIVERS FEE WAIVERS ANNUAL INVESTMENT OPTION OPERATING EXPENSES BEFORE AND OR EXPENSE INVESTMENT OPTION FEE WAIVERS OR EXPENSE REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS --------------------------------------------------------------- --------------------------------------------------------------- MANAGEMENT RULE SERVICE OTHER ACQUIRED TOTAL FUND FEES 12B-1 AND FEES FEES* FEES EXPENSES EXPENSES ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AIM ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL AIM International Equity .90 .25 - .18 - 1.33 - 1.33 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- BLACKROCK ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Money Market Fund(1) .35 .25 - .09 - .69 - .69 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- BlackRock Global Allocation .55 .25 - .23 - 1.03 - 1.03 V.I. Fund - Class 3(4) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- CLEARBRIDGE ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL LMP Large Cap Growth .80 .25 - .08 - 1.13 - 1.13 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- COLUMBIA ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Columbia Technology .80 .25 - .15 - 1.20 - 1.20 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- DAVIS ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Davis NY Venture Fund - .75 - - .09 - .84 - .84 Class 1(1),(6),(7) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Davis NY Venture Fund - .75 .25 - .09 - 1.09 - 1.09 Class 2(1),(6) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Davis VA Financial .75 - - .10 - .85 - .85 Portfolio(5) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- DREYFUS ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Dreyfus Founders Equity .77 .25 - .16 - 1.18 - 1.18 Growth Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Dreyfus Premier Small Cap .90 - - .14 - 1.04 - 1.04 Value Fund - Class 1(1),(6),(7) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Dreyfus Premier Small Cap .90 .25 - .14 - 1.29 - 1.29 Value Fund - Class 2(1),(6) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL S&P 500 Index Fund - .17 .25 - .31 - .73 .24 .49 Class 2(1),(6) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Small Cap Stock Index .26 .25 - .36 - .87 .29 .58 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- FIRST TRUST ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL First Trust Target Double .60 .25 - .18 - 1.03 .24 .79 Play Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- FRANKLIN TEMPLETON ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Franklin Small Cap Value .75 .25 - .11 - 1.11 - 1.11 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Franklin Global .54 .25 - .07 - .86 - .86 Communications Securities Fund - Class 2(3) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Franklin High Income .55 .25 - .06 - .86 - .86 Securites Fund - Class 2(3) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Franklin Income Securities .45 .25 - .02 - .72 - .72 Fund - Class 2(3) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP .00 .25 - .41 .65 1.31 .28 1.03 Founding Funds Allocation Fund - Class 2(8) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Franklin U.S. Government Fund .49 .25 - .04 - .78 - .78 - Class 2(3) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Franklin Zero Coupon Fund .61 - - .05 - .66 - .66 2010 - Class 1(3) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Mutual Discovery Securities .80 .25 - .17 - 1.22 - 1.22 Fund - Class 2 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 77 TOTAL ANNUAL OPERATING EXPENSES AMOUNT OF AFTER CONTRACTUAL CONTRACTUAL FEE WAIVERS FEE WAIVERS ANNUAL INVESTMENT OPTION OPERATING EXPENSES BEFORE AND OR EXPENSE INVESTMENT OPTION FEE WAIVERS OR EXPENSE REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS --------------------------------------------------------------- --------------------------------------------------------------- MANAGEMENT RULE SERVICE OTHER ACQUIRED TOTAL FUND FEES 12B-1 AND FEES FEES* FEES EXPENSES EXPENSES ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund .59 .25 - .13 - .97 - .97 - Class 2 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Templeton Global Income .50 .25 - .14 - .89 - .89 Securities Fund - Class 2(3) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities .73 .25 - .03 - 1.01 - 1.01 Fund - Class 2(3) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- JENNISON ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Jennison 20/20 Focus .77 .25 - .10 - 1.12 - 1.12 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Jennison Growth Fund(1) .80 .25 - .17 - 1.22 - 1.22 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- LEGG MASON ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Legg Mason Growth Fund(1) .85 .25 - .11 - 1.21 - 1.21 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Legg Mason Value Fund(1) .75 .25 - .09 - 1.09 - 1.09 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- NEUBERGER BERMAN ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Neuberger Berman Regency .75 .25 - .10 - 1.10 - 1.10 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- NICHOLAS-APPLEGATE ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL NACM International Fund(1) .85 .25 - .35 - 1.45 - 1.45 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL OCC Opportunity Fund(1) .85 .25 - .11 - 1.21 - 1.21 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL OCC Value Fund(1) .75 .25 - .16 - 1.16 - 1.16 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- OpCap Mid Cap Portfolio(9) .80 - - .19 - .99 - .99 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER FUNDS ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Oppenheimer Global Fund - .90 - - .15 - 1.05 - 1.05 Class 1(1),(6),(7) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Oppenheimer Global Fund - .90 .25 - .15 - 1.30 - 1.30 Class 2(1),(6) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Oppenheimer International .73 .25 - .21 - 1.19 - 1.19 Growth Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Oppenheimer Main Street .80 - - .15 - .95 - .95 Fund - Class 1(1),(6),(7) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Oppenheimer Main Street .80 .25 - .15 - 1.20 - 1.20 Fund - Class 2(1),(6) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- PIMCO ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL PIMCO Fundamental .75 .25 - .21 - 1.21 .01 1.20 IndexPLUS Total Return Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- PIMCO VIT All Asset Portfolio .18 - .15 .25 .69 1.27 .02 1.25 - Admin. Class(5),(10),(11) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- PIMCO VIT CommodityRealReturn .49 - .15 .31 .05 1.00 .05 .95 Strategy Portfolio - Admin. Class(2),((5)),(11) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- PIMCO VIT Emerging Markets .45 - .15 .40 - 1.00 - 1.00 Bond Portfolio - Admin. Class(5) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- PIMCO VIT Global Bond .25 - .15 .50 - .90 - .90 Portfolio (Unhedged) - Admin. Class(5) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- PIMCO VIT High Yield .25 - .15 .35 - .75 - .75 Portfolio - Admin. Class(5) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- PIMCO VIT Real Return .25 - .15 .25 - .65 - .65 Portfolio - Admin. Class(5) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- PIMCO VIT Total Return .25 - .15 .43 - .83 - .83 Portfolio - Admin. Class(5) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- SCHRODER ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Schroder Emerging Markets 1.23 .25 - .48 - 1.96 .31 1.65 Equity Fund - Class 2(1),(6) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Schroder International 1.00 .25 - .27 - 1.52 - 1.52 Small Cap Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 78 TOTAL ANNUAL OPERATING EXPENSES AMOUNT OF AFTER CONTRACTUAL CONTRACTUAL FEE WAIVERS FEE WAIVERS ANNUAL INVESTMENT OPTION OPERATING EXPENSES BEFORE AND OR EXPENSE INVESTMENT OPTION FEE WAIVERS OR EXPENSE REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS --------------------------------------------------------------- --------------------------------------------------------------- MANAGEMENT RULE SERVICE OTHER ACQUIRED TOTAL FUND FEES 12B-1 AND FEES FEES* FEES EXPENSES EXPENSES ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- TARGETPLUS PORTFOLIOS ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL TargetPLUS Balanced .52 .25 - .53 - 1.30 .41 .89 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL TargetPLUS Equity Fund(1) .60 .25 - .29 - 1.14 .35 .79 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL TargetPLUS Growth Fund(1) .52 .25 - .29 - 1.06 .17 .89 ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL TargetPLUS Moderate .52 .25 - .37 - 1.14 .25 .89 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- TURNER ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Turner Quantitative Small .85 .25 - .13 - 1.23 - 1.23 Cap Growth Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Van Kampen Comstock .72 .25 - .11 - 1.08 - 1.08 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Van Kampen Equity and .75 .25 - .11 - 1.11 - 1.11 Income Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Van Kampen Global .95 .25 - .12 - 1.32 - 1.32 Franchise Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Van Kampen Global Real .90 .25 - .22 - 1.37 .02 1.35 Estate Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Van Kampen Growth and .75 .25 - .09 - 1.09 - 1.09 Income Fund(1) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- AZL Van Kampen Mid Cap Growth .80 .25 - .12 - 1.17 - 1.17 Fund(1) ----------------------------------------------------------------------------------------------------------------------------- * The 12b-1 fees cover certain distribution and shareholder support services provided by the companies selling Contracts. Our principal underwriter, Allianz Life Financial Services, LLC, will receive 12b-1 fees, except for those classes of shares that do not pay a 12b-1 fee, as identified in footnote (6). (1) Allianz Investment Management LLC (AZL), the Investment Option's investment adviser, and the Investment Option have entered into a written contract limiting operating expenses to the "after waiver" amount listed above through April 30, 2009. The operating expenses covered by the expense limitation agreement include fees deducted from Investment Option assets such as audit fees and payments to independent trustees, but do not include the operating expenses of other investment companies in which the Investment Option may invest (acquired fund fees and expenses). The Investment Option is authorized to reimburse AZL for management fees previously waived and/or for the cost of other expenses paid by AZL provided that such reimbursement will not cause the Investment Option to exceed the expense limits in effect at the time of such reimbursement. The Investment Option's ability to reimburse AZL in this manner only applies to fees paid or reimbursement made by AZL within the three fiscal years prior to the date of such reimbursement. (2) PIMCO has contractually agreed to waive the advisory fee and the administration fee it receives from the Portfolio in an amount equal to the advisory fee and administration fee, respectively, paid to PIMCO by the subsidiary. This waiver may not be terminated by PIMCO and will remain in effect for as long as PIMCO's contract with the subsidiary is in place. (3) The Fund administration fee is paid indirectly through the management fee. (4) The Investment Option commenced operations under this Contract as of May 1, 2008. Therefore, the expenses shown are estimated for the current calendar year. (5) We may enter into certain arrangements under which we, or our affiliate Allianz Life Financial Services, LLC, the principal underwriter for the Contracts, are compensated by the Investment Options' advisers, distributors and/or affiliates for the administrative services and benefits which we provide to the Investment Options. The amount of the compensation usually is based on the aggregate assets of the Investment Options of other investment portfolios from contracts that we issue or administer. Some advisers may pay us more or less than others, however, the maximum fee that we currently receive is at the annual rate of 0.25% of the average aggregate amount invested by us in the Investment Options. (6) The Investment Option has both Class 1 shares and Class 2 shares. Class 2 shares pay a 12b-1 fee of up to 0.25% of its average daily assets. Class 1 shares do not pay a 12b-1 fee. (7) Not currently available. (8) Effective December 1, 2007, the administrator has contractually agreed to waive or limit its fee and to assume as its own expense certain expenses, otherwise payable by the Fund, excluding acquired funds' fees and expenses, so that direct operating expenses of the fund do not exceed 0.38% (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2009. (9) OpCap Advisors has contractually agreed to reduce the total annual portfolio operating expenses to the extent they would exceed 1.00% (net of any expenses offset by earnings credits from the custodian bank) of the Portfolio's average daily net assets. This reduction of annual portfolio operating expenses is guaranteed by OpCap Advisors through December 31, 2015. Net portfolio operating expenses do not reflect a reduction of custody expenses offset by custody credits earned on cash balances at the custodian bank. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 79 (10) Acquired fund fees and expenses for the Portfolio are based upon an allocation of the Portfolio's assets among the underlying funds and upon the total annual operating expenses of the institutional shares of these underlying funds. Acquired fund fees and expenses will vary with changes in the expenses of the underlying funds, as well as allocation of the Portfolio's assets, and may be higher or lower than those shown above. (11) PIMCO has contractually agreed to waive the advisory fee and/or administration fee. See the Investment Option prospectus for further information.
This table describes, in detail, the annual expenses for each of the AZL FusionPortfolios. We show the expenses as a percentage of an Investment Option's average daily net assets. The underlying funds may pay 12b-1 fees to the distributor of the Contracts for distribution and/or administrative services. The underlying funds do not pay service fees or 12b-1 fees to the AZL FusionPortfolios, and the AZL FusionPortfolios do not pay service fees or 12b-1 fees. The underlying funds of the AZL FusionPortfolios may pay service fees to the insurance companies issuing variable contracts, or their affiliates, for providing customer service and other administrative services to contract purchasers. The amount of such service fees may vary depending on the underlying fund.
INVESTMENT OPTION ANNUAL INVESTMENT OPTION OPERATING ACQUIRED TOTAL AMOUNT OF TOTAL ANNUAL OPERATING EXPENSES AFTER CONTRACTUAL CONTRACTUAL FUND FEES ANNUAL FEE WAIVERS FEE WAIVERS EXPENSES BEFORE FEE WAIVERS OR AND OPERATING AND OR EXPENSE EXPENSE REIMBURSEMENTS EXPENSES(2) EXPENSES REIMBURSEMENTS REIMBURSEMENTS -------------------------------------- MANAGEMENTRULE OTHER TOTAL 12B-1 FEES FEES* EXPENSES ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ FUSION PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ AZL Fusion Balanced Fund(1) .20% -% .06% .26% 1.01% 1.27% -% 1.27% ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ AZL Fusion Growth Fund(1) .20 - .05 .25 1.07 1.32 - 1.32 ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ AZL Fusion Moderate Fund(1) .20 - .05 .25 1.14 1.39 - 1.39 ------------------------------------------------------------------------------------------------------------------------ * The 12b-1 fees cover certain distribution and shareholder support services provided by the companies selling Contracts. Our principal underwriter, Allianz Life Financial Services, LLC, will receive 12b-1 fees. (1) Allianz Investment Management LLC (AZL), the Investment Option's investment adviser, and the Investment Option have entered into a written contract limiting operating expenses (excluding certain fund expenses including, but not limited to, any taxes, interest, brokerage fees or extraordinary expenses) from exceeding 0.30% through at least April 30, 2009. The operating expenses covered by the expense limitation include fees deducted from fund assets such as audit fees and payments to outside trustees, but do not include the operating expenses of other investment companies in which the funds may invest (acquired fund fees and expenses). Acquired fund fees and expenses are incurred indirectly by the Investment Option(s) through the Investment Option's investment in permitted underlying funds. Accordingly, acquired fees and expenses affect the Investment Option's total returns. The Investment Option is authorized to reimburse AZL for fees previously waived and/or for the cost of other expenses paid by AZL provided that such reimbursement will not cause the Investment Option to exceed the expense limits in effect at the time of such reimbursement. AZL may request and receive reimbursement of fees waived or limited and other reimbursements made by AZL. The Investment Option's ability to reimburse AZL in this manner only applies to fees paid or reimbursement made by AZL within the three fiscal years prior to the date of such reimbursement. (2) Persons with Contract Value allocated to the AZL FusionPortfolios will also indirectly pay the expenses of the underlying funds. The underlying fund fees and expenses are an estimate. These expenses will vary, depending upon the allocation of assets to individual underlying funds. In addition, it can be expected that underlying funds may be added or deleted as investments, with a resulting change in expenses. The investment advisers to the underlying funds or their affiliates may pay "service fees" to Allianz Life or its affiliates for providing customer service and other administrative services to Contract purchasers. The amount of such fees may vary by underlying fund. The underlying funds may also pay Rule 12b-1 distribution fees to the distributor of the Contracts. The underlying funds do not pay service fees or 12b-1 fees to the AZL FusionPortfolios, and the AZL FusionPortfolios do not pay service fees or 12b-1 fees.
-------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 80 APPENDIX B - CONDENSED FINANCIAL INFORMATION The consolidated financial statements of Allianz Life Insurance Company of New York and the financial statements of Allianz Life of NY Variable Account C may be found in the Statement of Additional Information. Accumulation Unit value (AUV) information corresponding to the highest and lowest combination of charges for the Contract currently offered by this prospectus is listed in the tables below. You can find AUV information corresponding to the additional combinations of charges in the appendix to the Statement of Additional Information. This information should be read in conjunction with the financial statements and related notes of the Separate Account included in the Statement of Additional Information. The Statement of Additional Information is available without charge by contacting us at the telephone number or address listed at the back of this prospectus.
* KEY TO BENEFIT OPTION M&E CHARGES Allianz Vision New York - Base Contracts............................................ 1.40% Allianz Vision New York - Base Contracts with the Quarterly Value Death Benefit, Bonus Option, and joint Lifetime Plus Payments under the Lifetime Plus Benefit...... 3.05%
The following Investment Option commenced operations under this Contract after December 31, 2007. Therefore, no AUV information is shown for it: BlackRock Global Allocation V.I. Fund (Number of Accumulation Units in thousands) NUMBER OF AUV ACCUMULATION PERIOD AT UNITS OR AUV AT END OUTSTANDING BENEFIT YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ AZL AIM International Equity Fund 1.40% 12/31/2007 N/A 19.830 0 3.05% 12/31/2007 N/A 17.768 0 AZL Columbia Technology Fund 1.40% 12/31/2007 N/A 10.014 4 3.05% 12/31/2007 N/A 8.888 0 AZL Davis NY Venture Fund 1.40% 12/31/2007 N/A 13.555 6 3.05% 12/31/2007 N/A 12.030 0 AZL Dreyfus Founders Equity Growth Fund 1.40% 12/31/2007 N/A 11.526 1 3.05% 12/31/2007 N/A 10.230 0 AZL Dreyfus Premier Small Cap Value Fund 1.40% 12/31/2007 N/A 12.439 0 3.05% 12/31/2007 N/A 11.591 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ AZL First Trust Target Double Play Fund 1.40% 12/31/2007 N/A 10.609 0 3.05% 12/31/2007 N/A 10.443 0 AZL Franklin Small Cap Value Fund 1.40% 12/31/2007 N/A 17.485 3 3.05% 12/31/2007 N/A 15.975 0 AZL Fusion Balanced Fund 1.40% 12/31/2007 N/A 12.121 0 3.05% 12/31/2007 N/A 11.516 0 AZL Fusion Growth Fund 1.40% 12/31/2007 N/A 12.813 15 3.05% 12/31/2007 N/A 12.173 0 AZL Fusion Moderate Fund 1.40% 12/31/2007 N/A 12.396 9 3.05% 12/31/2007 N/A 11.777 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 81 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ AZL Jennison 20/20 Focus Fund 1.40% 12/31/2007 N/A 14.871 0 3.05% 12/31/2007 N/A 14.128 0 AZL Jennison Growth Fund 1.40% 12/31/2007 N/A 13.110 4 3.05% 12/31/2007 N/A 12.455 0 AZL Legg Mason Growth Fund 1.40% 12/31/2007 N/A 13.354 8 3.05% 12/31/2007 N/A 11.965 0 AZL Legg Mason Value Fund 1.40% 12/31/2007 N/A 11.662 0 3.05% 12/31/2007 N/A 10.350 0 AZL LMP Large Cap Growth Fund 1.40% 12/31/2007 N/A 11.617 0 3.05% 12/31/2007 N/A 10.408 0 AZL Money Market Fund 1.40% 12/31/2007 N/A 11.125 9 3.05% 12/31/2007 N/A 9.525 0 AZL NACM International Fund 1.40% 12/31/2007 N/A 9.471 4 3.05% 12/31/2007 N/A 9.356 0 AZL Neuberger Berman Regency Fund 1.40% 12/31/2007 N/A 10.319 1 3.05% 12/31/2007 N/A 9.996 0 AZL OCC Opportunity Fund 1.40% 12/31/2007 N/A 16.672 0 3.05% 12/31/2007 N/A 14.938 0 AZL OCC Value Fund 1.40% 12/31/2007 N/A 14.847 0 3.05% 12/31/2007 N/A 13.178 0 AZL Oppenheimer Global Fund 1.40% 12/31/2007 N/A 15.236 2 3.05% 12/31/2007 N/A 14.196 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ AZL Oppenheimer International Growth Fund 1.40% 12/31/2007 N/A 20.503 9 3.05% 12/31/2007 N/A 18.198 0 AZL Oppenheimer Main Street Fund 1.40% 12/31/2007 N/A 12.939 3 3.05% 12/31/2007 N/A 12.056 0 AZL PIMCO Fundamental IndexPLUS Total Return Fund 1.40% 12/31/2007 N/A 11.654 0 3.05% 12/31/2007 N/A 11.290 0 AZL S&P 500 Index Fund 1.40% 12/31/2007 N/A 9.882 5 3.05% 12/31/2007 N/A 9.762 0 AZL Schroder Emerging Markets Equity Fund 1.40% 12/31/2007 N/A 13.455 10 3.05% 12/31/2007 N/A 13.035 0 AZL Schroder International Small Cap Fund 1.40% 12/31/2007 N/A 9.243 3 3.05% 12/31/2007 N/A 9.130 0 AZL Small Cap Stock Index Fund 1.40% 12/31/2007 N/A 9.329 7 3.05% 12/31/2007 N/A 9.216 0 AZL TargetPLUS Balanced Fund 1.40% 12/31/2007 N/A 10.116 1 3.05% 12/31/2007 N/A 9.993 0 AZL TargetPLUS Equity Fund 1.40% 12/31/2007 N/A 10.524 0 3.05% 12/31/2007 N/A 10.360 0 AZL TargetPLUS Growth Fund 1.40% 12/31/2007 N/A 9.939 0 3.05% 12/31/2007 N/A 9.818 0 AZL TargetPLUS Moderate Fund 1.40% 12/31/2007 N/A 10.080 1 3.05% 12/31/2007 N/A 9.957 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 82 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ AZL Turner Quantitative Small Cap Growth Fund 1.40% 12/31/2007 N/A 12.772 0 3.05% 12/31/2007 N/A 12.134 0 AZL Van Kampen Comstock Fund 1.40% 12/31/2007 N/A 12.386 0 3.05% 12/31/2007 N/A 10.883 0 AZL Van Kampen Equity and Income Fund 1.40% 12/31/2007 N/A 12.832 0 3.05% 12/31/2007 N/A 11.956 0 AZL Van Kampen Global Franchise Fund 1.40% 12/31/2007 N/A 19.359 1 3.05% 12/31/2007 N/A 17.687 0 AZL Van Kampen Global Real Estate Fund 1.40% 12/31/2007 N/A 10.852 2 3.05% 12/31/2007 N/A 10.512 0 AZL Van Kampen Growth and Income Fund 1.40% 12/31/2007 N/A 14.291 2 3.05% 12/31/2007 N/A 12.557 0 AZL Van Kampen Mid Cap Growth Fund 1.40% 12/31/2007 N/A 16.193 3 3.05% 12/31/2007 N/A 14.228 0 Davis VA Financial Portfolio 1.40% 12/31/2007 N/A 15.832 0 3.05% 12/31/2007 N/A 11.091 0 Franklin Global Communications Securities Fund 1.40% 12/31/2007 N/A 31.356 0 3.05% 12/31/2007 N/A 21.687 0 Franklin High Income Securities Fund 1.40% 12/31/2007 N/A 25.387 0 3.05% 12/31/2007 N/A 17.558 0 Franklin Income Securities Fund 1.40% 12/31/2007 N/A 48.490 5 3.05% 12/31/2007 N/A 33.538 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ Franklin Templeton VIP Founding Funds Allocation Fund 1.40% 12/31/2007 N/A 9.246 37 3.05% 12/31/2007 N/A 9.164 0 Franklin U.S. Government Fund 1.40% 12/31/2007 N/A 26.205 1 3.05% 12/31/2007 N/A 18.172 0 Franklin Zero Coupon Fund 2010 1.40% 12/31/2007 N/A 39.978 0 3.05% 12/31/2007 N/A 27.723 0 Mutual Discovery Securities Fund 1.40% 12/31/2007 N/A 29.830 1 3.05% 12/31/2007 N/A 24.019 0 Mutual Shares Securities Fund 1.40% 12/31/2007 N/A 24.148 6 3.05% 12/31/2007 N/A 19.443 0 OpCap Mid Cap Portfolio 1.40% 12/31/2007 N/A 10.583 3 3.05% 12/31/2007 N/A 10.294 0 PIMCO VIT All Asset Portfolio 1.40% 12/31/2007 N/A 12.953 0 3.05% 12/31/2007 N/A 12.911 0 PIMCO VIT CommodityRealReturn Strategy Portfolio 1.40% 12/31/2007 N/A 12.816 1 3.05% 12/31/2007 N/A 12.263 0 PIMCO VIT Emerging Markets Bond Portfolio 1.40% 12/31/2007 N/A 12.287 0 3.05% 12/31/2007 N/A 11.757 0 PIMCO VIT Global Bond Portfolio (Unhedged) 1.40% 12/31/2007 N/A 10.440 2 3.05% 12/31/2007 N/A 9.990 0 PIMCO VIT High Yield Portfolio 1.40% 12/31/2007 N/A 14.297 0 3.05% 12/31/2007 N/A 12.581 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 83 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ PIMCO VIT Real Return Portfolio 1.40% 12/31/2007 N/A 12.324 0 3.05% 12/31/2007 N/A 11.361 0 PIMCO VIT Total Return Portfolio 1.40% 12/31/2007 N/A 14.986 0 3.05% 12/31/2007 N/A 12.181 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ Templeton Global Income Securities Fund 1.40% 12/31/2007 N/A 32.376 2 3.05% 12/31/2007 N/A 22.439 0 Templeton Growth Securities Fund 1.40% 12/31/2007 N/A 29.538 6 3.05% 12/31/2007 N/A 22.584 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 84 APPENDIX C - TARGET VALUE CALCULATION AND EXAMPLES If your Contract includes the Target Date Retirement Benefit, we will calculate the Target Value until the benefit terminates and you can only make additional Purchase Payments to the Contract for the first three years after the rider effective date. If your Contract includes the Bonus Option, the bonus will not be included in the portions of the Target Value that are based on Purchase Payments. CALCULATING THE TARGET VALUE UNDER THE TARGET DATE RETIREMENT BENEFIT If the rider effective date is the Issue Date, the Target Value on the Issue Date is equal to the Purchase Payment received on the Issue Date. If the rider effective date occurs after the Issue Date, the Target Value on the rider effective date is equal to the Contract Value on that date. On each Business Day, we increase the Target Value by the amount of any additional Purchase Payments received that day, and we reduce the Target Value proportionately by the percentage of Contract Value applied to a Partial Annuitization or withdrawn that day (including any withdrawal charge). On each Contract Anniversary, we process any increase or decrease to the Target Value due to a Purchase Payment received that day or a Partial Annuitization or withdrawal taken that day, after we do the following calculation. On each Contract Anniversary, the Target Value is equal to the greater of its value on the immediately preceding Business Day or the Contract Value as of that Contract Anniversary. WHILE THE TARGET DATE RETIREMENT BENEFIT APPLIES TO YOUR CONTRACT, ANY WITHDRAWALS TAKEN AND/OR AMOUNTS APPLIED TO PARTIAL ANNUITIZATIONS MAY REDUCE THE TARGET VALUE BY MORE THAN THE AMOUNT WITHDRAWN AND/OR ANNUITIZED. If the Contract Value at the time of withdrawal and/or annuitization is less than the Target Value, we will deduct more than the amount withdrawn and/or annuitized from the Target Value. EXAMPLES OF THE TARGET VALUE CALCULATIONS This example shows how we calculate the Target Value under the Target Date Retirement Benefit. o You purchase a Contract with an initial Purchase Payment of $100,000. You select the Target Date Retirement Benefit at issue and you also select the earliest possible Target Value Date, which is the 7th Contract Anniversary. You make no additional Purchase Payments. CONTRACT VALUE TARGET VALUE On the Issue Date $100,000 $100,000 1st Contract Anniversary $108,000 $108,000 2nd Contract Anniversary $110,000 $110,000 3rd Contract Anniversary $102,000 $110,000 4 th Contract Anniversary $104,000 $110,000 5th Contract Anniversary $109,000 $110,000 6th Contract Anniversary $115,000 $115,000 7th Contract Anniversary $131,000 $131,000 8th Contract Anniversary $121,000 $131,000 BEFORE A CREDIT 8th Contract Anniversary $131,000 $131,000 AFTER A CREDIT o On the Issue Date, the Target Value is equal to the total Purchase Payment ($100,000). o At the first Contract Anniversary the Contract Value had increased to $108,000, which is greater than the previous Target Value ($100,000), so the Target Value was increased to equal the Contract Value. The Target Value also increased on the second Contract Anniversary because the Contract Value ($110,000) was greater than the previous Target Value ($108,000). o At the third Contract Anniversary, the Contract Value had decreased to $102,000, which is less than the previous Target Value ($110,000), so the Target Value was not increased. On the fourth and fifth Contract Anniversaries, the Contract Value was also less than the previous Target Value, so the Target Value was not increased and remained at the previous highest value of $110,000. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 85 o At the sixth Contract Anniversary the Contract Value had increased to $115,000, which is greater than the previous Target Value ($110,000), so the Target Value was increased to equal the Contract Value. o At the seventh Contract Anniversary the Contract Value had increased to $131,000, which is greater than the previous Target Value ($115,000), so the Target Value was increased to equal the Contract Value. The seventh Contract Anniversary is also the initial Target Value Date. Because the Contract Value on the initial Target Value Date was greater than the Target Value, there was no credit on the seventh Contract Anniversary. o At the eighth Contract Anniversary, the Contract Value had decreased to $121,000, which is less than the previous Target Value ($131,000), so the Target Value was not increased. The eighth Contract Anniversary is also the second Target Value Date. Because the Contract Value on the second Target Value Date was less than the Target Value, there was a credit of $10,000 to the Contract Value on the eighth Contract Anniversary. EXAMPLE OF THE EFFECT OF A PARTIAL WITHDRAWAL ON THE TARGET VALUE o Continuing the assumptions from the previous example, except that you take a partial withdrawal of $9,000 (including the withdrawal charge) in the second month of the second Contract Year when the Contract Value on the day of (but before) the partial withdrawal is $109,000.
THE TARGET VALUE WILL BE ADJUSTED FOR THE PARTIAL WITHDRAWAL AS FOLLOWS: The previous Target Value..........................................................................$108,000.00 Reduced proportionately by the percentage of Contract Value withdrawn ($9,000 / $109,000) = 0.08257 x $108,000 = ........................................- 8,917.43 The Target Value after the partial withdrawal.........................................................$ 99,082.57 o This Target Value will remain in effect until at least the next Contract Anniversary unless you take another partial withdrawal.
-------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 86 APPENDIX D - INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS AND QUARTERLY REBALANCING If your Contract includes the Target Date Retirement Benefit, we divide your Investment Options into the following four groups. Allianz Life determines the composition of the Investment Option groups. We will not recategorize the groups to which we assigned the Investment Options currently available under the Contract, but we may add or remove Investment Options from your Contract in the future. If we do, we will provide written notice regarding additions to or deletions from the Investment Option groups. WHEN AN INVESTMENT OPTION IS CLOSED OR SUBSTITUTED WITHIN ANY OF THE INVESTMENT OPTION GROUPS, WE WILL SEND WRITTEN NOTICE REGARDING THE CLOSING OR SUBSTITUTION 30 DAYS PRIOR TO THE EFFECTIVE DATE OF THE CLOSING OR SUBSTITUTION.
TABLE 1 ------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------ Group A Investment Options AZL Columbia Technology Fund AZL Small Cap Stock Index Fund AZL Turner Quantitative Small Cap Growth Fund AZL Dreyfus Premier Small Cap Value Fund AZL Van Kampen Global Real Estate Fund AZL Franklin Small Cap Value Fund Davis VA Financial Portfolio AZL OCC Opportunity Fund Franklin Global Communications Securities Fund AZL Schroder Emerging Markets Equity Fund PIMCO VIT CommodityRealReturn Strategy Portfolio AZL Schroder International Small Cap Fund Group B Investment Options AZL AIM International Equity Fund AZL Oppenheimer Global Fund AZL Oppenheimer International Growth Fund AZL Davis NY Venture Fund AZL Oppenheimer Main Street Fund AZL Dreyfus Founders Equity Growth Fund AZL PIMCO Fundamental IndexPLUS Total Return Fund AZL S&P 500 Index Fund AZL TargetPLUS Equity Fund AZL First Trust Target Double Play Fund AZL Van Kampen Comstock Fund AZL Jennison 20/20 Focus Fund AZL Van Kampen Global Franchise Fund AZL Jennison Growth Fund AZL Van Kampen Growth and Income Fund AZL Legg Mason Growth Fund AZL Van Kampen Mid Cap Growth Fund AZL Legg Mason Value Fund Mutual Discovery Securities Fund AZL LMP Large Cap Growth Fund Mutual Shares Securities Fund AZL NACM International Fund OpCap Mid Cap Portfolio AZL Neuberger Berman Regency Fund Templeton Growth Securities Fund AZL OCC Value Fund Group X Investment Options Group Y Investment Options AZL Fusion Growth Fund AZL Fusion Balanced Fund AZL Money Market Fund AZL Fusion Moderate Fund AZL TargetPLUS Balanced Fund AZL TargetPLUS Growth Fund Franklin Income Securities Fund AZL TargetPLUS Moderate Fund Franklin High Income Securities Fund AZL Van Kampen Equity and Income Fund Franklin U.S. Government Fund BlackRock Global Allocation V.I. Fund Franklin Zero Coupon Fund 2010 Franklin Templeton VIP Founding Funds Allocation Fund PIMCO VIT All Asset Portfolio PIMCO VIT Emerging Markets Bond Portfolio PIMCO VIT Global Bond Portfolio (Unhedged) PIMCO VIT High Yield Portfolio PIMCO VIT Real Return Portfolio PIMCO VIT Total Return Portfolio Templeton Global Income Securities Fund
-------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 87 If your Contract includes the Target Date Retirement Benefit, we will restrict your allocations to the Investment Option groups. The maximum allowed allocation of Contract Value to the Investment Options in the combined Groups A, B and X is as follows.
TABLE 2 ------------------------------------------------------------------------------------------------------------------------------- ------------- ----------------------------------------------------------------------------------------------------------------- MAXIMUM % OF CONTRACT VALUE ALLOWED IN THE COMBINED INVESTMENT OPTION GROUPS A, B AND X BASED ON THE NUMBER OF YEARS* TO THE INITIAL TARGET VALUE DATE AND THE COMPARISON OF CONTRACT VALUE (CV) TO THE TARGET VALUE (TV) NUMBER OF CV CV CV CV CV YEARS* TO = = = = = THE INITIAL 76% 58% 40% 22% 4% TARGET CV = CV = to CV = CV = to CV = CV = to CV = CV = to CV = CV = to VALUE DATE 88% 82% < 70% 64% < 52% 46% < 34% 28% < 16% 10% < CV = to < to < 82% to < to < 64% to < to < 46% to < to < 28% to < to < 10% CV < 94%+ 94% 88% of 76% 70% of 58% 52% of 40% 34% of 22% 16% of 4% of TV of TV of TV TV of TV of TV TV of TV of TV TV of TV of TV TV of TV of TV TV of TV 28+ 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% ------ ------ 27 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 90% ----- ----- 26 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 90% 85% ------ ------ 25 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 90% 85% 80% ------ ------ 24 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 90% 85% 80% 75% ----- ----- 23 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 90% 85% 80% 75% 70% ------ ------ 22 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 90% 85% 80% 75% 70% 65% ------ ------ 21 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 90% 85% 80% 75% 70% 65% 60% ----- ----- 20 95% 95% 95% 95% 95% 95% 95% 95% 95% 90% 85% 80% 75% 70% 65% 60% 55% ------ ------ 19 95% 95% 95% 95% 95% 95% 95% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% ------ ------ 18 95% 95% 95% 95% 95% 95% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% ----- ----- 17 95% 95% 95% 95% 95% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% ------ ------ ------ ------ 16 95% 95% 95% 95% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% ------ ----- ------ ----- 15 95% 95% 95% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 35% ----- ------ ----- ------ 14 95% 95% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 35% 35% ------ ------ ------ ------ 13 95% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 35% 35% 35% ------ ----- ------ ----- 12 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 35% 35% 35% 35% ------ ------ ------ ------ 11 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 35% 35% 35% 35% 35% ------ ------ 10 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 35% 35% 35% 35% 35% 35% ----- ----- 9 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 35% 35% 35% 35% 35% 35% 35% ------ ------ 8 75% 70% 65% 60% 55% 50% 45% 40% 35% 35% 35% 35% 35% 35% 35% 35% 35% ------ ------ 7 70% 65% 60% 55% 50% 45% 40% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% ----- ----- 6 65% 60% 55% 50% 45% 40% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% ------ ------ 5 60% 55% 50% 45% 40% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% ------ ------ 4 55% 50% 45% 40% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% ----- ----- 3 50% 45% 40% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% ------ ------ 2 45% 40% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% ------ ------ 1 40% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% ------ ------ INITIAL 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% TARGET VALUE DATE AND BEYOND
* We round the number of years until the initial Target Value Date up to the next whole number. For example, when you are actually seven complete Contract Years and four months away from your initial Target Value Date, for the purposes of this table, we would consider you to be eight years from the initial Target Value Date. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 88 The maximum allowed allocation of Contract Value for Investment Option Group A and minimum required allocation of Contract Value for Investment Option Group Y depend on the maximum allowed allocation for the combined Groups A, B and X as follows. TABLE 3 WHEN THE MAXIMUM % OF THEN THE MAXIMUM % AND THE MINIMUM % OF CONTRACT VALUE ALLOWED IN OF CONTRACT VALUE CONTRACT VALUE THE COMBINED ALLOWED IN REQUIRED IN GROUPS A, B AND X IS... GROUP A IS... GROUP Y IS... 95% 30% 5% 90% 30% 10% 85% 25% 15% 80% 25% 20% 75% 20% 25% 70% 20% 30% 65% 15% 35% 60% 15% 40% 55% 10% 45% 50% 10% 50% 45% 5% 55% 40% 5% 60% 35% 5% 65% We will automatically rebalance your Contract Value in each of the Investment Options on each Quarterly Anniversary until the rider termination date. This rebalancing applies to all of your selected Investment Options and not just the ones that are in Groups A, B or X. If you choose to allocate 5% or less of your Contract Value to the Investment Options in Group A; and 35% or less of your Contract Value to the Investment Options in the combined Groups A, B and X; we will never reduce the percentage of Contract Value you allocated to each group, but we will rebalance your Contract Value in your selected Investment Options on each Quarterly Anniversary according to your selected allocations. On each Quarterly Anniversary we determine the allocation of Contract Value to your selected Investment Options as follows. First we establish the maximum allowable allocation for each Investment Option group. Then we compute the required allocation for each Investment Option group, which is your allocation instructions adjusted downward if necessary to match the maximum allowable allocation. Lastly we will rebalance the Contract Value in your selected Investment Options according to the required allocations. DETERMINING THE MAXIMUM ALLOWABLE AND MINIMUM REQUIRED GROUP ALLOCATION COMBINED GROUPS A, B AND X. The new maximum allowable allocation for the combined Groups A, B, and X on each Quarterly Anniversary is the lesser of: a) the current maximum allowable allocation for the combined Groups A, B, and X established on the previous Quarterly Anniversary; or b) the maximum allowable allocation for the combined Groups A, B, and X as set out in Table 2 (which appears earlier in this appendix). Table 2 compares the length of time until the initial Target Value Date and the comparison of the current Contract Value to the current Target Value. GROUPS A AND Y. We then use Table 3 (which appears earlier in this appendix) and the new maximum allowable allocation for the combined Groups A, B and X to determine the new maximum allowable allocation for Group A, and the new minimum required allocation for Group Y. COMBINED GROUPS B AND X. Lastly, we determine the new maximum allowable allocation for the combined Groups B and X. We make this determination after we compute the required allocation for Group A as described next in this appendix. The new maximum allowable allocation for the combined Groups B and X is the new maximum allowable allocation for the combined Groups A, B and X, less the new required allocation for Group A. We limit the amount by which the maximum allowable allocation for the Investment Option groups can decrease in any twelve-month period. WE CANNOT REDUCE THE MAXIMUM PERCENTAGE OF CONTRACT VALUE WE ALLOW IN GROUP A BY MORE THAN 10% IN ANY ONE YEAR, AND WE CANNOT REDUCE THE MAXIMUM PERCENTAGE OF CONTRACT VALUE WE ALLOW IN THE COMBINED GROUPS A, B AND X BY MORE THAN 15% IN ANY ONE YEAR. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 89 We will allocate any additional Purchase Payments according to your most recent allocation instructions if they comply with the current maximum allowable allocations, but if they do not comply with the current maximum allowable allocations, we will instead allocate any additional Purchase Payments according to the current required allocation as discussed next in this appendix. NOTE: UNLESS THE MAXIMUM ALLOWABLE ALLOCATION FOR THE COMBINED GROUPS A, B, AND X CHANGES, THE MAXIMUM ALLOWABLE ALLOCATION FOR GROUP A, AND THE MINIMUM REQUIRED ALLOCATION FOR GROUP Y, WILL NOT CHANGE. DETERMINING THE REQUIRED GROUP ALLOCATION YOUR SELECTED ALLOCATIONS COMPLY WITH THE NEW MAXIMUM ALLOWABLE AND NEW MINIMUM REQUIRED ALLOCATIONS. If your selected allocations for Group A, AND the combined Groups B and X, are less than or equal to the new maximum allowable allocations for these groups, the required allocations for the Investment Option groups will be equal to your selected allocations. YOUR SELECTED ALLOCATION FOR GROUP A COMPLIES WITH THE NEW MAXIMUM ALLOWABLE ALLOCATION, BUT YOUR SELECTED ALLOCATION FOR THE COMBINED GROUPS B AND X EXCEEDS THE NEW MAXIMUM ALLOWABLE ALLOCATION. If your selected allocation for Group A is less than or equal to the new maximum allowable allocation for this group, the required allocation of Contract Value for Group A will be equal to your selected allocation. If your selected allocation for the combined Groups B and X is greater than the new maximum allowable allocation for these groups, then we will decrease the required allocation for the combined Groups B and X to equal the new maximum allowable allocation. We will then take the excess allocation from the combined Groups B and X (your selected allocation minus the new maximum allowable allocation) and apply it to Group Y. YOUR SELECTED ALLOCATION FOR GROUP A EXCEEDS THE NEW MAXIMUM ALLOWABLE ALLOCATION AND THERE MAY BE A CHANGE IN THE REQUIRED ALLOCATION FOR THE COMBINED GROUPS B AND X. If your selected allocation for Group A is greater than the new maximum allowable allocation for this group, then we will decrease the required allocation for Group A to equal the new maximum allowable allocation. We will then take the excess allocation from Group A (your selected allocation minus the new maximum allowable allocation) and rebalance it as follows. a) If your selected allocation for the combined Groups B and X is less than the new maximum allowable allocation for these groups, the new required allocation will be equal to your selected allocation for Groups B and X, plus the excess allocation from Group A, subject to the new maximum allowable allocation for the combined Groups B and X. We will then apply any remaining excess allocation from Group A to Group Y. b) If your selected allocation for the combined Groups B and X is greater than or equal to the new maximum allowable allocation for these groups, then we will decrease the new required allocation for the combined Groups B and X to equal the new maximum allowable allocation. We will then take any excess allocation from the combined Groups B and X (your selected allocation minus the new maximum allowable allocation), plus any excess allocation from Group A, and apply it all to Group Y. The new required allocation for Group Y is equal to 100% minus the new required allocations to Group A, and minus the new required allocation for Groups B and X. We will then rebalance the Contract Value in your selected Investment Options according to the required allocations for each Investment Option group. NOTE: WE WILL NEVER REALLOCATE MORE CONTRACT VALUE TO GROUP A THAN YOUR SELECTED ALLOCATION INSTRUCTIONS SPECIFY. HOWEVER, WE MAY REALLOCATE MORE CONTRACT VALUE TO THE COMBINED GROUPS B AND X THAN YOUR ALLOCATION INSTRUCTIONS SPECIFY IF WE REMOVE EXCESS CONTRACT VALUE FROM GROUP A. REBALANCING CALCULATION WITHIN THE INVESTMENT OPTION GROUPS Within the Investment Option groups, the rebalancing calculation formula is: a x (b / c) where: a =The required group allocation on the current Quarterly Anniversary. b =The required allocation for each Investment Option as of the Business Day immediately preceding the current Quarterly Anniversary. c =The required group allocation as of the Business Day immediately preceding the current Quarterly Anniversary. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 90 Because the allocation to each Investment Option must be a whole number, we will round your required allocation to the nearest whole percentage. Transfers of Contract Value between Investment Options will not change the current required allocation for each Investment Option. In order to change the current required allocation when you make a transfer, you must also change your future allocation instructions (see section 2, Purchase - Allocation of Purchase Payments). Any change you make to your future allocation instructions must comply with the current maximum allowable allocations. We will then treat your future allocation instructions as your required allocation until the earlier of the next Quarterly Anniversary, or the Business Day we process any new allocation instructions. NOTE: O IT IS POSSIBLE THAT WE MAY MOVE ALL OF YOUR CONTRACT VALUE OUT OF ONE OR MORE OR YOUR SELECTED INVESTMENT OPTIONS DUE TO THE PASSAGE OF TIME AND/OR AS CONTRACT VALUE AS A PERCENTAGE OF TARGET VALUE DECREASES. O YOU WILL BE NOTIFIED BY TRANSACTION CONFIRMATION OF ANY CHANGE TO YOUR SELECTED ALLOCATION IN THE INVESTMENT OPTION GROUPS. IN ORDER TO CHANGE YOUR SELECTED INVESTMENT OPTION ALLOCATION AFTER NOTIFICATION, YOU MUST CHANGE YOUR ALLOCATION INSTRUCTIONS. YOUR NEW ALLOCATION INSTRUCTIONS ARE SUBJECT TO THEN CURRENT INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS. o UNLESS YOU RESET THE INITIAL TARGET VALUE DATE, THE MAXIMUM ALLOWABLE ALLOCATION OF YOUR CONTRACT VALUE TO INVESTMENT OPTIONS IN GROUP A, AND THE MAXIMUM ALLOWABLE ALLOCATION OF YOUR CONTRACT VALUE TO INVESTMENT OPTIONS IN THE COMBINED GROUPS A, B AND X WILL NEVER INCREASE, REGARDLESS OF CONTRACT VALUE PERFORMANCE. o IF YOU ALLOCATE LESS THAN THE MAXIMUM ALLOWABLE AMOUNT OF CONTRACT VALUE TO THE INVESTMENT OPTIONS IN THE COMBINED GROUPS A, B AND X, YOU MAY BE SUBJECT TO FEWER REALLOCATIONS OF YOUR CONTRACT VALUE IN THESE GROUPS DUE TO THE PASSAGE OF TIME AND/OR AS THE COMPARISON OF CONTRACT VALUE AS A PERCENTAGE OF TARGET VALUE DECREASES. O YOU CAN NEVER ALLOCATE MORE THAN 30% OF YOUR CONTRACT VALUE TO INVESTMENT OPTION GROUP A, OR MORE THAN 95% OF YOUR CONTRACT VALUE TO INVESTMENT OPTION IN THE COMBINED GROUPS A, B AND X. O WE CANNOT REQUIRE YOU TO HAVE LESS THAN 5% OF YOUR CONTRACT VALUE IN INVESTMENT OPTION GROUP A, NOR CAN WE REQUIRE YOU TO HAVE LESS THAN 35% OF YOUR CONTRACT VALUE IN INVESTMENT OPTION IN THE COMBINED GROUPS A, B AND X. O INVESTMENT OPTION GROUP Y HAS NO MAXIMUM LIMIT ON THE PERCENTAGE OF CONTRACT VALUE YOU CAN ALLOCATE TO IT. O THE MAXIMUM ALLOWABLE ALLOCATION FOR THE INVESTMENT OPTION GROUPS CAN DECREASE AS THE NUMBER OF YEARS UNTIL THE INITIAL TARGET VALUE DATE DECREASES AND AS THE COMPARISON OF CONTRACT VALUE AS A PERCENTAGE OF TARGET VALUE DECREASES. WE LIMIT THE AMOUNT BY WHICH THE MAXIMUM ALLOWABLE ALLOCATION FOR THE INVESTMENT OPTION GROUPS CAN DECREASE IN ANY TWELVE-MONTH PERIOD. WE CANNOT REDUCE THE MAXIMUM PERCENTAGE OF CONTRACT VALUE WE ALLOW IN GROUP A BY MORE THAN 10% IN ANY ONE YEAR, AND WE CANNOT REDUCE THE MAXIMUM PERCENTAGE OF CONTRACT VALUE WE ALLOW IN THE COMBINED GROUPS A, B AND X BY MORE THAN 15% IN ANY ONE YEAR. EXAMPLES OF QUARTERLY REBALANCING This example shows how we apply quarterly rebalancing under the Target Date Retirement Benefit. We are demonstrating significant losses in your Contract Value in order to illustrate the most possible changes over a short period of time. This may not be an accurate reflection of your actual performance. o You purchase a Contract with an initial Purchase Payment of $100,000. You select the Target Date Retirement Benefit at issue and you select the twelfth Contract Anniversary as your initial Target Value Date. Your initial Target Value is equal to your initial Purchase Payment of $100,000. You make no additional Purchase Payments, withdrawals, or transfers and you do not change your selected allocations after the Issue Date. o On the Issue Date, you have twelve complete Contract Years until the initial Target Value Date, and the Contract Value is equal to the Target Value. On the Issue Date, the maximum allowable allocation of Contract Value to the Investment Options in Group A is 30%, and to the combined Groups A, B, and X it is 95%. The minimum required allocation for Group Y is 5% of Contract Value. You choose to allocate 75% of your Contract Value to the combined Groups A, B and X (with 25% to Group A, and 50% to the combined Groups B and X) and 25% of your Contract Value to Group Y. You allocate your Contract Value to the Investment Options as follows. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 91 CONTRACT VALUE INVESTMENT ALLOCATED TO EACH OPTION GROUP INVESTMENT OPTION Investment Option 1 A 15% Investment Option 2 A 10% Investment Option 3 B 20% Investment Option 4 B 15% Investment Option 5 X 15% Investment Option 6 Y 25% o During the first two Contract Years you experience the following performance.
MAXIMUM NEW MAXIMUM CONTRACT YEARS ALLOWED ALLOWABLE NEW REQUIRED VALUE UNTIL IN ALLOCATION MAXIMUM ALLOCATION AS A % INITIAL COMBINEDGROUPS FOR ALLOWABLE REQUIRED FOR REQUIRED OF TARGET A, B AND COMBINED ALLOCATION ALLOCATION COMBINED ALLOCATION QUARTERLY CONTRACT TARGET TARGET VALUE X PER GROUPS FOR FOR GROUPS FOR ANNIVERSARY VALUE VALUE VALUE DATE TABLE 2 A, B AND X GROUP A GROUP A B AND X GROUP Y Issue Date $100,000 $100,000 100% 12 95% 95% 30% 25% 50% 25% 1st $ 87,000 $100,000 87% 12 85% 85% 25% 25% 50% 25% 2nd $ 93,000 $100,000 93% 12 90% 85% 25% 25% 50% 25% 3rd $ 73,000 $100,000 73% 12 75% 80% 25% 25% 50% 25% 4th $ 89,000 $100,000 89% 11 85% 80% 25% 25% 50% 25% 5th $ 79,000 $100,000 79% 11 75% 75% 20% 20% 55% 25% 6th $ 73,000 $100,000 73% 11 70% 70% 20% 20% 50% 30%
o On the first Quarterly Anniversary, your Contract Value has declined to 87% of the Target Value ($87,000 / $100,000). The new maximum allowable allocation for the combined Groups A, B and X has decreased to 85% (the lesser of the current maximum allowable allocation (95%), or the maximum allowable allocation from Table 2 (85%)). According to Table 3, the new maximum allowable allocation for Group A has decreased to 25% and the table would indicate the new minimum required allocation for Group Y has increased to 15%. However the actual required allocation to Group Y is equal to 100% minus the new required allocation for Group A (25%) and minus the new required allocation for Groups B and X (50%), or 25%. Because your selected allocations comply with the new maximum allowable and minimum required allocations, we will rebalance your Contract Value in the Investment Options according to your selected allocations. o On the second Quarterly Anniversary, your Contract Value has increased to 93% of the Target Value ($93,000 / $100,000). Although the maximum allowable allocation for the combined Groups A, B and X from Table 2 has increased to 90%, the new maximum allowable allocation for Contract Value to the combined Groups A, B and X will not change at this time because it is based on the LESSER of the current maximum allowable allocation (85%), or the maximum allowable allocation from Table 2 (90%). Because there is no change in the maximum allocation for the combined Groups A, B, and X, there is no change in the new maximum allowable allocation for Group A, or the new minimum required allocation for Group Y. Because your selected allocations comply with the new maximum allowable and new minimum required allocations, we will rebalance your Contract Value in the Investment Options according to your selected allocations. o On the third Quarterly Anniversary, your Contract Value has declined to 73% of the Target Value ($73,000 / $100,000). The new maximum allowable allocation for the combined Groups A, B and X would now decrease to 75% (the lesser of the current maximum allowable allocation (85%), or the maximum allowable allocation from Table 2 (75%)). However the maximum allowable allocation for the combined Groups A, B, and X cannot decrease by more than 15% in any twelve-month period. Because the maximum allowable allocation for the combined Groups A, B, and X was 95% one year ago, the new maximum allowable allocation for the combined Groups A, B, and X is 80%. According to Table 3, the new maximum allowable allocation for Group A remains at 25% and the table would indicate the new minimum required allocation for Group Y has increased to 20%. However the actual required allocation to Group Y is equal to 100% minus the new required allocation for Group A (25%) and minus the new required allocation for Groups B and X (50%), or 25%. Because your selected allocations comply with the new maximum allowable and new minimum required allocations, we will rebalance your Contract Value in the Investment Options according to your selected allocations. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 92 o On the fourth Quarterly Anniversary, your Contract Value has increased to 89% of the Target Value ($89,000 / $100,000). The fourth Quarterly Anniversary is also the first Contract Anniversary and there is now eleven complete Contract Years until the initial Target Value Date. Although the maximum allowable allocation for the combined Groups A, B and X from Table 2 has increased to 85%, the new maximum allowable allocation for Contract Value to the combined Groups A, B and X will not change at this time because it is based on the LESSER of the current maximum allowable allocation (80%), or the maximum allowable allocation from Table 2 (85%). Because there is no change in the maximum allocation for the combined Groups A, B, and X, there is no change in the new maximum allowable allocation for Group A, or the new minimum required allocation for Group Y. Because your selected allocations comply with the new maximum allowable and new minimum required allocations, we will rebalance your Contract Value in the Investment Options according to your selected allocations. o On the fifth Quarterly Anniversary, your Contract Value has declined to 79% of the Target Value ($79,000 / $100,000). The new maximum allowable allocation for the combined Groups A, B and X has decreased to 75% (the lesser of the current maximum allowable allocation (80%), or the maximum allowable allocation from Table 2 (75%)). According to Table 3, the new maximum allowable allocation for Group A has decreased to 20%, and the new minimum required allocation for Group Y has increased to 25%. Because your selected allocations do not comply with the new maximum allowable and new minimum required allocations, we will rebalance your Contract Value in the Investment Options according to the following required allocations. The required allocation for Group A is 20% (the lesser of your selected allocation for Group A (25%), or the new maximum allowable allocation (20%)). The new maximum allowable allocation for the combined Groups B and X has increased to 55% (the new maximum allowable allocation for the combined Groups A, B and X (75%), less the new required allocation for Group A (20%)). Because your selected allocation for Groups B and X (50%) is less than the new maximum allowable allocation (55%), we will remove the 5% excess allocation from Group A and apply it to the combined Groups B and X. The new required allocation for Groups B and X is 55%. Because we were able to apply all the excess allocation from Group A to the combined Groups B and X, the required allocation for Group Y is equal to your selected allocation. We will then rebalance your Contract Value within the Investment Options as follows.
