<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 3 (File No. 333-00041) [x]
---------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 4 (File No. 811-07475) [x]
---------
(Check appropriate box or boxes)
ACL VARIABLE ANNUITY ACCOUNT 1
- --------------------------------------------------------------------------------
(Exact Name of Registrant)
American Centurion Life Assurance Company
- --------------------------------------------------------------------------------
(Name of Depositor)
20 Madison Avenue Extension, Albany NY 12203
- --------------------------------------------------------------------------------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-4085
- --------------------------------------------------------------------------------
Sherilyn K. Beck, IDS Tower 10, Minneapolis, MN 55440-0010
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
CROSS REFERENCE SHEET
Cross reference sheet showing location in the prospectus and Statement of
Additional Information of the information called for by the items enumerated in
Part A and B of Form N-4.
Negative answers omitted from the prospectus and Statement of Additional
Information are so indicated.
PART A
Item No. Section in Prospectus
1 Cover page
2 Key terms
3 (a) Expense Summary
(b) The Privileged Assets Select Annuity in brief
4 (a) Condensed financial information
(b) Performance information
(c) Financial statements
5 (a) Cover page; About American Centurion Life
(b) The variable account
(c) The funds
(d) Cover page; The funds
(e) Voting rights
(f) NA
(g) NA
6 (a) Charges
(b) Expense Summary; Charges
(c) Charges
(d) NA
(e) The funds
(f) NA
7 (a) Buying your annuity; Benefits in case of death; The annuity
payout period
(b) The variable account; Making the most of your annuity
(c) The funds; Charges
(d) Cover page
8 (a) The annuity payout period
(b) Buying the annuity
(c) The annuity payout period
(d) The annuity payout period
(e) The annuity payout period
(f) The annuity payout period
9 (a) Benefits in case of death
(b) Benefits in case of death
10 (a) Buying your annuity; Valuing your investment
(b) Valuing your investment
(c) Buying your annuity; Valuing your investment
(d) About American Centurion Life
11 (a) Surrendering your contract
(b) NA
(c) Surrendering your contract
(d) Buying your annuity
(e) The Privileged Assets Select Annuity in brief
12 (a) Taxes
(b) Key terms
(c) NA
13 NA
14 Table of contents of the Statement of Additional Information
<PAGE>
PART B
Section in
Item No. Statement of Additional Information
15 (a) Cover page
(b) NA
16 Table of contents
17 (a) NA
(b) NA
(c) About American Centurion Life*
18 (a) NA
(b) NA
(c) Independent Auditors
(d) NA
(e) NA
(f) NA
19 (a) Distribution of the contracts*; About American Centurion Life*
(b) NA
20 (a) Principal underwriter
(b) Principal underwriter
(c) NA
(d) NA
21 (a) Performance information
(b) Performance information
22 Calculating annuity payouts
23 (a) Financial statements
(b) Financial statements
*Designates section in the prospectus, which is hereby incorporated by reference
in this Statement of Additional Information.
<PAGE>
Privileged Assets(R) Select Annuity
Prospectus/May 1, 1998
The Privileged Assets(R) Select Annuity is a flexible premium group deferred
fixed/variable annuity.
The annuity is available for non-qualified and certain qualified retirement
plans.
ACL Variable Annuity Account 1
Sold by: American Centurion Life Assurance Company (American Centurion
Life),
Service Office: 20 Madison Avenue Ext., Albany, NY 12203
Telephone: (518) 452-4150 (Albany area)
(800) 297-9797 (Toll free)
This Prospectus contains the information about the variable accounts that you
should know before investing. Refer to "The variable accounts" in this
prospectus. As in the case of other annuities, it may not be advantageous to
purchase this annuity as a replacement for, or in addition to an existing
annuity.
The Prospectus is accompanied or preceded by the following prospectuses: IDS
Life Retirement Annuity Mutual Funds, INVESCO Variable Investment Funds, Inc.,
Janus Aspen Series, American Century Variable Portfolios, Inc. and Warburg
Pincus Trust. Please read these documents carefully and keep them for future
reference.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any state securities commission, nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this Prospectus. Any representation to the contrary is a
criminal offense.
American Centurion Life is not a bank or financial institution, and the
securities it offers are not deposits or obligations of, backed or guaranteed or
endorsed by any bank or financial institution nor are they insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any other
agency.
