<PAGE>
                                   EXHIBIT 99
<PAGE>
FIRST FORTIS MASTERS VARIABLE ANNUITY

Flexible Premium Deferred

Combination Variable and Fixed Annuity Contracts

PROSPECTUS DATED
May 1, 1997
FORTIS LOGO

FIRST FORTIS LIFE INSURANCE COMPANY
MAILING ADDRESS:     STREET ADDRESS:                PHONE: 1-800-745-8248
P.O. BOX 3249        220 SALINA MEADOWS PARKWAY
SYRACUSE             SUITE 255
NEW YORK 13220       SYRACUSE
                     NEW YORK 13220

This  Prospectus describes  flexible premium  deferred combination  variable and
fixed annuity contracts  (a "Contract")  issued by First  Fortis Life  Insurance
Company  ("First  Fortis"). The  minimum initial  purchase payment  is generally
$5,000 and is $1,000 for each subsequent purchase payment.

A Contract allows you to accumulate funds on a tax-deferred basis. You may elect
a guaranteed interest accumulation option through First Fortis' Fixed Account or
a variable return accumulation option through Separate Account A (the  "Variable
Account")  of First  Fortis, or  a combination of  these two  options. Under the
variable rate  accumulation option,  you can  choose among  one or  more of  the
following investment portfolios of Fortis Series Fund, Inc. (the "Series Fund"):
Money  Market  Series,  U.S. Government  Securities  Series,  Diversified Income
Series, Global Bond Series, High  Yield Series, Asset Allocation Series,  Global
Asset  Allocation Series,  Value Series, Growth  & Income Series,  S&P 500 Index
Series, Blue  Chip Stock  Series,  Growth Stock  Series, Global  Growth  Series,
International  Stock  Series  and  Aggressive  Growth  Series.  The accompanying
Prospectus for Fortis Series Fund describes the investment objectives,  policies
and  risks of each of the Portfolios. Under the guaranteed interest accumulation
option, you can choose among ten different guarantee periods, each of which  has
its own interest rate.

The  Contract provides several different types of retirement and death benefits,
including fixed and variable annuity income options. Within limits, you may make
partial surrenders of the Contract Value  or may totally surrender the  Contract
for its Cash Surrender Value.

You  have the right to examine a Contract for ten days from the time you receive
the Contract and return it for a refund of the full Contract Value.

This Prospectus gives prospective investors information about the Contracts that
they should know  before investing.  This Prospectus  must be  accompanied by  a
current  Prospectus of Fortis Series Fund, Inc. Both Prospectuses should be read
carefully and kept for future reference.

A Statement of Additional Information, dated May 1, 1997, about certain  aspects
of  the Contracts has been filed with the Securities and Exchange Commission and
is available without charge, from First  Fortis at the address and phone  number
printed above. The Table of Contents for the Statement of Additional Information
appears on page 23 of this Prospectus.

THESE  CONTRACTS ARE NOT OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK,
CREDIT UNION,  BROKER-DEALER  OR  OTHER  FINANCIAL  INSTITUTION.  THEY  ARE  NOT
FEDERALLY  INSURED  BY THE  FEDERAL DEPOSIT  INSURANCE CORPORATION,  THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY; AND INVOLVE INVESTMENT RISKS, INCLUDING  THE
POSSIBLE LOSS OF PRINCIPAL.

THESE  SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

97104 (Ed. 5/96)
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
Special Terms Used in this Prospectus...................................       3
Information Concerning Fees and Charges.................................       4
Summary of Contract Features............................................       7
First Fortis Life Insurance Company.....................................       8
The Variable Account....................................................       8
Series Fund.............................................................       9
The Fixed Account.......................................................       9
    - Guaranteed Interest Rates/Guarantee Periods.......................       9
    - Market Value Adjustment...........................................       9
    - Investments by First Fortis.......................................      10
Accumulation Period.....................................................      10
    - Issuance of a Contract and Purchase Payments......................      10
    - Contract Value....................................................      11
    - Allocation of Purchase Payments and Contract Value................      11
    - Total and Partial Surrenders......................................      12
    - Benefit Payable on Death of Annuitant or Contract Owner...........      12
The Annuity Period......................................................      13
    - Annuity Commencement Date.........................................      13
    - Commencement of Annuity Payments..................................      13
    - Relationship Between Subaccount Investment Performance and Amount
      of Variable Annuity Payments......................................      13
    - Annuity Forms.....................................................      14
    - Death of Annuitant or Other Payee.................................      14
Charges and Deductions..................................................      14
    - Premium Taxes.....................................................      14
    - Charges Against the Variable Account..............................      14
    - Tax Charge........................................................      15
    - Surrender Charge..................................................      15
    - Miscellaneous.....................................................      15
    - Reduction of Charges..............................................      15
General Provisions......................................................      15
    - The Contracts.....................................................      15
    - Postponement of Payment...........................................      15
    - Misstatement of Age or Sex and Other Errors.......................      15
    - Assignment........................................................      16
    - Beneficiary.......................................................      16
    - Reports...........................................................      16
Rights Reserved By First Fortis.........................................      16
Distribution............................................................      16
Federal Tax Matters.....................................................      17
Further Information about First Fortis..................................      18
    - General...........................................................      19
    - Selected Financial Data...........................................      19
Management's Discussion and Analysis of Financial Condition and Results
 of Operations..........................................................      19
Directors and Executive Officers........................................      21
    - Executive Compensation............................................      22
    - Ownership of Securities...........................................      22
Voting Privileges.......................................................      22
Legal Matters...........................................................      23
Other Information.......................................................      23
Contents of Statement of Additional Information.........................      23
First Fortis Financial Statements.......................................      23
Appendix A--Sample Market Value Adjustment Calculations.................     A-1
Appendix B--Sample Death Benefit Calculations...........................     B-1
Appendix C--Explanation of Expense Calculations.........................     C-1
</TABLE>

THE CONTRACTS  ARE  NOT  AVAILABLE  IN ALL  STATES.  THIS  PROSPECTUS  DOES  NOT
CONSTITUTE  AN  OFFERING IN  ANY  JURISDICTION IN  WHICH  SUCH OFFERING  MAY NOT
LAWFULLY  BE  MADE.  FIRST  FORTIS   DOES  NOT  AUTHORIZE  ANY  INFORMATION   OR
REPRESENTATION  REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS WHICH IS NOT
INCLUDED IN THIS PROSPECTUS, THE RELATED STATEMENT OF ADDITIONAL INFORMATION, OR
ANY SUPPLEMENTS  THERETO OR  IN ANY  SUPPLEMENTAL SALES  MATERIAL AUTHORIZED  BY
FIRST FORTIS.
<PAGE>
SPECIAL TERMS USED IN THIS PROSPECTUS

<TABLE>
<S>                             <C>
ACCUMULATION PERIOD             The  time  period under  a Contract  between the
                                Contract Issue Date and the Annuity Commencement
                                Date.
ACCUMULATION UNIT               A unit of measure  used to calculate a  Contract
                                Owner's  interest in the Variable Account during
                                the Accumulation Period.
ANNUITANT                       A person during whose life annuity payments  are
                                to be made by First Fortis under the Contract.
ANNUITY COMMENCEMENT DATE       The date on which the Annuity Period commences.
ANNUITY PERIOD                  The   time  period  following  the  Accumulation
                                Period, during which  annuity payments are  made
                                by First Fortis.
ANNUITY UNIT                    A unit of measurement used to calculate variable
                                annuity payments.
BENEFICIARY                     The  person entitled  to receive  benefits under
                                the terms of the Contract.
CASH SURRENDER VALUE            The amount  payable  to the  Contract  Owner  on
                                surrender  of the Contract  after all applicable
                                adjustments  and  deduction  of  all  applicable
                                charges.
CONTRACT ISSUE DATE             The date on which the Contract becomes effective
                                as shown on the Contract Data Page.
CONTRACT OWNER                  The  person or company  named in the application
                                for a Contract, who is entitled to exercise  all
                                rights  and  privileges of  ownership  under the
                                Contract during the Accumulation Period.
CONTRACT VALUE                  The sum  of  the  Fixed Account  Value  and  the
                                Variable Account Value.
FIXED ACCOUNT                   The name of the alternative under which purchase
                                payments  are allocated to First Fortis' General
                                Account.
FIXED ACCOUNT VALUE             The amount of  your Contract Value  which is  in
                                the Fixed Account.
FIXED ANNUITY OPTION            An  annuity  option  under  which  First  Fortis
                                promises to pay the Annuitant or any other payee
                                that you designate one or more fixed payments.
GENERAL ACCOUNT                 All assets of First  Fortis other than those  in
                                the  Variable Account,  and other  than those in
                                any other  legally segregated  separate  account
                                established by First Fortis.
GUARANTEED INTEREST RATE        The  rate  of  interest  we  credit  during  any
                                Guarantee Period, on an effective annual basis.
GUARANTEE PERIOD                The period for which a Guaranteed Interest  Rate
                                is credited.
HOME OFFICE                     Our   office  at  220  Salina  Meadows  Parkway,
                                Syracuse,  New   York   13220;   1-800-745-8248;
                                Mailing  address:  P.O.  Box  3249,  Syracuse NY
                                13220.
MARKET VALUE ADJUSTMENT         Positive or negative adjustment in Fixed Account
                                Value that we  make if  such value  is paid  out
                                more  than fifteen days before  or after the end
                                of a  Guarantee Period  in  which it  was  being
                                held.
NET PURCHASE PAYMENT            The  gross amount of a purchase payment less any
                                applicable premium taxes or similar governmental
                                assessments.
NON-QUALIFIED CONTRACTS         Contracts that do  not qualify  for the  special
                                federal   income  tax  treatment  applicable  in
                                connection with certain retirement plans.
PORTFOLIO                       Each separate  investment  portfolio  of  Series
                                Fund  eligible  for investment  by  the Variable
                                Account.
QUALIFIED CONTRACTS             Contracts that  are  qualified for  the  special
                                federal   income  tax  treatment  applicable  in
                                connection with certain retirement plans.
SERIES FUND                     Fortis  Series   Fund,  Inc.,   a   diversified,
                                open-end  management investment company in which
                                the Variable Account invests.
SEVEN YEAR ANNIVERSARY          The seventh  anniversary  of  a  Contract  Issue
                                Date, and each subsequent seventh anniversary of
                                that date.
SUBACCOUNTS                     The several Subaccounts of the Variable Account,
                                each  of which invests its assets in a different
                                Portfolio.
VALUATION DATE                  All business days  except, with  respect to  any
                                Subaccount,  days on which the related Portfolio
                                does  not  value  its  shares.  Generally,   the
                                Portfolios  value their  shares on  each day the
                                New York Stock Exchange is open.
VALUATION PERIOD                The period that starts  at the close of  regular
                                trading  on  the New  York  Stock Exchange  on a
                                Valuation Date and ends at the close of  regular
                                trading  on the exchange  on the next succeeding
                                Valuation Date.
VARIABLE ACCOUNT                The segregated  asset  account  referred  to  as
                                Separate   Account  A   of  First   Fortis  Life
                                Insurance Company  established  to  receive  and
                                invest purchase payments under Contracts.
VARIABLE ACCOUNT VALUE          The   amount  of  your  Contract  Value  in  the
                                Subaccounts of the Variable Account.
VARIABLE ANNUITY OPTION         An  annuity  option  under  which  First  Fortis
                                promises to pay the Annuitant or any other payee
                                chosen by you one or more payments which vary in
                                amount  in  accordance with  the  net investment
                                experience of  the Subaccounts  selected by  the
                                Annuitant.
WRITTEN REQUEST                 A written, signed and dated request, in form and
                                substance   satisfactory  to  First  Fortis  and
                                received at our Home Office.
</TABLE>

                                       3
<PAGE>
INFORMATION CONCERNING FEES AND CHARGES

CONTRACT OWNER TRANSACTION CHARGES

<TABLE>
<S>                                                           <C>
Front-End Sales Charge Imposed on Purchases.................       0%
Maximum Surrender Charge for Sales Expenses.................       7%(1)
</TABLE>

<TABLE>
<CAPTION>
                                     SURRENDER CHARGE AS A
    NUMBER OF YEARS SINCE           PERCENTAGE OF PURCHASE
PURCHASE PAYMENT WAS CREDITED               PAYMENT
------------------------------      -----------------------
<S>                                 <C>
                   Less than 1                 7%
    At least 1 but less than 2                 6%
    At least 2 but less than 3                 5%
    At least 3 but less than 4                 4%
    At least 4 but less than 5                 3%
    At least 5 but less than 6                 2%
    At least 6 but less than 7                 1%
                     7 or more                 0%
</TABLE>

<TABLE>
<S>                                                           <C>
       Other Surrender Fees.................................       0%
       Exchange Fee.........................................       0%

ANNUAL CONTRACT ADMINISTRATION CHARGE.......................  $    0

VARIABLE ACCOUNT ANNUAL EXPENSES
 (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE)
</TABLE>

<TABLE>
<S>                                                           <C>
       Mortality and Expense Risk Charge....................     1.25%
       Variable Account Administrative Charge...............      .10%
                                                                  ---
         Total Variable Account Annual Expenses.............     1.35%

OPTIONAL VARIABLE ACCOUNT ANNUAL EXPENSES
 (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE)
</TABLE>

<TABLE>
<S>                                                           <C>
       Enhanced Death Benefit Current Charge................      .15%
</TABLE>

There  is  an  Enhanced Death  Benefit  which can  be  selected at  the  time of
application. The current charge  is a mortality risk  charge as set forth  above
and  this change can be increased to a  maximum of .30% of the average daily net
assets  of   the  Variable   Account.  (See   "Charges  Against   the   Variable
Account--Enhanced  Death Benefit Charge.") There are two sets of examples below.
One set has been calculated with  the current Enhanced Death Benefit Charge  and
the other set has been calculated without it.
------------------------
(1)  This charge does not apply in certain cases such as partial surrenders each
     year  of up to 10% of "new  purchase payments" as defined under the heading
     "surrender charge," or payment of a death benefit.

MARKET VALUE ADJUSTMENT WITH RESPECT TO FIXED ACCOUNT

Surrenders and other withdrawals from the  Fixed Account more than fifteen  days
from the end of a Guarantee Period are subject to a Market Value Adjustment. The
Market  Value Adjustment may increase  or reduce the Fixed  Account Value. It is
computed pursuant to a  formula that is described  in more detail under  "Market
Value Adjustment."

SERIES FUND ANNUAL EXPENSES (A)
<TABLE>
<CAPTION>
                                                                                                                 GLOBAL
                                   MONEY    U.S. GOVERNMENT   DIVERSIFIED    GLOBAL     HIGH        ASSET         ASSET
                                  MARKET      SECURITIES         INCOME       BOND      YIELD    ALLOCATION    ALLOCATION     VALUE
                                  SERIES        SERIES           SERIES      SERIES    SERIES      SERIES        SERIES      SERIES
                                  -------   ---------------   ------------   -------   -------   -----------   -----------   -------
<S>                               <C>       <C>               <C>            <C>       <C>       <C>           <C>           <C>
Investment Advisory and
 Management Fee.................
Other Expenses..................
Total Series Fund Operating
 Expenses.......................

<CAPTION>
                                  GROWTH &   S&P 500    BLUE CHIP    GROWTH    GLOBAL
                                   INCOME     INDEX       STOCK       STOCK    GROWTH    INTERNATIONAL     AGGRESSIVE
                                   SERIES     SERIES      SERIES     SERIES    SERIES     STOCK SERIES    GROWTH SERIES
                                  --------   --------   ----------   -------   -------   --------------   -------------
<S>                               <C>        <C>        <C>          <C>       <C>       <C>              <C>
Investment Advisory and
 Management Fee.................
Other Expenses..................
Total Series Fund Operating
 Expenses.......................
</TABLE>

------------------------------
(a)As a percentage of Series average net assets based on 1996 historical data.

                                       4
<PAGE>
EXAMPLES*

CALCULATED  WITHOUT CURRENT ENHANCED  DEATH BENEFIT CHARGE  (SEE CHARGES AGAINST
THE SEPARATE ACCOUNT--DEDUCTION FOR ENHANCED DEATH BENEFIT CHARGE)

If you SURRENDER your  Contract in full at  the end of any  of the time  periods
shown  below,  you  would pay  the  following  cumulative expenses  on  a $1,000
investment, assuming a 5% annual return on assets:

<TABLE>
<CAPTION>
IF ALL AMOUNTS ARE INVESTED IN ONE
PORTFOLIO:                                          1 YEAR   3 YEARS   5 YEARS   10 YEARS
                                                    ------   -------   -------   --------
<S>                                                 <C>      <C>       <C>       <C>
Money Market Series...............................
U.S. Government Securities Series.................
Diversified Income Series.........................
Global Bond Series................................
High Yield Series.................................
Asset Allocation Series...........................
Global Asset Allocation Series....................
Growth & Income Series............................
Growth Stock Series...............................
Global Growth Series..............................
Aggressive Growth Series..........................
International Stock Series........................
S&P 500 Index Series..............................
Blue Chip Stock Series............................
Value Series......................................
</TABLE>

If you COMMENCE AN ANNUITY PAYMENT OPTION, or do NOT surrender your Contract  or
commence  as  annuity payment  option, you  would  pay the  following cumulative
expenses on a $1,000 investment, assuming a 5% annual return on assets:

<TABLE>
<CAPTION>
IF ALL AMOUNTS ARE INVESTED IN ONE
PORTFOLIO:                                          1 YEAR   3 YEARS   5 YEARS   10 YEARS
                                                    ------   -------   -------   --------
<S>                                                 <C>      <C>       <C>       <C>
Money Market Series...............................
U.S. Government Securities Series.................
Diversified Income Series.........................
Global Bond Series................................
High Yield Series.................................
Asset Allocation Series...........................
Global Asset Allocation Series....................
Growth & Income Series............................
Growth Stock Series...............................
Global Growth Series..............................
Aggressive Growth Series..........................
International Stock Series........................
S&P 500 Index Series..............................
Blue Chip Stock Series............................
Value Series......................................
</TABLE>

------------------------

    * Does not include the effect of any Market Value Adjustment.

                                       5
<PAGE>
CALCULATED WITH CURRENT ENHANCED DEATH  BENEFIT CHARGE (SEE CHARGES AGAINST  THE
SEPARATE ACCOUNT--DEDUCTION FOR ENHANCED DEATH BENEFIT CHARGE)

If  you SURRENDER your  Contract in full at  the end of any  of the time periods
shown below,  you  would pay  the  following  cumulative expenses  on  a  $1,000
investment, assuming a 5% annual return on assets:

<TABLE>
<CAPTION>
IF ALL AMOUNTS ARE INVESTED IN ONE
PORTFOLIO:                                          1 YEAR   3 YEARS   5 YEARS   10 YEARS
                                                    ------   -------   -------   --------
<S>                                                 <C>      <C>       <C>       <C>
Money Market Series...............................
U.S. Government Securities Series.................
Diversified Income Series.........................
Global Bond Series................................
High Yield Series.................................
Asset Allocation Series...........................
Global Asset Allocation Series....................
Growth & Income Series............................
Growth Stock Series...............................
Global Growth Series..............................
Aggressive Growth Series..........................
International Stock Series........................
S&P 500 Index Series..............................
Blue Chip Stock Series............................
Value Series......................................
</TABLE>

If  you COMMENCE AN ANNUITY PAYMENT OPTION, or do NOT surrender your Contract or
commence as  annuity payment  option,  you would  pay the  following  cumulative
expenses on a $1,000 investment, assuming a 5% annual return on assets:

<TABLE>
<CAPTION>
IF ALL AMOUNTS ARE INVESTED IN ONE
PORTFOLIO:                                          1 YEAR   3 YEARS   5 YEARS   10 YEARS
                                                    ------   -------   -------   --------
<S>                                                 <C>      <C>       <C>       <C>
Money Market Series...............................
U.S. Government Securities Series.................
Diversified Income Series.........................
Global Bond Series................................
High Yield Series.................................
Asset Allocation Series...........................
Global Asset Allocation Series....................
Growth & Income Series............................
Growth Stock Series...............................
Global Growth Series..............................
Aggressive Growth Series..........................
International Stock Series........................
S&P 500 Index Series..............................
Blue Chip Stock Series............................
Value Series......................................
</TABLE>

THE  EXAMPLES  SHOULD  NOT BE  CONSIDERED  A  REPRESENTATION OF  PAST  OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
                            ------------------------

The foregoing tables and  examples are included to  assist you in  understanding
the  transaction and operating expenses imposed directly or indirectly under the
Contracts  and  Series  Fund.  Amounts  for  state  premium  taxes  or   similar
assessments will also be deducted, where applicable.