ALLOCATION AFTER INVESTMENT OPTION REBALANCING CALCULATION THE QUARTERLY GROUP [A X (B / C)* REBALANCING Investment Option 1 A = 20% x (15% / 25%) 12% Investment Option 2 A = 20% x (10% / 25%) 8% Investment Option 3 B = 55% x (20% / 50%) 22% Investment Option 4 B = 55% x (15% / 50%) 17% Investment Option 5 X = 55% x (15% / 50%) 16% Investment Option 6 Y = 25% x (25% / 25%) 25% * "a" is the required group allocation on the current Quarterly Anniversary, "b" is the required allocation for each Investment Option as of the previous Quarterly Anniversary, and "c" is the required group allocation as of the previous Quarterly Anniversary. o On the sixth Quarterly Anniversary, your Contract Value has declined to 73% of the Target Value ($73,000 / $100,000). The new maximum allowable allocation for the combined Groups A, B and X has decreased to 70% (the lesser of the current maximum allowable allocation (75%), or the maximum allowable allocation from Table 2 (70%)). According to Table 3, the new maximum allowable allocation for Group A remains at 20%, and the new minimum required allocation for Group Y increases to 30%. Because your selected allocations do not comply with the new maximum allowable and new minimum required allocations, we will rebalance your Contract Value in the Investment Options according to the following required allocations. The required allocation for the combined Groups A, B and X is 70% (the lesser of your selected allocation for the combined Groups A, B and X (75%), or the new maximum allowable allocation (70%)). The required allocation for Group A is 20% (the lesser of your selected allocation for Group A (25%), or the new maximum allowable allocation (20%)). The new maximum allowable allocation for the combined Groups B and X has decreased to 50% (the new maximum allowable allocation for the combined Groups A, B and X (70%), less the new required allocation for Group A (20%)). Because your selected allocation for the combined Groups B and X (50%) is already equal to the new maximum allowable allocation (50%), the required allocation for the combined Groups B and X is equal to your selected allocation. Instead we will remove the 5% excess allocation from Group A and apply it to Group Y. We will then rebalance your Contract Value within the Investment Options as follows. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 93 ALLOCATION AFTER INVESTMENT OPTION REBALANCING CALCULATION THE QUARTERLY GROUP [A X (B / C)* REBALANCING Investment Option 1 A = 20% x (12% / 20%) 12% Investment Option 2 A = 20% x (8% / 20%) 8% Investment Option 3 B = 50% x (22% / 55%) 20% Investment Option 4 B = 50% x (17% / 55%) 15% Investment Option 5 X = 50% x (16% / 55%) 15% Investment Option 6 Y = 30% x (25% / 25%) 30%
* "a" is the required group allocation on the current Quarterly Anniversary, "b" is the required allocation for each Investment Option as of the previous Quarterly Anniversary, and "c" is the required group allocation as of the previous Quarterly Anniversary. -------------------------------------------------------------------------------- APPENDIX E - QUARTERLY ANNIVERSARY VALUE CALCULATION AND EXAMPLES If your Contract includes the Lifetime Plus Benefit and/or the Quarterly Value Death Benefit, we will calculate a Quarterly Anniversary Value under each of these optional benefits. While both of the Quarterly Anniversary Values use the same general formula, they could result in different amounts if you add the Lifetime Plus Benefit to your contract after the Issue Date. However, if you select both of these benefits on the Issue Date, then the Quarterly Anniversary Values under each optional benefit will be the same until you begin taking Lifetime Plus Payments. Once you begin taking Lifetime Plus Payments, we no longer calculate the Quarterly Anniversary Value under the Lifetime Plus Benefit. CALCULATING THE QUARTERLY ANNIVERSARY VALUE UNDER THE LIFETIME PLUS BENEFIT We only calculate the Quarterly Anniversary Value during the Accumulation Phase and before the earlier of the older Covered Person's 91st birthday or the Benefit Date on which Lifetime Plus Payments begin. WE NO LONGER CALCULATE THE QUARTERLY ANNIVERSARY VALUE BEGINNING ON THE EARLIER OF THE OLDER COVERED PERSON'S 91ST BIRTHDAY, THE BENEFIT DATE, OR THE DATE YOU TAKE A FULL ANNUITIZATION. If you have not begun receiving Lifetime Plus Payments before the older Covered Person's 91st birthday or before the date you take a Full Annuitization, the Quarterly Anniversary Value will cease to exist and Lifetime Plus Payments will no longer be available to you. If the rider effective date is the Issue Date, the Quarterly Anniversary Value on the Issue Date is equal to the Purchase Payment received on the Issue Date. If the rider effective date occurs after the Issue Date, the Quarterly Anniversary Value on the rider effective date is equal to the Contract Value on that date. On each Business Day we increase the Quarterly Anniversary Value by the amount of any additional Purchase Payments received that day, and we reduce the Quarterly Anniversary Value proportionately by the percentage of Contract Value applied to a Partial Annuitization or withdrawn that day (including any withdrawal charge). On each Quarterly Anniversary we process any increase or decrease to the Quarterly Anniversary Value due to a Purchase Payment received that day, or a Partial Annuitization or withdrawal taken that day, after we do the following calculation. On each Quarterly Anniversary the Quarterly Anniversary Value is equal to the greater of its value on the immediately preceding Business Day, or the Contract Value as of that Quarterly Anniversary. ANY WITHDRAWALS TAKEN BEFORE THE BENEFIT DATE AND/OR AMOUNTS APPLIED TO PARTIAL ANNUITIZATIONS MAY REDUCE THE QUARTERLY ANNIVERSARY VALUE BY MORE THAN THE AMOUNT WITHDRAWN AND/OR ANNUITIZED. If the Contract Value at the time of withdrawal and/or annuitization is less than the Quarterly Anniversary Value, we will deduct more than the amount withdrawn and/or annuitized from the Quarterly Anniversary Value. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 94 CALCULATING THE QUARTERLY ANNIVERSARY VALUE UNDER THE QUARTERLY VALUE DEATH BENEFIT WE ONLY CALCULATE THE QUARTERLY ANNIVERSARY VALUE UNTIL THE BUSINESS DAY DURING WHICH WE RECEIVE, IN GOOD ORDER AT OUR SERVICE CENTER, BOTH DUE PROOF OF DEATH AND AN ELECTION OF THE DEATH BENEFIT PAYMENT OPTION. IF YOUR CONTRACT INCLUDES THE LIFETIME PLUS BENEFIT, THEN ON AND AFTER THE BENEFIT DATE (THE DATE YOU BEGIN TO RECEIVE LIFETIME PLUS PAYMENTS) EACH LIFETIME PLUS PAYMENT AND ANY EXCESS WITHDRAWALS WILL REDUCE THE QUARTERLY ANNIVERSARY VALUE PROPORTIONATELY BY THE PERCENTAGE OF CONTRACT VALUE WITHDRAWN (INCLUDING ANY WITHDRAWAL CHARGE). The Quarterly Anniversary Value on the Issue Date is equal to the Purchase Payment received on the Issue Date. On each Business Day we increase the Quarterly Anniversary Value by the amount of any additional Purchase Payments received that day, and we reduce the Quarterly Anniversary Value proportionately by the percentage of Contract Value applied to a Partial Annuitization or withdrawn that day (including any withdrawal charge). Withdrawals include Lifetime Plus Payments and Excess Withdrawals. On each Quarterly Anniversary before the older Owner's 91st birthday (or the Annuitant's 91st birthday if the Contract is owned by a non-individual) we process any increase or decrease to the Quarterly Anniversary Value due to a Purchase Payment received that day, or a Partial Annuitization or withdrawal taken that day, after we do the following calculation. On each Quarterly Anniversary before the older Owner's 91st birthday (or the Annuitant's 91st birthday if the Contract is owned by a non-individual) the Quarterly Anniversary Value is equal to the greater of its value on the immediately preceding Business Day, or the Contract Value as of that Quarterly Anniversary. Beginning with the Quarterly Anniversary that occurs on or after the older Owner's 91st birthday (or the Annuitant's 91st birthday if the Contract is owned by a non-individual) we calculate the Quarterly Anniversary Value in the same way that we do on each Business Day other than a Quarterly Anniversary. ANY WITHDRAWALS (INCLUDING LIFETIME PLUS PAYMENTS AND EXCESS WITHDRAWALS) AND/OR AMOUNTS APPLIED TO PARTIAL ANNUITIZATIONS MAY REDUCE THE QUARTERLY ANNIVERSARY VALUE BY MORE THAN THE AMOUNT WITHDRAWN AND/OR ANNUITIZED. If the Contract Value at the time of withdrawal and/or annuitization is less than the Quarterly Anniversary Value, we will deduct more than the amount withdrawn and/or annuitized from the Quarterly Anniversary Value. EXAMPLES OF THE QUARTERLY ANNIVERSARY VALUE CALCULATIONS This example shows how we calculate the Quarterly Anniversary Value under the Lifetime Plus Benefit and the Quarterly Value Death Benefit. o You purchase a Contract with an initial Purchase Payment of $100,000. You select the Lifetime Plus Benefit and the Quarterly Value Death Benefit at issue. You are the only Owner and are age 69 or younger on the Issue Date. You make no additional Purchase Payments. QUARTERLY ------------------ ANNIVERSARY CONTRACT VALUE VALUE ------------------- --------------- ------------------- --------------- On the Issue Date $100,000 $100,000 End of 1st Quarter, 1st Contract Year $98,000 $100,000 End of 2nd Quarter, 1st Contract Year $102,000 $102,000 End of 3rd Quarter, 1st Contract Year $104,000 $104,000 1st Contract Anniversary $103,000 $104,000 End of 1st Quarter, 2nd Contract Year $106,000 $106,000 o On the Issue Date, the Quarterly Anniversary Value is equal to total Purchase Payment ($100,000). o At the end of the Contract's first Quarter, the Contract Value had decreased to $98,000, which is less than the previous Quarterly Anniversary Value ($100,000), so the Quarterly Anniversary Value was not increased. o At the end of the Contract's second Quarter, the Contract Value had increased to $102,000, which is greater than the previous Quarterly Anniversary Value ($100,000), so the Quarterly Anniversary Value was increased to equal the Contract Value. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 95 o At the end of the Contract's third Quarter, the Contract Value had increased to $104,000, which is greater than the previous Quarterly Anniversary Value ($102,000), so the Quarterly Anniversary Value was increased to equal the Contract Value. o At the first Contract Anniversary, the Contract Value had decreased to $103,000, which is less than the previous Quarterly Anniversary Value ($104,000), so the Quarterly Anniversary Value was not increased. o At the end of the first Quarter of the second Contract Year, the Contract Value had increased to $106,000, which is greater than the previous Quarterly Anniversary Value ($104,000), so the Quarterly Anniversary Value was increased to equal the Contract Value. EXAMPLE OF THE EFFECT OF A PARTIAL WITHDRAWAL ON THE QUARTERLY ANNIVERSARY VALUE o Continuing the assumptions from the previous example, except that you take a partial withdrawal (including the withdrawal charge) of $9,000 in the second month of the second Contract Year when the Contract Value on the day of (but before) the partial withdrawal is $103,000. THE QUARTERLY ANNIVERSARY VALUE WILL BE ADJUSTED FOR THE PARTIAL WITHDRAWAL AS FOLLOWS:
The previous Quarterly Anniversary Value...........................................................$104,000.00 Reduced proportionately by the percentage of Contract Value withdrawn ($9,000 / $103,000) = 0.08738 x $104,000 = ........................................- 9,087.38 The Quarterly Anniversary Value after the partial withdrawal..........................................$ 94,912.62
o This Quarterly Anniversary Value will remain in effect until at least the next Quarterly Anniversary unless you take another partial withdrawal. o All withdrawals, including those made under the free withdrawal privilege, Lifetime Plus Payments, or withdrawals that are subject to a withdrawal charge (including Excess Withdrawals), will reduce the Quarterly Anniversary in exactly the same manner, which is proportionately based on the percentage of Contract Value withdrawn -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 96 APPENDIX F - CALCULATIONS AND EXAMPLES OF THE 5% ANNUAL INCREASE UNDER THE LIFETIME PLUS BENEFIT CALCULATING THE 5% ANNUAL INCREASE We only calculate the 5% Annual Increase before the older Covered Person's 91st birthday and before you exercise the Lifetime Plus Benefit or take a Full Annuitization. WE NO LONGER CALCULATE THE 5% ANNUAL INCREASE BEGINNING ON THE EARLIER OF THE OLDER COVERED PERSON'S 91ST BIRTHDAY, THE BENEFIT DATE, OR THE DATE YOU TAKE A FULL ANNUITIZATION. If you have not exercised the Lifetime Plus Benefit before the older Covered Person's 91st birthday or before the date you take a Full Annuitization, the 5% Annual Increase will cease to exist and the Lifetime Plus Benefit will no longer be available to you. IF YOU SELECT THE LIFETIME PLUS BENEFIT AT ISSUE AND THERE ARE NO RESETS TO THE 5% ANNUAL INCREASE, then the 5% Annual Increase on the Issue Date is the Purchase Payment received on the Issue Date. On each Business Day after the Issue Date, we increase the 5% Annual Increase by the amount of any additional Purchase Payments received that day, and we reduce the 5% Annual Increase proportionately by the percentage of Contract Value applied to a Partial Annuitization or withdrawn that day (including any withdrawal charge). On each Contract Anniversary after the Issue Date, we process any increase or decrease to the 5% Annual Increase due to a Purchase Payment received that day, or a Partial Annuitization or withdrawal taken that day, after we do the following anniversary calculations. On the first Contract Anniversary of the Issue Date, the 5% Annual Increase is equal to the following. a + (0.05 x b) where: a = The 5% Annual Increase as of the immediately preceding Business Day. b = Total Purchase Payments* received within 90 days of the Issue Date. On the second and later Contract Anniversaries of the Issue Date, the 5% Annual Increase is equal to the following. c + (0.05 x d) where: c = The 5% Annual Increase as of the immediately preceding Business Day. d = Total Purchase Payments* received more than one year ago and at most 11 years ago. Because the Lifetime Plus Benefit was selected at issue and there was no reset of the 5% Annual Increase on the 11th Contract Anniversary, we exclude Purchase Payments received within 90 days of the Issue Date. * We reduce each Purchase Payment proportionately by the percentage of Contract Value applied to a Partial Annuitization or withdrawn (including any withdrawal charge) for each annuitization or withdrawal taken since we received that payment. IF YOU SELECT THE LIFETIME PLUS BENEFIT AFTER ISSUE OR THERE IS A RESET TO THE 5% ANNUAL INCREASE, then the 5% Annual Increase on the rider effective date or reset anniversary is equal to the Contract Value as of the rider effective date or reset anniversary, as applicable. On each Business Day after the rider effective date or reset anniversary, as applicable, we increase the 5% Annual Increase by the amount of any additional Purchase Payments received that day, and we reduce the 5% Annual Increase proportionately by the percentage of Contract Value applied to a Partial Annuitization or withdrawn that day (including any withdrawal charge). On each Contract Anniversary after the rider effective date or reset anniversary, as applicable, we process any increase or decrease to the 5% Annual Increase due to a Purchase Payment received that day, or a Partial Annuitization or withdrawal taken that day, after we do the following anniversary calculations. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 97 On the first Contract Anniversary that occurs after the rider effective date or reset anniversary, as applicable, the 5% Annual Increase is equal to the following. a + (0.05 x b) where: a = The 5% Annual Increase as of the immediately preceding Business Day. b = The Contract Value* as of the rider effective date or reset anniversary, as applicable. On the second and later Contract Anniversaries that occur after the rider effective date or reset anniversary, as applicable, the 5% Annual Increase is equal to the following. c + (0.05 x d) where: c = The 5% Annual Increase as of the immediately preceding Business Day. d = The Contract Value* as of the rider effective date or reset anniversary, as applicable, plus total Purchase Payments received more than one year ago and at most 11 years ago, but after the rider effective date or reset anniversary. We reduce each Purchase Payment proportionately by the percentage of Contract Value applied to a Partial Annuitization or withdrawn (including any withdrawal charge) for each annuitization or withdrawal taken since we received that payment. * We reduce the Contract Value as of the rider effective date or reset anniversary by the percentage of Contract Value applied to a Partial Annuitization or withdrawn (including any withdrawal charge) for each annuitization or withdrawal taken since the rider effective date or reset anniversary. If there is a reset to the 5% Annual Increase, we will change the M&E charge for the Lifetime Plus Benefit and payment type (single life or joint life) to equal the additional M&E charge that is in effect for a newly issued Contract as of the reset anniversary IF THIS AMOUNT DIFFERS FROM THE CURRENT M&E CHARGE ON YOUR CONTRACT. EXAMPLE OF THE 5% ANNUAL INCREASE CALCULATION o You purchase a Contract with the Lifetime Plus Benefit. You make an initial Purchase Payment of $50,000 on the Issue Date. You make a second Purchase Payment of $50,000 during the third month of the Contract, and you make a third Purchase Payment of $50,000 during the second Contract Year. ANNIVERSARY 5% ANNUAL INCREASE Issue Date $ 50,000 ------------------------------------------------------------ ------------------- ------------------------------------------------------------ ------------------- Immediately after Purchase Payment in third month $100,000 First Contract Anniversary $105,000 Immediately after Purchase Payment in second Contract Year $155,000 Second Contract Anniversary $160,000 Third Contract Anniversary $167,500 Fourth Contract Anniversary $175,000 Fifth Contract Anniversary $182,500 ------------------------------------------------------------ ------------------- ------------------------------------------------------------ ------------------- Sixth Contract Anniversary $190,000 Seventh Contract Anniversary $197,500 Eighth Contract Anniversary $205,000 Ninth Contract Anniversary $212,500 Tenth Contract Anniversary $220,000 ------------------------------------------------------------ ------------------- ------------------------------------------------------------ ------------------- 11th Contract Anniversary $222,500 12th Contract Anniversary $225,000 13th Contract Anniversary $225,000 o On the Issue Date the 5% Annual Increase is equal to the Purchase Payment received on the Issue Date ($50,000). o During the third month, on the Business Day we receive the additional Purchase Payment, we add that payment to the 5% Annual Increase ($100,000 = $50,000 + $50,000). o On the first Contract Anniversary, since the total Purchase Payments received within the first 90 days are $100,000, we credit 5% of $100,000 to the 5% Annual Increase ($105,000 = $100,000 + (0.05 x $100,000)). -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 98 o During the second Contract Year, on the Business Day we receive the additional Purchase Payment, we add that payment to the 5% Annual Increase ($155,000 = $105,000 + $50,000). o On the second Contract Anniversary, since the total Purchase Payments received more than one year ago and at most 11 years ago were $100,000, we credit 5% of $100,000 to the 5% Annual Increase ($160,000 = $155,000 + (0.05 x $100,000)). o On the third Contract Anniversary, since the total Purchase Payments received more than one year ago and at most 11 years ago were $150,000, we credit 5% of $150,000 to the 5% Annual Increase ($167,500 = $160,000 + (0.05 x $150,000)). o On each of the fourth through the tenth Contract Anniversaries, since the total Purchase Payments received more than one year ago and at most 11 years ago were $150,000, we credit 5% of $150,000 ($7,500 = 5% x $150,000) to the 5% Annual Increase on each of these anniversaries. o On the 11th Contract Anniversary, because the Lifetime Plus Benefit was selected at issue and there was no reset of the 5% Annual Increase, we exclude the Purchase Payments received within 90 days of the Issue Date. Therefore, since the total Purchase Payments received more than one year ago and after the first 90 days of the Issue Date were $50,000, we credit 5% of this $50,000 to the 5% Annual Increase ($222,500 = $220,000 + (0.05 x $50,000)). o On the 12th Contract Anniversary, since the total Purchase Payments received more than one year ago and at most 11 years ago were $50,000, we credit 5% of this $50,000 to the 5% Annual Increase ($225,000 = $222,500 + (0.05 x $50,000)). o On the 13th and later Contract Anniversaries, since there are no Purchase Payments that were received more than one year ago and at most 11 years ago, the 5% Annual Increase remains the same. -------------------------------------------------------------------------------- APPENDIX G - WITHDRAWAL CHARGE EXAMPLES All of the following examples assume you purchase a Contract with an initial Purchase Payment of $100,000, you do not select the Short Withdrawal Charge Option or the Bonus Option, and you make no additional Purchase Payments. The free withdrawal privilege for each Contract Year is 12% of your total Purchase Payments, less the total amount previously withdrawn under the free withdrawal privilege in the same Contract Year. Any unused free withdrawal privilege in one Contract Year does not carry over to the next Contract Year. This means at the beginning of each Contract Year, there would be $12,000 available under the free withdrawal privilege. FULL WITHDRAWAL WHEN THE CONTRACT VALUE HAS DECLINED DUE TO A LOSS IN YOUR SELECTED INVESTMENT OPTIONS: o You take a full withdrawal in the third Contract Year when the Contract Value is $90,000 and the withdrawal charge is 7.5%. You have taken no other withdrawals from the Contract. o There are no Purchase Payments that are beyond the withdrawal charge period. We assess the withdrawal charge against the Withdrawal Charge Basis, less the free withdrawal privilege.
We calculate the withdrawal charge as follows: The Withdrawal Charge Basis is equal to total Purchase Payments less any withdrawals (including any withdrawal charges) = $100,000 - $0 = .............................................$100,000 Reduced by the amount of the free withdrawal privilege = 12% x $100,000 =........................- 12,000 ...................................................................................$ 88,000 Multiplied by the withdrawal charge..............................................................X 7.5% ..........................................................................................$ 6,600 Therefore, we would withdraw $90,000 from the Contract and pay you $83,400 ($90,000 less the $6,600 withdrawal charge). -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 99 PARTIAL WITHDRAWAL UNDER THE FREE WITHDRAWAL PRIVILEGE FOLLOWED BY A FULL WITHDRAWAL: o You take a partial withdrawal of $9,000 in the second Contract Year. The total amount available under the free withdrawal privilege at this time is $12,000. The $9,000 withdrawn is not subject to a withdrawal charge. o You take a full withdrawal in the third Contract Year when the Contract Value is $90,000 and the withdrawal charge is 7.5%. At this time, there are no Purchase Payments that are beyond the withdrawal charge period. We assess the withdrawal charge against the Withdrawal Charge Basis, less the free withdrawal privilege. We calculate the withdrawal charge for the full withdrawal as follows: The Withdrawal Charge Basis is equal to total Purchase Payments less any withdrawals (including any withdrawal charges) = $100,000 - $0 = .............................................$100,000 Reduced by the amount of the free withdrawal privilege = 12% x $100,000 =........................- 12,000 ...................................................................................$ 88,000 Multiplied by the withdrawal charge..............................................................X 7.5% ..........................................................................................$ 6,600 Therefore, upon the full withdrawal, we would withdraw $90,000 from the Contract and pay you $83,400 ($90,000 less the $6,600 withdrawal charge). In this example, your total distributions from the Contract after deducting the withdrawal charges are $92,400. PARTIAL WITHDRAWAL IN EXCESS OF THE FREE WITHDRAWAL PRIVILEGE FOLLOWED BY A FULL WITHDRAWAL: o You take a partial withdrawal of $15,000 in the second Contract Year when the withdrawal charge is 8.5%. The total amount available under the free withdrawal privilege at this time is $12,000, so $3,000 of the withdrawal is subject to a withdrawal charge and will reduce the Withdrawal Charge Basis. We calculate the withdrawal charge for the partial withdrawal as follows: The amount of the withdrawal that is subject to a withdrawal charge................................$ 3,000 Divided by (1 minus the withdrawal charge percentage)............................................../ 0.915 Total amount withdrawn.............................................................................$ 3,279 Total withdrawal charge (amount withdrawn minus the amount requested) = $3,279 - $3,000 =.........$ 279 Therefore, we would withdraw $3,279 from the Contract and pay you $3,000. o Continuing the example, assume you take a full withdrawal in the third Contract Year when the Contract Value is $90,000 and the withdrawal charge is 7.5%. At this time, there are no Purchase Payments that are beyond the withdrawal charge period. We assess the withdrawal charge against the Withdrawal Charge Basis, less the free withdrawal privilege. We calculate the withdrawal charge for the full withdrawal as follows: The Withdrawal Charge Basis is equal to total Purchase Payments less any withdrawals (including any withdrawal charges) = $100,000 - $3,279 = ..........................................$96,721 Reduced by the amount of the free withdrawal privilege = 12% x $100,000 =........................- 12,000 ...................................................................................$ 84,721 Multiplied by the withdrawal charge................................................................X 7.5% ............................................................................................$ 6,354 Therefore, upon the full withdrawal, we would withdraw $90,000 from the Contract and pay you $83,646 ($90,000 less the $6,354 withdrawal charge). In this example, your total distributions from the Contract after deducting the withdrawal charges are $98,646.
-------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- 100 FOR SERVICE OR MORE INFORMATION In order to help you understand how your Contract Values vary over time and under different sets of assumptions, we will provide you with certain personalized illustrations upon request and free of charge. You can request illustrations by contacting your registered representative. Illustrations demonstrate how your Contract Value, cash surrender value, and death benefits change based on the investment experience of the Investment Options or the hypothetical rate of return. The illustrations are hypothetical and may not be used to project or predict investment results. You can review and copy information about us, the Separate Account, the prospectus and the SAI at the SEC's Public Reference Room in Washington, D.C. You may obtain information about the operation of the Public Reference Room by calling (202) 551-8090. The SEC also maintains a website (http://www.sec.gov). The prospectus, the SAI and other information about the Contract are available on the EDGAR database on the SEC's website. If you do not have access to the website you can get copies of information from the website upon payment of a duplication fee by writing to: PUBLIC REFERENCE SECTION OF THE COMMISSION 100 F Street, NE Washington, DC 20549 You can contact us at: ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK One Chase Manhattan Plaza, 37th Floor New York, NY 10005-1423 (800) 624-0197 If you need service (such as changes in Contract information, inquiry into Contract Values, to request a withdrawal, etc.), please contact our Service Center: ALLIANZ SERVICE CENTER P.O. Box 1122 Southeastern, PA 19398-1122 (800) 624-0197 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract Prospectus May 1, 2008 -------------------------------------------------------------------------------- PART B - SAI 1 STATEMENT OF ADDITIONAL INFORMATION ALLIANZ VISION(SM) NEW YORK INDIVIDUAL FLEXIBLE PURCHASE PAYMENT VARIABLE DEFERRED ANNUITY CONTRACT ISSUED BY ALLIANZ LIFE(R) OF NY VARIABLE ACCOUNT C (THE SEPARATE ACCOUNT) AND ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK (ALLIANZ LIFE OF NEW YORK, WE, US, OUR) MAY 1, 2008 This is not a prospectus. This Statement of Additional Information (SAI) should be read in conjunction with the prospectus for the Contract, which is dated the same date as this SAI. Definitions of capitalized terms can be found in the glossary in the prospectus. The prospectus is incorporated in this SAI by reference. The prospectus for the Contract concisely sets forth information that a prospective investor ought to know before investing. For a copy of the Contract prospectus, call or write us at: ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK One Chase Manhattan Plaza, 37th Floor New York, NY 10005-1423 (800) 624-0197 -------------------------------------------------------------------------------- TABLE OF CONTENTS ALLIANZ LIFE OF NEW YORK..............................2 EXPERTS...............................................2 LEGAL OPINIONS........................................2 DISTRIBUTOR...........................................2 REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE.....3 FEDERAL TAX STATUS....................................3 GENERAL...........................................3 DIVERSIFICATION...................................4 OWNER CONTROL.....................................4 CONTRACTS OWNED BY NON-INDIVIDUALS................5 INCOME TAX WITHHOLDING............................5 REQUIRED DISTRIBUTIONS............................5 QUALIFIED CONTRACTS...............................6 ANNUITY PROVISIONS....................................7 ANNUITY UNITS/CALCULATING VARIABLE ANNUITY PAYMENTS..................................7 MORTALITY AND EXPENSE RISK GUARANTEE..................7 FINANCIAL STATEMENTS..................................7 APPENDIX - CONDENSED FINANCIAL INFORMATION............8 VISNYSAI-0508 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 2 ALLIANZ LIFE OF NEW YORK Allianz Life of New York is a stock life insurance company organized under the laws of the state of New York. Before January 1, 2003, Allianz Life of New York was known as Preferred Life Insurance Company of New York. We are a subsidiary of Allianz Life Insurance Company of North America (Allianz Life), which is also a stock life Insurance company. Allianz Life is a subsidiary of Allianz of America, Inc. (AZOA), a financial holding company. AZOA is a subsidiary of Allianz SE, a provider of integrated financial services. Allianz SE is headquartered in Munich, Germany, and has sales outlets throughout the world. We offer fixed and variable annuities, individual and group life insurance, and long-term care insurance. Allianz Life of New York does not have a separate custodian for the assets owned through the Separate Account. Most mutual fund shares are not in certificated form, and as such, Allianz Life of New York in effect acts as self custodian for the non-certificated shares we own through the Separate Account. XPERTS The financial statements of Allianz Life of NY Variable Account C as of and for the year ended December 31, 2007 (including the statements of changes in net assets for each of the years or periods in the two year period then ended) and the financial statements and supplemental schedules of Allianz Life of New York as of December 31, 2007 and 2006 and for each of the years in the three-year period ended December 31, 2007, included in this SAI have been audited by KPMG LLP, independent registered public accounting firm, as indicated in their report included in this SAI and are included herein in reliance upon such reports and upon the authority of said firm as experts in accounting and auditing. The principal business address of KPMG LLP is 4200 Wells Fargo Center, Minneapolis, MN. LEGAL OPINIONS Stewart D. Gregg, Senior Securities Counsel of Allianz Life of New York, has provided legal advice on certain matters in connection with the issuance of the Contracts. DISTRIBUTOR Allianz Life Financial Services, LLC (Allianz Life Financial (previously USAllianz Investor Services, LLC)), a wholly-owned subsidiary of Allianz Life Insurance Company of North America, acts as the distributor. Allianz Life Financial does not sell the Contracts on a retail basis. Rather, Allianz Life Financial enters into selling agreements with other third-party broker/dealers registered under the Securities Exchange Act of 1934 (selling firms) for the sale of the Contracts. The Contracts are offered to the public on a continuous basis. We anticipate continuing to offer the Contracts, but reserve the right to discontinue the offering. We pay commissions for sales of the Contracts. Allianz Life Financial passes through most of the commissions it receives to selling firms for their sales. Allianz Life Financial received sales compensation with respect to the Contracts issued under Allianz Life of NY Variable Account C in the following amounts during the last three calendar years:
------------- -------------------------------- ------------------------------------ ------------ AGGREGATE AMOUNT OF AGGREGATE AMOUNT OF COMMISSIONS CALENDAR COMMISSIONS PAID TO RETAINED BY ALLIANZ LIFE FINANCIAL YEAR ALLIANZ LIFE FINANCIAL AFTER PAYMENTS TO SELLING FIRMS ------------- -------------------------------- ------------------------------------ ------------- -------------------------------- ------------------------------------ 2005 $4,367,160.63 $0 ------------- -------------------------------- ------------------------------------ ------------- -------------------------------- ------------------------------------ 2006 $5,508,561.44 $0 ------------- -------------------------------- ------------------------------------ ------------- -------------------------------- ------------------------------------ 2007 $5,838,450.54 $0 ------------- -------------------------------- ------------------------------------
We may fund Allianz Life Financial's operating and other expenses including: overhead; legal and accounting fees; registered representative training; deferred compensation and insurance benefits for registered representatives; compensation for the Allianz Life Financial management team; and other expenses associated with the Contracts. We also pay for Allianz Life Financial's operating and other expenses, including overhead, legal and accounting fees. As described above, Allianz Life Financial sells its Contracts primarily through "wholesaling", in which Allianz Life Financial sells contracts through a large group of mostly non-affiliated broker/dealer firms. Currently, Allianz Life Financial has agreements with approximately 1,116 retail broker/dealers to sell its Contracts. All of the broker/dealer firms except one are non-affiliated. As described in the prospectus, Allianz Life Financial may pay marketing support payments to certain of these firms for providing marketing support services in the sale of the Contracts. Currently, Allianz Life Financial makes marketing support payments to approximately 40-45 firms. These payments vary in amount. In -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 3 2007, the five firms receiving the largest payments, ranging from $525,320 to $1,867,575, are listed below. Marketing support payments may also be made to managers of Investment Options or their affiliates for providing Investment Option information and marketing support. FIRM NAME --------------------------------------- --------------------------------------- 1 LPL Financial Network 2 AIG Advisor Group 3 National Planning Holdings 4 H D Vest Investments 5 Raymond James REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE We may reduce or eliminate the amount of the withdrawal charge on the Contracts when Contract sales are made to individuals or to a group of individuals in a manner that results in savings of sales expenses. We will determine the entitlement to a reduction of the withdrawal charge after examination of the following factors: o the size of the group; o the total amount of Purchase Payments expected to be received from the group; o the nature of the group for which the Contracts are purchased, and the persistency expected in that group (for example, the expectation that the Owners will continue to hold the Contracts for a certain period of time); o the purpose for which the Contracts are purchased and whether that purpose makes it likely that expenses will be reduced; and o any other circumstances which we believe to be relevant to determining whether reduced sales or administrative expenses may be expected. None of these reductions are contractually guaranteed. We may eliminate the withdrawal charge when the Contracts are issued to an officer, director or employee of Allianz Life of New York or any of its affiliates. We may reduce or eliminate the withdrawal charge when the Contract is sold by a registered representative appointed with Allianz Life of New York to any members of his or her immediate family and the commission is waived. In no event will any reduction or elimination of the withdrawal charge be permitted where the reduction or elimination will be unfairly discriminatory to any person. FEDERAL TAX STATUS NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON OUR UNDERSTANDING OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. WE CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE. PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE POSSIBILITY OF SUCH CHANGES. WE DO NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS. PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS "ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS. GENERAL Section 72 of the Internal Revenue Code of 1986, as amended (the Code) governs taxation of annuities in general. An Owner is generally not taxed on increases in the value of a Contract until distribution occurs, either in the form of a lump sum payment or as Annuity Payments. For a lump sum payment received as a full withdrawal (total redemption) or death benefit, the recipient is taxed on the portion of the payment that exceeds the cost basis of the Contract (your investment). For Non-Qualified Contracts, this cost basis is generally the Purchase Payments, while for Qualified Contracts there may be no cost basis. The taxable portion of the lump sum payment is taxed at ordinary income tax rates. A partial withdrawal results in tax on any gain in the Contract (for example, the difference, if any, between the Contract Value immediately before the withdrawal, unreduced by any charges, and the Contract's cash basis). Lump sum withdrawals, whether partial or full, may also be subject to a federal penalty tax equal to 10% of the taxable amount. For Annuity Payments, the portion of each payment included in income equals the excess of the payment over the exclusion amount. The exclusion amount for Annuity Payments based on a variable Annuity Option is determined by dividing the investment in the Contract (adjusted for any period certain or refund guarantee) by the number of years over -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 4 which the annuity is expected to be paid (which is determined by Treasury Regulations). The exclusion amount for Annuity Payments based on a fixed Annuity Option is determined by multiplying the Annuity Payment by the ratio that the investment in the Contract (adjusted for any period certain or refund guarantee) bears to the expected return under the Contract. Annuity Payments received after the investment in the Contract has been recovered (for example, when the total of the excludable amounts equal the investment in the Contract) are fully taxable. The taxable portion of an Annuity Payment is taxed at ordinary income tax rates. Partial Annuitizations are taxed as partial withdrawals, not as Annuity Payments, until the entire Contract Value has been applied to Annuity Payments. For certain types of Qualified Contracts there may be no cost basis in the Contract within the meaning of Section 72 of the Code. Owners, Annuitants and Beneficiaries under the Contracts should seek competent financial advice about the tax consequences of any distributions. We are taxed as a life insurance company under the Code. For federal income tax purposes, the Separate Account is not a separate entity from us, and its operations form a part of Allianz Life of New York. Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the Contract could change by legislation or otherwise. Consult a tax adviser with respect to legislative developments and their effect on the Contract. We have the right to modify the Contract in response to legislative changes that could otherwise diminish the favorable tax treatment that annuity Owners currently receive. We make no guarantee regarding the tax status of any contract and do not intend the above discussion as tax advice. DIVERSIFICATION Section 817(h) of the Code imposes certain diversification standards on the underlying assets of variable annuity contracts. The Code provides that a variable annuity contract will not be treated as an annuity contract for any period (and any subsequent period) for which the investments are not adequately diversified in accordance with regulations prescribed by the United States Treasury Department (Treasury Department). Disqualification of the Contract as an annuity contract would result in the imposition of federal income tax to the Owner with respect to earnings allocable to the Contract before the receipt of Annuity Payments under the Contract. The Code contains a safe harbor provision which provides that annuity contracts, such as the Contract, meet the diversification requirements if, as of the end of each quarter, the underlying assets meet the diversification standards for a regulated investment company and no more than 55% of the total assets consist of cash, cash items, U.S. government securities and securities of other regulated investment companies. On March 2, 1989, the Treasury Department issued regulations (Treas. Reg. 1.817-5) which established diversification requirements for the Investment Options underlying variable contracts such as the Contract. The regulations amplify the diversification requirements for variable contracts set forth in the Code and provide an alternative to the safe harbor provision described above. Under these regulations, an Investment Option will be deemed adequately diversified if: o no more than 55% of the value of the total assets of the Investment Option is represented by any one investment; o no more than 70% of the value of the total assets of the Investment Option is represented by any two investments; o no more than 80% of the value of the total assets of the Investment Option is represented by any three investments; and o no more than 90% of the value of the total assets of the Investment Option is represented by any four investments. The Code provides that for purposes of determining whether or not the diversification standards imposed on the underlying assets of variable contracts by Section 817(h) of the Code have been met, "each United States government agency or instrumentality shall be treated as a separate issuer." We intend that all Investment Options underlying the Contracts will be managed by the investment advisers in such a manner as to comply with these diversification requirements. OWNER CONTROL The Treasury Department has indicated that the diversification regulations do not provide guidance regarding the circumstances in which Owner control of the investments of the Separate Account will cause the Owner to be treated as the owner of the assets of the Separate Account, thereby resulting in the loss of favorable tax treatment for the Contract. In certain circumstances, owners of variable annuity contracts have been considered for federal income tax purposes to be the owners of the assets of the separate account, supporting their contracts due to their ability to exercise investment control over those assets. When this is the case, the contract owners have been currently taxed on income and gains -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 5 attributable to the variable account assets. There is little guidance in this area, and some features of our Contracts, such as the flexibility of an Owner to allocate Purchase Payments and transfer amounts among the investment divisions of the Separate Account, have not been explicitly addressed in published rulings. While we believe that the Contracts do not give Owners investment control over Separate Account assets, we reserve the right to modify the Contracts as necessary to prevent an Owner from being treated as the owner of the Separate Account assets supporting the Contract. CONTRACTS OWNED BY NON-INDIVIDUALS Under Section 72(u) of the Code, the investment earnings on Purchase Payments for the Contracts will be taxed currently to the Owner if the Owner is a non-individual, for example, a corporation or certain other entities. Such Contracts generally will not be treated as annuities for federal income tax purposes. However, this treatment is not applied to Contracts held by a trust or other entity as an agent for an individual or to Contracts held by qualified retirement plans. Purchasers should consult a tax adviser before purchasing a Contract to be owned by a non-individual. INCOME TAX WITHHOLDING All distributions or the portion thereof which is included in the gross income of the Owner are subject to federal income tax withholding. Generally, amounts are withheld from periodic payments at the same rate as wages and at the rate of 10% from non-periodic payments. However, the Owner, in most cases, may elect not to have taxes withheld or to have withholding done at a different rate. Certain distributions from retirement plans qualified under Section 401 of the Code, which are not directly rolled over to another eligible retirement plan or individual retirement account or Individual Retirement Annuity, are subject to a mandatory 20% withholding for federal income tax. The 20% withholding requirement generally does not apply to: o a series of substantially equal payments made at least annually for the life or life expectancy of the participant or joint and last survivor expectancy of the participant and a designated Beneficiary, or for a specified period of ten years or more; or o distributions which are required minimum distributions; or o the portion of the distributions not included in gross income (for example, returns of after-tax contributions); or o hardship withdrawals. Participants should consult a tax adviser regarding withholding requirements. REQUIRED DISTRIBUTIONS In order to be treated as an annuity contract for federal income tax purposes, Section 72(s) of the Code requires any non-qualified contract to contain certain provisions specifying how your interest in the contract will be distributed in the event of the death of an owner. Specifically, with regard to this Contract, Section 72(s) requires that: o if any Owner dies on or after the Income Date, but before the time the entire interest in the Contract has been distributed, the entire interest in the Contract will be distributed at least as rapidly as under the method of distribution being used as of the date of such Owner's death; and o if any Owner dies before the Income Date, the entire interest in the Contract will be distributed within five years after the date of such Owner's death. These requirements will be considered satisfied as to any portion of an Owner's interest which is payable to or for the benefit of a designated Beneficiary and which is distributed over the life of such designated Beneficiary or over a period not extending beyond the life expectancy of that Beneficiary, provided that such distributions begin within one year of the Owner's death. The designated Beneficiary refers to an individual designated by the Owner as a Beneficiary and to whom ownership of the Contract passes by reason of death. However, if the designated Beneficiary is the surviving spouse of the deceased Owner, the Contract may be continued with the surviving spouse as the new Owner. If the Owner is a non-individual, then the death or change of an Annuitant is treated as the death of the Owner. Non-Qualified Contracts contain provisions that are intended to comply with these Code requirements, although no regulations interpreting these requirements have yet been issued. We intend to review such provisions and modify them if necessary to assure that they comply with the applicable requirements when such requirements are clarified by regulation or otherwise. Other rules may apply to Qualified Contracts. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 6 QUALIFIED CONTRACTS The Contract is designed to be suitable for use under various types of qualified plans. Because of the minimum Purchase Payment requirements, these Contracts may not be appropriate for some periodic payment retirement plans. Taxation of participants in each Qualified Contract varies with the type of plan and terms and conditions of each specific plan. Owners, Annuitants and Beneficiaries are cautioned that benefits under a Qualified Contract may be subject to the terms and conditions of the plan regardless of the terms and conditions of the Contracts issued pursuant to the plan. Some retirement plans are subject to distribution and other requirements that are not incorporated into our administrative procedures. We are not bound by the terms and conditions of such plans to the extent such terms conflict with the terms of a Contract, unless we specifically consent to be bound. Owners, participants and Beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the Contracts comply with applicable law. General descriptions of the types of qualified plans with which the Contracts may be used can be found in the prospectus. Such descriptions are not exhaustive and are for general informational purposes only. The tax rules regarding qualified plans are very complex and will have differing applications, depending on individual facts and circumstances. Each purchaser should obtain competent tax advice before purchasing a Contract issued under a qualified plan. On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V. NORRIS that optional annuity benefits provided under an employer's deferred compensation plan could not, under Title VII of the Civil Rights Act of 1964, vary between men and women. The Contracts sold by us in connection with qualified plans may utilize annuity tables that do not differentiate on the basis of sex. These annuity tables will also be available for use in connection with certain non-qualified deferred compensation plans. Qualified plans include special provisions restricting Contract provisions that may otherwise be available and described in this SAI. Generally, Contracts issued pursuant to qualified plans are not transferable except upon withdrawal or annuitization. Various penalty and excise taxes may apply to contributions or distributions made in violation of applicable limitations. Furthermore, certain withdrawal penalties and restrictions may apply to withdrawals from Qualified Contracts. Many withdrawals from Qualified Contracts can be rolled over to an IRA or another qualified retirement plan. If you receive a withdrawal from a Qualified Contract that could be rolled over and you do not elect to make a direct rollover of that amount to an IRA or qualified plan, by law 20% of the taxable amount must be withheld by us for taxes. In situations where this mandatory tax withholding does not apply, other tax amounts may be withheld unless you elect out of the withholding. You may request more detailed information about income tax withholding at the time of a withdrawal. For more information, see prospectus section 7, Taxes - Distributions - Qualified Contracts. PENSION AND PROFIT-SHARING PLANS. Sections 401(a) and 401(k) of the Code permit employers, including self-employed individuals, to establish various types of retirement plans for employees. These retirement plans may permit the purchase of the Contracts to provide benefits under the plan. Contributions to the plan for the benefit of employees will not be included in the gross income of the employee until distributed from the plan. The tax consequences to participants may vary, depending upon the particular plan design. However, the Code places limitations and restrictions on all plans, including on such items as: amount of allowable contributions; form, manner and timing of distributions; transferability of benefits; vesting and nonforfeitability of interests; nondiscrimination in eligibility and participation; and the tax treatment of distributions and withdrawals. Participant loans are not allowed under the Contracts purchased in connection with these plans. For more information, see prospectus section 7, Taxes - Qualified Contracts. Purchasers of Contracts for use with pension or profit-sharing plans should obtain competent tax advice as to the tax treatment and suitability of such an investment. We may choose not to allow pension or profit-sharing plans to purchase this Contract. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 7 ANNUITY PROVISIONS We base Annuity Payments upon the following. o Whether you request fixed payments, variable payments, or a combination of both fixed and variable Annuity Payments. o The adjusted Contract Value (less any deduction we make to reimburse ourselves for premium tax that we pay) on the Income Date. o The Annuity Option you select. o The age of the Annuitant and any joint Annuitant. o The sex of the Annuitant and any joint Annuitant where allowed. We guarantee fixed Annuity Payments as to dollar amount and the amount does not vary with the investment experience of an Investment Option. If you request fixed Annuity Payments, the amount of adjusted Contract Value that you apply to fixed Annuity Payments will be placed in our general account and it will not participate in the investment experience of the Investment Options. Variable payments are not predetermined as to dollar amount and will vary in amount with the investment experience of the Investment Option(s) you select. We use Annuity Units to determine the amount of any variable Annuity Payments you elect to receive. ANNUITY UNITS/CALCULATING VARIABLE ANNUITY PAYMENTS The first Annuity Payment is equal to the amount of Contract Value you are applying to variable Annuity Payments on the Income Date (less any deductions we make to reimburse us for premium tax), divided first by $1,000 and then multiplied by the appropriate variable annuity payout factor for each $1,000 of value for the Annuity Option you selected. We will then purchase a fixed number of Annuity Units on the Income Date for each subaccount of the Investment Options you select. We do this by dividing the amount of the first Annuity Payment among the subaccounts for your selected Investment Options according to your most recent allocation instructions. We then divide the amount in each subaccount by the Annuity Unit value for each subaccount on the Income Date. We determine the Annuity Unit value on each Business Day as follows: o multiply the Annuity Unit value for the immediately preceding Business Day by the net investment factor for the current Business Day; and o divide by the assumed net investment factor for the current Business Day. The assumed net investment factor for the current Business Day is one plus the annual AIR adjusted to reflect the number of calendar days that have elapsed since the immediately preceding Business Day. We will allow an AIR of 3% or 4.5% based on your selection and applicable law. Thereafter, the number of Annuity Units in each subaccount generally remains unchanged unless you make a transfer. However, the number of Annuity Units will change if Annuity Option 3 is in effect, one Annuitant dies, and the Owner requests Annuity Payments at 75% or 50% of the previous payment amount. All calculations will appropriately reflect the payment frequency you selected. The Annuity Payment on each subsequent payment date is equal to the sum of the Annuity Payments for each subaccount. We determine the Annuity Payment for each subaccount by multiplying the number of Annuity Units allocated to the subaccount by the Annuity Unit value for that subaccount on the payment date. MORTALITY AND EXPENSE RISK GUARANTEE Allianz Life of New York guarantees that the dollar amount of each Variable Annuity Payment after the first Annuity Payment will not be affected by variations in mortality and expense experience. FINANCIAL STATEMENTS The audited financial statements of Allianz Life of New York as of and for the year ended December 31, 2007, included herein should be considered only as bearing upon the ability of Allianz Life of New York to meet its obligations under the Contracts. The audited financial statements of the Separate Account as of and for the year ended December 31, 2007 are also included herein. -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 8 APPENDIX - CONDENSED FINANCIAL INFORMATION The financial statements of Allianz Life Insurance Company of New York and the financial statements of Allianz Life of NY Variable Account C are found in this SAI. Accumulation Unit value (AUV) information corresponding to the highest and lowest combination of charges for Contracts we currently offer is found in Appendix B to the prospectus. AUV information listing the additional combinations of charges for all Contracts is found below. This information should be read in conjunction with the financial statements and related notes of the Separate Account included in this SAI.