A Statement of Additional Information (SAI) (incorporated by reference into this
prospectus) has been filed with the Securities and Exchange Commission (SEC) and
is available for reference, along with other related materials, on the SEC
Internet web site (http://www.sec.gov). The SAI is available without charge by
contacting American Centurion Life at the telephone number above or by
completing and sending the order form on the last page of this prospectus. The
table of contents of the SAI is on the last page of this prospectus.
Participation in the annuity contract will be accounted for separately by the
issuance of an annuity certificate showing your interest in the contract.
Purchase payments may be allocated among different accounts, providing variable
and/or fixed returns. Through the subaccounts of the variable account, you can
invest in mutual
<PAGE>
funds that are managed to meet a variety of investment objectives. The
certificate value will vary according to the investment performance of the funds
you select. You bear the entire investment risk under the annuity.
The annuity offers tax-deferred asset accumulation. This may be particularly
attractive to investors in high federal and state tax brackets who have made
maximum contributions to employer-sponsored retirement programs and IRAs.
The annuity has no front-end sales charge, nor does it have a redemption or
surrender charge.
The Privileged Assets Select Annuity is designed to allow you to build up funds
for retirement. When you need to access your money, such as at retirement, you
may do so in several ways including the following: you may take a monthly fixed
annuity payout for the lifetime of the annuitant(s) you have designated, or you
may take a lump-sum or a fixed amount per month on the principal and/or earnings
on the annuity.
<PAGE>
Contents
Key terms................................................................
The Privileged Assets(R) Select Annuity in brief...........................
Expense summary..........................................................
Financial statements.....................................................
Performance information..................................................
The variable account.....................................................
The funds................................................................
IDS Life Aggressive Growth Fund.....................................
IDS Life International Equity Fund..................................
IDS Life Capital Resource Fund......................................
IDS Life Managed Fund...............................................
IDS Life Special Income Fund........................................
IDS Life Moneyshare Fund............................................
INVESCO VIF-Industrial Income Portfolio.............................
Janus Aspen Series Worldwide Growth Portfolio.......................
Janus Aspen Series Growth Portfolio.................................
American Century VP Capital Appreciation............................
American Century VP Value...........................................
Warburg Pincus Trust-Post-Venture Capital Portfolio.................
The fixed account........................................................
Buying your annuity......................................................
Setting the annuity start date......................................
Beneficiary.........................................................
Minimum purchase payments...........................................
Three ways to make purchase payments................................
Charges..................................................................
Administrative charge...............................................
Mortality and expense risk fee......................................
Other information on charges........................................
Valuing your investment..................................................
Number of units.....................................................
Accumulation unit value.............................................
Net investment factor...............................................
Factors that affect variable subaccount accumulation units..........
Making the most of your annuity..........................................
Automated dollar-cost averaging.....................................
Transferring money between accounts.................................
Transfer policies...................................................
Two ways to request a transfer or a surrender.......................
Surrendering your annuity................................................
Surrender policies..................................................
Receiving payment when you request a surrender......................
Changing ownership.......................................................
Benefits in case of death................................................
The annuity payout period................................................
Annuity payout plans................................................
Death after annuity payouts begin...................................
Taxes....................................................................
Voting rights............................................................
<PAGE>
Substitution of investments..............................................
Distribution of the annuities............................................
About American Centurion Life............................................
Year 2000................................................................
Regular and special reports..............................................
Table of contents of the Statement of Additional Information.............
<PAGE>
Key terms
These terms can help you understand details about your annuity.
American Centurion Life - In this prospectus, "we," "us," "our" and "American
Centurion Life" refer to American Centurion Life Assurance Company.
Annuity - A contract or the related certificate you receive that shows your
coverage under the contract, purchased from an insurance company that offers
tax-deferred growth of the investment until earnings are withdrawn, and that can
be tailored to meet the specific needs of the individual during retirement.
Accumulation unit - A measure of the value of each variable subaccount before
annuity payouts begin.
Annuitant - The person on whose life or life expectancy the payouts are based.
Annuity payout - An amount paid at regular intervals under one of several plans
available to the owner and/or any other payee. This amount is paid on a fixed
basis.