See  Appendix C for an  explanation of the calculation  of the amounts set forth
above.

                                       6
<PAGE>
SUMMARY OF CONTRACT FEATURES

The  following  summary  should  be  read  in  conjunction  with  the   detailed
information in this Prospectus.

The  Contracts  are designed  to  provide individuals  with  retirement benefits
through the accumulation of Net Purchase Payments on a fixed or variable  basis,
and  by  the application  of  such accumulations  to  provide fixed  or variable
annuity payments.

"We," "our," and "us" mean First Fortis Life Insurance Company. "You" and "your"
mean a reader of this Prospectus  who is contemplating making purchase  payments
or taking any other action in connection with a Contract.

PURCHASE PAYMENTS

The  initial purchase payment under  a Contract must be  at least $5,000 ($2,000
for a Contract pursuant to  a qualified contract). Additional purchase  payments
under  a  Contract must  be at  least $1,000.  See "Issuance  of a  Contract and
Purchase Payments."

On the  Contract Issue  Date,  the initial  purchase  payment is  allocated,  as
specified  by the Contract Owner in the  Contract application, among one or more
of the Subaccounts of the Variable Account,  or to one or more of the  Guarantee
Periods  in the Fixed Account, or  to a combination thereof. Subsequent purchase
payments are allocated  in the  same way,  or pursuant  to different  allocation
percentages that the Contract Owner may subsequently request In Writing.

VARIABLE ACCOUNT INVESTMENT OPTIONS

Each  of  the  Subaccounts  of  the Variable  Account  invests  in  shares  of a
corresponding  Portfolio  of  Series  Fund.  Contract  Value  in  each  of   the
Subaccounts  of  the  Variable  Account  will  vary  to  reflect  the investment
experience of each of  the corresponding Portfolios, as  well as deductions  for
certain charges.

Each  Portfolio has a separate and  distinct investment objective and is managed
by Fortis  Advisers,  Inc  or a  subadviser  of  Fortis Advisers,  Inc.  A  full
description  of the Portfolios and  their investment objectives, policies, risks
and expenses  can be  found in  the current  Prospectus for  Series Fund,  which
accompanies this Prospectus, and Series Fund Statement of Additional Information
which is available upon request.

FIXED ACCOUNT INVESTMENT OPTIONS

Any  amount  allocated  by the  Contract  Owner  to the  Fixed  Account  earns a
Guaranteed Interest Rate. The level of  the Guaranteed Interest Rate depends  on
the  length of the Guarantee Period selected by the Contract Owner. We currently
make available ten different Guarantee Periods, ranging from one to ten years.

If amounts are transferred, surrendered or otherwise paid out more than  fifteen
days  before or after the end of the applicable Guarantee Period, a Market Value
Adjustment will be applied to increase  or decrease the amount of Fixed  Account
Value  that is paid out. Accordingly, the  Market Value Adjustment can result in
gains or losses to you.

For a more complete discussion of  the Fixed Account investment options and  the
Market Value Adjustment, see "The Fixed Account."

TRANSFERS

During  the Accumulation Period, you  can transfer all or  part of your Contract
Value from one Subaccount to another or  into the Fixed Account and, subject  to
any  Market Value  Adjustment, from  one Guarantee Period  to another  or into a
Subaccount. There is  currently no charge  for these transfers.  We reserve  the
right  to restrict the frequency of or otherwise condition, terminate, or impose
charges upon, transfers from a Subaccount during the Accumulation Period. During
the Annuity Period  the person receiving  annuity payments may  make up to  four
transfers  (but not from a Fixed Annuity Option) during each year of the Annuity
Period. For  a  description  of  certain limitations  on  transfer  rights,  see
"Allocations of Purchase Payments and Contract Value--Transfers."

TOTAL OR PARTIAL SURRENDERS

Subject  to  certain  conditions, all  or  part  of the  Contract  Value  may be
surrendered by the Contract Owner before the earlier of the Annuitant's death or
the Annuity Commencement Date. Amounts surrendered may be subject to a surrender
charge and,  in addition,  amounts surrendered  from the  Fixed Account  may  be
subject  to  a  Market Value  Adjustment.  See "Total  and  Partial Surrenders,"
"Surrender Charge" and "Market Value Adjustment." Particular attention should be
paid to the tax implications of any surrender, including possible penalties  for
premature distributions. See "Federal Tax Matters."

ANNUITY PAYMENTS

The  Contract provides several  types of annuity benefits  to Contract Owners or
other persons they properly designate to receive such payments, including  Fixed
and Variable Annuity Options. The Contract Owner has considerable flexibility in
choosing  the Annuity  Commencement Date.  However, the  tax implications  of an
Annuity  Commencement  Date   must  be  carefully   considered,  including   the
possibility  of penalties for  commencing benefits either too  soon or too late.
See "Annuity Commencement Date,"  "Annuity Forms" and  "Federal Tax Matters"  in
this  Prospectus and "Taxation Under Certain  Retirement Plans" in the Statement
of Additional Information.

DEATH BENEFIT

In the event  that the Annuitant  or Contract  Owner dies prior  to the  Annuity
Commencement  Date, a death benefit is payable. See "Benefit Payable on Death of
Annuitant or Contract Owner."

RIGHT TO EXAMINE THE CONTRACT

The Contract Owner can cancel a  Contract by delivering or mailing it,  together
with  a  Written  Request,  to  First  Fortis'  Home  Office  or  to  the  sales
representative through whom it  was purchased, before the  close of business  on
the  tenth day after receipt  of the Contract. If these  items are sent by mail,
properly addressed and postage  prepaid, they will be  deemed to be received  by
First  Fortis on the date postmarked. First Fortis will pay you the then current
Contract Value.

LIMITATIONS IMPOSED BY RETIREMENT PLANS AND EMPLOYERS

Certain rights you would otherwise have under  a Contract may be limited by  the
terms  of any applicable  employee benefit plan.  These limitations may restrict
such things as total  and partial surrenders, the  amount or timing of  purchase
payments  that may  be made, when  annuity payments  must start and  the type of
annuity options  that  may  be selected.  Accordingly,  you  should  familiarize
yourself  with these and all other aspects  of any retirement plan in connection
with which a Contract is issued.

The record owner of Contracts may be an employer (or the employer's designee) in
connection with an employee  benefit plan. In the  latter cases, certain  rights
that  a Contract  Owner otherwise  would have under  a Contract  may be reserved
instead by the employer.

                                       7
<PAGE>
TAX IMPLICATIONS

The tax implications for  Contract Owners or any  other persons who may  receive
payments under a Contract, and those of any related employee benefit plan can be
quite  important. A brief discussion of some  of these is set out under "Federal
Tax Matters" in this Prospectus and "Taxation Under Certain Retirement Plans" in
the  Statement  of   Additional  Information,   but  such   discussion  is   not
comprehensive.  Therefore,  you  should  consider  these  matters  carefully and
consult a qualified tax  adviser before making purchase  payments or taking  any
other action in connection with a Contract or any related employee benefit plan.
Failure  to do so could  result in serious adverse  tax consequences which might
otherwise have been avoided.

QUESTIONS AND OTHER COMMUNICATIONS

Any question about procedures of the  Contract should be directed to your  sales
representative, or First Fortis' Home Office: P.O. Box 3249, Syracuse, NY 13220;
1-800-745-8248.  Purchase  payments and  Written  Requests should  be  mailed or
delivered to the same Home Office address. All communications should include the
Contract number, the Contract  Owner's name and,  if different, the  Annuitant's
name. The number for telephone transfers is 1-800-745-8248.
Any  purchase  payment  or  other communication,  except  a  10-day cancellation
notice, is deemed received at  First Fortis' Home Office  on the actual date  of
receipt  there in  proper form  unless received (1)  after the  close of regular
trading on The New York Stock Exchange, or (2) on a date that is not a Valuation
Date. In either of these two cases, the date of receipt will be deemed to be the
next Valuation Date.

FINANCIAL AND PERFORMANCE INFORMATION

The information presented below reflects  the Accumulation Unit Information  for
subaccounts  of  the Variable  Account through  December 31,  1996. Accumulation
Units have been rounded to the nearest whole unit.
<TABLE>
<CAPTION>
                                                U.S. GOV'T    DIVERSIFIED                                      ASSET
                                MONEY MARKET    SECURITIES       INCOME      GLOBAL BOND     HIGH YIELD     ALLOCATION
                                ------------   ------------   ------------   ------------   ------------   -------------
<S>                             <C>            <C>            <C>            <C>            <C>            <C>
DECEMBER 31, 1996
Accumulation Units in Force...
Accumulation Unit Value.......
MAY 1, 1996*
Accumulation Unit Value.......

<CAPTION>
                                GLOBAL ASSET                    GROWTH &         S&P            BLUE          GLOBAL
                                 ALLOCATION       VALUE          INCOME          500            CHIP          GROWTH
                                ------------   ------------   ------------   ------------   ------------   ------------
<S>                             <C>            <C>            <C>
DECEMBER 31, 1996
Accumulation Units in Force...                      --                            --             --
Accumulation Unit Value.......                      --                            --             --
MAY 1, 1996*
Accumulation Unit Value.......                       10.000                        10.000         10.000

<CAPTION>
                                               INTERNATIONAL   AGGRESSIVE
                                GROWTH STOCK      STOCK          GROWTH
                                -------------  ------------   ------------
DECEMBER 31, 1996
Accumulation Units in Force...
Accumulation Unit Value.......
MAY 1, 1996*
Accumulation Unit Value.......
</TABLE>

----------------------------------------
* Accumulation Unit Value at date of initial registration effectiveness.

Audited financial  statements  of  the  Variable Account  are  included  in  the
Statement of Additional Information.

Advertising and other sales materials may include yield and total return figures
for  the  Subaccounts  of  the  Variable Account.  These  figures  are  based on
historical results and are not intended to indicate future performance.  "Yield"
is the income generated by an investment in the Subaccount over a period of time
specified in the advertisement. This rate of return is assumed to be earned over
a  full year and is  shown as a percentage of  the investment. "Total return" is
the total change in value  of an investment in the  Subaccount over a period  of
time specified in the advertisement. The rate of return shown would produce that
change in value over the specified period, if compounded annually. Yield figures
do  not reflect the surrender  charge and yield and  total return figures do not
reflect premium tax charges. This makes the performance shown more favorable.

Financial information concerning  First Fortis  is included  in this  Prospectus
under  "Further  Information About  First  Fortis" and  "First  Fortis Financial
Statements."

FIRST FORTIS LIFE INSURANCE COMPANY

First Fortis Life Insurance Company, the issuer of the Contracts, was founded in
1971. At the end  of 1995, First  Fortis had approximately $   billion of  total
life insurance in force. First Fortis is a New York corporation and is qualified
to  sell life  insurance and annuity  contracts in  New York. First  Fortis is a
wholly-owned subsidiary of Fortis, Inc., which is itself indirectly owned 50% by
Fortis AMEV  and  50% by  Fortis  AG. Fortis,  Inc.  manages the  United  States
operations for these two companies.

First  Fortis is affiliated with  the Fortis Financial Group,  a joint effort by
Fortis Benefits  Insurance Company,  Fortis  Advisers, Inc.,  Fortis  Investors,
Inc.,  and  Time  Insurance  Company, offering  financial  products  through the
management, marketing and servicing of  mutual funds, annuities, life  insurance
and disability income products.

Fortis  AMEV  is  a  diversified  financial  services  company  headquartered in
Utrecht, The Netherlands, where its  insurance operations began in 1847.  Fortis
AG  is  a  diversified  financial services  company  headquartered  in Brussels,
Belgium, where its insurance operations began in 1824. Fortis AMEV and Fortis AG
have merged their operating companies under the trade name of Fortis. The Fortis
group of companies is active in  insurance, banking and financial services,  and
real  estate development in The Netherlands, Belgium, the United States, Western
Europe, and the Pacific Rim. The Fortis group of companies has assets in  excess
of $160 billion.

All   of  the  guarantees  and  commitments  under  the  Contracts  are  general
obligations of First Fortis, regardless of  whether the Contract Value has  been
allocated to the Separate Account or to the Fixed Account. None of First Fortis'
affiliated  companies has any legal obligation to back First Fortis' obligations
under the Contracts.

THE VARIABLE ACCOUNT

The Variable Account, which is a segregated investment account of First  Fortis,
was  established as Variable Account A by First Fortis pursuant to the insurance
laws of New  York as of  October 1, 1993.  Although the Variable  Account is  an
integral  part  of First  Fortis, the  Variable Account  is registered  with the
Securities and  Exchange  Commission  as  a  unit  investment  trust  under  the
Investment  Company Act  of 1940.  Assets in  the Variable  Account representing
reserves and liabilities  under Contracts and  other variable annuity  contracts
issued  by First Fortis will  not be chargeable with  liabilities arising out of
any other business of First Fortis.

There are currently fifteen Subaccounts in  the Variable Account. The assets  in
each  Subaccount are  invested exclusively  in a  distinct class  (or series) of
stock issued by  Series Fund,  each of  which represents  a separate  investment
Portfolio  within Series Fund. Income and  both realized and unrealized gains or
losses from the assets of each  Subaccount of the Variable Account are  credited
to  or charged against that Subaccount without regard to income, gains or losses
from any other

                                       8
<PAGE>
Subaccount of the Variable Account or arising  out of any other business we  may
conduct. New Subaccounts may be added as new Portfolios are added to Series Fund
and  made  available. Correspondingly,  if  any Portfolios  are  eliminated from
Series Fund, Subaccounts may be eliminated from the Variable Account.

SERIES FUND

Series Fund is  a "series"  type of  mutual fund  which is  registered with  the
Securities  and Exchange  Commission under the  Investment Company  Act of 1940.
Series Fund has served as the  investment medium for the Variable Account  since
the  Variable Account commenced operations and has also served as the investment
media of other variable accounts of an affiliated company since 1987.

First Fortis purchases and redeems Series Fund' shares for the Variable  Account
at  their net  asset value  without the  imposition of  any sales  or redemption
charges. Such  shares  represent interests  in  the Portfolios  of  Series  Fund
available  for investment by the Variable Account. Each Portfolio corresponds to
one of the Subaccounts of the Variable Account. The assets of each Portfolio are
separate from the others  and each Portfolio operates  as a separate  investment
portfolio  whose performance has no effect  on the investment performance of any
other Portfolio.

Any dividend  or  capital  gain  distributions  attributable  to  Contracts  are
automatically reinvested in shares of the Portfolio from which they are received
at  the  Portfolio's  net asset  value  on  the date  paid.  Such  dividends and
distributions will have the effect of reducing the net asset value of each share
of the  corresponding Portfolio  and  increasing, by  an equivalent  value,  the
number  of  shares outstanding  of  the Portfolio.  However,  the value  of your
interest in the corresponding Subaccount will not change as a result of any such
dividends and distributions.

The Portfolios of Series Fund available  for investment by the Variable  Account
are  the  Money  Market  Series,  the  U.S.  Government  Securities  Series, the
Diversified Income Series, the  Global Bond Series, the  High Yield Series,  the
Asset Allocation Series, the Global Asset Allocation Series, the Growth & Income
Series,  the Growth  Stock Series, the  Global Growth  Series, the International
Stock Series  and  the Aggressive  Growth  Series.  A full  description  of  the
Portfolios,  their investment policies and  restrictions, the charges, the risks
attendant to  investing  in them,  and  other  aspects of  their  operations  is
contained  in the Prospectus for Series Fund accompanying this Prospectus and in
the Statement of  Additional Information  for Series Fund  referred to  therein.
Additional   copies  of  these  documents  may   be  obtained  from  your  sales
representative or from  our Home  Office. The  complete risk  disclosure in  the
Prospectus  for the Diversified Income Series and Asset Allocation Series should
be read before selection of them for investment.

THE FIXED ACCOUNT

GUARANTEED INTEREST RATES/GUARANTEE PERIODS

Any amount  allocated  by  the Contract  Owner  to  the Fixed  Account  earns  a
Guaranteed  Interest  Rate commencing  with the  date  of such  allocation. This
Guaranteed Interest Rate  continues for a  number of years  (not to exceed  ten)
selected  by  the Contract  Owner.  At the  end  of this  Guarantee  Period, the
Contract Owner's Contract  Value in  that Guarantee  Period, including  interest
accrued  thereon, will be allocated to a new Guarantee Period of the same length
unless First Fortis has  received a Written Request  from the Contract Owner  to
allocate  this amount to  a different Guarantee  Period or periods  or to one or
more of the  Subaccounts. We must  receive this Written  Request at least  three
business days prior to the end of the Guarantee Period. The first day of the new
Guarantee  Period (or other reallocation)  will be the day  after the end of the
prior Guarantee Period. We will notify the  Contract Owner at least 45 days  and
not more than 60 days prior to the end of any Guarantee Period.

We currently make available ten different Guarantee Periods, ranging from one to
ten years. Each Guarantee Period has its own Guaranteed Interest Rate, which may
differ from those for other Guarantee Periods. From time to time we will, at our
discretion,  change the Guaranteed Interest Rate for future Guarantee Periods of
various lengths. These  changes will  not affect the  Guaranteed Interest  Rates
being  paid on Guarantee Periods that have already commenced. Each allocation or
transfer of an  amount to  a Guarantee  Period commences  the running  of a  new
Guarantee  Period  with respect  to that  amount, which  will earn  a Guaranteed
Interest Rate that  will continue unchanged  until the end  of that period.  The
Guaranteed Interest Rate will never be less than an effective annual rate of 4%.

First  Fortis declares the Guaranteed Interest Rates from time to time as market
conditions dictate.  First Fortis  advises a  Contract Owner  of the  Guaranteed
Interest  Rate for a chosen  Guarantee Period at the  time a purchase payment is
received, a transfer is effectuated or a Guarantee Period is renewed.

First Fortis has no  specific formula for  establishing the Guaranteed  Interest
Rates  for  the  Guarantee Periods.  The  rate  may be  influenced  by,  but not
necessarily correspond to, interest  rates generally available  on the types  of
investments  acquired  with  amounts  allocated  to  the  Guarantee  Period. See
"Investments by First Fortis." First  Fortis in determining Guaranteed  Interest
Rates,  may  also consider,  among other  factors, the  duration of  a Guarantee
Period, regulatory and tax requirements, sales and administrative expenses borne
by First  Fortis, risks  assumed by  First Fortis,  First Fortis'  profitability
objectives, and general economic trends.

FIRST  FORTIS'  MANAGEMENT  MAKES  THE  FINAL  DETERMINATION  OF  THE GUARANTEED
INTEREST RATES TO BE DECLARED. FIRST  FORTIS CANNOT PREDICT OR ASSURE THE  LEVEL
OF ANY FUTURE GUARANTEED INTEREST RATES IN EXCESS OF AN EFFECTIVE ANNUAL RATE OF
4%.

Information  concerning the Guaranteed Interest  Rates applicable to the various
Guarantee Periods at any time may be obtained from our Home Office or from  your
sales representative.

MARKET VALUE ADJUSTMENT

If  any Fixed  Account Value is  surrendered, transferred or  otherwise paid out
before the end of the Guarantee Period in which it is being held, a Market Value
Adjustment will  be  applied. This  generally  includes amounts  applied  to  an
annuity  option and amounts paid as a single sum in lieu of an annuity. However,
NO Market Value Adjustment will be applied  to amounts that are paid out  during
the  period beginning fifteen days before and  ending fifteen days after the end
of a Guarantee Period  in which it was  being held or to  amounts paid out as  a
death benefit.