KEY TO BENEFIT OPTION* M&E CHARGES VISB 1.. Allianz Vision NY - Base Contract with the Bonus Option.................................... 1.90% VISB 2.... Allianz Vision NY - Base Contract with the Bonus Option and Quarterly Value Death Benefit.. 2.20% VISB 3.... Allianz Vision NY - Base Contract with the Bonus Option and single Lifetime Plus Payments under the Lifetime Plus Benefit............................................................ 2.60% VISB 4.... Allianz Vision NY - Base Contract with the Bonus Option, Quarterly Value Death Benefit and single Lifetime Plus Payments under the Lifetime Plus Benefit.............................. 2.90% VISB 5.... Allianz Vision NY - Base Contract with the Bonus Option and joint Lifetime Plus Payments under the Lifetime Plus Benefit.................................................................. 2.75% VISI 2.... Allianz Vision NY - Base Contract with the Quarterly Value Death Benefit................... 1.70% VISI 3.... Allianz Vision NY - Base Contract with single Lifetime Plus Payments under the Lifetime Plus Benefit ................................................................................... 2.10% VISI 4.... Allianz Vision NY - Base Contract with the Quarterly Value Death Benefit and single Lifetime Plus Payments under the Lifetime Plus Benefit.............................................. 2.40% VISI 5.... Allianz Vision NY - Base Contract with joint Lifetime Plus Payments under the Lifetime Plus Benefit.................................................................................... 2.25% VISI 6.... Allianz Vision NY - Base Contract with the Quarterly Value Death Benefit and joint Lifetime Plus Payments under the Lifetime Plus Benefit.............................................. 2.55% VISL 1.... Allianz Vision NY - Base Contract with the Short Withdrawal Charge Option.................. 1.65% VISL 2.... Allianz Vision NY - Base Contract with Quarterly Value Death Benefit and the Short Withdrawal Charge Options............................................................ 1.95% VISL 3.... Allianz Vision NY - Base Contract with the Short Withdrawal Charge Option and single Lifetime Plus Payments under the Lifetime Plus Benefit.............................................. 2.35% VISL 4.... Allianz Vision NY - Base Contract with the Quarterly Value Death Benefit, Short Withdrawal Charge Option and single Lifetime Plus Payments under the Lifetime Plus Benefit............ 2.65% VISL 5.... Allianz Vision NY - Base Contract with the Short Withdrawal Charge Option and joint Lifetime Plus Payments under the Lifetime Plus Benefit.............................................. 2.50% VISL 6.... Allianz Vision NY - Base Contract with the Quarterly Value Death Benefit, Short Withdrawal Charge Option and joint Lifetime Plus Payments under the Lifetime Plus Benefit............. 2.80%
The following Investment Option commenced operations under this Contract after December 31, 2007. Therefore, no AUV information is shown for it: BlackRock Global Allocation V.I. Fund (Number of Accumulation Units in thousands) NUMBER OF AUV ACCUMULATION PERIOD AT UNITS OR AUV AT END OUTSTANDING BENEFIT YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ AZL AIM International Equity Fund VISB 1 1.90% 12/31/2007 N/A 19.276 4 VISB 2 2.20% 12/31/2007 N/A 18.646 5 VISB 3 2.60% 12/31/2007 N/A 18.525 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISB 4 2.90% 12/31/2007 N/A 17.920 0 VISB 5 2.75% 12/31/2007 N/A 18.368 0 VISI 2 1.70% 12/31/2007 N/A 19.496 1 VISI 3 2.10% 12/31/2007 N/A 19.058 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 9 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISI 4 2.40% 12/31/2007 N/A 18.736 0 VISI 5 2.25% 12/31/2007 N/A 18.897 0 VISI 6 2.55% 12/31/2007 N/A 18.578 0 VISL 1 1.65% 12/31/2007 N/A 19.551 1 VISL 2 1.95% 12/31/2007 N/A 19.221 0 VISL 3 2.35% 12/31/2007 N/A 18.790 0 VISL 4 2.65% 12/31/2007 N/A 18.473 0 VISL 5 2.50% 12/31/2007 N/A 18.630 0 VISL 6 2.80% 12/31/2007 N/A 18.316 0 AZL Columbia Technology Fund VISB 1 1.90% 12/31/2007 N/A 9.710 0 VISB 2 2.20% 12/31/2007 N/A 9.365 1 VISB 3 2.60% 12/31/2007 N/A 9.300 0 VISB 4 2.90% 12/31/2007 N/A 8.970 0 VISB 5 2.75% 12/31/2007 N/A 9.214 0 VISI 2 1.70% 12/31/2007 N/A 9.830 1 VISI 3 2.10% 12/31/2007 N/A 9.591 0 VISI 4 2.40% 12/31/2007 N/A 9.415 0 VISI 5 2.25% 12/31/2007 N/A 9.502 0 VISI 6 2.55% 12/31/2007 N/A 9.328 0 VISL 1 1.65% 12/31/2007 N/A 9.860 1 VISL 2 1.95% 12/31/2007 N/A 9.680 0 VISL 3 2.35% 12/31/2007 N/A 9.444 0 VISL 4 2.65% 12/31/2007 N/A 9.271 0 VISL 5 2.50% 12/31/2007 N/A 9.357 0 VISL 6 2.80% 12/31/2007 N/A 9.186 0 AZL Davis NY Venture Fund VISB 1 1.90% 12/31/2007 N/A 13.143 8 VISB 2 2.20% 12/31/2007 N/A 12.677 1 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISB 3 2.60% 12/31/2007 N/A 12.588 0 VISB 4 2.90% 12/31/2007 N/A 12.142 0 VISB 5 2.75% 12/31/2007 N/A 12.472 0 VISI 2 1.70% 12/31/2007 N/A 13.306 1 VISI 3 2.10% 12/31/2007 N/A 12.982 0 VISI 4 2.40% 12/31/2007 N/A 12.744 0 VISI 5 2.25% 12/31/2007 N/A 12.863 0 VISI 6 2.55% 12/31/2007 N/A 12.627 0 VISL 1 1.65% 12/31/2007 N/A 13.347 8 VISL 2 1.95% 12/31/2007 N/A 13.103 0 VISL 3 2.35% 12/31/2007 N/A 12.784 0 VISL 4 2.65% 12/31/2007 N/A 12.549 0 VISL 5 2.50% 12/31/2007 N/A 12.666 0 VISL 6 2.80% 12/31/2007 N/A 12.434 0 AZL Dreyfus Founders Equity Growth Fund VISB 1 1.90% 12/31/2007 N/A 11.176 0 VISB 2 2.20% 12/31/2007 N/A 10.780 0 VISB 3 2.60% 12/31/2007 N/A 10.704 0 VISB 4 2.90% 12/31/2007 N/A 10.325 0 VISB 5 2.75% 12/31/2007 N/A 10.606 0 VISI 2 1.70% 12/31/2007 N/A 11.315 0 VISI 3 2.10% 12/31/2007 N/A 11.039 0 VISI 4 2.40% 12/31/2007 N/A 10.837 0 VISI 5 2.25% 12/31/2007 N/A 10.938 0 VISI 6 2.55% 12/31/2007 N/A 10.737 0 VISL 1 1.65% 12/31/2007 N/A 11.350 0 VISL 2 1.95% 12/31/2007 N/A 11.142 0 VISL 3 2.35% 12/31/2007 N/A 10.870 0 VISL 4 2.65% 12/31/2007 N/A 10.671 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 10 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 5 2.50% 12/31/2007 N/A 10.770 0 VISL 6 2.80% 12/31/2007 N/A 10.573 0 AZL Dreyfus Premier Small Cap Value Fund VISB 1 1.90% 12/31/2007 N/A 12.213 0 VISB 2 2.20% 12/31/2007 N/A 11.957 0 VISB 3 2.60% 12/31/2007 N/A 11.903 0 VISB 4 2.90% 12/31/2007 N/A 11.654 0 VISB 5 2.75% 12/31/2007 N/A 11.838 0 VISI 2 1.70% 12/31/2007 N/A 12.303 0 VISI 3 2.10% 12/31/2007 N/A 12.124 0 VISI 4 2.40% 12/31/2007 N/A 11.991 0 VISI 5 2.25% 12/31/2007 N/A 12.057 0 VISI 6 2.55% 12/31/2007 N/A 11.925 0 VISL 1 1.65% 12/31/2007 N/A 12.326 0 VISL 2 1.95% 12/31/2007 N/A 12.191 0 VISL 3 2.35% 12/31/2007 N/A 12.013 0 VISL 4 2.65% 12/31/2007 N/A 11.881 0 VISL 5 2.50% 12/31/2007 N/A 11.947 0 VISL 6 2.80% 12/31/2007 N/A 11.816 0 AZL First Trust Target Double Play Fund VISB 1 1.90% 12/31/2007 N/A 10.556 4 VISB 2 2.20% 12/31/2007 N/A 10.527 0 VISB 3 2.60% 12/31/2007 N/A 10.487 0 VISB 4 2.90% 12/31/2007 N/A 10.458 0 VISB 5 2.75% 12/31/2007 N/A 10.472 0 VISI 2 1.70% 12/31/2007 N/A 10.577 0 VISI 3 2.10% 12/31/2007 N/A 10.534 0 VISI 4 2.40% 12/31/2007 N/A 10.502 0 VISI 5 2.25% 12/31/2007 N/A 10.518 0 VISI 6 2.55% 12/31/2007 N/A 10.486 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 1 1.65% 12/31/2007 N/A 10.582 0 VISL 2 1.95% 12/31/2007 N/A 10.550 0 VISL 3 2.35% 12/31/2007 N/A 10.507 0 VISL 4 2.65% 12/31/2007 N/A 10.476 0 VISL 5 2.50% 12/31/2007 N/A 10.491 0 VISL 6 2.80% 12/31/2007 N/A 10.460 0 AZL Franklin Small Cap Value Fund VISB 1 1.90% 12/31/2007 N/A 17.081 0 VISB 2 2.20% 12/31/2007 N/A 16.623 0 VISB 3 2.60% 12/31/2007 N/A 16.532 0 VISB 4 2.90% 12/31/2007 N/A 16.088 0 VISB 5 2.75% 12/31/2007 N/A 16.416 0 VISI 2 1.70% 12/31/2007 N/A 17.242 1 VISI 3 2.10% 12/31/2007 N/A 16.923 0 VISI 4 2.40% 12/31/2007 N/A 16.687 0 VISI 5 2.25% 12/31/2007 N/A 16.804 0 VISI 6 2.55% 12/31/2007 N/A 16.570 0 VISL 1 1.65% 12/31/2007 N/A 17.282 1 VISL 2 1.95% 12/31/2007 N/A 17.042 0 VISL 3 2.35% 12/31/2007 N/A 16.726 0 VISL 4 2.65% 12/31/2007 N/A 16.493 0 VISL 5 2.50% 12/31/2007 N/A 16.609 0 VISL 6 2.80% 12/31/2007 N/A 16.378 0 AZL Fusion Balanced Fund VISB 1 1.90% 12/31/2007 N/A 11.960 47 VISB 2 2.20% 12/31/2007 N/A 11.780 10 VISB 3 2.60% 12/31/2007 N/A 11.739 0 VISB 4 2.90% 12/31/2007 N/A 11.562 0 VISB 5 2.75% 12/31/2007 N/A 11.692 0 VISI 2 1.70% 12/31/2007 N/A 12.025 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 11 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISI 3 2.10% 12/31/2007 N/A 11.897 0 VISI 4 2.40% 12/31/2007 N/A 11.802 0 VISI 5 2.25% 12/31/2007 N/A 11.849 0 VISI 6 2.55% 12/31/2007 N/A 11.754 0 VISL 1 1.65% 12/31/2007 N/A 12.041 21 VISL 2 1.95% 12/31/2007 N/A 11.944 0 VISL 3 2.35% 12/31/2007 N/A 11.817 0 VISL 4 2.65% 12/31/2007 N/A 11.723 0 VISL 5 2.50% 12/31/2007 N/A 11.770 0 VISL 6 2.80% 12/31/2007 N/A 11.676 0 AZL Fusion Growth Fund VISB 1 1.90% 12/31/2007 N/A 12.643 17 VISB 2 2.20% 12/31/2007 N/A 12.453 45 VISB 3 2.60% 12/31/2007 N/A 12.408 0 VISB 4 2.90% 12/31/2007 N/A 12.222 0 VISB 5 2.75% 12/31/2007 N/A 12.359 0 VISI 2 1.70% 12/31/2007 N/A 12.711 3 VISI 3 2.10% 12/31/2007 N/A 12.575 0 VISI 4 2.40% 12/31/2007 N/A 12.475 0 VISI 5 2.25% 12/31/2007 N/A 12.525 0 VISI 6 2.55% 12/31/2007 N/A 12.425 0 VISL 1 1.65% 12/31/2007 N/A 12.728 6 VISL 2 1.95% 12/31/2007 N/A 12.626 8 VISL 3 2.35% 12/31/2007 N/A 12.492 0 VISL 4 2.65% 12/31/2007 N/A 12.392 0 VISL 5 2.50% 12/31/2007 N/A 12.442 0 VISL 6 2.80% 12/31/2007 N/A 12.342 0 AZL Fusion Moderate Fund VISB 1 1.90% 12/31/2007 N/A 12.231 27 VISB 2 2.20% 12/31/2007 N/A 12.047 11 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISB 3 2.60% 12/31/2007 N/A 12.004 0 VISB 4 2.90% 12/31/2007 N/A 11.824 0 VISB 5 2.75% 12/31/2007 N/A 11.956 0 VISI 2 1.70% 12/31/2007 N/A 12.297 0 VISI 3 2.10% 12/31/2007 N/A 12.166 0 VISI 4 2.40% 12/31/2007 N/A 12.069 0 VISI 5 2.25% 12/31/2007 N/A 12.117 0 VISI 6 2.55% 12/31/2007 N/A 12.020 0 VISL 1 1.65% 12/31/2007 N/A 12.313 37 VISL 2 1.95% 12/31/2007 N/A 12.215 0 VISL 3 2.35% 12/31/2007 N/A 12.085 0 VISL 4 2.65% 12/31/2007 N/A 11.988 0 VISL 5 2.50% 12/31/2007 N/A 12.037 0 VISL 6 2.80% 12/31/2007 N/A 11.940 0 AZL Jennison 20/20 Focus Fund VISB 1 1.90% 12/31/2007 N/A 14.674 5 VISB 2 2.20% 12/31/2007 N/A 14.453 1 VISB 3 2.60% 12/31/2007 N/A 14.401 0 VISB 4 2.90% 12/31/2007 N/A 14.185 0 VISB 5 2.75% 12/31/2007 N/A 14.344 0 VISI 2 1.70% 12/31/2007 N/A 14.752 0 VISI 3 2.10% 12/31/2007 N/A 14.595 0 VISI 4 2.40% 12/31/2007 N/A 14.479 0 VISI 5 2.25% 12/31/2007 N/A 14.537 0 VISI 6 2.55% 12/31/2007 N/A 14.421 0 VISL 1 1.65% 12/31/2007 N/A 14.772 2 VISL 2 1.95% 12/31/2007 N/A 14.654 0 VISL 3 2.35% 12/31/2007 N/A 14.498 0 VISL 4 2.65% 12/31/2007 N/A 14.382 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 12 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 5 2.50% 12/31/2007 N/A 14.440 0 VISL 6 2.80% 12/31/2007 N/A 14.325 0 AZL Jennison Growth Fund VISB 1 1.90% 12/31/2007 N/A 12.936 6 VISB 2 2.20% 12/31/2007 N/A 12.741 0 VISB 3 2.60% 12/31/2007 N/A 12.696 0 VISB 4 2.90% 12/31/2007 N/A 12.505 0 VISB 5 2.75% 12/31/2007 N/A 12.645 0 VISI 2 1.70% 12/31/2007 N/A 13.005 0 VISI 3 2.10% 12/31/2007 N/A 12.867 0 VISI 4 2.40% 12/31/2007 N/A 12.764 0 VISI 5 2.25% 12/31/2007 N/A 12.815 0 VISI 6 2.55% 12/31/2007 N/A 12.713 0 VISL 1 1.65% 12/31/2007 N/A 13.023 1 VISL 2 1.95% 12/31/2007 N/A 12.918 0 VISL 3 2.35% 12/31/2007 N/A 12.781 0 VISL 4 2.65% 12/31/2007 N/A 12.679 0 VISL 5 2.50% 12/31/2007 N/A 12.730 0 VISL 6 2.80% 12/31/2007 N/A 12.628 0 AZL Legg Mason Growth Fund VISB 1 1.90% 12/31/2007 N/A 12.980 5 VISB 2 2.20% 12/31/2007 N/A 12.556 6 VISB 3 2.60% 12/31/2007 N/A 12.475 0 VISB 4 2.90% 12/31/2007 N/A 12.067 0 VISB 5 2.75% 12/31/2007 N/A 12.369 0 VISI 2 1.70% 12/31/2007 N/A 13.129 2 VISI 3 2.10% 12/31/2007 N/A 12.834 0 VISI 4 2.40% 12/31/2007 N/A 12.617 0 VISI 5 2.25% 12/31/2007 N/A 12.725 0 VISI 6 2.55% 12/31/2007 N/A 12.510 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 1 1.65% 12/31/2007 N/A 13.166 5 VISL 2 1.95% 12/31/2007 N/A 12.944 0 VISL 3 2.35% 12/31/2007 N/A 12.653 0 VISL 4 2.65% 12/31/2007 N/A 12.439 0 VISL 5 2.50% 12/31/2007 N/A 12.546 0 VISL 6 2.80% 12/31/2007 N/A 12.334 0 AZL Legg Mason Value Fund VISB 1 1.90% 12/31/2007 N/A 11.308 0 VISB 2 2.20% 12/31/2007 N/A 10.907 0 VISB 3 2.60% 12/31/2007 N/A 10.830 0 VISB 4 2.90% 12/31/2007 N/A 10.446 0 VISB 5 2.75% 12/31/2007 N/A 10.730 0 VISI 2 1.70% 12/31/2007 N/A 11.448 0 VISI 3 2.10% 12/31/2007 N/A 11.169 0 VISI 4 2.40% 12/31/2007 N/A 10.965 0 VISI 5 2.25% 12/31/2007 N/A 11.066 0 VISI 6 2.55% 12/31/2007 N/A 10.864 0 VISL 1 1.65% 12/31/2007 N/A 11.483 0 VISL 2 1.95% 12/31/2007 N/A 11.273 0 VISL 3 2.35% 12/31/2007 N/A 10.998 0 VISL 4 2.65% 12/31/2007 N/A 10.797 0 VISL 5 2.50% 12/31/2007 N/A 10.897 0 VISL 6 2.80% 12/31/2007 N/A 10.697 0 AZL LMP Large Cap Growth Fund VISB 1 1.90% 12/31/2007 N/A 11.292 0 VISB 2 2.20% 12/31/2007 N/A 10.923 1 VISB 3 2.60% 12/31/2007 N/A 10.852 0 VISB 4 2.90% 12/31/2007 N/A 10.497 0 VISB 5 2.75% 12/31/2007 N/A 10.760 0 VISI 2 1.70% 12/31/2007 N/A 11.421 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 13 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISI 3 2.10% 12/31/2007 N/A 11.164 0 VISI 4 2.40% 12/31/2007 N/A 10.976 0 VISI 5 2.25% 12/31/2007 N/A 11.070 0 VISI 6 2.55% 12/31/2007 N/A 10.883 0 VISL 1 1.65% 12/31/2007 N/A 11.453 0 VISL 2 1.95% 12/31/2007 N/A 11.260 0 VISL 3 2.35% 12/31/2007 N/A 11.007 0 VISL 4 2.65% 12/31/2007 N/A 10.821 0 VISL 5 2.50% 12/31/2007 N/A 10.914 0 VISL 6 2.80% 12/31/2007 N/A 10.729 0 AZL Money Market Fund VISB 1 1.90% 12/31/2007 N/A 10.318 47 VISB 2 2.20% 12/31/2007 N/A 10.105 49 VISB 3 2.60% 12/31/2007 N/A 9.828 0 VISB 4 2.90% 12/31/2007 N/A 9.625 0 VISB 5 2.75% 12/31/2007 N/A 9.726 0 VISI 2 1.70% 12/31/2007 N/A 10.864 0 VISI 3 2.10% 12/31/2007 N/A 10.525 0 VISI 4 2.40% 12/31/2007 N/A 10.278 0 VISI 5 2.25% 12/31/2007 N/A 10.401 0 VISI 6 2.55% 12/31/2007 N/A 10.156 0 VISL 1 1.65% 12/31/2007 N/A 10.907 0 VISL 2 1.95% 12/31/2007 N/A 10.651 12 VISL 3 2.35% 12/31/2007 N/A 10.318 0 VISL 4 2.65% 12/31/2007 N/A 10.076 0 VISL 5 2.50% 12/31/2007 N/A 10.197 0 VISL 6 2.80% 12/31/2007 N/A 9.957 0 AZL NACM International Fund VISB 1 1.90% 12/31/2007 N/A 9.439 1 VISB 2 2.20% 12/31/2007 N/A 9.409 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISB 3 2.60% 12/31/2007 N/A 9.395 0 VISB 4 2.90% 12/31/2007 N/A 9.365 0 VISB 5 2.75% 12/31/2007 N/A 9.386 0 VISI 2 1.70% 12/31/2007 N/A 9.452 0 VISI 3 2.10% 12/31/2007 N/A 9.427 0 VISI 4 2.40% 12/31/2007 N/A 9.408 0 VISI 5 2.25% 12/31/2007 N/A 9.417 0 VISI 6 2.55% 12/31/2007 N/A 9.398 0 VISL 1 1.65% 12/31/2007 N/A 9.455 0 VISL 2 1.95% 12/31/2007 N/A 9.436 0 VISL 3 2.35% 12/31/2007 N/A 9.411 0 VISL 4 2.65% 12/31/2007 N/A 9.392 0 VISL 5 2.50% 12/31/2007 N/A 9.401 0 VISL 6 2.80% 12/31/2007 N/A 9.383 0 AZL Neuberger Berman Regency Fund VISB 1 1.90% 12/31/2007 N/A 10.233 0 VISB 2 2.20% 12/31/2007 N/A 10.139 0 VISB 3 2.60% 12/31/2007 N/A 10.113 0 VISB 4 2.90% 12/31/2007 N/A 10.021 0 VISB 5 2.75% 12/31/2007 N/A 10.088 0 VISI 2 1.70% 12/31/2007 N/A 10.267 0 VISI 3 2.10% 12/31/2007 N/A 10.198 0 VISI 4 2.40% 12/31/2007 N/A 10.147 0 VISI 5 2.25% 12/31/2007 N/A 10.173 0 VISI 6 2.55% 12/31/2007 N/A 10.122 0 VISL 1 1.65% 12/31/2007 N/A 10.276 2 VISL 2 1.95% 12/31/2007 N/A 10.224 0 VISL 3 2.35% 12/31/2007 N/A 10.156 0 VISL 4 2.65% 12/31/2007 N/A 10.105 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 14 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 5 2.50% 12/31/2007 N/A 10.130 0 VISL 6 2.80% 12/31/2007 N/A 10.079 0 AZL OCC Opportunity Fund VISB 1 1.90% 12/31/2007 N/A 16.205 0 VISB 2 2.20% 12/31/2007 N/A 15.676 1 VISB 3 2.60% 12/31/2007 N/A 15.574 0 VISB 4 2.90% 12/31/2007 N/A 15.065 0 VISB 5 2.75% 12/31/2007 N/A 15.442 0 VISI 2 1.70% 12/31/2007 N/A 16.390 0 VISI 3 2.10% 12/31/2007 N/A 16.022 0 VISI 4 2.40% 12/31/2007 N/A 15.752 0 VISI 5 2.25% 12/31/2007 N/A 15.887 0 VISI 6 2.55% 12/31/2007 N/A 15.618 0 VISL 1 1.65% 12/31/2007 N/A 16.437 0 VISL 2 1.95% 12/31/2007 N/A 16.159 0 VISL 3 2.35% 12/31/2007 N/A 15.797 0 VISL 4 2.65% 12/31/2007 N/A 15.530 0 VISL 5 2.50% 12/31/2007 N/A 15.663 0 VISL 6 2.80% 12/31/2007 N/A 15.398 0 AZL OCC Value Fund VISB 1 1.90% 12/31/2007 N/A 14.397 0 VISB 2 2.20% 12/31/2007 N/A 13.886 0 VISB 3 2.60% 12/31/2007 N/A 13.789 0 VISB 4 2.90% 12/31/2007 N/A 13.300 0 VISB 5 2.75% 12/31/2007 N/A 13.662 0 VISI 2 1.70% 12/31/2007 N/A 14.575 0 VISI 3 2.10% 12/31/2007 N/A 14.220 0 VISI 4 2.40% 12/31/2007 N/A 13.960 0 VISI 5 2.25% 12/31/2007 N/A 14.089 0 VISI 6 2.55% 12/31/2007 N/A 13.831 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 1 1.65% 12/31/2007 N/A 14.620 0 VISL 2 1.95% 12/31/2007 N/A 14.352 0 VISL 3 2.35% 12/31/2007 N/A 14.003 0 VISL 4 2.65% 12/31/2007 N/A 13.746 0 VISL 5 2.50% 12/31/2007 N/A 13.874 0 VISL 6 2.80% 12/31/2007 N/A 13.620 0 AZL Oppenheimer Global Fund VISB 1 1.90% 12/31/2007 N/A 14.958 4 VISB 2 2.20% 12/31/2007 N/A 14.645 1 VISB 3 2.60% 12/31/2007 N/A 14.579 0 VISB 4 2.90% 12/31/2007 N/A 14.274 0 VISB 5 2.75% 12/31/2007 N/A 14.499 0 VISI 2 1.70% 12/31/2007 N/A 15.069 2 VISI 3 2.10% 12/31/2007 N/A 14.849 0 VISI 4 2.40% 12/31/2007 N/A 14.686 0 VISI 5 2.25% 12/31/2007 N/A 14.767 0 VISI 6 2.55% 12/31/2007 N/A 14.606 0 VISL 1 1.65% 12/31/2007 N/A 15.096 5 VISL 2 1.95% 12/31/2007 N/A 14.931 0 VISL 3 2.35% 12/31/2007 N/A 14.713 0 VISL 4 2.65% 12/31/2007 N/A 14.552 0 VISL 5 2.50% 12/31/2007 N/A 14.633 0 VISL 6 2.80% 12/31/2007 N/A 14.472 0 AZL Oppenheimer International Growth Fund VISB 1 1.90% 12/31/2007 N/A 19.881 0 VISB 2 2.20% 12/31/2007 N/A 19.176 0 VISB 3 2.60% 12/31/2007 N/A 19.041 0 VISB 4 2.90% 12/31/2007 N/A 18.366 0 VISB 5 2.75% 12/31/2007 N/A 18.866 0 VISI 2 1.70% 12/31/2007 N/A 20.128 1 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 15 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISI 3 2.10% 12/31/2007 N/A 19.637 0 VISI 4 2.40% 12/31/2007 N/A 19.277 0 VISI 5 2.25% 12/31/2007 N/A 19.456 0 VISI 6 2.55% 12/31/2007 N/A 19.100 0 VISL 1 1.65% 12/31/2007 N/A 20.190 3 VISL 2 1.95% 12/31/2007 N/A 19.820 0 VISL 3 2.35% 12/31/2007 N/A 19.337 0 VISL 4 2.65% 12/31/2007 N/A 18.983 0 VISL 5 2.50% 12/31/2007 N/A 19.159 0 VISL 6 2.80% 12/31/2007 N/A 18.808 0 AZL Oppenheimer Main Street Fund VISB 1 1.90% 12/31/2007 N/A 12.704 0 VISB 2 2.20% 12/31/2007 N/A 12.438 1 VISB 3 2.60% 12/31/2007 N/A 12.382 0 VISB 4 2.90% 12/31/2007 N/A 12.123 0 VISB 5 2.75% 12/31/2007 N/A 12.314 0 VISI 2 1.70% 12/31/2007 N/A 12.798 2 VISI 3 2.10% 12/31/2007 N/A 12.611 0 VISI 4 2.40% 12/31/2007 N/A 12.473 0 VISI 5 2.25% 12/31/2007 N/A 12.542 0 VISI 6 2.55% 12/31/2007 N/A 12.404 0 VISL 1 1.65% 12/31/2007 N/A 12.821 1 VISL 2 1.95% 12/31/2007 N/A 12.681 0 VISL 3 2.35% 12/31/2007 N/A 12.496 0 VISL 4 2.65% 12/31/2007 N/A 12.359 0 VISL 5 2.50% 12/31/2007 N/A 12.427 0 VISL 6 2.80% 12/31/2007 N/A 12.291 0 AZL PIMCO Fundamental IndexPLUS Total Return Fund VISB 1 1.90% 12/31/2007 N/A 11.557 0 VISB 2 2.20% 12/31/2007 N/A 11.451 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISB 3 2.60% 12/31/2007 N/A 11.422 0 VISB 4 2.90% 12/31/2007 N/A 11.318 0 VISB 5 2.75% 12/31/2007 N/A 11.394 0 VISI 2 1.70% 12/31/2007 N/A 11.596 0 VISI 3 2.10% 12/31/2007 N/A 11.518 0 VISI 4 2.40% 12/31/2007 N/A 11.461 0 VISI 5 2.25% 12/31/2007 N/A 11.490 0 VISI 6 2.55% 12/31/2007 N/A 11.432 0 VISL 1 1.65% 12/31/2007 N/A 11.606 1 VISL 2 1.95% 12/31/2007 N/A 11.547 0 VISL 3 2.35% 12/31/2007 N/A 11.470 0 VISL 4 2.65% 12/31/2007 N/A 11.413 0 VISL 5 2.50% 12/31/2007 N/A 11.441 0 VISL 6 2.80% 12/31/2007 N/A 11.384 0 AZL S&P 500 Index Fund VISB 1 1.90% 12/31/2007 N/A 9.849 0 VISB 2 2.20% 12/31/2007 N/A 9.817 4 VISB 3 2.60% 12/31/2007 N/A 9.803 0 VISB 4 2.90% 12/31/2007 N/A 9.771 0 VISB 5 2.75% 12/31/2007 N/A 9.793 0 VISI 2 1.70% 12/31/2007 N/A 9.862 0 VISI 3 2.10% 12/31/2007 N/A 9.836 0 VISI 4 2.40% 12/31/2007 N/A 9.816 0 VISI 5 2.25% 12/31/2007 N/A 9.826 0 VISI 6 2.55% 12/31/2007 N/A 9.806 0 VISL 1 1.65% 12/31/2007 N/A 9.865 0 VISL 2 1.95% 12/31/2007 N/A 9.846 0 VISL 3 2.35% 12/31/2007 N/A 9.819 0 VISL 4 2.65% 12/31/2007 N/A 9.799 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 16 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 5 2.50% 12/31/2007 N/A 9.809 0 VISL 6 2.80% 12/31/2007 N/A 9.790 0 AZL Schroder Emerging Markets Equity Fund VISB 1 1.90% 12/31/2007 N/A 13.343 6 VISB 2 2.20% 12/31/2007 N/A 13.221 3 VISB 3 2.60% 12/31/2007 N/A 13.187 0 VISB 4 2.90% 12/31/2007 N/A 13.067 0 VISB 5 2.75% 12/31/2007 N/A 13.154 0 VISI 2 1.70% 12/31/2007 N/A 13.388 1 VISI 3 2.10% 12/31/2007 N/A 13.298 0 VISI 4 2.40% 12/31/2007 N/A 13.232 0 VISI 5 2.25% 12/31/2007 N/A 13.265 0 VISI 6 2.55% 12/31/2007 N/A 13.198 0 VISL 1 1.65% 12/31/2007 N/A 13.399 6 VISL 2 1.95% 12/31/2007 N/A 13.332 0 VISL 3 2.35% 12/31/2007 N/A 13.243 0 VISL 4 2.65% 12/31/2007 N/A 13.176 0 VISL 5 2.50% 12/31/2007 N/A 13.209 0 VISL 6 2.80% 12/31/2007 N/A 13.143 0 AZL Schroder International Small Cap Fund VISB 1 1.90% 12/31/2007 N/A 9.212 0 VISB 2 2.20% 12/31/2007 N/A 9.182 0 VISB 3 2.60% 12/31/2007 N/A 9.169 0 VISB 4 2.90% 12/31/2007 N/A 9.139 0 VISB 5 2.75% 12/31/2007 N/A 9.159 0 VISI 2 1.70% 12/31/2007 N/A 9.224 1 VISI 3 2.10% 12/31/2007 N/A 9.199 0 VISI 4 2.40% 12/31/2007 N/A 9.181 0 VISI 5 2.25% 12/31/2007 N/A 9.190 0 VISI 6 2.55% 12/31/2007 N/A 9.172 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 1 1.65% 12/31/2007 N/A 9.227 2 VISL 2 1.95% 12/31/2007 N/A 9.209 0 VISL 3 2.35% 12/31/2007 N/A 9.184 0 VISL 4 2.65% 12/31/2007 N/A 9.165 0 VISL 5 2.50% 12/31/2007 N/A 9.175 0 VISL 6 2.80% 12/31/2007 N/A 9.156 0 AZL Small Cap Stock Index Fund VISB 1 1.90% 12/31/2007 N/A 9.298 5 VISB 2 2.20% 12/31/2007 N/A 9.268 2 VISB 3 2.60% 12/31/2007 N/A 9.254 0 VISB 4 2.90% 12/31/2007 N/A 9.225 0 VISB 5 2.75% 12/31/2007 N/A 9.245 0 VISI 2 1.70% 12/31/2007 N/A 9.310 3 VISI 3 2.10% 12/31/2007 N/A 9.285 0 VISI 4 2.40% 12/31/2007 N/A 9.267 0 VISI 5 2.25% 12/31/2007 N/A 9.276 0 VISI 6 2.55% 12/31/2007 N/A 9.257 0 VISL 1 1.65% 12/31/2007 N/A 9.314 0 VISL 2 1.95% 12/31/2007 N/A 9.295 0 VISL 3 2.35% 12/31/2007 N/A 9.270 0 VISL 4 2.65% 12/31/2007 N/A 9.251 0 VISL 5 2.50% 12/31/2007 N/A 9.261 0 VISL 6 2.80% 12/31/2007 N/A 9.242 0 AZL TargetPLUS Balanced Fund VISB 1 1.90% 12/31/2007 N/A 10.083 10 VISB 2 2.20% 12/31/2007 N/A 10.050 0 VISB 3 2.60% 12/31/2007 N/A 10.035 0 VISB 4 2.90% 12/31/2007 N/A 10.003 0 VISB 5 2.75% 12/31/2007 N/A 10.025 0 VISI 2 1.70% 12/31/2007 N/A 10.096 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 17 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISI 3 2.10% 12/31/2007 N/A 10.069 0 VISI 4 2.40% 12/31/2007 N/A 10.049 0 VISI 5 2.25% 12/31/2007 N/A 10.059 0 VISI 6 2.55% 12/31/2007 N/A 10.039 0 VISL 1 1.65% 12/31/2007 N/A 10.100 4 VISL 2 1.95% 12/31/2007 N/A 10.079 0 VISL 3 2.35% 12/31/2007 N/A 10.052 0 VISL 4 2.65% 12/31/2007 N/A 10.032 0 VISL 5 2.50% 12/31/2007 N/A 10.042 0 VISL 6 2.80% 12/31/2007 N/A 10.022 0 AZL TargetPLUS Equity Fund VISB 1 1.90% 12/31/2007 N/A 10.472 0 VISB 2 2.20% 12/31/2007 N/A 10.443 3 VISB 3 2.60% 12/31/2007 N/A 10.404 0 VISB 4 2.90% 12/31/2007 N/A 10.374 0 VISB 5 2.75% 12/31/2007 N/A 10.389 0 VISI 2 1.70% 12/31/2007 N/A 10.492 0 VISI 3 2.10% 12/31/2007 N/A 10.450 0 VISI 4 2.40% 12/31/2007 N/A 10.418 0 VISI 5 2.25% 12/31/2007 N/A 10.434 0 VISI 6 2.55% 12/31/2007 N/A 10.402 0 VISL 1 1.65% 12/31/2007 N/A 10.498 3 VISL 2 1.95% 12/31/2007 N/A 10.466 0 VISL 3 2.35% 12/31/2007 N/A 10.424 0 VISL 4 2.65% 12/31/2007 N/A 10.392 0 VISL 5 2.50% 12/31/2007 N/A 10.408 0 VISL 6 2.80% 12/31/2007 N/A 10.376 0 AZL TargetPLUS Growth Fund VISB 1 1.90% 12/31/2007 N/A 9.906 11 VISB 2 2.20% 12/31/2007 N/A 9.874 3 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISB 3 2.60% 12/31/2007 N/A 9.859 0 VISB 4 2.90% 12/31/2007 N/A 9.828 0 VISB 5 2.75% 12/31/2007 N/A 9.850 0 VISI 2 1.70% 12/31/2007 N/A 9.919 15 VISI 3 2.10% 12/31/2007 N/A 9.893 0 VISI 4 2.40% 12/31/2007 N/A 9.873 0 VISI 5 2.25% 12/31/2007 N/A 9.883 0 VISI 6 2.55% 12/31/2007 N/A 9.863 0 VISL 1 1.65% 12/31/2007 N/A 9.923 0 VISL 2 1.95% 12/31/2007 N/A 9.903 3 VISL 3 2.35% 12/31/2007 N/A 9.876 0 VISL 4 2.65% 12/31/2007 N/A 9.856 0 VISL 5 2.50% 12/31/2007 N/A 9.866 0 VISL 6 2.80% 12/31/2007 N/A 9.846 0 AZL TargetPLUS Moderate Fund VISB 1 1.90% 12/31/2007 N/A 10.046 0 VISB 2 2.20% 12/31/2007 N/A 10.014 0 VISB 3 2.60% 12/31/2007 N/A 9.999 0 VISB 4 2.90% 12/31/2007 N/A 9.967 0 VISB 5 2.75% 12/31/2007 N/A 9.989 0 VISI 2 1.70% 12/31/2007 N/A 10.059 0 VISI 3 2.10% 12/31/2007 N/A 10.032 0 VISI 4 2.40% 12/31/2007 N/A 10.012 0 VISI 5 2.25% 12/31/2007 N/A 10.022 0 VISI 6 2.55% 12/31/2007 N/A 10.002 0 VISL 1 1.65% 12/31/2007 N/A 10.063 0 VISL 2 1.95% 12/31/2007 N/A 10.043 0 VISL 3 2.35% 12/31/2007 N/A 10.016 0 VISL 4 2.65% 12/31/2007 N/A 9.995 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 18 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 5 2.50% 12/31/2007 N/A 10.005 0 VISL 6 2.80% 12/31/2007 N/A 9.985 0 AZL Turner Quantitative Small Cap Growth Fund VISB 1 1.90% 12/31/2007 N/A 12.602 0 VISB 2 2.20% 12/31/2007 N/A 12.413 0 VISB 3 2.60% 12/31/2007 N/A 12.369 0 VISB 4 2.90% 12/31/2007 N/A 12.183 0 VISB 5 2.75% 12/31/2007 N/A 12.319 0 VISI 2 1.70% 12/31/2007 N/A 12.670 0 VISI 3 2.10% 12/31/2007 N/A 12.535 0 VISI 4 2.40% 12/31/2007 N/A 12.435 0 VISI 5 2.25% 12/31/2007 N/A 12.485 0 VISI 6 2.55% 12/31/2007 N/A 12.385 0 VISL 1 1.65% 12/31/2007 N/A 12.687 0 VISL 2 1.95% 12/31/2007 N/A 12.585 0 VISL 3 2.35% 12/31/2007 N/A 12.452 0 VISL 4 2.65% 12/31/2007 N/A 12.352 0 VISL 5 2.50% 12/31/2007 N/A 12.402 0 VISL 6 2.80% 12/31/2007 N/A 12.303 0 AZL Van Kampen Comstock Fund VISB 1 1.90% 12/31/2007 N/A 11.979 0 VISB 2 2.20% 12/31/2007 N/A 11.518 0 VISB 3 2.60% 12/31/2007 N/A 11.432 0 VISB 4 2.90% 12/31/2007 N/A 10.993 0 VISB 5 2.75% 12/31/2007 N/A 11.318 0 VISI 2 1.70% 12/31/2007 N/A 12.140 0 VISI 3 2.10% 12/31/2007 N/A 11.820 0 VISI 4 2.40% 12/31/2007 N/A 11.586 0 VISI 5 2.25% 12/31/2007 N/A 11.703 0 VISI 6 2.55% 12/31/2007 N/A 11.471 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 1 1.65% 12/31/2007 N/A 12.181 0 VISL 2 1.95% 12/31/2007 N/A 11.939 0 VISL 3 2.35% 12/31/2007 N/A 11.625 0 VISL 4 2.65% 12/31/2007 N/A 11.394 0 VISL 5 2.50% 12/31/2007 N/A 11.509 0 VISL 6 2.80% 12/31/2007 N/A 11.281 0 AZL Van Kampen Equity and Income Fund VISB 1 1.90% 12/31/2007 N/A 12.599 3 VISB 2 2.20% 12/31/2007 N/A 12.335 1 VISB 3 2.60% 12/31/2007 N/A 12.279 0 VISB 4 2.90% 12/31/2007 N/A 12.022 0 VISB 5 2.75% 12/31/2007 N/A 12.211 0 VISI 2 1.70% 12/31/2007 N/A 12.691 0 VISI 3 2.10% 12/31/2007 N/A 12.506 0 VISI 4 2.40% 12/31/2007 N/A 12.369 0 VISI 5 2.25% 12/31/2007 N/A 12.438 0 VISI 6 2.55% 12/31/2007 N/A 12.301 0 VISL 1 1.65% 12/31/2007 N/A 12.715 1 VISL 2 1.95% 12/31/2007 N/A 12.575 0 VISL 3 2.35% 12/31/2007 N/A 12.392 0 VISL 4 2.65% 12/31/2007 N/A 12.256 0 VISL 5 2.50% 12/31/2007 N/A 12.324 0 VISL 6 2.80% 12/31/2007 N/A 12.189 0 AZL Van Kampen Global Franchise Fund VISB 1 1.90% 12/31/2007 N/A 18.912 3 VISB 2 2.20% 12/31/2007 N/A 18.404 0 VISB 3 2.60% 12/31/2007 N/A 18.303 0 VISB 4 2.90% 12/31/2007 N/A 17.812 0 VISB 5 2.75% 12/31/2007 N/A 18.176 0 VISI 2 1.70% 12/31/2007 N/A 19.090 1 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 19 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISI 3 2.10% 12/31/2007 N/A 18.736 0 VISI 4 2.40% 12/31/2007 N/A 18.475 0 VISI 5 2.25% 12/31/2007 N/A 18.605 0 VISI 6 2.55% 12/31/2007 N/A 18.346 0 VISL 1 1.65% 12/31/2007 N/A 19.135 0 VISL 2 1.95% 12/31/2007 N/A 18.868 0 VISL 3 2.35% 12/31/2007 N/A 18.519 0 VISL 4 2.65% 12/31/2007 N/A 18.261 0 VISL 5 2.50% 12/31/2007 N/A 18.389 0 VISL 6 2.80% 12/31/2007 N/A 18.133 0 AZL Van Kampen Global Real Estate Fund VISB 1 1.90% 12/31/2007 N/A 10.761 4 VISB 2 2.20% 12/31/2007 N/A 10.663 0 VISB 3 2.60% 12/31/2007 N/A 10.636 0 VISB 4 2.90% 12/31/2007 N/A 10.539 0 VISB 5 2.75% 12/31/2007 N/A 10.609 0 VISI 2 1.70% 12/31/2007 N/A 10.797 1 VISI 3 2.10% 12/31/2007 N/A 10.725 0 VISI 4 2.40% 12/31/2007 N/A 10.671 0 VISI 5 2.25% 12/31/2007 N/A 10.698 0 VISI 6 2.55% 12/31/2007 N/A 10.645 0 VISL 1 1.65% 12/31/2007 N/A 10.806 1 VISL 2 1.95% 12/31/2007 N/A 10.752 0 VISL 3 2.35% 12/31/2007 N/A 10.680 0 VISL 4 2.65% 12/31/2007 N/A 10.627 0 VISL 5 2.50% 12/31/2007 N/A 10.653 0 VISL 6 2.80% 12/31/2007 N/A 10.600 0 AZL Van Kampen Growth and Income Fund VISB 1 1.90% 12/31/2007 N/A 13.822 1 VISB 2 2.20% 12/31/2007 N/A 13.291 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISB 3 2.60% 12/31/2007 N/A 13.191 0 VISB 4 2.90% 12/31/2007 N/A 12.684 0 VISB 5 2.75% 12/31/2007 N/A 13.060 0 VISI 2 1.70% 12/31/2007 N/A 14.008 0 VISI 3 2.10% 12/31/2007 N/A 13.639 0 VISI 4 2.40% 12/31/2007 N/A 13.368 0 VISI 5 2.25% 12/31/2007 N/A 13.503 0 VISI 6 2.55% 12/31/2007 N/A 13.235 0 VISL 1 1.65% 12/31/2007 N/A 14.055 0 VISL 2 1.95% 12/31/2007 N/A 13.776 0 VISL 3 2.35% 12/31/2007 N/A 13.413 0 VISL 4 2.65% 12/31/2007 N/A 13.147 0 VISL 5 2.50% 12/31/2007 N/A 13.279 0 VISL 6 2.80% 12/31/2007 N/A 13.016 0 AZL Van Kampen Mid Cap Growth Fund VISB 1 1.90% 12/31/2007 N/A 15.661 1 VISB 2 2.20% 12/31/2007 N/A 15.059 5 VISB 3 2.60% 12/31/2007 N/A 14.946 0 VISB 4 2.90% 12/31/2007 N/A 14.372 0 VISB 5 2.75% 12/31/2007 N/A 14.797 0 VISI 2 1.70% 12/31/2007 N/A 15.872 1 VISI 3 2.10% 12/31/2007 N/A 15.454 0 VISI 4 2.40% 12/31/2007 N/A 15.147 0 VISI 5 2.25% 12/31/2007 N/A 15.300 0 VISI 6 2.55% 12/31/2007 N/A 14.996 0 VISL 1 1.65% 12/31/2007 N/A 15.925 1 VISL 2 1.95% 12/31/2007 N/A 15.609 0 VISL 3 2.35% 12/31/2007 N/A 15.198 0 VISL 4 2.65% 12/31/2007 N/A 14.897 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 20 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 5 2.50% 12/31/2007 N/A 15.046 0 VISL 6 2.80% 12/31/2007 N/A 14.748 0 Davis VA Financial Portfolio VISB 1 1.90% 12/31/2007 N/A 12.015 1 VISB 2 2.20% 12/31/2007 N/A 11.767 0 VISB 3 2.60% 12/31/2007 N/A 11.444 0 VISB 4 2.90% 12/31/2007 N/A 11.208 0 VISB 5 2.75% 12/31/2007 N/A 11.325 0 VISI 2 1.70% 12/31/2007 N/A 15.460 0 VISI 3 2.10% 12/31/2007 N/A 14.978 0 VISI 4 2.40% 12/31/2007 N/A 14.626 0 VISI 5 2.25% 12/31/2007 N/A 14.801 0 VISI 6 2.55% 12/31/2007 N/A 14.454 0 VISL 1 1.65% 12/31/2007 N/A 15.522 0 VISL 2 1.95% 12/31/2007 N/A 15.157 0 VISL 3 2.35% 12/31/2007 N/A 14.684 0 VISL 4 2.65% 12/31/2007 N/A 14.340 0 VISL 5 2.50% 12/31/2007 N/A 14.511 0 VISL 6 2.80% 12/31/2007 N/A 14.170 0 Franklin Global Communications Securities Fund VISB 1 1.90% 12/31/2007 N/A 28.546 3 VISB 2 2.20% 12/31/2007 N/A 25.478 3 VISB 3 2.60% 12/31/2007 N/A 25.029 0 VISB 4 2.90% 12/31/2007 N/A 22.313 0 VISB 5 2.75% 12/31/2007 N/A 24.334 0 VISI 2 1.70% 12/31/2007 N/A 29.623 0 VISI 3 2.10% 12/31/2007 N/A 27.461 0 VISI 4 2.40% 12/31/2007 N/A 25.943 0 VISI 5 2.25% 12/31/2007 N/A 26.691 0 VISI 6 2.55% 12/31/2007 N/A 25.216 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 1 1.65% 12/31/2007 N/A 29.905 1 VISL 2 1.95% 12/31/2007 N/A 28.253 0 VISL 3 2.35% 12/31/2007 N/A 26.190 0 VISL 4 2.65% 12/31/2007 N/A 24.743 0 VISL 5 2.50% 12/31/2007 N/A 25.456 0 VISL 6 2.80% 12/31/2007 N/A 24.050 0 Franklin High Income Securities Fund VISB 1 1.90% 12/31/2007 N/A 23.111 0 VISB 2 2.20% 12/31/2007 N/A 20.627 1 VISB 3 2.60% 12/31/2007 N/A 20.264 0 VISB 4 2.90% 12/31/2007 N/A 18.065 0 VISB 5 2.75% 12/31/2007 N/A 19.701 0 VISI 2 1.70% 12/31/2007 N/A 23.984 0 VISI 3 2.10% 12/31/2007 N/A 22.233 0 VISI 4 2.40% 12/31/2007 N/A 21.004 0 VISI 5 2.25% 12/31/2007 N/A 21.610 0 VISI 6 2.55% 12/31/2007 N/A 20.416 0 VISL 1 1.65% 12/31/2007 N/A 24.212 0 VISL 2 1.95% 12/31/2007 N/A 22.874 0 VISL 3 2.35% 12/31/2007 N/A 21.204 0 VISL 4 2.65% 12/31/2007 N/A 20.032 0 VISL 5 2.50% 12/31/2007 N/A 20.610 0 VISL 6 2.80% 12/31/2007 N/A 19.471 0 Franklin Income Securities Fund VISB 1 1.90% 12/31/2007 N/A 44.144 2 VISB 2 2.20% 12/31/2007 N/A 39.399 1 VISB 3 2.60% 12/31/2007 N/A 38.706 0 VISB 4 2.90% 12/31/2007 N/A 34.505 0 VISB 5 2.75% 12/31/2007 N/A 37.631 0 VISI 2 1.70% 12/31/2007 N/A 45.811 1 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 21 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISI 3 2.10% 12/31/2007 N/A 42.467 0 VISI 4 2.40% 12/31/2007 N/A 40.120 0 VISI 5 2.25% 12/31/2007 N/A 41.276 0 VISI 6 2.55% 12/31/2007 N/A 38.995 0 VISL 1 1.65% 12/31/2007 N/A 46.247 4 VISL 2 1.95% 12/31/2007 N/A 43.691 0 VISL 3 2.35% 12/31/2007 N/A 40.502 0 VISL 4 2.65% 12/31/2007 N/A 38.263 0 VISL 5 2.50% 12/31/2007 N/A 39.367 0 VISL 6 2.80% 12/31/2007 N/A 37.191 0 Franklin Templeton VIP Founding Funds Allocation Fund VISB 1 1.90% 12/31/2007 N/A 9.223 5 VISB 2 2.20% 12/31/2007 N/A 9.203 68 VISB 3 2.60% 12/31/2007 N/A 9.191 0 VISB 4 2.90% 12/31/2007 N/A 9.171 0 VISB 5 2.75% 12/31/2007 N/A 9.185 0 VISI 2 1.70% 12/31/2007 N/A 9.232 2 VISI 3 2.10% 12/31/2007 N/A 9.214 0 VISI 4 2.40% 12/31/2007 N/A 9.200 0 VISI 5 2.25% 12/31/2007 N/A 9.207 0 VISI 6 2.55% 12/31/2007 N/A 9.194 0 VISL 1 1.65% 12/31/2007 N/A 9.235 8 VISL 2 1.95% 12/31/2007 N/A 9.221 2 VISL 3 2.35% 12/31/2007 N/A 9.203 0 VISL 4 2.65% 12/31/2007 N/A 9.189 0 VISL 5 2.50% 12/31/2007 N/A 9.196 0 VISL 6 2.80% 12/31/2007 N/A 9.182 0 Franklin U.S. Government Fund VISB 1 1.90% 12/31/2007 N/A 23.866 0 VISB 2 2.20% 12/31/2007 N/A 21.324 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISB 3 2.60% 12/31/2007 N/A 20.865 0 VISB 4 2.90% 12/31/2007 N/A 18.692 0 VISB 5 2.75% 12/31/2007 N/A 20.286 0 VISI 2 1.70% 12/31/2007 N/A 24.767 0 VISI 3 2.10% 12/31/2007 N/A 22.971 0 VISI 4 2.40% 12/31/2007 N/A 21.711 0 VISI 5 2.25% 12/31/2007 N/A 22.332 0 VISI 6 2.55% 12/31/2007 N/A 21.106 0 VISL 1 1.65% 12/31/2007 N/A 25.001 0 VISL 2 1.95% 12/31/2007 N/A 23.629 0 VISL 3 2.35% 12/31/2007 N/A 21.916 0 VISL 4 2.65% 12/31/2007 N/A 20.713 0 VISL 5 2.50% 12/31/2007 N/A 21.306 0 VISL 6 2.80% 12/31/2007 N/A 20.137 0 Franklin Zero Coupon Fund 2010 VISB 1 1.90% 12/31/2007 N/A 36.395 0 VISB 2 2.20% 12/31/2007 N/A 32.531 0 VISB 3 2.60% 12/31/2007 N/A 31.911 0 VISB 4 2.90% 12/31/2007 N/A 28.516 0 VISB 5 2.75% 12/31/2007 N/A 31.025 0 VISI 2 1.70% 12/31/2007 N/A 37.784 0 VISI 3 2.10% 12/31/2007 N/A 35.045 0 VISI 4 2.40% 12/31/2007 N/A 33.122 0 VISI 5 2.25% 12/31/2007 N/A 34.070 0 VISI 6 2.55% 12/31/2007 N/A 32.200 0 VISL 1 1.65% 12/31/2007 N/A 38.141 0 VISL 2 1.95% 12/31/2007 N/A 36.048 0 VISL 3 2.35% 12/31/2007 N/A 33.435 0 VISL 4 2.65% 12/31/2007 N/A 31.600 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 22 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 5 2.50% 12/31/2007 N/A 32.504 0 VISL 6 2.80% 12/31/2007 N/A 30.721 0 Mutual Discovery Securities Fund VISB 1 1.90% 12/31/2007 N/A 28.237 6 VISB 2 2.20% 12/31/2007 N/A 26.408 1 VISB 3 2.60% 12/31/2007 N/A 26.116 0 VISB 4 2.90% 12/31/2007 N/A 24.424 0 VISB 5 2.75% 12/31/2007 N/A 25.683 0 VISI 2 1.70% 12/31/2007 N/A 28.848 2 VISI 3 2.10% 12/31/2007 N/A 27.590 0 VISI 4 2.40% 12/31/2007 N/A 26.682 0 VISI 5 2.25% 12/31/2007 N/A 27.132 0 VISI 6 2.55% 12/31/2007 N/A 26.239 0 VISL 1 1.65% 12/31/2007 N/A 29.010 5 VISL 2 1.95% 12/31/2007 N/A 28.055 0 VISL 3 2.35% 12/31/2007 N/A 26.831 0 VISL 4 2.65% 12/31/2007 N/A 25.948 0 VISL 5 2.50% 12/31/2007 N/A 26.386 0 VISL 6 2.80% 12/31/2007 N/A 25.517 0 Mutual Shares Securities Fund VISB 1 1.90% 12/31/2007 N/A 22.858 6 VISB 2 2.20% 12/31/2007 N/A 21.377 0 VISB 3 2.60% 12/31/2007 N/A 21.141 0 VISB 4 2.90% 12/31/2007 N/A 19.771 0 VISB 5 2.75% 12/31/2007 N/A 20.790 0 VISI 2 1.70% 12/31/2007 N/A 23.353 4 VISI 3 2.10% 12/31/2007 N/A 22.334 0 VISI 4 2.40% 12/31/2007 N/A 21.599 0 VISI 5 2.25% 12/31/2007 N/A 21.963 0 VISI 6 2.55% 12/31/2007 N/A 21.241 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 1 1.65% 12/31/2007 N/A 23.484 4 VISL 2 1.95% 12/31/2007 N/A 22.711 0 VISL 3 2.35% 12/31/2007 N/A 21.720 0 VISL 4 2.65% 12/31/2007 N/A 21.005 0 VISL 5 2.50% 12/31/2007 N/A 21.359 0 VISL 6 2.80% 12/31/2007 N/A 20.656 0 OpCap Mid Cap Portfolio VISB 1 1.90% 12/31/2007 N/A 10.495 4 VISB 2 2.20% 12/31/2007 N/A 10.442 0 VISB 3 2.60% 12/31/2007 N/A 10.372 0 VISB 4 2.90% 12/31/2007 N/A 10.320 0 VISB 5 2.75% 12/31/2007 N/A 10.346 0 VISI 2 1.70% 12/31/2007 N/A 10.530 0 VISI 3 2.10% 12/31/2007 N/A 10.460 0 VISI 4 2.40% 12/31/2007 N/A 10.407 0 VISI 5 2.25% 12/31/2007 N/A 10.433 0 VISI 6 2.55% 12/31/2007 N/A 10.381 0 VISL 1 1.65% 12/31/2007 N/A 10.539 0 VISL 2 1.95% 12/31/2007 N/A 10.486 0 VISL 3 2.35% 12/31/2007 N/A 10.416 0 VISL 4 2.65% 12/31/2007 N/A 10.364 0 VISL 5 2.50% 12/31/2007 N/A 10.390 0 VISL 6 2.80% 12/31/2007 N/A 10.338 0 PIMCO VIT All Asset Portfolio VISB 1 1.90% 12/31/2007 N/A 13.467 0 VISB 2 2.20% 12/31/2007 N/A 13.320 0 VISB 3 2.60% 12/31/2007 N/A 13.126 0 VISB 4 2.90% 12/31/2007 N/A 12.982 0 VISB 5 2.75% 12/31/2007 N/A 13.054 0 VISI 2 1.70% 12/31/2007 N/A 12.811 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 23 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISI 3 2.10% 12/31/2007 N/A 12.624 0 VISI 4 2.40% 12/31/2007 N/A 12.486 0 VISI 5 2.25% 12/31/2007 N/A 12.555 0 VISI 6 2.55% 12/31/2007 N/A 12.417 0 VISL 1 1.65% 12/31/2007 N/A 12.834 0 VISL 2 1.95% 12/31/2007 N/A 12.694 0 VISL 3 2.35% 12/31/2007 N/A 12.509 0 VISL 4 2.65% 12/31/2007 N/A 12.372 0 VISL 5 2.50% 12/31/2007 N/A 12.440 0 VISL 6 2.80% 12/31/2007 N/A 12.304 0 PIMCO VIT CommodityRealReturn Strategy Portfolio VISB 1 1.90% 12/31/2007 N/A 12.645 12 VISB 2 2.20% 12/31/2007 N/A 12.544 2 VISB 3 2.60% 12/31/2007 N/A 12.411 0 VISB 4 2.90% 12/31/2007 N/A 12.312 0 VISB 5 2.75% 12/31/2007 N/A 12.361 0 VISI 2 1.70% 12/31/2007 N/A 12.713 1 VISI 3 2.10% 12/31/2007 N/A 12.578 0 VISI 4 2.40% 12/31/2007 N/A 12.478 0 VISI 5 2.25% 12/31/2007 N/A 12.528 0 VISI 6 2.55% 12/31/2007 N/A 12.428 0 VISL 1 1.65% 12/31/2007 N/A 12.730 1 VISL 2 1.95% 12/31/2007 N/A 12.629 0 VISL 3 2.35% 12/31/2007 N/A 12.494 0 VISL 4 2.65% 12/31/2007 N/A 12.394 0 VISL 5 2.50% 12/31/2007 N/A 12.444 0 VISL 6 2.80% 12/31/2007 N/A 12.345 0 PIMCO VIT Emerging Markets Bond Portfolio VISB 1 1.90% 12/31/2007 N/A 12.124 1 VISB 2 2.20% 12/31/2007 N/A 12.027 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISB 3 2.60% 12/31/2007 N/A 11.899 0 VISB 4 2.90% 12/31/2007 N/A 11.804 0 VISB 5 2.75% 12/31/2007 N/A 11.851 0 VISI 2 1.70% 12/31/2007 N/A 12.189 0 VISI 3 2.10% 12/31/2007 N/A 12.059 0 VISI 4 2.40% 12/31/2007 N/A 11.963 0 VISI 5 2.25% 12/31/2007 N/A 12.011 0 VISI 6 2.55% 12/31/2007 N/A 11.915 0 VISL 1 1.65% 12/31/2007 N/A 12.205 0 VISL 2 1.95% 12/31/2007 N/A 12.108 0 VISL 3 2.35% 12/31/2007 N/A 11.979 0 VISL 4 2.65% 12/31/2007 N/A 11.883 0 VISL 5 2.50% 12/31/2007 N/A 11.931 0 VISL 6 2.80% 12/31/2007 N/A 11.835 0 PIMCO VIT Global Bond Portfolio (Unhedged) VISB 1 1.90% 12/31/2007 N/A 10.302 0 VISB 2 2.20% 12/31/2007 N/A 10.219 1 VISB 3 2.60% 12/31/2007 N/A 10.111 0 VISB 4 2.90% 12/31/2007 N/A 10.030 0 VISB 5 2.75% 12/31/2007 N/A 10.070 0 VISI 2 1.70% 12/31/2007 N/A 10.357 0 VISI 3 2.10% 12/31/2007 N/A 10.247 0 VISI 4 2.40% 12/31/2007 N/A 10.165 0 VISI 5 2.25% 12/31/2007 N/A 10.206 0 VISI 6 2.55% 12/31/2007 N/A 10.124 0 VISL 1 1.65% 12/31/2007 N/A 10.371 0 VISL 2 1.95% 12/31/2007 N/A 10.288 0 VISL 3 2.35% 12/31/2007 N/A 10.178 0 VISL 4 2.65% 12/31/2007 N/A 10.097 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 24 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 5 2.50% 12/31/2007 N/A 10.138 0 VISL 6 2.80% 12/31/2007 N/A 10.057 0 PIMCO VIT High Yield Portfolio VISB 1 1.90% 12/31/2007 N/A 13.628 0 VISB 2 2.20% 12/31/2007 N/A 13.346 1 VISB 3 2.60% 12/31/2007 N/A 12.980 0 VISB 4 2.90% 12/31/2007 N/A 12.713 0 VISB 5 2.75% 12/31/2007 N/A 12.846 0 VISI 2 1.70% 12/31/2007 N/A 13.962 1 VISI 3 2.10% 12/31/2007 N/A 13.526 0 VISI 4 2.40% 12/31/2007 N/A 13.209 0 VISI 5 2.25% 12/31/2007 N/A 13.366 0 VISI 6 2.55% 12/31/2007 N/A 13.053 0 VISL 1 1.65% 12/31/2007 N/A 14.017 0 VISL 2 1.95% 12/31/2007 N/A 13.688 0 VISL 3 2.35% 12/31/2007 N/A 13.261 0 VISL 4 2.65% 12/31/2007 N/A 12.950 0 VISL 5 2.50% 12/31/2007 N/A 13.104 0 VISL 6 2.80% 12/31/2007 N/A 12.797 0 PIMCO VIT Real Return Portfolio VISB 1 1.90% 12/31/2007 N/A 11.989 0 VISB 2 2.20% 12/31/2007 N/A 11.822 0 VISB 3 2.60% 12/31/2007 N/A 11.603 0 VISB 4 2.90% 12/31/2007 N/A 11.441 0 VISB 5 2.75% 12/31/2007 N/A 11.522 0 VISI 2 1.70% 12/31/2007 N/A 12.153 0 VISI 3 2.10% 12/31/2007 N/A 11.927 0 VISI 4 2.40% 12/31/2007 N/A 11.761 0 VISI 5 2.25% 12/31/2007 N/A 11.844 0 VISI 6 2.55% 12/31/2007 N/A 11.679 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISL 1 1.65% 12/31/2007 N/A 12.181 0 VISL 2 1.95% 12/31/2007 N/A 12.011 0 VISL 3 2.35% 12/31/2007 N/A 11.789 0 VISL 4 2.65% 12/31/2007 N/A 11.625 0 VISL 5 2.50% 12/31/2007 N/A 11.706 0 VISL 6 2.80% 12/31/2007 N/A 11.543 0 PIMCO VIT Total Return Portfolio VISB 1 1.90% 12/31/2007 N/A 13.195 0 VISB 2 2.20% 12/31/2007 N/A 12.923 0 VISB 3 2.60% 12/31/2007 N/A 12.568 0 VISB 4 2.90% 12/31/2007 N/A 12.309 0 VISB 5 2.75% 12/31/2007 N/A 12.438 0 VISI 2 1.70% 12/31/2007 N/A 14.634 2 VISI 3 2.10% 12/31/2007 N/A 14.177 0 VISI 4 2.40% 12/31/2007 N/A 13.844 0 VISI 5 2.25% 12/31/2007 N/A 14.010 0 VISI 6 2.55% 12/31/2007 N/A 13.681 0 VISL 1 1.65% 12/31/2007 N/A 14.692 0 VISL 2 1.95% 12/31/2007 N/A 14.347 0 VISL 3 2.35% 12/31/2007 N/A 13.899 0 VISL 4 2.65% 12/31/2007 N/A 13.573 0 VISL 5 2.50% 12/31/2007 N/A 13.735 0 VISL 6 2.80% 12/31/2007 N/A 13.413 0 Templeton Global Income Securities Fund VISB 1 1.90% 12/31/2007 N/A 29.551 7 VISB 2 2.20% 12/31/2007 N/A 26.360 1 VISB 3 2.60% 12/31/2007 N/A 26.004 0 VISB 4 2.90% 12/31/2007 N/A 23.086 0 VISB 5 2.75% 12/31/2007 N/A 25.301 0 VISI 2 1.70% 12/31/2007 N/A 30.650 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- 24 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISI 3 2.10% 12/31/2007 N/A 28.491 0 VISI 4 2.40% 12/31/2007 N/A 26.971 0 VISI 5 2.25% 12/31/2007 N/A 27.721 0 VISI 6 2.55% 12/31/2007 N/A 26.243 0 VISL 1 1.65% 12/31/2007 N/A 30.931 3 VISL 2 1.95% 12/31/2007 N/A 29.282 0 VISL 3 2.35% 12/31/2007 N/A 27.219 0 VISL 4 2.65% 12/31/2007 N/A 25.768 0 VISL 5 2.50% 12/31/2007 N/A 26.483 0 VISL 6 2.80% 12/31/2007 N/A 25.071 0 Templeton Growth Securities Fund VISB 1 1.90% 12/31/2007 N/A 27.591 2 VISB 2 2.20% 12/31/2007 N/A 25.397 2 VISB 3 2.60% 12/31/2007 N/A 25.049 0 VISB 4 2.90% 12/31/2007 N/A 23.057 0 BENEFIT PERIOD AUV AT AUV NUMBER OF ACCUMULATION AT UNITS OR END OUTSTANDING YEAR BEGINNING OF AT END OF OPTION * ENDED OF PERIOD PERIOD PERIOD ------------ ---------- ------------ -------- -------------- ------------------------------------------------------------ INVESTMENT OPTION ------------------------------------------------------------ VISB 5 2.75% 12/31/2007 N/A 24.535 0 VISI 2 1.70% 12/31/2007 N/A 28.340 1 VISI 3 2.10% 12/31/2007 N/A 26.817 0 VISI 4 2.40% 12/31/2007 N/A 25.729 0 VISI 5 2.25% 12/31/2007 N/A 26.267 0 VISI 6 2.55% 12/31/2007 N/A 25.201 0 VISL 1 1.65% 12/31/2007 N/A 28.536 0 VISL 2 1.95% 12/31/2007 N/A 27.378 0 VISL 3 2.35% 12/31/2007 N/A 25.907 0 VISL 4 2.65% 12/31/2007 N/A 24.855 0 VISL 5 2.50% 12/31/2007 N/A 25.376 0 VISL 6 2.80% 12/31/2007 N/A 24.346 0 -------------------------------------------------------------------------------- The Allianz Vision(SM) New York Variable Annuity Contract*SAI*May 1, 2008 -------------------------------------------------------------------------------- ALLIANZ LIFE OF NY VARIABLE ACCOUNT C of ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements December 31, 2007 (With Report of Independent Registered Public Accounting Firm Thereon) Report of Independent Registered Public Accounting Firm The Board of Directors of Allianz Life Insurance Company of New York and Contract Owners of Allianz Life of NY Variable Account C: We have audited the accompanying statements of assets and liabilities of the sub-accounts of Allianz Life of NY Variable Account C (the Variable Account) as of December 31, 2007, and the related statements of operations for the year or period in the period then ended, the statements of changes in net assets for each of the years or periods in the two-year period then ended, and the financial highlights for each of the years or periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Variable Account's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Investment securities held in custody for the benefit of the Variable Account were confirmed to us by the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the assets and liabilities of the sub-accounts of Allianz Life of NY Variable Account C as of December 31, 2007, the results of their operations, the changes in their net assets, and the financial highlights for the periods stated above, in conformity with U.S. generally accepted accounting principles. Minneapolis, Minnesota April 15, 2008 2 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements Statements of Assets and Liabilities December 31, 2007 (In thousands)
Alger Alger Alger AIM V.I. Alger American American American Capital AIM V.I. American Leveraged MidCap Small Appreciation Core Equity Growth AllCap Growth Capitalization Fund Fund Portfolio Portfolio Portfolio Portfolio -------------------------------------------------------------------------- Assets: Investments at net asset value* $432 98 279 275 85 2 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets 432 98 279 275 85 2 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $432 98 279 275 85 2 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 432 98 279 275 85 2 Contracts in annuity payment period (note 2) - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $432 98 279 275 85 2 -------------------------------------------------------------------------- *Investment shares 15 3 6 5 4 - Investments at cost $383 84 325 274 64 1 See accompanying notes to financial statements 3 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) AZL AZL AZL Dreyfus Dreyfus AZL AIM AZL AIM Columbia AZL Davis Founders Premier Basic International Technology NY Venture Equity Small Cap Value Fund Equity Fund Fund Fund Growth Fund Value Fund -------------------------------------------------------------------------- Assets: Investments at net asset value* $- 5,106 2,544 10,524 4,877 2,383 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets - 5,106 2,544 10,524 4,877 2,383 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $- 5,106 2,544 10,524 4,877 2,383 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period - 5,106 2,544 10,524 4,877 2,383 Contracts in annuity payment period (note 2) - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $- 5,106 2,544 10,524 4,877 2,383 -------------------------------------------------------------------------- *Investment shares - 256 235 745 441 211 Investments at cost $- 4,354 2,296 9,378 4,644 2,614 See accompanying notes to financial statements 4 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) AZL AZL First Franklin AZL AZL AZL Trust Target Small Cap Fusion Fusion AZL Fusion Jennison Double Play Value Balanced Growth Moderate 20/20 Fund Fund Fund Fund Fund Focus Fund -------------------------------------------------------------------------- Assets: Investments at net asset value* $412 5,370 10,317 24,767 21,158 3,716 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets 412 5,370 10,317 24,767 21,158 3,716 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $412 5,370 10,317 24,767 21,158 3,716 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 412 5,370 10,317 24,767 21,158 3,716 Contracts in annuity payment period (note 2) - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $412 5,370 10,317 24,767 21,158 3,716 -------------------------------------------------------------------------- *Investment shares 38 326 848 1,914 1,699 250 Investments at cost $412 5,569 9,816 22,999 19,628 3,396 See accompanying notes to financial statements 5 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) AZL AZL LMP Jennison AZL Legg AZL Legg Large Cap AZL NACM Growth Mason Mason Growth AZL Money International Fund Growth Fund Value Fund Fund Market Fund Fund -------------------------------------------------------------------------- Assets: Investments at net asset value* $2,006 5,511 4,799 3,327 19,915 87 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets 2,006 5,511 4,799 3,327 19,915 87 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $2,006 5,511 4,799 3,327 19,915 87 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 2,006 5,511 4,799 3,327 19,915 87 Contracts in annuity payment period (note 2) - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $2,006 5,511 4,799 3,327 19,915 87 -------------------------------------------------------------------------- *Investment shares 147 409 398 272 19,915 9 Investments at cost $1,860 5,413 4,640 2,890 19,915 90 See accompanying notes to financial statements 6 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) AZL AZL Neuberger Oppenheimer Berman AZL OCC AZL OCC AZL International Regency Opportunity Renaissance AZL OCC Oppenheimer Growth Fund Fund Fund Value Fund Global Fund Fund -------------------------------------------------------------------------- Assets: Investments at net asset value* $965 3,925 - 7,672 7,056 5,592 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets 965 3,925 - 7,672 7,056 5,592 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $965 3,925 - 7,672 7,056 5,592 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 965 3,925 - 7,667 7,056 5,592 Contracts in annuity payment period (note 2) - - - 6 - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $965 3,925 - 7,672 7,056 5,592 -------------------------------------------------------------------------- *Investment shares 92 262 - 614 469 271 Investments at cost $943 3,931 - 8,161 6,287 4,860 See accompanying notes to financial statements 7 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) AZL AZL AZL AZL PIMCO Schroder Schroder AZL Oppenheimer Fundamental Emerging Emerging Schroder Main IndexPLUS AZL S&P Markets Markets International Street Total 500 Index Equity Equity Fund Small Cap Fund Return Fund Fund Fund CL 1 CL 2 Fund -------------------------------------------------------------------------- Assets: Investments at net asset value* $4,840 140 704 23 13,766 341 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets 4,840 140 704 23 13,766 341 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $4,840 140 704 23 13,766 341 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 4,840 140 704 23 13,766 341 Contracts in annuity payment period (note 2) - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $4,840 140 704 23 13,766 341 -------------------------------------------------------------------------- *Investment shares 390 14 71 2 1,000 36 Investments at cost $4,418 145 729 24 12,860 357 See accompanying notes to financial statements 8 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) AZL Turner AZL AZL AZL AZL Quantitative AZL Small TargetPLUS TargetPLUS TargetPLUS TargetPLUS Small Cap Cap Stock Balanced Equity Growth Moderate Growth Index Fund Fund Fund Fund Fund Fund -------------------------------------------------------------------------- Assets: Investments at net asset value* $463 366 1,613 949 327 952 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets 463 366 1,613 949 327 952 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $463 366 1,613 949 327 952 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 463 366 1,613 949 327 952 Contracts in annuity payment period (note 2) - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $463 366 1,613 949 327 952 -------------------------------------------------------------------------- *Investment shares 50 36 153 96 33 74 Investments at cost $492 373 1,643 965 335 888 See accompanying notes to financial statements 9 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) AZL Van AZL Van Kampen Kampen AZL Van AZL Van AZL Van Equity Global Kampen Kampen Kampen and AZL Van Real Growth and Aggressive Comstock Income Kampen Global Estate Income Growth Fund Fund Fund Franchise Fund Fund Fund -------------------------------------------------------------------------- Assets: Investments at net asset value* $- 8,290 1,776 6,967 1,977 4,422 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets - 8,290 1,776 6,967 1,977 4,422 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $- 8,290 1,776 6,967 1,977 4,422 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period - 8,281 1,776 6,967 1,977 4,422 Contracts in annuity payment period (note 2) - 9 - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $- 8,290 1,776 6,967 1,977 4,422 -------------------------------------------------------------------------- *Investment shares - 739 141 356 181 341 Investments at cost $- 8,487 1,705 6,071 2,182 4,368 See accompanying notes to financial statements 10 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) AZL Van AZL Van Davis VA Dreyfus IP Kampen Mid Kampen Davis VA Real Davis VA Small Cap Cap Growth Strategic Financial Estate Value Stock Index Fund Growth Fund Portfolio Portfolio Portfolio Portfolio --------------------------------------------------------------------------- Assets: Investments at net asset value* $17,475 - 1,895 - 719 3,453 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Total Assets 17,475 - 1,895 - 719 3,453 --------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - --------------------------------------------------------------------------- --------------------------------------------------------------------------- Total Liabilities - - - - - - --------------------------------------------------------------------------- --------------------------------------------------------------------------- Net Assets $17,475 - 1,895 - 719 3,453 --------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 17,475 - 1,895 - 719 3,453 Contracts in annuity payment period (note 2) - - - - - - --------------------------------------------------------------------------- --------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $17,475 - 1,895 - 719 3,453 --------------------------------------------------------------------------- *Investment shares 1,121 - 133 - 50 196 Investments at cost $16,503 - 1,916 - 506 3,338 See accompanying notes to financial statements 11 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) Franklin Franklin Growth Franklin Franklin Global and High Franklin Large Cap Dreyfus Communications Income Income Income Growth Stock Securities SecuritiesSecurities Securities Securities Index Fund Fund Fund Fund Fund Fund -------------------------------------------------------------------------- Assets: Investments at net asset value* $5,258 18,502 29,733 9,555 45,280 9,665 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets 5,258 18,502 29,733 9,555 45,280 9,665 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $5,258 18,502 29,733 9,555 45,280 9,665 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 5,251 18,432 29,470 9,544 44,908 9,650 Contracts in annuity payment period (note 2) 7 70 263 11 372 15 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $5,258 18,502 29,733 9,555 45,280 9,665 -------------------------------------------------------------------------- *Investment shares 141 1,483 1,977 1,435 2,590 555 Investments at cost $4,174 19,839 31,286 10,814 39,930 8,670 See accompanying notes to financial statements 12 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) Franklin Templeton Franklin Franklin Franklin VIP Franklin Rising Small Cap Small-Mid Founding Money Franklin Dividends Value Cap Growth Funds Market Real Estate Securities Securities Securities Allocation Fund Fund Fund Fund Fund Fund -------------------------------------------------------------------------- Assets: Investments at net asset value* $5,420 10,219 30,953 3,114 7,335 1,434 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets 5,420 10,219 30,953 3,114 7,335 1,434 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $5,420 10,219 30,953 3,114 7,335 1,434 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 5,404 10,162 30,741 3,114 7,257 1,434 Contracts in annuity payment period (note 2) 16 57 212 - 78 - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $5,420 10,219 30,953 3,114 7,335 1,434 -------------------------------------------------------------------------- *Investment shares 5,420 405 1,588 181 315 154 Investments at cost $5,416 10,130 24,006 2,486 5,951 1,443 See accompanying notes to financial statements 13 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) J.P. J.P. Morgan Franklin Morgan U.S. Large Mutual U.S. Franklin International Cap Core Jennison Discovery Government Zero Coupon Opportunities Equity 20/20 Focus Securities Fund 2010 Fund Portfolio Portfolio Portfolio Fund -------------------------------------------------------------------------- Assets: Investments at net asset value* $22,936 4,581 12 15 1,539 20,783 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Assets 22,936 4,581 12 15 1,539 20,783 -------------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Liabilities - - - - - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net Assets $22,936 4,581 12 15 1,539 20,783 -------------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 22,924 4,572 12 15 1,539 20,744 Contracts in annuity payment period (note 2) 12 9 - - - 39 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $22,936 4,581 12 15 1,539 20,783 -------------------------------------------------------------------------- *Investment shares 1,787 281 1 1 98 871 Investments at cost $23,000 4,496 7 13 1,207 15,637 See accompanying notes to financial statements 14 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) Mutual Oppenheimer OppenheimerOppenheimer PIMCO Shares OpCap Global High Main VIT All Securities Mid Cap Securities Income Street Asset Fund Portfolio Fund/VA Fund/VA Fund/VA Portfolio --------------------------------------------------------------------- ---------------------------------------------- Assets: Investments at net asset value* $27,956 818 2,160 663 2,309 2,193 --------------------------------------------------------------------- --------------------------------------------------------------------- Total Assets 27,956 818 2,160 663 2,309 2,193 --------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Total Liabilities - - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Net Assets $27,956 818 2,160 663 2,309 2,193 --------------------------------------------------------------------- ---------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 27,916 818 2,160 663 2,309 2,193 Contracts in annuity payment period (note 2) 40 - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $27,956 818 2,160 663 2,309 2,193 --------------------------------------------------------------------- ---------------------------------------------- *Investment shares 1,379 50 59 83 90 187 Investments at cost $23,666 820 1,589 681 1,724 2,202 15 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) PIMCO PIMCO VIT PIMCO VIT VIT PIMCO VIT StocksPLUS Commodity Emerging Global PIMCO PIMCO VIT Growth RealReturn Markets Bond VIT High Real and Strategy Bond Portfolio Yield Return Income Portfolio Portfolio (Unhedged) Portfolio Portfolio Portfolio --------------------------------------------------------------------- --------------------------------------------------------------------- Assets: Investments at net asset value* $2,146 1,235 1,005 3,190 6,396 193 --------------------------------------------------------------------- --------------------------------------------------------------------- Total Assets 2,146 1,235 1,005 3,190 6,396 193 --------------------------------------------------------------------- --------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Total Liabilities - - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Net Assets $2,146 1,235 1,005 3,190 6,396 193 --------------------------------------------------------------------- --------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 2,146 1,235 1,005 3,190 6,396 193 Contracts in annuity payment period (note 2) - - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $2,146 1,235 1,005 3,190 6,396 193 --------------------------------------------------------------------- --------------------------------------------------------------------- *Investment shares 161 90 79 396 509 17 Investments at cost $1,962 1,245 960 3,229 6,407 159 See accompanying notes to financial statements 16 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) SP Strategic PIMCO VIT Seligman Seligman Partners SP Templeton Total Global Small-Cap Focused International Asset Return Technology Value Growth Growth Strategy Portfolio Portfolio Portfolio Portfolio Portfolio Fund --------------------------------------------------------------------- --------------------------------------------------------------------- Assets: Investments at net asset value* $9,028 8 1,579 370 529 781 --------------------------------------------------------------------- --------------------------------------------------------------------- Total Assets 9,028 8 1,579 370 529 781 --------------------------------------------------------------------- --------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Total Liabilities - - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Net Assets $9,028 8 1,579 370 529 781 --------------------------------------------------------------------- --------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 9,028 8 1,579 370 529 781 Contracts in annuity payment period (note 2) - - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $9,028 8 1,579 370 529 781 --------------------------------------------------------------------- --------------------------------------------------------------------- *Investment shares 861 - 92 46 63 53 Investments at cost $8,843 6 1,495 307 479 928 17 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) Van Kampen Templeton Templeton LIT Developing Templeton Global Templeton Van Growth Markets Foreign Income Growth Kampen LIT and Securities Securities Securities Securities Enterprise Income Fund Fund Fund Fund Portfolio Portfolio --------------------------------------------------------------------- --------------------------------------------------------------------- Assets: Investments at net asset value* $9,888 21,594 4,446 22,689 - 15 --------------------------------------------------------------------- --------------------------------------------------------------------- Total Assets 9,888 21,594 4,446 22,689 - 15 --------------------------------------------------------------------- --------------------------------------------------------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Total Liabilities - - - - - - --------------------------------------------------------------------- --------------------------------------------------------------------- Net Assets $9,888 21,594 4,446 22,689 - 15 --------------------------------------------------------------------- --------------------------------------------------------------------- Contract Owners' Equity: Contracts in accumulation period 9,888 21,537 4,446 22,648 - 15 Contracts in annuity payment period (note 2) - 57 - 41 - - --------------------------------------------------------------------- --------------------------------------------------------------------- Total Contract Owners' Equity (Note 6) $9,888 21,594 4,446 22,689 - 15 --------------------------------------------------------------------- --------------------------------------------------------------------- *Investment shares 615 1,052 263 1,459 - 1 Investments at cost $6,187 14,774 3,696 20,096 - 12 18 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Assets and Liabilities (continued) December 31, 2007 (In thousands) Van Kampen LIT Strategic Growth Total Portfolio All Funds ----------------------- ----------------------- Assets: Investments at net asset value* $5 572,188 ----------------------- ----------------------- Total Assets 5 572,188 ----------------------- ----------------------- Liabilities: Accrued mortality and expense risk and administrative charges - - ----------------------- ----------------------- Total Liabilities - - ----------------------- ----------------------- Net Assets $5 572,188 ----------------------- ----------------------- Contract Owners' Equity: Contracts in accumulation period 5 570,873 Contracts in annuity payment period (note 2) - 1,315 ----------------------- ----------------------- Total Contract Owners' Equity (Note 6) $5 572,188 ----------------------- ----------------------- *Investment shares - 61,955 Investments at cost $4 523,510
19 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations For the Year Ended December 31, 2007 (In thousands)