Annuity start date - The date when annuity payouts are scheduled to begin. This
date is established when you start your annuity. As your financial goals change,
you may change the annuity start date.
Beneficiary - The person designated to receive annuity benefits in case of the
owner's or annuitant's death.
Certificate value - The total purchase payments, plus investment return, less
any administrative charges and prior withdrawals.
Certificate year - A period of 12 months, starting on the effective date of the
certificate and on each anniversary of the effective date.
Close of business - When the New York Stock Exchange (NYSE) closes, normally 4
p.m. Eastern time.
Code - Internal Revenue Code of 1986, as amended.
Fixed account - An account to which you may allocate purchase payments. Amounts
allocated to this account earn interest at rates that are declared periodically
by American Centurion Life.
Mutual funds (funds) - Mutual funds or portfolios, each with a different
investment objective. (See "The funds.") You may allocate your purchase payments
into variable subaccounts investing in shares of any or all of these funds.
Owner (you, your) - The person who controls the annuity (decides on investment
allocation, transfers, payout options, etc.).
Purchase payments - Payments made to American Centurion Life for an annuity.
<PAGE>
Qualified annuity - An annuity purchased for a retirement plan that is subject
to applicable federal law and any rules of the plan itself. These plans include:
o Individual Retirement Annuities (IRAs), including rollovers from qualified
plans
o Simplified Employee Pension (SEP) Plans
All other annuities we currently issue are considered nonqualified annuities.
Surrender value - The amount you are entitled to receive if you surrender your
annuity. It is the certificate value. No surrender charge will apply.
Valuation date - Any normal business day, Monday through Friday, that the NYSE
is open. The value of each variable subaccount is calculated at the close of
business on each valuation date.
Variable account - An account consisting of separate subaccounts to which you
may allocate purchase payments; each invests in shares of one mutual fund. (See
"The variable account.") The value of your investment in each variable
subaccount changes with the performance of the particular fund.
The Privileged Assets(R) Select Annuity in brief
Purpose: The Privileged Assets(R) Select Annuity is designed to allow you to
build up funds for retirement. You do this by making one or more investments
(purchase payments) that may earn returns that increase the value of the
annuity. Beginning at a specified future date (the annuity start date), the
annuity provides lifetime or other forms of annuity payouts to you or to anyone
you designate.
Accounts: You may allocate your purchase payments among any or all of:
o variable subaccounts, each of which invests in a mutual fund with a
particular investment objective. The value of each variable subaccount
varies with the performance of the particular fund. Therefore, the
certificate value at the annuity start date may be more or less than
the total of purchase payments allocated to the variable subaccounts.
(p.)
o a fixed account, which earns interest at rates that are declared
periodically by American Centurion Life. The guaranteed minimum
interest rate is 3%. (p.)
Buying the annuity: You can purchase an annuity by submitting a complete
application. Applications are subject to acceptance at our service office. You
may buy a nonqualified annuity or a qualified annuity. Payment may be made
either in a lump sum with the option of additional payments in the future or
installments:
o Minimum purchase payment - $2,000 ($1,000 for qualified certificates)
unless you pay in installments by means of a bank authorization or
under a group billing arrangement at a rate of $100/month or more or
other payment plan acceptable to us.
<PAGE>
o Minimum additional payment - $100.
o Maximum first-year payment(s) - $500,000 to $1,000,000 depending on
your age.
o Maximum payment for each subsequent year - $50,000. (p.)
Thirty-day free look: You may return your annuity for a full refund within 30
days after you receive it. The portion of your first purchase payment allocated
to the variable account must be invested initially in the IDS Life Moneyshare
subaccount for the period we estimate or calculate your free look right to be in
existence (generally 35 days after the annuity issue date.)
If you choose not to keep your annuity, return it to us within the free look
period. The annuity will be canceled and we will refund promptly the greater of
(1) your purchase payment without investment earnings, or (2) your certificate
value plus any amount deducted from your payment prior to allocation to the
variable account or the fixed account.
Transfers: Subject to certain restrictions you may re-allocate your money among
accounts without charge at any time until annuity payouts begin. You may
establish automated transfers among the fixed account and variable subaccount(s)
and you may request a transfer by telephone. (p.)
Surrenders: You may surrender all or part of your certificate value at any time
before the annuity start date. You also may establish systematic surrenders.