The Market Value Adjustment may increase or decrease the amount of Fixed Account
Value  being withdrawn or transferred. The comparison of two Guaranteed Interest
Rates determines whether the Market Value  Adjustment produces an increase or  a
decrease.  The first  rate to  compare is the  Guaranteed Interest  Rate for the
amount being  transferred  or  withdrawn.  The second  rate  is  the  Guaranteed
Interest  Rate then being offered for new Guarantee Periods of the same duration
as that  remaining  in the  Guarantee  Period from  which  the funds  are  being
withdrawn  or  transferred.  If  the  first  rate  exceeds  the  second  by more

                                       9
<PAGE>
than 1/4%, the Market Value Adjustment  produces an increase. If the first  rate
does  not  exceed the  second  by at  least  1/4%, the  Market  Value Adjustment
produces a decrease. Sample calculations are shown in Appendix A.

The Market Value Adjustment will be  determined by multiplying the amount  being
withdrawn  or  transferred from  the Guarantee  Period  (after deduction  of any
applicable surrender charge) by the following factor:

         1 + I           n / 12
      -----------               - 1
 (   1 + J + .0025   )

where,

    - I is  the Guaranteed  Interest Rate  being credited  to the  amount  being
      withdrawn from the existing Guarantee Period,

    - J  is the  Guaranteed Interest Rate  then being offered  for new Guarantee
      Periods with  durations equal  to the  number of  years remaining  in  the
      existing Guarantee Period (rounded up to the next higher number of years),
      and

    - N  is  the number  of months  remaining in  the existing  Guarantee Period
      (rounded up to the next higher number of months).

In the event that First Fortis discontinues offering a Guaranteed Interest  Rate
for  a Guarantee  Period, I  and J  will not  be determined  as described above.
Instead they will  be determined  by use  of the  bond equivalent  yield on  the
applicable  U.S. Treasury Bill or Note ("the yield") as determined on either the
1st or the 15th of the applicable month as follows:

    - I will be equal to  "the yield" at the  beginning of the Guarantee  Period
      and  assuming a maturity  equal to the  length of the  Guarantee Period at
      that time.

    - J will be equal to "the yield" at the time the Market Value Adjustment  is
      being  calculated  and assuming  a  maturity equal  to  the length  of the
      Guarantee Period remaining at that time.

INVESTMENTS BY FIRST FORTIS

Our obligations with respect to the Fixed Account are legal obligations of First
Fortis and  are supported  by our  General Account  assets, which  also  support
obligations  incurred  by  us  under  other  insurance  and  annuity  contracts.
Investments purchased  with  amounts allocated  to  the Fixed  Account  are  the
property  of First  Fortis, and  Contract Owners  have no  legal rights  in such
investments. Subject  to  applicable  law,  we have  sole  discretion  over  the
investment  of  assets in  our General  Account  and in  the Fixed  Account, and
neither of such accounts is subject to registration under the Investment Company
Act of 1940.

Amounts in  the First  Fortis General  Account  and the  Fixed Account  will  be
invested  in  compliance with  applicable state  insurance laws  and regulations
concerning the nature and quality of investments for the General Account. Within
specified limits and subject  to certain standards  and limitations, these  laws
generally  permit  investment  in  federal,  state  and  municipal  obligations,
preferred and common stocks, corporate bonds, real estate mortgages, real estate
and certain  other  investments. See  "First  Fortis Financial  Statements"  for
information  on First Fortis' investments.  Investment management for amounts in
the General Account  and in the  Fixed Account  is provided to  First Fortis  by
Fortis Advisers, Inc.

First  Fortis intends  to consider  the return  available on  the instruments in
which it  intends to  invest amounts  allocated  to the  Fixed Account  when  it
establishes  Guaranteed Interest Rates. Such return  is only one of many factors
considered in  establishing  the  Guaranteed  Interest  Rates.  See  "Guaranteed
Interest Rates/Guarantee Periods."

First  Fortis expects that amounts allocated to the Fixed Account generally will
be  invested  in  debt  instruments  that  approximately  match  First   Fortis'
liabilities  with regard  to the  Guarantee Periods.  First Fortis  expects that
these will  include  primarily the  following  types of  debt  instruments:  (1)
securities   issued  by  the  United  States   Government  or  its  agencies  or
instrumentalities, which securities may or may  not be guaranteed by the  United
States  Government; (2) debt  securities which have an  investment grade, at the
time of purchase, within the four  highest grades assigned by Moody's  Investors
Services,  Inc. ("Moody's") (Aaa,  Aa, A or Baa),  Standard & Poor's Corporation
("Standard & Poor's") (AAA,  AA, A or BBB),  or any other nationally  recognized
rating service; (3) other debt instruments including, but not limited to, issues
of  or guaranteed  by banks  or bank  holding companies  and corporations, which
obligations although not rated  by Moody's or Standard  & Poor's, are deemed  by
First Fortis to have an investment quality comparable to securities which may be
purchased  as stated above;  and (4) other evidences  of indebtedness secured by
mortgages or deeds of trust representing liens upon real estate. Notwithstanding
the foregoing, First Fortis is not obligated to invest amounts allocated to  the
Fixed Account according to any particular strategy, except as may be required by
applicable state insurance laws and regulations. See "Regulation and Reserves."

ACCUMULATION PERIOD

ISSUANCE OF A CONTRACT AND PURCHASE PAYMENTS

First Fortis reserves the right to reject any application for a Contract for any
reason.  If the application  can be accepted  in the form  received, the initial
purchase payment will be credited within two Valuation Dates after the later  of
receipt  of the application or receipt of  the initial purchase payment at First
Fortis' Home Office. If the initial  purchase payment cannot be credited  within
five  Valuation Dates  after receipt  because the  application or  other issuing
requirements are  incomplete,  the initial  purchase  payment will  be  returned
unless  the applicant consents to our retaining the initial purchase payment and
crediting it  as of  the end  of the  Valuation Period  in which  the  necessary
requirements are fulfilled. Despite the consent of the applicant, if the initial
purchase  payment still cannot  be credited within  thirty Valuation Dates after
receipt because  the application  or issuing  instructions are  incomplete,  the
initial purchase payment will be returned to the applicant. The initial purchase
payment  under a Contract must be at  least $5,000 ($2,000 for a Contract issued
pursuant to a qualified plan).

The date that the  initial purchase payment  is applied to  the purchase of  the
Contract  is also the Contract  Issue Date. The Contract  Issue Date is the date
used to determine Contract years, regardless of when the Contract is  delivered.
The  crediting of investment experience in the Variable Account, or a fixed rate
of return in the Fixed Account, begins as of the Contract Issue Date.

The Contract Owner may make additional  purchase payments at any time after  the
Contract  Issue Date and prior to the  Annuity Commencement Date, as long as the
Annuitant is living. Purchase payments  (together with any required  information
identifying  the  proper  Contracts and  account  to be  credited  with purchase
payments) must be transmitted to  our Home Office. Additional purchase  payments
are  credited to the Contract and  added to the Contract Value  as of the end of
the Valuation Period in which they are received in good order.

Each additional purchase payment under a  Contract must be at least $1,000.  The
total  of all purchase payments  for all First Fortis  annuities having the same
owner or participant,  or annuitant, may  not exceed $1  million (not more  than
$500,000  allocated to the Fixed Account)  without First Fortis' prior approval,
and we reserve the right to modify this limitation at any time.

                                       10
<PAGE>
Purchase  payments in excess of the initial minimum may be made by monthly draft
against the bank account of any Contract Owner who has completed and returned to
us a special "Thrift-O-Matic" authorization form that may be obtained from  your
sales  representative or from our Home Office. Arrangements can also be made for
purchase payments  by  wire  transfer, payroll  deduction,  military  allotment,
direct deposit and billing. Purchase payments by check should be made payable to
First Fortis Life Insurance Company.

If  the Contract Value  is less than $1,000,  we may cancel  the Contract on any
Valuation Date. We will notify the Contract Owner at least 90 days in advance of
our intention to  cancel the Contract.  Upon such cancellation  we will pay  the
Contract Owner the full Contract Value.

CONTRACT VALUE

Contract Value is the total of any Variable Account Value in all the Subaccounts
of  the Variable Account pursuant to the  Contract, plus any Fixed Account Value
in all the Guarantee Periods.

There is no guaranteed  minimum Variable Account Value.  To the extent  Contract
Value is allocated to the Variable Account, you bear the entire investment risk.

DETERMINATION  OF VARIABLE ACCOUNT VALUE. A Contract's Variable Account Value is
based on Accumulation Unit values, which are determined on each Valuation  Date.
The  value of  an Accumulation Unit  for a  Subaccount on any  Valuation Date is
equal to the previous value of that Subaccount's Accumulation Unit multiplied by
that Subaccount's  net  investment factor  (discussed  directly below)  for  the
Valuation  Period ending  on that  Valuation Date. At  the end  of any Valuation
Period, a Contract's  Variable Account  Value in a  Subaccount is  equal to  the
number  of  Accumulation  Units  in  the  Subaccount  times  the  value  of  one
Accumulation Unit for that Subaccount.

The number of Accumulation Units in each Subaccount is equal to:

    - Accumulation Units purchased at the time that any Net Purchase Payments or
      transferred amounts are allocated to the Subaccount; less

    - Accumulation Units redeemed to pay for  the portion of any transfers  from
      or partial surrenders allocated to the Subaccount; less

    - Accumulation Units redeemed to pay charges under the Contract.

NET  INVESTMENT FACTOR. If a Subaccount's  net investment factor is greater than
one, the  Subaccount's  Accumulation  Unit  value  has  increased.  If  the  net
investment factor is less than one, the Subaccount's Accumulation Unit value has
decreased.  The net investment factor for a Subaccount is determined by dividing
(1) the  net  asset  value  per  share of  the  Portfolio  shares  held  by  the
Subaccount,  determined at the end of the current Valuation Period, plus the per
share amount of any dividend or capital gains distribution made with respect  to
the Portfolio shares held by the Subaccount during the current Valuation Period,
minus  a per  share charge  for the increase,  plus a  per share  credit for the
decrease, in any income taxes assessed which we determine to have resulted  from
the  investment  operation  of  the  subaccount or  any  other  taxes  which are
attributable to this  Contract, by  (2) the  net asset  value per  share of  the
Portfolio shares held in the Subaccount as determined at the end of the previous
Valuation  Period, and  subtracting from that  result a  factor representing the
mortality risk, expense risk and administrative expense charge.

DETERMINATION OF  FIXED  ACCOUNT VALUE.  A  Contract's Fixed  Account  Value  is
guaranteed  by First Fortis.  Therefore, First Fortis  bears the investment risk
with respect to  amounts allocated to  the Fixed Account,  except to the  extent
that (a) First Fortis may vary the Guaranteed Interest Rate for future Guarantee
Periods  (subject to the 4%  effective annual minimum) and  (b) the Market Value
Adjustment imposes investment risks on the Contract Owner.

The Contract's Fixed Account Value on any Valuation Date is the sum of its Fixed
Account Values in each Guarantee Period on that date. The Fixed Account Value in
a Guarantee Period is equal to the following amounts, in each case increased  by
accrued interest at the applicable Guaranteed Interest Rate:

    - The  amount of Net  Purchase Payments or  transferred amounts allocated to
      the Guarantee Period; less

    - The amount of any transfers or surrenders out of the Guarantee Period.

ALLOCATION OF PURCHASE PAYMENTS AND CONTRACT VALUE

ALLOCATION OF PURCHASE PAYMENTS. In the application for a Contract, the Contract
Owner can allocate Net Purchase Payments, or portions thereof, to the  available
Subaccounts  of the Variable  Account or to  the Guarantee Periods  in the Fixed
Account, or a combination thereof. Percentages must be in whole numbers and  the
total  allocation must  equal 100%.  The percentage  allocations for  future Net
Purchase Payments  may be  changed, without  charge, at  any time  by sending  a
Written  Request  to First  Fortis' Home  Office. Changes  in the  allocation of
future Net  Purchase Payments  will be  effective  on the  date we  receive  the
Contract Owner's Written Request.

TRANSFERS.  Transfers of Contract Value from one available Subaccount to another
or into the Fixed  Account, or from  one Guarantee Period to  another or to  the
Subaccount,  can  be made  by the  Contract  Owner in  Written Request  to First
Fortis' Home Office, or  by telephone transfer as  described below. There is  no
charge  for any  transfer, although transfers  from a Guarantee  Period that are
more than 15 days before or after the expiration thereof are subject to a Market
Value Adjustment. See  "Market Value  Adjustment." The minimum  transfer from  a
Subaccount  or Guarantee Period is  the lesser of $1,000  or all of the Contract
Value in the Subaccount  or Guarantee Period. Irrespective  of the above we  may
permit   a  continuing  request  for   transfers  of  lesser  specified  amounts
automatically on a periodic basis. We will count all transfers between and among
the Subaccounts of the Variable Account  and the Fixed Account as one  transfer,
if  all the transfer requests are made at  the same time as part of one request.
We will  execute the  transfers  and determine  all  values in  connection  with
transfers as of the end of the Valuation Period in which we receive the transfer
request.  The  amount  of  any positive  or  negative  Market  Value Adjustment,
respectively, will be added to or deducted from the transferred amount.

At the time an  application for a  Contract is completed,  or at any  subsequent
time,  you may complete the Telephone Transfer Authorization Form. We will honor
telephone transfer  instructions  from  any  person  who  provides  the  correct
identifying  information. First Fortis will not be responsible for, and you will
bear the risk of loss from, oral instructions, including fraudulent instructions
which  are  reasonably  believed  to  be  genuine.  We  will  employ  reasonable
procedures  to  confirm that  telephone instructions  are  genuine, but  if such
procedures are not deemed  reasonable, we may  be liable for  any losses due  to
unauthorized  or fraudulent instructions.  Our procedures are  to verify address
and social security number, tape record the telephone call, and provide  written
confirmation  of  the  transaction. We  may  modify or  terminate  our telephone
transfer  procedures  at  any  time.  The  number  for  telephone  transfers  is
1-800-745-8248.

Certain  restrictions on very substantial investments  in any one Subaccount are
set forth  under "Limitations  on Allocations"  in the  Statement of  Additional
Information.

                                       11
<PAGE>
TOTAL AND PARTIAL SURRENDERS

TOTAL  SURRENDERS. The  Contract Owner may  surrender all of  the Cash Surrender
Value at any  time during the  life of the  Annuitant and prior  to the  Annuity
Commencement  Date by a  Written Request sent  to First Fortis'  Home Office. We
reserve the right to require that the Contract be returned to us prior to making
payment, although this will  not affect our determination  of the amount of  the
Cash  Surrender Value. Cash Surrender Value is  the Contract Value at the end of
the Valuation Period during which the Written Request for the total surrender is
received by  First Fortis  at its  Home Office,  less any  applicable  surrender
charge and after any Market Value Adjustment. See "Surrender Charge" and "Market
Value Adjustment."

The  written consent of  all collateral assignees  and irrevocable beneficiaries
must be obtained  prior to  any total  surrender. Surrenders  from the  Variable
Account will generally be paid within seven days of the date of receipt by First
Fortis'  Home Office of the Written Request. Postponement of payments may occur,
however, in certain circumstances. See "Postponement of Payment."

The amount paid upon  total surrender of the  Cash Surrender Value (taking  into
account  any prior partial  surrenders) may be  more or less  than the total Net
Purchase Payments made. After a surrender of the Cash Surrender Value or at  any
time the Contract Value is zero, all rights of the Contract Owner, Annuitant, or
any other person will terminate.

PARTIAL  SURRENDERS.  At any  time prior  to the  Annuity Commencement  Date and
during the lifetime of the Annuitant, the Contract Owner may surrender a portion
of the Fixed Account Value and/or the Variable Account Value by sending to First
Fortis' Home Office a  Written Request. We will  not accept a partial  surrender
request unless the net proceeds payable to you as a result of the request are at
least $1,000. If the total Contract Value in both the Variable Account and Fixed
Account would be less than $1,000 after the partial surrender, First Fortis will
surrender the entire Cash Surrender Value under the Contract.

In  order for a  request to be  processed, the Contract  Owner must specify from
which Subaccounts of  the Variable  Account or  Guarantee Periods  of the  Fixed
Account a partial surrender should be made.

We  will surrender Accumulation  Units from the Variable  Account and/ or dollar
amounts from the Fixed Account so that the total amount of the partial surrender
equals the dollar amount of the partial surrender request. The amount payable to
the Contract Owner will  be reduced by any  applicable surrender charge and  any
negative  Market Value  Adjustment, or  increased by  any positive  Market Value
Adjustment. The partial surrender will be effective at the end of the  Valuation
Period  in which First Fortis receives the Written Request for partial surrender
at its Home Office.  Payments will generally  be made within  seven days of  the
effective  date  of such  request, although  certain  delays are  permitted. See
"Postponement of Payment."

The Internal Revenue Code provides that a penalty tax will be imposed on certain
premature surrenders. For  a discussion of  this and other  tax implications  of
total  and partial surrenders, including  withholding requirements, see "Federal
Tax Matters." Also, under  tax deferred annuity,  Contracts pursuant to  Section
403(b)  of  the  Internal Revenue  Code,  no distributions  of  voluntary salary
reduction amounts  will be  permitted  prior to  one  of the  following  events:
attainment  of age  59 1/2  by the  employee or  the employee's  separation from
service, death, disability or hardship. (Hardship distributions will be  limited
to  the lesser of the  amount of the hardship or  the amount of salary reduction
contributions, exclusive of earnings thereon.)

BENEFIT PAYABLE ON DEATH OF ANNUITANT OR CONTRACT OWNER

If the Annuitant or Contract Owner dies prior to the Annuity Commencement  Date,
a  death benefit will  be paid. If more  than one Annuitant  has been named, the
death benefit payable upon the death of an Annuitant will only be paid upon  the
death of the last survivor of the persons so named. The death benefit will equal
the greater of:

    (1) the sum of all Net Purchase Payments made (less all prior surrenders and
        previously-imposed  surrender  charges and  prior negative  Market Value
        Adjustments),

    (2) the Contract Value as of the date used for valuing the death benefit, or

    (3) the Contract  Value (less the  amount of any  subsequent surrenders  and
        surrender  charges and  negative Market Value  Adjustments in connection
        therewith), as  of the  Contract's  Seven Year  Anniversary  immediately
        preceding  the earlier of  a) the date  of death of  either the Contract
        Owner or Annuitant or b) the date  either first reaches his or her  75th
        birthday. (See Appendix B for Sample Death Benefit Calculations).

ENHANCED DEATH BENEFIT. If the Contract Owner selects the Enhanced Death Benefit
and  the Annuitant or  a Contract Owner  dies prior to  the Annuity Commencement
Date, the death benefit will equal the greater of (1), (2) and (3) as follows:

    (1) (a)   If a  Contract Owner  or the Annuitant  dies before  the date  any
        Contract  Owner or Annuitant  first reaches age  75, the accumulation of
        Net Purchase  Payments  made less  all  prior surrenders  and  less  any
        applicable  prior  negative  Market  Value  Adjustments  less previously
        imposed surrender  charges at  an effective  annual rate  of 3.0%.  This
        amount may not exceed a maximum of two times the following: Net Purchase
        Payments  made less all  prior surrenders and  less any applicable prior
        negative Market Value Adjustments and less previously imposed  surrender
        charges. This amount is referred to as the "roll-up amount."

                                           or

    (1)  (b)  If the Annuitant or a Contract Owner dies on or after the date any
        Contract Owner or Annuitant first reaches age 75, the roll-up amount  as
        of the date that a Contract Owner or Annuitant first reaches age 75 plus
        subsequent  Net Purchase  Payments made, less  subsequent surrenders and
        any subsequent negative Market  Value Adjustments and less  subsequently
        imposed surrender charges.

                                          and

    (2) The Contract Value as of the date used for valuing the death benefit.

                                          and

    (3)  The Contract  Value (less the  amount of any  subsequent surrenders and
        surrender charges and  negative Market Value  Adjustments in  connection
        therewith),  as  of the  Contract's  Seven Year  Anniversary immediately
        preceding the earlier  of a) the  date of death  of either the  Contract
        Owner  or Annuitant or b) the date  either first reaches his or her 75th
        birthday. (See Appendix B for Sample Death Benefit Calculations.)