Alger Alger Alger AIM V.I. Alger American American American Capital AIM V.I. American Leveraged MidCap Small AppreciationCore Equity Growth AllCap Growth Capitalization Fund Fund Portfolio Portfolio Portfolio Portfolio -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $- 1 1 - - - -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 7 3 5 4 1 - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net (7) (2) (4) (4) (1) - -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios - - - - 13 - Realized gains (losses) on sales of investments, net 6 8 (43) (5) 8 - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on 6 8 (43) (5) 21 - investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments 46 3 104 86 6 1 -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 52 11 61 81 27 1 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $45 9 57 77 26 1 operations -------------------------------------------------------------------------- 20 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) AZL AZL AZL Dreyfus Dreyfus AZL AIM AZL AIM Columbia AZL Davis Founders Premier Basic International Technology NY Venture Equity Small Cap Value Fund Equity Fund Fund Fund Growth Fund Value Fund -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $28 27 - 50 2 8 -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 83 121 75 303 73 72 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net (55) (94) (75) (253) (71) (64) -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios 629 213 4 - 85 185 Realized gains (losses) on sales of investments, net 286 681 346 950 94 36 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on 915 894 350 950 179 221 investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments (719) (244) 176 (488) 42 (455) -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 196 650 526 462 221 (234) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $141 556 451 209 150 (298) operations -------------------------------------------------------------------------- See accompanying notes to financial statements 21 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) AZL First Trust AZL AZL AZL AZL Target Franklin Fusion Fusion AZL Fusion Jennison Double Small Cap Balanced Growth Moderate 20/20 Play Fund Value Fund Fund Fund Fund Focus Fund -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $- 37 128 111 193 6 -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 3 167 194 555 452 77 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net (3) (130) (66) (444) (259) (71) -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios - 252 116 384 310 111 Realized gains (losses) on sales of investments, net - 131 134 420 341 140 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on - 383 250 804 651 251 investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments - (732) 127 147 257 35 -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments - (349) 377 951 908 286 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $(3) (479) 311 507 649 215 operations -------------------------------------------------------------------------- See accompanying notes to financial statements 22 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) AZL AZL LMP Jennison AZL Legg AZL Legg Large Cap AZL NACM Growth Mason Mason Growth AZL Money International Fund Growth Fund Value Fund Fund Market Fund Fund -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $- - - - 1,061 - -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 33 54 135 90 508 - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net (33) (54) (135) (90) 553 - -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios - 41 93 - - - Realized gains (losses) on sales of investments, net 40 101 168 153 - - -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on 40 142 261 153 - - investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments 100 17 (572) 34 - (4) -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 140 159 (311) 187 - (4) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $107 105 (446) 97 553 (4) operations -------------------------------------------------------------------------- See accompanying notes to financial statements 23 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) AZL AZL Neuberger Oppenheimer Berman AZL OCC AZL OCC AZL International Regency Opportunity Renaissance AZL OCC Oppenheimer Growth Fund Fund Fund Value Fund Global Fund Fund -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $- - 47 69 37 28 -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 18 99 83 147 209 109 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net (18) (99) (36) (78) (172) (81) -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios - 518 1,311 395 236 82 Realized gains (losses) on sales of investments, net 4 356 (871) 154 554 275 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on 4 874 440 549 790 357 investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments (16) (526) (81) (1,256) (427) 48 -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments (12) 348 359 (707) 363 405 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $(30) 249 323 (785) 191 324 operations -------------------------------------------------------------------------- See accompanying notes to financial statements 24 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) AZL AZL AZL AZL PIMCO Schroder Schroder AZL Oppenheimer Fundamental Emerging Emerging Schroder Main IndexPLUS AZL S&P Markets Markets International Street Total 500 Index Equity Equity Fund Small Cap Fund Return Fund Fund Fund CL 1 CL 2 Fund -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $28 11 7 - 1 - -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 130 3 3 - 127 2 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net (102) 8 4 - (126) (2) -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios 266 - 2 - - - Realized gains (losses) on sales of investments, net 234 (4) (1) 5 492 (1) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on 500 (4) 1 5 492 (1) investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments (310) 2 (25) (1) 484 (16) -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 190 (2) (24) 4 976 (17) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $88 6 (20) 4 850 (19) operations -------------------------------------------------------------------------- See accompanying notes to financial statements 25 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) AZL Turner AZL AZL AZL AZL Quantitative AZL Small TargetPLUS TargetPLUS TargetPLUS TargetPLUS Small Cap Cap Stock Balanced Equity Growth Moderate Growth Index Fund Fund Fund Fund Fund Fund -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $3 6 13 10 4 - -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 3 1 22 4 2 25 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net - 5 (9) 6 2 (25) -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios 5 - 3 - - 25 Realized gains (losses) on sales of investments, net 6 - 6 (3) (2) 40 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on 11 - 9 (3) (2) 65 investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments (29) (7) (30) (16) (8) (1) -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments (18) (7) (21) (19) (10) 64 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $(18) (2) (30) (13) (8) 39 operations -------------------------------------------------------------------------- See accompanying notes to financial statements 26 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) AZL Van Kampen AZL Van AZL Van AZL Van AZL Van Equity Kampen AZL Van Kampen Kampen Kampen and Global Kampen Growth and Aggressive Comstock Income Franchise Global Real Income Growth Fund Fund Fund Fund Estate Fund Fund -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $- 88 28 - 11 69 -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 35 162 45 165 71 151 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net (35) (74) (17) (165) (60) (82) -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios 950 152 42 116 9 234 Realized gains (losses) on sales of investments, net (462) 215 61 320 318 324 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on 488 367 103 436 327 558 investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments (56) (792) (84) 135 (384) (664) -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 432 (425) 19 571 (57) (106) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $397 (499) 2 406 (117) (188) operations -------------------------------------------------------------------------- See accompanying notes to financial statements 27 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) Dreyfus AZL Van AZL Van Davis VA IP Small Kampen Mid Kampen Davis VA Real Davis VA Cap Stock Cap Growth Strategic Financial Estate Value Index Fund Growth Fund Portfolio Portfolio Portfolio Portfolio -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $1 - 22 - 8 28 -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 167 28 55 - 22 127 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net (166) (28) (33) - (14) (99) -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios 258 252 112 - 30 301 Realized gains (losses) on sales of investments, net 297 141 182 16 223 359 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on 555 393 294 16 253 660 investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments 503 (151) (389) (14) (202) (497) -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 1,058 242 (95) 2 51 163 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $892 214 (128) 2 37 64 operations -------------------------------------------------------------------------- See accompanying notes to financial statements 28 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) Franklin Franklin Franklin Franklin Global Growth and High Franklin Large Cap Dreyfus Communications Income Income Income Growth Stock Index Securities Securities Securities Securities Securities Fund Fund Fund Fund Fund Fund --------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $93 - 831 726 1,704 96 --------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 141 266 531 184 845 194 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Investment Income (loss), net (48) (266) 300 542 859 (98) --------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios - - 1,873 - 309 81 Realized gains (losses) on sales of investments, net 497 (233) 361 (542) 1,336 370 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Realized gains (losses) on 497 (233) 2,234 (542) 1,645 451 investments, net --------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments (203) 3,599 (3,985) 8 (1,625) 210 --------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 294 3,366 (1,751) (534) 20 661 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Net increase (decrease) in net assets from $246 3,100 (1,451) 8 879 563 operations --------------------------------------------------------------------------- See accompanying notes to financial statements 29 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) Franklin Templeton Franklin Franklin Franklin VIP Franklin Rising Small Cap Small-Mid Founding Money Franklin Dividends Value Cap Growth Funds Market Real Estate Securities Securities Securities Allocation Fund Fund Fund Fund Fund Fund -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $269 343 861 29 - - -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 85 258 584 76 138 2 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net 184 85 277 (47) (138) (2) -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios - 1,003 501 259 597 - Realized gains (losses) on sales of investments, net - 591 1,600 316 469 (9) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on - 1,594 2,101 575 1,066 (9) investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments (1) (4,935) (3,643) (641) (124) (9) -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments (1) (3,341) (1,542) (66) 942 (18) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $183 (3,256) (1,265) (113) 804 (20) operations -------------------------------------------------------------------------- See accompanying notes to financial statements 30 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) J.P. J.P. Morgan Franklin Morgan U.S. Large Mutual U.S. Franklin InternationasCap Core Jennison Discovery Government Zero Coupon Opportunitie Equity 20/20 Focus Securities Fund 2010 Fund Portfolio Portfolio Portfolio Fund -------------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $1,166 224 - - 2 390 -------------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 395 83 - - 37 508 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Investment Income (loss), net 771 141 - - (35) (118) -------------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios - - - - 143 309 Realized gains (losses) on sales of investments, net (127) (4) - - 91 1,878 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Realized gains (losses) on (127) (4) - - 234 2,187 investments, net -------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments 543 159 - - (79) 25 -------------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 416 155 - - 155 2,212 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net increase (decrease) in net assets from $1,187 296 - - 120 2,094 operations -------------------------------------------------------------------------- See accompanying notes to financial statements 31 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) Mutual Oppenheimer Oppenheimer Oppenheimer Shares OpCap Mid Global High Main PIMCO VIT Securities Cap Securities Income Street All Asset Fund Portfolio Fund/VA Fund/VA Fund/VA Portfolio --------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $447 1 39 81 31 172 --------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 575 11 57 20 62 55 --------------------------------------------------------------------- --------------------------------------------------------------------- Investment Income (loss), net (128) (10) (18) 61 (31) 117 --------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios 1,046 13 142 - - - Realized gains (losses) on sales of investments, net 1,551 (1) 316 (16) 276 11 --------------------------------------------------------------------- --------------------------------------------------------------------- Realized gains (losses) on 2,597 12 458 (16) 276 11 investments, net --------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments (2,189) (10) (303) (54) (143) 1 --------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 408 2 155 (70) 133 12 --------------------------------------------------------------------- --------------------------------------------------------------------- Net increase (decrease) in net assets from $280 (8) 137 (9) 102 129 operations --------------------------------------------------------------------- See accompanying notes to financial statements 32 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) PIMCO PIMCO VIT PIMCO VIT VIT PIMCO VIT Commodity Emerging Global PIMCO StocksPLUS RealReturn Markets Bond PIMCO VIT VIT Real Growth and Strategy Bond Portfolio High Yield Return Income Portfolio Portfolio (Unhedged) Portfolio Portfolio Portfolio --------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $79 57 23 239 314 16 --------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 39 23 16 76 153 4 --------------------------------------------------------------------- --------------------------------------------------------------------- Investment Income (loss), net 40 34 7 163 161 12 --------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios - 22 2 - 15 - Realized gains (losses) on sales of investments, net 4 - 8 17 (92) 40 --------------------------------------------------------------------- --------------------------------------------------------------------- Realized gains (losses) on 4 22 10 17 (77) 40 investments, net --------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments 275 (23) 42 (129) 441 (40) --------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 279 (1) 52 (112) 364 - --------------------------------------------------------------------- --------------------------------------------------------------------- Net increase (decrease) in net assets from $319 33 59 51 525 12 operations --------------------------------------------------------------------- See accompanying notes to financial statements 33 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) SP Strategic PIMCO Seligman Seligman Partners SP Templeton VIT Total Global Small-Cap Focused International Asset Return Technology Value Growth Growth Strategy Portfolio Portfolio Portfolio Portfolio Portfolio Fund --------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $425 - - - 2 134 --------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 178 - 40 9 10 11 --------------------------------------------------------------------- --------------------------------------------------------------------- Investment Income (loss), net 247 - (40) (9) (8) 123 --------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios 0 - 171 14 72 173 Realized gains (losses) on sales of investments, net (32) - 94 25 58 13 --------------------------------------------------------------------- --------------------------------------------------------------------- Realized gains (losses) on (32) - 265 39 130 186 investments, net --------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments 350 1 (165) 15 (55) (240) --------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 318 1 100 54 75 (54) --------------------------------------------------------------------- --------------------------------------------------------------------- Net increase (decrease) in net assets from $565 1 60 45 67 69 operations --------------------------------------------------------------------- See accompanying notes to financial statements 34 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) Templeton Templeton Van Van Developing Templeton Global Templeton Kampen Kampen LIT Markets Foreign Income Growth LIT Growth and Securities Securities Securities Securities Enterprise Income Fund Fund Fund Fund Portfolio Portfolio --------------------------------------------------------------------- Investment Income: Dividends reinvested in fund shares $242 470 97 337 - - --------------------------------------------------------------------- Expenses: Mortality and expense risk and administrative charges (note 2) 209 357 51 443 - - --------------------------------------------------------------------- --------------------------------------------------------------------- Investment Income (loss), net 33 113 46 (106) - - --------------------------------------------------------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios 768 993 - 1,013 - 1 Realized gains (losses) on sales of investments, net 1,061 1,167 136 737 - - --------------------------------------------------------------------- --------------------------------------------------------------------- Realized gains (losses) on 1,829 2,160 136 1,750 - 1 investments, net --------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments 438 599 133 (1,622) - (1) --------------------------------------------------------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 2,267 2,759 269 128 - - --------------------------------------------------------------------- --------------------------------------------------------------------- Net increase (decrease) in net assets from $2,300 2,872 315 22 - - operations --------------------------------------------------------------------- See accompanying notes to financial statements 35 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Operations (continued) For the Year Ended December 31, 2007 (In thousands) Van Kampen LIT Strategic Growth Portfolio Total ----------------------- Investment Income: Dividends reinvested in fund shares $- 12,112 ----------------------- Expenses: Mortality and expense risk and administrative charges (note 2) - 11,756 ----------------------- ----------------------- Investment Income (loss), net - 356 ----------------------- Realized gains (losses) and unrealized appreciation (depreciation) on investments: Realized capital gain distributions from underlying portfolios - 17,255 Realized gains (losses) on sales of investments, net 1 19,201 ----------------------- ----------------------- Realized gains (losses) on 1 36,456 investments, net ----------------------- Net change in unrealized appreciation (depreciation) on investments - (20,223) ----------------------- Total realized gains (losses) & unrealized appreciation (depreciation) on investments 1 16,233 ----------------------- ----------------------- Net increase (decrease) in net assets from $1 16,589 operations -----------------------
See accompanying notes to financial statements 36 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets For the Years Ended December 31, 2007 and 2006 (In thousands)
AIM V.I. Capital AIM V.I. Core Equity Alger American Growth Appreciation Fund Fund Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(7) (8) (2) 1 (4) (5) Realized gains (losses) on investments, net 6 (514) 8 4 (43) (55) Net change in unrealized appreciation (depreciation) on investments 46 547 3 14 104 69 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 45 25 9 19 57 9 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments - - - - - - Transfers between funds (note 2) (11) (82) - - - (12) Surrenders and terminations, net (71) (151) (47) (34) (158) (90) Rescissions - - - - - - Bonus - - - - - - Contract maintenance charges (note 2) - - - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (82) (233) (47) (34) (158) (102) -------------------------------------------------------------------------- Increase (decrease) in net assets (37) (208) (38) (15) (101) (93) Net assets at beginning of period 469 677 136 151 380 473 -------------------------------------------------------------------------- Net assets at end of period $432 469 98 136 279 380 -------------------------------------------------------------------------- See accompanying notes to financial statements 37 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Alger American Alger American Small Leveraged AllCap Alger American MidCap Capitalization Portfolio Growth Portfolio Portfolio ------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 ------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(4) (4) (1) (4) - - Realized gains (losses) on investments, net (5) (46) 21 (5) - - Net change in unrealized appreciation (depreciation) on investments 86 95 6 86 1 - ------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 77 45 26 77 1 - ------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments - - - - - - Transfers between funds (note 2) - (66) - - - - Surrenders and terminations, net (71) (23) (33) (71) - - Rescissions - - - - - - Bonus - - - - - - Contract maintenance charges (note 2) - - - - - - ------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (71) (89) (33) (71) - - ------------------------------------------------------------------------- Increase (decrease) in net assets 6 (44) (7) 6 1 - Net assets at beginning of period 269 313 92 269 1 1 ------------------------------------------------------------------------- Net assets at end of period $275 269 85 275 2 1 ------------------------------------------------------------------------- See accompanying notes to financial statements 38 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL AIM International AZL Columbia AZL AIM Basic Value Fund Equity Fund Technology Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(55) (95) (94) (72) (75) (24) Realized gains (losses) on investments, net 915 208 894 137 350 12 Net change in unrealized appreciation (depreciation) on investments (719) 328 (244) 744 176 16 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 141 441 556 809 451 4 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 182 544 1,155 2,451 964 394 Transfers between funds (note 2) (4,792) (218) (2,742) 2,019 225 155 Surrenders and terminations, net (314) (84) (631) (98) (392) (32) Rescissions (2) (92) (1) (38) (46) - Bonus 7 17 50 69 28 14 Contract maintenance charges (note 2) - (1) (1) - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (4,919) 166 (2,170) 4,403 779 531 -------------------------------------------------------------------------- Increase (decrease) in net assets (4,778) 607 (1,614) 5,212 1,230 535 Net assets at beginning of period 4,778 4,171 6,720 1,508 1,314 779 -------------------------------------------------------------------------- Net assets at end of period $- 4,778 5,106 6,720 2,544 1,314 -------------------------------------------------------------------------- See accompanying notes to financial statements 39 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Davis NY Venture AZL Dreyfus Founders AZL Dreyfus Premier Fund Equity Growth Fund Small Cap Value Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(253) (177) (71) (40) (64) (50) Realized gains (losses) on investments, net 950 150 179 132 221 142 Net change in unrealized appreciation (depreciation) on investments (488) 1,072 42 101 (455) 128 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 209 1,045 150 193 (298) 220 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 4,353 4,975 939 651 699 1,134 Transfers between funds (note 2) (4,858) 601 1,978 155 (256) (14) Surrenders and terminations, net (1,620) (304) (534) (95) (507) (40) Rescissions (103) (140) - (32) (12) (46) Bonus 94 141 18 11 18 41 Contract maintenance charges (note 2) (1) (1) - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (2,135) 5,272 2,401 690 (58) 1,075 -------------------------------------------------------------------------- Increase (decrease) in net assets (1,926) 6,317 2,551 883 (356) 1,295 Net assets at beginning of period 12,450 6,133 2,326 1,443 2,739 1,444 -------------------------------------------------------------------------- Net assets at end of period $10,524 12,450 4,877 2,326 2,383 2,739 -------------------------------------------------------------------------- See accompanying notes to financial statements 40 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL First Trust Target AZL Franklin Small AZL Fusion Balanced Double Play Fund Cap Value Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(3) - (130) (118) (66) (71) Realized gains (losses) on investments, net - - 383 450 250 27 Net change in unrealized appreciation (depreciation) on investments - - (732) 239 127 324 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations (3) - (479) 571 311 280 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 228 - 1,425 2,626 4,935 3,382 Transfers between funds (note 2) 186 - (936) (304) 769 125 Surrenders and terminations, net (1) - (1,165) (294) (1,285) (61) Rescissions - - (12) (21) (20) - Bonus 2 - 31 99 116 108 Contract maintenance charges (note 2) - - (1) (1) (1) - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 415 - (658) 2,105 4,514 3,554 -------------------------------------------------------------------------- Increase (decrease) in net assets 412 - (1,137) 2,676 4,825 3,834 Net assets at beginning of period - - 6,507 3,831 5,492 1,658 -------------------------------------------------------------------------- Net assets at end of period $412 - 5,370 6,507 10,317 5,492 -------------------------------------------------------------------------- See accompanying notes to financial statements 41 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Fusion Moderate AZL Jennison 20/20 AZL Fusion Growth Fund Fund Focus Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(444) (282) (259) (219) (71) (55) Realized gains (losses) on investments, net 804 115 651 107 251 37 Net change in unrealized appreciation (depreciation) on investments 147 1,393 257 1,060 35 226 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 507 1,226 649 948 215 208 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 8,535 10,179 8,289 6,891 1,203 1,883 Transfers between funds (note 2) 361 1,343 151 557 (59) (293) Surrenders and terminations, net (1,585) (244) (2,535) (207) (367) (54) Rescissions (497) (585) (289) (56) - (47) Bonus 226 363 196 233 40 61 Contract maintenance charges (note 2) (2) (1) (2) (1) - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 7,038 11,055 5,810 7,417 817 1,550 -------------------------------------------------------------------------- Increase (decrease) in net assets 7,545 12,281 6,459 8,365 1,032 1,758 Net assets at beginning of period 17,222 4,941 14,699 6,334 2,684 926 -------------------------------------------------------------------------- Net assets at end of period $24,767 17,222 21,158 14,699 3,716 2,684 -------------------------------------------------------------------------- See accompanying notes to financial statements 42 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Jennison Growth AZL Legg Mason Growth AZL Legg Mason Value Fund Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(33) (20) (54) (31) (135) (118) Realized gains (losses) on investments, net 40 (4) 142 52 261 89 Net change in unrealized appreciation (depreciation) on investments 100 35 17 (14) (572) 262 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 107 11 105 7 (446) 233 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 617 758 1,259 843 542 1,374 Transfers between funds (note 2) 254 41 2,668 347 (231) 87 Surrenders and terminations, net (146) (17) (300) (44) (919) (171) Rescissions - - - (184) - (13) Bonus 18 32 24 25 8 53 Contract maintenance charges (note 2) - - - - (1) (1) -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 743 814 3,651 987 (601) 1,329 -------------------------------------------------------------------------- Increase (decrease) in net assets 850 825 3,756 994 (1,047) 1,562 Net assets at beginning of period 1,156 331 1,755 761 5,846 4,284 -------------------------------------------------------------------------- Net assets at end of period $2,006 1,156 5,511 1,755 4,799 5,846 -------------------------------------------------------------------------- See accompanying notes to financial statements 43 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL LMP Large Cap AZL NACM International Growth Fund AZL Money Market Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(90) (79) 553 365 - - Realized gains (losses) on investments, net 153 113 - - - - Net change in unrealized appreciation (depreciation) on investments 34 32 - (63) (4) - -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 97 66 553 302 (4) - -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 260 355 7,681 10,965 70 - Transfers between funds (note 2) 37 37 9,051 (4,582) 21 - Surrenders and terminations, net (654) (144) (14,000) (4,113) - - Rescissions (4) (5) (212) (938) - - Bonus 7 15 210 377 - - Contract maintenance charges (note 2) - - (3) (3) - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (354) 258 2,727 1,706 91 - -------------------------------------------------------------------------- Increase (decrease) in net assets (257) 324 3,280 2,008 87 - Net assets at beginning of period 3,584 3,260 16,635 14,627 - - -------------------------------------------------------------------------- Net assets at end of period $3,327 3,584 19,915 16,635 87 - -------------------------------------------------------------------------- See accompanying notes to financial statements 44 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Neuberger Berman AZL OCC Opportunity Regency Fund Fund AZL OCC Renaissance Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(18) (3) (99) (83) (36) (99) Realized gains (losses) on investments, net 4 - 874 176 440 454 Net change in unrealized appreciation (depreciation) on investments (16) 37 (526) 276 (81) 45 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations (30) 34 249 369 323 400 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 556 213 864 2,218 444 347 Transfers between funds (note 2) 44 151 (2,559) 1,212 (5,399) (761) Surrenders and terminations, net (17) - (487) (84) (281) (225) Rescissions (1) - (1) (58) - (1) Bonus 8 7 27 62 14 12 Contract maintenance charges (note 2) - - - - (1) (1) -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 590 371 (2,156) 3,350 (5,223) (629) -------------------------------------------------------------------------- Increase (decrease) in net assets 560 405 (1,907) 3,719 (4,900) (229) Net assets at beginning of period 405 - 5,832 2,113 4,900 5,129 -------------------------------------------------------------------------- Net assets at end of period $965 405 3,925 5,832 - 4,900 -------------------------------------------------------------------------- See accompanying notes to financial statements 45 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Oppenheimer AZL Oppenheimer International Growth AZL OCC Value Fund Global Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(78) (74) (172) (124) (81) (53) Realized gains (losses) on investments, net 549 474 790 158 357 82 Net change in unrealized appreciation (depreciation) on investments (1,256) 472 (427) 621 48 541 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations (785) 872 191 655 324 570 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 165 420 2,173 1,469 1,591 838 Transfers between funds (note 2) 4,135 (209) (774) 378 816 646 Surrenders and terminations, net (1,796) (399) (945) (83) (517) (77) Rescissions - (13) (46) (29) (7) (79) Bonus 5 14 60 53 37 31 Contract maintenance charges (note 2) (1) (1) (1) (1) (1) - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 2,508 (188) 467 1,787 1,919 1,359 -------------------------------------------------------------------------- Increase (decrease) in net assets 1,723 684 658 2,442 2,243 1,929 Net assets at beginning of period 5,949 5,265 6,398 3,956 3,349 1,420 -------------------------------------------------------------------------- Net assets at end of period $7,672 5,949 7,056 6,398 5,592 3,349 -------------------------------------------------------------------------- See accompanying notes to financial statements 46 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL PIMCO Fundamental AZL Oppenheimer Main IndexPLUS Total Return Street Fund Fund AZL S&P 500 Index Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(102) (79) 8 7 4 - Realized gains (losses) on investments, net 500 130 (4) 6 1 - Net change in unrealized appreciation (depreciation) on investments (310) 436 2 (6) (25) - -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 88 487 6 7 (20) - -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 937 1,206 149 48 615 - Transfers between funds (note 2) (363) 136 (210) 151 108 - Surrenders and terminations, net (993) (137) (15) - (1) - Rescissions - (109) (1) - - - Bonus 18 20 4 1 2 - Contract maintenance charges (note 2) (1) (1) - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (402) 1,115 (73) 200 724 - -------------------------------------------------------------------------- Increase (decrease) in net assets (314) 1,602 (67) 207 704 - Net assets at beginning of period 5,154 3,552 207 - - - -------------------------------------------------------------------------- Net assets at end of period $4,840 5,154 140 207 704 - -------------------------------------------------------------------------- See accompanying notes to financial statements 47 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Schroder Emerging AZL Schroder Emerging AZL Schroder Markets Equity Fund CL Markets Equity Fund CL International Small Cap 1 2 Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $- - (126) (18) (2) - Realized gains (losses) on investments, net 5 - 492 10 (1) - Net change in unrealized appreciation (depreciation) on investments (1) - 484 422 (16) - -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 4 - 850 414 (19) - -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 418 - 2,459 2,110 310 - Transfers between funds (note 2) (327) - 6,997 1,341 49 - Surrenders and terminations, net (69) - (404) (22) - - Rescissions (15) - (86) (15) - - Bonus 12 - 70 52 1 - Contract maintenance charges (note 2) - - - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 19 - 9,036 3,466 360 - -------------------------------------------------------------------------- Increase (decrease) in net assets 23 - 9,886 3,880 341 - Net assets at beginning of period - - 3,880 - - - -------------------------------------------------------------------------- Net assets at end of period $23 - 13,766 3,880 341 - -------------------------------------------------------------------------- See accompanying notes to financial statements 48 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Small Cap Stock AZL TargetPLUS AZL TargetPLUS Equity Index Fund Balanced Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $- - 5 - (9) - Realized gains (losses) on investments, net 11 - - - 9 - Net change in unrealized appreciation (depreciation) on investments (29) - (7) - (30) - -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations (18) - (2) - (30) - -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 570 - 296 - 1,270 - Transfers between funds (note 2) (98) - 73 - 445 - Surrenders and terminations, net 2 - (11) - (129) - Rescissions - - - - - - Bonus 7 - 10 - 57 - Contract maintenance charges (note 2) - - - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 481 - 368 - 1,643 - -------------------------------------------------------------------------- Increase (decrease) in net assets 463 - 366 - 1,613 - Net assets at beginning of period - - - - - - -------------------------------------------------------------------------- Net assets at end of period $463 - 366 - 1,613 - -------------------------------------------------------------------------- See accompanying notes to financial statements 49 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Turner AZL TargetPLUS Growth AZL TargetPLUS Quantitative Small Cap Fund Moderate Fund Growth Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $6 - 2 - (25) (14) Realized gains (losses) on investments, net (3) - (2) - 65 3 Net change in unrealized appreciation (depreciation) on investments (16) - (8) - (1) 67 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations (13) - (8) - 39 56 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 777 - 466 - 302 409 Transfers between funds (note 2) 173 - (56) - (52) 71 Surrenders and terminations, net - - (6) - (162) (19) Rescissions - - (69) - (9) (6) Bonus 12 - - - 10 14 Contract maintenance charges (note 2) - - - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 962 - 335 - 89 469 -------------------------------------------------------------------------- Increase (decrease) in net assets 949 - 327 - 128 525 Net assets at beginning of period - - - - 824 299 -------------------------------------------------------------------------- Net assets at end of period $949 - 327 - 952 824 -------------------------------------------------------------------------- See accompanying notes to financial statements 50 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Van Kampen AZL Van Kampen AZL Van Kampen Equity Aggressive Growth Fund Comstock Fund and Income Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(35) (31) (74) (63) (17) (19) Realized gains (losses) on investments, net 488 239 367 365 103 83 Net change in unrealized appreciation (depreciation) on investments (56) (69) (792) 323 (84) 76 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 397 139 (499) 625 2 140 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 478 1,173 1,111 885 597 452 Transfers between funds (note 2) (1,885) (1,008) 3,979 347 (108) 77 Surrenders and terminations, net (131) (69) (2,148) (237) (415) (33) Rescissions - - - (19) (1) (122) Bonus 11 24 34 29 12 5 Other transactions (note 2) - - (1) (1) - - -------------------------------------------------------------------------- Contract maintenance charges (note 2) from contract transactions (1,527) 120 2,975 1,004 85 379 -------------------------------------------------------------------------- Increase (decrease) in net assets (1,130) 259 2,476 1,629 87 519 Net assets at beginning of period 1,130 871 5,814 4,185 1,689 1,170 -------------------------------------------------------------------------- Net assets at end of period $- 1,130 8,290 5,814 1,776 1,689 -------------------------------------------------------------------------- See accompanying notes to financial statements 51 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Van Kampen Global AZL Van Kampen Global AZL Van Kampen Growth Franchise Fund Real Estate Fund and Income Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(165) (41) (60) 7 (82) (64) Realized gains (losses) on investments, net 436 250 327 10 558 346 Net change in unrealized appreciation (depreciation) on investments 135 553 (384) 176 (664) 297 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 406 762 (117) 193 (188) 579 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 2,716 2,517 2,769 937 1,077 739 Transfers between funds (note 2) (914) (630) (3,954) 2,233 (824) 695 Surrenders and terminations, net (712) (84) (140) (6) (1,339) (140) Rescissions (38) (30) (35) - (40) (34) Bonus 58 73 66 31 36 24 Other transactions (note 2) (1) - - - (1) (1) -------------------------------------------------------------------------- Contract maintenance charges (note 2) from contract transactions 1,109 1,846 (1,294) 3,195 (1,091) 1,283 -------------------------------------------------------------------------- Increase (decrease) in net assets 1,515 2,608 (1,411) 3,388 (1,279) 1,862 Net assets at beginning of period 5,452 2,844 3,388 - 5,701 3,839 -------------------------------------------------------------------------- Net assets at end of period $6,967 5,452 1,977 3,388 4,422 5,701 -------------------------------------------------------------------------- See accompanying notes to financial statements 52 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) AZL Van Kampen Mid Cap AZL Van Kampen Davis VA Financial Growth Fund Strategic Growth Fund Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(166) (82) (28) (33) (33) (24) Realized gains (losses) on investments, net 555 196 393 42 294 43 Net change in unrealized appreciation (depreciation) on investments 503 91 (151) (18) (389) 232 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 892 205 214 (9) (128) 251 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 1,846 1,254 214 191 470 648 Transfers between funds (note 2) 11,352 429 (1,802) 58 75 50 Surrenders and terminations, net (746) (115) (157) (130) (542) (42) Rescissions (53) (75) - - (20) (128) Bonus 40 44 4 10 10 14 Contract maintenance charges (note 2) (1) (1) - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 12,438 1,536 (1,741) 129 (7) 542 -------------------------------------------------------------------------- Increase (decrease) in net assets 13,330 1,741 (1,527) 120 (135) 793 Net assets at beginning of period 4,145 2,404 1,527 1,407 2,030 1,237 -------------------------------------------------------------------------- Net assets at end of period $17,475 4,145 - 1,527 1,895 2,030 -------------------------------------------------------------------------- See accompanying notes to financial statements 53 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Davis VA Real Estate Davis VA Value Dreyfus IP Small Cap Portfolio Portfolio Stock Index Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $- 1 (14) (15) (99) (79) Realized gains (losses) on investments, net 16 4 253 52 660 196 Net change in unrealized appreciation (depreciation) on investments (14) 4 (202) 124 (497) 285 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 2 9 37 161 64 402 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments - - 4 19 1,620 1,486 Transfers between funds (note 2) - - (229) (62) (1,796) (497) Surrenders and terminations, net (39) - (441) (99) (717) (190) Rescissions - - - (1) (34) (39) Bonus - - - - 38 45 Contract maintenance charges (note 2) - - - - (1) - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (39) - (666) (143) (890) 805 -------------------------------------------------------------------------- Increase (decrease) in net assets (37) 9 (629) 18 (826) 1,207 Net assets at beginning of period 37 28 1,348 1,330 4,279 3,072 -------------------------------------------------------------------------- Net assets at end of period $- 37 719 1,348 3,453 4,279 -------------------------------------------------------------------------- See accompanying notes to financial statements 54 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Franklin Global Dreyfus Stock Index Communications Franklin Growth and Fund Securities Fund Income Securities Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(48) (41) (266) (152) 300 379 Realized gains (losses) on investments, net 497 161 (233) (1,283) 2,234 1,790 Net change in unrealized appreciation (depreciation) on investments (203) 601 3,599 4,217 (3,985) 2,841 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 246 721 3,100 2,782 (1,451) 5,010 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 376 657 972 585 714 516 Transfers between funds (note 2) (504) 72 2,502 63 (893) 243 Surrenders and terminations, net (1,555) (362) (2,297) (1,834) (5,183) (4,911) Rescissions (4) (25) (62) (120) (60) (5) Bonus 8 21 37 19 20 21 Contract maintenance charges (note 2) (1) (1) (10) (10) (15) (17) -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (1,680) 362 1,142 (1,297) (5,417) (4,153) -------------------------------------------------------------------------- Increase (decrease) in net assets (1,434) 1,083 4,242 1,485 (6,868) 857 Net assets at beginning of period 6,692 5,609 14,260 12,775 36,601 35,744 -------------------------------------------------------------------------- Net assets at end of period $5,258 6,692 18,502 14,260 29,733 36,601 -------------------------------------------------------------------------- See accompanying notes to financial statements 55 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Franklin High Income Franklin Income Franklin Large Cap Securities Fund Securities Fund Growth Securities Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $542 456 859 830 (98) (95) Realized gains (losses) on investments, net (542) (430) 1,645 1,146 451 3 Net change in unrealized appreciation (depreciation) on investments 8 693 (1,625) 4,466 210 1,075 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 8 719 879 6,442 563 983 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 1,286 959 5,996 4,862 272 615 Transfers between funds (note 2) (1,304) 1,732 308 1,113 (480) (422) Surrenders and terminations, net (1,751) (1,883) (7,750) (6,784) (1,998) (1,913) Rescissions (15) (1) (31) (527) - - Bonus 27 13 138 81 6 11 Contract maintenance charges (note 2) (4) (4) (14) (16) (4) (5) -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (1,761) 816 (1,353) (1,271) (2,204) (1,714) -------------------------------------------------------------------------- Increase (decrease) in net assets (1,753) 1,535 (474) 5,171 (1,641) (731) Net assets at beginning of period 11,308 9,773 45,754 40,583 11,306 12,037 -------------------------------------------------------------------------- Net assets at end of period $9,555 11,308 45,280 45,754 9,665 11,306 -------------------------------------------------------------------------- See accompanying notes to financial statements 56 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Franklin Rising Franklin Money Market Franklin Real Estate Dividends Securities Fund Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $184 174 85 51 277 (164) Realized gains (losses) on investments, net - - 1,594 2,149 2,101 2,139 Net change in unrealized appreciation (depreciation) on investments (1) - (4,935) 582 (3,643) 3,361 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 183 174 (3,256) 2,782 (1,265) 5,336 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 17 17 173 1,000 203 1,575 Transfers between funds (note 2) (95) 1,592 (1,289) (555) (1,113) (881) Surrenders and terminations, net (1,057) (1,297) (2,413) (1,852) (4,239) (5,204) Rescissions - - (26) (27) (2) (56) Bonus - - 4 42 3 34 Contract maintenance charges (note 2) (2) (2) (4) (5) (14) (15) -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (1,137) 310 (3,555) (1,397) (5,162) (4,547) -------------------------------------------------------------------------- Increase (decrease) in net assets (954) 484 (6,811) 1,385 (6,427) 789 Net assets at beginning of period 6,374 5,890 17,030 15,645 37,380 36,591 -------------------------------------------------------------------------- Net assets at end of period $5,420 6,374 10,219 17,030 30,953 37,380 -------------------------------------------------------------------------- See accompanying notes to financial statements 57 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Franklin Small-Mid Franklin Templeton VIP Franklin Small Cap Cap Growth Securities Founding Funds Value Securities Fund Fund Allocation Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(47) (50) (138) (149) (2) - Realized gains (losses) on investments, net 575 416 1,066 357 (9) - Net change in unrealized appreciation (depreciation) on investments (641) 238 (124) 381 (9) - -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations (113) 604 804 589 (20) - -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 33 49 80 169 1,101 - Transfers between funds (note 2) (428) (209) (224) (246) 317 - Surrenders and terminations, net (483) (466) (1,640) (1,704) (3) - Rescissions (20) - - - - - Bonus 1 1 3 4 39 - Contract maintenance charges (note 2) (1) (1) (4) (4) - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (898) (626) (1,785) (1,781) 1,454 - -------------------------------------------------------------------------- Increase (decrease) in net assets (1,011) (22) (981) (1,192) 1,434 - Net assets at beginning of period 4,125 4,147 8,316 9,508 - - -------------------------------------------------------------------------- Net assets at end of period $3,114 4,125 7,335 8,316 1,434 - -------------------------------------------------------------------------- See accompanying notes to financial statements 58 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) J.P. Morgan Franklin U.S. Franklin Zero Coupon International Government Fund 2010 Fund Opportunities Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $771 772 141 116 - - Realized gains (losses) on investments, net (127) (204) (4) (34) - - Net change in unrealized appreciation (depreciation) on investments 543 54 159 (45) - 2 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 1,187 622 296 37 - 2 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 504 666 83 172 - - Transfers between funds (note 2) (19) (1,516) 66 715 - - Surrenders and terminations, net (4,369) (4,612) (440) (945) - - Rescissions (3) - - - - - Bonus 5 21 - 6 - - Contract maintenance charges (note 2) (10) (12) (1) (1) - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (3,892) (5,453) (292) (53) - - -------------------------------------------------------------------------- Increase (decrease) in net assets (2,705) (4,831) 4 (16) - 2 Net assets at beginning of period 25,641 30,472 4,577 4,593 12 10 -------------------------------------------------------------------------- Net assets at end of period $22,936 25,641 4,581 4,577 12 12 -------------------------------------------------------------------------- See accompanying notes to financial statements 59 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) J.P. Morgan U.S. Large Cap Core Equity Jennison 20/20 Focus Mutual Discovery Portfolio Portfolio Securities Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $- - (35) (35) (118) (106) Realized gains (losses) on investments, net - - 234 142 2,187 1,112 Net change in unrealized appreciation (depreciation) on investments - 2 (79) 54 25 1,864 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations - 2 120 161 2,094 2,870 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments - - 8 60 6,187 1,988 Transfers between funds (note 2) - - 1 (26) (2,058) 1,200 Surrenders and terminations, net - - (214) (43) (2,959) (1,136) Rescissions - - - (1) (190) (61) Bonus - - - - 136 60 Contract maintenance charges (note 2) - - - - (4) (4) -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions - - (205) (10) 1,112 2,047 -------------------------------------------------------------------------- Increase (decrease) in net assets - 2 (85) 151 3,206 4,917 Net assets at beginning of period 15 13 1,624 1,473 17,577 12,660 -------------------------------------------------------------------------- Net assets at end of period $15 15 1,539 1,624 20,783 17,577 -------------------------------------------------------------------------- See accompanying notes to financial statements 60 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Mutual Shares OpCap Mid Cap Oppenheimer Global Securities Fund Portfolio Securities Fund/VA -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(128) (105) (10) (1) (18) (30) Realized gains (losses) on investments, net 2,597 1,755 12 2 458 241 Net change in unrealized appreciation (depreciation) on investments (2,189) 1,815 (10) 9 (303) 191 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 280 3,465 (8) 10 137 402 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 5,709 5,361 622 98 7 26 Transfers between funds (note 2) (185) 1,020 77 20 (448) (82) Surrenders and terminations, net (4,259) (2,684) (12) (2) (454) (80) Rescissions (29) (400) - - - - Bonus 138 119 9 4 - 1 Contract maintenance charges (note 2) (6) (7) - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 1,368 3,409 696 120 (895) (135) -------------------------------------------------------------------------- Increase (decrease) in net assets 1,648 6,874 688 130 (758) 267 Net assets at beginning of period 26,308 19,434 130 - 2,918 2,651 -------------------------------------------------------------------------- Net assets at end of period $27,956 26,308 818 130 2,160 2,918 -------------------------------------------------------------------------- See accompanying notes to financial statements 61 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Oppenheimer High Oppenheimer Main PIMCO VIT All Asset Income Fund/VA Street Fund/VA Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $61 120 (31) (30) 117 68 Realized gains (losses) on investments, net (16) 15 276 123 11 - Net change in unrealized appreciation (depreciation) on investments (54) 1 (143) 283 1 (35) -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations (9) 136 102 376 129 33 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments - 10 14 28 305 668 Transfers between funds (note 2) (319) (1,033) (223) (341) (43) (1,477) Surrenders and terminations, net (150) (178) (679) (217) (397) (94) Rescissions - (5) - - (8) - Bonus - 1 - 1 7 10 Contract maintenance charges (note 2) - - - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (469) (1,205) (888) (529) (136) (893) -------------------------------------------------------------------------- Increase (decrease) in net assets (478) (1,069) (786) (153) (7) (860) Net assets at beginning of period 1,141 2,210 3,095 3,248 2,200 3,060 -------------------------------------------------------------------------- Net assets at end of period $663 1,141 2,309 3,095 2,193 2,200 -------------------------------------------------------------------------- See accompanying notes to financial statements 62 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) PIMCO VIT CommodityRealReturn PIMCO VIT Emerging PIMCO VIT Global Bond Strategy Portfolio Markets Bond Portfolio Portfolio (Unhedged) -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $40 31 34 14 7 3 Realized gains (losses) on investments, net 4 (16) 22 13 10 - Net change in unrealized appreciation (depreciation) on investments 275 (118) (23) 14 42 2 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 319 (103) 33 41 59 5 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 580 880 425 289 301 173 Transfers between funds (note 2) (30) (97) 69 285 297 172 Surrenders and terminations, net (224) (48) (115) (8) (83) (1) Rescissions (1) (15) (9) - - - Bonus 23 39 16 11 11 8 Contract maintenance charges (note 2) - - - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 348 759 386 577 526 352 -------------------------------------------------------------------------- Increase (decrease) in net assets 667 656 419 618 585 357 Net assets at beginning of period 1,479 823 816 198 420 63 -------------------------------------------------------------------------- Net assets at end of period $2,146 1,479 1,235 816 1,005 420 -------------------------------------------------------------------------- See accompanying notes to financial statements 63 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) PIMCO VIT StocksPLUS PIMCO VIT High Yield PIMCO VIT Real Return Growth and Income Portfolio Portfolio Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $163 171 161 135 12 9 Realized gains (losses) on investments, net 17 3 (77) 150 40 16 Net change in unrealized appreciation (depreciation) on investments (129) 49 441 (417) (40) 17 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 51 223 525 (132) 12 42 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 328 354 870 1,395 2 1 Transfers between funds (note 2) (255) 16 (596) (432) (112) 17 Surrenders and terminations, net (574) (494) (1,180) (428) (32) (53) Rescissions (1) - (11) (12) - - Bonus 11 14 11 69 - - Contract maintenance charges (note 2) - (1) (1) (1) - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (491) (111) (907) 591 (142) (35) -------------------------------------------------------------------------- Increase (decrease) in net assets (440) 112 (382) 459 (130) 7 Net assets at beginning of period 3,630 3,518 6,778 6,319 323 316 -------------------------------------------------------------------------- Net assets at end of period $3,190 3,630 6,396 6,778 193 323 -------------------------------------------------------------------------- See accompanying notes to financial statements 64 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) PIMCO VIT Total Return Seligman Global Seligman Smaller-Cap Portfolio Technology Portfolio Value Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $247 205 - - (40) (38) Realized gains (losses) on investments, net (32) 3 - - 265 186 Net change in unrealized appreciation (depreciation) on investments 350 (72) 1 1 (165) 174 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 565 136 1 1 60 322 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 955 1,571 - - 3 11 Transfers between funds (note 2) 440 263 - - (214) (54) Surrenders and terminations, net (1,835) (798) (2) - (234) (62) Rescissions (9) (604) - - - - Bonus 30 24 - - - 1 Contract maintenance charges (note 2) (1) (1) - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (420) 455 (2) - (445) (104) -------------------------------------------------------------------------- Increase (decrease) in net assets 145 591 (1) 1 (385) 218 Net assets at beginning of period 8,883 8,292 9 8 1,964 1,746 -------------------------------------------------------------------------- Net assets at end of period $9,028 8,883 8 9 1,579 1,964 -------------------------------------------------------------------------- See accompanying notes to financial statements 65 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) SP Strategic Partners Focused Growth SP International Templeton Asset Portfolio Growth Portfolio Strategy Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(9) (10) (8) (2) 123 48 Realized gains (losses) on investments, net 39 52 130 40 186 65 Net change in unrealized appreciation (depreciation) on investments 15 (62) (55) 26 (240) 36 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 45 (20) 67 64 69 149 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 6 2 8 1 - - Transfers between funds (note 2) (71) (84) 213 9 (1) (28) Surrenders and terminations, net (58) (13) (167) (33) (106) (117) Rescissions - - - - - - Bonus - - - - - - Contract maintenance charges (note 2) - - - - - (1) -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (123) (95) 54 (23) (107) (146) -------------------------------------------------------------------------- Increase (decrease) in net assets (78) (115) 121 41 (38) 3 Net assets at beginning of period 448 563 408 367 819 816 -------------------------------------------------------------------------- Net assets at end of period $370 448 529 408 781 819 -------------------------------------------------------------------------- See accompanying notes to financial statements 66 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Templeton Developing Templeton Foreign Templeton Global Markets Securities Fund Securities Fund Income Securities Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $33 (80) 113 (39) 46 62 Realized gains (losses) on investments, net 1,829 782 2,160 628 136 80 Net change in unrealized appreciation (depreciation) on investments 438 1,336 599 3,078 133 248 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 2,300 2,038 2,872 3,667 315 390 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 165 1,175 445 811 634 - Transfers between funds (note 2) (1,016) 53 (464) 193 424 (16) Surrenders and terminations, net (1,340) (1,265) (2,936) (2,128) (443) (497) Rescissions - (186) (9) (22) - - Bonus 6 49 16 31 17 - Contract maintenance charges (note 2) (2) (3) (9) (10) (2) (2) -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (2,187) (177) (2,957) (1,125) 630 (515) -------------------------------------------------------------------------- Increase (decrease) in net assets 113 1,861 (85) 2,542 945 (125) Net assets at beginning of period 9,775 7,914 21,679 19,137 3,501 3,626 -------------------------------------------------------------------------- Net assets at end of period $9,888 9,775 21,594 21,679 4,446 3,501 -------------------------------------------------------------------------- See accompanying notes to financial statements 67 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Templeton Growth Van Kampen LIT Van Kampen LIT Growth Securities Fund Enterprise Portfolio and Income Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $(106) (66) - - - - Realized gains (losses) on investments, net 1,750 1,220 - - 1 1 Net change in unrealized appreciation (depreciation) on investments (1,622) 2,370 - (12) (1) 1 -------------------------------------------------------------------------- Net increase (decrease) in net assets from operations 22 3,524 - (12) - 2 -------------------------------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments 4,650 3,910 - - - - Transfers between funds (note 2) (1,125) 718 - - - - Surrenders and terminations, net (2,922) (3,046) - - - - Rescissions (11) (325) - - - - Bonus 116 74 - - - - Contract maintenance charges (note 2) (7) (8) - - - - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions 701 1,323 - - - - -------------------------------------------------------------------------- Increase (decrease) in net assets 723 4,847 - (12) - 2 Net assets at beginning of period 21,966 17,119 - 12 15 13 -------------------------------------------------------------------------- Net assets at end of period $22,689 21,966 - - 15 15 -------------------------------------------------------------------------- See accompanying notes to financial statements 68 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements (continued) Statements of Changes in Net Assets (continued) For the Years Ended December 31, 2007 and 2006 (In thousands) Van Kampen LIT Strategic Growth Portfolio Total All Funds ------------------------------------------------- 2007 2006 2007 2006 ------------------------------------------------- Increase (decrease) in net assets: Operations: Investment income (loss), net $- - 356 365 Realized gains (losses) on investments, net 1 - 36,456 17,313 Net change in unrealized appreciation (depreciation) on investments - (3) (20,223) 40,905 ------------------------------------------------- Net increase (decrease) in net assets from operations 1 (3) 16,589 58,583 ------------------------------------------------- Contract Transactions-All Products (note 5) Purchase payments - - 104,634 99,637 Transfers between funds (note 2) - - (83) 6,702 Surrenders and terminations, net (5) - (97,251) (55,693) Rescissions - - (2,155) (5,347) Bonus - - 2,594 3,014 Contract maintenance charges (note 2) - - (138) (147) ------------------------------------------------- Net increase (decrease) in net assets resulting from contract transactions (5) - 7,601 48,166 ------------------------------------------------- Increase (decrease) in net assets (4) (3) 24,190 106,749 Net assets at beginning of period 9 12 547,998 441,249 ------------------------------------------------- Net assets at end of period $5 9 572,188 547,998 -------------------------------------------------
See accompanying notes to financial statements 69 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements December 31, 2007 1. ORGANIZATION Allianz Life of New York Variable Account C (Variable Account) is a segregated investment account of Allianz Life Insurance Company of New York (Allianz Life of New York) and is registered with the Securities and Exchange Commission as a unit investment trust pursuant to the provisions of the Investment Company Act of 1940 (as amended). The Variable Account was established by Allianz Life of New York on February 26, 1988 and commenced operations September 6, 1991. Accordingly, it is an accounting entity wherein all segregated account transactions are reflected. The Variable Account's assets are the property of Allianz Life of New York and are held for the benefit of the owners and other persons entitled to payments under variable annuity contracts issued through the Variable Account and underwritten by Allianz Life of New York. The assets of the Variable Account, equal to the reserves and other liabilities of the Variable Account, are not chargeable with liabilities that arise from any other business which Allianz Life of New York may conduct. The Variable Account's sub-accounts invest, at net asset values, in one or more of select portfolios of AIM Variable Insurance Funds, Inc., The Alger American Fund, Allianz Investment Management, LLC, LLC, Davis Variable Account Fund, Inc., Dreyfus Service Corporation, Franklin Templeton Variable Insurance Products Trust (formerly, Franklin Valuemark Funds), J.P. Morgan Series Trust II, Oppenheimer Variable Account Funds, Pacific Investment Management Company, Prudential Investments Fund Management, LLC, Seligman Portfolios, Inc., LLC, Van Kampen Life Investment Trust and William Blair & Company LLC, in accordance with the selection made by the contract owner. Not all portfolios are available as investment options for the products which comprise the Variable Account. The investment advisers and specialist manager for each portfolio is listed in the following table.