There is no surrender charge. Earnings on amounts you surrender may be taxable
(and include a 10% penalty if surrenders are made prior to your reaching age 59
1/2); and have other tax consequences; also, certain restrictions apply. (p.)
Changing ownership: You may change ownership of a nonqualified annuity by
written instruction. However, such changes of nonqualified annuities may have
federal income tax consequences. Certain restrictions apply concerning change of
ownership of a qualified annuity. (p.)
Benefits in case of death: If you or the annuitant dies before annuity payouts
begin, we will pay the beneficiary the greater of the certificate value or total
purchase payments made less partial surrenders. (p.)
Annuity payouts: The certificate value of your investment can be applied to an
annuity payout plan that begins on the annuity start date. You may choose from a
variety of plans to make sure that payouts continue as long as they are needed.
If you purchased a qualified annuity, the payout schedule must meet requirements
of the qualified plan. Payouts will be made on a fixed basis. (p.)
Taxes: Generally, your annuity grows tax-deferred until you surrender it or
begin to receive payouts. (Under certain circumstances, IRS penalty taxes may
apply.) Even if you direct payouts to someone else, you will still be taxed on
the income if you are the owner. (p.)
Charges: Your Privileged Assets Select Annuity is subject to a $30 annual
administrative charge and a 1% mortality and expense risk charge against the
variable subaccounts. (p.)
<PAGE>
Expense summary
The purpose of this summary is to help you understand the various costs and
expenses associated with the annuity.
Owner expenses
Surrender charge 0%
Annual contract administrative charge $30
(If the total purchase payments (less partial
surrenders) is at least $10,000, we will waive the
charge.)
Separate account annual expense 1%
(as a percentage of average net assets) Mortality
and expense risk fee
Operating expenses of underlying mutual funds: management fees and other
expenses deducted as a percentage of average net assets as follows:
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life
Growth Equity Resource Managed Income Moneyshare
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.60% 0.83% 0.60% 0.59% 0.60% 0.51%
Other expenses 0.07 0.11 0.07 0.05 0.07 0.06
Total* 0.67% 0.94% 0.67% 0.64% 0.67% 0.57%
</TABLE>
<TABLE>
<CAPTION>
INVESCO VIF Janus Aspen Warburg Pincus
Industrial Series World- Janus Aspen American Trust - Post-
Income wide Growth Series Growth Century VP American Venture
(After (After expense (After Capital Century VP Capital
expense reimbursement) expense Appreciation Value (After fee
reimbursement) reimbursement) limitation)
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.75% 0.66% 0.65% 1.00% 1.00% 1.07%
Other expenses 0.16 0.08 0.05 -- -- .33
Total 0.91%** 0.74%** 0.70%** 1.00% + 1.00% + 1.40% ++
</TABLE>
* Annualized operating expenses of the underlying mutual funds at Dec. 31, 1997.
**The figures given above are based on gross expenses before expense offset
arrangements, if any, during 1997, for these funds. As of the date of this
prospectus, certain fees are being waived or expenses are being assumed by the
respective investment managers or service providers for certain of the
underlying mutual funds, in each case on a voluntary basis. Without such waivers
or reimbursements the "Management fees", "Other expenses" and "Total" that would
have been incurred for the last completed fiscal year would be 0.75%, 0.22%, and
0.97% , respectively , for the INVESCO VIF-Industrial Income Portfolio; 0.72%,
0.09% and 0.81%, respectively, for Janus Aspen Series Worldwide Growth and
0.74%, .04% and 0.78% respectively for Janus Aspen Series Growth. See the
Portfolios' prospectuses for a discussion of fee waiver and expense
reimbursements.
<PAGE>
+Operating expenses of the underlying funds at Dec. 31, 1997.
++Absent the waiver of fees by the Portfolio's investment adviser and
co-administrator, Management Fees would equal 1.25%, Other Expenses would equal
.33%; and Total Portfolio Operating Expenses would equal 1.58%. Management Fees,
Other Expenses and Total Operating Expenses for the Portfolio is based on actual
expenses for the fiscal year ending Dec. 31, 1997 (net of any fee waivers or
expense reimbursements). The investment adviser has undertaken to limit the
Portfolio's Total Portfolio Operating Expenses to 1.40% through Dec. 31, 1998.