The value of  the death benefit  is determined as  of the end  of the  Valuation
Period  in which we receive, at our Home  Office, proof of death and the written
request as to  the manner of  payment. Upon  receipt of these  items, the  death
benefit  generally will be paid within  seven days. Under certain circumstances,
payment of the death benefit

                                       12
<PAGE>
may be postponed. See "Postponement of Payment." If we do not receive a  Written
Request  for a settlement method, we will pay the death benefit in a single sum,
based on values determined at that time.

The person entitled to the death benefit under the terms of the Contract may (a)
receive a single sum  payment, which terminates the  Contract, or (b) select  an
annuity  option. If the death benefit payee selects an annuity option, he or she
will have all the rights  and privileges of a payee  under the Contract. If  the
death  benefit  payee desires  an Annuity  option, the  election should  be made
within 60 days of the date the death benefit becomes payable. Failure to make  a
timely  election  can  result  in  unfavorable  tax  consequences.  For  further
information, see "Federal Tax Matters."

We accept any of the  following as proof of death:  a copy of a certified  death
certificate;  a copy of a certified decree  of a court of competent jurisdiction
as to the  finding of  death; or  a written statement  by a  medical doctor  who
attended the deceased at the time of death.

If  the  Contract  Owner  dies  before  the  Annuitant  and  before  the Annuity
Commencement Date with  respect to a  Non-Qualified Contract certain  additional
requirements  are mandated  by the  Internal Revenue  Code, which  are discussed
below under  "Federal Tax  Matters--  Required Distributions  for  Non-Qualified
Contracts."  It is imperative that  Written Notice of the  death of the Contract
Owner be  promptly transmitted  to First  Fortis  at its  Home Office,  so  that
arrangements can be made for distribution of the entire interest in the Contract
Owner in a manner that satisfies the Internal Revenue Code requirements. Failure
to satisfy these requirements may result in the Contract Owner not being treated
as an annuity contract for federal income tax purposes, which could have adverse
tax consequences.

THE ANNUITY PERIOD

ANNUITY COMMENCEMENT DATE

The  Contract Owner may specify an  Annuity Commencement Date in the application
not later  than the  Annuitant's 90th  birthday. The  Annuity Commencement  Date
marks  the beginning  of the  period during  which an  Annuitant or  other payee
designated by the Contract Owner  receives annuity payments under the  Contract.
We  may  not  permit an  Annuity  Commencement Date  which  is on  or  after the
Annuitant's 75th birthday, and you  should consult your sales representative  in
this  regard. The Annuity Commencement Date must be at least two years after the
Contract Issue Date.

Depending on  the type  of  retirement arrangement  involved, amounts  that  are
distributed  either too soon or  too late may be  subject to penalty taxes under
the Internal Revenue Code. See "Federal  Tax Matters." You should consider  this
carefully in selecting or changing an Annuity Commencement Date.

In  order to advance or defer the  Annuity Commencement Date, the Contract Owner
must submit a Written Request during the Annuitant's lifetime. The request  must
be  received  at our  Home Office  at  least 30  days before  the then-scheduled
Annuity Commencement Date.  The new Annuity  Commencement Date must  also be  at
least  30 days after the Written Request is  received. There is no right to make
any total or partial surrender during the Annuity Period.

COMMENCEMENT OF ANNUITY PAYMENTS

If the Contract  Value at the  end of  the Valuation Period  which contains  the
Annuity  Commencement Date is less  than $1,000, we may  pay the entire Contract
Value, without the imposition of any charges other than the premium tax  charge,
if applicable, in a single sum payment to the Annuitant or other payee chosen by
the Contract Owner and cancel the Contract.

Otherwise,  First Fortis  will apply  (1) the Fixed  Account Value  to provide a
Fixed Annuity Option  and (2) the  Variable Account Value  in any Subaccount  to
provide a Variable Annuity Option using the same Subaccount, unless the Contract
Owner  has notified us by  Written Request to apply  the Fixed Account Value and
Variable Account Value in different  proportions. Any such Written Request  must
be  received  by us  at our  Home Office  at  least 30  days before  the Annuity
Commencement Date.

Annuity payments under  a Fixed or  Variable Annuity  Option will be  made on  a
monthly  basis to  the Annuitant or  other properly-designated  payee, unless we
agree to a different payment  schedule. If more than one  person is named as  an
Annuitant,  the Contract Owner may  elect to name one of  such persons to be the
sole Annuitant as  of the  Annuity Commencement Date.  We reserve  the right  to
change  the frequency  of any annuity  payment so  that each payment  will be at
least $50. There is no right to  make any total or partial surrender during  the
Annuity Period.

The  amount of each annuity payment will  depend on the amount of Contract Value
applied to an annuity option,  the form of annuity selected  and the age of  the
Annuitant.  Information concerning the relationship  between the Annuitant's sex
and the amount of annuity payments, including special requirements in connection
with employee  benefits  plans, is  set  forth under  "Calculations  of  Annuity
Payments"   in  the  Statement  of  Additional  Information.  The  Statement  of
Additional Information also contains detailed  information about how the  amount
of each annuity payment is computed.

The  dollar amount of any fixed annuity  payments is specified during the entire
period of  annuity payments  according to  the provisions  of the  annuity  form
selected.  The  dollar amount  of variable  annuity  payments varies  during the
annuity period based on changes in Annuity Unit Values for the Subaccounts  that
you choose to use in connection with your payments.

RELATIONSHIP  BETWEEN SUBACCOUNT  INVESTMENT PERFORMANCE AND  AMOUNT OF VARIABLE
ANNUITY PAYMENTS

If a Subaccount  on which a  variable annuity  payment is based  has an  average
effective  net  investment return  higher than  4% per  annum during  the period
between two such annuity payments, the Annuity Unit Value will increase, and the
second payment will be  higher than the first.  Conversely, if the  Subaccount's
average  effective net  investment return  over the  period between  the annuity
payments is less than 4%  per annum, the Annuity  Unit Value will decrease,  and
the  second payment will be  lower than the first.  "Net investment return," for
this purpose, refers to the Subaccount's overall investment performance, net  of
the  mortality and  expense risk and  administrative expense  charges, which are
assessed at a  nominal aggregate  annual rate of  1.35%. We  guarantee that  the
amount  of each  variable annuity  payment after the  first payment  will not be
affected by variations in our mortality experience or our expenses.

TRANSFERS. During the Annuity Period, the person receiving annuity payments  may
make  up to four transfers a year  among Subaccounts. The current procedures for
and conditions  on  these  transfers  are the  same  as  described  above  under
"Allocation  of Purchase Payments and Contract Value--Transfers." Transfers from
a Fixed Annuity Option are not permitted during the Annuity Period.

                                       13
<PAGE>
ANNUITY FORMS

The Contract Owner may select an annuity form or change a previous selection  by
Written  Request,  which must  be received  by us  at least  30 days  before the
Annuity Commencement  Date.  One  annuity  form may  be  selected,  although  as
discussed above, payments under that form may be received on a combination fixed
and  variable basis. If  no annuity form  selection is in  effect on the Annuity
Commencement Date,  in most  cases we  automatically apply  Option B  (described
below),  with payments guaranteed for 10 years.  If the Contract is issued under
certain retirement plans, however, federal  pension law may require any  default
payments  that payments be made pursuant  to plan provisions and/or federal law.
Tax laws and  regulations may  impose further  restrictions to  assure that  the
primary  purpose of  the plan  is distribution of  the accumulated  funds to the
employee.

The following options are available for fixed annuity payments and for  variable
annuity payments.

OPTION A, LIFE ANNUITY. Payments are made as of the first Valuation Date of each
monthly   period  during  the  Annuitant's   life,  starting  with  the  Annuity
Commencement Date. No  payments will  be made after  the Annuitant  dies. It  is
possible  for the payee  to receive only  one payment under  this option, if the
Annuitant dies before the second payment is due.

OPTION  B,  LIFE  ANNUITY   WITH  PAYMENTS  GUARANTEED  FOR   10  YEARS  TO   20
YEARS.  Payments are made as of the  first Valuation Date of each monthly period
starting on the Annuity Commencement Date. Payments will continue as long as the
Annuitant lives. If  the Annuitant dies  before all of  the guaranteed  payments
have  been made, we will continue installments of the guaranteed payments to the
Beneficiary.

OPTION C, JOINT AND  FULL SURVIVOR ANNUITY.  Payments are made  as of the  first
Valuation  Date of  each monthly period  starting with  the Annuity Commencement
Date. Payments  will continue  as long  as  either the  Annuitant or  the  joint
Annuitant  is alive. Payments  will stop when  both the Annuitant  and the joint
Annuitant have died. It is possible for the payee or payees under this option to
receive only one payment,  if both Annuitants die  before the second payment  is
due.

OPTION  D, JOINT AND ONE-HALF CONTINGENT  SURVIVOR ANNUITY. Payments are made as
of the first  Valuation Date of  each monthly period  starting with the  Annuity
Commencement Date. Payments will continue as long as either the Annuitant or the
joint Annuitant is alive. If the Annuitant dies first, payments will continue to
the joint Annuitant at one-half the original amount. If the joint Annuitant dies
first,  payments will  continue to  the Annuitant  at the  original full amount.
Payments will stop when both the Annuitant and the joint Annuitant have died. It
is possible  for the  payee or  payees under  this option  to receive  only  one
payment if both Annuitants die before the second payment is due.

We  also have other  annuity forms available  and information about  them can be
obtained from your  sales representative or  by calling or  writing to our  Home
Office.

DEATH OF ANNUITANT OR OTHER PAYEE

Under  most annuity forms offered by First  Fortis, the amounts, if any, payable
on the death of the Annuitant during the Annuity Period are the continuation  of
annuity payments for any remaining guarantee period or for the life of any joint
Annuitant.  In  all such  cases, the  person entitled  to receive  payments also
receives any rights and privileges under the annuity form in effect.

Additional rules applicable to such distributions under Non-Qualified  Contracts
are   described   under   "Federal  Tax   Matters--Required   Distributions  for
Non-Qualified Contracts."  Though the  rules  there described  do not  apply  to
Contracts  issued in connection with qualified plans, similar rules apply to the
plans themselves.

CHARGES AND DEDUCTIONS

PREMIUM TAXES

First Fortis will deduct a charge for state premium taxes or similar assessments
from the Contract Value at the time that annuity payments begin. The charge will
be deducted on a pro-rata basis  from the then-current Fixed Account Value  and,
by  redemption of Accumulation Units, the then-current Variable Account Value in
each Subaccount.

Applicable premium tax rates depend upon the Contract Owner's then-current place
of  residence.  Applicable   rates  are  subject   to  change  by   legislation,
administrative interpretations or judicial acts.

CHARGES AGAINST THE VARIABLE ACCOUNT

MORTALITY  AND  EXPENSE  RISK CHARGE.  We  will  assess each  Subaccount  of the
Variable Account with a daily charge for mortality and expense risk at a nominal
annual rate of 1.25%  of the average  daily net assets  of the Variable  Account
(consisting  of approximately .8% for mortality  risk and approximately .45% for
expense risk). This charge is assessed  during both the Accumulation Period  and
the Annuity Period. We guarantee not to increase this charge for the duration of
the Contract.

The  mortality risk  borne by  First Fortis arises  from its  obligation to make
annuity payments (determined  in accordance  with the annuity  tables and  other
provisions  contained  in the  Contract)  for the  full  life of  all Annuitants
regardless of how long all Annuitants or any individual Annuitant might live. In
addition, First Fortis bears  a mortality risk  in that it  guarantees to pay  a
death  benefit upon  the death of  an Annuitant  or Contract Owner  prior to the
Annuity Commencement Date. No surrender charge is imposed upon the payment of  a
death benefit, which places a further mortality risk on First Fortis.

The  expense risk  assumed is that  actual expenses incurred  in connection with
issuing and administering the Contract will exceed the limits on  administrative
charges set in the Contract.

If  the administrative  charges and  the mortality  and expense  risk charge are
insufficient to cover the expenses and costs assumed, the loss will be borne  by
First  Fortis. Conversely, if  the amount deducted  proves more than sufficient,
the excess will be profit to First Fortis.

ADMINISTRATIVE EXPENSE CHARGE. We  will assess each  Subaccount of the  Variable
Account  with a daily charge at an annual  rate of .10% of the average daily net
assets of the Subaccount.  This charge is imposed  during both the  Accumulation
Period and the Annuity Period. This charge is to help cover administrative costs
such  as those incurred  in issuing Contracts,  establishing and maintaining the
records  relating  to  Contracts,  making  regulatory  filings  and   furnishing
confirmation  notices,  voting  materials  and  other  communications, providing
computer,  actuarial   and   accounting  services,   and   processing   Contract
transactions.   There  is  no  necessary  relationship  between  the  amount  of
administrative charges imposed on  a given Contract and  the amount of  expenses
actually attributable to that Contract.

ENHANCED DEATH BENEFIT CHARGE. If the Enhanced Death Benefit is elected, we will
assess  the  Subaccounts  of the  Variable  Account  in which  the  Contract has
allocations to with an additional charge for the mortality risk associated  with
the  Enhanced Death  Benefit at  a nominal  annual current  rate of  .15% of the
average daily net assets of the

                                       14
<PAGE>
Subaccounts. This charge is assessed only during the Accumulation Period and not
during the Annuity Period. The amount of the current charge is based upon  First
Fortis'  expectations of its future experience  of its future costs in providing
this benefit. First  Fortis reserves  the right to  increase the  amount of  the
charge to an amount not in excess of .30% of the average daily net assets of the
Subaccounts.    (See    "Benefit   Payable    on    Death   of    Annuitant   or
Participant--Enhanced Death Benefit.")

TAX CHARGE

We currently impose no  charge for taxes  payable by us  in connection with  the
Contract,  other than for premium taxes and similar assessments when applicable.
We reserve the  right to impose  a charge for  any other taxes  that may  become
payable  by us in  the future in  connection with the  Contracts or the Separate
Account.

The annual  administrative  charge  and charges  against  the  Variable  Account
described  above are for the  purposes described and First  Fortis may receive a
profit as a result of these charges.

SURRENDER CHARGE

No sales charge is collected or deducted  at the time Net Purchase Payments  are
applied  under a Contract. A surrender charge  will be assessed on certain total
or partial surrenders. The  amounts obtained from the  surrender charge will  be
used  to  partially  defray expenses  incurred  in  the sale  of  the Contracts,
including commissions and other promotional or distribution expenses  associated
with  the marketing of the Contracts, and costs associated with the printing and
distribution of prospectuses and sales material.

FREE SURRENDERS.  The  following amounts  can  be withdrawn  from  the  Contract
without a surrender charge:

    - Any  purchase payments received by  us more than seven  years prior to the
      surrender date and that have not been previously surrendered;

    - Any earnings that have not been previously surrendered;

    - In any contract year, up  to 10% of the  purchase payments received by  us
      less  than seven  years prior  to the surrender  date (whether  or not the
      purchase payments have been previously surrendered).

Earnings are  deemed  to  be  withdrawn first.  After  all  earnings  have  been
withdrawn, all purchase payments not subject to a surrender charge are deemed to
be  withdrawn prior to purchase payments which  are still subject to a surrender
charge.

No surrender charge  is imposed  on annuitization (or  payment of  a single  sum
because less than the minimum required Contract Value is available to provide an
annuity  at the Annuity Commencement Date). Nor is the surrender charge deducted
from the payment  of any  benefit upon  the death  of an  Annuitant or  Contract
Owner.

In  addition, we  have an administrative  policy to waive  surrender charges for
full surrenders of  Contracts that have  been in  force for at  least ten  years
provided  that the amount then subject to  the surrender charge is less than 25%
of the Contract Value. Since the Contracts have only been offered since 1994, no
such waivers have yet  been made. We  reserve the right  to change or  terminate
this practice at any time, both for new and for previously issued Contracts.

AMOUNT  OF SURRENDER  CHARGE. Surrender charges  apply only if  the amount being
withdrawn exceeds the  sum of  the amounts  listed above  under Free  Surrenders
(that  is, if  the amount being  withdrawn includes purchase  payments made less
than seven years prior to the surrender date). The surrender charges are:

       NUMBER OF YEARS           SURRENDER CHARGE
        SINCE PURCHASE          AS A PERCENTAGE OF
     PAYMENT WAS CREDITED        PURCHASE PAYMENT
------------------------------  ------------------
         Less than 1                     7%
  At least 1 but less than 2             6%
  At least 2 but less than 3             5%
  At least 3 but less than 4             4%
  At least 4 but less than 5             3%
  At least 5 but less than 6             2%
  At least 6 but less than 7             1%
          7 or more                      0%

We anticipate  the  surrender  charge  will  not  be  sufficient  to  cover  our
distribution  expenses. To the extent that  the surrender charge is insufficient
to cover the actual costs  of distribution, such costs  will be paid from  First
Fortis'  General Account assets, which will include profit, if any, derived from
the mortality and expense risk charge.

MISCELLANEOUS

Because the Variable Account invests in shares of the Portfolios of Series Fund,
the net assets of the Variable Account will reflect the investment advisory fees
and certain other expenses incurred by the Portfolios that are described in  the
prospectus for Series Fund.

REDUCTION OF CHARGES

No  surrender  charge will  be imposed  under  any Contract  owned by  (A) First
Fortis, and  the following  persons  associated with  First  Fortis, if  at  the
Contract  Issue date they are: (1) officers and directors; (2) employees; or (3)
spouses of any such persons or any of such persons' children.

GENERAL PROVISIONS

THE CONTRACTS

The Contract, copies  of any applications,  amendments, riders, or  endorsements
attached   to  the  Contract  and   copies  of  any  supplemental  applications,
amendments, endorsements, or revised Contract pages which are mailed to you  are
the  entire Contract.  Only an officer  of First  Fortis can agree  to change or
waive any provisions of a Contract. Any change or waiver must be in writing  and
signed by an officer of First Fortis. The Contracts are non-participating and do
not share in dividends or earnings of First Fortis.

POSTPONEMENT OF PAYMENT

First  Fortis may defer for up to 15 days the payment of any amount attributable
to a purchase payment made by check to allow the check reasonable time to clear.
For a  description  of other  circumstances  in  which amounts  payable  out  of
Variable Account assets could be deferred, see "Postponement of Payments" in the
Statement  of Additional  Information. First  Fortis may  also defer  payment of
surrender proceeds payable  out of the  Fixed Account for  a period of  up to  6
months.

MISSTATEMENT OF AGE OR SEX AND OTHER ERRORS

If  the age or sex of the Annuitant  has been misstated, any amount payable will
be that which the purchase payments paid would have purchased at the correct age
and sex. If we have made any overpayments because of incorrect information about
age  or  sex,  or  any  other  miscalculation,  First  Fortis  will  deduct  the
overpayment  from the next payment or payments  due. We add underpayments to the
next payment. The  amount of  any adjustment will  be credited  or charged  with
interest at the effective annual rate of 4% per year.

                                       15
<PAGE>
ASSIGNMENT

Rights  and interests under a Qualified Contract may be assigned only in certain
narrow circumstances  referred to  in the  Contract. Contract  Owners and  other
payees  may  assign their  rights and  interests under  Non-Qualified Contracts,
including their ownership rights.

We take  no responsibility  for the  validity  of any  assignment. A  change  in
ownership  rights must  be made  in writing  and a  copy must  be sent  to First
Fortis' Home Office.  The change  will be  effective on  the date  it was  made,
although  we are not bound by  a change until the date  we record it. The rights
under a Contract are subject to any  assignment of record at the Home Office  of
First  Fortis.  An assignment  or  pledge of  a  Contract may  have  adverse tax
consequences. See below under "Federal Tax Matters."

BENEFICIARY

Before the Annuity  Commencement Date  and while  the Annuitant  is living,  the
Contract  Owner may name or change a  beneficiary or a contingent beneficiary by
sending a  Written  Request  of  the  change  to  First  Fortis.  Under  certain
retirement  programs, however, spousal consent may be required to name or change
a beneficiary, and the right to name a beneficiary other than the spouse may  be
subject  to applicable tax laws and regulations.  We are not responsible for the
validity of any change. A  change will take effect as  of the date it is  signed
but  will not affect any payments we make or action we take before receiving the
Written Request. We also need the consent of any irrevocably named person before
making a requested change.