Portfolio Investment Adviser Specialist Manager \ Adviser AIM V.I. Capital Appreciation Fund AIM Advisors, Inc. N\A AIM V.I. Core Equity Fund AIM Advisors, Inc. N\A Alger American Growth Portfolio Fred Alger Management, Inc. N\A Alger American Leveraged AllCap Portfolio Fred Alger Management, Inc. N\A Alger American MidCap Growth Portfolio Fred Alger Management, Inc. N\A Alger American Small Capitalization Portfolio Fred Alger Management, Inc. N\A AZL AIM International Equity Fund *+ Allianz Investment A I M Capital Management, Inc. Management, LLC AZL Columbia Technology Fund *+ Allianz Investment Columbia Management Advisors, Management, LLC LLC AZL Davis NY Venture Fund *+ Allianz Investment Davis Selected Advisers, L.P. Management, LLC AZL Dreyfus Founders Equity Growth Fund *+ Allianz Investment Founders Asset Management, LLC Management, LLC AZL Dreyfus Premier Small Cap Value Fund *+ Allianz Investment The Dreyfus Corporation Management, LLC AZL First Trust Target Double Play Fund Allianz Investment First Trust, Inc. Management, LLC AZL Franklin Small Cap Value Fund *+ Allianz Investment Franklin Advisory Services LLC Management, LLC AZL Fusion Balanced Fund + Allianz Investment Allianz Investment Management, Management, LLC LLC AZL Fusion Growth Fund + Allianz Investment Allianz Investment Management, Management, LLC LLC AZL Fusion Moderate Fund + Allianz Investment Allianz Investment Management, Management, LLC LLC AZL Jennison 20/20 Focus Fund *+ Allianz Investment Jennison Associates LLC Management, LLC AZL Jennison Growth Fund *+ Allianz Investment Jennison Associates LLC Management, LLC AZL Legg Mason Growth Fund *+ Allianz Investment Legg Mason Funds Management, Management, LLC Inc. AZL Legg Mason Value Fund *+ Allianz Investment Legg Mason Funds Management, Management, LLC Inc. AZL LMP Large Cap Growth Fund *+ Allianz Investment Legg Mason Funds Management, Management, LLC Inc. AZL Money Market Fund *+ Allianz Investment Prudential Investment Management, LLC Management, Inc. AZL NACM International Fund Allianz Investment Nicholas Applegate Management, Management, LLC Inc. AZL Neuberger Berman Regency Fund *+ Allianz Investment Neuberger Berman Management Inc. Management, LLC AZL OCC Opportunity Fund *+ Allianz Investment Oppenheimer Capital, LLC Management, LLC AZL OCC Value Fund *+ Allianz Investment Oppenheimer Capital, LLC Management, LLC AZL Oppenheimer Global Fund *+ Allianz Investment OppenheimerFunds, Inc. Management, LLC AZL Oppenheimer International Growth Fund *+ Allianz Investment OppenheimerFunds, Inc. Management, LLC AZL Oppenheimer Main Street Fund *+ Allianz Investment OppenheimerFunds, Inc. Management, LLC AZL PIMCO Fundamental IndexPLUS Total Return Allianz Investment Pacific Investment Management Fund *+ Management, LLC Company 70 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 1. ORGANIZATION (continued) Portfolio Investment Adviser Specialist Manager \ Adviser AZL S&P 500 Index Fund Allianz Investment Management, LLC The Dreyfus Corporation AZL Schroder Emerging Markets Equity Fund Allianz Investment Management, LLC Schroder Management CL 1 AZL Schroder Emerging Markets Equity Fund Allianz Investment Management, LLC Schroder Management CL 2 AZL Schroder International Small Cap Fund Allianz Investment Management, LLC Schroder Management AZL Small Cap Stock Index Fund Allianz Investment Management, LLC The Dreyfus Corporation AZL TargetPLUS Balanced Fund Allianz Investment Management, LLC The Dreyfus Corporation AZL TargetPLUS Equity Fund Allianz Investment Management, LLC The Dreyfus Corporation AZL TargetPLUS Growth Fund Allianz Investment Management, LLC The Dreyfus Corporation AZL TargetPLUS Moderate Fund Allianz Investment Management, LLC The Dreyfus Corporation AZL Turner Quantitative Small Cap Growth Allianz Investment Management, LLC Turner Investment Partners Fund AZL Van Kampen Comstock Fund *+ Allianz Investment Management, LLC Van Kampen Asset Management, Inc. AZL Van Kampen Equity and Income Fund *+ Allianz Investment Management, LLC Van Kampen Asset Management, Inc AZL Van Kampen Global Franchise Fund *+ Allianz Investment Management, LLC Van Kampen Asset Management, Inc AZL Van Kampen Global Real Estate Fund *+ Allianz Investment Management, LLC Van Kampen Asset Management, Inc AZL Van Kampen Growth and Income Fund *+ Allianz Investment Management, LLC Van Kampen Asset Management, Inc. AZL Van Kampen Mid Cap Growth Fund *+ Allianz Investment Management, LLC Van Kampen Investment Advisory Corp. Davis VA Financial Portfolio Davis Selected Advisers, LP N\A Davis VA Real Estate Portfolio Davis Selected Advisers, LP N\A Davis VA Value Portfolio Davis Selected Advisers, LP N\A Dreyfus IP Small Cap Stock Index The Dreyfus Corporation N\A Portfolio * Dreyfus Stock Index Fund * The Dreyfus Corporation N\A Franklin Global Communications Securities Franklin Advisers, Inc. N\A Fund * Franklin Growth and Income Securities Franklin Advisers, Inc. N\A Fund * Franklin High Income Securities Fund * Franklin Advisers, Inc. N\A Franklin Income Securities Fund * Franklin Advisers, Inc. N\A Franklin Large Cap Growth Securities Fund* Franklin Advisers, Inc. N\A Franklin Money Market Fund * Franklin Advisers, Inc. N\A Franklin Real Estate Fund * Franklin Advisers, Inc. N\A Franklin Rising Dividends Securities Fund* Franklin Advisory Services, LLC N\A Franklin Small Cap Value Securities Fund * Franklin Advisory Services, LLC N\A Franklin Small-Mid Cap Growth Securities Franklin Advisers, Inc. N\A Fund * Franklin Templeton VIP Founding Funds Franklin Advisers, Inc. N\A Allocation Fund Franklin U.S. Government Fund * Franklin Advisory Services, LLC N\A Franklin Zero Coupon 2010 Fund Franklin Advisers, Inc. N\A J.P. Morgan International Opportunities J.P. Morgan Investment Management N\A Portfolio Inc. J.P. Morgan U.S. Large Cap Core Equity J.P. Morgan Investment Management N\A Portfolio Inc. Jennison 20/20 Focus Portfolio * Prudential Investments Fund N/A Management, LLC Mutual Discovery Securities Fund * Franklin Mutual Advisers, LLC N\A Mutual Shares Securities Fund * Franklin Mutual Advisers, LLC N\A OpCap Mid Cap Portfolio OpCap Advisors, LLC N\A Oppenheimer Global Securities Fund/VA OppenheimerFunds, Inc. N\A Oppenheimer High Income Fund/VA OppenheimerFunds, Inc. N\A Oppenheimer Main Street Fund/VA OppenheimerFunds, Inc. N\A PIMCO VIT All Asset Portfolio + Pacific Investment Management N\A Company PIMCO VIT CommodityRealReturn Strategy Pacific Investment Management N\A Portfolio + Company PIMCO VIT Emerging Markets Bond Portfolio+ Pacific Investment Management N\A Company 71 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 1. ORGANIZATION (continued) Portfolio Investment Adviser Specialist Manager \ Adviser PIMCO VIT Global Bond Portfolio (Unhedged)+Pacific Investment Management N\A Company PIMCO VIT High Yield Portfolio + Pacific Investment Management N\A Company PIMCO VIT Real Return Portfolio + Pacific Investment Management N\A Company PIMCO VIT StocksPLUS Growth and Income Pacific Investment Management N\A Portfolio + Company PIMCO VIT Total Return Portfolio + Pacific Investment Management N\A Company Seligman Global Technology Portfolio J & W Seligman & Co. Inc. N\A Seligman Smaller-Cap Value Portfolio J & W Seligman & Co. Inc. N\A SP Strategic Partners Focused Growth Prudential Investments Fund N\A Portfolio * Management , LLC SP International Growth Portfolio * William Blair & Company, LLC N\A Templeton Asset Strategy Fund * Templeton Global Advisors Limited N\A Templeton Developing Markets Securities Templeton Asset Management Ltd. N\A Fund * Templeton Foreign Securities Fund * Franklin Advisers, Inc. N\A Templeton Global Income Securities Fund * Franklin Advisers, Inc. N\A Templeton Growth Securities Fund * Templeton Global Advisors Limited N\A Van Kampen LIT Enterprise Portfolio Van Kampen Asset Management, Inc. N\A Van Kampen LIT Growth and Income Portfolio Van Kampen Asset Management, Inc. N\A Van Kampen LIT Strategic Growth Portfolio* Van Kampen Asset Management, Inc. N\A * Portfolio contains class 2 shares which assess 12b-1 fees. + The investment adviser of this fund is an affiliate of Allianz Life of New York and is paid an investment management fee by the fund.
2. SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. Actual results could differ from those estimates. Investments Investments of the Variable Account are valued each day the markets are open at fair value using net asset values provided by the investment advisers of the portfolios after the 4 PM Eastern market close. Realized investment gains include realized gain distributions received from the respective portfolios and gains on the sale of portfolio shares as determined by the average cost method. Realized gain distributions are reinvested in the respective portfolios. Dividend distributions received from the portfolios are reinvested in additional shares of the portfolios and are recorded as income to the Variable Account on the ex-dividend date. A Flexible Fixed Account investment option and a Dollar Cost Averaging Fixed Account investment option are available to deferred annuity contract owners. These accounts are comprised of equity and fixed income investments which are part of the general assets of Allianz Life of New York. The liabilities of the Fixed Account, including the guaranteed minimum rate of return on the Fixed Account of 3%, are part of the general obligations of Allianz Life of New York and are not included in the Variable Account. Certain of the sub-accounts invest in Investment Options that invest in various forms of fixed income securities, including mortgage backed securities. These types of securities may present a variety of potential risks, including credit risk, extension and prepayment risk, and interest rate risk. Recently, certain types of mortgage backed securities, such as structured investment vehicles (SIVs), subprime mortgage backed bonds, and commercial paper backed by mortgage backed securities have experienced losses as a result of defaults on underlying mortgages and a lack of liquidity. These securities have also been subject to price declines resulting from lack of a trading market for the securities. As a result of the lack of liquidity, it is possible that certain securities may become more difficult to value. It is possible that these types of securities may continue to experience price declines as a result of defaults and lack of liquidity. Available investment options, including the date the investment option was available for each product, as of December 31, 2007 are listed in the following table. 72 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007
Allianz Allianz Allianz Allianz Allianz Allianz Portfolio Advantage Charter II NY High Five NY Opportunity Valuemark II Vision AZL AIM International Equity Fund 5/1/2002 5/3/2004 3/19/2007 10/4/2002 N/A 5/1/2007 AZL Columbia Technology Fund 11/5/2001 5/3/2004 3/19/2007 10/4/2002 11/5/2001 5/1/2007 AZL Davis NY Venture Fund 11/15/2001 5/3/2004 3/19/2007 3/8/2004 3/8/2004 5/1/2007 AZL Dreyfus Founders Equity Growth Fund 11/15/2001 5/3/2004 3/19/2007 3/8/2004 3/8/2004 5/1/2007 AZL Dreyfus Premier Small Cap Value Fund 5/3/2004 5/3/2004 3/19/2007 5/3/2004 N/A 5/1/2007 AZL First Trust Target Double Play Fund 12/28/2006 12/28/2006 3/19/2007 12/28/2006 12/28/2006 12/28/2006 AZL Franklin Small Cap Value Fund 5/1/2003 5/3/2004 3/19/2007 5/1/2003 N/A 5/1/2007 AZL Fusion Balanced Fund 5/2/2005 5/2/2005 3/19/2007 5/2/2005 N/A 5/1/2007 AZL Fusion Growth Fund 5/2/2005 5/2/2005 3/19/2007 5/2/2005 N/A 5/1/2007 AZL Fusion Moderate Fund 5/2/2005 5/2/2005 3/19/2007 5/2/2005 N/A 5/1/2007 AZL Jennison 20/20 Focus Fund 5/2/2005 5/2/2005 3/19/2007 5/2/2005 N/A 5/1/2007 AZL Jennison Growth Fund 5/2/2005 5/2/2005 3/19/2007 5/2/2005 N/A 5/1/2007 AZL Legg Mason Growth Fund 5/1/2002 5/3/2004 3/19/2007 10/4/2002 N/A 5/1/2007 AZL Legg Mason Value Fund 11/5/2001 5/3/2004 3/19/2007 10/4/2002 11/5/2001 5/1/2007 AZL LMP Large Cap Growth Fund 5/1/2002 5/3/2004 3/19/2007 10/4/2002 N/A 5/1/2007 AZL Money Market Fund 1/22/2001 5/3/2004 3/19/2007 10/4/2002 11/5/2001 5/1/2007 AZL NACM International Fund 5/1/2007 5/1/2007 3/19/2007 5/1/2007 5/1/2007 5/1/2007 AZL Neuberger Berman Regency Fund 5/1/2006 5/1/2006 3/19/2007 5/1/2006 5/1/2006 5/1/2007 AZL OCC Opportunity Fund 5/1/2002 5/3/2004 3/19/2007 10/4/2002 N/A 5/1/2007 AZL OCC Value Fund 11/5/2001 5/3/2004 3/19/2007 10/4/2002 11/5/2001 5/1/2007 AZL Oppenheimer Global Fund 5/3/2004 5/3/2004 3/19/2007 5/3/2004 N/A 5/1/2007 AZL Oppenheimer International Growth Fund3/8/2004 5/3/2004 3/19/2007 3/8/2004 3/8/2004 5/1/2007 AZL Oppenheimer Main Street Fund 5/3/2004 5/3/2004 3/19/2007 5/3/2004 N/A 5/1/2007 AZL PIMCO Fundamental IndexPLUS Total Return Fund 5/1/2006 5/1/2006 3/19/2007 5/1/2006 5/1/2006 5/1/2007 AZL S&P 500 Index Fund 5/1/2007 5/1/2007 3/19/2007 5/1/2007 5/1/2007 5/1/2007 AZL Schroder Emerging Markets Equity Fund5/1/2006 5/1/2006 3/19/2007 5/1/2006 5/1/2006 5/1/2007 AZL Schroder International Small Cap Fund5/1/2007 5/1/2007 3/19/2007 5/1/2007 5/1/2007 5/1/2007 AZL Small Cap Stock Index Fund 5/1/2007 5/1/2007 3/19/2007 5/1/2007 5/1/2007 5/1/2007 AZL TargetPLUS Balanced Fund 5/1/2007 5/1/2007 3/19/2007 5/1/2007 5/1/2007 5/1/2007 AZL TargetPLUS Equity Fund 5/1/2007 5/1/2007 3/19/2007 5/1/2007 5/1/2007 5/1/2007 AZL TargetPLUS Growth Fund 5/1/2007 5/1/2007 3/19/2007 5/1/2007 5/1/2007 5/1/2007 AZL TargetPLUS Moderate Fund 5/1/2007 5/1/2007 3/19/2007 5/1/2007 5/1/2007 5/1/2007 AZL Turner Quantitative Small Cap Growth Fund 5/2/2005 5/2/2005 3/19/2007 5/2/2005 N/A 5/1/2007 AZL Van Kampen Comstock Fund 5/1/2001 5/3/2004 3/19/2007 10/4/2002 5/1/2001 5/1/2007 AZL Van Kampen Equity and Income Fund 5/3/2004 5/3/2004 3/19/2007 5/3/2004 N/A 5/1/2007 AZL Van Kampen Global Franchise Fund 5/1/2003 5/3/2004 3/19/2007 5/3/2004 N/A 5/1/2007 AZL Van Kampen Global Real Estate Fund 5/1/2006 5/1/2006 3/19/2007 5/1/2006 5/1/2006 5/1/2007 AZL Van Kampen Growth and Income Fund 5/1/2001 5/3/2004 3/19/2007 10/4/2002 5/1/2001 5/1/2007 AZL Van Kampen Mid Cap Growth Fund 5/1/2001 5/3/2004 3/19/2007 10/4/2002 5/1/2001 5/1/2007 Davis VA Financial Portfolio 11/5/2001 5/3/2004 3/19/2007 10/4/2002 N/A 5/1/2007 Franklin Global Communications Securities Fund 1/22/2001 5/3/2004 3/19/2007 10/4/2002 9/6/1991 5/1/2007 73 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 Allianz Allianz Allianz Allianz Allianz Allianz Portfolio Advantage Charter II NY High Five NY Opportunity Valuemark II Vision Franklin High Income Fund 1/22/2001 5/3/2004 3/19/2007 10/4/2002 9/6/1991 5/1/2007 Franklin Templeton VIP Founding Funds Allocation Fund 9/25/2007 9/25/2007 3/19/2007 9/25/2007 9/25/2007 9/25/2007 Franklin U.S. Government Fund 1/22/2001 5/3/2004 3/19/2007 10/4/2002 9/6/1991 5/1/2007 Franklin Zero Coupon 2010 Fund 11/5/2001 5/3/2004 3/19/2007 10/4/2002 9/6/1991 5/1/2007 Mutual Discovery Securities Fund 1/22/2001 5/3/2004 3/19/2007 10/4/2002 11/8/1996 5/1/2007 Mutual Shares Securities Fund 1/22/2001 5/3/2004 3/19/2007 10/4/2002 11/8/1996 5/1/2007 OpCap Mid Cap Portfolio 5/1/2006 5/1/2006 3/19/2007 5/1/2006 5/1/2006 5/1/2007 PIMCO VIT All Asset Portfolio 5/3/2004 5/3/2004 3/19/2007 5/3/2004 N/A 5/1/2007 PIMCO VIT CommodityRealReturn Strategy Portfolio 5/2/2005 5/2/2005 3/19/2007 5/2/2005 N/A 5/1/2007 PIMCO VIT Emerging Markets Bond Portfolio 5/2/2005 5/2/2005 3/19/2007 5/2/2005 N/A 5/1/2007 PIMCO VIT Global Bond Portfolio (Unhedged) 5/2/2005 5/2/2005 3/19/2007 5/2/2005 N/A 5/1/2007 PIMCO VIT High Yield Portfolio 1/22/2001 5/3/2004 3/19/2007 10/4/2002 11/5/2001 5/1/2007 PIMCO VIT Real Return Portfolio 5/1/2003 5/3/2004 3/19/2007 5/1/2003 N/A 5/1/2007 PIMCO VIT Total Return Portfolio 1/22/2001 5/3/2004 3/19/2007 10/4/2002 11/5/2001 5/1/2007 Templeton Global Income Securities Fund 11/5/2001 5/3/2004 3/19/2007 10/4/2002 1/24/1992 5/1/2007 Templeton Growth Securities Fund 11/5/2001 5/3/2004 3/19/2007 10/4/2002 7/31/1994 5/1/2007
74 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments (continued) For the Years Ended December 31, 2007 and 2006, several portfolios were closed to new money. The portfolio names and effective date of the closures are summarized in the following table. Portfolio Date Closed Franklin Real Estate Fund May 1, 2006 Franklin Rising Dividends Securities Fund May 1, 2006 Franklin Small-Mid Cap Growth Securities Fund May 1, 2006 Templeton Developing Markets Securities Fund May 1, 2006 For the Years Ended December 31, 2007 and 2006, several portfolios merged. The portfolio names and effective date of the mergers are summarized in the following table.
Closed Portfolio Receiving Portfolio Date Merged AIM V.I. Premier Equity Fund AIM V.I. Core Equity Fund May 1, 2006 AIM V.I. Growth Fund AIM V.I. Capital Appreciation Fund May 1, 2006 AZL Aim Basic Value Fund AZL Van Kampen Comstock Fund September 21, 2007 AZL Van Kampen Strategic Equity Growth Fund AZL Dreyfus Founders Equity Growth Fund September 21, 2007 AZL OCC Renaissance Fund AZL OCC Value Fund September 21, 2007 AZL Van Kampen Aggressive Growth Fund AZL Van Kampen Mid Cap Growth Fund September 21, 2007 For the Years Ended December 31, 2007 and 2006, several portfolios changed their name as summarized, with the effective date of the change, in the following table. Current Portfolio Prior Portfolio Name Effective Date AZL AIM Basic Value Fund USAZ AIM Basic Value Fund May 1, 2006 AZL AIM International Equity Fund USAZ AIM International Equity Fund May 1, 2006 AZL Davis NY Venture Fund USAZ Davis NY Venture Fund May 1, 2006 AZL Dreyfus Founders Equity Growth Fund USAZ Dreyfus Founders Equity Growth Fund May 1, 2006 AZL Dreyfus Premier Small Cap Value Fund USAZ Dreyfus Premier Small Cap Value Fund May 1, 2006 AZL Franklin Small Cap Value Fund USAZ Franklin Small Cap Value Fund May 1, 2006 AZL Fusion Balance Fund USAZ Fusion Balance Fund May 1, 2006 AZL Fusion Growth Fund USAZ Fusion Growth Fund May 1, 2006 AZL Fusion Moderate Fund USAZ Fusion Moderate Fund May 1, 2006 AZL Jennison 20/20 Focus Fund USAZ Jennison 20/20 Focus Fund May 1, 2006 AZL Jennison Growth Fund USAZ Jennison Growth Fund May 1, 2006 AZL Legg Mason Growth Fund USAZ Legg Mason Growth Fund May 1, 2006 AZL Legg Mason Value Fund USAZ Legg Mason Value Fund May 1, 2006 AZL Money Market Fund USAZ Money Market Fund May 1, 2006 AZL OCC Renaissance Fund USAZ OCC Renaissance Fund May 1, 2006 AZL OCC Value Fund USAZ OCC Value Fund May 1, 2006 AZL Oppenheimer Emerging Growth Fund USAZ Oppenheimer Emerging Growth Fund May 1, 2006 AZL Oppenheimer Emerging Technologies Fund USAZ Oppenheimer Emerging Technologies Fund May 1, 2006 AZL Oppenheimer Global Fund USAZ Oppenheimer Global Fund May 1, 2006 75 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments (continued) AZL Oppenheimer International Growth Fund USAZ Oppenheimer International Growth Fund May 1, 2006 AZL Oppenheimer Main Street Fund USAZ Oppenheimer Main Street Fund May 1, 2006 AZL Salomon Brothers Large Cap Growth Fund USAZ Salomon Brothers Large Cap Growth Fund May 1, 2006 AZL Salomon Brothers Small Cap Growth Fund USAZ Salomon Brothers Small Cap Growth Fund May 1, 2006 AZL Van Kampen Aggressive Growth Fund USAZ Van Kampen Aggressive Growth Fund May 1, 2006 AZL Van Kampen Comstock Fund USAZ Van Kampen Comstock Fund May 1, 2006 AZL Van Kampen Emerging Growth Fund USAZ Van Kampen Emerging Growth Fund May 1, 2006 AZL Van Kampen Equity and Income Fund USAZ Van Kampen Equity and Income Fund May 1, 2006 AZL Van Kampen Global Franchise Fund USAZ Van Kampen Global Franchise Fund May 1, 2006 AZL Van Kampen Growth and Income Fund USAZ Van Kampen Growth and Income Fund May 1, 2006 AZL Van Kampen Mid Cap Growth Fund USAZ Van Kampen Mid Cap Growth Fund May 1, 2006 AZL Columbia Technology Fund AZL Oppenheimer Emerging Technologies Fund July 7, 2006 AZL OCC Opportunity Fund AZL Oppenheimer Emerging Growth Fund August 28, 2006 AZL LMP Large Cap Growth Fund AZL Salomon Brothers Large Cap Growth Fund September 26, 2006 AZL LMP Small Cap Growth Fund AZL Salomon Brothers Small Cap Growth Fund September 26, 2006 AZL Van Kampen Strategic Growth Fund AZL Van Kampen Emerging Growth Fund November 5, 2006 AZL Turner Quantitative Small Cap Growth Fund AZL LMP Small Cap Growth Fund June 26, 2007 AZL Schroder Emerging Markets Equity Fund CL 2 AZL Oppenheimer Developing Markets Fund December 7, 2007
Contracts in Annuity Payment Period Annuity reserves are computed for currently payable contracts according to the 1983 and 2000 Individual Annuity Mortality Tables, using an assumed investment return (AIR) equal to the AIR of the specific contracts, either 3%, 4.5% or 5%. Charges to annuity reserves for mortality and risk expense are reimbursed to Allianz Life of New York if the reserves required are less than originally estimated. If additional reserves are required, Allianz Life of New York reimburses the account. Premium Bonus A premium bonus is awarded to the contract owner of the Allianz Opportunity product at the time of deposit. The bonus credited is 6% of the purchase payment. 76 Expenses Asset Based Expenses A mortality and expense risk charge and an administrative charge are deducted from the Variable Account based on invested assets. The charges, on an annual basis, are summarized in the following table.
Contract Mortality and Expense Administrative Risk Charge Charge Allianz Advantage - Option 1 1.34% 0.15% Allianz Advantage - Option 2 1.50% 0.15% Allianz Advantage - Option 3 1.70% 0.15% Allianz Advantage - Option 4 1.70% 0.15% Allianz Advantage - Option 5 1.85% 0.15% Allianz Advantage - Option 6 2.20% 0.15% Allianz Advantage - Option 7 2.35% 0.15% Allianz Charter II - NY - Option 1 1.75% 0.00% Allianz Charter II - NY - Option 2 1.95% 0.00% Allianz Charter II - NY - Option 3 1.95% 0.00% Allianz Charter II - NY - Option 4 2.10% 0.00% Allianz Charter II - NY - Option 5 2.45% 0.00% Allianz Charter II - NY - Option 6 2.60% 0.00% Allianz Opportunity - Option 1 1.90% 0.00% Allianz Opportunity - Option 2 2.10% 0.00% Allianz Opportunity - Option 3 2.10% 0.00% Allianz Opportunity - Option 4 2.25% 0.00% Allianz Opportunity - Option 5 2.60% 0.00% Allianz Opportunity - Option 6 2.75% 0.00% Allianz Valuemark II 1.25% 0.15% Allianz Valuemark IV 1.34% 0.15% Allianz Vision Bonus - Option 1 1.90% 0.15% Allianz Vision Bonus - Option 2 2.20% 0.15% Allianz Vision Bonus - Option 3 2.60% 0.15% Allianz Vision Bonus - Option 4 2.90% 0.15% Allianz Vision Bonus - Option 5 2.75% 0.15% Allianz Vision B - Option 6 3.05% 0.15% Allianz Vision B - Option 1 1.40% 0.15% Allianz Vision B - Option 2 1.70% 0.15% Allianz Vision B - Option 3 2.10% 0.15% Allianz Vision B - Option 4 2.40% 0.15% Allianz Vision B - Option 5 2.25% 0.15% Allianz Vision B - Option 6 2.55% 0.15% Allianz Vision L - Option 1 1.65% 0.15% Allianz Vision L- Option 2 1.95% 0.15% Allianz Vision L- Option 3 2.35% 0.15% Allianz Vision L- Option 4 2.65% 0.15% Allianz Vision L- Option 5 2.50% 0.15% Allianz Vision L- Option 6 2.80% 0.15%
77 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 The M&E charge and administrative charge for Allianz Advantage can be summarized as follows: The Advantage Original Contract was available from January 2001 to February 19, 2004 (Original Contract). For Original Contracts without an Enhanced Death Benefit (EDB) endorsement the death benefit is equal to the contract value. For Original Contracts with an EDB endorsement if the owner was age 80 or older at issue the death benefit is the greater of contract value, or total purchase payments less withdrawals. For Original Contracts with an EDB endorsement if the owner was age 79 or younger at issue the death benefit is the contract value or the greater of: a) total purchase payments less withdrawals, or b) the highest contract anniversary value. The currently offered Contract replaced the Original Contract beginning in February 20004. The currently offered Contract automatically provides a Traditional Guaranteed Minimum Death Benefit (Traditional GMDB) where the death benefit is based on the greater of contract value or total purchase payments adjusted for partial withdrawals. For an additional charge, the owner can instead elect either the optional Enhanced Guaranteed Minimum Death Benefit (Enhanced GMDB) where the death benefit is the greater of the current contract value or the highest contract anniversary value. Currently offered contracts also offer a choice of either the Traditional Guaranteed Benefit Package (Traditional GBP) or the Enhanced Guaranteed Benefit Package (Enhanced GBP) for an additional charge. The GBPs include a Guaranteed Minimum Income Benefit (GMIB) and a Guaranteed Partial Withdrawal Benefit (GPWB). The GBPs provide guarantees on future income that can be accessed through partial withdrawals under the GPWB or through annuity payments under the GMIB. Under the Traditional GBP income is based on total purchase payments adjusted for partial withdrawals. Under the Enhanced GBP income is based on the greater of: a) the highest contract anniversary value, or b) total purchase payments adjusted for partial withdrawals increased annually by 7%. For Advantage Contracts issued from February 19, 2004 to April 28, 2007 income under the Enhanced GBP is based on the greater of: a) the highest contract anniversary value, or b) total purchase payments adjusted for partial withdrawals increased annually by either 3% or 5%.
Charges Currently Currently offered offered Contract Currently offered (includes a 0.15% Original Contract with the Contract with the administrative charge) Contract without a GBP Traditional GBP Enhanced GBP ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 1.49% - - - Traditional GMDB - 1.65% 1.85% 2.35% Enhanced GMDB - 1.85% 2.00% 2.50% 78 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Expenses (continued) The M&E charge for Allianz Charter II can be summarized as follows: The Charter II contract automatically provides a Traditional Guaranteed Minimum Death Benefit (Traditional GMDB) where the death benefit is based on the greater of contract value or total purchase payments adjusted for partial withdrawals. For an additional charge, the owner can instead elect either the optional Enhanced Guaranteed Minimum Death Benefit (Enhanced GMDB) where the death benefit is the greater of the current contract value or the highest contract anniversary value. Charter II contracts also offer a choice of either the Traditional Guaranteed Benefit Package (Traditional GBP) or the Enhanced Guaranteed Benefit Package (Enhanced GBP) for an additional charge. The GBPs include a Guaranteed Minimum Income Benefit (GMIB) and a Guaranteed Partial Withdrawal Benefit (GPWB). The GBPs provide guarantees on future income that can be accessed through partial withdrawals under the GPWB or through annuity payments under the GMIB. Under the Traditional GBP income is based on total purchase payments adjusted for partial withdrawals. Under the Enhanced GBP income is based on the greater of: a) the highest contract anniversary value, or b) total purchase payments adjusted for partial withdrawals increased annually by 7%. For Charter II contracts issued from February 19, 2004 to April 28, 2007 income under the Enhanced GBP is based on the greater of: a) the highest contract anniversary value, or b) total purchase payments adjusted for partial withdrawals increased annually by either 3% or 5%. Charges Contracts with Contracts the Traditional Contracts with the without a GBP GBP Enhanced GBP ----------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------- Traditional GMDB 1.75% 1.95% 2.45% Enhanced GMDB 1.95% 2.10% 2.60% The M&E charge for Allianz High 5 New York can be summarized as follows: The Allianz High 5 New York Contract automatically provides a Traditional Guaranteed Minimum Death Benefit (Traditional GMDB) where the death benefit is based on the greater of contract value or total purchase payments adjusted for partial withdrawals. For an additional charge, the owner can instead elect the optional Enhanced Guaranteed Minimum Death Benefit (Enhanced GMDB) where the death benefit is the greater of: a) current contract value, b) total purchase payments adjusted for partial withdrawals, or c) the highest contract anniversary value. Allianz High 5 New York also automatically provides Living Guarantees unless the owner elects otherwise at Contract issue. The Living Guarantees include the Guaranteed Account Value Benefit (GAV Benefit), and the Guaranteed Withdrawal Benefit (GWB). There are no additional fees or charges associated with the Living Guarantees. However, we monitor the Contract Value daily and systematically transfer amounts between the selected Investment Options and the Fixed Period Accounts (FPAs) to support the Living Guarantees. The GAV Benefit guarantees that beginning on your fifth Contract Anniversary, and on each subsequent Contract Anniversary until the Contract terminates or you begin receiving Annuity Payments, your Contract Value will be at least equal to an amount we call the Guaranteed Account Value (GAV) from five years ago, reduced by subsequent withdrawals. The GAV is initially equal to the Purchase Payments received within 90 days of Contract issue. The GAV is recalculated on each Contract Anniversary to equal the greater of: a) the previous GAV adjusted for subsequent Purchase Payments and partial withdrawals, or b) the current Contract Value. The GAV Benefit does not provide any protection until the fifth and subsequent Contract Anniversaries, and does not lock in any investment gains until at least five years after they occur. The GWB guarantees a minimum level of income through partial withdrawals. Traditional GMDB 1.25% Enhanced GMDB 1.45% 79 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Expenses (continued) The M&E charge for Allianz Opportunity can be summarized as follows: The Opportunity contract automatically provides a Traditional Guaranteed Minimum Death Benefit (Traditional GMDB) where the death benefit is based on the greater of contract value or total purchase payments adjusted for partial withdrawals. For an additional charge, the owner can instead elect either the optional Enhanced Guaranteed Minimum Death Benefit (Enhanced GMDB) where the death benefit is the greater of the current contract value or the highest contract anniversary value. Currently offered contracts also offer a choice of either the Traditional Guaranteed Benefit Package (Traditional GBP) or the Enhanced Guaranteed Benefit Package (Enhanced GBP) for an additional charge. The GBPs include a Guaranteed Minimum Income Benefit (GMIB) and a Guaranteed Partial Withdrawal Benefit (GPWB). The GBPs provide guarantees on future income that can be accessed through partial withdrawals under the GPWB or through annuity payments under the GMIB. Under the Traditional GBP income is based on total purchase payments adjusted for partial withdrawals. Under the Enhanced GBP income is based on the greater of: a) the highest contract anniversary value, or b) total purchase payments adjusted for partial withdrawals increased annually by 7%. For Opportunity contracts issued from February 19, 2004 to April 28, 2007 income under the Enhanced GBP is based on the greater of: a) the highest contract anniversary value, or b) total purchase payments adjusted for partial withdrawals increased annually by either 3% or 5%. Charges Contracts with Contracts the Traditional Contracts with the without a GBP GBP Enhanced GBP ----------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------- Traditional GMDB 1.90% 2.10% 2.60% Enhanced GMDB 2.10% 2.25% 2.75%
80 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Expenses (continued) The M&E charge and administrative charge for Valuemark II can be summarized as follows: The Valuemark II contract was available from September 1991 to August 1998. Valuemark II contracts provided a death benefit of the greater of: a) total purchase payments less withdrawals, or b) the highest contract value from any fifth contract anniversary. (includes a 0.15% administrative charge) Charges 1.40% The M&E charge and administrative charge for Valuemark IV can be summarized as follows: The Valuemark IV contract was available from August 1998 to January 2001. For Valuemark IV contracts without an Enhanced Death Benefit (EDB) endorsement the death benefit is equal to the contract value. For Valuemark IV contracts with an EDB endorsement if the owner was age 80 or older at issue the death benefit is the greater of contract value, or total purchase payments less withdrawals. For Valuemark IV contracts with an EDB endorsement if the owner was age 79 or younger at issue the death benefit is the contract value or the greater of: a) total purchase payments less withdrawals, or b) the highest contract anniversary value. (includes a 0.15% administrative charge) Charges 1.49% 81 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 The M&E charge for Allianz Vision New York can be summarized as follows: The Allianz Vision New York Base Contract provides a Traditional Death Benefit or the owner can instead select the Quarterly Value Death Benefit., which locks in the highest Contract Value from any Quarterly Anniversary. The Contract also allows the owner to select at issue either a Bonus Option (which provides an immediately vested 6% bonus, but extends the withdrawal charge period from seven years to nine years) or a Short Withdrawal Charge Option (which shortens the withdrawal charge period from seven years to four years). The Contract also offers the Lifetime Plus Benefit, which is designed for those who want lifetime income and continued access to Contract Value. Traditional Quarterly Death Value Death Benefit t Benefit ------------------------------------------------ -------------- -------------- ------------------------------------------------ -------------- -------------- Base Contract 1.40% 1.70% (xxx) (xxx) Contract with the Bonus Option 1.90% 2.20% (xxx) (xxx) Contract with the Short Withdrawal Charge 1.65% 1.95% Option (xxx) (xxx) Contract with the Lifetime Plus Benefit 2.10% 2.40% (single Lifetime Plus Payments) (xxx) (xxx) Contract with the Lifetime Plus Benefit (joint 2.25% 2.55% Lifetime Plus Payments) (xxx) (xxx) Contract with the with the Bonus Option and 2.60% 2.90% Lifetime Plus Benefit (single Lifetime Plus (xxx) (xxx) Payments) Contract with the with the Bonus Option and 2.75% 3.05% Lifetime Plus Benefit (joint Lifetime Plus (xxx) (xxx) Payments) Contract with the Short Withdrawal Charge 2.35% 2.65% Option and Lifetime Plus Benefit (single (xxx) (xxx) Lifetime Plus Payments) Contract with the Short Withdrawal Charge 2.50% 2.80% Option and Lifetime Plus Benefit (joint (xxx) (xxx) Lifetime Plus Payments) 82 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Contract Based Expenses A contract maintenance charge is paid by the contract owner annually from each contract by liquidating contract units at the end of the contract year and at the time of full surrender. The amount of the charge is $30 each year. Contract maintenance charges deducted during the years ended December 31, 2007 and 2006 were $138,000 and $147,000, respectively. These contract charges are reflected in the Statements of Changes in Net Assets as contract maintenance charges. A contingent deferred sales charge is deducted from the contract value at the time of surrender. This charge applies only to a surrender of purchase payments received within five years of the date of surrender for Valuemark II contracts, within seven years of the date of surrender for Allianz Advantage, Valuemark IV contracts, within nine years of the date of surrender for Allianz Opportunity contracts and within two years of the date of surrender for Charter II - NY. The amount of the contingent deferred sales charge is shown below.