Example:* You would pay the following expenses on a $1,000 investment, assuming
5% annual return and surrender, no surrender or selection of an annuity payout
plan at the end of each time period:
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life
Growth Equity Resource Managed Income Moneyshare
<S> <C> <C> <C> <C> <C> <C>
1 year $18.31 $21.07 $18.31 $18.00 $18.31 $17.28
3 years 56.68 65.07 56.68 55.74 56.68 53.56
5 years 97.52 111.64 97.52 95.74 97.52 92.25
10 years 211.51 240.40 211.51 208.25 211.52 200.61
American
INVESCO VIF Janus Aspen Century VP American Warburg Pincus
Industrial Series World- Janus Aspen Capital Century VP Trust - Post-
Income wide Growth Series Growth Appreciation Value Venture
Capital
1 year $20.77 $19.02 $18.61 $21.69 $21.69 $25.79
3 years 64.14 58.86 57.61 66.93 66.93 79.26
5 years 110.08 101.20 99.10 114.76 114.76 135.34
10 years 237.23 219.07 214.76 246.71 246.71 287.88
</TABLE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
* In this example, the $30 annual administrative charge is approximated as a
.116% charge based on our estimated average annuity size. American Centurion
Life has entered into certain arrangements under which it is compensated by the
funds' advisors and/or distributors for the administrative services it provides
to the funds.
<PAGE>
Condensed Financial information (unaudited)
The following tables give per-unit information about the financial history of
each variable subaccount.
Condensed Financial Information (Unaudited)
The following table gives per-unit information about the financial history of
each variable subaccount.
Year Ended Dec. 31,
1997 1996
Subaccount DCR1 (Investing in shares of IDS Life Capital Resource Fund)
Accumulation unit $0.98 $1.00
value at beginning
of period
Accumulation unit value $1.20 $0.98
at end of period
Number of accumulation 23 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
Subaccount DIE1 ( Investing in shares of IDS Life International Equity Fund)
Accumulation unit $1.01 $1.00
value at beginning
of period
Accumulation unit value $1.03 $1.01
at end of period
Number of accumulation 14 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
Subaccount DAG1 (Investing in shares of IDS Life Aggressive Growth Fund)
Accumulation unit $1.00 $1.00
value at beginning
of period
Accumulation unit value $1.11 $1.00
at end of period
Number of accumulation 42 --
units outstanding at end
of period (000 omitted)
Ration of operating 1.00% --
expense to average
net assets
Subaccount DSI1 (Investing in shares of IDS Life Special Income Fund)
Accumulation unit $0.99 $1.00
value at beginning
of period
Accumulation unit value $1.06 $0.99
at end of period
Number of accumulation 15 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
Subaccount DMS1 (Investing in shares of IDS Life Money Share Fund)
Accumulation unit $1.00 $1.00
value at beginning
of period
Accumulation unit value $1.04 $1.00
at end of period
Number of accumulation 189 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
Subaccount DMG1 (Investing in shares of IDS Life Managed Fund)
Accumulation unit $0.99 $1.00
value at beginning
of period
Accumulation unit value $1.17 $0.99
at end of period
Number of accumulation 44 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
<PAGE>
Subaccount DII2 (Investing in shares of INVESCO VIF Industrial Income Portfolio)
Accumulation unit $1.00 $1.00
value at beginning
of period
Accumulation unit value $1.26 $1.00
at end of period
Number of accumulation 155 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
Subaccount DWG2 (Investing in shares of
Janus Aspen Series Worldwide Growth Portfolio)
Accumulation unit $1.01 $1.00
value at beginning
of period
Accumulation unit value $1.22 $1.01
at end of period
Number of accumulation 252 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
Subaccount DSG2 (Investing in shares of Janus Aspen Series Growth Portfolio)
Accumulation unit $1.00 $1.00
value at beginning
of period
Accumulation unit value $1.21 $1.00
at end of period
Number of accumulation 230 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
Subaccount DGR2 (Investing in shares of
American Century VP Capital Appreciation)
Accumulation unit $0.97 $1.00
value at beginning
of period
Accumulation unit value $0.93 $0.97
at end of period
Number of accumulation 42 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
Subaccount DVL2 (Investing in shares of American Century VP Value)
Accumulation unit $1.01 $1.00
value at beginning
of period
Accumulation unit value $1.27 $1.01
at end of period
Number of accumulation 33 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
Subaccount DVC2 (Investing in shares of
Warbug Pincus Trust-Post Venture Capital Portfolio)
Accumulation unit $0.98 $1.00
value at beginning
of period
Accumulation unit value $1.10 $0.98
at end of period
Number of accumulation 65 --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% --
expense to average
net assets
1 For the period Dec. 9, 1996 (commencement of operations) to Dec. 31, 1996.
The subaccounts had no activity in this period.