In the event of the death of a Contract Owner or Annuitant prior to the  Annuity
Commencement date the Beneficiary will be determined as follows:

    - If  upon the  death of  a Contract  Owner there  is one  or more surviving
      Contract Owners, the surviving Contract  Owner(s) will be the  beneficiary
      (these override any other beneficiary designations).

    - If  upon the  death of  a Contract Owner  there are  no surviving Contract
      Owners, and upon the death of  the Annuitant, the Beneficiary will be  the
      beneficiary  designated by  the Contract Owner.  If there  is no surviving
      beneficiary who  has  been designated  by  the Contract  Owner,  then  the
      Contract Owner, or the Contract Owner's estate, will be the Beneficiary.

REPORTS

We  will mail to the Contract Owner  (or to the person receiving payments during
the annuity  period), at  the last  known  address of  record, any  reports  and
communications  required  by  any  applicable  law  or  regulation.  You  should
therefore give us prompt written notice of any address change. This will include
annual audited financial statements of the  Series Fund, but not necessarily  of
the Variable Account or First Fortis.

RIGHTS RESERVED BY FIRST FORTIS

First  Fortis reserves the  right to make  certain changes if,  in its judgment,
they would best serve the interests  of Contract Owners and Annuitants or  would
be  appropriate in carrying out the purposes  of the Contracts. Any changes will
be made only to the extent and in the manner permitted by applicable laws. Also,
when required by law, First Fortis will obtain your approval of the changes  and
approval  from any  appropriate regulatory authority.  Such approval  may not be
required in all cases,  however. Examples of the  changes First Fortis may  make
include:

    - To operate the Variable Account in any form permitted under the Investment
      Company Act of 1940 or in any other form permitted by law.

    - To  transfer any assets in any Subaccount to another Subaccount, or to one
      or more separate accounts, or to the Fixed Account; or to add, combine  or
      remove Subaccounts in the Variable Account.

    - To substitute, for the Portfolio shares held in any Subaccount, the shares
      of  another Portfolio of  Series Fund or the  shares of another investment
      company or any other investment permitted by law.

    - To make any changes required by the Internal Revenue Code or by any  other
      applicable  law  in order  to  continue treatment  of  the Contract  as an
      annuity.

    - To change the time or time of day  at which a Valuation Date is deemed  to
      have ended.

    - To  make any other necessary technical changes in the Contract in order to
      conform with any action the above provisions permit First Fortis to  take,
      including  to change  the way First  Fortis assesses  charges, but without
      increasing as to any then outstanding Contract the aggregate amount of the
      types of charges which First Fortis has guaranteed.

DISTRIBUTION

The Contracts will be sold by individuals who, in addition to being licensed  by
state  insurance authorities  to sell  the Contracts  of First  Fortis, are also
registered representatives of Fortis  Investors, Inc. ("Fortis Investors"),  the
principal  underwriter of the  Contracts or registered  representatives of other
broker-dealer firms  or representatives  of  other firms  that are  exempt  from
broker  dealer  regulation. Fortis  Investors and  any such  other broker-dealer
firms are  registered with  the  Securities and  Exchange Commission  under  the
Securities  Exchange  Act  of 1934  as  broker-dealers  and are  members  of the
National Association of Securities Dealers, Inc.

As compensation  for  distributing  the  Contracts,  First  Fortis  pays  Fortis
Investors  a maximum of 7.0%  of all purchase payments.  Fortis Investors pays a
selling  allowance  not  in  excess  of  7.0%  of  purchase  payments  to  other
broker-dealer  firms or exempt  firms who sell the  Contracts. First Fortis may,
under certain flexible compensation arrangements, pay Fortis Investors a  lesser
selling allowance and a service fee, and Fortis Investors may in turn pay lesser
selling allowances and a service fee to its registered representatives and other
broker   dealer  firms.  However,  in  such  case,  such  flexible  compensation
arrangements will have actuarially  equivalent present values  which are not  in
excess of the amounts of the selling allowances set forth above.

Additionally,  registered representatives, broker-dealer firms, and exempt firms
may  be  eligible  for  additional  compensation  based  upon  meeting   certain
production  standards.  Fortis Investors  may  charge back  commissions  paid to
others if the  Contract upon  which the commission  was paid  is surrendered  or
cancelled  within certain specified time periods. In the distribution agreement,
First  Fortis  has  agreed  to  indemnify  Fortis  Investors  (and  its  agents,
employees,  and controlling persons) for certain damages and expenses, including
those arising  under federal  securities  laws. First  Fortis  paid a  total  of
$        to Fortis  Investors for annuity  contract distribution services during
1996, $        of which  in 1996 was  not reallowed to  other broker dealers  or
exempt firms.

                                       16
<PAGE>
First  Fortis or  Fortis Investors may  also provide  additional compensation to
broker-dealers in connection with sales  of Contracts. Compensation may  include
financial  assistance to broker-dealers in connection with conferences, sales or
training programs for  their employees,  seminars for  the public,  advertising,
sales  campaigns regarding Contracts, and other broker-dealer sponsored programs
or events.  Compensation may  include payment  for travel  expenses incurred  in
connection  with trips  taken by  invited sales  representatives and  members of
their families to locations within or outside of the United States for  meetings
or seminars of a business nature.

See  Note 11 to the Notes to First Fortis' Financial Statements as to amounts it
has paid to Fortis,  Inc. and Fortis Benefits  Insurance Company, affiliates  of
First Fortis for various services.

Fortis  Investors is an indirect subsidiary of  Fortis AMEV and Fortis AG and is
therefore under common  control with First  Fortis. Fortis Investors'  principal
business  address is  500 Bielenberg  Drive, Woodbury,  Minnesota 55125  and its
mailing address is P.O. Box 64284, St.  Paul, MN 55164. Fortis Investors is  not
obligated  to  sell  any  specific  amount  of  interests  under  the Contracts.
$23,000,000 of  interests in  the  Fixed Account  and  an indefinite  amount  of
interests  in the Variable Account have  been registered with the Securities and
Exchange Commission.

FEDERAL TAX MATTERS

The following  description is  a general  summary of  the tax  rules,  primarily
related  to  federal income  taxes, which  in  the opinion  of First  Fortis are
currently  in  effect.  These   rules  are  based   on  laws,  regulations   and
interpretations  which are subject  to change at  any time. This  summary is not
comprehensive and is  not intended as  tax advice. Federal  estate and gift  tax
considerations,  as well  as state  and local taxes,  may also  be material. You
should consult a qualified tax adviser as to the tax implications of taking  any
action under a Contract or related retirement plan.

NON-QUALIFIED CONTRACTS

Section  72  of  the Internal  Revenue  Code  ("Code") governs  the  taxation of
annuities in general. Purchase payments  made under Non-Qualified Contracts  are
not  excludible or deductible from the gross income of the Contract Owner or any
other person. However, any increase in the accumulated value of a  Non-Qualified
Contract  resulting from the  investment performance of  the Variable Account or
interest credited to the Fixed Account is generally not taxable to the  Contract
Owner  or other payee until received by him or her, as surrender proceeds, death
benefit proceeds, or otherwise. The exception  to this rule is that,  generally,
Contract  Owners who are not natural persons  ARE taxed annually on any increase
in the Contract Value. However, this exception does not apply in all cases,  and
you may wish to discuss this with your tax adviser.

The  following  discussion  applies  generally  to  Contracts  owned  by natural
persons.

In general,  surrenders or  partial  withdrawals under  Contracts are  taxed  as
ordinary  income  to the  extent of  the  accumulated income  or gain  under the
Contract. If a  Contract Owner assigns  or pledges any  part of the  value of  a
Contract,  the value so  pledged or assigned  is taxed to  the Contract Owner as
ordinary income to the same extent as a partial withdrawal.

With respect to annuity payment options, although the tax consequences may  vary
depending  on the option elected under the Contract, until the investment in the
Contract is recovered, generally  only the portion of  the annuity payment  that
represents the amount by which the Contract Value exceeds the "investment in the
Contract"  will be taxed. In general, a person's "investment in the Contract" is
the aggregate  amount  of  purchase  payments  made by  him  or  her.  After  an
Annuitant's or other payee's "investment in the Contract" is recovered, the full
amount  of  any additional  annuity payments  is  taxable. For  variable annuity
payments, in general,  the taxable  portion of  each annuity  payment (prior  to
recovery  of the "investment in the Contract")  is determined by a formula which
establishes the  specific dollar  amount of  each annuity  payment that  is  not
taxed.  This  dollar amount  is determined  by dividing  the "investment  in the
Contract" by the total  number of expected annuity  payments. For fixed  annuity
payments,  in general,  prior to recovery  of the "investment  in the Contract,"
there is no tax on the amount of each payment which bears the same ratio to that
payment as the "investment in the Contract" bears to the total expected value of
the annuity payments  for the term  of the payments.  However, the remainder  of
each  annuity payment is taxable. The taxable  portion of a distribution (in the
form of an annuity or a single sum payment) is taxed as ordinary income.

For purposes  of  determining  the  amount  of  taxable  income  resulting  from
distributions,  all Contracts  and other annuity  contracts issued by  us or our
affiliates to the Contract Owner within  the same calendar year will be  treated
as if they were a single Contract.

There  is a 10%  penalty under the Code  on the taxable  portion of a "premature
distribution." Generally, an  amount is  a "premature  distribution" unless  the
distribution  is (1) made on or after  the Contract Owner or other payee reaches
age 59 1/2, (2) made to a Beneficiary  on or after death of the Contract  Owner,
(3)  made upon the disability of the Contract  Owner or other payee, or (4) part
of a  series  of substantially  equal  annuity payments  for  the life  or  life
expectancy  of  the  Contract  Owner  or  the  Contract  Owner  and Beneficiary.
Premature  distributions  may  result,  for  example,  from  an  early   Annuity
Commencement  Date, an  early surrender,  partial surrender  or assignment  of a
Contract or the early death of an  Annuitant who is not also the Contract  Owner
or other person receiving annuity payments under the Contract.

A  transfer of ownership of a Contract,  or designation of an Annuitant or other
payee who is not also the Contract  Owner, may result in certain income or  gift
tax  consequences  to the  Contract  Owner that  are  beyond the  scope  of this
discussion. A  Contract Owner  contemplating  any transfer  or assignment  of  a
Contract  should contact a  competent tax adviser with  respect to the potential
tax effects of such transaction.

REQUIRED DISTRIBUTIONS FOR NON-QUALIFIED CONTRACTS

In order that  a Non-Qualified Contract  be treated as  an annuity contract  for
federal  income tax  purposes, Section  72(s) of  the Code  requires (a)  if any
person receiving annuity payments dies on or after the Annuity Commencement Date
but prior to the time the entire interest in the Contract has been  distributed,
the  remaining portion of such interest will  be distributed at least as rapidly
as under the method of  distribution being used as of  the date of the  person's
death;  and (b)  if any  Contract Owner dies  prior to  the Annuity Commencement
Date, the entire interest  in the Contract will  be distributed (1) within  five
years  after the date  of that person's  death or (2)  as annuity payments which
will begin within one year of that Contract Owner's death and which will be made
over the life of  the Contract Owner's designated  Beneficiary or over a  period
not  extending beyond the  life expectancy of that  Beneficiary. However, if the
Contract Owner's designated Beneficiary is the surviving spouse of the  Contract
Owner,  the Contract may be continued with the surviving spouse deemed to be the
new Contract Owner. Where the Contract Owner or other person receiving  payments
is  not a natural  person, the required distributions  provided by Section 72(s)
apply upon the death of the primary Annuitant.

                                       17
<PAGE>
No regulations  interpreting the  requirements of  Section 72(s)  have yet  been
issued  (although  proposed regulations  have  been issued  interpreting similar
requirements for qualified plans). First Fortis intends to review and modify the
Contract if  necessary to  ensure  that it  complies  with the  requirements  of
Section 72(s) when clarified by regulation or otherwise.

Generally,  unless the Beneficiary elects otherwise, the above requirements will
be satisfied where the  death occurs prior to  the Annuity Commencement Date  by
paying  the death  benefit in  a single  sum, subject  to proof  of the Contract
Owner's death. The Beneficiary, however, may elect by Written Request to receive
an annuity option instead of a lump sum payment. However, if the election is not
made within 60 days of the date  the single sum death benefit otherwise  becomes
payable,  particularly where  the annuitant  dies and  the annuitant  is not the
Contract Owner, the IRS may disregard the election for tax purposes and tax  the
Beneficiary as if a single sum payment had been made.

QUALIFIED CONTRACTS

The  Contracts may be  used with several  types of tax-qualified  plans. The tax
rules applicable to Contract Owners, Annuitants and other payees vary  according
to the type of plan and the terms and conditions of the plan itself. In general,
purchase  payments made under a retirement  program recognized under the Code on
behalf of an individual  are excludable from the  individual's gross income  for
tax  purposes  during  the Accumulation  Period.  The  portion, if  any,  of any
purchase payment made by or on behalf of an individual under a Contract that  is
not  excluded from  the individual's  gross income  for tax  purposes during the
Accumulation Period constitutes the  individual's "investment in the  Contract."
Aggregate  deferrals under all plans at the  employee's option may be subject to
limitations.

When annuity  payments  begin, the  individual  will  receive back  his  or  her
"investment in the Contract" if any, as a tax-free return of capital. The dollar
amount  of annuity  payments received in  any year  in excess of  such return is
taxable as  ordinary income.  When  payments are  received  as an  annuity,  the
tax-free  return of capital  is treated as  if received ratably  over the entire
period of the annuity until fully recovered (as described above with respect  to
Non-Qualified Contracts).

The Contracts are available in connection with the following types of retirement
plans:  Section  403(b)  annuity  plans  for  employees  of  certain  tax-exempt
organizations  and  public  educational  institutions;  Section  401  or  403(a)
qualified  pension,  profit-sharing  or  annuity  plans;  individual  retirement
annuities ("IRAs")  under  Section  408(b); simplified  employee  pension  plans
("SEPs")  under Section 408(k);  SIMPLE IRA Plans  under Section 408(p); Section
457 unfunded  deferred compensation  plans of  public employers  and  tax-exempt
organizations'  and private  employer unfunded deferred  compensation plans. The
tax implications  of these  plans  are further  discussed  in the  Statement  of
Additional  Information  under the  heading  "Taxation Under  Certain Retirement
Plans."

WITHHOLDING

Annuity payments  and other  amounts  received under  Contracts are  subject  to
income  tax withholding unless the recipient  elects not to have taxes withheld.
The amounts withheld will vary among  recipients depending on the tax status  of
the individual and the type of payments from which taxes are withheld.

Notwithstanding  the  recipient's  election, withholding  may  be  required with
respect to certain payments to be  delivered outside the United States and  with
respect  to  certain distributions  from certain  types of  qualified retirement
plans, unless the proceeds are transferred  directly from the qualified plan  to
another  qualified retirement plan. Moreover, special "backup withholding" rules
may require First Fortis to disregard the recipient's election if the  recipient
fails  to supply  First Fortis  with a  "TIN" or  taxpayer identification number
(social security number  for individuals),  or if the  Internal Revenue  Service
notifies First Fortis that the TIN provided by the recipient is incorrect.

PORTFOLIO DIVERSIFICATION

The  United  States Treasury  Department has  adopted regulations  under Section
817(h) of the Code  which set standards of  diversification for the  investments
underlying the Contracts, in order for the Contracts to be treated as annuities.
First  Fortis believes that  these diversification standards  will be satisfied.
Failure to  do so  would result  in  immediate taxation  to Contract  Owners  or
persons  receiving annuity payments of all returns credited to Contracts, except
in the case  of certain Qualified  Contracts. Also, current  regulations do  not
provide  guidance as  to any circumstances  in which control  over allocation of
values among  different investment  alternatives may  cause Contract  Owners  or
persons  receiving  annuity payments  to be  treated as  the owners  of Variable
Account assets for tax  purposes. First Fortis reserves  the right to amend  the
Contracts in any way necessary to avoid any such result. The Treasury Department
may  establish standards  in this  regard through  regulations or  rulings. Such
standards may  apply only  prospectively,  although retroactive  application  is
possible if such standards were considered not to embody a new position.

CERTAIN EXCHANGES

Section  1035  of the  Code  provides generally  that no  gain  or loss  will be
recognized under the  exchange of a  life insurance or  annuity contract for  an
annuity contract. Thus, a properly completed exchange from one of these types of
products  into a Contract pursuant to the special annuity contract exchange form
we provide for this purpose is not generally a taxable event under the Code, and
your investment in  the Contract  will be  the same  as your  investment in  the
product you exchanged out of.

Because  of the complexity of these and  other tax aspects in connection with an
exchange, you should consult a tax adviser before making any exchange.

TAX LAW RESTRICTIONS AFFECTING SECTION 403(B) PLANS

Section 403(b)(12) of the Internal Revenue Code restricts the distribution under
Section 403(b) annuity contracts of:

    (1) elective contributions made for years beginning after December 31, 1988;

    (2) earnings on those contributions; and

    (3) earnings on amounts held as of December 31, 1988.

Distribution of  these  amounts may  only  occur  upon death  of  the  employee,
attainment  of age  59 1/2,  separation from  service, disability,  or financial
hardship. In addition, income attributable to elective contributions made  after
December 31, 1988 may not be distributed in the case of hardship.

FURTHER INFORMATION ABOUT FIRST FORTIS

First  Fortis Life  Insurance Company  is an  affiliate of  the worldwide Fortis
group of companies  owned by Fortis  AMEV of  the Netherlands and  Fortis AG  of
Belgium.  The Company was  originally organized under New  York Insurance Law on
August 12, 1971, and was acquired

                                       18
<PAGE>
by the current owners on March 24, 1989, to enable the Fortis group of companies
the ability to distribute their products to the New York State marketplace.

On October 1, 1991, First Fortis Life Insurance Company and its affiliate Fortis
Benefits Insurance Company (the "Companies"), entered into an Asset Transfer and
Acquisition Agreement  (the  "Agreement")  with Mutual  Benefit  Life  Insurance
Company  in  Rehabilitation  (MBL).  Pursuant to  the  Agreement,  the Companies
acquired certain assets and assumed certain  liabilities of MBL relating to  the
group  life, accident  and health, disability  and dental  insurance business of
MBL. That portion of  the business conducted  in New York  was assumed by  First
Fortis,  while the  remaining and more  substantial portion of  the business was
assumed by Fortis Benefits Insurance Company. N.V. AMEV contributed $25  million
in  cash to the paid-in-capital of First Fortis on October 1, 1991 in connection
with the acquisition.

GENERAL
First Fortis is engaged in the  offer and sale of insurance products,  including
fixed  and  variable  annuity contracts,  and  group life,  accident  and health
insurance policies.  First Fortis  markets its  products to  small business  and
individuals  through  a network  of independent  agents, brokers,  and financial
institutions.

SELECTED FINANCIAL DATA

The following  is a  summary of  certain financial  data of  First Fortis.  This
summary  has been derived in part from,  and should be read in conjunction with,
the financial statements of First Fortis included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31,
                                                                    -----------------------------------------------------
                                                                      1996       1995       1994       1993       1992
                                                                    ---------  ---------  ---------  ---------  ---------
                                                                                       (IN THOUSANDS)
<S>                                                                 <C>        <C>        <C>        <C>        <C>
INCOME STATEMENT DATA
  Premiums........................................................  $  67,517  $  81,202  $  92,056  $  75,393  $  58,209
  Net investment income...........................................      7,891      7,466      6,261      6,074      6,245
  Realized investment gains (losses)..............................         (4)     2,683     (1,057)     3,062      1,773
  Other income....................................................        336        297        287        533        296
                                                                    ---------  ---------  ---------  ---------  ---------
    TOTAL REVENUES................................................     75,740     91,648     97,547     85,062     66,523
                                                                    ---------  ---------  ---------  ---------  ---------
  Benefits and expenses...........................................     75,596     96,371    104,582     85,170     63,215
  Income tax expense (benefit)....................................        (39)    (1,563)      (999)      (686)     1,058
                                                                    ---------  ---------  ---------  ---------  ---------
  Net income (loss)...............................................  $     183  $  (3,160) $  (6,036) $     578  $   2,250
                                                                    ---------  ---------  ---------  ---------  ---------
                                                                    ---------  ---------  ---------  ---------  ---------
BALANCE SHEET DATA
  Total assets....................................................  $ 143,139  $ 139,913  $ 123,954  $ 132,077  $ 109,565
  Total liabilities...............................................  $ 107,447  $ 101,523  $  97,913  $  92,863  $  73,209
  Total shareholder's equity......................................  $  35,692  $  38,390  $  26,041  $  39,214  $  36,356
</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

REVENUES

Life premiums of First Fortis (the "Company") are principally composed of  group
life  coverages. Total  life premiums  in 1996  increased 21%  over 1995  due to
strong group life sales  and premium rate  increases on the  group life line  in
1996. Also, the Company began issuing variable annuity products in 1996.

