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Previous: MANOR INVESTMENT FUNDS INC, NSAR-A, 1996-08-16 |
Next: CSG SYSTEMS INTERNATIONAL INC, S-8, 1996-08-16 |
<PAGE> 1
PROVIDENT NATIONAL ASSURANCE COMPANY
Separate Account B
June 30, 1996
Semiannual Report
<PAGE> 2
MANAGEMENT
BOARD OF MANAGERS OF SEPARATE ACCOUNT B
Henry E. Blaine
H. Grant Law, Jr.
David G. Fussell
Susan N. Roth, Secretary
to the Board of Managers
PRINCIPAL OFFICERS OF PROVIDENT
NATIONAL ASSURANCE COMPANY
Eugene A. Jones, President
J. Harold Chandler, Executive Vice President
Thomas R. Watjen, Executive Vice President and
Chief Financial Officer
Robert O. Best, Senior Vice President and
Chief Information Officer
Thomas B. Heys, Jr., Senior Vice President
Ralph A. Rogers, Vice President and Controller
Kenneth Blankenship, Vice President, Internal
Audit
Glenn P. Felton, Vice President, Managing
Corporate Counsel and Assistant Secretary
Susan N. Roth, Corporate Secretary and Counsel
George A. Shell, Jr., Treasurer
This report and the financial statements attached are submitted
solely for the general information of contract owners of Separate Account B and
are not authorized for other use.
<PAGE> 3
MESSAGE TO PARTICIPANTS IN
PROVIDENT NATIONAL'S
VARIABLE ANNUITY CONTRACTS
This semiannual report of Separate Account B contains the financial
statements and portfolio information of Separate Account B for the six months
ended June 30, 1996. Comparative figures which relate to Separate Account B's
activities during the first half of 1996 are provided below.
The accumulation unit value for Separate Account B increased 9.9% in the
first half of 1996, from $6.908158 at year end 1995 to $7.593667 on June 30,
1996. During this same period, the S&P 500 Index rose by a yield adjusted
10.1%. Reflecting transfers to the fixed-dollar account, as well as withdrawals
and retirements, the number of accumulation units outstanding on June 30, 1996,
was 1,654,079, down from 1,767,394 six months earlier. As a result of
withdrawals, net purchase payments received, and changes in the accumulation
unit value, total contract owners' equity on June 30, 1996, was $13,529,891
compared to $13,151,831 on December 31, 1995.
The economy appears to be slowing with second half 1996 GDP growth
projected to slow to 2%, after rising to a 3% rate during the first half.
Slower economic growth implies a further slowdown in earnings momentum
for stocks, resulting in downward pressure on both P/E and earnings. The
economy is likely to remain on a moderate growth, low inflation path for
the rest of the year and well into 1997.
Thank you for your continued support.
/s/ David Fussell
-------------------------------------
David Fussell
Chairman, Board of Managers
Provident National Assurance Company
Separate Account B
<PAGE> 4
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
(UNAUDITED)
JUNE 30, 1996
<TABLE>
<S> <C>
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Statements of Changes in Variable Annuity Contract Owners' Equity . . . . . . . . . . . . . . . . . . . . . . . 2
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Accumulation Unit Value Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 5
STATEMENT OF ASSETS AND LIABILITIES
(Unaudited)
Provident National Assurance Company Separate Account B
<TABLE>
<CAPTION>
June 30, 1996
-------------
<S> <C>
ASSETS
Investments:
Common stocks--at market value
(cost: $10,154,913) $13,379,419
Bonds--at market value
(cost: $100,000) 101,750
-----------
13,481,169
Cash 30,279
Accrued dividends and interest 18,554
Amounts due from Provident National Assurance Company 516
Receivable from sale of investments 172,294
-----------
13,702,812
-----------
TOTAL ASSETS
LIABILITIES AND CONTRACT OWNERS' EQUITY
Amounts payable for purchase of investments 160,000
Management fee and other amounts due Provident
National Assurance Company 12,921
-----------
TOTAL LIABILITIES 172,921
-----------
Variable annuity contract owners' equity:
Deferred annuity contracts terminable by owners--(accumulation
units outstanding: 1,654,079.231; unit value: $7.593667) 12,560,527
Annuity contracts in pay-out period 969,364
-----------
TOTAL CONTRACT OWNERS' EQUITY $13,529,891
===========
</TABLE>
See notes to financial statements.