2 For the period Dec. 10, 1996 (commencement of operations) to Dec. 31, 1996.
The subaccounts had no activity in this period.
<PAGE>
Financial statements
The SAI dated May 1, 1998, contains:
audited financial statements of the variable account including:
- statements of net assets as of Dec. 31, 1997;
- statements of operations for the year ended Dec. 31, 1997; except for
subaccounts DGR and DWG which are for the period Jan. 29, 1997
(commencement of operations) to Dec. 31, 1997 and subaccounts DSG, DVL
and DVC, which are for the period Sept. 3, 1997 (commencement of
operations) to Dec. 31, 1997;
- statements of changes in net assets for the year ended Dec. 31, 1997;
except for subaccounts DGR and DWG which are for the period Jan. 29,
1997 (commencement of operations) to Dec. 31, 1997 and subaccounts DSG,
DVL and DVC which are for the period Sept. 3, 1997 (commencement of
operations) to Dec. 31, 1997.
audited financial statements of American Centurion Life including:
- balance sheets as of Dec. 31, 1997 and Dec. 31, 1996
- related statements of income, stockholder's equity and cash flows for
the years ended Dec. 31, 1997, 1996, and 1995.
Performance information
Performance information for the variable subaccounts may appear from time to
time in advertisements or sales literature. In all cases, such information
reflects the performance of a hypothetical investment in a particular account
during a particular time period. Calculations are performed as follows:
Simple yield - IDS Life Moneyshare Subaccount: Income over a given seven-day
period (not counting any change in the capital value of the investment) is
annualized (multiplied by 52) by assuming that the same income is received for
52 weeks. This annual income is then stated as an annual percentage return on
the investment.
Compound yield - IDS Life Moneyshare Subaccount: Calculated like simple yield,
except that, when annualized, the income is assumed to be reinvested.
Compounding of reinvested returns increases the yield as compared to a simple
yield.
Yield - For accounts investing in income funds: Net investment income (income
less expenses) per accumulation unit during a given 30-day period is divided by
the value of the unit on the last day of the period. The result is converted to
an annual percentage.
Average annual total return: Expressed as an average annual compounded rate of
return of a hypothetical investment over a period of one, five and ten years (or
up to the life of the subaccount if it is less than ten years old). This figure
reflects deduction of all applicable charges, including the administrative
charge and mortality and expense risk fee.
Aggregate total return: Represents the cumulative change in the value of an
investment for a specified period of time (reflecting change in a subaccount's
accumulation unit value). The calculation assumes reinvestment of investment
earnings and reflects the deduction of all applicable charges, including the
administrative charge and mortality and expense risk fee. Aggregate total return
may be shown by means of schedules, charts or graphs.
<PAGE>
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the fund in which the
subaccount invests and the market conditions during the given time period. Such
information is not intended to indicate future performance. Because advertised
yields and total return figures include all charges attributable to the annuity,
which has the effect of decreasing advertised performance, subaccount
performance should not be compared to that of mutual funds that sell their
shares directly to the public. (See the SAI for a further description of methods
used to determine yield and total return for the subaccounts.)
If you would like additional information about actual performance, contact
American Centurion Life at telephone number on cover page.
The variable account
Purchase payments can be allocated to any or all of the subaccounts of the
variable account that invest in shares of the following funds:
IDS Life Aggressive Growth Fund DAG
IDS Life International Equity Fund DIE
IDS Life Capital Resource Fund DCR
IDS Life Managed Fund DMG
IDS Life Special Income Fund DSI
IDS Life Moneyshare Fund DMS
INVESCO VIF - Industrial Income Portfolio DII
Janus Aspen Series Worldwide Growth Portfolio DWG
Janus Aspen Series Growth Portfolio DSG
American Century VP Capital Appreciation DGR
American Century VP Value DVL
Warburg Pincus Trust-Post-Venture Capital Portfolio DVC
The variable account meets the definition of a separate account under federal
securities laws. Income, capital gains and capital losses of each subaccount are
credited or charged to that account alone. No subaccount will be charged with
liabilities of any other variable account or of our general business. The
obligations arising under the annuities are general obligations of American
Centurion Life.