Total  accident and  health premiums  continued to  decrease in  1996. Effective
January 1,  1996,  the Company  ceased  new  sales of  group  medical  policies,
however,  the Company continues to renew  and service the existing group medical
business. On July  1, 1996,  $5.4 million of  group dental  premium lapsed.  The
historical  benefit loss  experience on the  lapsed business was  worse than the
experience on the remaining business. On-going marketing efforts have  continued
to  increase the Company's group disability  income business. The group accident
and health premium  mix continues to  shift. In  1996, the premium  mix was  35%
medical;  40% disability income; and, 25% dental compared to the 1995 mix of 54%
medical; 26% disability income; and 20% dental and the 1994 mix of 66%  medical;
18% disability income; and 16% dental.

The  Company continues  to match  investment portfolio  composition to liquidity
needs and capital requirements. Changes in interest rates during 1996, 1995  and
1994 resulted in recognition of realized gains and losses.

BENEFITS

During  1995 and the first  six months of 1996,  the Company's group life claims
ratio was higher  than expected as  a result of  increased mortality and  larger
average  claims  amounts. During  the  last six  months  of 1996,  mortality and
average claim  amounts began  to decrease.  In 1994,  the group  life  mortality
experience   level  was  consistent  with  Management's  expectations.  Improved
accident and health benefit results from  1994 through 1996 are attributable  to
actions  taken by  the Company  on its  medical and  dental business  along with
continuous improvement in  recovery rates  on existing  group disability  income
claimants.

EXPENSES

The  Company  continues  to  monitor its  commission  rate  structures,  and, as
indicated by market conditions, periodically adjusts rates paid. Rates paid vary
by product type, group  size and duration.  Changes in the  mix of business  has
resulted  in an  increase in the  Company's average commission  rate. During the
last six  months  of 1995,  as  the Company's  inforce  medical lives  began  to
decrease,  the  Company  began  to experience  a  reduction  in  medical related
expenses. This trend continued through 1996.

                                       19
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

The liquidity requirements of the Company  have been met by funds provided  from
operations,  including investment income. Funds  are principally used to provide
for policy benefits, operating  expenses, commissions and investment  purchases.
The  impact of  the declining  inforce medical  business has  been considered in
evaluating the  Company's  future  liquidity  needs.  The  Company  expects  its
operating activities to continue to generate sufficient funds.

The  NAIC has implemented risk-based capital  standards to determine the capital
requirements of a life  insurance company based upon  the risks inherent in  its
operations.  These  standards require  the computation  of a  risk-based capital
amount which is  then compared  to a  company's actual  total adjusted  capital.
Based  upon current  calculation using  these risk-based  capital standards, the
Company's percentage of  total adjusted  capital is  in excess  of ratios  which
would require regulatory attention.

The  Company  has no  long  or short  term  debt. The  Company's  fixed maturity
investments consisted of 97% investment grade bonds as of December 31, 1996  and
the  Company  does not  expect this  percentage to  change significantly  in the
future.

REGULATION

The Company is subject to the laws  and regulations established by the New  York
State  Insurance Department governing  insurance business conducted  in New York
State. Periodic  audits  are conducted  by  the New  York  Insurance  Department
related  to the  Company's compliance with  these laws and  regulations. To date
there have been no adverse findings regarding the Company's operations.

As a small group (1-50  lives) medical insurer in the  State of New York,  First
Fortis  was impacted by the passage in  1992 of Regulation 145, "Open Enrollment
and Community  Rating  of  Individual  and Small  Group  Health  Insurance"  and
Regulation  146, "Establishment and Operation on Market Stabilization Mechanisms
for Individuals and Small Group Health Insurance". The purpose of Regulation 145
is to  promote  competition  among  insurers and  facilitate  access  to  health
insurance  by all  New York residents.  Beginning April 1,  1993, Regulation 145
required insurers to apply  a rating methodology (community  rate) in which  the
premium  for all persons covered by a policy  or contract form is the same based
on the experience of the entire pool of risks covered by that policy or contract
form without regard  to age, sex,  health status or  occupation. Regulation  146
established  a market stabilization process  to share among insurers substantive
cost  variations  attributable   to  significant   differences  in   demographic
characteristics of the persons covered. During 1996, 1995, and 1994, demographic
characteristics  of the Company's  medical business resulted  in payments to the
pools which have been reflected in accident and health benefits.

                                       20
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS

Set forth  is  information  concerning First  Fortis'  directors  and  executive
officers,  together with their business experience and principal occupations for
the past five years:

<TABLE>
<S>                               <C>
Larry M. Cains, 50                Treasurer; Senior  Vice President  of  Fortis,
Director since 1995               Inc.
Allen R. Freedman, 57             Chairman,    Chief   Executive   Officer   and
Director Since 1989               President;  Chairman   and   Chief   Executive
                                  Officer of Fortis, Inc.
Thomas M. Keller, 49              President    of   Time    Insurance   Company;
Director Since 1994               President--Fortis   Healthcare    of    Fortis
                                  Benefits Insurance Company; before that Senior
                                  Vice President of Fortis, Inc.
Dean C. Kopperud, 44              Chief  Executive  Officer of  Fortis Advisers,
Director Since 1994               Inc. and President of Fortis Investors,  Inc.;
                                  President--Fortis  Financial  Group  of Fortis
                                  Benefits Insurance Company
Terry J. Kryshak, 46              Senior Vice President and Chief Administrative
Director Since 1991               Officer
Susie Gharib, 46                  Anchorwoman,   Cable    NBC;   before    that,
Director Since 1991               Anchorwoman, Financial News Network
Guy Gerard Rutherfurd, Jr., 57    Senior Vice President, Dean Witter
Director Since 1989               Intercapital;   before  that   Executive  Vice
                                  President  and  Chief  Investment  Officer  of
                                  Nomura Asset Management, Inc.
Dale Edward Gardner, 66           President, Gardner & Bull
Director Since 1989
Kenneth W. Nelson, 75             President, Tech Products, Inc.
Director Since 1989
Clarence Elkus Galston, 87        Attorney at Law
Director Since 1989
Robert B. Pollock, 42             President   and  Chief  Executive  Officer  of
Director Since 1995               Fortis Benefits Insurance Company
Leanne F. Hughes, 36              Assistant   Treasurer    and    Director    of
                                  Accounting;  before  that  Senior  Manager  of
                                  Ernst & Young LLP
Jerome A. Atkinson, 47            Secretary;  Vice   President,  Secretary   and
                                  General  Counsel of Fortis,  Inc.; before that
                                  Senior Vice President,  Secretary and  General
                                  Counsel of American Security Insurance Company
</TABLE>

First  Fortis' officers  serve at  the pleasure of  the Board  of Directors, and
members of the Board who  are also officers or  employees of First Fortis  serve
without  compensation.  All  Directors  serve until  their  successors  are duly
elected and qualified. The compensation of members of the Board who are not also
officers or  employees of  First Fortis  or its  affiliates is  as follows.  The
Director  receives $1,000  for attendance  at the  annual Board  meeting. If the
Director is  also  a  member  of  the  Audit  Committee  and/or  the  Investment
Committee,  the Director also receives $1,000  for attending any meeting of such
committee unless the committee meeting date  is the same as the annual  meeting,
in which case the committee meeting compensation is $500.

Mr.  Freedman is also a director  of Systems and Computer Technology Corporation
and Genesis Health Ventures and  the following registered investment  companies:
Fortis Equity Portfolios, Inc.; Fortis Growth Fund, Inc.; Fortis Fiduciary Fund,
Inc.;  Fortis Income Portfolios, Inc.;  Fortis Securities, Inc.; Fortis Tax-Free
Portfolios, Inc.; Fortis  Money Portfolios, Inc.;  Fortis Advantage  Portfolios,
Inc.;  Fortis  Worldwide Portfolios,  Inc.;  Fortis Series  Fund,  Inc.; Special
Portfolios, Inc.

                                       21
<PAGE>
EXECUTIVE COMPENSATION

Set forth below is certain information concerning the compensation of the  named
executive  officers  of  First  Fortis. Mr.  Freedman  is  compensated  by other
affiliates of First Fortis.

--------------------------------------------------------------------------------

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                     ANNUAL COMPENSATION
                                                               --------------------------------
                                                                                   OTHER ANNUAL      ALL OTHER
                                                                SALARY    BONUS    COMPENSATION   COMPENSATION (1)
              NAME AND PRINCIPAL POSITION                YEAR    ($)       ($)         ($)              ($)
-------------------------------------------------------  ----  --------  --------  ------------   ----------------
<S>                                                      <C>   <C>       <C>       <C>            <C>
Allen R. Freedman                                        1996  $      0  $      0    $     0          $     0
 President                                               1995         0         0          0                0
Terry J. Kryshak                                         1996   111,000    34,000          0            6,660
 Senior Vice President and Chief Administrative Officer  1995   107,350    25,764          0            8,288
                                                         1994    95,000    30,780          0            1,535
Robert O. Blaber                                         1996    78,234   256,647          0                0
 Senior Vice President                                   1995    75,000   263,654          0           14,852
                                                         1994    75,000   246,032                      14,140
</TABLE>

------------------------
1   This column includes contributions made by First Fortis for the year for the
    benefit for the named individual to defined contribution retirement plans.

As additional compensation to its employees and executive officers, First Fortis
has an Employees' Uniform Retirement Plan and an Executive Retirement Plan which
generally provide an  annual annuity  benefit upon retirement  at age  65 (or  a
reduced  benefit upon early retirement) equal  to: .9% of the employee's Average
Annual compensation up to the  employee's social security covered  compensation,
plus  1.3% of Average  Annual compensation above  the employee's social security
covered compensation up to $235,840, as adjusted by an index, multiplied by  the
employee's years of credited services.

The  following  table illustrates  the combined  estimated life  annuity benefit
payable from the Employees Uniform Retirement Plan and the Executive  Retirement
Plan  to employees with the specified Final  Average Salary and Years of Service
upon retirement.

PENSION TABLE

<TABLE>
<CAPTION>
                                                    YEARS OF SERVICE
                                     -----------------------------------------------
FINAL AVERAGE EARNINGS                 10      15      20      25      30      35
-----------------------------------  ------  ------  ------  ------  ------  -------
<S>                                  <C>     <C>     <C>     <C>     <C>     <C>
125,000                              15,147  22,720  30,294  37,867  45,441   53,014
150,000                              18,397  27,595  36,794  45,992  55,191   64,389
175,000                              21,647  32,470  43,294  54,117  64,941   75,764
200,000                              24,897  37,345  49,794  62,242  74,691   87,139
225,000                              28,147  42,220  56,294  70,367  84,441   98,514
250,000                              30,214  45,321  60,428  75,536  90,643  105,750
275,000+                             30,352  45,528  60,704  75,880  91,056  106,232
</TABLE>

The table above excludes social security benefits. In general, for the  purposes
of  these plans compensation includes salary  and bonuses. The credited years of
service  with  First  Fortis  for   those  individuals  named  in  the   Summary
Compensation Table above are as follows: 0, 6, and 10.

OWNERSHIP OF SECURITIES

All  of First Fortis'  outstanding shares are  owned by Fortis,  Inc., One Chase
Manhattan Plaza, New York, N.Y. 10005. Fortis, Inc., in turn is wholly owned  by
Fortis International, Inc., which is wholly owned by AMEV/VSB 1990 N.V., both of
which  share  the same  address  with N.V.  AMEV.,  Archimedeslaan 10,  3584 BA,
Utrecht, The Netherlands. AMEV/ VSB  1990 N.W. is 50%  owned by Fortis AMEV  and
50%  owned, through certain subsidiaries, by Fortis AG, Boulevard Emile Jacqmain
53, 1000 Brussels, Belgium.

VOTING PRIVILEGES

In accordance with its  view of current applicable  law, First Fortis will  vote
shares of each of the Portfolios which are attributable to a Contract at regular
and  special  meetings  of the  shareholders  of  Series Fund  in  proportion to
instructions received  from  the  persons  having the  voting  interest  in  the
Contract  as of the  record date for the  corresponding Series Fund shareholders
meeting. Contract  Owners  have  the voting  interest  during  the  Accumulation
Period,  persons  receiving  annuity  payments during  the  Annuity  Period, and
Beneficiaries after the death  of the Annuitant or  Contract Owner. However,  if
the  Investment Company Act of 1940 or any rules thereunder should be amended or
if the  present interpretation  thereof should  change, and  as a  result  First
Fortis  determines that it is permitted to  vote shares of the Portfolios in its
own right, it may elect to do so.

During the Accumulation Period, the number of shares of a Portfolio attributable
to a Contract  is determined by  dividing the  amount of Contract  Value in  the
corresponding  Subaccount pursuant to the Contract as of the record date for the
shareholders meeting by the net  asset value of one  Portfolio share as of  that
date. During the Annuity Period, or after the death of the Annuitant or Contract
Owner,  the number of Portfolio shares  deemed attributable to the Contract will
be computed in a comparable manner,  based on the liability for future  variable
annuity  payments  allocable to  that Subaccount  under the  Contract as  of the
record date. Such liability for future payments will be calculated on the  basis
of  the mortality assumptions and the  assumed interest rate used in determining
the number of Annuity Units credited to the Contract and the applicable  Annuity
Unit  value on the record  date. During the Annuity  Period, the number of votes
attributable to a Contract will generally decrease since funds set aside to make
the annuity payments will decrease.

First Fortis will vote shares for which it has received no timely  instructions,
and  any shares attributable  to excess amounts First  Fortis has accumulated in
the related  Subaccount,  in proportion  to  the voting  instructions  which  it
receives  with respect  to all  Contracts and  other variable  annuity contracts
participating in a Portfolio. To the extent

                                       22
<PAGE>
that First Fortis  or any affiliated  company holds any  shares of a  Portfolio,
they  will be voted  in the same  proportion as instructions  for that Portfolio
that are received from persons holding  the voting interest with respect to  all
First  Fortis separate accounts participating in  that Portfolio. Shares held by
separate accounts other than  the Variable Account will  in general be voted  in
accordance  with instructions of  participants in such  other separate accounts.
This diminishes the relative voting influence of the Contracts.

Each person having  a voting interest  in a Subaccount  of the Separate  Account
will  receive  proxy  material,  reports and  other  materials  relating  to the
appropriate Portfolio. Pursuant to the procedures described above, these persons
may give instructions regarding the election of the Board of Directors of Series
Fund, ratification of the selection of its independent auditors, the approval of
the investment  managers  of  a Portfolio,  changes  in  fundamental  investment
policies  of a Portfolio and all other matters  that are put to a vote by Series
Fund shareholders.

LEGAL MATTERS

The legality of the Contracts described in this Prospectus has been passed  upon
by  Douglas R. Lowe, Esquire, Assistant  General Counsel with the law department
of Fortis  Benefits Insurance  Company, an  affiliate of  First Fortis.  Messrs.
Freedman,  Levy, Kroll & Simonds, Washington, D.C., have advised First Fortis on
certain federal securities law matters.

OTHER INFORMATION

Registration Statements  have  been  filed  with  the  Securities  and  Exchange
Commission  under the  Securities Act  of 1933 as  amended, with  respect to the
Contracts discussed in this Prospectus. Not all of the information set forth  in
the Registration Statement, amendments and exhibits thereto has been included in
this  Prospectus. Statements contained in this Prospectus concerning the content
of the Contracts and other legal instruments are intended to be summaries. For a
complete statement of the terms of these documents, reference should be made  to
the instruments filed with the Securities and Exchange Commission.

A  Statement of Additional  Information is available  upon request. Its contents
are as follows:

CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
First Fortis and the Variable Account.....................................    2
Calculation of Annuity Payments...........................................    2
Postponement of Payments..................................................    3
Services..................................................................    3
  - Safekeeping of Variable Account Assets................................    3
  - Experts...............................................................    3
  - Principal Underwriter.................................................    3
Limitations on Allocations................................................    4
Change of Investment Adviser or Investment Policy.........................    4
Taxation Under Certain Retirement Plans...................................    4
Withholding...............................................................    8
Terms of Exemptive Relief in Connection With Mortality and Expense Risk
 Charge...................................................................    8
Variable Account Financial Statements.....................................    9
APPENDIX A--Performance Information.......................................  A-1
</TABLE>

FIRST FORTIS FINANCIAL STATEMENTS

The financial statements of  First Fortis that are  included in this  Prospectus
should be considered primarily as bearing on the ability of First Fortis to meet
its  obligations  under  the  Contracts.  The  Contracts  are  not  entitled  to
participate in earnings, dividends or surplus of First Fortis.

[to be filed by subsequent post effective amendment]

                                       23
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors
First Fortis Life Insurance Company

We  have audited the accompanying balance  sheets of First Fortis Life Insurance
Company (a wholly-owned subsidiary of Fortis  AMEV) as of December 31, 1996  and
1995, and the related statements of operations, changes in shareholder's equity,
and  cash flows  for each of  the three years  in the period  ended December 31,
1996. 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  generally  accepted   auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence  supporting
the  amounts and disclosures in the financial statements. An audit also includes
assessing the  accounting  principles used  and  significant estimates  made  by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the  financial statements referred to  above present fairly,  in
all  material respects,  the financial position  of First  Fortis Life Insurance
Company at December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.

                                                    /s/ Ernst & Young LLP
Syracuse, New York
February 21, 1997

                                      F-1
<PAGE>
BALANCE SHEETS
FIRST FORTIS LIFE INSURANCE COMPANY

<TABLE>
<CAPTION>
                                                                                 DECEMBER 31
                                                                        -----------------------------
                                                                            1996             1995
                                                                        ------------     ------------
<S>                                                                     <C>              <C>
ASSETS
Investments--(Note 3):
  Fixed maturities, at fair value (amortized cost 1996--$111,970,939;
   1995--$106,648,754)................................................  $113,136,650     $112,183,452
  Preferred stock at fair value (cost 1995--$92,029)..................            --           89,345
  Short-term investments..............................................            --        6,850,000
                                                                        ------------     ------------
                                                                         113,136,650      119,122,797
Cash..................................................................     1,544,745        1,145,131

Receivables:
  Uncollected premiums, less allowance--$100,000......................     3,890,111        4,440,446
  Reinsurance recoverable on unpaid and paid losses...................    14,731,285        9,335,947
  Prepaid federal income taxes and other assets.......................     4,311,855        2,255,199
                                                                        ------------     ------------
                                                                          22,933,251       16,031,592
Accrued investment income.............................................     1,739,498        1,814,291
Property and equipment at cost, less accumulated depreciation
 (1996--$1,395,517; 1995--$1,249,280).................................     1,027,576        1,199,482
Goodwill..............................................................       554,000          600,000
Assets held in separate accounts......................................     2,203,109               --
                                                                        ------------     ------------
TOTAL ASSETS..........................................................  $143,138,829     $139,913,293
                                                                        ------------     ------------
                                                                        ------------     ------------

RESERVES, LIABILITIES, AND SHAREHOLDER'S EQUITY
POLICY RESERVES AND LIABILITIES
  Future policy benefit reserves:
    Life insurance....................................................  $ 25,225,095     $ 22,529,817
    Accident and health...............................................    60,774,384       59,442,638
                                                                        ------------     ------------
                                                                          85,999,479       81,972,455
  Other policy claims and benefits payable............................    14,798,802       13,561,740
  Other liabilities...................................................     4,445,831        5,988,794
  Liabilities related to separate accounts............................     2,203,109               --
                                                                        ------------     ------------
TOTAL POLICY RESERVES AND LIABILITIES.................................   107,447,221      101,522,989

SHAREHOLDER'S EQUITY (Notes 1, 8, 9, and 10):
  Common stock, $20 par value 100,000 shares authorized, issued, and
   outstanding........................................................     2,000,000        2,000,000
  Additional paid-in capital..........................................    37,440,000       37,440,000
  Retained earnings (deficit).........................................    (4,517,761)      (4,700,825)
  Unrealized appreciation of investment securities, net of tax (Note
   3).................................................................       769,369        3,651,129
                                                                        ------------     ------------
TOTAL SHAREHOLDER'S EQUITY............................................    35,691,608       38,390,304
                                                                        ------------     ------------
TOTAL RESERVES, LIABILITIES, AND SHAREHOLDER'S EQUITY.................  $143,138,829     $139,913,293
                                                                        ------------     ------------
                                                                        ------------     ------------
</TABLE>

                            See accompanying notes.