Years Since Contingent Deferred Sales Charge Payment Advantage Charter II - Allianz High Opportunity Valuemark Vision NY Five NY II ---------------------- ------------- -------------- --------------- ------------ ------------ ------------------ ---------------------- ------------- -------------- --------------- ------------ ------------ ------------------ 0-1 6% 8% 8% 8.50% 5% 8.50% 1-2 6% 7% 7.50% 8.50% 5% 7.50% 2-3 6% 0% 7% 8.50% 4% 5.50% 3-4 5% 0% 6% 8% 3% 3.00% 4-5 4% 0% 5% 7% 1.50% 0% 5-6 3% 0% 4% 6% 0% 0% 6-7 2% 0% 3% 5% 0% 0% 7-8 0% 0% 0% 4% 0% 0% 8-9 0% 0% 0% 3% 0% 0% 9 years or more 0% 0% 0% 0% 0% 0%
Total contingent deferred sales charges paid by the contract owners during the years ended December 31, 2007 and 2006 were $833,786 and $752,896, respectively. On Valuemark II deferred annuity contracts, a systematic withdrawal plan is available which allows an owner to withdraw up to nine percent (9%) of purchase payments less prior surrenders annually, paid monthly or quarterly, without incurring a contingent deferred sales charge. The systematic withdrawal plan available to Allianz Advantage and Valuemark IV deferred annuity contract owners allows up to fifteen percent (15%) of the contract value withdrawn annually, paid monthly or quarterly, without incurring a contingent deferred sales charge. The systematic withdrawal plan available to Allianz Opportunity deferred annuity contract owners allows up to ten percent (10%) of the contract value withdrawn annually, paid monthly or quarterly, without incurring a contingent deferred sales charge. The exercise of the systematic withdrawal plan in any contract year replaces the 15% penalty free privilege for that year for Valuemark II, Allianz Advantage and Valuemark IV deferred annuity contracts, and the 10% penalty free privilege for that year for Allianz Opportunity deferred annuity contracts. Currently, twelve transfers are permitted each contract year. Thereafter, the fee is $25 per transfer, or 2% of the amount transferred for Valuermark II and Advantage, if less. Currently, transfers associated with the dollar cost averaging program are not counted. Total transfer charges during the years ended December 31, 2007 and 2006 were $125 and $25, respectively. Net transfers from the Fixed Accounts were $(83,000) and $6,702,000, years ended December 31, 2007 and 2006, respectively. 83 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Contract Based Expenses (continued) Premium taxes or other taxes payable to a state or other governmental entity will be charged against the contract values. Allianz Life of New York may, at its sole discretion, pay taxes when due and deduct that amount from the contract value at a later date. Payment at an earlier date does not waive any right Allianz Life of New York may have to deduct such amounts at a later date. A rescission is defined as a contract that is returned to Allianz Life of New York and canceled within the free-look period, generally within 10 days. 3. FEDERAL INCOME TAXES Operations of the Variable Account form a part of, and are taxed with, operations of Allianz Life of New York. Allianz Life of New York does not expect to incur any federal income taxes in the operation of the Variable Account. If, in the future, Allianz Life of New York determines that the Variable Account may incur federal income taxes, it may then assess a charge against the Variable Account for such taxes. 84 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 4. PURCHASES AND SALES OF INVESTMENTS (IN THOUSANDS) The cost of purchases and proceeds from sales of investments for the year ended December 31, 2007 are as follows:
Cost of Proceeds Purchases from Sales --------------------------- AIM V.I. Capital Appreciation Fund 1 90 AIM V.I. Core Equity Fund 1 50 Alger American Growth Portfolio 1 163 Alger American Leveraged AllCap Portfolio - 75 Alger American MidCap Growth Portfolio 13 34 Alger American Small Capitalization Portfolio - - AZL AIM Basic Value Fund 997 5,341 AZL AIM International Equity Fund 2,656 4,707 AZL Columbia Technology Fund 7,081 6,374 AZL Davis NY Venture Fund 5,695 8,083 AZL Dreyfus Founders Equity Growth Fund 3,555 1,140 AZL Dreyfus Premier Small Cap Value Fund 1,133 1,071 AZL First Trust Target Double Play Fund 417 5 AZL Franklin Small Cap Value Fund 2,251 2,788 AZL Fusion Balanced Fund 6,852 2,288 AZL Fusion Growth Fund 11,291 4,314 AZL Fusion Moderate Fund 9,951 4,089 AZL Jennison 20/20 Focus Fund 1,957 1,100 AZL Jennison Growth Fund 1,165 455 AZL Legg Mason Growth Fund 5,059 1,421 AZL Legg Mason Value Fund 920 1,563 AZL LMP Large Cap Growth Fund 557 1,001 AZL Money Market Fund 43,109 39,829 AZL NACM International Fund 103 12 AZL Neuberger Berman Regency Fund 1,054 483 AZL OCC Opportunity Fund 2,302 4,039 AZL OCC Renaissance Fund 1,922 5,870 AZL OCC Value Fund 5,858 3,034 AZL Oppenheimer Global Fund 5,686 5,154 AZL Oppenheimer International Growth Fund 3,560 1,641 AZL Oppenheimer Main Street Fund 1,417 1,656 AZL PIMCO Fundamental IndexPLUS Total Return Fund 164 229 AZL S&P 500 Index Fund 759 30 AZL Schroder Emerging Markets Equity Fund CL 1 71 52 AZL Schroder Emerging Markets Equity Fund CL 2 13,391 4,481 AZL Schroder International Small Cap Fund 403 46 AZL Small Cap Stock Index Fund 635 150 AZL TargetPLUS Balanced Fund 413 40 AZL TargetPLUS Equity Fund 1,801 164 AZL TargetPLUS Growth Fund 1,044 75 AZL TargetPLUS Moderate Fund 424 87 AZL Turner Quantitative Small Cap Growth Fund 776 686 AZL Van Kampen Aggressive Growth Fund 5,590 6,201 AZL Van Kampen Comstock Fund 6,525 3,471 85 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 4. PURCHASES AND SALES OF INVESTMENTS (IN THOUSANDS) (CONTINUED) The cost of purchases and proceeds from sales of investments for the year ended December 31, 2007 are as follows: Cost of Proceeds Purchases from Sales --------------------------- AZL Van Kampen Equity and Income Fund 1,120 1,010 AZL Van Kampen Global Franchise Fund 3,281 2,221 AZL Van Kampen Global Real Estate Fund 3,496 4,841 AZL Van Kampen Growth and Income Fund 6,111 7,049 AZL Van Kampen Mid Cap Growth Fund 14,851 2,321 AZL Van Kampen Strategic Growth Fund 621 2,138 Davis VA Financial Portfolio 1,709 1,637 Davis VA Real Estate Portfolio - 40 Davis VA Value Portfolio 31 679 Dreyfus IP Small Cap Stock Index Portfolio 4,998 5,687 Dreyfus Stock Index Fund 609 2,353 Franklin Global Communications Securities Fund 6,327 5,451 Franklin Growth and Income Securities Fund 3,749 6,992 Franklin High Income Fund 5,571 6,790 Franklin Income Securities Fund 12,232 12,417 Franklin Large Cap Growth Securities Fund 776 2,997 Franklin Money Market Fund 170 1,125 Franklin Real Estate Fund 1,977 4,445 Franklin Rising Dividends Securities Fund 1,835 6,219 Franklin Small Cap Value Securities Fund 373 1,060 Franklin Small-Mid Cap Growth Securities Fund 975 2,300 Franklin Templeton VIP Founding Funds Allocation Fund 1,889 437 Franklin U.S. Government Fund 5,005 8,125 Franklin Zero Coupon Fund 2010 1,047 1,198 J.P. Morgan International Opportunities Portfolio - - J.P. Morgan U.S. Large Cap Core Equity Portfolio - - Jennison 20/20 Focus Portfolio 212 309 Mutual Discovery Securities Fund 13,568 12,265 Mutual Shares Securities Fund 11,362 9,075 OpCap Mid Cap Portfolio 783 85 Oppenheimer Global Securities Fund/VA 328 1,099 Oppenheimer High Income Fund/VA 365 774 Oppenheimer Main Street Fund/VA 71 990 PIMCO VIT All Asset Portfolio 800 820 PIMCO VIT Commodity Portfolio 869 481 PIMCO VIT Emerging Markets Bond Portfolio 883 440 PIMCO VIT Global Bond Portfolio 721 187 PIMCO VIT High Yield Portfolio 1,132 1,459 PIMCO VIT Real Return Portfolio 1,605 2,336 PIMCO VIT StocksPLUS Growth and Income Portfolio 30 160 PIMCO VIT Total Return Portfolio 2,477 2,649 Seligman Global Technology Portfolio - 2 Seligman Small-Cap Value Portfolio 190 505 SP Strategic Partners Focused Growth Portfolio 30 162 SP William Blair International Growth Portfolio 317 199 Templeton Asset Strategy Fund 307 118 86 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 4. PURCHASES AND SALES OF INVESTMENTS (IN THOUSANDS) (CONTINUED) The cost of purchases and proceeds from sales of investments for the year ended December 31, 2007 are as follows: Cost of Proceeds Purchases from Sales --------------------------- Templeton Developing Markets Securities Fund 2,067 3,453 Templeton Foreign Securities Fund 2,326 4,177 Templeton Global Income Securities Fund 1,370 694 Templeton Growth Securities Fund 8,196 6,587 Van Kampen LIT Enterprise Portfolio - - Van Kampen LIT Growth and Income Portfolio 1 - Van Kampen LIT Strategic Growth Portfolio - 5
87 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows:
AIM V.I. Capital AIM V.I. Core Equity Alger American Growth Appreciation Fund Fund Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments - - - - - - Transfers between funds (1) (42) - (6) - (1) Surrenders and terminations (8) (21) (4) (3) (17) (12) Rescissions - - - - - - Bonus - - - - - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (9) (63) (4) (9) (17) (13) -------------------------------------------------------------------------- Alger American Alger American MidCap Alger American Small Leveraged AllCap Portfolio Growth Portfolio Capitalization Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments - - - - - - Transfers between funds - (8) - - - - Surrenders and terminations (6) (3) (2) (1) - - Rescissions - - - - - - Bonus - - - - - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (6) (11) (2) (1) - - -------------------------------------------------------------------------- AZL AIM Basic Value AZL AIM International AZL Columbia Technology Fund Equity Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 14 49 64 162 108 51 Transfers between funds (387) (19) (163) 133 43 19 Surrenders and terminations (26) (8) (34) (7) (44) (4) Rescissions - (8) - (3) (5) - Bonus 1 1 3 5 3 2 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (398) 15 (130) 290 105 68 -------------------------------------------------------------------------- 88 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows: AZL Davis NY Venture AZL Dreyfus Founders AZL Dreyfus Premier Fund Equity Growth Fund Small Cap Value Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 335 426 87 66 51 90 Transfers between funds (382) 49 178 17 (19) (1) Surrenders and terminations (124) (25) (48) (9) (39) (3) Rescissions (8) (12) - (3) (1) (4) Bonus 7 13 2 1 1 3 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (172) 452 219 73 (7) 85 -------------------------------------------------------------------------- AZL First Trust AZL Franklin Small AZL Fusion Balanced Target Double Play Fund Cap Value Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 21 - 76 155 422 315 Transfers between funds 17 - (54) (20) 64 12 Surrenders and terminations - - (66) (17) (108) (6) Rescissions - - (1) (1) (2) - Bonus - - 2 6 10 10 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 38 - (43) 123 386 330 -------------------------------------------------------------------------- AZL Fusion Growth AZL Fusion Moderate AZL Jennison 20/20 Fund Fund Focus Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 678 904 684 631 84 152 Transfers between funds 27 119 11 49 (6) (24) Surrenders and terminations (125) (21) (208) (19) (25) (5) Rescissions (38) (53) (24) (5) - (4) Bonus 18 33 17 21 3 5 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 560 981 480 678 56 125 -------------------------------------------------------------------------- 89 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows: AZL Jennison Growth AZL Legg Mason Growth AZL Legg Mason Value Fund Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 49 66 96 80 44 122 Transfers between funds 20 3 205 30 (20) 4 Surrenders and terminations (11) (1) (24) (4) (77) (15) Rescissions - - - (18) - (1) Bonus 1 3 2 3 1 5 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 59 71 279 90 (52) 115 -------------------------------------------------------------------------- AZL LMP Large Cap AZL Money Market Fund AZL NACM International Growth Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 24 35 764 1,141 7 - Transfers between funds 3 2 934 (481) 2 - Surrenders and terminations (57) (14) (1,412) (405) - - Rescissions - (1) (21) (97) - - Bonus 1 1 21 39 - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (29) 24 286 198 9 - -------------------------------------------------------------------------- AZL Neuberger Berman AZL OCC Opportunity AZL OCC Renaissance Regency Fund Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 54 23 55 158 29 26 Transfers between funds 2 17 (171) 88 (355) (56) Surrenders and terminations (2) - (31) (6) (19) (16) Rescissions - - - (4) - - Bonus 1 1 2 5 1 1 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 55 40 (145) 240 (344) (45) -------------------------------------------------------------------------- 90 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows: AZL OCC Value Fund AZL Oppenheimer AZL Oppenheimer International Growth Global Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 11 31 147 111 81 55 Transfers between funds 264 (18) (53) 29 41 42 Surrenders and terminations (119) (28) (64) (6) (26) (5) Rescissions - (1) (3) (2) - (5) Bonus - 1 4 4 2 2 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 156 (15) 31 136 98 89 -------------------------------------------------------------------------- AZL PIMCO AZL Oppenheimer Fundamental IndexPLUS Main Street Fund Total Return Fund AZL S&P 500 Index Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 73 105 13 5 61 - Transfers between funds (28) 12 (18) 14 10 - Surrenders and terminations (77) (12) (1) - - - Rescissions - (10) - - - - Bonus 1 2 - - - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (31) 97 (6) 19 71 - -------------------------------------------------------------------------- AZL Schroder Emerging AZL Schroder Emerging AZL Schroder Markets Equity Fund CL 1 Markets Equity Fund CL 2 International Small Cap Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments - - 204 226 32 - Transfers between funds 2 - 498 145 5 - Surrenders and terminations - - (32) (2) - - Rescissions - - (7) (2) - - Bonus - - 6 6 - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 2 - 669 373 37 - -------------------------------------------------------------------------- 91 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows: AZL Small Cap Stock AZL TargetPLUS AZL TargetPLUS Equity Index Fund Balanced Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 59 - 29 - 119 - Transfers between funds (10) - 7 - 42 - Surrenders and terminations - - (1) - (12) - Rescissions - - - - - - Bonus 1 - 1 - 5 - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 50 - 36 - 154 - -------------------------------------------------------------------------- AZL TargetPLUS Growth AZL TargetPLUS AZL Turner Quantitative Fund Moderate Fund Small Cap Growth Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 78 - 46 - 25 36 Transfers between funds 17 - (6) - (4) 6 Surrenders and terminations - - (1) - (13) (2) Rescissions - - (7) - (1) (1) Bonus 1 - - - 1 1 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 96 - 32 - 8 40 -------------------------------------------------------------------------- AZL Van Kampen AZL Van Kampen AZL Van Kampen Equity Aggressive Growth Fund Comstock Fund and Income Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 51 139 91 80 47 39 Transfers between funds (166) (108) 315 29 (10) 6 Surrenders and terminations (14) (8) (174) (21) (33) (3) Rescissions - - - (2) - (10) Bonus 1 3 3 3 1 - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (128) 26 235 89 5 32 -------------------------------------------------------------------------- 92 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows: AZL Van Kampen Global AZL Van Kampen Global AZL Van Kampen Growth Franchise Fund Real Estate Fund and Income Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 149 161 223 85 77 59 Transfers between funds (51) (36) (312) 196 (76) 53 Surrenders and terminations (39) (5) (12) (1) (97) (11) Rescissions (2) (2) (3) - (3) (3) Bonus 3 5 5 3 3 2 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 60 123 (99) 283 (96) 101 -------------------------------------------------------------------------- AZL Van Kampen Mid AZL Van Kampen Davis VA Financial Cap Growth Fund Strategic Growth Fund Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 125 103 26 24 36 57 Transfers between funds 758 32 (195) 6 9 5 Surrenders and terminations (49) (9) (18) (17) (42) (4) Rescissions (4) (6) - - (2) (11) Bonus 3 4 1 1 1 1 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 833 124 (186) 14 2 49 -------------------------------------------------------------------------- Davis VA Real Estate Davis VA Value Dreyfus IP Small Cap Portfolio Portfolio Stock Index Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments - - - 2 110 112 Transfers between funds - - (18) (5) (112) (38) Surrenders and terminations (1) - (35) (8) (49) (14) Rescissions - - - - (3) (3) Bonus - - - - 3 4 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (1) - (53) (11) (51) 60 -------------------------------------------------------------------------- 93 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows: Dreyfus Stock Index Franklin Global Franklin Growth and Communications Fund Securities Fund Income Securities Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 29 55 40 32 22 17 Transfers between funds (38) 7 101 4 (26) 9 Surrenders and terminations (116) (30) (81) (80) (133) (138) Rescissions - (2) (3) (7) (2) - Bonus 1 2 2 1 1 1 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (124) 32 59 (49) (138) (111) -------------------------------------------------------------------------- Franklin High Income Franklin Income Franklin Large Cap Securities Fund Securities Fund Growth Securities Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 55 45 139 130 14 36 Transfers between funds (61) 77 3 30 (24) (24) Surrenders and terminations (74) (82) (168) (157) (97) (100) Rescissions (1) - (1) (15) - - Bonus 1 1 3 2 - 1 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (80) 41 (24) (10) (107) (87) -------------------------------------------------------------------------- Franklin Money Market Franklin Real Estate Franklin Rising Dividends Securities Fund Fund Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments - - 3 20 5 47 Transfers between funds (6) 100 (24) (9) (31) (24) Surrenders and terminations (63) (81) (40) (31) (111) (144) Rescissions - - - (1) - (2) Bonus - - - 1 - 1 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (69) 19 (61) (20) (137) (121) -------------------------------------------------------------------------- 94 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows: Franklin Small Cap Franklin Small-Mid Franklin Templeton VIP Cap Growth Securities Founding Funds Value Securities Fund Fund Allocation Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 2 3 3 8 119 - Transfers between funds (23) (11) (11) (11) 33 - Surrenders and terminations (26) (26) (65) (76) - - Rescissions (1) - - - - - Bonus - - - - 4 - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (48) (34) (73) (79) 156 - -------------------------------------------------------------------------- Franklin U.S. Franklin Zero Coupon J.P. Morgan International Government Fund 2010 Fund Opportunities Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 21 32 3 5 - - Transfers between funds (3) (68) 3 21 - - Surrenders and terminations (177) (189) (12) (26) - - Rescissions - - - - - - Bonus - 1 - - - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (159) (224) (6) 1 - - -------------------------------------------------------------------------- J.P. Morgan U.S. Large Jennison 20/20 Focus Mutual Discovery Cap Core Equity Portfolio Portfolio Securities Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments - - 1 4 232 89 Transfers between funds - - - (2) (67) 51 Surrenders and terminations - - (13) (3) (107) (47) Rescissions - - - - (7) (3) Bonus - - - - 5 3 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions - - (12) (1) 56 94 -------------------------------------------------------------------------- 95 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows: Mutual Shares OpCap Mid Cap Oppenheimer Global Securities Fund Portfolio Securities Fund/VA -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 249 271 59 11 - 2 Transfers between funds (14) 52 7 2 (31) (6) Surrenders and terminations (180) (124) (1) - (30) (6) Rescissions (1) (21) - - - - Bonus 6 6 1 - - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 60 185 66 13 (61) (9) -------------------------------------------------------------------------- Oppenheimer High Oppenheimer Main PIMCO VIT All Asset Income Fund/VA Street Fund/VA Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments - 1 1 3 24 55 Transfers between funds (25) (83) (20) (33) (4) (123) Surrenders and terminations (12) (14) (60) (22) (31) (8) Rescissions - - - - (1) - Bonus - - - - 1 1 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (37) (96) (79) (52) (11) (75) -------------------------------------------------------------------------- PIMCO VIT PIMCO VIT Emerging PIMCO VIT Global Bond CommodityRealReturn Strategy Portfolio Markets Bond Portfolio Portfolio (Unhedged) -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 51 82 36 26 31 18 Transfers between funds (4) (12) 5 26 30 19 Surrenders and terminations (20) (4) (10) (1) (8) - Rescissions - (1) (1) - - - Bonus 2 4 1 1 1 1 Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 29 68 31 52 54 38 -------------------------------------------------------------------------- 96 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows: PIMCO VIT High PIMCO VIT Real Return PIMCO VIT StocksPLUS Yield Portfolio Portfolio Growth and Income Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 25 28 77 126 - - Transfers between funds (19) - (53) (42) (10) 2 Surrenders and terminations (44) (39) (104) (39) (3) (5) Rescissions - - (1) (1) - - Bonus 1 1 1 6 - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (37) (10) (80) 50 (13) (3) -------------------------------------------------------------------------- PIMCO VIT Total Seligman Global Seligman Small-Cap Return Portfolio Technology Portfolio Value Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 76 133 - - - 1 Transfers between funds 34 19 - - (11) (3) Surrenders and terminations (145) (64) - - (11) (4) Rescissions (1) (52) - - - - Bonus 3 2 - - - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (33) 38 - - (22) (6) -------------------------------------------------------------------------- SP Strategic Partners SP International Templeton Asset Focused Growth Portfolio Growth Portfolio Strategy Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 1 - 1 - - - Transfers between funds (10) (13) 23 1 - (1) Surrenders and terminations (8) (2) (18) (4) (4) (6) Rescissions - - - - - - Bonus - - - - - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (17) (15) 6 (2) (4) (7) -------------------------------------------------------------------------- 97 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 5. CONTRACT TRANSACTIONS - ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED) Transactions in units for each subaccount for the years ended December 31, 2007 and 2006 were as follows: Templeton Developing Templeton Foreign Templeton Global Income Markets Securities Fund Securities Fund Securities Fund -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 7 69 17 37 22 - Transfers between funds (48) 4 (16) 8 15 (1) Surrenders and terminations (56) (65) (100) (82) (15) (18) Rescissions - (11) - (1) - - Bonus - 3 1 1 1 - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions (97) (1) (98) (37) 23 (19) -------------------------------------------------------------------------- Templeton Growth Van Kampen LIT Van Kampen LIT Growth Securities Fund Enterprise Portfolio and Income Portfolio -------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 -------------------------------------------------------------------------- Contract Transactions Purchase payments 170 168 - - - - Transfers between funds (48) 31 - - - - Surrenders and terminations (101) (117) - - - - Rescissions - (14) - - - - Bonus 4 3 - - - - Other transactions - - - - - - -------------------------------------------------------------------------- Total Net Contract Transactions 25 70 - - - - -------------------------------------------------------------------------- Van Kampen LIT Total Strategic Growth Portfolio ------------------------------------------------- 2007 2007 2007 2006 ------------------------------------------------- Contract Transactions Purchase payments - - 7,195 7,641 Transfers between funds - - 485 253 Surrenders and terminations (1) - (5,671) (2,614) Rescissions - - (155) (403) Bonus - - 184 241 Other transactions - - - - ------------------------------------------------- ------------------------- Total Net Contract Transactions (1) - 2,038 5,118 -------------------------------------------------
98 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows:
At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** AIM V.I. Capital Appreciation Fund 2007 48 $8.37to $9.17 432 0.00% 1.40%to 1.49% 10.35%to 10.45% 2006 57 $7.58to $8.30 469 0.00% 1.40%to 1.49% -1.09%to 4.73% 2005 119 $7.24to $7.24 265 0.00% 1.49%to 1.49% 7.23%to 7.23% 2004 159 $6.75to $6.75 343 0.00% 1.49%to 1.49% 5.04%to 5.04% 2003 189 $6.43to $6.43 402 0.00% 1.49%to 1.49% 27.60%to 27.60% AIM V.I. Core Equity Fund 2007 8 $11.57to$11.57 98 0.75% 1.40%to 1.49% 6.51%to 6.51% 2006 12 $10.87to$10.87 136 2.00% 1.49%to 1.49% 8.22%to 8.22% 2005 22 $6.83to $6.83 151 0.67% 1.49%to 1.49% 4.10%to 4.10% 2004 23 $6.56to $6.56 150 0.70% 1.49%to 1.49% 4.20%to 4.20% 2003 23 $6.30to $6.30 145 0.00% 1.49%to 1.49% 23.23%to 23.23% Alger American Growth Portfolio 2007 28 $9.84to $9.91 279 0.29% 1.40%to 1.49% 18.16%to 18.27% 2006 45 $8.32to $8.38 380 0.24% 1.40%to 1.49% 3.60%to 3.69% 2005 59 $8.03to $8.08 473 0.21% 1.40%to 1.49% 10.38%to 10.48% 2004 68 $7.28to $7.31 499 0.00% 1.40%to 1.49% 3.93%to 4.03% 2003 80 $7.00to $7.03 563 0.00% 1.40%to 1.49% 33.16%to 33.28% Alger American Leveraged AllCap Portfolio 2007 23 $11.97to$12.06 275 0.00% 1.40%to 1.49% 31.55%to 31.67% 2006 29 $9.10to $9.16 269 0.00% 1.40%to 1.49% 17.50%to 17.61% 2005 40 $7.75to $7.79 313 0.00% 1.40%to 1.49% 12.76%to 12.86% 2004 53 $6.87to $6.90 368 0.00% 1.40%to 1.49% 6.58%to 6.68% 2003 62 $6.45to $6.47 399 0.00% 1.40%to 1.49% 32.73%to 32.85% Alger American MidCap Growth Portfolio 2007 5 $16.98to$16.98 85 0.00% 1.40%to 1.49% 29.60%to 29.60% 2006 7 $13.11to$13.11 92 0.00% 1.49%to 1.49% 8.52%to 8.52% 2005 8 $12.08to$12.08 94 0.00% 1.49%to 1.49% 8.20%to 8.20% 2004 8 $11.16to$11.16 92 0.00% 1.49%to 1.49% 11.37%to 11.37% 2003 9 $10.02to$10.02 87 0.00% 1.49%to 1.49% 45.61%to 45.61% 99 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** Alger American Small Capitalization Portfolio 2007 - $9.34to $9.34 2 0.00% 1.40%to 1.49% 15.50%to 15.50% 2006 - $8.09to $8.09 1 0.00% 1.49%to 1.49% 18.25%to 18.25% 2005 - $6.84to $6.84 1 0.00% 1.49%to 1.49% 15.16%to 15.16% 2004 - $5.94to $5.94 1 0.00% 1.49%to 1.49% 14.84%to 14.84% 2003 - $5.17to $5.17 1 0.00% 1.49%to 1.49% 40.24%to 40.24% AZL AIM International Equity Fund 2007 272 $18.37to $20.00 5,106 0.54% 1.25%to 3.05% 10.92%to 14.04% 2006 402 $16.47to $17.47 6,720 0.24% 1.49%to 2.75% 23.61%to 25.17% 2005 112 $13.33to $13.96 1,508 0.27% 1.49%to 2.75% 13.22%to 14.65% 2004 62 $11.77to $12.18 731 0.00% 1.49%to 2.75% 18.80%to 20.31% 2003 8 $10.02to $10.12 82 0.00% 1.49%to 2.10% 24.50%to 25.26% AZL Columbia Technology Fund 2007 271 $9.21to $10.11 2,544 0.00% 1.25%to 3.05% 18.78%to 22.30% 2006 166 $7.72to $8.27 1,314 0.00% 1.40%to 2.75% -0.22%to 1.14% 2005 98 $7.73to $8.18 779 0.00% 1.40%to 2.75% -2.02%to -0.69% 2004 78 $7.89to $8.24 631 0.00% 1.40%to 2.75% -6.93%to -5.66% 2003 53 $8.60to $8.73 456 0.00% 1.40%to 2.10% 39.01%to 39.98% AZL Davis NY Venture Fund 2007 821 $12.47to $13.68 10,524 0.40% 1.25%to 3.05% 0.78%to 3.77% 2006 994 $12.31to $13.20 12,450 0.30% 1.40%to 2.75% 10.83%to 12.33% 2005 543 $11.11to $11.75 6,133 0.14% 1.40%to 2.75% 6.72%to 8.16% 2004 260 $10.41to $10.86 2,767 0.27% 1.40%to 2.75% 7.55%to 9.02% 2003 99 $9.82to $9.97 980 0.84% 1.40%to 2.10% 26.74%to 27.63% AZL Dreyfus Founders Equity Growth Fund 2007 446 $10.61to $11.63 4,877 0.06% 1.25%to 3.05% 5.24%to 8.36% 2006 227 $10.03to $10.75 2,326 0.00% 1.40%to 2.75% 9.87%to 11.36% 2005 155 $9.12to $9.65 1,443 0.31% 1.40%to 2.75% 1.73%to 3.11% 2004 112 $8.97to $9.36 1,032 0.00% 1.40%to 2.75% 4.79%to 6.22% 2003 75 $8.68to $8.81 657 0.00% 1.40%to 2.10% 21.66%to 22.52% AZL Dreyfus Premier Small Cap Value Fund 2007 199 $11.84to $12.42 2,383 0.28% 1.25%to 3.05% -11.20%to -9.25% 2006 205 $13.26to $13.72 2,739 0.10% 1.49%to 2.75% 10.33%to 11.73% 2005 120 $12.02to $12.28 1,444 0.00% 1.49%to 2.75% 0.59%to 1.70% 2004(3) 39 $11.95to $12.04 471 0.00% 1.65%to 2.75% 18.80%to 19.67% 100 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** AZL First Trust Target Double Play Fund 2007? 39 $10.48to $10.62 412 0.00% 1.25%to 3.05% 3.74%to 5.50% AZL Franklin Small Cap Value Fund 2007 322 $16.42to $17.61 5,370 0.54% 1.25%to 3.05% -7.46%to -5.14% 2006 365 $17.65to $18.48 6,507 0.30% 1.49%to 2.75% 12.29%to 13.71% 2005 242 $15.72to $16.25 3,831 0.59% 1.49%to 2.75% 4.14%to 5.45% 2004 100 $15.09to $15.41 1,519 0.00% 1.49%to 2.75% 19.75%to 21.27% 2003 21 $12.66to $12.71 262 0.88% 1.49%to 2.10% 26.59%to 27.10% AZL Fusion Balanced Fund 2007 873 $11.69to $12.17 10,317 1.61% 1.25%to 3.05% 3.65%to 5.78% 2006 488 $11.22to $11.46 5,492 0.31% 1.49%to 2.75% 6.53%to 7.87% 2005(3) 157 $10.53to $10.61 1,658 0.00% 1.49%to 2.75% 5.36%to 6.25% AZL Fusion Growth Fund 2007 1,990 $12.36to $12.86 24,767 0.51% 1.25%to 3.05% 2.34%to 4.43% 2006 1,430 $12.01to $12.27 17,222 0.07% 1.49%to 2.75% 9.17%to 10.55% 2005(3) 448 $11.00to $11.10 4,941 0.00% 1.49%to 2.75% 10.07%to 11.00% AZL Fusion Moderate Fund 2007 1,748 $11.96to $12.45 21,158 1.04% 1.25%to 3.05% 3.10%to 5.21% 2006 1,268 $11.54to $11.75 14,699 0.23% 1.49%to 2.75% 7.72%to 9.08% 2005(3) 590 $10.71to $10.79 6,334 0.00% 1.49%to 2.75% 7.13%to 8.03% AZL Jennison 20/20 Focus Fund 2007 257 $14.34to $14.93 3,716 0.19% 1.25%to 3.05% 7.15%to 9.35% 2006 201 $13.32to $13.60 2,684 0.00% 1.49%to 2.75% 9.73%to 11.12% 2005(3) 76 $12.14to $12.24 926 0.25% 1.49%to 2.75% 21.38%to 22.40% AZL Jennison Growth Fund 2007 157 $12.65to $13.16 2,006 0.00% 1.25%to 3.05% 7.34%to 9.54% 2006 98 $11.72to $11.97 1,156 0.00% 1.49%to 2.75% -1.18%to 0.07% 2005(3) 28 $11.86to $11.96 331 0.00% 1.49%to 2.75% 18.62%to 19.61% AZL Legg Mason Growth Fund 2007 436 $12.37to $13.47 5,511 0.00% 1.25%to 3.05% 11.30%to 14.44% 2006 157 $11.06to $11.73 1,755 0.00% 1.49%to 2.75% -2.03%to -0.79% 2005 67 $11.28to $11.82 761 0.00% 1.49%to 2.75% 8.05%to 9.42% 2004 29 $10.44to $10.80 306 0.00% 1.49%to 2.75% 5.14%to 6.47% 2003 7 $10.04to $10.14 66 0.00% 1.49%to 2.10% 33.65%to 34.46% 101 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** AZL Legg Mason Value Fund 2007 435 $10.73to $11.77 4,799 0.00% 1.25%to 3.05% -9.22%to -6.53% 2006 487 $11.76to $12.61 5,846 0.00% 1.40%to 2.75% 3.82%to 5.23% 2005 372 $11.33to $11.98 4,284 0.00% 1.40%to 2.75% 3.39%to 4.79% 2004 123 $10.95to $11.43 1,367 0.42% 1.40%to 2.75% 12.02%to 13.55% 2003 42 $9.92to $10.07 418 1.56% 1.40%to 2.10% 23.27%to 24.14% AZL LMP Large Cap Growth Fund 2007 303 $10.76to $11.58 3,327 0.00% 1.25%to 3.05% 1.32%to 4.17% 2006 334 $10.56to $11.20 3,584 0.00% 1.49%to 2.75% 1.41%to 2.69% 2005 309 $10.42to $10.91 3,260 0.34% 1.49%to 2.75% 6.73%to 8.08% 2004 162 $9.76to $10.10 1,604 0.00% 1.49%to 2.75% 1.53%to 2.83% 2003 32 $9.72to $9.82 313 0.00% 1.49%to 2.10% 21.80%to 22.55% AZL Money Market Fund 2007 1,968 $9.73to $11.24 19,915 4.70% 1.25%to 3.05% 1.64%to 3.49% 2006 1,683 $9.54to $10.70 16,635 4.41% 1.40%to 2.75% 1.62%to 2.99% 2005 1,485 $9.39to $10.45 14,627 2.61% 1.40%to 2.75% -0.20%to 1.15% 2004 679 $9.41to $10.29 6,670 0.74% 1.40%to 2.75% -2.06%to -0.73% 2003 491 $9.79to $10.37 4,897 0.32% 1.40%to 2.10% -1.74%to -1.05% AZL NACM International Fund 2007? 9 $9.39to $9.48 87 0.00% 1.25%to 3.05% -6.43%to -5.19% AZL Neuberger Berman Regency Fund 2007 95 $10.09to $10.34 965 0.00% 1.25%to 3.05% 0.50%to 2.56% 2006? 40 $9.99to $10.06 405 0.42% 1.49%to 2.75% -0.12%to 0.72% AZL OCC Opportunity Fund 2007 250 $15.44to $16.81 3,925 0.00% 1.25%to 3.05% 5.37%to 8.33% 2006 396 $14.58to $15.46 5,832 0.00% 1.49%to 2.75% 8.66%to 10.03% 2005 156 $13.42to $14.05 2,113 0.00% 1.49%to 2.75% 2.24%to 3.53% 2004 117 $13.12to $13.57 1,548 0.00% 1.49%to 2.75% 4.83%to 6.17% 2003 14 $12.66to $12.79 184 0.00% 1.49%to 2.10% 58.66%to 59.64% AZL OCC Value Fund 2007 546 $13.66to $14.85 7,672 1.09% 1.25%to 3.05% -8.81%to -6.11% 2006 390 $14.90to $15.98 5,949 0.87% 1.40%to 2.75% 16.86%to 18.44% 2005 405 $12.75to $13.49 5,265 0.26% 1.40%to 2.75% -0.11%to 1.24% 2004 294 $12.77to $13.33 3,826 0.17% 1.40%to 2.75% 13.35%to 14.90% 2003 88 $11.42to $11.60 1,010 0.89% 1.40%to 2.10% 42.19%to 43.19% 102 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** AZL Oppenheimer Global Fund 2007 482 $14.50to $15.32 7,056 0.45% 1.25%to 3.05% 2.34%to 4.59% 2006 452 $14.09to $14.58 6,398 0.06% 1.49%to 2.75% 13.15%to 14.58% 2005 317 $12.46to $12.72 3,956 0.00% 1.49%to 2.75% 9.57%to 10.96% 2004(2) 130 $11.37to $11.45 1,482 0.00% 1.65%to 2.75% 13.71%to 14.54% AZL Oppenheimer International Growth Fund 2007 288 $18.87to $20.69 5,592 0.61% 1.25%to 3.05% 8.66%to 11.88% 2006 190 $17.27to $18.52 3,349 0.00% 1.40%to 2.75% 25.49%to 27.20% 2005 102 $13.76to $14.56 1,420 0.00% 1.40%to 2.75% 11.09%to 12.49% 2004 30 $12.39to $12.89 378 0.65% 1.49%to 2.75% 11.37%to 12.79% 2003 4 $11.33to $11.43 50 0.00% 1.49%to 1.90% 31.26%to 31.80% AZL Oppenheimer Main Street Fund 2007 388 $12.31to $13.01 4,840 0.54% 1.25%to 3.05% 0.44%to 2.65% 2006 420 $12.20to $12.61 5,154 0.56% 1.49%to 2.75% 11.49%to 12.90% 2005 323 $10.94to $11.17 3,552 0.00% 1.49%to 2.75% 2.60%to 3.90% 2004(2) 195 $10.66to $10.75 2,088 0.98% 1.49%to 2.75% 6.64%to 7.54% AZL PIMCO Fundamental IndexPLUS Total Return Fund 2007 12 $11.39to $11.61 140 8.69% 1.25%to 3.05% 3.22%to 5.33% 2006? 19 $10.98to $11.04 207 12.24% 1.49%to 2.75% 9.84%to 10.76% AZL S&P 500 Index Fund 2007? 72 $9.79to $9.90 704 4.97% 1.25%to 3.05% -2.38%to -1.03% AZL Schroder Emerging Markets Equity Fund CL 1 2007? 2 $13.65to $13.65 23 0.00% 1.40%to 1.49% 20.98%to 21.05% AZL Schroder Emerging Markets Equity Fund CL 2 2007 1,042 $13.15to $13.49 13,766 0.02% 1.25%to 3.05% 26.10%to 28.69% 2006? 373 $10.38to $10.47 3,880 0.30% 1.49%to 2.75% 3.79%to 4.67% AZL Schroder International Small Cap Fund 2007? 37 $9.16to $9.25 341 0.00% 1.25%to 3.05% -8.69%to -7.48% AZL Small Cap Stock Index Fund 2007? 50 $9.25to $9.34 463 1.54% 1.25%to 3.05% -7.84%to -6.61% AZL TargetPLUS Balanced Fund 2007? 36 $10.04to $10.13 366 6.06% 1.25%to 3.05% 0.04%to 1.37% 103 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** AZL TargetPLUS Equity Fund 2007? 155$10.38 to $10.54 1,613 1.03% 1.25% to 3.05% 3.01%to 4.77% AZL TargetPLUS Growth Fund 2007? 96 $9.86 to $9.95 949 3.14% 1.25% to 3.05% -1.81%to -0.50% AZL TargetPLUS Moderate Fund 2007? 33$10.00 to $10.09 327 3.17% 1.25% to 3.05% -0.42%to 0.90% AZL Turner Quantitative Small Cap Growth Fund 2007 77$12.32 to $12.82 952 0.00% 1.25% to 3.05% 2.64%to 4.75% 2006 69$11.94 to $12.19 824 0.00% 1.49% to 2.75% 8.30%to 9.67% AZL Van Kampen Comstock Fund 2007 712$11.32 to $12.51 8,290 1.29% 1.25% to 3.05% -5.38%to -2.42% 2006 478$11.90 to $12.85 5,814 1.09% 1.40% to 2.75% 12.63%to 14.16% 2005 388$10.57 to $11.25 4,185 0.43% 1.40% to 2.75% 1.11%to 2.48% 2004 248$10.45 to $10.98 2,647 0.44% 1.40% to 2.75% 13.93%to 15.48% 2003 66 $9.33 to $9.51 620 1.10% 1.40% to 2.10% 27.82%to 28.72% AZL Van Kampen Equity and Income Fund 2007 143$12.21 to $12.90 1,776 1.45% 1.25% to 3.05% -0.27%to 1.92% 2006 137$12.18 to $12.60 1,689 1.02% 1.49% to 2.75% 9.48%to 10.86% 2005 105$11.13 to $11.33 1,170 0.00% 1.65% to 2.75% 3.86%to 5.18% 2004(2) 26$10.71 to $10.77 274 0.91% 1.90% to 2.75% 7.15%to 7.75% AZL Van Kampen Global Franchise Fund 2007 378$18.18 to $19.50 6,967 0.00% 1.25% to 3.05% 6.27%to 8.93% 2006 318$17.01 to $17.82 5,452 1.59% 1.49% to 2.75% 17.97%to 19.47% 2005 196$14.42 to $14.92 2,844 0.00% 1.49% to 2.75% 8.62%to 10.00% 2004 58$13.28 to $13.56 772 0.00% 1.49% to 2.75% 9.15%to 10.54% 2003 5$12.22 to $12.27 58 0.00% 1.49% to 2.10% 22.17%to 22.67% AZL Van Kampen Global Real Estate Fund 2007 185$10.61 to $10.88 1,977 0.39% 1.25% to 3.05% -11.63%to -9.82% 2006? 283$11.94 to $12.04 3,388 2.72% 1.49% to 2.75% 19.46%to 20.46% AZL Van Kampen Growth and Income Fund 2007 328$13.06 to $14.29 4,422 1.07% 1.25% to 3.05% -0.68%to 2.43% 2006 424$13.08 to $14.12 5,701 0.83% 1.40% to 2.75% 12.76%to 14.29% 2005 324$11.60 to $12.35 3,839 0.38% 1.40% to 2.75% 6.28%to 7.72% 2004 187$10.91 to $11.47 2,091 0.36% 1.40% to 2.75% 10.72%to 12.23% 2003 93$10.03 to $10.22 944 1.15% 1.40% to 2.10% 24.81%to 25.69% 104 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** AZL Van Kampen Mid Cap Growth Fund 2007 1,158 $14.80to $16.36 17,475 0.01% 1.25%to 3.05% 18.24%to 21.93% 2006 325 $12.45to $13.44 4,145 0.00% 1.40%to 2.75% 6.25%to 7.69% 2005 201 $11.72to $12.48 2,404 0.00% 1.40%to 2.75% 14.36%to 15.91% 2004 117 $10.25to $10.77 1,225 0.00% 1.40%to 2.75% 17.94%to 19.54% 2003 27 $8.84to $9.01 240 0.00% 1.40%to 2.10% 25.76%to 26.65% Davis VA Financial Portfolio 2007 161 $11.33to $16.00 1,895 0.97% 1.25%to 3.05% -8.88%to -7.22% 2006 158 $12.39to $16.98 2,030 0.75% 1.49%to 2.75% 15.30%to 16.76% 2005 111 $10.75to $14.55 1,237 0.65% 1.49%to 2.75% 5.45%to 6.78% 2004 65 $10.19to $13.62 705 0.43% 1.49%to 2.75% 7.32%to 8.68% 2003 22 $9.68to $12.53 232 0.92% 1.49%to 2.10% 29.41%to 30.20% Davis VA Real Estate Portfolio 2007 - $0.00to $0.00 - 0.00% 1.40%to 1.49% -16.74%to -16.74% 2006 1 $35.48to $35.48 37 3.08% 1.49%to 1.49% 32.39%to 32.39% 2005 1 $26.80to $26.80 28 3.88% 1.49%to 1.49% 11.46%to 11.46% 2004 1 $24.04to $24.04 25 4.28% 1.49%to 1.49% 31.35%to 31.35% 2003 1 $18.30to $18.30 22 5.30% 1.49%to 1.49% 34.77%to 34.77% Davis VA Value Portfolio 2007 55 $11.93to $14.16 719 0.70% 1.40%to 2.75% 1.78%to 3.08% 2006 108 $11.72to $13.73 1,348 0.77% 1.49%to 2.75% 11.89%to 13.30% 2005 120 $10.48to $12.12 1,330 0.96% 1.49%to 2.75% 6.48%to 7.83% 2004 138 $9.84to $11.24 1,434 0.86% 1.49%to 2.75% 9.28%to 10.66% 2003 112 $9.18to $10.16 1,069 1.38% 1.49%to 2.10% 27.06%to 27.84% Dreyfus IP Small Cap Stock Index Portfolio 2007 251 $13.44to $14.63 3,453 0.53% 1.25%to 2.75% -3.36%to -1.90% 2006 302 $13.91to $14.75 4,279 0.36% 1.49%to 2.75% 11.32%to 12.72% 2005 243 $12.49to $13.09 3,072 0.00% 1.49%to 2.75% 4.33%to 5.65% 2004 165 $11.98to $12.39 2,003 0.71% 1.49%to 2.75% 18.57%to 20.08% 2003 31 $10.21to $10.31 322 1.19% 1.49%to 2.10% 34.92%to 35.74% 105 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** Dreyfus Stock Index Fund 2007 403 $12.58to $13.77 5,258 1.47% 1.25%to 2.75% 2.13%to 3.78% 2006 528 $12.31to $13.27 6,692 1.47% 1.40%to 2.75% 12.09%to 13.90% 2005 497 $10.99to $11.65 5,609 1.39% 1.40%to 2.75% 1.61%to 3.24% 2004 489 $10.81to $11.29 5,409 1.79% 1.40%to 2.75% 7.35%to 9.10% 2003 247 $10.18to $10.35 2,537 1.46% 1.40%to 2.10% 25.39%to 26.58% Franklin Global Communications Securities Fund 2007 615 $24.33to $32.04 18,502 0.00% 1.25%to 3.05% 20.23%to 28.74% 2006 557 $20.13to $26.08 14,260 0.34% 1.40%to 2.75% 21.19%to 22.96% 2005 606 $16.61to $21.21 12,775 2.75% 1.40%to 2.75% 12.66%to 14.51% 2004 699 $14.75to $18.52 12,935 1.02% 1.40%to 2.75% 11.07%to 13.06% 2003 773 $14.62to $16.38 12,649 0.92% 1.40%to 2.10% 37.52%to 38.51% Franklin Growth and Income Securities Fund 2007 809 $28.40to $37.40 29,733 2.39% 1.25%to 2.75% -6.33%to -4.81% 2006 948 $30.32to $39.29 36,601 2.57% 1.40%to 2.75% 13.60%to 15.43% 2005 1,059 $26.70to $34.04 35,744 2.72% 1.40%to 2.75% 0.71%to 2.27% 2004 1,184 $26.51to $33.29 39,356 2.60% 1.40%to 2.75% 7.61%to 9.36% 2003 1,332 $27.12to $30.44 40,473 3.23% 1.40%to 2.10% 23.08%to 24.31% Franklin High Income Securities Fund 2007 398 $19.70to $26.12 9,555 6.97% 1.25%to 3.05% -0.60%to 6.44% 2006 478 $19.72to $25.54 11,308 6.14% 1.40%to 2.75% 6.41%to 7.96% 2005 436 $18.53to $23.66 9,773 6.30% 1.40%to 2.75% 0.52%to 2.29% 2004 582 $18.44to $23.13 12,925 5.49% 1.40%to 2.75% 6.89%to 8.50% 2003 505 $18.99to $21.32 10,611 8.91% 1.40%to 2.10% 28.45%to 29.67% Franklin Income Securities Fund 2007 983 $37.63to $49.89 45,280 3.56% 1.25%to 3.05% 0.40%to 7.51% 2006 1,008 $37.29to $48.33 45,754 3.63% 1.40%to 2.75% 15.04%to 16.83% 2005 1,019 $32.41to $41.37 40,583 3.53% 1.40%to 2.75% -1.14%to 0.42% 2004 978 $32.79to $41.20 39,699 3.19% 1.40%to 2.75% 10.76%to 12.54% 2003 935 $32.59to $36.61 34,141 5.24% 1.40%to 2.10% 28.98%to 30.26% 106 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** Franklin Large Cap Growth Securities Fund 2007 469 $18.01to $21.58 9,665 0.87% 1.25%to 2.75% 3.33%to 5.04% 2006 576 $17.43to $20.54 11,306 0.86% 1.40%to 2.75% 7.90%to 9.63% 2005 662 $16.15to $18.74 12,037 0.68% 1.40%to 2.75% -1.68%to -0.10% 2004 655 $16.43to $18.76 12,084 0.54% 1.40%to 2.75% 5.00%to 6.72% 2003 644 $16.45to $17.58 11,290 0.73% 1.40%to 2.10% 24.31%to 25.37% Franklin Money Market Fund 2007 322 $16.51to $16.79 5,420 4.45% 1.40%to 1.49% 2.97%to 3.06% 2006 390 $16.03to $16.29 6,374 4.32% 1.40%to 1.49% 2.84%to 2.93% 2005 372 $15.59to $15.83 5,890 2.50% 1.40%to 1.49% 1.04%to 1.13% 2004 423 $15.43to $15.65 6,624 0.72% 1.40%to 1.49% -0.76%to -0.67% 2003 501 $15.55to $15.76 7,899 0.53% 1.40%to 1.49% -0.96%to -0.87% Franklin Real Estate Fund 2007 203 $41.56to $54.76 10,219 2.44% 1.25%to 2.75% -23.02%to -21.76% 2006 265 $53.99to $69.99 17,030 2.11% 1.40%to 2.75% 17.32%to 19.20% 2005 284 $46.01to $58.72 15,645 1.49% 1.40%to 2.75% 10.40%to 12.16% 2004 275 $41.68to $52.35 14,022 1.96% 1.40%to 2.75% 28.22%to 30.34% 2003 238 $35.78to $40.16 9,513 2.58% 1.40%to 2.10% 32.93%to 34.19% Franklin Rising Dividends Securities Fund 2007 855 $29.92to $37.84 30,953 2.47% 1.25%to 2.75% -5.34%to -3.78% 2006 992 $31.61to $39.32 37,380 1.20% 1.40%to 2.75% 13.95%to 15.80% 2005 1,114 $27.74to $33.96 36,591 0.98% 1.40%to 2.75% 0.63%to 2.24% 2004 1,119 $27.56to $33.21 36,526 0.71% 1.40%to 2.75% 7.98%to 9.70% 2003 1,058 $27.59to $30.28 31,911 0.97% 1.40%to 2.10% 22.00%to 23.14% Franklin Smaller Cap Value Securities Fund 2007 181 $15.87to $18.50 3,114 0.76% 1.40%to 2.75% -5.04%to -3.50% 2006 228 $16.71to $19.17 4,125 0.74% 1.40%to 2.75% 13.82%to 15.68% 2005 263 $14.68to $16.57 4,147 0.87% 1.40%to 2.75% 5.82%to 7.48% 2004 247 $13.87to $15.42 3,695 0.27% 1.40%to 2.75% 20.38%to 22.36% 2003 149 $11.96to $12.60 1,865 0.28% 1.40%to 2.10% 29.38%to 30.63% 107 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** Franklin Small-Mid Cap Growth Securities Fund 2007 292 $21.49to $25.81 7,335 0.00% 1.25%to 2.75% 8.21%to 9.95% 2006 365 $19.86to $23.47 8,316 0.00% 1.40%to 2.75% 5.75%to 7.44% 2005 444 $18.78to $21.84 9,508 0.00% 1.40%to 2.75% 1.95%to 3.63% 2004 473 $18.42to $21.08 9,938 0.00% 1.40%to 2.75% 8.44%to 10.15% 2003 507 $17.91to $19.14 9,680 0.00% 1.40%to 2.10% 34.39%to 35.69% Franklin Templeton VIP Founding Funds Allocation Fund 2007 156 $9.18to $9.25 1,434 0.00% 1.25%to 3.05% -8.36%to -7.47% Franklin U.S. Government Fund 2007 898 $20.29to $26.96 22,936 4.79% 1.25%to 3.05% 3.16%to 10.40% 2006 1,058 $19.56to $25.37 25,641 4.47% 1.40%to 2.75% 1.20%to 2.86% 2005 1,282 $19.33to $24.67 30,472 4.28% 1.40%to 2.75% -0.37%to 1.22% 2004 1,304 $19.40to $24.37 30,923 5.07% 1.40%to 2.75% 0.66%to 2.27% 2003 1,348 $21.22to $23.83 31,969 5.16% 1.40%to 2.10% 0.09%to 1.01% Franklin Zero Coupon 2010 Fund 2007 124 $31.02to $39.98 4,581 4.95% 1.25%to 3.05% 5.11%to 12.43% 2006 132 $29.36to $37.33 4,577 4.23% 1.40%to 2.75% -0.07%to 1.29% 2005 131 $29.38to $36.85 4,593 3.94% 1.40%to 2.75% -1.21%to 0.13% 2004 126 $29.74to $36.80 4,542 4.75% 1.40%to 2.75% 1.87%to 3.26% 2003 131 $32.14to $35.64 4,627 3.70% 1.40%to 2.10% 1.44%to 2.15% J.P. Morgan International Opportunities Portfolio 2007 1 $12.17to $12.17 12 0.00% 1.40%to 1.49% 7.71%to 7.71% 2006 1 $11.30to $11.30 12 0.00% 1.49%to 1.49% 20.24%to 20.24% 2005 1 $9.40to $9.40 10 0.00% 1.49%to 1.49% 9.06%to 9.06% 2004 1 $8.62to $8.62 9 0.00% 1.49%to 1.49% 16.61%to 16.61% 2003 1 $7.39to $7.39 8 0.00% 1.49%to 1.49% 30.48%to 30.48% J.P. Morgan U.S. Large Cap Core Equity Portfolio 2007 2 $9.35to $9.35 15 0.00% 1.40%to 1.49% 0.15%to 0.15% 2006 2 $9.33to $9.33 15 0.00% 1.49%to 1.49% 14.85%to 14.85% 2005 2 $8.13to $8.13 13 0.00% 1.49%to 1.49% -0.14%to -0.14% 2004 2 $8.14to $8.14 13 0.00% 1.49%to 1.49% 7.86%to 7.86% 2003 2 $7.54to $7.54 12 0.00% 1.49%to 1.49% 26.24%to 26.24% 108 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** Jennison 20/20 Focus Portfolio 2007 94 $15.95to $17.13 1,539 0.12% 1.25%to 2.75% 7.12%to 8.74% 2006 107 $14.89to $15.80 1,624 0.00% 1.49%to 2.75% 10.54%to 11.93% 2005 107 $13.47to $14.11 1,473 0.00% 1.49%to 2.75% 17.98%to 19.47% 2004 85 $11.42to $11.81 984 0.00% 1.49%to 2.75% 12.24%to 13.67% 2003 31 $10.29to $10.39 318 0.00% 1.49%to 2.10% 26.12%to 26.89% Mutual Discovery Securities Fund 2007 732 $25.68to $30.42 20,783 1.57% 1.25%to 3.05% 8.23%to 13.23% 2006 676 $23.61to $27.51 17,577 1.12% 1.40%to 2.75% 19.73%to 21.61% 2005 582 $19.72to $22.62 12,660 1.33% 1.40%to 2.75% 12.83%to 14.66% 2004 512 $17.47to $19.73 9,929 1.13% 1.40%to 2.75% 14.98%to 16.90% 2003 460 $15.92to $16.88 7,736 1.83% 1.40%to 2.10% 26.31%to 27.40% Mutual Shares Securities Fund 2007 1,224 $20.79to $24.65 27,956 1.55% 1.25%to 3.05% 0.13%to 4.75% 2006 1,165 $20.65to $24.10 26,308 1.37% 1.40%to 2.75% 15.18%to 17.02% 2005 980 $17.93to $20.60 19,434 0.97% 1.40%to 2.75% 7.56%to 9.29% 2004 879 $16.67to $18.85 16,326 0.88% 1.40%to 2.75% 9.57%to 11.31% 2003 889 $15.94to $16.93 14,987 1.17% 1.40%to 2.10% 22.55%to 23.74% OpCap Mid Cap Portfolio 2007 79 $10.35to $10.61 818 0.22% 1.25%to 3.05% 3.99%to 5.89% 2006? 13 $9.92to $10.00 130 0.00% 1.49%to 2.75% -1.24%to -0.41% Oppenheimer Global Securities Fund/VA 2007 150 $13.78to $15.60 2,160 1.49% 1.40%to 2.75% 3.42%to 4.74% 2006 210 $13.32to $14.89 2,918 1.02% 1.49%to 2.75% 14.51%to 15.96% 2005 220 $11.63to $12.84 2,651 1.05% 1.49%to 2.75% 11.21%to 12.62% 2004 232 $10.46to $11.40 2,504 0.90% 1.49%to 2.75% 15.92%to 17.40% 2003 92 $9.20to $9.71 869 0.52% 1.49%to 2.10% 40.05%to 40.90% Oppenheimer High Income Fund/VA 2007 53 $11.71to $12.90 663 8.16% 1.25%to 2.75% -2.83%to -1.35% 2006 90 $12.05to $13.11 1,141 7.80% 1.49%to 2.75% 6.46%to 7.81% 2005 188 $11.32to $12.16 2,210 7.61% 1.49%to 2.75% -0.45%to 0.80% 2004 246 $11.37to $12.06 2,898 8.74% 1.49%to 2.75% 6.00%to 7.35% 2003 171 $10.94to $11.23 1,886 3.62% 1.49%to 2.10% 21.38%to 22.12% 109 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** Oppenheimer Main Street Fund/VA 2007 213 $10.48to $11.31 2,309 1.07% 1.40%to 2.75% 1.58%to 2.87% 2006 291 $10.31to $11.01 3,095 1.16% 1.49%to 2.75% 11.91%to 13.33% 2005 344 $9.22to $9.73 3,248 1.35% 1.49%to 2.75% 3.11%to 4.41% 2004 365 $8.94to $9.34 3,330 0.68% 1.49%to 2.75% 6.48%to 7.84% 2003 146 $8.32to $8.61 1,240 0.74% 1.49%to 2.10% 24.08%to 24.84% PIMCO VIT All Asset Portfolio 2007 166 $12.83to $13.67 2,193 7.39% 1.25%to 3.05% 5.06%to 6.97% 2006 176 $12.39to $12.81 2,200 5.13% 1.49%to 2.75% 1.83%to 3.12% 2005 250 $12.17to $12.42 3,060 5.55% 1.49%to 2.75% 3.35%to 4.66% 2004(2) 57 $11.77to $11.87 668 5.90% 1.49%to 2.75% 10.24%to 11.16% PIMCO VIT CommodityRealReturn Strategy Portfolio 2007 172 $12.36to $12.87 2,146 4.84% 1.25%to 3.05% 19.52%to 21.70% 2006 143 $10.31to $10.53 1,479 4.70% 1.49%to 2.75% -5.72%to -4.53% 2005(3) 75 $10.94to $11.03 823 3.40% 1.49%to 2.75% 9.20%to 10.11% PIMCO VIT Emerging Markets Bond Portfolio 2007 103 $11.85to $12.34 1,235 5.76% 1.25%to 3.05% 2.63%to 4.50% 2006 70 $11.51to $11.76 816 5.25% 1.49%to 2.75% 6.32%to 7.66% 2005(3) 18 $10.83to $10.92 198 3.24% 1.49%to 2.75% 8.22%to 9.12% PIMCO VIT Global Bond Portfolio (Unhedged) 2007 99 $10.07to $10.48 1,005 3.39% 1.25%to 3.05% 6.43%to 8.38% 2006 44 $9.43to $9.61 420 3.46% 1.49%to 2.75% 1.82%to 3.11% 2005(3) 7 $9.26to $9.33 63 0.00% 1.65%to 2.75% -7.27%to -6.49% PIMCO VIT High Yield Portfolio 2007 239 $12.85to $14.14 3,190 7.00% 1.25%to 3.05% 0.39%to 2.22% 2006 276 $12.76to $13.86 3,630 6.93% 1.40%to 2.75% 6.15%to 7.59% 2005 286 $12.02to $12.88 3,518 6.58% 1.40%to 2.75% 1.31%to 2.68% 2004 226 $11.86to $12.54 2,750 6.54% 1.40%to 2.75% 6.58%to 8.04% 2003 98 $11.27to $11.61 1,111 7.21% 1.40%to 2.10% 20.35%to 21.20% 110 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** PIMCO VIT Real Return Portfolio 2007 540$11.57 to $12.30 6,396 4.70% 1.25% to 3.05% 7.33% to 9.29% 2006 621$10.75 to $11.26 6,778 4.26% 1.49% to 2.75% -2.01% to -0.77% 2005 570$10.97 to $11.34 6,319 2.84% 1.49% to 2.75% -0.66% to 0.59% 2004 382$11.02 to $11.28 4,257 1.09% 1.49% to 2.75% 5.96% to 7.30% 2003(1) 58$10.47 to $10.51 607 0.72% 1.49% to 2.10% 4.30% to 4.73% PIMCO VIT StocksPLUS Growth and Income Portfolio 2007 17$10.72 to $11.57 193 7.18% 1.25% to 2.75% 3.94% to 5.52% 2006 30$10.30 to $10.98 323 4.95% 1.40% to 2.75% 11.79% to 13.31% 2005 33 $9.20 to $9.69 316 2.43% 1.40% to 2.60% 0.84% to 2.05% 2004 38 $9.10 to $9.50 357 1.66% 1.40% to 2.60% 7.96% to 9.27% 2003 45 $8.33 to $8.69 385 2.57% 1.40% to 2.10% 27.67% to 28.57% PIMCO VIT Total Return Portfolio 2007 682$12.44 to $14.75 9,028 4.82% 1.25% to 3.05% 5.48% to 7.40% 2006 716$11.76 to $13.52 8,883 4.44% 1.40% to 2.75% 1.04% to 2.41% 2005 678$11.64 to $13.21 8,292 3.44% 1.40% to 2.75% -0.32% to 1.03% 2004 588$11.67 to $13.09 7,202 1.89% 1.40% to 2.75% 2.04% to 3.43% 2003 413$11.66 to $12.67 4,965 2.80% 1.40% to 2.10% 2.86% to 3.58% Seligman Global Technology Portfolio 2007 1 $7.68 to $7.68 8 0.00% 1.40% to 1.49% 13.73% to 13.73% 2006 1 $6.75 to $6.75 9 0.00% 1.49% to 1.49% 16.18% to 16.18% 2005 1 $5.81 to $5.81 8 0.00% 1.49% to 1.49% 6.54% to 6.54% 2004 1 $5.45 to $5.45 7 0.00% 1.49% to 1.49% 2.44% to 2.44% 2003 1 $5.32 to $5.32 7 0.00% 1.49% to 1.49% 34.10% to 34.10% Seligman Small-Cap Value Portfolio 2007 79$18.64 to $28.05 1,579 0.00% 1.40% to 2.75% 1.30% to 2.59% 2006 100$18.40 to $27.35 1,964 0.00% 1.49% to 2.75% 17.97% to 19.46% 2005 106$15.60 to $22.89 1,746 10.45% 1.49% to 2.75% -6.58% to -5.39% 2004 113$16.69 to $24.20 1,993 0.00% 1.49% to 2.75% 16.69% to 18.17% 2003 56$14.58 to $20.48 872 0.00% 1.49% to 2.10% 46.83% to 47.72% 111 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** SP Strategic Partners Focused Growth Portfolio 2007 48 $7.38to $8.12 370 0.00% 1.25%to 2.75% 11.55%to 13.24% 2006 65 $6.62to $7.18 448 0.00% 1.40%to 2.75% -3.78%to -2.48% 2005 80 $6.88to $7.36 563 0.00% 1.40%to 2.75% 11.72%to 13.23% 2004 49 $6.16to $6.50 311 0.00% 1.40%to 2.75% 6.91%to 8.37% 2003 28 $5.87to $6.00 165 0.00% 1.40%to 2.10% 22.84%to 23.71% SP International Growth Portfolio 2007 55 $9.26to $10.19 529 0.43% 1.25%to 2.75% 15.88%to 17.64% 2006 49 $7.99to $8.67 408 1.54% 1.40%to 2.75% 16.92%to 18.51% 2005 52 $6.84to $7.32 367 0.29% 1.40%to 2.75% 12.66%to 14.19% 2004 54 $6.07to $6.41 340 0.00% 1.40%to 2.75% 12.96%to 14.50% 2003 23 $5.48to $5.60 128 0.00% 1.40%to 2.10% 36.25%to 37.21% Templeton Asset Strategy Fund 2007 33 $23.23to $23.49 781 16.91% 1.40%to 1.49% 8.38%to 8.78% 2006 38 $21.37to $21.60 819 7.26% 1.40%to 1.49% 19.32%to 19.71% 2005 45 $17.87to $18.04 816 3.97% 1.40%to 1.49% 2.32%to 2.41% 2004 49 $17.46to $17.62 870 2.94% 1.40%to 1.49% 14.00%to 14.32% 2003 56 $15.29to $15.41 855 2.85% 1.40%to 1.49% 30.00%to 30.47% Templeton Developing Markets Securities Fund 2007 383 $23.43to $28.71 9,888 2.44% 1.25%to 2.75% 25.27%to 27.28% 2006 480 $18.71to $22.56 9,775 1.17% 1.40%to 2.75% 24.62%to 26.65% 2005 479 $15.01to $17.81 7,914 1.28% 1.40%to 2.75% 23.98%to 25.99% 2004 353 $12.11to $14.14 4,770 1.82% 1.40%to 2.75% 21.32%to 23.09% 2003 283 $10.64to $11.48 3,231 1.29% 1.40%to 2.10% 49.81%to 51.60% Templeton Foreign Securities Fund 2007 678 $25.97to $33.00 21,594 2.14% 1.25%to 2.75% 12.31%to 14.17% 2006 777 $23.12to $28.90 21,679 1.38% 1.40%to 2.75% 18.16%to 20.01% 2005 814 $19.57to $24.08 19,137 1.29% 1.40%to 2.75% 7.19%to 8.94% 2004 885 $18.26to $22.11 19,411 1.16% 1.40%to 2.75% 15.30%to 17.22% 2003 937 $17.11to $18.86 17,644 1.88% 1.40%to 2.10% 29.46%to 30.71% 112 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) A summary of units outstanding (thousands), unit values, net assets (thousands), ratios, and total returns for variable annuity contracts for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows: At December 31 For the year ended December 31 ----------------------------------------------------------------------------------- Units Unit Fair Net Assets Investment Expense Ratio Total Return Outstanding Value lowest Income lowest to lowest to to highest Ratio* highest** highest*** Templeton Global Income Securities Fund 2007 140 $25.30to $33.35 4,446 2.76% 1.25%to 3.05% 7.48%to 15.16% 2006 115 $29.91to $30.40 3,501 3.17% 1.40%to 1.49% 11.11%to 11.57% 2005 133 $26.83to $27.24 3,626 6.34% 1.40%to 1.49% -4.51%to -4.26% 2004 145 $28.05to $28.46 4,136 11.01% 1.40%to 1.49% 13.04%to 13.49% 2003 165 $24.74to $25.07 4,126 7.83% 1.40%to 1.49% 20.90%to 21.01% Templeton Growth Securities Fund 2007 812 $24.54to $30.17 22,689 1.44% 1.25%to 3.05% -0.96%to 4.43% 2006 787 $24.64to $29.84 21,966 1.40% 1.40%to 2.75% 18.51%to 20.51% 2005 717 $20.80to $24.76 17,119 1.19% 1.40%to 2.75% 5.92%to 7.55% 2004 761 $19.63to $23.02 17,190 1.25% 1.40%to 2.75% 12.87%to 14.63% 2003 727 $18.54to $20.08 14,581 1.67% 1.40%to 2.10% 29.39%to 30.78% Van Kampen LIT Growth and Income Portfolio 2007 1 $16.81to $16.81 15 0.00% 1.40%to 1.49% 1.27%to 1.27% 2006 1 $16.60to $16.60 15 0.00% 1.49%to 1.49% 14.52%to 14.52% 2005 1 $14.49to $14.49 13 0.00% 1.49%to 1.49% 8.36%to 8.36% 2004 1 $13.37to $13.37 12 0.00% 1.49%to 1.49% 12.68%to 12.68% 2003 1 $11.87to $11.87 10 0.00% 1.49%to 1.49% 26.14%to 26.14% Van Kampen LIT Strategic Growth Portfolio 2007 1 $8.84to $8.84 5 0.00% 1.40%to 1.49% 14.91%to 15.01% 2006 1 $7.69to $7.73 9 0.00% 1.40%to 1.49% 1.11%to 1.20% 2005 2 $7.61to $7.64 12 0.00% 1.40%to 1.49% 6.05%to 6.15% 2004 2 $7.18to $7.20 14 0.00% 1.40%to 1.49% 5.19%to 5.29% 2003 2 $6.82to $6.84 16 0.00% 1.40%to 1.49% 25.16%to 25.27%
113 ALLIANZ LIFE OF NY VARIABLE ACCOUNT C OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to the Financial Statements (continued) December 31, 2007 6. FINANCIAL HIGHLIGHTS (CONTINUED) * These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense risk and administrative charges, that result in direct reductions in the unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. ** These ratios represent the annualized contract expenses of the separate account, consisting of mortality and expense risk and administrative charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying funds are excluded. *** These amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and reflect contract expenses of the separate account. The total return does not include any expenses assessed through the redemption of units, inclusion of these expenses in the calculation would result in a reduction in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for the period indicated or from the effective date through the end of the reporting period. 1. Period from May 1, 2003 (fund commencement) to December 31, 2003 2. Period from May 3, 2004 (fund commencement) to December 31, 2004 3. Period from May 2, 2005 (fund commencement) to December 31, 2005 4. Period from May 2, 2006 (fund commencement) to December 31, 2006 5. Period from May 1, 2007 (fund commencement) to December 31, 2007 114 ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Financial Statements and Supplemental Schedules December 31, 2007 and 2006 (With Report of Independent Registered Public Accounting Firm Thereon) REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholder Allianz Life Insurance Company of New York: We have audited the accompanying balance sheets of Allianz Life Insurance Company of New York (the Company) as of December 31, 2007 and 2006, and the related statements of operations, comprehensive income, stockholder's equity, and cash flows for each of the years in the three-year period ended December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Allianz Life Insurance Company of New York as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information included in Schedules I, III, and IV is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Minneapolis, Minnesota April 16, 2008 ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Balance Sheets December 31, 2007 and 2006 (In thousands, except share data)
Assets 2007 2006 ------------------------------------------------------------------------------------------------------------ Investments: Fixed-maturity securities, at fair value (amortized cost of $278,599 and $279,334, respectively) $ 288,549 $ 282,932 Short-term securities 1,218 8,315 Policy loans 96 68 ------------------------------------------------------------------------------------------------------------ Total investments 289,863 291,315 Cash 1,921 3,970 Accrued investment income 3,766 3,761 Income tax receivable from affiliates 1,333 - Receivables, non-affiliated (net of allowance for uncollectible accounts of $0 in 2007 and 2006) 2,465 2,010 Receivable from parent and affiliates 10,568 - Reinsurance recoverable: Recoverable on policyholder liabilities 4,448 13,726 Receivable on policyholder liabilities 27 55 Deferred acquisition costs 38,741 32,170 Deferred sales inducements 10,992 9,763 Other assets 372 136 ------------------------------------------------------------------------------------------------------------ Assets, exclusive of separate account assets 364,496 356,906 Separate account assets 572,186 547,993 ------------------------------------------------------------------------------------------------------------ Total assets $ 936,682 $ 904,899 ------------------------------------------------------------------------------------------------------------ See accompanying notes to financial statements. 2 ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Balance Sheets December 31, 2007 and 2006 (In thousands, except share data) Liabilities and Stockholder's Equity 2007 2006 ---------------------------------------------------------------------------------------------------------------- Policyholder liabilities: Policy and contract account balances $ 263,300 $ 246,121 Policy and contract claims 7,298 16,750 Future policy benefit reserves 5,147 4,383 Other policyholder funds 1,191 771 Unearned premiums 737 366 ---------------------------------------------------------------------------------------------------------------- Total policyholder liabilities 277,673 268,391 Payable to parent and affiliates - 1,766 Deferred gain on reinsurance 748 8,704 Amounts drawn in excess of bank balances 1,045 1,464 Income tax payable to affiliate - 2,762 Deferred income taxes 5,390 17 Other liabilities 1,688 5,461 ---------------------------------------------------------------------------------------------------------------- Liabilities, exclusive of separate account liabilities 286,544 288,565 Separate account liabilities 572,186 547,993 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Total liabilities 858,730 836,558 ---------------------------------------------------------------------------------------------------------------- Stockholder's equity: Common stock, $10 par value; 200,000 shares authorized, issued, and outstanding at December 31, 2007 and 2006 2,000 2,000 Additional paid-in capital 15,500 15,500 Retained earnings 57,147 49,337 Accumulated other comprehensive income 3,305 1,504 ---------------------------------------------------------------------------------------------------------------- Total stockholder's equity 77,952 68,341 ---------------------------------------------------------------------------------------------------------------- Total liabilities and stockholder's equity $ 936,682 $ 904,899 ----------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 3 ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Statements of Operations Years Ended December 31, 2007, 2006, and 2005 (In thousands)
2007 2006 2005 -------------------------------------------------------------------------------------------------------------- Revenue: Annuity considerations and policy fees $ 11,017 $ 10,200 $ 8,110 Accident and health premiums 5,034 16,632 18,701 Life insurance premiums 1,529 1,780 2,086 -------------------------------------------------------------------------------------------------------------- Total premiums and considerations 17,580 28,612 28,897 Premiums ceded 4,824 8,278 8,095 -------------------------------------------------------------------------------------------------------------- Net premiums and considerations 12,756 20,334 20,802 Net investment income 19,893 12,127 9,930 Realized investment (losses) gains, net (6,035) (5,522) 23 Amortization of deferred gain on reinsurance 7,955 4,246 - Other 583 507 462 -------------------------------------------------------------------------------------------------------------- Total revenue 35,152 31,692 31,217 -------------------------------------------------------------------------------------------------------------- Benefits and expenses: Interest credited to policyholder account values 8,022 5,744 5,454 Life insurance benefits 926 597 1,171 Annuity benefits 2,023 834 1,461 Accident and health insurance benefits 5,134 16,292 13,956 -------------------------------------------------------------------------------------------------------------- Total benefits 16,105 23,467 22,042 - Benefit recoveries 5,196 5,941 5,493 -------------------------------------------------------------------------------------------------------------- Net benefits 10,909 17,526 16,549 Commissions and other agent compensation 9,764 8,238 9,349 General and administrative expenses, affiliated 4,958 7,912 8,261 General and administrative expenses, non-affiliated 6,919 3,836 1,164 Taxes, licenses, and fees 1,226 900 491 Change in deferred acquisition costs, net (9,650) (8,153) (7,833) -------------------------------------------------------------------------------------------------------------- Total benefits and expenses 24,126 30,259 27,981 -------------------------------------------------------------------------------------------------------------- Income from operations before income taxes 11,026 1,433 3,236 -------------------------------------------------------------------------------------------------------------- Income tax (benefit) expense: Current (1,537) 1,333 1,439 Deferred 4,753 (1,356) (1,085) -------------------------------------------------------------------------------------------------------------- Total income tax expense (benefit) 3,216 (23) 354 -------------------------------------------------------------------------------------------------------------- Net income $ 7,810 $ 1,456 $ 2,882 --------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 4 ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Statements of Comprehensive Income Years Ended December 31, 2007, 2006, and 2005 (In thousands)