1
<PAGE> 6
STATEMENTS OF CHANGES IN VARIABLE ANNUITY CONTRACT OWNERS' EQUITY
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1996 December 31, 1995
---------------- -----------------
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD $13,151,831 $12,171,347
----------- -----------
FROM INVESTMENT ACTIVITIES:
Net investment income 21,117 112,248
Net realized gain on investments 826,700 1,801,868
Increase in net unrealized appreciation of investments 417,165 1,174,075
----------- -----------
Increase in contract owners' equity from
investment activities 1,264,982 3,088,191
----------- -----------
FROM VARIABLE ANNUITY CONTRACT TRANSACTIONS:
Net contract purchase payments (Units purchased:
1996--1,648.171;
1995--8,835.033) 12,521 53,380
Terminations and death benefits (Units terminated:
1996--115,421.448;
1995--337,338.173) (838,196) (2,054,839)
Variable annuity benefits paid (Number of units:
1996--8,304.827;
1995--17,171.953) (61,247) (106,248)
----------- -----------
Decrease in contract owners' equity from variable
contract transactions (886,922) (2,107,707)
----------- -----------
NET INCREASE IN CONTRACT OWNERS' EQUITY 378,060 980,484
----------- -----------
BALANCE AT END OF PERIOD $13,529,891 $13,151,831
=========== ===========
</TABLE>
See notes to financial statements.
3
<PAGE> 7
STATEMENT OF OPERATIONS
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1996
-----------------
<S> <C>
INVESTMENT INCOME
Income:
Dividends $ 97,703
Interest 4,357
----------
102,060
----------
Expenses--Note C:
Investment advisory services 33,726
Mortality and expense assurances 47,217
----------
80,943
----------
NET INVESTMENT INCOME 21,117
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS--NOTE A
Net realized gain from investment transactions
(excluding short-term securities):
Proceeds from sales 3,804,702
Cost of investments sold 2,978,002
----------
Net realized gain 826,700
----------
Net unrealized appreciation of investments:
At end of period 3,226,256
At beginning of period 2,809,091
----------
Increase in net unrealized appreciation of investments 417,165
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,243,865
----------
$1,264,982
==========
NET GAIN
Ratio of expenses to total investment income 79.31%
==========
</TABLE>
See notes to financial statements.
3
<PAGE> 8
SCHEDULE OF INVESTMENTS
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
JUNE 30, 1996
<TABLE>
<CAPTION>
Number of Market
Shares Value
------------- ----------------
<S> <C> <C>
COMMON STOCKS
BASIC PRODUCTS (2.1%)
Boise Cascade Corporation 3,500 $ 128,188
USG Corporation 5,500 153,312
----------
281,500
CAPITAL GOODS (5.8%)
General Electric Company 9,000 780,750
CONSUMER (33.1%)
Bristol-Myers Squibb Company 4,500 405,000
Coca-Cola Company 9,000 441,000
Eckerd Jack Company 4,000 90,500
Exide Corporation 3,500 84,875
Gannett Company, Inc. 5,500 389,125
General Motors Corporation 7,000 366,625
McDonald's Corporation 10,500 490,875
Pentos PLC 160,000 0
PepsiCo, Inc. 10,000 355,000
Proctor & Gamble Company 3,500 317,188
Sara Lee Corporation 6,000 195,000
Safeway, Inc. 4,200 138,600
Sears, Roebuck & Company 5,000 243,125
Viacom, Inc. Class B 13,712 533,054
Wal-Mart Stores, Inc. 17,000 431,375
----------
4,481,342
FINANCIAL (10.1%)
AFLAC, Inc. 9,000 268,875
American Express Company 8,000 357,000
Corestates Financial Corporation 6,250 240,625
Wells Fargo & Company 2,100 502,163
----------
1,368,663
</TABLE>
See notes to financial statements.