                                      F-2
<PAGE>
STATEMENTS OF OPERATIONS
FIRST FORTIS LIFE INSURANCE COMPANY

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31
                                                                        ------------------------------------------
                                                                           1996            1995           1994
                                                                        -----------    ------------    -----------
<S>                                                                     <C>            <C>             <C>
REVENUES
  Insurance operations (NOTE 7):
    Life insurance premiums...........................................  $22,850,286    $ 18,879,246    $19,431,130
    Accident and health premiums......................................   44,666,246      62,322,484     72,624,559
  Net investment income (NOTE 3)......................................    7,891,048       7,465,751      6,261,593
  Realized (losses) gains on investments (NOTE 3).....................       (3,650)      2,683,100     (1,057,438)
  Other income........................................................      335,934         297,767        287,426
                                                                        -----------    ------------    -----------
      TOTAL REVENUES..................................................   75,739,864      91,648,348     97,547,270

BENEFITS AND EXPENSES
  Benefits to policyholders:
    Life insurance....................................................   19,792,653      16,206,930     15,345,645
    Accident and health...............................................   37,987,686      56,592,227     68,115,512
  Amortization of deferred policy acquisition costs (NOTE 2)..........            -       4,595,000      1,838,000
  Insurance commissions...............................................    5,213,744       5,070,934      5,768,504
  General and administrative expenses.................................   12,601,939      13,906,043     13,514,820
                                                                        -----------    ------------    -----------
      TOTAL BENEFITS AND EXPENSES.....................................   75,596,022      96,371,134    104,582,481
                                                                        -----------    ------------    -----------
  Income (loss) before federal income taxes...........................      143,842      (4,722,786)    (7,035,211)
  Federal income tax benefit (NOTE 6).................................      (39,222)     (1,562,943)      (999,671)
                                                                        -----------    ------------    -----------
  NET INCOME (LOSS)...................................................  $   183,064    $ (3,159,843)    (6,035,540)
                                                                        -----------    ------------    -----------
                                                                        -----------    ------------    -----------
</TABLE>

                            See accompanying notes.

                                      F-3
<PAGE>
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
FIRST FORTIS LIFE INSURANCE COMPANY

<TABLE>
<CAPTION>
                                                                                                  UNREALIZED
                                                                                                 APPRECIATION
                                                                  ADDITIONAL      RETAINED      (DEPRECIATION)
                                                      COMMON        PAID-IN       EARNINGS       OF INVESTMENT
                                                      STOCK         CAPITAL       (DEFICIT)     SECURITIES, NET        TOTAL
                                                    ----------    -----------    -----------    ---------------     -----------
<S>                                                 <C>           <C>            <C>            <C>                 <C>
Balance January 1, 1994...........................  $2,000,000    $30,440,000    $ 4,494,558    $    2,280,000      $39,214,558
Net loss..........................................          --             --     (6,035,540)               --       (6,035,540)
Unrealized depreciation of investment securities,
 net..............................................          --             --             --        (5,486,586)      (5,486,586)
Change in deferred tax valuation allowance for
 unrealized depreciation on investment
 securities.......................................          --             --             --        (1,651,877)      (1,651,877)
                                                    ----------    -----------    -----------    ---------------     -----------
Balance December 31, 1994.........................   2,000,000     30,440,000     (1,540,982)       (4,858,463)      26,040,555
Additional paid-in capital from Fortis AMEV.......          --      7,000,000             --                --        7,000,000
Net loss..........................................          --             --     (3,159,843)               --       (3,159,843)
Unrealized appreciation of investment securities,
 net..............................................          --             --             --         6,857,715        6,857,715
Change in deferred tax valuation allowance for
 unrealized depreciation on investment
 securities.......................................          --             --             --         1,651,877        1,651,877
                                                    ----------    -----------    -----------    ---------------     -----------
Balance December 31, 1995                            2,000,000     37,440,000     (4,700,825)        3,651,129       38,390,304
  Net income......................................          --             --        183,064                --          183,064
Unrealized depreciation of investment securities.
 net..............................................          --             --             --        (2,881,760)      (2,881,760)
                                                    ----------    -----------    -----------    ---------------     -----------
Balance December 31, 1996.........................  $2,000,000    $37,440,000    $(4,517,761)   $      769,369      $35,691,608
                                                    ----------    -----------    -----------    ---------------     -----------
                                                    ----------    -----------    -----------    ---------------     -----------
</TABLE>

                            See accompanying notes.

                                      F-4
<PAGE>
STATEMENTS OF CASH FLOWS
FIRST FORTIS LIFE INSURANCE COMPANY

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31
                                                         --------------------------------------------------
                                                              1996              1995              1994
                                                         --------------    --------------    --------------
<S>                                                      <C>               <C>               <C>
OPERATING ACTIVITIES
  Net income (loss)....................................  $      183,064    $   (3,159,843)   $   (6,035,540)
  Adjustments to reconcile net income (loss) to net
   cash (used in) provided by operating activities:
    Non-cash transactions:
      Change in deferred tax valuation allowance.......              --          (177,708)        1,515,531
      Depreciation, amortization and accretion.........         803,858           750,029           716,129
      Net realized losses (gains) on investments.......           3,650        (2,683,100)        1,057,438
    Changes in assets and liabilities:
      (Increase) decrease in uncollected premiums,
       accrued investment income and other.............      (1,322,446)          112,767         2,258,061
      (Increase) decrease in reinsurance recoverable...      (5,395,338)         (460,598)          333,480
      Increase (decrease) in income taxes..............       1,771,804        (1,569,235)       (2,903,210)
      Amortization of policy acquisition costs.........              --         4,595,000         1,838,000
      Policy acquisition costs deferred................              --                --          (432,000)
      Increase in future policy benefit reserves and
       other policy claims and benefits................       5,264,086         3,481,220         7,835,342
      (Decrease) increase in other liabilities.........      (1,939,303)          128,321        (2,118,752)
                                                         --------------    --------------    --------------
        NET CASH (USED IN) PROVIDED BY OPERATING
         ACTIVITIES....................................        (630,625)        1,016,853         4,064,479

INVESTING ACTIVITIES
  Purchases of fixed maturity investments..............    (140,954,176)     (122,289,460)      (77,995,025)
  Sales and maturities of fixed maturity investments...     135,352,498       120,298,152        69,440,809
  Decrease (increase) in equity securities and
   short-term investments..............................       6,942,029        (5,042,029)        3,731,866
  Purchase of property and equipment...................        (310,112)         (321,460)         (562,438)
                                                         --------------    --------------    --------------
        NET CASH PROVIDED BY (USED IN) INVESTING
         ACTIVITIES....................................       1,030,239        (7,354,797)       (5,384,788)
FINANCING ACTIVITIES
  Proceeds from additional paid-in capital.............              --         7,000,000                --
                                                         --------------    --------------    --------------
        NET CASH PROVIDED BY FINANCING ACTIVITIES......              --         7,000,000                --
                                                         --------------    --------------    --------------
  Increase (decrease) in cash..........................         399,614           662,056        (1,320,309)
        CASH AT BEGINNING OF YEAR......................       1,145,131           483,075         1,803,384
                                                         --------------    --------------    --------------
        CASH AT END OF YEAR............................  $    1,544,745    $    1,145,131    $      483,075
                                                         --------------    --------------    --------------
                                                         --------------    --------------    --------------
</TABLE>

                            See accompanying notes.

                                      F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FIRST FORTIS LIFE INSURANCE COMPANY

DECEMBER 31, 1996

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS

First  Fortis Life  Insurance Company  ("First Fortis"  or "the  Company") is an
affiliate of the worldwide Fortis group of companies owned by Fortis AMEV of the
Netherlands and Fortis  AG of Belgium.  First Fortis is  wholly-owned by  Fortis
AMEV. The other U.S. subsidiaries of Fortis AREV and Fortis AG operate under the
holding company name Fortis, Inc. Subject to regulatory approval by the New York
State Insurance Department, the Company will become a wholly-owned subsidiary of
Fortis,  Inc. in 1997. The  Company was organized to  enable the Fortis group of
companies to distribute  their products to  the New York  State marketplace.  To
date,  the Company's  revenues have been  derived primarily  from group employee
benefits products. During 1996,  the Company had  $11,425,000 of direct  premium
written  principally  by  two third  party  administrators  ("TPA's"). Effective
January 1,  1996,  the Company  stopped  offering its  group  medical  products;
however,  the  Company  will  continue to  renew  and  service  existing medical
business, which  represented  $17,871,000  and  $34,011,000  of  1996  and  1995
accident  and health  premiums, respectively.  During 1996,  $250,000 of related
termination benefits were paid, which were  accrued for and included in  general
and administrative expenses in 1995.

BASIS OF STATEMENT PRESENTATION

The  financial statements  are presented  in conformity  with generally accepted
accounting principles which differ in certain respects from statutory accounting
practices prescribed or permitted  by the New  York State Insurance  Department.
Significant accounting policies followed by the Company are:

    POLICY REVENUES

    For  group  life, medical,  disability,  and credit  life  products, amounts
    collected from  policyholders  are recognized  as  premium income  over  the
    premium  paying period and are reported net of experience rating refunds and
    unearned premiums.

    CLAIMS AND BENEFITS PAYABLE

    Claims and  benefits payable  for  reported and  incurred but  not  reported
    losses  are determined using case base estimates and prior experience. These
    estimates are  subject  to the  effects  of  trends in  claim  severity  and
    frequency  and represent  the estimates of  the ultimate cost  of all unpaid
    losses incurred  through December  31 of  each year.  Although  considerable
    variability  is  inherent in  such estimates,  management believes  that the
    reserve for claims and benefits payable  is adequate. The methods of  making
    such  estimates  and establishing  the  related liabilities  are continually
    reviewed and updated, and any adjustments resulting therefrom are  reflected
    in operations currently.

    RESERVES FOR FUTURE POLICY BENEFITS

    Active  life reserves  for future policy  and contract benefits  on life and
    accident and health products are provided  on the net level premium  method.
    The   reserves  are  calculated  based  upon  assumptions  as  to  interest,
    withdrawal, mortality, and morbidity  that were appropriate  at the date  of
    issue.  Interest rate  assumptions range principally  from 3.0%  to 5.5% for
    traditional life products and 4.0% to 10.0% for annuity products. Withdrawal
    assumptions are based on actual Company experience. Mortality and  morbidity
    assumptions  are based  upon industry  standards adjusted  as appropriate to
    reflect actual Company  experience. The  assumptions vary by  plan, year  of
    issue, and policy duration and include a provision for adverse deviation.

    Disabled   lives  reserves  for  future  policy  and  contract  benefits  on
    disability income  policies  are calculated  based  upon assumptions  as  to
    interest  and  claim  termination  rates  that  are  currently  appropriate.
    Disabled lives reserves for group life policies are based on a 3.5% interest
    rate  assumption.  For  group  long-term  disability  income  policies,  the
    interest rate assumption on claims is 6.0%. Termination rate assumptions are
    based  upon  industry standards  adjusted as  appropriate to  reflect actual
    Company experience. The assumptions vary by year of claim incurred.

    INVESTMENTS

    The Company's  investment  strategy  is  developed  based  on  many  factors
    including  insurance liability  matching, rate  of return,  maturity, credit
    risk, tax considerations, and regulatory requirements.

    All fixed maturities are considered  available-for-sale and are reported  at
    fair  value; short-term investments are reported at cost, which approximates
    fair value. Changes in the fair values of available-for-sale securities, net
    of deferred  income  taxes,  are  reported  as  unrealized  appreciation  or
    depreciation  directly  in shareholder's  equity  and, accordingly,  have no
    effect on net income. Realized gains and losses on sales of investments, and
    declines in value judged to  be other-than-temporary, are recognized on  the
    specific identification basis.

    PROPERTY AND DEPRECIATION

    The  Company provides depreciation (principally on the straight-line method)
    over the estimated useful life of the related property.

    INCOME TAXES

    Income taxes have  been provided  using the liability  method. Deferred  tax
    assets and liabilities are determined based on the differences between their
    financial  reporting and tax  bases, and are measured  using the enacted tax
    rates.

                                      F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FIRST FORTIS LIFE INSURANCE COMPANY

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    SEPARATE ACCOUNTS

    The Company began selling variable annuity products July 1, 1996. Assets and
    liabilities associated with separate accounts relate to premium and  annuity
    considerations  for which the  policyholder, rather than  the Company, bears
    the investment risk.  Separate account  assets are reported  at fair  value.
    Revenues   and  expenses  related   to  the  separate   account  assets  and
    liabilities, to the  extent of  benefits paid  or provided  to the  separate
    account  policyholders,  are  excluded  from  the  amounts  reported  in the
    accompanying statements of operations.

    USE OF ESTIMATES

    The  preparation  of  financial  statements  in  conformity  with  generally
    accepted  accounting principles  requires management  to make  estimates and
    assumptions that affect the amounts reported in the financial statements and
    accompanying notes. Actual results could differ from those estimates.

2.  DEFERRED POLICY ACQUISITION COSTS
On October 1, 1991, First Fortis Life Insurance Company and an affiliate, Fortis
Benefits Insurance Company, (the "Companies") entered into an Asset Transfer and
Acquisition Agreement  (the  "Agreement")  with Mutual  Benefit  Life  Insurance
Company  in  Rehabilitation ("MBL).  Pursuant  to the  Agreement,  the Companies
acquired certain assets and assumed certain  liabilities of MBL relating to  the
group  life, disability, dental and  medical insurance business (the "Business")
of MBL. That portion of the Business conducted in New York was assumed by  First
Fortis, while the most substantial portion of the Business was assumed by Fortis
Benefits Insurance Company. First Fortis paid $10,166,000 for its portion of the
Business   acquired  including  contingent  Promissory  Note  ("Note")  payments
aggregating $1,366,000 from 1992 to 1994 which were based on the persistency  of
the acquired Business through September 30, 1994. No additional payments will be
made.  Note payments  were added to  deferred policy  acquisition costs ("DPAC")
when made. The DPAC amortization period, which was originally scheduled  through
September  30,  1997,  was  completed  December  31,  1995  (an  acceleration of
$2,749,000 into 1995), based on the overall experience of the acquired block  of
business.

3.  INVESTMENTS
FIXED MATURITIES

The  following  is a  summary  of the  amortized cost  and  fair value  of fixed
maturity securities:

<TABLE>
<CAPTION>
                                                                            GROSS           GROSS
                                                          AMORTIZED       UNREALIZED     UNREALIZED
                                                             COST            GAIN           LOSS          FAIR VALUE
                                                         ------------    ------------    -----------     ------------
<S>                                                      <C>             <C>             <C>             <C>
December 31, 1996:
  Governments..........................................  $ 13,463,189    $    92,446     $  (44,103)     $ 13,511,532
  Public utilities.....................................     6,445,882         66,809        (24,710)        6,487,981
  Industrial and miscellaneous.........................    92,061,868      1,425,693       (350,424)       93,137,137
                                                         ------------    ------------    -----------     ------------
    Total..............................................  $111,970,939    $ 1,584,948     $ (419,237)     $113,136,650
                                                         ------------    ------------    -----------     ------------
                                                         ------------    ------------    -----------     ------------
</TABLE>

<TABLE>
<S>                                                      <C>             <C>             <C>             <C>
December 31, 1995:
  Governments..........................................  $ 17,068,216    $ 1,025,440     $       --      $ 18,093,656
  Public utilities.....................................     4,906,703        262,773             --         5,169,476
  Industrial and miscellaneous.........................    84,673,835      4,272,901        (26,416)       88,920,320
                                                         ------------    ------------    -----------     ------------
    Total..............................................  $106,648,754    $ 5,561,114     $  (26,416)     $112,183,452
                                                         ------------    ------------    -----------     ------------
                                                         ------------    ------------    -----------     ------------
</TABLE>

The fair values for fixed maturity securities are based on quoted market prices,
where available. For fixed maturity securities not actively traded, fair  values
are estimated using values obtained from independent pricing services or, in the
case  of private placements,  are estimated by  discounting expected future cash
flows using a current market rate  applicable to the yield, credit quality,  and
maturity of the investments.

The  amortized cost and fair value of  fixed maturity securities at December 31,
1996, 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.

<TABLE>
<CAPTION>
                                                          AMORTIZED
                                                             COST       FAIR VALUE
                                                         ------------  ------------
<S>                                                      <C>           <C>
Due in one year or less................................  $    502,354  $    503,010
Due after one year through five years..................    38,588,214    39,067,289
Due after five years through ten years.................    39,780,501    40,023,689
Due after ten years....................................    33,099,870    33,542,662
                                                         ------------  ------------
                                                         $111,970,939  $113,136,650
                                                         ------------  ------------
                                                         ------------  ------------
</TABLE>

Proceeds  from  sales   and  maturities  of   fixed  maturity  securities   were
$135,352,498,   $120,298,152   and  $69,440,809   in   1996,  1995,   and  1994,
respectively. Gross  gains  of $1,551,135,  $3,373,880  and $510,242  and  gross
losses  of $1,554,785,  $690,780 and  $1,572,163 were  realized on  the sales in
1996, 1995, and 1994 respectively.

                                      F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FIRST FORTIS LIFE INSURANCE COMPANY

3.  INVESTMENTS (CONTINUED)
NET INVESTMENT INCOME AND NET REALIZED GAINS (LOSSES) ON INVESTMENTS

Major categories  of  net  investment  income and  realized  gains  (losses)  on
investments for each year were as follows:

<TABLE>
<CAPTION>
                                                                                NET REALIZED GAINS (LOSSES) ON
                                                NET INVESTMENT INCOME                     INVESTMENTS
                                          ----------------------------------  -----------------------------------
                                             1996        1995        1994        1996        1995         1994
                                          ----------  ----------  ----------  ----------  -----------  ----------
<S>                                       <C>         <C>         <C>         <C>         <C>          <C>
Fixed maturities........................  $7,940,703  $7,578,652  $6,341,978  $   (3,650) $ 2,683,100  $(1,061,921)
Short-term investments..................     231,448     152,211     200,274          --           --       4,483
                                          ----------  ----------  ----------  ----------  -----------  ----------
                                           8,172,151   7,730,863   6,542,252  $   (3,650) $ 2,683,100  $(1,057,438)
                                                                              ----------  -----------  ----------
                                                                              ----------  -----------  ----------
Expenses................................    (281,103)   (265,112)   (280,659)
                                          ----------  ----------  ----------
Net investment income...................  $7,891,048  $7,465,751  $6,261,593
                                          ----------  ----------  ----------
                                          ----------  ----------  ----------
</TABLE>

4.  LEASES
The  Company leases  office space under  operating lease  arrangements that have
various renewal options and  are subject to escalation  clauses for real  estate
taxes  and operating expenses. Rent expense  was $691,588, $673,407 and $597,365
in 1996, 1995, and  1994, respectively. Future  minimum payments required  under
operating  lease arrangements that have initial or noncancelable terms in excess
of  one  year  or  more  are:  1997--$715,797,  1998--$739,352,  1999--$569,049,
2000--$18,830, and 2001--$15,691.