2007 2006 2005 ---------------------------------------------------------------------------------------------------------------------- Net income $ 7,810 $ 1,456 $ 2,882 ---------------------------------------------------------------------------------------------------------------------- Other comprehensive income (loss): Unrealized losses on fixed-maturity and equity securities: Unrealized holding losses arising during the period, net of effect of shadow adjustments of $3,581, $1,061 and $224, in 2007, 2006, and 2005, respectively and net of tax benefit of $1,143, $1,866, and $1,282 in 2007, 2006, and 2005, respectively (2,122) (3,467) (2,381) Decrease (increase) in unrealized holding losses due to reclassification adjustment for realized (losses) gains included in net income, net of tax (benefit) expense of $(2,112), $(1,932), and $7 in 2007, 2006, and 2005, respectively 3,923 3,590 (15) ---------------------------------------------------------------------------------------------------------------------- Total other comprehensive income (loss) 1,801 123 (2,396) ---------------------------------------------------------------------------------------------------------------------- Total comprehensive income $ 9,611 $ 1,579 $ 486 ----------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 5 ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Statements of Stockholder's Equity Years Ended December 31, 2007, 2006, and 2005 (In thousands)
Accumulated Additional other Total Common paid in Retained comprehensive stockholder's stock capital earnings income (loss) equity ------------------- ------------------ ------------------ ------------------ --------------- 2005: Balance, beginning of year $ 2,000 $ 15,500 $ 44,999 $ 3,777 $ 66,276 Comprehensive income: Net income - - 2,882 - 2,882 Net unrealized loss on investments, net of shadow adjustments and deferred taxes - - - (2,396) (2,396) ------------------ Total comprehensive income 486 ------------------- ------------------ ------------------ ------------------ ------------------ ------------------- ------------------ ------------------ ------------------ ------------------ Balance, end of year 2,000 15,500 47,881 1,381 66,762 =================== ================== ================== ================== ================== 2006: Balance, beginning of year 2,000 15,500 47,881 1,381 66,762 Comprehensive income: Net income - - 1,456 - 1,456 Net unrealized gain on investments, net of shadow adjustments and deferred taxes - - - 123 123 ------------------ Total comprehensive income 1,579 ------------------- ------------------ ------------------ ------------------ ------------------ ------------------- ------------------ ------------------ ------------------ ------------------ Balance, end of year 2,000 15,500 49,337 1,504 68,341 =================== ================== ================== ================== ================== 2007: Balance, beginning of year 2,000 15,500 49,337 1,504 68,341 Comprehensive income: Net income - - 7,810 - 7,810 Net unrealized gain on investments, net of shadow adjustments and deferred taxes - - - 1,801 1,801 ------------------ Total comprehensive income 9,611 ------------------- ------------------ ------------------ ------------------ ------------------ ------------------- ------------------ ------------------ ------------------ ------------------ Balance, end of year $ 2,000 $ 15,500 $ 57,147 $ 3,305 $ 77,952 =================== ================== ================== ================== ==================
See accompanying notes to financial statements. 6 ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Statements of Cash Flows Years ended December 31, 2007, 2006, and 2005 (In thousands except security holdings quantities)
2007 2006 2005 ----------------------------------------------------------------------------------------------------------------------- Cash flows provided by (used in) operating activities: Net income $ 7,810 $ 1,456 $ 2,882 ----------------------------------------------------------------------------------------------------------------------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Realized investment losses (gains) 6,035 5,522 (23) Unrealized (loss) gain on annuity-related reserves (3,197) 4,928 42 Deferred federal income tax expense (benefit) 4,753 (1,356) (1,085) Charges to policy account balances (327) (16) (19) Interest credited to policy account balances 8,022 5,744 5,454 Amortization of (discount) premium , net (367) 450 456 Change in: Receivables and other assets (1,045) (1,280) (1,098) Reinsurance recoverable 9,306 (8,500) (806) Deferred gain on reinsurance (7,956) 8,704 - Deferred acquisition costs (9,649) (8,153) (7,833) Deferred sales inducements (1,733) (2,863) (2,591) Future policy benefit reserves 764 240 295 Policy and contract claims (9,452) 67 2,638 Unearned premiums 371 259 12 Other policyholder funds 420 (2,174) 2,010 Reinsurance payable (285) (36) 429 Accrued expenses and other liabilities (3,955) 4,717 (265) Commissions due and accrued 469 (313) (117) Current tax payable (recoverable) (4,095) 1,170 (428) (Receivable) payable (from) to parent (12,334) 2,228 (1,893) ----------------------------------------------------------------------------------------------------------------------- Total adjustments (24,255) 9,338 (4,822) ----------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) operating activities (16,445) 10,794 (1,940) ----------------------------------------------------------------------------------------------------------------------- Cash flows provided by (used in) investing activities: Purchase of fixed-maturity securities (69,585) (59,334) (130,395) Purchase of equity securities - (9) (150) Sale and other redemptions of fixed-maturity securities 64,649 20,696 43,001 Sale of equity securities, tax free exchanges, and spin-offs - 1,088 143 Change in securities held under agreements to repurchase - (879) 878 Net change in short-term securities 7,097 (1,425) (1,508) Other, net (28) (32) 44 ----------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities 2,133 (39,895) (87,987) ----------------------------------------------------------------------------------------------------------------------- Cash flows provided by financing activities: Policyholders' deposits to account balances 57,756 50,045 100,884 Policyholders' withdrawals from account balances (44,823) (13,651) (10,453) Policyholders' net transfers between account balances (251) (6,760) (641) Change in amounts drawn in excess of bank balances (419) (353) 1,171 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 12,263 29,281 90,961 ----------------------------------------------------------------------------------------------------------------------- Net change in cash (2,049) 180 1,034 Cash at beginning of year 3,970 3,790 2,756 ----------------------------------------------------------------------------------------------------------------------- Cash at end of year $ 1,921 $ 3,970 $ 3,790 -----------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 7 ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) (1) ORGANIZATION Allianz Life Insurance Company of New York (the Company) is a wholly owned subsidiary of Allianz Life Insurance Company of North America (Allianz Life), a wholly owned subsidiary of Allianz of America, Inc. (AZOA), a wholly owned subsidiary of Allianz Societas Europaea (Allianz SE), a European company incorporated in Germany. The Company is a life insurance company licensed to sell annuity, group accident and health, group life, and long-term care policies in six states and the District of Columbia. Based on 2007 statutory net premium written, 99%, 1%, and less than 1% of the Company's business is annuity, accident and health, and life insurance, respectively. The annuity business consists of variable, fixed-indexed, five-year deferred, and one-year deferred annuities representing 65%, 20%, 15%, and less than 1% of 2007 statutory net premium written, respectively. As a result of the 2006 sale of certain health business discussed in note 9, going forward accident and health business is comprised primarily of long-term care. Life business is comprised of both traditional and group life and consists principally of term insurance policies. The Company's primary distribution channels are through independent agents and third-party marketing organizations. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP), which vary in certain respects from accounting practices prescribed or permitted by state insurance regulatory authorities. USE OF ESTIMATES The preparation of the accompanying financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect reported amounts of assets and liabilities, including reporting or disclosure of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Future events, including changes in mortality, morbidity, interest rates, capital markets, and asset valuations, could cause actual results to differ from the estimates used in the accompanying financial statements. Such changes in estimates are recorded in the period they are determined. INVESTMENT PRODUCTS BUSINESS Investment products consist primarily of fixed-indexed, variable, and deferred annuity products. Premium receipts are reported as deposits to the contractholders' accounts. Annuity considerations and policy fees on the accompanying Statements of Operations represent asset fees, cost of insurance charges, administrative fees, and surrender charges for investment products. These fees have been earned and assessed against contractholders on a daily or monthly basis throughout the contract period and are recognized as revenue when assessed and earned. Amounts assessed that represent compensation to the insurance enterprise for services to be provided in future periods are not earned in the period assessed. Such amounts shall be reported as unearned premiums and recognized in income over the period benefited using the same assumptions and factors used to amortize capitalized acquisition costs. Surrender charges are recognized upon surrender of a contract in accordance with contractual terms. The change in fair value of embedded derivatives in fixed-indexed and variable products is included in net investment income. Benefits consist of interest credited to contractholders' accounts and claims incurred in excess of the contractholders' account balance and are included in annuity benefits on the accompanying Statements of Operations. 8 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) LIFE AND ACCIDENT AND HEALTH INSURANCE Premiums on traditional life products are recognized as earned when due. Benefits and expenses are associated with earned premiums so as to result in recognition of profits over the life of the contracts. This association is accomplished by establishing provisions for future policy benefits and deferring and amortizing related acquisition costs (see next section below for further information). Accident and health premiums are recognized as earned on a pro-rata basis over the risk coverage periods. Benefits and expenses are recognized as incurred. DEFERRED ACQUISITION COSTS Acquisition costs, consisting of commissions and other costs that vary with and are primarily related to production of new business, are deferred to the extent recoverable from future policy revenues and gross profits. For investment products, acquisition costs are amortized in relation to the present value of expected future gross profits from investment margins and mortality, morbidity, and expense charges. Acquisition costs for accident and health insurance policies are deferred and amortized over the lives of the policies in the same manner as premiums are earned. For traditional life and group life products, such costs are amortized over the projected earnings pattern of the related policies using the same actuarial assumptions used in computing future policy benefit reserves. Deferred acquisition costs (DAC) are reviewed for recoverability, at least annually, and adjusted when necessary. Adjustments to DAC are made to reflect the corresponding impact on the present value of expected future gross profits from unrealized gains and losses on available-for-sale investments used to support policyholder liabilities (commonly known as shadow DAC). These adjustments are included in accumulated other comprehensive income and are explained further in the investments section of this note. Changes in assumptions can have an impact on the amount of DAC reported for annuity and life insurance products and their related amortization patterns. In the event experience differs from assumptions or assumptions are revised, the Company is required to record an increase or decrease in DAC amortization expense (DAC unlocking). In general, increases in the estimated investment spreads and fees result in increased expected future profitability and may lower the rate of DAC amortization, while increases in lapse/surrender and mortality assumptions reduce the expected future profitability of the underlying business and may increase the rate of DAC amortization. The Company formally evaluates the appropriateness of the best-estimate assumptions on an annual basis. If the economic environment or policyholder behavior changes quickly and substantially, assumptions will be reviewed more frequently to affirm best estimates. Any resulting DAC unlocking is reflected currently on the accompanying Statements of Operations. Adjustments may also be made to the estimated gross profits related to DAC that correspond with deferred annuities for investment activity, such as bond defaults on fixed-maturity securities, write-downs on other-than-temporarily impaired fixed-maturity securities, and trading gains and losses. Management action may include assumption changes in the DAC models, such as adjustments to expected future gross profits used, as well as policyholder changes, such as credited rate or cap changes. This approach applies to fixed-maturity securities purchased as investment grade only and not noninvestment grade items that were purchased with other yield considerations. 9 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) The Company assesses internal replacements on insurance contracts to determine whether such modifications significantly change the contract terms. An internal replacement represents a modification in product benefits, features, rights, or coverages that occurs by the exchange of an insurance contract for a new insurance contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. If the modification substantially changes the contract, the remaining DAC on the original contract are immediately expensed and any new DAC on the replacement contract are deferred. If the contract modification does not substantially change the contract, DAC amortization on the original contract continues and any new acquisition costs associated with the modification are immediately expensed. DEFERRED SALES INDUCEMENTS Sales inducements are product features that enhance the investment yield to the contractholder on the contract. The Company offers two types of sales inducements on certain annuity contracts. The first type, an immediate bonus, increases the account value at inception, and the second type, a persistency bonus, increases the account value at the end of a specified period. Sales inducements are deferred as paid or credited to contract holders. Deferred sales inducements (DSI) are amortized over the expected life of the contract in a manner similar to DAC and are reviewed annually for recoverability. Amortization is recorded in annuity benefits on the Statements of Operations. DSI related to a persistency bonus are recorded in life insurance benefits on the accompanying Statements of Operations. DSI related to an immediate bonus are shown as a reduction of premium within annuity considerations and policy fees on the accompanying Statements of Operations. Adjustments to DSI are made to reflect the corresponding impact on the present value of expected future gross profits from unrealized gains and losses on available-for-sale investments used to support policyholder liabilities (commonly known as shadow DSI). These adjustments are included in accumulated other comprehensive income and are explained further in the Investments section of this note. Adjustments may also be made to DSI related to deferred annuities for investment activity, such as bond defaults on fixed-maturity securities, write-downs on other-than-temporarily impaired fixed-maturity securities, and trading gains and losses. Management action may include assumption changes in the DSI models, such as adjustments to expected future gross profits used, as well as policyholder changes, such as credited rate changes. This approach applies to fixed-maturity securities purchased as investment grade only and not non-investment grade items that were purchased with other yield considerations. FUTURE POLICY BENEFIT RESERVES Future policy benefit reserves on traditional life products are computed by the net level-premium method based upon estimated future investment yield, mortality, and withdrawal assumptions, commensurate with the Company's experience, modified as necessary to reflect anticipated trends, including possible unfavorable deviations. Most life reserve interest assumptions range from 4.0% to 6.0%. POLICY AND CONTRACT ACCOUNT BALANCES Policy and contract account balances for investment products, which include fixed deferred annuities, are generally carried at accumulated contract values. For fixed-indexed products, the policyholder obligation is divided into two parts - one part representing the value of the underlying base contract (host contract) and the second part representing the fair value of the expected index benefit over the life of the contract. The host contract is valued using principles consistent with similar deferred annuity contracts without an index benefit. The index benefit is valued at fair value using current capital market assumptions, along with estimates of future policyholder behavior. The fair value determination of the index benefit is sensitive to the economic market and 10 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) interest rate environment, as it is discounted at current market interest rates. There is volatility in this liability due to these external market sensitivities. Policy and contract account balances for variable annuity products are carried at accumulated contract values. Any additional reserves for any death and income benefits that may exceed the accumulated contract values are established using a range of economic scenarios and are accrued for using assumptions consistent with those used in estimating gross profits for purposes of amortizing DAC. POLICY AND CONTRACT CLAIMS Policy and contract claims include the liability for claims reported but not yet paid, claims incurred but not yet reported (IBNR), and claim settlement expenses as of December 31 on the Company's accident and health business. Development methods are generally used in the determination of IBNR. In cases of limited experience or lack of credible claims data, loss ratios are used to determine an appropriate IBNR. Claim and IBNR liabilities of a short-term nature are not discounted, but those claim liabilities resulting from disability income or long-term care benefits include interest and mortality discounting. REINSURANCE The Company assumes and cedes business with other insurers. Reinsurance premium and benefits paid or provided are accounted for in a manner consistent with the basis used in accounting for original policies issued and the terms of the reinsurance contracts. Insurance liabilities are reported before the effects of reinsurance. Future policy benefit reserves, policy and contract account balances, and unpaid claims covered under reinsurance contracts are recorded as a reinsurance recoverable. Amounts paid or deemed to have been paid for claims covered by reinsurance contracts are recorded as a reinsurance receivable. Reinsurance recoverables are recognized in a manner consistent with the liabilities related to the underlying reinsured contracts. Amounts due to other insurers on assumed business is recorded as a reinsurance payable. The gain recognized when the Company enters into a coinsurance agreement with a third-party reinsurer is deferred and recorded in deferred gain on reinsurance on the accompanying Balance Sheets. The gains are amortized into operations over either the revenue-producing period or the claims run-off period, as appropriate, of the related reinsured policies. INVESTMENTS The Company classifies certain fixed-maturity securities as "available-for-sale," and accordingly, the securities are carried at fair value, and related unrealized gains and losses are credited or charged directly to accumulated other comprehensive income in stockholder's equity, net of tax and related adjustments to DAC and DSI (commonly referred to as shadow adjustments). The adjustments to DAC and DSI represent the change in amortization that would have been required as a charge or credit to operations had such unrealized amounts been realized. Dividends are accrued on the date they are declared. Interest is accrued as earned. Prepayment assumptions for loan-backed securities are obtained from various external sources or internal estimates. Premiums or discounts on fixed-maturity securities are amortized using the constant yield method. Short-term securities, which include certificates of deposit, are carried at amortized cost. Policy loans are reflected at their unpaid principal balances. For mortgage-backed securities and structured securities, the Company recognizes income using a constant effective-yield method based on prepayment assumptions and the estimated economic life of the securities. When estimated prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. Any resulting adjustment is 11 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) included in net investment income on the accompanying Statements of Operations. The fair value of fixed-maturity securities, equity securities, and securities held under agreements to repurchase are obtained from third-party pricing sources wherever possible, except for short-term securities, which are priced at amortized cost. In certain cases, including private assets as well as certain difficult to price securities, internal pricing models may be used that are based on market proxies. The internal pricing models use yield spreads versus U.S. Treasury Bonds to estimate a market price, approximately 0.3% of the fixed maturity securities are valued using this method. The models use market yields of corporate securities with credit and maturity characteristics similar to the security being priced to derive a spread to treasuries, approximately 0.2% of the fixed maturity securities are valued using this method. All prices that are not supplied by pricing vendors are reviewed and approved by the AZOA Head of Fixed Income and further reviewed and approved by the AZOA Chief Operating Officer or AZOA Compliance Officer. Short-term securities, which include certificates of deposit, are carried at amortized cost, which approximates fair value. Policy loan balances, which are supported by the underlying cash value of the policies, approximate fair value. Realized gains and losses are computed based on sale lots with the highest cost basis on the trade date. Those lots are sold first. The Company adjusts DAC and DSI for unrealized gains and losses on available-for-sale investments that support policyholder liabilities. Changes in the fair value of available-for-sale investments are reflected as a direct charge or credit to accumulated other comprehensive income in stockholder's equity, net of related adjustments for DAC, DSI, and deferred taxes that would have been recorded if these investments had been sold as of the Balance Sheet date. The Company reviews the entire available-for-sale investment portfolio each quarter to determine whether declines in fair value are other-than-temporary. The Company views equity securities that have a fair value of at least 20% below average cost at the end of a quarter or are in an unrealized loss position for nine consecutive months as other-than-temporarily impaired. However, other factors, including market analysis, current events, and management's judgment, are also used to determine whether equity securities are considered other-than-temporarily impaired and may result in an equity security being impaired. All previously impaired equity securities will also incur additional impairments should the fair value fall below the book value. For the year ended December 31, 2006, the Company adopted Financial Accounting Standard Board (FASB), FASB Staff Position (FSP) FSP FAS 115-1 and FAS 124-1, THE MEANING OF OTHER-THAN-TEMPORARY IMPAIRMENT AND ITS APPLICATION TO CERTAIN INVESTMENTS (FSP FAS 115-1). The Company continues to evaluate factors in addition to average cost and fair value, including credit quality, market analysis, current events, and management's judgment, to determine whether fixed-maturity securities are considered other-than-temporarily impaired. In addition, FSP FAS 115-1 requires that the Company evaluate other-than-temporary impairments on available-for-sale fixed-income securities based on additional factors. Specifically, declines in value resulting from changes in risk-free interest rates must also be considered. If a fixed-maturity security's fair market value is less than its amortized cost value, an impairment loss must be recorded unless management can assert its ability and intent to hold until recovery. The Company's absence of control over the investment manager's decision to sell (or hold) renders the Company unable to assert ability to hold to recovery and will therefore require the Company to classify all impairments as other-than-temporary and recognize an impairment loss in the period of the decline. In periods subsequent to the recognition of an other-than-temporary impairment loss, the impaired fixed-maturity security must be accounted for as if it had been purchased on the date of the impairment. That is, the discount or reduced premium recorded from the fixed-maturity security would be accreted over its remaining life in a prospective manner. Impairments in the value of securities held by the Company, considered to be other-than-temporary, are recorded as a reduction of the cost of the security, and a corresponding realized loss is recognized on the accompanying Statements of Operations. The Company may adjust DAC and DSI for impairments on fixed-maturity securities, as discussed in their respective sections of this note. 12 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) ACCOUNTING FOR FUTURES CONTRACTS The Company provides additional benefits through certain life and annuity products which may increase the policy annuitization value based on the growth in the Standard and Poor's (S&P) 500 Index and the NASDAQ 100 Index. The Company has analyzed the characteristics of these benefits and, beginning in July 2006, has entered into exchange-traded futures contracts in order to economically hedge these risks. Management monitors correlation of in-force amounts and futures contract values to ensure satisfactory matching. If persistency assumptions were to deviate significantly from anticipated rates, management would purchase or sell futures contracts as deemed appropriate or take other actions. Futures contracts do not require an initial cash outlay and the Company has agreed to daily net settlement based on movements of the representative index. Therefore, no asset or liability is recorded on the accompanying Balance Sheets. Gains and/or losses on futures contracts are included in net investment income on the accompanying Statements of Operations. The Company is required by the Chicago Mercantile Exchange (CME) to post collateral for futures contracts. The Company retains ownership of the collateral but the collateral resides in an account designated by the CME and the collateral is subject to the CME exchange rules regarding rehypothecation. Collateral posted at December 31, 2007 and 2006 were U.S. Treasury Bonds with a fair value of $4,655 and $4,854, respectively, and included in fixed-maturity securities on the accompanying Balance Sheets. RECEIVABLES Receivable balances (contractual amount less allowance for doubtful accounts) approximate estimated fair values. This is based on pertinent information available to management as of year-end, including the financial condition and creditworthiness of the parties underlying the receivables. Receivable balances are monitored and allowances for doubtful accounts are maintained based on the nature of the receivable. INCOME TAXES The Company and the Company's parent, Allianz Life, file a consolidated federal income tax return with AZOA. The consolidated tax allocation agreement stipulates that each company participating in the return will bear its share of the tax liability pursuant to certain tax allocation elections under the Internal Revenue Code and its related regulations, and then reimbursement will be in accordance with an intercompany tax reimbursement arrangement. The Company generally will be paid for the tax benefit on its losses and any other tax attributes to the extent it could have obtained a benefit against the Company's post-1990 separate return tax liability. The Company provides for federal income taxes based on amounts the Company believes it ultimately will owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain items and the realization of certain tax credits. In the event the ultimate deductibility of certain items or the realization of certain tax credits differs from estimates, the Company may be required to significantly change the provision for federal income taxes recorded on the accompanying Balance Sheets. Any such change could significantly affect the amounts reported on the accompanying Statements of Operations. Management uses best estimates to establish reserves based on current facts and circumstances regarding tax exposure items where the ultimate deductibility is open to interpretation. Quarterly, management evaluates the appropriateness of such reserves based on any new developments specific to their fact patterns. Information considered includes results of completed tax examinations, Technical Advice Memorandums, and other rulings issued by the Internal Revenue Service (IRS) or the tax courts. The Company utilizes the asset and liability method of accounting for income tax. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets 12 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Valuation allowances are established when it is determined that it is more likely than not that the deferred tax asset will not be fully realized (see further discussion in note 10). SEPARATE ACCOUNTS The Company issues variable annuity and life contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholder. The Company recognizes gains or losses on transfers from the general account to the separate accounts at fair value to the extent of contractholder interests in separate accounts, which are offset by changes in contractholder liabilities. The Company also issues variable annuity and life contracts through its separate accounts, where the Company provides certain contractual guarantees to the contractholder. These guarantees are in the form of a guaranteed minimum death benefit (GMDB), a guaranteed minimum income benefit (GMIB), a guaranteed minimum accumulation benefit (GMAB), and a guaranteed minimum withdrawal benefit (GMWB). These guarantees provide for benefits that are payable to the contractholder in the event of death or annuitization. Separate account assets supporting variable annuity contracts represent funds for which investment income and investment gains and losses accrue directly to contractholders. Each fund has specific investment objectives, and the assets are carried at fair value. The assets of each account are legally segregated and are not subject to claims that arise out of any of other business of the Company. Separate account assets and liabilities are reported as summary totals on the accompanying Balance Sheets. Amounts charged to the contractholders for mortality and contract maintenance are included in annuity considerations and policy fees on the accompanying Statements of Operations. These fees have been earned and assessed against contractholders on a daily or monthly basis throughout the contract period and are recognized as revenue when assessed and earned. Changes in the liabilities for minimum guarantees are included in annuity benefits on the accompanying Statements of Operations. The GMDB net amount at risk is defined as the guaranteed amount that would be paid upon death, less the current accumulated policyholder account value. The GMIB net amount at risk is defined as the current amount that would be needed to fund expected future guaranteed payments less the current policyholder account value, assuming that all benefit selections occur as of the valuation date. The GMDB provides a specified minimum return upon death. The survivor has the option to terminate the contract or continue it and have the death benefit paid into the contract. The Company's GMDB options have the following definitions: o RETURN OF PREMIUM: Provides the greater of account value or total deposits made to the contract, less any partial withdrawals and assessments. o RESET: Provides the greater of a return of premium death benefit or the most recent five-year anniversary (prior to age 81) account value, adjusted for withdrawals. o RATCHET: Provides the greater of a return of premium death benefit or the highest specified "anniversary" account value (prior to age 81), adjusted for withdrawals. Currently, there are three versions of ratchet, with the difference based on the definition of anniversary: quarter - evaluated quarterly, annual - evaluated annually, and six-year - evaluated every sixth year. 14 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) The GMIB is a living benefit that provides the contractholder with a guaranteed annuitization value. The GMIB types are: o RETURN OF PREMIUM: Provides the greater of account value or total deposits made to the contract, less any partial withdrawals and assessments. o RATCHET: Provides an annuitization value equal to the greater of account value, net premiums, or the highest one-year anniversary account value (prior to age 81), adjusted for withdrawals. o ROLLUP: Provides an annuitization value equal to the greater of account value and premiums, adjusted for withdrawals accumulated with a compound interest rate. The GMAB is a living benefit that provides the contract holder with a guaranteed value that was established at least five years prior at each contract anniversary. This benefit is first available at the fifth contract anniversary. Depending on the contract holder's selection at issue, this value may be either a return of premium or may reflect market gains, adjusted at least proportionately for withdrawals. The contract holder also has the option to reset this benefit. The GMWB is a living benefit that provides the contract holder with a guaranteed amount of income in the form of partial withdrawals. The benefit is payable provided the covered person is between the ages of 50 and 90. The benefit is a fixed rate (depending on the age of the covered person) multiplied by the benefit base in the first year the benefit is taken and contract value in following years. The benefit does not decrease if the contract value decreases due to market losses. The benefit can decrease if the contract value is reduced by withdrawals. The benefit base used to calculate the initial benefit is the maximum of: the contract value, the quarterly anniversary value, or the 5% annual increase of purchase payments (capped at twice the total purchase payments). 15 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) Guaranteed minimums for the respective years ended December 31 are summarized as follows (note that the amounts listed are not mutually exclusive, as many products contain multiple guarantees):
December 31, 2007 December 31, 2006 -------------------------------------------- ------------------------------------------- -------------------------------------------- ------------------------------------------- Guaranteed Minimum Death Account Net Amount Weighted Account Net Amount Weighted Benefits (GMDB) Value at Risk Age Value at Risk Age ---------------------------------- ------------- ------------- ------------ ------------- ------------ ------------ ---------------------------------- ------------- ------------- ------------ ------------- ------------ ------------ Return of premium $ 164,072 $ 209 61.1 $ 148,380 $ - 62.1 Ratchet & return of premium 272,151 4,443 67.2 249,071 840 60.5 Reset 191,531 1,520 71.4 216,451 968 69.9 ------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------ Total $ 627,754 $ 6,172 $ 613,902 $ 1,808 ============= ============= ============= ============ ============= ============= ============= ============ Guaranteed Minimum Income Account Net Amount Weighted Account Net Amount Weighted Benefits (GMIB) Value at Risk Age Value at Risk Age ---------------------------------- ------------- ------------- ------------ ------------- ------------ ------------ ---------------------------------- ------------- ------------- ------------ ------------- ------------ ------------ Return of premium $ 113,908 $ - 59.2 $ 13,412 $ - 65.5 Ratchet & rollup 268,398 39 69.3 208,346 29 58.7 ------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------ Total $ 382,306 $ 39 $ 221,758 $ 29 ============= ============= ============= ============ ============= ============= ============= ============ Guaranteed Minimum Accumulation Account Net Amount Weighted Account Net Amount Weighted Benefits (GMAB) Value at Risk Age Value at Risk Age ---------------------------------- ------------- ------------- ------------ ------------- ------------ ------------ ---------------------------------- ------------- ------------- ------------ ------------- ------------ ------------ 5 year $ 16,336 $ 274 n/a $ - $ - n/a ------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------ Total $ 16,336 $ 274 $ - $ - ============= ============= ============= ============ ============= ============= ============= ============ Guaranteed Minimum Withdrawal Account Net Amount Weighted Account Net Amount Weighted Benefits (GMWB) Value at Risk Age Value at Risk Age ---------------------------------- ------------- ------------- ------------ ------------- ------------ ------------ ---------------------------------- ------------- ------------- ------------ ------------- ------------ ------------ No living benefit $ 2,238 - n/a $ - $ - n/a Life benefit with optional reset 9,705 - n/a - - n/a ------------- ------------- ------------ ------------- ------------ ------------ Total $ 11,943 $ - $ - $ - ============= ============= ============= ============ ============= ============= ============= ============
At December 31, 2007 and 2006, variable annuity account balances were invested in separate account funds with the following investment objectives. Balances are presented at fair value: Investment Type 2007 2006 ----------------------------------------------------------- ------------ ----------------------------------------------------------- ------------ Mutual Funds: Bond $ 58,55 $ 63,161 Domestic equity 221,609 230,015 International equity 93,134 87,148 Specialty 172,252 143,192 -------------- ------------ -------------- ------------ Total mutual fund 545,552 523,516 Money market funds 25,319 22,991 -------------- ------------ -------------- ------------ Total funds 570,871 546,507 -------------- ------------ -------------- ------------ Other 1,315 1,486 -------------- ------------ -------------- ------------ Total $ 572,186 $ 547,993 ============== ============ ============== ============ 16 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) The following table summarizes the liabilities for variable contract guarantees that are reflected in the general account and shown in future policy benefit reserves on the accompanying Balance Sheets:
GMDB GMIB Totals ------------------------------------------------------------------------------------------------------------ Balance as of December 31, 2005 $ 433 $ 123 $ 556 Incurred guaranteed benefits 150 171 321 Paid guaranteed benefits 8 - 8 ---------------- -------------- -------------- Balance as of December 31, 2006 591 294 885 ---------------- -------------- -------------- Incurred guaranteed benefits 65 74 139 Paid guaranteed benefits (40) - (40) ---------------- -------------- -------------- Balance as of December 31, 2007 $ 616 $ 368 $ 984 ================ ============== ==============
The GMDB and GMIB liabilities are determined each period by estimating the expected future claims in excess of the associated account balances. The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to annuity benefits on the accompanying Statements of Operations, if actual experience or other evidence suggests that earlier assumptions should be revised. The GMAB and GMWB liabilities are determined each period by estimating the expected future claims and the expected future profits and taking the difference. One result of this calculation is that these liabilities can be negative (contra-liability). The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to annuity benefits on the accompanying Statements of Operations, if actual experience or other evidence suggests that earlier assumptions should be revised. Products featuring these benefits were first issued in 2007. In the calendar year that a product launches, the reserves are set to $0. Thus, at December 31, 2007, there were no reserves established for these products. The following assumptions were used to determine the GMDB and GMIB liabilities as of December 31, 2007 and 2006: o 100 stochastically-generated investment performance scenarios. o Mean investment performance assumption was 7.96%. o Volatility assumption was 13.69%. o Mortality is assumed to be 60% of the 1994 MGDB Mortality Table as of December 31, 2007 and 2006, respectively. o Lapse rates vary by contract type and duration. Spike rates could approach 45%, with an ultimate rate around 20%. o GMIB contracts have dynamic lapse and benefit utilization assumptions. For example, if the contract is projected to have a large additional benefit, then it becomes more likely to elect the GMIB benefit and less likely to lapse. o Discount rates vary by contract type and are equal to an assumed long-term investment return (8.6%), less the applicable mortality and expense rate. PERMITTED STATUTORY ACCOUNTING PRACTICES The Company is required to file annual statements with insurance regulatory authorities, which are prepared on an accounting basis prescribed or permitted by such authorities. Prescribed statutory accounting practices include state laws, regulations, and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners (NAIC). Permitted statutory accounting practices encompass all accounting practices that are not prescribed; such practices differ from state to state, may differ from company to company within a state, and may change in the future. The Company currently has no permitted practices. 17 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - ADOPTED In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation (FIN) No. 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES, AN INTERPRETATION OF FASB STATEMENT NO. 109, ACCOUNTING FOR INCOME TAXES (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, ACCOUNTING FOR INCOME TAXES. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and additional disclosure. Upon adoption, the cumulative effect of applying FIN 48 is reported as an adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets in the balance sheet). This pronouncement was adopted January 1, 2007 and did not have a material impact on the accompanying Financial Statements. In May 2007, the FASB issued FASB Staff Position (FSP) FIN 48-1, DEFINITION OF SETTLEMENT IN FASB INTERPRETATION NO. 48 (FSP FIN 48-1). The FSP addresses whether it is appropriate for a company to recognize a previously unrecognized tax benefit when the only factor that has changed, since determining that a benefit should not be recognized, was the completion of an examination or audit by a taxing authority. The FSP is effective January 1, 2007, the date of the Company's initial adoption of FIN 48. The adoption of this interpretation did not have a material impact on the accompanying Financial Statements. In February 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 155, ACCOUNTING FOR CERTAIN HYBRID FINANCIAL INSTRUMENTS, AN AMENDMENT OF FASB STATEMENTS NO. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, AND NO. 140, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES, A REPLACEMENT OF SFAS NO. 125. This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1, APPLICATION OF STATEMENT 133 TO BENEFICIAL INTERESTS IN SECURITIZED FINANCIAL ASSETS. This Statement is effective for all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006. The Company adopted this guidance effective January 1, 2007, and the adoption did not have a material effect on the Company's accompanying financial statements. In September 2005, the AcSEC issued SOP 05-1, DEFERRED ACQUISITION COSTS (DAC) ON INTERNAL REPLACEMENTS (SOP 05-1), which expands the definition of internal replacements and changes the accounting for DAC on replacements in connection with modifications or exchanges of insurance contracts. An internal replacement, as defined in the guidance, is a policy revision that changes the nature of the investment rights or insurance risk between the Company and contractholder. The result of the SOP 05-1 methodology change for contracts that are substantially different would result in writing off the existing DAC balance. This Statement was effective for fiscal years beginning after December 15, 2006. The Company adopted SOP 05-1 on January 1, 2007 and the adoption did not have a material impact on the Company's accompanying Financial Statements. In September 2006, the Securities and Exchange Commission (SEC) published Staff Accounting Bulletin (SAB) No. 108, CONSIDERING THE EFFECTS OF PRIOR YEAR MISSTATEMENTS WHEN QUANTIFYING MISSTATEMENTS IN CURRENT YEAR FINANCIAL STATEMENTS. This Bulletin addresses quantifying the financial statement effects of misstatements, specifically, how the effects of prior year uncorrected errors must be considered in quantifying misstatements in the current year financial statements. This Bulletin is effective for fiscal years ending after November 15, 2006. The adoption of this bulletin did not have a material impact on the accompanying financial statements. In November 2005, the FASB issued FASB Staff Position (FSP) FAS 115-1 and FAS 124-1, THE MEANING OF OTHER-THAN-TEMPORARY IMPAIRMENT AND ITS APPLICATION TO CERTAIN INVESTMENTS, effective for reporting periods beginning after December 15, 2005. The FSP FAS 115-1 and FAS 124-1 addresses determination as to when an investment is considered impaired, whether that impairment is other-than-temporary, subsequent recognition of 18 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) other-than-temporary impairment, and disclosures on unrealized losses. The Company adopted FSP FAS 115-1 and FAS 124-1 effective December 31, 2006 which resulted in realizing $5,315 of additional losses from interest-related impairments on investments managed by a third party where the investment manager has the discretion to sell securities in a loss position. The realized investment losses impact the current and estimated future gross profits and assessments used in determining the amortization of DAC and DSI. The investment losses were offset by increases of $293 in DAC and $320 in DSI. In May 2005, the FASB issued SFAS No. 154, ACCOUNTING CHANGES AND ERROR CORRECTIONS - A REPLACEMENT OF APB OPINION NO. 20 AND SFAS NO. 3. SFAS No. 154 was effective for fiscal years beginning after December 15, 2005 and applies to voluntary accounting changes and corrections of error made in fiscal years beginning after December 15, 2005. It also applies to changes required by new accounting pronouncements if the pronouncement does not include specific transition provisions. The standard requires retrospective application of changes in accounting principle, unless it is impracticable to determine either the period-specific effect of an accounting change or the cumulative effect of the change. Adoption of SFAS No. 154 did not have a material impact on the accompanying financial statements. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - TO BE ADOPTED In February 2007, the FASB issued SFAS No. 159, THE FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES, AN AMENDMENT OF SFAS NO. 115 (SFAS No. 159). This Statement provides companies with an option to report selected financial assets and liabilities at fair value, with the associated changes in fair value reflected in the accompanying Statements of Operations. This Statement is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Company is currently evaluating the effect of this statement on its results of operations or financial position. In September 2006, the FASB issued SFAS No. 157, FAIR VALUE MEASUREMENTS (SFAS No. 157). For financial statement elements currently required to be measured at fair value, this Statement defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. The definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price). SFAS 157 provides guidance on how to measure fair value when required under existing accounting standards. In February 2008, the FASB issued FSP FAS 157-1, APPLICATION OF FASB STATEMENT NO. 157 TO FASB STATEMENT NO. 13 AND OTHER ACCOUNTING PRONOUNCEMENTS THAT ADDRESS FAIR VALUE MEASUREMENTS FOR PURPOSES OF LEASE CLASSIFICATION OR MEASUREMENT UNDER STATEMENT 13 and FSP FAS 157-2, EFFECTIVE DATE OF FASB STATEMENT NO. 157. FSP FAS 157-1 amends SFAS No. 157 to exclude SFAS No. 13, ACCOUNTING FOR LEASES (SFAS No. 13), and other accounting pronouncements that address fair value measurements under SFAS No. 13. FSP FAS 157-2 delays the effective date of SFAS No. 157 for certain nonfinancial assets and nonfinancial liabilities. The two FSPs will not have an impact on the Company's adoption of SFAS 157. This Statement is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Company plans to adopt this guidance effective January 1, 2008. The Company is currently evaluating the effect of this statement on its results of operations or financial position. RECLASSIFICATIONS AND IMMATERIAL CORRECTIONS Certain prior year balances have been reclassified to conform to the current year presentation. During 2007, following the issuance of the 2006 and 2005 Financial Statements and Supplemental Schedules, the Company identified a reclassification item in the accompanying Balance Sheet, which also impacted the Statement of Cash Flows. The adjustment amounts, and reporting implications, are detailed below: 19 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) The adjustment is related to the classification of negative cash balances, where the right of set off exists. Additional analysis performed on the cash accounts resulted in the determination that certain negative cash accounts met the conditions of the right to set off, and therefore, $1,560 and $1,816 were reclassified from amounts drawn in excess of bank balances to cash for 2006 and 2005, respectively. Additionally, the Company determined $4,926 should be reclassified from amounts drawn in excess of bank balances to payable to parent and affiliates in 2006 due to an unrelated journal entry error. As a result of the correction of this classification, the Company has adjusted certain items within the accompanying Balance Sheet and Statement of Cash Flows. The adjusted items are presented in the tables below:
Balance Sheet As of December 31, 2006 As originally reporAdjustment As adjusted --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Assets Cash $ 5,530 $ (1,560) $ 3,970 Receivable from parent and affiliates 3,160 (3,160) - --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Total assets 909,619 (4,720) 904,899 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Liabilities and Stockholder's Equity Payable to parent and affiliates - 1,766 1,766 Amounts drawn in excess of bank balances 7,950 (6,486) 1,464 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Total liabilities 841,278 (4,720) 836,558 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Total liabilities and stockholder's equity $ 909,619 $ (4,720) $ 904,899 --------------------------------------------------------------------------------------------------------------- Statement of Cash Flow For the year ended December 31, 2006 As originally report Adjustment As adjusted ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Adjustments to reconcile net income to net cash (used in) provided by operating activities: (Receivable) payable (from) to parent $ (2,698) $ 4,926 $ 2,228 ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Total adjustments 4,412 4,926 9,338 ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 5,868 4,926 10,794 ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Cash flows provided by (used in) financing activities: Change in amounts drawn in excess of bank balances 4,317 (4,670) (353) ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing actvities 33,951 (4,670) 29,281 ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Net change in cash (76) 256 180 Cash at beginning of year 5,606 (1,816) 3,790 ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Cash at end of year $ 5,530 $ (1,560) $ 3,970 ---------------------------------------------------------------------------------------------------------------------- 20 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) Statement of Cash Flow For the year ended December 31, 2005 As originally report Adjustment As adjusted ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Cash flows provided by (used in) financing activities: Change in amounts drawn in excess of bank balances $ 2,152 $ (981) $ 1,171 ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 91,942 (981) 90,961 ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Net change in cash 2,015 (981) 1,034 Cash at beginning of year 3,591 (835) 2,756 ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Cash at end of year $ 5,606 $ (1,816) $ 3,790 ----------------------------------------------------------------------------------------------------------------------
(3) RISK DISCLOSURES The following is a description of the most significant risks facing the Company and how the Company attempts to mitigate those risks: CREDIT RISK: The risk that issuers of fixed- and variable-rate income securities or transactions with other parties, such as reinsurers and derivative counterparties, default on their contractual obligations. The Company attempts to mitigate this risk by adhering to investment policies that provide portfolio diversification on an asset class, creditor, and industry basis, and by complying with investment limitations governed by state insurance laws and regulations, as applicable. The Company actively monitors and manages exposures, and determines whether any securities are impaired. The aggregate credit risk taken in the investment portfolio is influenced by management's risk/return preferences, the economic and credit environment, and the relationship of credit risk in the asset portfolio to liabilities. For derivative counterparties, the Company attempts to minimize credit risk by establishing relationships with counterparties rated A- and higher. The Company has executed Credit Support Annexes (CSA) with all active counterparties and requires a CSA from all new counterparties added to the counterparty pool. The CSA agreement further limits credit risk by requiring counterparties to post collateral to a trust account based on their current credit rating. The Company reviews the credit rating of the counterparties at least quarterly. CREDIT CONCENTRATION RISK: The risk of increased exposure to major asset defaults (of a single security issuer or class of security issuers); economic conditions (if business is concentrated in a certain industry sector or geographic area); or adverse regulatory or court decisions (if concentrated in a single jurisdiction) affecting credit. The Company's Asset Liability Management Committee (ALM) specifies the asset allocation among major asset classes and a benchmark for each asset class. ALM provides investment guidelines that document the constraints and limits under which the asset manager must operate, including limits in regard to credit concentration. These internal guidelines comply, at a minimum, with state statute. ALM is also responsible for implementing internal controls and procedures to ensure compliance with these investment guidelines. Deviations from these guidelines are monitored and addressed. ALM, and subsequently the board of directors, review and approve the mandated investment guidelines at least annually. Mitigation controls include a monthly report from the asset manager that shows the fixed income risk profile, including sector allocation, credit rating distribution, and other credit statistics. The Company performs a quarterly calculation to ensure compliance with the State of New York basket clause. 21 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) LIQUIDITY RISK: The risk that unexpected timing or amounts of cash needed will require liquidation of assets in a market that will result in loss of realized value or an inability to sell certain classes of assets such that an insurer will be unable to meet its obligations and contractual guarantees. Market or Company conditions may preclude access to, or cause disruption of, outside sources of liquidity (e.g., through borrowing, affiliate advances, reinsurance, or securitization) upon which an insurance company typically relies on in the normal course of business. Additionally, the Company may not be able to sell large blocks of assets at current market prices. Liquidity risk also arises from uncertain or unusual cash demands from catastrophic events. The Company designs products with features that attempt to help mitigate the risk of high levels of product surrenders when interest rates change. INTEREST RATE RISK: The risk that interest rates will change and cause a decrease in the value of an insurer's investments relative to the value of its liabilities and/or an unfavorable change in prepayment activity, resulting in compressed interest margins. The Company attempts to mitigate risk by offering products that transfer interest rate risk to the policyholder and by attempting to approximately match the maturity schedule of its assets with the expected payouts of its liabilities, both at inception and on an ongoing basis. Asset and liability matching models used by the Company to mitigate interest rate risk due to the close relationship between its interest rate sensitive assets and liabilities. The Company considers both the maturity and duration of the asset portfolio as compared to the expected duration of the liability reserves. The Company also attempts to mitigate interest rate risk through asset/liability risk controls, including product development and pricing, product management, and investment asset management. In certain situations, the Company accepts some interest rate risk in exchange for a higher yield on the investment. EQUITY MARKET RISK: The risk that movements in the equity markets will result in losses to assets held within the Company's surplus portfolio or that product features tied to equity markets will increase in value by more than held assets. Fixed-indexed annuity (FIA) products increase the policy value based on the growth of market indexes (S&P 500 and NASDAQ 100). The Company uses exchange-traded futures to assist in managing potential policyholder benefit obligations. An additional risk is that some variable annuity products have guarantees, GMWB, GMIB, and GMDB, which provide a guaranteed level of payments irrespective of market movements. The risk here is of a market downturn. The Company has adopted an economic hedging program using derivative instruments (S&P 500 index futures) to attempt to manage this risk and provide for these excess guarantee payments in those situations when the separate account assets are not sufficient to provide for them. For products with GMAB, policyholder contracts allow the Company to employ an automatic investment allocation process to move policyholder funds into fixed accounts during a market downturn to help mitigate this risk. LEGAL/REGULATORY RISK: The risk that changes in the legal or regulatory environment in which the Company operates may result in reduced demand for the Company's products or additional expenses not assumed in product pricing. Additionally, the Company is exposed to risk related to how the Company conducts itself in the market and the suitability of its product sales to contract holders. The Company attempts to mitigate risk by actively monitoring all market-related exposure and have members that participate in national and international discussions relating to legal, regulatory, and accounting changes that may impact the business. The Company has defined suitability standards that are as at least as rigorous, and usually exceeding, the requirements of regulators. 22 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) RATINGS RISK: The risk that rating agencies change their outlook or rating of the Company or a subsidiary of the Company. The rating agencies generally utilize proprietary capital adequacy models in the process of establishing ratings for the Company. The Company is at risk to changes in these models and the impact that changes in the underlying business that the Company is engaged in can have on such models. In an attempt to mitigate this risk, the Company maintains regular communications with the rating agencies and evaluates the impact of significant transactions on such capital adequacy models and considers the same in the design of transactions to minimize the adverse impact of this risk. Stress tests are performed on a quarterly basis to assess how rating agency capital adequacy models would be impacted by severe economic events. (4) INVESTMENTS At December 31, 2007 and 2006, the amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair values of available-for-sale securities are as shown in the following table.