4
<PAGE> 9
SCHEDULE OF INVESTMENTS - CONTINUED
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
JUNE 30, 1996
<TABLE>
<CAPTION>
Number of Market
Shares Value
------------- ----------------
<S> <C> <C>
COMMON STOCKS
HEALTH CARE (12.9%)
Columbia Healthcare Corporation 4,500 $ 241,313
HealthSouth Corporation 9,500 342,000
Johnson & Johnson 9,032 447,084
Merck & Company, Inc. 11,000 710,875
----------
1,741,272
HIGH GROWTH TECHNOLOGY (22.4%)
Airtouch Communications, Inc. 7,000 197,750
Comcast Corporation 14,500 268,250
Computer Associates International 5,000 355,000
Emerson Electric Company 5,000 451,875
Hewlett Packard Company 3,500 348,688
Intel Corporation 5,000 367,500
Microsoft Corporation 2,000 240,250
Motorola, Inc. 4,500 282,375
Oracle Corporation 5,000 197,500
SCI Systems, Inc. 5,000 203,125
3Com Corporation 2,500 114,375
-----------
3,026,688
MISCELLANEOUS (3.1%)
Minnesota Mining & Manufacturing Company 6,200 427,800
UTILITIES (9.4%)
AT & T Corporation 6,000 372,000
MFS Communications 3,000 112,875
Teleport Communications Group 10,000 191,250
Worldcom, Inc. 10,750 595,281
-----------
1,271,406
-----------
TOTAL COMMON STOCKS (98.9%) 13,379,419
-----------
</TABLE>
See notes to financial statements.
5
<PAGE> 10
SCHEDULE OF INVESTMENTS - CONTINUED
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
JUNE 30, 1996
<TABLE>
<CAPTION>
Principal Market
Amount Value
------------- ----------------
<S> <C> <C>
BONDS (0.7%)
Tenet Healthcare Corporation 6.00%
Exchangeable Subordinated Notes
due December 1, 2005 $100,000 $ 101,750
======== -----------
TOTAL INVESTMENTS (99.6%) 13,481,169
CASH AND RECEIVABLES LESS LIABILITIES (0.4%) 48,722
-----------
TOTAL VARIABLE ANNUITY CONTRACT
OWNERS' EQUITY (100.0%) $13,529,891
===========
</TABLE>
See notes to financial statements.
6
<PAGE> 11
SUPPLEMENTARY INFORMATION
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
Selected data for an accumulation unit outstanding throughout each year:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31
June 30, 1995 1994 1993 1992
1996
------------ -------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income $ .05 $ .13 $ .15 $ .14 $ .12
Expenses .04 .07 .07 .06 .06
------ ------ ------ ------ ------
Net investment income .01 .06 .08 .08 .06
Net realized and unrealized
gain (loss) on investments .67 1.44 (.32) .54 (.07)
------ ------ ------ ------ ------
Net increase (decrease) in
contract owners' equity .68 1.50 (.24) .62 (.01)
Net contract owners' equity:
Beginning of period 6.91 5.41 5.65 5.03 5.04
------ ------ ------ ------ ------
End of period $ 7.59 $ 6.91 $ 5.41 $ 5.65 $ 5.03
====== ====== ====== ====== ======
Ratio of expenses to average
contract owners' equity 0.60% 1.21% 1.21% 1.22% 1.21%
Ratio of net investment income to
average contract owners' equity 0.16% 0.89% 1.72% 1.39% 1.36%
Portfolio turnover 21% 101% 70% 57% 35%
Number of accumulation units
outstanding at end of period 1,654,079 1,767,394 2,097,793 2,242,809 2,655,895
</TABLE>
See notes to financial statements.
7
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
NOTE A--INVESTMENTS AND ACCOUNTING POLICIES
Separate Account B is a segregated investment account of Provident National
Assurance Company (a wholly-owned subsidiary of Provident Companies, Inc.) and
is registered under the Investment Company Act of 1940, as amended, as an
open-end diversified management investment company.