5.  UNPAID LOSSES AND LOSS EXPENSE ALLOWANCE
Activity  for the  liability for unpaid  accident and health  losses and related
loss expense allowance is summarized as follows:

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31
                                                           -----------------------------------------
                                                              1996           1995           1994
                                                           -----------    -----------    -----------
<S>                                                        <C>            <C>            <C>
Balance as of January 1, net of reinsurance
 recoverable...........................................    $65,764,070    $66,136,369    $58,646,889
Add: Incurred losses related to:
  Current year.........................................     38,798,085     57,400,613     66,066,609
  Prior years..........................................       (810,399)      (808,386)     2,048,903
                                                           -----------    -----------    -----------
    Total incurred losses..............................     37,987,686     56,592,227     68,115,512
                                                           -----------    -----------    -----------
Deduct: Paid losses related to:
  Current year.........................................     23,727,017     35,779,078     40,882,341
  Prior years..........................................     18,543,303     21,185,448     19,743,691
                                                           -----------    -----------    -----------
    Total paid losses..................................     42,270,320     56,964,526     60,626,032
                                                           -----------    -----------    -----------
Balance as of December 31, net of reinsurance
 recoverable...........................................    $61,481,436    $65,764,070    $66,136,369
                                                           -----------    -----------    -----------
                                                           -----------    -----------    -----------
</TABLE>

As discussed in Note 1, the  Company stopped offering group medical products  in
1996  but continues to  service and renew existing  business, resulting in lower
incurred and paid loss activity for the year ended December 31, 1996.

The total balance of unpaid losses  and loss expense allowances are reported  in
the  balance sheets  gross of reinsurance  as components of  future accident and
health policy benefit  reserves, other  policy claims and  benefits payable  and
other liabilities.

In  1994, lower than anticipated recovery rates on existing long-term disability
income claimants,  offset  by  a  favorable refinement  in  the  claims  reserve
estimates  contributed to the  "incurred losses related  to prior years" result.
The liability for unpaid accident and  health losses and loss expense  allowance
includes $55,152,000, $53,953,000 and $47,489,000 of long-term disability income
reserves  as  of December  31, 1996,  1995, and  1994, respectively,  which were
discounted for anticipated interest earnings assuming a 6.0% interest rate.

                                      F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FIRST FORTIS LIFE INSURANCE COMPANY

6.  FEDERAL INCOME TAXES
Deferred income  taxes reflect  the  net tax  effects of  temporary  differences
between the basis of assets and liabilities for financial statement purposes and
for  income tax purposes.  The significant components  of the Company's deferred
tax assets and liabilities as of December 31 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                            DECEMBER 31
                                                                        --------------------
                                                                          1996       1995
                                                                        ---------  ---------
<S>                                                                     <C>        <C>
Deferred tax assets:
  Reserves............................................................  $   2,006  $   2,104
  Deferred policy acquisition costs...................................        555        470
  Alternative minimum tax credit carryforward.........................        392        191
  Net operating loss carryforward.....................................        216         --
  Other...............................................................        299        485
                                                                        ---------  ---------
    Total gross deferred tax assets...................................      3,468      3,250
Valuation allowance...................................................     (1,338)    (1,338)
                                                                        ---------  ---------
Net deferred tax assets...............................................      2,130      1,912
Deferred tax liabilities:
  Unrealized gains....................................................        396      1,881
  Other...............................................................        206         31
                                                                        ---------  ---------
    Total gross deferred tax liabilities..............................        602      1,912
                                                                        ---------  ---------
    Net deferred tax asset............................................  $   1,528  $      --
                                                                        ---------  ---------
                                                                        ---------  ---------
</TABLE>

The net deferred tax asset is reported as a component of "prepaid federal income
taxes and other assets" in the balance sheet.

As of December 31, 1996 and 1995,  respectively, the Company had a deferred  tax
asset  valuation allowance  of $1,337,823.  The valuation  allowance decrease of
$1,829,585 in 1995 was  recognized as a $1,651,877  increase to the  "unrealized
appreciation   (depreciation)  of  investment   securities,  net"  component  of
shareholder's equity and a $177,708 tax  benefit in the statement of  operations
in 1995.

The income tax provision is summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                       1996       1995       1994
                                                      -------    -------    -------
<S>                                                   <C>        <C>        <C>
Current...........................................    $  (131)   $   393    $(1,775)
Deferred..........................................         92     (1,778)      (740)
Valuation allowance...............................         --       (178)     1,516
                                                      -------    -------    -------
Federal income tax benefit........................    $   (39)   $(1,563)   $  (999)
                                                      -------    -------    -------
                                                      -------    -------    -------
</TABLE>

Tax  payments of $32,000, $251,591  and $1,442,818 were made  in 1996, 1995, and
1994, respectively.

The differences between the provision (benefit) for income taxes at the  federal
statutory income tax rate and the tax benefit were as follows (in thousands):

<TABLE>
<CAPTION>
                                                       1996       1995       1994
                                                      -------    -------    -------
<S>                                                   <C>        <C>        <C>
Federal statutory rate............................      (34.0)%    (34.0)%    (34.0)%
                                                      -------    -------    -------
                                                      -------    -------    -------
Tax provision (benefit) at statutory rate.........    $    49    $(1,606)   $(2,392)
Tax exempt interest...............................         --       (188)      (406)
Other, net........................................        (88)       409        283
Valuation allowance...............................         --       (178)     1,516
                                                      -------    -------    -------
Tax benefit as reported...........................    $   (39)   $(1,563)   $  (999)
                                                      -------    -------    -------
                                                      -------    -------    -------
</TABLE>

At  December  31, 1996,  the Company  has net  operating loss  carryforwards for
federal income tax  purposes of $636,000  which are available  to offset  future
federal  taxable income, if any, through  2011. The Company also has alternative
minimum tax  credit carryforwards  of $392,000,  which are  available to  reduce
future federal regular income taxes, if any, over an indefinite period of time.

                                      F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FIRST FORTIS LIFE INSURANCE COMPANY

7.  REINSURANCE
The  maximum amounts that the  Company retains on any  one life are $500,000 for
group life; $250,000 for group accidental death; $2,000 net monthly benefit  for
long-term  disability; from 10% to 50% of possible benefits payable under credit
life and credit  disability insurance; and  0% of a  closed block of  individual
life  business. Amounts  in excess  of these  limits are  reinsured with various
insurance companies on a yearly renewable term, coinsurance or other basis.

In the second quarter of 1996, the  Company received approval from the New  York
State  Insurance  Department for  a reinsurance  agreement with  Fortis Benefits
Insurance Company ("Fortis Benefits"), an affiliate. The agreement, which became
effective as of January  1, 1996, decreased  the Company's long-term  disability
reinsurance retention from a $10,000 net monthly benefit to a $2,000 net monthly
benefit  for claims incurred on and after  January 1, 1996. Through December 31,
1996, the Company has ceded $6,144,000 of premium to Fortis Benefits and  Fortis
Benefits has assumed $3,599,000 of reserves from the Company. In the future, the
agreement  is expected to  reduce the variability of  financial results for this
product line.

Future policy benefits and other policy claims and benefits payable are reported
gross of reinsurance. The reinsured portion of future policy benefits and  other
policy  claims and benefits  payable are $14,731,285 and  $9,335,947 in 1996 and
1995, respectively. The  Company remains  contingently liable in  the event  the
reinsuring companies are unable to meet their obligations under such reinsurance
agreements.

Additional  information  regarding the  Company's  reinsurance activity  for the
years ended December 31, 1996, 1995, and 1994 is as follows:

<TABLE>
<CAPTION>
                                     GROSS AMOUNT      CEDED        NET AMOUNT
                                    --------------  ------------  --------------
<S>                                 <C>             <C>           <C>
1996
Life insurance in force...........  $6,576,692,000  $238,628,000  $6,338,064,000
                                    --------------  ------------  --------------
                                    --------------  ------------  --------------
Premiums:
  Group and individual life.......  $   24,216,176  $  1,365,890  $   22,850,286
  Accident and health.............      51,751,740     7,085,494      44,666,246
                                    --------------  ------------  --------------
Total premiums....................  $   75,967,916  $  8,451,384  $   67,516,532
                                    --------------  ------------  --------------
                                    --------------  ------------  --------------
1995
Life insurance in force...........  $6,864,625,000  $321,785,000  $6,542,840,000
                                    --------------  ------------  --------------
                                    --------------  ------------  --------------
Premiums:
  Group and individual life.......  $   20,376,696  $  1,497,450  $   18,879,246
  Accident and health.............      63,696,935     1,374,451      62,322,484
                                    --------------  ------------  --------------
Total premiums....................  $   84,073,631  $  2,871,901      81,201,730
                                    --------------  ------------  --------------
                                    --------------  ------------  --------------
1994
Life insurance in force...........  $5,116,384,000  $297,027,000  $4,819,357,000
                                    --------------  ------------  --------------
                                    --------------  ------------  --------------
Premiums:
  Group and individual life.......  $   20,508,492  $  1,077,362  $   19,431,130
  Accident and health.............      72,835,490       210,931      72,624,559
                                    --------------  ------------  --------------
Total premiums....................  $   93,343,982  $  1,288,293  $   92,055,689
                                    --------------  ------------  --------------
                                    --------------  ------------  --------------
</TABLE>

8.  DIVIDEND RESTRICTIONS
The Company  is subject  to insurance  regulatory restrictions  that limit  cash
dividends  which  can be  paid from  the  Company to  its Parent.  All dividends
require prior approval by the New York State Insurance Department.

9.  TRANSACTIONS WITH AFFILIATED COMPANIES
Affiliates of  the  Company  provide  services,  such  as  information  systems,
actuarial  and  investment management,  in return  for payment  representing the
costs incurred for such services. In 1996, 1995, and 1994, the Company  incurred
$1,648,000,  $1,581,000 and $1,443,000, respectively,  in service fees under the
arrangements with  the  affiliates.  In  1995,  the  Company  received  cash  of
$7,000,000 representing additional paid-in capital from Fortis AMEV.

The  Company participates  in the  Fortis, Inc.  noncontributory defined benefit
pension plan and a contributory  profit sharing plan covering substantially  all
of its employees. Amounts expensed under these plans were $253,609, $232,252 and
$171,519 in 1996, 1995, and 1994, respectively.

10. STATUTORY ACCOUNTING PRACTICES
The Company prepares its statutory-basis financial statements in accordance with
accounting   practices   prescribed   or  permitted   by   insurance  regulatory
authorities. Prescribed  statutory accounting  practices  include a  variety  of
publications of the National Association of Insurance Commissioners ("NAIC"), as
well  as  state laws,  regulations and  general administrative  rules. Permitted
statutory  accounting  practices  encompass  all  accounting  practices  not  so
prescribed;  such  practices may  differ from  state to  state, may  differ from
company to company within a state, and

                                      F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FIRST FORTIS LIFE INSURANCE COMPANY

10. STATUTORY ACCOUNTING PRACTICES (CONTINUED)
may change in the future.  The NAIC is currently  in the process of  recodifying
statutory  accounting practices. This project, which is expected to be completed
in 1998,  may result  in  changes to  the  accounting practices  that  insurance
enterprises use to prepare their statutory-basis financial statements.

Insurance  enterprises are required by state  insurance departments to adhere to
minimum risk-based  capital  ("RBC") requirements  developed  by the  NAIC.  The
Company exceeds minimum RBC requirements.

Reconciliations  of net income or loss and  shareholder's equity on the basis of
statutory accounting  to  the  related amounts  presented  in  the  accompanying
statements were as follows:

<TABLE>
<CAPTION>
                                                              NET INCOME (LOSS)              SHAREHOLDER'S EQUITY
                                                    -------------------------------------  ------------------------
                                                       1996         1995         1994         1996         1995
                                                    -----------  -----------  -----------  -----------  -----------
<S>                                                 <C>          <C>          <C>          <C>          <C>
Based on statutory accounting practices...........  $  (427,557) $(1,627,624) $(2,004,993) $27,466,966  $27,773,005
Deferred policy acquisition costs.................           --   (4,595,000)  (1,838,000)          --           --
Deferred and uncollected premiums.................       76,233           --     (100,000)     358,155      149,066
Property and equipment............................           --           --           --      481,875      583,613
Policy reserves...................................      476,177       68,018      (16,872)     658,723      182,546
Investment valuation difference...................           --           --           --    1,165,710    5,532,013
Realized gains (losses) on investments............       (3,650)   2,683,736   (1,060,352)          --           --
Amortization of goodwill..........................      (46,000)     (46,000)     (46,000)     554,000      600,000
Income taxes......................................      115,009      674,642    1,035,479    2,865,246    1,337,823
Deferred tax valuation allowance..................           --      177,708   (1,515,531)  (1,337,823)  (1,337,823)
Interest maintenance reserve ("IMR")..............           --           --           --    2,001,250    2,430,093
Amortization of IMR...............................     (426,200)    (432,656)    (451,286)          --           --
Asset valuation reserve...........................           --           --           --      997,799      881,150
Other.............................................      419,052      (62,667)     (37,985)     479,707      258,818
                                                    -----------  -----------  -----------  -----------  -----------
                                                    $   183,064  $(3,159,843) $(6,035,540) $35,691,608  $38,390,304
                                                    -----------  -----------  -----------  -----------  -----------
                                                    -----------  -----------  -----------  -----------  -----------
</TABLE>

11. COMMITMENTS AND CONTINGENCIES
The  Company is party to  various legal actions arising  in the normal course of
its operations. The Company  does not believe that  the eventual outcome of  any
such litigation will have a materially adverse effect on its financial condition
or future operations.

                                      F-11
<PAGE>
APPENDIX A--SAMPLE MARKET VALUE ADJUSTMENT CALCULATIONS

The formula which will be used to determine the Market Value Adjustment is:

<TABLE>
<C>  <C>            <C>  <C>   <S>
         1 + I           n/12
      -----------              - 1
 (   1 + J + .0025   )
</TABLE>

Sample Calculation 1: Positive Adjustment

<TABLE>
<S>                                       <C>
Amount withdrawn or transferred           $10,000
Existing Guarantee Period                 7 years
Time of withdrawal or transfer            beginning of 3rd year of Existing
                                          Guarantee Period
Guaranteed Interest Rate (I)              8%*
Guaranteed Interest Rate for
  new 5-year guarantee (J)                7%*
Remaining Guarantee Period (N)            60 months
Market Value Adjustment
</TABLE>

<TABLE>
<S>         <C>  <C>              <C>  <C>    <C>   <C>
                     1 + .08           60/12
$10,000 x         -------------               - 1]  =
            [(   1 + .07 + .0025   )                $354.57
</TABLE>

              Amount transferred or withdrawn (adjusted for Market Value
Adjustment): $10,354.57

Sample Calculation 2: Negative Adjustment

<TABLE>
<S>                                       <C>
Amount withdrawn or transferred           $10,000
Existing Guarantee Period                 7 years
Time of withdrawal or transfer            beginning of 3rd year of Existing
                                          Guarantee Period
Guaranteed Interest Rate (I)              8%*
Guaranteed Interest Rate for
  new 5-year guarantee (J)                9%*
Remaining Guarantee Period (N)            60 months
Market Value Adjustment:
</TABLE>

<TABLE>
<S>         <C>  <C>              <C>  <C>    <C>   <C>
                     1 + .08           60/12
$10,000 x         -------------               - 1]  = -
            [(   1 + .09 + .0025   )                $559.14
</TABLE>

              Amount transferred or withdrawn (adjusted for Market Value
Adjustment): $9,440.86

Sample Calculation 3: Negative Adjustment

<TABLE>
<S>                                       <C>
Amount withdrawn or transferred           $10,000
Guarantee Period                          7 years
Time of withdrawal or transfer            beginning of 3rd year of Existing
                                          Guarantee Period
Guaranteed Interest Rate (I)              8%*
Guaranteed Interest Rate for
  new 5-year guarantee (J)                7.75%*
Remaining Guarantee Period (N)            60 months
Market Value Adjustment:
</TABLE>

<TABLE>
<S>         <C>  <C>              <C>  <C>    <C>   <C>
                     1 + .08           60/12
                 ---------------                    =
$10,000 x          1 + .0775 +                - 1]  $0
            [(        .0025        )
</TABLE>

              Amount transferred or withdrawn (adjusted for Market Value
Adjustment): $10,000
------------------------
* Assumed for illustrative purposes only.

                                      A-1
<PAGE>
APPENDIX B--SAMPLE DEATH BENEFIT CALCULATIONS
(WITHOUT ENHANCED DEATH BENEFIT)

DATE OF DEATH IS THE 3RD CONTRACT ANNIVERSARY

<TABLE>
<CAPTION>
                                                           EXAMPLE 1    EXAMPLE 2
                                                          -----------  -----------
<S>   <C>                                                 <C>          <C>
a.    Net Purchase Payments Made Prior to Date of
      Death.............................................   $  20,000    $  20,000

b.    Contract Value on Date of Death...................   $  17,000    $  25,000

Death Benefit is larger of a, and b.....................   $  20,000    $  25,000
</TABLE>

DATE OF DEATH IS THE 8TH CONTRACT ANNIVERSARY

<TABLE>
<CAPTION>
                                                           EXAMPLE 3    EXAMPLE 4    EXAMPLE 5
                                                          -----------  -----------  -----------
<S>   <C>                                                 <C>          <C>          <C>
a.    Net Purchase Payments Made Prior to Date of
      Death.............................................   $  20,000    $  20,000    $  20,000

b.    Contract Value on 7th Contract Anniversary........   $  15,000    $  30,000    $  30,000

c.    Contract Value on Date of Death...................   $  17,000    $  25,000    $  35,000

Death Benefit is larger of a, b, and c..................   $  20,000    $  30,000    $  35,000
</TABLE>

DATE OF DEATH IS THE 15TH CONTRACT ANNIVERSARY

<TABLE>
<CAPTION>
                                                           EXAMPLE 6    EXAMPLE 7    EXAMPLE 8
                                                          -----------  -----------  -----------
<S>   <C>                                                 <C>          <C>          <C>
a.    Net Purchase Payments Made Prior to Date of
      Death.............................................   $  20,000    $  20,000    $  20,000

b.    Contract Value on 14th Contract Anniversary.......   $  15,000    $  40,000    $  40,000

c.    Contract Value on Date of Death...................   $  17,000    $  30,000    $  50,000

Death Benefit is larger of a, b, and c..................   $  20,000    $  40,000    $  50,000
</TABLE>

                                      B-1
<PAGE>
APPENDIX C--EXPLANATION OF EXPENSE CALCULATIONS

The  expense  for  a  given  year is  calculated  by  multiplying  the projected
beginning of the year policy value by the total expense rate. The total  expense
rate  is the sum of the variable account expense rate plus the total Series Fund
expense rate plus The annual administrative charge rate.

The policy values are projected by assuming a single payment of $1,000 grows  at
an annual rate equal to 5% reduced by the total expense rate described above.

For  example, the  3 year expense  for the  Growth Stock Series  as a  part of a
Contract that  has not  elected the  Enhanced Death  Benefit, is  calculated  as
follows:

<TABLE>
<S>  <C>                                            <C>
     Total Variable Account Annual Expenses         1.35%
+    Total Series Fund Operating Expenses
=    Total Expense Rate
</TABLE>

<TABLE>
<S>                      <C>         <C>
Year 1 Beginning Policy Value = $1000.00
Year 1 Expense =
1000.00                   x     =    $

Year 2 Beginning Policy Value = $
Year 2 Expense =          x     =    $

Year 3 Beginning Policy Value = $
Year 3 Expense =          x     =    $
</TABLE>

So the cumulative expenses for years 1-3 for the Growth Stock Series are equal
to    +    +    = $   .

If  the contract  is surrendered, the  surrender charge is  the surrender charge
percentage times the purchase payment minus the 10% free withdrawal amount:

<TABLE>
<S>                                <C>                                       <C>  <C>
                                                                                  Surrender
Surrender Charge Percentage x      (Initial Premium - 10% Free Withdrawal)    =   Charge
          0.05          x          (  1000.00    -       100.00    )          =       4
</TABLE>

So the total expense if surrendered is    + 45.00 = $    .

                                      C-1
<PAGE>
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                                      B-2