Gross Gross Estimated Amortized unrealized unrealized fair cost gains losses value --------------------------------------------------------------------------------------------------------------- 2007: Fixed-maturity securities: U.S. government $ 29,790 $ 2,762 $ - $ 32,552 States and political subdivisions 2,204 99 - 2,303 Foreign government 1,571 103 - 1,674 Public utilities 14,917 296 - 15,213 Corporate securities 162,985 4,464 - 167,449 Mortgage-backed securities 67,132 2,226 - 69,358 --------------------------------------------------------------------------------------------------------------- Total $ 278,599 $ 9,950 $ - $ 288,549 --------------------------------------------------------------------------------------------------------------- 2006: Fixed-maturity securities: U.S. government $ 59,242 $ 462 $ - $ 59,704 States and political subdivisions 2,277 - - 2,277 Foreign government 1,622 - - 1,622 Public utilities 10,221 101 - 10,322 Corporate securities 138,711 2,897 - 141,608 Mortgage-backed securities 67,261 138 - 67,399 --------------------------------------------------------------------------------------------------------------- Total $ 279,334 $ 3,598 $ - $ 282,932 --------------------------------------------------------------------------------------------------------------- 23 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) The net unrealized gains (losses) on securities included in stockholder's equity consist of the following at December 31: 2007 2006 2005 ---------------------------------------------------------------------------------------------------------- Fixed-maturities $ 9,950 $ 3,598 $ 2,090 Securities held under agreements to repurchase - - 13 Equities - - 245 Adjustments for: DAC (4,278) (1,200) (116) DSI (589) (85) (108) Deferred taxes (1,778) (809) (743) ---------------------------------------------------------------------------------------------------------- Net unrealized gains $ 3,305 $ 1,504 $ 1,381 ----------------------------------------------------------------------------------------------------------
The changes in net unrealized gains (losses) on fixed-maturity securities and securities held under agreements to repurchase, before adjustments for deferred taxes, DAC, and DSI, were $6,352, $1,495, and $(3,478) in each of the years ended December 31, 2007, 2006, and 2005, respectively. The changes in net unrealized (losses) gains from equity investments, before deferred taxes, was $0, $(245), and $17 for the years ended December 31, 2007, 2006, and 2005, respectively. The amortized cost and estimated fair value of fixed-maturity securities at December 31, 2007, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The amortized cost of fixed-maturity securities with rights to call or prepay without penalty is $68,652 as of December 31, 2007.
Amortized Estimated cost fair value ---------------------------------------------------------------------------------------------------------------- Due in one year or less $ 1,638 $ 1,661 Due after one year through five years 17,345 18,021 Due after five years through ten years 106,777 109,401 Due after ten years 85,707 90,108 Mortgage-backed securities 67,132 69,358 ---------------------------------------------------------------------------------------------------------------- Totals $ 278,599 $ 288,549 ----------------------------------------------------------------------------------------------------------------
Proceeds from sales of fixed-maturity securities investments were $36,712, $13,358, and $13,095 during 2007, 2006, and 2005, respectively. Proceeds from tax-free and taxable exchanges on fixed-maturity securities were $0 and $(110) during 2007 and 2006, respectively. The negative proceeds of $110 in 2006 were the result of a reclassification related to an exchange of notes and were immaterial in nature. Gross gains of $2,330, $6, and $259 and gross losses of $1,246, $457, and $210 were realized on those sales and tax-free exchanges of securities in 2007, 2006, and 2005, respectively. Forward commitments of $0, $0, and $11,022 were purchased and $0, $0, and $11,022 were sold by the Company during 2007, 2006, and 2005, respectively. 24 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) Proceeds from the sale of equity securities were $0, $1,079, and $115 during 2007, 2006, and 2005, respectively. Proceeds from tax-free exchanges, redemptions, and spin-offs from equity securities were $0, $9, and $28 during 2007, 2006 and 2005, respectively. Gross gains of $0, $256, and $17 and gross losses of $0, $11, and $6 were realized on those sales in 2007, 2006, and 2005, respectively. In 2007, 2006, and 2005, losses of $0, $0, and $37, respectively, were recognized on equity securities for other-than-temporary impairment. As of December 31, 2007, the Company held futures contracts, which do not require an initial investment; therefore, no asset or liability is recorded. The Company is required to settle cash daily based on movements of the representative index. As of December 31, 2007 and 2006, investments with a carrying value of $1,698 and $1,673, respectively, were pledged to the New York Superintendent of Insurance, as required by statutory regulation. Net realized investment (losses) gains for the years ended December 31, are summarized as follows:
2007 2006 2005 ----------------------------------------------------------------------------------------------------------------------- Fixed-maturity securities - sales $ 1,084 $ (451) $ 49 Fixed-maturity securities - other than temporary impairments (7,119) (5,316) - Equity securities - 245 (26) ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Net (losses) gains $ (6,035) $ (5,522) $ 23 ----------------------------------------------------------------------------------------------------------------------- The increase in other-than-temporary impairments beginning in 2006 related to the adoption of FSP FAS 115-1 and FAS 124-1 is discussed further in the Recently Issued Accounting Pronouncements section in note 2. Major categories of net investment income for the respective years ended December 31 are shown below. Net investment income related to securities held under repurchase agreements is shown with fixed-maturity securities and was $0, $8, and $52 in 2007, 2006, and 2005, respectively. 2007 2006 2005 ---------------------------------------------------------------------------------------------------------------- Interest: Fixed-maturity securities $ 16,445 $ 14,446 $ 9,764 Short-term securities 233 209 247 Policy loans 3 4 5 Dividends: Equity securities - - 22 (Loss) gain on exercise of equity-indexed annuity and guaranteed benefit-related futures (314) 2,494 - Change in fair value of equity-indexed annuity and guaranteed benefit-related options 3,467 (4,928) (42) Other invested assets 178 (1) - ---------------------------------------------------------------------------------------------------------------- Total investment income 20,012 12,224 9,996 Investment expenses 119 97 66 ---------------------------------------------------------------------------------------------------------------- Net investment income $ 19,893 $ 12,127 $ 9,930 ----------------------------------------------------------------------------------------------------------------
As of December 31, 2007 and 2006, the number of investment holdings that was in an unrealized loss position was 0 and 0, respectively, for fixed-maturity securities. 25 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) There were no fixed-maturity securities that were in an unrealized loss position less than 12 months at December 31, 2007. The Company's investment portfolio includes mortgage-backed securities. Due to the high quality of these securities and the lack of sub-prime loans within the securities, the Company does not have a material exposure to sub-prime mortgages. (5) SUMMARY TABLE OF FAIR VALUE DISCLOSURES
2007 2006 ---------------------------- ---------------------------- Carrying Fair Carrying Fair amount value amount value ------------ ------------ ------------ ------------ Financial assets Fixed-maturity securities: U.S. government $ 32,552 $ 32,552 $ 59,704 $ 59,704 States and political subdivisions 2,303 2,303 2,277 2,277 Foreign governments 1,674 1,674 1,622 1,622 Public utilities 15,213 15,213 10,322 10,322 Corporate securities 167,449 167,449 141,608 141,608 Mortgage-backed securities 69,358 69,358 67,399 67,399 Short-term securities 1,218 1,218 8,315 8,315 Policy loans 96 96 68 68 Cash 1,921 1,921 3,970 3,970 Separate account assets 572,186 572,186 547,993 547,993 Financial liabilities Investment contracts 206,301 193,159 178,485 161,349 Separate account liabilities 572,186 555,804 547,993 533,023 -----------------------------------------------------------------------------------------------------------
Investment contracts include certain reserves related to deferred annuity products. These reserves are included in the future policy benefit reserves and the policy and contract claims balances on the Balance Sheets. Fair value of investment contracts, which include deferred annuities and other annuities without significant mortality risk, are determined by testing amounts payable on demand against discounted cash flows using interest rates commensurate with the risks involved. Fair values of investment contracts are based on the amount payable on demand at December 31. Fair values of separate account assets were determined using the fair value of the underlying investments held in segregated mutual funds. Fair values of separate account liabilities were determined using the cash surrender values of the contractholders' accounts. Changes in market conditions subsequent to year-end may cause fair values calculated subsequent to year-end to differ from the amounts presented herein. 26 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) (6) DEFERRED ACQUISITION COSTS DAC at December 31, 2007, 2006, and 2005, and the changes in the balance for the years then ended are as follows:
2007 2006 2005 -------------------------------------------------------------------------------------------------------------- Balance, beginning of year $ 32,170 $ 25,101 $ 17,383 Capitalization 11,154 11,210 11,270 Interest 2,099 1,615 1,280 Amortization (3,604) (4,672) (4,717) Change in shadow DAC (3,078) (1,084) (115) ------------------------------------------------------------ -------------- ------------- ------------- -------------------------------------------------------------------------------------------------------------- Balance, end of year $ 38,741 $ 32,170 $ 25,101 -------------------------------------------------------------------------------------------------------------- The Company reviews its best estimate assumptions each year and typically records "unlocking" as appropriate. During 2007, the Company completed a comprehensive study of assumptions underlying estimated gross profits (EGP), resulting in an "unlocking". This study was based on recent changes in the organization and businesses of the Company and actual and expected performance of in-force policies. The study included all assumptions, including mortality, lapses, expenses, and separate account returns. The revised best estimate assumptions were applied to the current in-force policies to project future gross profits. (7) DEFERRED SALES INDUCEMENTS DSI at December 31, 2007, 2006, and 2005, and the changes in the balance for the years then ended are as follows: 2007 2006 2005 -------------------------------------------------------------------------------------------------------------- Balance, beginning of year $ 9,763 $ 6,878 $ 4,396 Capitalization 3,369 3,268 3,385 Interest 609 490 372 Amortization (2,245) (896) (1,166) Change in shadow DSI (504) 23 (109) ------------------------------------------------------------ -------------- ------------- ------------- -------------------------------------------------------------------------------------------------------------- Balance, end of year $ 10,992 $ 9,763 $ 6,878 --------------------------------------------------------------------------------------------------------------
(8) ACCIDENT AND HEALTH CLAIM RESERVES Accident and health claim reserves are based on estimates that are subject to uncertainty. Uncertainty regarding reserves of a given accident year is gradually reduced as new information emerges each succeeding year, thereby allowing more reliable re-evaluations of such reserves. While management believes that reserves as of December 31, 2007 are appropriate, uncertainties in the reserving process could cause such reserves to develop favorably or unfavorably in the near term as new or additional information emerges. Any adjustments to reserves are reflected in the operating results of the periods in which they are made. Movements in reserves, which are small relative to the amount of such reserves, could significantly impact the Company's future reported earnings. 27 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) Activity in the accident and health claim reserves is summarized as follows:
2007 2006 2005 ----------------------------------------------------------------------------------------------------------------------- Balance at January 1, net of reinsurance recoverables of $13,293, $4,782, and $4,026, respectively $ 3,076 $ 11,476 $ 9,376 Commutations - (3,221) - Incurred related to: Current year 87 2,720 9,283 Prior years 99 1,287 (170) ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Total incurred 186 4,007 9,113 ----------------------------------------------------------------------------------------------------------------------- Paid related to: Current year 49 630 1,873 Prior years 175 8,556 5,140 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Total paid 224 9,186 7,013 ----------------------------------------------------------------------------------------------------------------------- Balance at December 31, net of reinsurance recoverables of $3,832, $13,293, and $4,782, respectively $ 3,038 $ 3,076 $ 11,476 -----------------------------------------------------------------------------------------------------------------------
Prior year incurreds for 2007 reflect increased loss ratios due to unfavorable claim development in the group accident and health business. Prior year incurreds for 2006 reflect increased loss ratios due to unfavorable claim development in both group accident and health business and medical excess of loss business. Incurred losses related to prior years during 2005 were due to unanticipated favorable claim development in both group accident and health business and medical excess of loss business. The significant decrease in total incurred and total paid claims from 2006 to 2007 is a result of the exiting of the Health Products business on October 1, 2006 as discussed in note 9. (9) REINSURANCE In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding risks under excess coverage and coinsurance contracts. The Company has a maximum retention level of $1,500 on excess yearly renewal term coverage, and on Long-Term Care business the Company retains 90% of Limited Benefit Plans, and 90% on claims years one through eight, and 20% on claims years eight and beyond for Lifetime Benefit Plans. Reinsurance contracts do not relieve the Company from its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk to minimize its exposure to significant losses from reinsurer insolvencies. A contingent liability exists to the extent that the Company's reinsurers are unable to meet their contractual obligations under reinsurance contracts. Management is of the opinion that no liability will accrue to the Company with respect to this contingency. During 2006, the Company made the decision to exit the health products business. On October 1, 2006, the Company entered into a 100% quota share agreement with an unrelated insurance company, Houston Casualty Company (HCC), to reinsure the health block of business. Related to this transaction, the Company received a ceding commission of $12,950 for the recapture of $13,510 in reserves. The Company recorded a deferred gain of 28 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) $12,950, which is being amortized into operations through 2009. The Company amortized $7,956 and $4,246 for 2007 and 2006, respectively, and is included on the accompanying Statements of Operations. The remaining deferred gain was $748 and $8,704 as of December 31, 2007 and 2006, respectively. Offsetting the gain on sale, total incremental expenses of $1,877 were incurred in 2006 including $1,327 for commutation of reinsurance agreements in contemplation of the agreement with HCC, and $550 for employee-related termination benefits. The commutation of reinsurance agreements expense is included in benefit recoveries and termination benefits expense is included in general and administrative expenses on the accompanying Statements of Operations. As of December 31, 2006, all of these incremental costs have been paid. Included in reinsurance recoverables at December 31, 2007 is a $3,726 recoverable from HCC who, as of December 31, 2007, was rated A+ by A.M. Best's Insurance Reports. At December 31, 2007 and 2006, the Company had reinsurance recoverables of $1 and $0, respectively, on paid claims, unpaid claims, future benefit reserves, and policy and contract account balances from Allianz Life. The Company mitigates risk by arranging trust accounts or letters of credit with certain insurers. Insurers with ratings lower than A-, and without a trust account or letter of credit, account for less than 4% of the total reinsurance recoverable as of December 31, 2007. Effective June 30, 2006, the Company recaptured certain health business previously ceded to R.W. Morey. Related to this transaction, the Company paid a ceding commission of $1,327 for the recapture of $4,988 in reserves. The Company entered into numerous reinsurance arrangements with unrelated insurance companies to reinsure group life and accident and health reinsurance-assumed, and excess of loss health insurance business as well as business produced through the broker administrator distribution channel. In connection with these agreements, the Company had ceded premiums of $4,132, $3,466, and $33 and received expense allowances of $363, $133, and $1 in 2007, 2006, and 2005, respectively. Of the amounts assumed from and ceded to other companies, accident and health insurance assumed from and ceded to Allianz Life on a statutory basis is as follows:
Assumed Ceded ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Premiums: Accident and health $ 2 $ (5) $ 37 $ - $ 12 $ 7 ------------------------------------------------------------------------------------------------------------------ Total premiums $ 2 $ (5) $ 37 $ - $ 12 $ 7 ------------------------------------------------------------------------------------------------------------------
Effective January 1, 2005, the Company entered into a new multiline ceded reinsurance agreement with Allianz Life whereby Allianz Life assumes risk related to excess of loss medical coverage. The agreement ended in 2006. 29 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) (10) INCOME TAXES INCOME TAX EXPENSE (BENEFIT) Total income tax expense (benefit) for the years ended December 31 is as follows:
2007 2006 2005 ------------------------------------------------------------------------------------------------------------------- Income tax expense (benefit) attributable to operations: Current tax (benefit) expense $ (1,537) $ 1,333 $ 1,439 Deferred tax expense (benefit) 4,753 (1,356) (1,085) ------------------------------------------------------------------------------------------------------------------- Total income tax expense (benefit) attributable to operations 3,216 (23) 354 Income tax effect on equity: Attributable to unrealized gains (losses) for the year 969 66 (1,290) ------------------------------------------------------------------------------------------------------------------- Total income tax effect on equity $ 4,185 $ 43 $ (936) ------------------------------------------------------------------------------------------------------------------- COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) Income tax expense (benefit) computed at the statutory rate of 35% varies from income tax expense (benefit) reported in the accompanying Statements of Operations for the respective years ended December 31 as follows: 2007 2006 2005 ----------------------------------------------------------------------------------------------------------------- Income tax expense computed at the statutory rate $ 3,859 $ 502 $ 1,132 Dividends-received deductions and tax-exempt interest (728) (677) (646) Other 85 152 (132) ----------------------------------------------------------------------------------------------------------------- Income tax expense (benefit) as reported $ 3,216 $ (23)$ 354 -----------------------------------------------------------------------------------------------------------------
30 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES ON THE BALANCE SHEET Tax effects of temporary differences giving rise to the significant components of the net deferred tax liabilities at December 31 are as follows:
2007 2006 ---------------------------------------------------------------------------------------------------------------- Deferred tax assets: Future benefit reserves $ 5,263 $ 5,999 Coinsurance deferred income 262 3,046 Expense accruals 644 250 Other-than-temporarily impaired assets 3,713 1,861 Impaired assets - 1 ---------------------------------------------------------------------- -------------------------------------- ---------------------------------------------------------------------------------------------------------------- Total deferred tax assets 9,882 11,157 ---------------------------------------------------------------------------------------------------------------- Deferred tax liabilities: Deferred acquisition costs 11,608 9,726 Due and deferred premium 15 82 Net unrealized gains on investments 3,483 1,260 Investment income 156 106 Other 10 - ---------------------------------------------------------------------------------------------------------------- Total deferred tax liabilities 15,272 11,174 ---------------------------------------------------------------------------------------------------------------- ------- Net deferred tax liability $ 5,390 $ 17 ----------------------------------------------------------------------------------------------------------------
Although realization is not assured, the Company believes it is not necessary to establish a valuation allowance for the deferred tax asset, as it is more likely than not the deferred tax asset will be realized principally through future reversals of existing taxable temporary differences and future taxable income. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future reversals of existing taxable temporary differences and future taxable income are reduced. Income taxes paid by the Company were $2,906, $162, and $1,867 in 2007, 2006 and 2005, respectively. At December 31, 2007 and 2006, the Company had a tax (receivable) payable to AZOA of $(1,333) and $2,762, respectively, reported in income tax (receivable) payable on the accompanying Balance Sheets. The Company and the Company's parent, Allianz Life, file a consolidated federal income tax return with AZOA and all of its wholly owned subsidiaries. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2003. AZOA had net operating losses in 2000 through 2003 that were carried forward and used to offset taxable income in 2005 through 2007. Although the statute has closed for these years, they remain open to the extent that net operating losses utilized in future years can be adjusted. The years in which the net operating losses were used to offset taxable income will be open for examination for three years after the tax return for the given year was filed. Tax years 2005 through 2007 will close in 2009 through 2011, respectively. The 2004 tax year will close in 2008. The IRS has notified AZOA of its intent to initiate an audit of tax year 2006 during the calendar year 2008. At this time, the Company is not aware of any adjustments that may be proposed by the IRS. 31 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized approximately a $349 increase in the liability for unrecognized tax benefits, which was accounted for as an increased current tax liability and an increased deferred tax asset as of January 1, 2007. It is reasonably expected that the amount of unrecognized tax benefits will increase in 2008 by approximately the same amount as it did in year 2007. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Balance at January 1, 2007 $ 349 Additions based on tax positions related to the current year 189 ------------- ------------- Balance at December 31, 2007 $ 538 ============= Included in the balance at December 31, 2007 are $538 of tax positions for which the deductibility is more likely than not, however, there is uncertainty with respect to the timing of the deduction. Because of the impact of deferred tax accounting, other than interest and penalty, the disallowance would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in federal income tax expense. During the years ended December 31, 2007, 2006 and 2005, the Company recognized approximately $8, $29, and $0 in interest and penalties, respectively. The Company had approximately $37 and $29 for the payment of interest and penalties accrued at December 31, 2007 and 2006, respectively. (11) RELATED-PARTY TRANSACTIONS During 2005, the Company entered into an agreement to sublease office space from Fireman's Fund Insurance Company (an affiliate). In connection with this agreement, the Company incurred rent expense of $157, $150 and $64 in 2007, 2006, and 2005, respectively, which is included in general and administrative expenses, affiliated on the accompanying Statements of Operations. Allianz Life performs certain administrative services for us and the Company has incurred fees for these services of $4,801, $7,762, and $8,197 in 2007, 2006, and 2005, respectively. At December 31, 2007 and 2006, the Company had an overpayment for service fees of $8,733 and $3,170, which is recorded in receivable from parent and affiliates on the accompanying Balance Sheets. The Company incurred fees for certain investment advisory services provided by affiliated companies. The Company incurred fees of $90, $95, and $5 in 2007, 2006, and 2005, respectively. The Company's liability for these charges was $0 and $10 as of December 31, 2007 and 2006, respectively, and is included in receivable from parent and affiliates on the accompanying Balance Sheets. The Company reinsured a portion of its group accident and health business with Allianz Life. See note 9 for further details. The Company has agreements with Pacific Investment Management Company (PIMCO) and Oppenheimer Capital, affiliates of the Company, related to its separate accounts, where the policyholders of variable annuity products may choose to invest in specific investment options managed by these affiliates. Income recognized by the Company from these affiliates for distribution and in-force related costs as a result of providing investment options to the policyholders was $77, $49, and $38 during 2007, 2006, and 2005, respectively, which is 32 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) included in other on the Statements of Operations. The receivable for these fees at December 31, 2007 and 2006 was $14 and $14, respectively, which are included in receivables, non-affiliated on the accompanying Balance Sheets. (12) EMPLOYEE BENEFIT PLANS The Company participates in the Allianz Asset Accumulation Plan (AAAP), a defined contribution plan sponsored by AZOA. Eligible employees are immediately enrolled in the AAAP upon their first day of employment. The AAAP will accept participants' pre-tax or after-tax contributions up to 80% of the participants' eligible compensation, although contributions remain subject to annual limitations set by the Employee Retirement Income Security Act (ERISA). Under the eligible employees' provisions, the Company will match 100% of contributions up to a maximum of 6%. Participants are 100% vested in the Company's matching contribution after three years of service. The Company may decide to declare a profit-sharing contribution under the AAAP based on the discretion of Company management. The Company has not yet determined if there will be a profit-sharing contribution under the AAAP for the plan year ended December 31, 2007. The Company declared a profit-sharing contribution of 1.5% of employees' salaries for the plan year ended December 31, 2006 and 2.5% of employees' salaries for the plan year ended December 31, 2005, reported in general and administrative expenses on the accompanying Statements of Operations and funded in 2007 and 2006, respectively. Employees are not required to participate in the AAAP to be eligible for the profit-sharing contribution. The expenses of administration of the AAAP and the trust fund, including all fees of the trustee, investment manager, and auditors, are payable from the trust fund, but may, at the Company's discretion, be paid by the Company. Any counsel fees are not paid from the trust fund, but are instead paid by the Company. It is the Company's policy to fund the AAAP costs as incurred. The Company has expensed $96, $182, and $134 in 2007, 2006, and 2005, respectively, toward the AAAP matching contributions and administration expenses. In addition to the AAAP, the Company offers certain benefits to eligible employees, including a comprehensive medical, dental, and vision plan and a flexible spending plan. In 2005, the Company started an Employee Severance Pay Plan for the benefit of eligible employees. The plan may provide severance benefits on account of an employee's termination of employment from the Company. To become a participant in the plan, an employee must be involuntarily terminated. In addition, the Company must determine if it wishes to provide the employee with a severance payment and must issue a written Severance Pay Award. The plan is unfunded, meaning no assets of the Company's have been segregated or defined to represent the liability for payments under the plan. The Company expensed $55, $550, and $0 in 2007, 2006, and 2005, respectively, toward severance payments. (13) STATUTORY FINANCIAL DATA AND DIVIDEND RESTRICTIONS Statutory accounting practices prescribed or permitted by the Company's state of domicile are directed toward insurer solvency and protection of policyholders. Accordingly, certain items recorded in financial statements prepared under GAAP are excluded or vary in calculation in determining statutory policyholders' surplus and gain from operations. Currently, these items include, among others, DAC, furniture and fixtures, deferred taxes, accident and health premiums receivable which are more than 90 days past due, reinsurance, certain investments, and undeclared dividends to policyholders. Additionally, future policy benefit reserves and policy and contract account balances calculated for statutory reporting do not include provisions for withdrawals. 33 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) The Company's statutory capital and surplus as of December 31, 2007 and 2006 were $50,337 and $62,528, respectively. The Company's statutory net income for the years ended December 31, 2007, 2006, and 2005 was $2,172, $3,160, and $3,031, respectively. The Company is required to meet minimum statutory capital and surplus requirements. The Company's statutory capital and surplus as of December 31, 2007 and 2006 were in compliance with these requirements. In accordance with New York statutes, the Company may not pay a stockholder dividend without prior approval by the Superintendent of Insurance. The Company paid no dividends in 2007, 2006, and 2005. REGULATORY RISK-BASED CAPITAL An insurance enterprise's state of domicile imposes minimum risk-based capital requirements that were developed by the NAIC. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of an enterprise's regulatory total adjusted capital to its authorized control-level risk-based capital, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. This ratio for the Company was 1,734% and 1,703% as of December 31, 2007 and 2006, respectively. Regulatory action level against a company may begin when this ratio falls below 200%. (14) COMMITMENTS AND CONTINGENCIES The Company is or may become subject to claims and lawsuits that arise in the ordinary course of business. In the opinion of management, the ultimate resolution of such litigation will not have a material adverse effect on the Company's financial position. The Company is contingently liable for possible future assessments under regulatory requirements pertaining to insolvencies and impairments of unaffiliated insurance companies. Provision has been made for assessments currently received and assessments anticipated for known insolvencies. The financial services industry, including mutual fund, variable and fixed annuity, life insurance, and distribution companies, has been the subject of increasing scrutiny by regulators, legislators, and the media over the past few years. Many regulators, including the U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) (formerly known as National Association of Securities Dealers), and state Attorneys General, commenced industry-wide investigations regarding late trading and market timing in connection with mutual funds and variable insurance contracts, and commenced enforcement actions against some mutual fund and life insurance companies on those issues. Like others in the industry, the Company, and/or its affiliates, has been contacted by the SEC, which is investigating market timing in certain mutual funds or in variable insurance products. The Company, and/or its affiliates, has responded to these requests, and no further information requests have been received with respect to these matters. In addition, state and federal regulators have commenced investigations or other proceedings relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products. Also under investigation are compensation and revenue-sharing arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates, the use of side agreements and finite reinsurance agreements, and funding agreements. Related investigations and proceedings may be commenced in the future. Like others in the industry, the Company and/or its affiliates has been contacted by state and federal regulatory agencies for information relating to certain of these investigations. The Company, and/or its affiliates, is cooperating with regulators in responding to these requests. 34 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Notes to Financial Statements December 31, 2007, 2006 and 2005 (in thousands except security holdings quantities) Federal and state regulators are also investigating various selling practices in the annuity industry, including suitability reviews, product exchanges, and sales to seniors. In certain instances, these investigations have led to regulatory enforcement proceedings. In February 2007, the Company entered into a stipulated order with the New York Department of Insurance (DOI) resolving allegations made by the DOI that the Company did not comply with certain New York laws or regulations during the period January 1, 2002 through December 31, 2004. The impact of these settlements was not material to the accompanying Financial Statements. A model regulation has been approved by the NAIC regarding the suitability of sales to seniors, and now has been expanded to include purchasers of all ages. In addition, the SEC has recently approved a proposed FINRA regulation governing the suitability of sales of variable annuities. It can be expected that annuity sales practices will be an ongoing source of litigation and rulemaking. Similarly, private litigation regarding sales practices is ongoing against a number of insurance companies. In addition, federal regulators have commenced a number of inquiries into the FIA industry and have issued various regulatory pronouncements. Among these are inquiries by the SEC and FINRA and a regulatory pronouncement by FINRA. In the SEC inquiry, the staff of the SEC inquired of a number of issuers of unregistered FIAs as to how modern FIA products are structured; how the products are distributed; and whether certain FIAs should be required to register as securities. Like other FIA issuers, the Company, and/or its affiliates, was contacted regarding this matter. The Company, and/or its affiliates, responded and there has been no further public action by the SEC. The North American Securities Administrators Association (NASAA) has identified attempting to get FIA's classified as securities as one of its top legislative priorities for 2008. In addition, FINRA has initiated various inquiries regarding transactions that involve exchanges from variable annuities into FIA's. Like other FIA issuers, the Company, and/or its affiliates, was contacted regarding this matter, and is responding. In addition, FINRA in 2005 issued a regulatory Notice to Members advising member firms of the unique issues raised by FIA's, and suggesting that broker-dealers consider taking various actions when their registered representatives sell FIA's as an outside business activity. As a result of this Notice to Members, certain firms have instituted enhanced procedures regarding FIA sales by the representatives, and some firms have placed restrictions on these sales. These proceedings are expected to continue in the future and could result in legal precedents and new industry-wide legislation, rules, and regulations that could significantly affect the financial services industry, including life insurance and annuity companies. It is unclear at this time whether any such litigation or regulatory actions will have a material adverse effect on the Company in the future. The Company leases office space. Expense for the operating lease was $157, $150, and $119 in 2007, 2006, and 2005, respectively. The future minimum lease payments required under this operating lease are as follows: Operating Lease ------------------------------------------------------------- ------------------------------------------------------------- 2008 $ 157 2009 157 2010 157 2011 177 2012 and beyond 1,622 ------------------------------------------------------------- ------------------------------------------------------------- Total $ 2,270 ------------------------------------------------------------- ------------------------------------------------------------- 35 (Continued) ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Schedule I- Summary of Investments- Other Than Investments in Related Parties December 31, 2007
Amount shown on Amortized Balance Type of Investment Cost (1) Fair Value Sheet --------------------------------------------------------------------------------------------------- Fixed-maturity securities: U.S. government $ 29,790 $ 32,552 $ 32,552 States and political subdivisions 2,204 2,303 2,303 Foreign government 1,571 1,674 1,674 Public utilities 14,917 15,213 15,213 Corporate securities 162,985 167,449 167,449 Mortgage-backed securities 67,132 69,358 69,358 --------------------------------------------------------------------------------------------------- Total fixed-maturity securities 278,599 288,549 288,549 --------------------------------------------------------------------------------------------------- Other investments: Short-term securities 1,218 1,218 Policy loans 96 96 ------------------------------------------------------------------ ----------------- Total other investments 1,314 1,314 ------------------------------------------------------------------ ----------------- Total investments $ 279,913 $ 289,863 ------------------------------------------------------------------ -----------------
(1) Original cost of fixed maturities reduced by repayments and adjusted for amortization of premiums or accrual discounts. See accompanying report of independent registered public accounting firm. 36
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Schedule III- Supplementary Insurance Information As of December 31 For the year ended December 31 ------------------------------------------------------- ---------------------------------------------------------------- ------------------------------------------------------- ---------------------------------------------------------------- Future Net premium Net change Net change benefit reserves Policy revenue in in Deferred Deferred and policy and and and other Net deferred deferred Other acquisition sales contract account Unearned contract contract investment Net sales acquisition operating costs inducements balances premiums claims considerations income benefits inducements* costs** expenses ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ 2007: Life $ 273 $ - $ 1,169 $ 53 $ 428 $ 273 $ 71 $ 122 $ - $ (273) $ 503 Annuities 36,862 10,992 265,652 - - 11,017 19,493 11,777 (1,732) (8,470) 20,394 Accident 1,606 - 1,626 684 6,870 1,466 329 742 - (907) 1,970 and health ------------------ ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- $ 38,741 $10,992 $ 268,447 $ 737 $ 7,298 $ 12,756 $ 19,893 $ 12,641 $ (1,732) $ (9,650) $ 22,867 --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- 2006: Life $ - $ - $ 1,034 $ 54 $ 380 $ 410 $ 81 $ 112 $ - $ - $ 169 Annuities 31,470 9,763 248,548 - - 10,200 11,315 9,441 (2,862) (7,454) 17,677 Accident 700 - 922 312 16,370 9,724 731 10,835 - (699) 3,040 and health --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- $ 32,170 $ 9,763 $ 250,504 $ 366 $ 16,750 $ 20,334 $ 12,127 $ 20,388 $ (2,862) $ (8,153) $ 20,886 --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- 2005: Life $ - $ - $ 1,506 $ 67 $ 424 $ 1,164 $ 110 $ 570 $ - $ - $ 295 Annuities 25,101 6,878 207,945 - - 8,110 9,052 9,506 (2,591) (7,833) 16,345 Accident - - 523 40 16,259 11,528 768 9,064 - - 2,625 and health --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- $ 25,101 $ 6,878 $ 209,974 $ 107 $ 16,683 $ 20,802 $ 9,930 $ 19,140 $ (2,591) $ (7,833) $ 19,265 --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- --------- -------- ---------- ------------ --------- --------- -------- --------- ---------- --------- ---------- * See note 7 for aggregate gross amortization of deferred sales inducements. ** See note 6 for aggregate gross amortization of deferred acquisition costs.
See accompanying report of independent registered public accounting firm. 37 ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK Schedule IV- Reinsurance
Percentage Assumed Ceded of amount Direct from other to other Net assumed Year ended amount companies companies amount to net ---------------------------------------- -------------- ------------- ------------- ------------- ------------ December 31, 2007: Life insurance in force $ 94,658 $ - $ 83,342 $ 11,317 0.0% -------------- ------------- ------------- ------------- ------------ Premiums: Life $ 1,529 $ - $ 1,256 $ 273 0.0% Annuities 11,017 - - 11,017 0.0% Accident and health 3,729 1,305 3,568 1,466 89.0% -------------- ------------- ------------- ------------- ------------ Total premiums $ 16,275 $ 1,305 $ 4,824 $ 12,756 10.2% ---------------------------------------- -------------- ------------- ------------- ------------- ------------ December 31, 2006: Life insurance in force $ 91,453 $ - $ 78,095 $ 13,358 0.0% -------------- ------------- ------------- ------------- ------------ Premiums: Life $ 1,780 $ - $ 1,370 $ 410 0.0% Annuities 10,200 - - 10,200 0.0% Accident and health 10,102 6,530 6,908 9,724 67.2% -------------- ------------- ------------- ------------- ------------ Total premiums $ 22,082 $ 6,530 $ 8,278 $ 20,334 32.1% ---------------------------------------- -------------- ------------- ------------- ------------- ------------ December 31, 2005: Life insurance in force $139,707 $ - $ 83,338 $ 56,369 0.0% -------------- ------------- ------------- ------------- ------------ Premiums: Life $ 2,086 $ - $ 922 $ 1,164 0.0% Annuities 8,110 - - 8,110 0.0% Accident and health 10,207 8,494 7,173 11,528 73.7% -------------- ------------- ------------- ------------- ------------ Total premiums $ 20,403 $ 8,494 $ 8,095 $ 20,802 40.8% ---------------------------------------- -------------- ------------- ------------- ------------- ------------
See accompanying report of independent registered public accounting firm. 38
PART C - OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS a. Financial Statements The following financial statements of the Company are included in Part B hereof: 1. Report of Independent Registered Public Accounting Firm. 2. Balance Sheets as of December 31, 2007 and 2006. 3. Statements of Operations for the years ended December 31, 2007, 2006 and 2005. 4. Statements of Comprehensive Income for the years ended December 31, 2007, 2006 and 2005. 5. Statements of Stockholder's Equity for the years ended December 31, 2007, 2006 and 2005. 6. Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005. 7. Notes to Financial Statements 8. Supplemental Schedules: - Schedule I - Summary of Investments - Other Than Investments in Related Parties. - Schedule III - Supplemental Insurance Information. - Schedule IV - Reinsurance The following financial statements of the Variable Account are included in Part B hereof: 1. Report of Independent Registered Public Accounting Firm. 2. Statements of Assets and Liabilities as of December 31, 2007. 3. Statements of Operations for the year or period ended December 31, 2007. 4. Statements of Changes in Net Assets for the years or periods ended December 31, 2007 and 2006. 5. Notes to Financial Statements - December 31, 2007. b. Exhibits 1. Resolution of Board of Directors of the Company authorizing the establishment of the Separate Account, dated February 26, 1988(1) incorporated by reference as exhibit EX-99.B1. 2. Not Applicable 3.a. Principal Underwriter Agreement by and between Preferred Life Insurance Company of New York on behalf of Preferred Life Variable Account C and NALAC Financial Plans, Inc. (2) incorporated by reference as exhibit EX-99.B3.a. Preferred Life Insurance Company of New York is the predecessor to Allianz Life Insurance Company of New York. Preferred Life Variable Account C is the predecessor to Allianz Life of NY Variable Account C. NALAC Financial Plans, Inc., is the predecessor to USAllianz Investor Services, LLC, which is the predecessor to Allianz Life Financial Services, LLC. b. Copy of Broker-Dealer Agreement between Preferred Life Insurance Company of New York and NALAC Financial Plans, Inc. (predecessor to Allianz Life Financial Services, LLC) (9) incorporated by reference as exhibit EX-99.B3.b. c. Form of General Agency Agreement with Allianz Life Financial Services, LLC.(6) incorporated by reference as exhibit EX-99.B3.b. 4.a. Individual Variable Annuity "Base" Contract-L40529-NY01(11) incorporated by reference as exhibit EX-99.B4.a. b. Individual Variable Annuity "Bonus" Contract-L40530-NY01(11) incorporated by reference as exhibit EX-99.B4.b. c. Schedule Pages (1 thru 33)(11) incorporated by reference as exhibit EX-99.B4.c. d. Asset Allocation Rider-S40741-NY(11) incorporated by reference as exhibit EX-99.B4.d. e. Lifetime Plus Benefit Rider-S40742-NY(11) incorporated by reference as exhibit EX-99.B4.e. f. Quarterly Value Death Benefit Rider-S40743-01-NY(11) incorporated by reference as exhibit EX-99.B4.f. g. Inherited IRA/Roth IRA Endorsement - S40714-NY(5) incorporated by reference as exhibit EX-99.B4.i. h. Roth IRA Endorsement - P20041(7) incorporated by reference as exhibit EX-99.B4.k. i. IRA Endorsement - P30012-NY(7) incorporated by reference as exhibit EX-99.B4.i. j. Unisex Endorsement(S20146)(7) incorporated by reference as exhibit EX-99.B4.l. k. 403(b) Endorsement - P30014(7) incorporated by reference as exhibit EX-99.B4.j. 5. Application for Ind. Var. Annuity Contract-F40461-NY(11) incorporated by reference as exhibit EX-99.5. 6.(i) Copy of Certificate of the Amendment of Charter of the Company dated October 5, 1988 and the Declaration of Intention and Charter dated August 26, 1996(6) incorporated by reference as exhibit EX-99.B6.(i). (ii) Copy of the Restated Bylaws of the Company (as amended on October 2, 1996)(6) incorporated by reference as exhibit EX-99.B6.(ii). 7. Not Applicable 8.a. 22c-2 Agreements (12)incorporated by reference as exhibit EX-99.B8.a. b. Form of Participation Agreement between BlackRock Series Fund, Inc., BlackRock Distributors, Inc., Allianz Life Insurance Co. of New York, and Allianz Life Financial Services, LLC (12)incorporated by reference as exhibit EX-99.B8.b. c. Form of Adminstrative Service Agreement between BlackRock Advisors, LLC and Allianz Life 12)incorporated by reference as exhibit EX-99.B8.c. d. Copy of Participation Agreement between Davis Variable Account Fund, Inc., Davis Distributors, LLC and Preferred Life Insurance Company of New York, dated 11/1/1999(4) incorporated by reference as exhibit EX-99.B8.e. e. Copy of Amendment to Participation Agreement between Davis Variable Account Fund, Inc., Davis Distributors, LLC and Allianz Life Insurance Company of New York dated 5/1/07(12) incorporated by reference as exhibit EX-99.B8.e. f. Copy of Administrative Services Agreement between Franklin Templeton Services LLC and Preferred Life Insurance Company of New York, dated 10/1/2003(5) incorporated by reference as exhibit EX-99.B8.ac. g. Copy of Amendment to Administrative Services Agreement between Franklin Templeton Services, LLC and Allianz Life Insurance Company of New York dated 7/31/2007(11) incorporated by reference as exhibit EX-99.B8.l. h. Copy of Participation Agreement between Franklin Templeton Variable Insurance Products Trust, Franklin/Templeton Distributors, Inc., Allianz Life Insurance Company of New York and USAllianz Investor Services, LLC (the predecessor to Allianz Life Financial Services, LLC.), and dated 10/1/2003(5) incorporated by reference as exhibit EX-99.B8.n. i. Copy of Amendments to Participation Agreement between Franklin Templeton Variable Insurance Products Trust, Franklin/Templeton Distributors, Inc., Allianz Life Insurance Company of New York and USAllianz Investor Services, LLC (the predecessor to Allianz Life Financial Services, LLC.), dated 5/1/07 and 12/11/2007(11) incorporated by reference as exhibit EX-99.B8.n. j. Copy of Participation Agreement between Premier VIT, Allianz Life of New York and Allianz Global Investors Distributors LLC, dated 5/1/2006(8) incorporated by reference as exhibit EX-99.B8.i. k. Copy of Administrative Service Agreement between OpCap Advisors LLC and Allianz Life of New York, dated 5/1/2006(8) incorporated by reference as exhibit EX-99.B8.j. l. Copy of Amended and Restated Services Agreement between Pacific Investment Management Company LLC and Allianz Life Insurance Company of New York, dated 01/01/2007(9) incorporated by reference as exhibit EX-99.B8.u. m. Copy of Participation Agreement between Preferred Life Insurance Company of New York, PIMCO Variable Insurance Trust, and PIMCO Funds Distributors LLC, dated 12/1/1999(4) incorporated by reference as exhibit EX-99.B8.i. n. Copy of Amendments to Participation Agreement between Allianz Life Insurance Company of New York (formerly Preferred Life Insurance Company of New York), PIMCO Variable Insurance Trust, and Allianz Global Investors Distributors LLC (formerly PIMCO Funds Distributors LLC), dated 4/1/00, 5/1/02, 5/1/03, 4/30/04, 4/29/05(9) incorporated by reference as exhibit EX-99.B8.w. o. Copy of Distribution Service Agreement between Allianz Life Insurance Company of New York and Allianz Global Investors Distributors, LLC dated 01/01/2007(9) incorporated by reference as exhibit EX-99.B8.x. 9. Opinion and Consent of Counsel* 10. Consent of Independent Registered Public Accounting Firm* 11. Not Applicable 12. Not Applicable 13. Power of Attorney(12)incorporated by reference as exhibit EX-99.B13. * Filed herewith (1) Incorporated by reference from Registrant's N-4 filing (File Nos. 333-19699 and 811-05716) electronically filed on January 13, 1997. (2) Incorporated by reference from Registrant's Pre-Effective Amendment No. 1 to Form N-4 (File Nos. 333-19699 and 811-05716) electronically filed on May 12, 1997. (3) Incorporated by reference from Registrant's Post-Effective Amendment No. 7 to Form N-4 (File Nos.333-19699 and 811-05716) electronically filed on November 12, 1999. (4) Incorporated by reference from Registrant's Post-Effective Amendment No. 8 to Form N-4 (File Nos.333-19699 and 811-05716) electronically filed on April 28, 2000. (5) Incorporated by reference from Registrant's Post Effective Amendment No. 15 to Form N-4 (File Nos.333-75718 and 811-05716) electronically filed on April 27, 2005. (6) Incorporated by reference from the Initial Registration Statement to Allianz Life Variable Account B's Form N-4 (File Nos.333-134267 and 811-05618) electronically filed on May 19, 2006. (7) Incorporated by reference from Registrant's Pre Effective Amendment No. 1 to Form N-4 (File Nos. 333-124767 and 811-05716) electronically filed on November 20, 2006. (8) Incorporated by reference from Registrant's Post Effective Amendment No. 25 to Form N-4 (File Nos. 333-19699 and 811-05716) electronically filed on December 28, 2006. (9) Incorporated by reference from Registrant's Post Effective Amendment No. 26 to Form N-4 (File Nos. 333-19699 and 811-05716) electronically filed on April 23, 2007. (10)Incorporated by reference from Registrant's Initial filing to Form N-4 (File Nos. 333-143195 and 811-05716) electronically filed on May 23, 2007. (11)Incorporated by reference from Registrant's Pre Effective Amendment No. 1 to Form N-4 (File Nos. 333-143195 and 811-05716) electronically filed on August 17, 2007. (12)Incorporated by reference from Registrant's Post Effective Amendment No. 28 to Form N-4 (File Nos. 333-19699 and 811-05716) electronically filed on April 24, 2008.
ITEM 25. OFFICERS AND DIRECTORS OF ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK. Unless noted otherwise, all officers and directors have the following principal business address: 5701 Golden Hills Drive Minneapolis, MN 55416-1297
The following are the Officers and Directors of the Company: -------------------------------------------------- ------------------------------------------------------ NAME AND PRINCIPAL BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR -------------------------------------------------- ------------------------------------------------------ Jill E. Paterson Chief Financial Officer -------------------------------------------------- ------------------------------------------------------ Vincent G. Vitiello Director, Chairman of the Board, Chief Executive Officer and President -------------------------------------------------- ------------------------------------------------------ Dennis J. Marion Director 39 Westview Road Wayne, NJ 07470 -------------------------------------------------- ------------------------------------------------------ Eugene T. Wilkinson Director 31A Mountain Blvd Warren, NJ 07059 -------------------------------------------------- ------------------------------------------------------ Stephen R. Herbert Director 900 Third Avenue New York, NY 10022 -------------------------------------------------- ------------------------------------------------------ Jack F. Rockett Director 140 East 95th Street, Ste 6A New York, NY 10129 -------------------------------------------------- ------------------------------------------------------ Suzanne Pepin Director -------------------------------------------------- ------------------------------------------------------ Martha Clark Goss Director -------------------------------------------------- ------------------------------------------------------ Gary A. Smith Director -------------------------------------------------- ------------------------------------------------------ Thomas P. Burns Director -------------------------------------------------- ------------------------------------------------------ John Esch Director & Vice President - Actuarial -------------------------------------------------- ------------------------------------------------------ Yvonne Franzese Director Fireman's Fund Insurance Co. 777 San Marin Drive Novato, CA 94998 -------------------------------------------------- ------------------------------------------------------ William Gaumond Director -------------------------------------------------- ------------------------------------------------------
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT The Insurance Company organizational chart is incorporated by reference from Registrant's Post-Effective No. 28 to Form N-4 (File Nos. 333-19699 and 811-05716) filed electronically on April 24, 2008. ITEM 27. NUMBER OF CONTRACT OWNERS As of March 31, 2008 there were 127 qualified Contract Owners and 68 non-qualified Contract Owners with Contracts in the Separate Account. ITEM 28. INDEMNIFICATION The Bylaws of the Insurance Company provide: ARTICLE XI. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES SECTION 1. RIGHT TO INDEMNIFICATION: (a)Subject to the conditions of this Article and any conditions or limitations imposed by applicable law, the Corporation shall indemnify any employee, director or officer of the Corporation (an "Indemnified Person") who was, is, or in the sole opinion of the Corporation, may reasonably become a party to or otherwise involved in any Proceeding by reason of the fact that such Indemnified Person is or was: (i) a director of the Corporation; or (ii) acting in the course and scope of his or her duties as an officer or employee of the Corporation; or (iii) rendering Professional Services at the request of and for the benefit of the Corporation; or (iv) serving at the request of the Corporation as an officer, director, fiduciary or member of another corporation, association, committee, partnership, joint venture, trust, employee benefit plan or other enterprise (an "Outside Organization"). (b)Notwithstanding the foregoing, no officer, director or employee shall be indemnified pursuant to these bylaws under the following circumstances: (i) in connection with a Proceeding initiated by such person, in his or her own personal capacity, unless such initiation was authorized by the Board of Directors; (ii) if a court of competent jurisdiction finally determines that any indemnification hereunder is unlawful; (iii) for acts or omissions involving intentional misconduct or knowing and culpable violation of law; (iv) for acts or omissions that the Indemnified Person believes to be contrary to the best interests of the Corporation or its shareholders or that involve the absence of good faith on the part of the Indemnified Person; (v) for any transaction for which the Indemnified Person derived an improper personal benefit; (vi) for acts or omissions that show a reckless disregard for the Indemnified Person's duty to the Corporation or its shareholders in circumstances in which the Indemnified Person was aware or should have been aware, in the ordinary course of performing the Indemnified Person's duties, of the risk of serious injury to the Corporation or its shareholders; (vii) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the Indemnified Person's duties to the Corporation or its shareholders; (viii) in circumstances where indemnification is prohibited by applicable law; (ix) in the case of service as an officer, director, fiduciary or member of an Outside Organization, where the Indemnified Person was aware or should have been aware that the conduct in question was outside the scope of the assignment as contemplated by the Corporation. SECTION 2. SCOPE OF INDEMNIFICATION: (a)Indemnification provided pursuant to Section 1(a)(iv) shall be secondary and subordinate to indemnification or insurance provided to an Indemnified Person by an Outside Organization or other source, if any. (b)Indemnification shall apply to all reasonable expenses, liability and losses, actually incurred or suffered by an Indemnified Person in connection with a Proceeding, including without limitation, attorneys' fees and any expenses of establishing a right to indemnification or advancement under this article, judgments, fines, ERISA excise taxes or penalties, amounts paid or to be paid in settlement and all interest, assessments and other charges paid or payable in connection with or in respect of such expense, liability and loss. (c)Such indemnification shall continue as to any Indemnified Person who has ceased to be an employee, director or officer of the Corporation and shall inure to the benefit of his or her heirs, estate, executors and administrators. SECTION 3. DEFINITIONS: (a)"Corporation" for the purpose of Article XI shall mean Allianz Life Insurance Company of New York and all of its subsidiaries. (b)"Proceeding" shall mean any threatened, pending, or completed action, suit or proceeding whether civil, criminal, administrative, investigative or otherwise, including actions by or in the right of the Corporation to procure a judgment in its favor. (c)"Professional Services" shall mean services rendered pursuant to (i) a professional actuarial designation, (ii) a license to engage in the practice of law issued by a State Bar Institution or (iii) a Certified Public Accountant designation issued by the American Institute of Certified Public Accountants. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted for directors and officers or controlling persons of the Insurance Company pursuant to the foregoing, or otherwise, the Insurance Company 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, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Insurance Company of expenses incurred or paid by a director, officer or controlling person of the Insurance Company 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 Company 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. ITEM 29. PRINCIPAL UNDERWRITERS a. Allianz Life Financial Services, LLC (previously USAllianz Investor Services, LLC) is the principal underwriter for the Contracts. It also is the principal underwriter for: Allianz Life Variable Account A Allianz Life Variable Account B b. The following are the officers (managers) and directors (Board of Governors) of Allianz Life Financial Services, LLC. All officers and directors have the following principal business address: 5701 Golden Hills Drive Minneapolis, MN 55416-1297
-------------------------------------- ----------------------------------------------------------------- NAME POSITIONS AND OFFICES WITH UNDERWRITER -------------------------------------- ----------------------------------------------------------------- Robert DeChellis Chief Manager, Chief Executive Officer, President and Governor -------------------------------------- ----------------------------------------------------------------- Thomas Burns Governor -------------------------------------- ----------------------------------------------------------------- Angela Wilson Chief Financial Officer and Vice President -------------------------------------- ----------------------------------------------------------------- Catherine Q. Farley Senior Vice President -------------------------------------- ----------------------------------------------------------------- Corey J. Walther Senior Vice President -------------------------------------- ----------------------------------------------------------------- Jeffrey W. Kletti Senior Vice President -------------------------------------- ----------------------------------------------------------------- Wayne Peterson Chief Compliance Officer and Vice President -------------------------------------- -----------------------------------------------------------------
c. For the period 1-1-2007 to 12-31-2007: ------------------------------------ --------------------- --------------------- --------------------- --------------------- NAME OF PRINCIPAL UNDERWRITER NET UNDERWRITING COMPENSATION ON BROKERAGE COMPENSATION DISCOUNTS AND COMMISSIONS REDEMPTION COMMISSIONS ------------------------------------ --------------------- --------------------- --------------------- --------------------- ------------------------------------ --------------------- --------------------- --------------------- --------------------- Allianz Life Financial Services, LLC $5,838,450.54 $0 $0 $0 ------------------------------------ --------------------- --------------------- --------------------- ---------------------
The $5,838,450.54 that Allianz Life Financial Services, LLC received from Allianz Life of New York as commissions on the sale of Contracts issued under Allianz Life of NY Variable Account C was subsequently paid entirely to the third party broker/dealers that perform the retail distribution of the Contracts and, therefore, no commission or compensation was retained by Allianz Life Financial Services, LLC. ITEM 30. LOCATION OF ACCOUNTS AND RECORDS 5701 Golden Hills Drive, Minneapolis, Minnesota 55416 and Delaware Valley Financial Services, Allianz Service Center, 300 Berwyn Park, Berwyn, Pennsylvania 19312, maintain physical possession of the accounts, books or documents of the Variable Account required to be maintained by Section 31(a) of the Investment Company Act of 1940, as amended, and the rules promulgated thereunder. ITEM 31. MANAGEMENT SERVICES Not Applicable ITEM 32. UNDERTAKINGS a. Registrant hereby undertakes to file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen (16) months old for so long as payment under the variable annuity contracts may be accepted. b. Registrant hereby undertakes to include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a postcard or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information. c. Registrant hereby undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request. REPRESENTATIONS Allianz Life Insurance Company of New York ("Company") hereby represents that the fees and charges deducted under the Contract, in the aggregate, are reasonable in relation to the services rendered, the expenses to be incurred and the risks assumed by the Company. The Company hereby represents that it is relying upon a No-Action Letter issued to the American Council of Life Insurance, dated November 28, 1988 (Commission ref. IP-6-88), and that the following provisions have been complied with: 1. Include appropriate disclosure regarding the redemption restrictions imposed by Section 403(b)(11) in each registration statement, including the prospectus, used in connection with the offer of the contract; 2. Include appropriate disclosure regarding the redemption restrictions imposed by Section 403(b)(11) in any sales literature used in connection with the offer of the contract; 3. Instruct sales representatives who solicit participants to purchase the contract specifically to bring the redemption restrictions imposed by Section 403(b)(11) to the attention of the potential participants; 4. Obtain from each plan participant who purchases a Section 403(b) annuity contract, prior to or at the time of such purchase, a signed statement acknowledging the participant's understanding of (1) the restrictions on redemption imposed by Section 403(b)(11), and (2) other investment alternatives available under the employer's Section 403(b) arrangement to which the participant may elect to transfer his contract value. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, as amended, Allianz Life Insurance Company of New York on behalf of the Registrant certifies that it meets the requirements of the Securities Act Rule 485(b) for effectiveness of this Registration Statement and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized in the City of Minneapolis and State of Minnesota, on this 24th day of April, 2008. ALLIANZ LIFE OF NY VARIABLE ACCOUNT C (Registrant) By: ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK (Depositor) BY: /S/ STEWART D. GREGG Stewart D. Gregg Senior Securities Counsel ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK (Depositor) BY: /S/ VINCENT G. VITIELLO* Vincent G. Vitiello Chief Executive Officer and President Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the 24th of April, 2008.
SIGNATURE TITLE Vincent G. Vitiello* Director, Chairman of the Board, President & Vincent G. Vitiello Chief Executive Officer Jill E. Paterson* Chief Financial Officer Jill E. Paterson Suzanne Pepin* Director Suzanne Pepin Dennis Marion* Director Dennis Marion Eugene T. Wilkinson* Director Eugene T. Wilkinson Stephen R. Herbert* Director Stephen R. Herbert Gary A. Smith* Director Gary A. Smith Martha Clark Goss* Director Martha Clark Goss Thomas P. Burns* Director Thomas P. Burns John Esch* Director & Vice President-Actuary John Esch Yvonne Franzese* Director Yvonne Franzese William Gaumond* Director William Gaumond * By Power of Attorney filed as Exhibit 13 to this Registration Statement.
BY /S/ STEWART D. GREGG Stewart D. Gregg Senior Securities Counsel EXHIBITS TO POST-EFECTIVE AMENDMENT NO. 3 TO FORM N-4 (FILE NOS. 333-143195 AND 811-05716) ALLIANZ LIFE VARIABLE ACCOUNT C ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK INDEX TO EXHIBITS
EX-99.B9 Opinion and Consent of Counsel EX-99.B10 Consent of Independent Registered Public Accounting Firm