Common stocks and bonds are valued at published market quotations which
represent the closing sales price for securities traded on a national stock
exchange or the mean between the quoted bid and asked prices for those traded
over-the-counter. Short-term investments are valued at cost plus accrued
interest.
Realized and unrealized gains and losses are credited to or charged to variable
annuity contract owners' equity. The identified cost basis has been used in
determining realized gains and losses on sales of investments. If determined
on the average cost basis, the net realized gain would have been $798,463 and
$1,798,019 for the six months ended June 30, 1996 and the year ended December
31, 1995, respectively. There were gross unrealized gains of $3,356,661 and
gross unrealized losses of $130,405 at June 30, 1996. Security transactions
are recorded on the date the securities are purchased or sold which is the
common practice of the industry. Dividends are taken into income on an accrual
basis as of the ex-dividend date.
A summary of the cost of investments purchased and proceeds from investments
sold for the six months ended June 30, 1996 and the year ended December 31,
1995 is shown below.
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1996 December 31, 1995
------------------- -----------------
<S> <C> <C>
Cost of investments purchased $6,642,011 $32,935,068
Less: Short-term securities 3,800,102 20,637,665
---------- -----------
$2,841,909 $12,297,403
========== ===========
Proceeds from investments sold $7,604,804 $34,650,485
Less: Short-term securities 3,800,102 21,336,918
---------- -----------
$3,804,702 $13,313,567
========== ===========
</TABLE>
The aggregate cost of investments for federal income tax purposes is the same
as that presented in the Statements of Assets and Liabilities.
NOTE B--FEDERAL INCOME TAXES
Operations of Separate Account B will form a part of the income tax return of
Provident National Assurance Company, which is taxed as a "life insurance
company" under the Internal Revenue Code.
Under current law, no federal income taxes are payable with respect to Separate
Account B.
8
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
NOTE C--EXPENSES
Deductions are made by Provident National Assurance Company at the end of
each valuation period for investment advisory services and for mortality and
expense assurances, which on an annual basis are approximately .50% and .70%,
respectively, of the net assets of Separate Account B.
9
<PAGE> 14
ACCUMULATION UNIT VALUE TABLE
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
<TABLE>
<CAPTION>
End of Month Accumulation Unit Value End of Month Accumulation Unit Value
------------ ----------------------- ------------ -----------------------
<S> <C> <C> <C>
December 1968 1.036279 March 1991 4.312244
December 1969 1.080379 June 4.243108
December 1970 1.030039 September 4.513598
December 1971 1.178612 December 5.036212
December 1972 1.403795 March 1992 4.735470
December 1973 1.126624 June 4.585274
December 1974 .863269 September 4.694884
December 1975 1.022844 December 5.028547
December 1976 1.156853 March 1993 5.208499
December 1977 1.064425 June 5.190340
December 1978 1.094150 September 5.441446
December 1979 1.219189 December 5.646864
December 1980 1.555258 March 1994 5.386379
December 1981 1.473246 June 5.274454
December 1982 1.812441 September 5.475394
December 1983 2.132092 December 5.410722
December 1984 2.029912 March 1995 5.656995
December 1985 2.480050 June 6.194660
December 1986 2.743444 September 6.505252
December 1987 2.734169 December 6.908158
March 1988 2.922656 January 1996 7.104573
June 3.103682 February 7.177128
September 3.094483 March 7.309625
December 3.087892 April 7.390144
March 1989 3.263117 May 7.561813
June 3.506709 June 7.593667
September 3.841545
December 3.812606
March 1990 3.729963
June 4.080042
September 3.435225
December 3.736441
</TABLE>
Initial contributions to Separate Account B were received on February 1, 1968,
prior to which time the unit value was set at 1.000000.
The above indicates the accumulation unit value on the last valuation day of
each year from December 1968 through December 1987, on the last valuation day
of each quarter from 1988 through December 1995, and on the last valuation day
during each month of 1996. The results shown should not be considered as a
representation of the results which may be realized in the future.
10
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