The variable account was established under New York law and is registered as a
unit investment trust under the Investment Company Act of 1940 (the 1940 Act).
This registration does not involve any supervision of our management or
investment practices and policies by the SEC.
The funds
IDS Life Aggressive Growth Fund
Objective: capital appreciation. Invests primarily in common stock of small-
and medium-size companies.
IDS Life International Equity Fund
Objective: capital appreciation. Invests primarily in common stock of foreign
issuers and foreign securities convertible into common stock.
<PAGE>
IDS Life Capital Resource Fund
Objective: capital appreciation. Invests primarily in U.S. common stocks and
other securities convertible into common stock, diversified over many different
companies in a variety of industries.
IDS Life Managed Fund
Objective: maximum total investment return. Invests primarily in U.S. common
stocks, securities convertible into common stock, warrants, fixed income
securities (primarily high-quality corporate bonds) and money market
instruments.
IDS Life Special Income Fund
Objective: to provide a high level of current income while conserving the value
of the investment for the longest time period. Invests primarily in
high-quality, lower-risk corporate bonds issued by many different companies in a
variety of industries, and in government bonds.
IDS Life Moneyshare Fund
Objective: maximum current income consistent with liquidity and conservation of
capital. Invests in high-quality money market securities with remaining
maturities of 13 months or less. The fund also will maintain a dollar-weighted
average portfolio maturity not exceeding 90 days. The fund attempts to maintain
a constant net asset value of $1 per share.
INVESCO VIF - Industrial Income Portfolio
Objective: to seek the best possible current income while following sound
investment practices with capital growth potential as an additional
consideration. The Fund normally invests at least 65% of the total assets in
dividend-paying common stocks. Up to 10% of the Fund's total assets may be
invested in equity securities that do not pay regular dividends. The remainder
assets are invested in other income-producing securities, such as corporate
bonds and other straight debt securities.
Janus Aspen Series Worldwide Growth Portfolio
Objective: long-term growth of capital in a manner consistent with the
preservation of capital. Invests primarily in common stocks of foreign and
domestic issuers.
Janus Aspen Series Growth Portfolio
Objective: long-term growth of capital in a manner consistent with the
preservation of capital. Invests primarily in common stocks, with an emphasis on
companies with larger market capitalizations.
American Century VP Capital Appreciation
Objective: capital growth. Invests primarily in common stocks that are
considered by management to have better-than-average prospects for appreciation.
American Century VP Value
Objective: long-term capital growth, with income as a secondary objective.
Invests primarily in securities that management believes to be undervalued at
the time of purchase.
Warburg Pincus Trust-Post-Venture Capital Portfolio
Objective: long-term growth of capital. Invests primarily in equity securities
of issuers in their post-venture capital stage of development.
<PAGE>
More comprehensive information regarding each fund is contained in the funds'
prospectuses. You should read the fund prospectuses and consider carefully, and
on a continuing basis, which fund or combination of funds is best suited to your
long-term investment needs. There is no assurance that the investment objectives
of the funds will be attained nor is there any guarantee that the certificate
value will equal or exceed the total purchase payments made. Some funds may
involve more risk than others -- please monitor your investments accordingly.
All funds are available to serve as the underlying investment for variable
annuities, and some funds are available to serve as the underlying investment
for variable annuities and variable life insurance contracts and qualified
plans. It is conceivable that in the future it may be disadvantageous for
variable annuity separate accounts, variable life insurance separate accounts
and/or qualified plans to invest in the available funds simultaneously. Although
American Centurion Life and the funds do not currently foresee any such
disadvantages, the boards of directors or trustees of the appropriate funds will
monitor events in order to identify any material conflicts between such
certificate owners and policy owners and qualified plans to determine what
action, if any, should be taken in response to a conflict. If a board were to
conclude that separate funds should be established for variable life insurance,
variable annuity and qualified separate accounts, the variable annuity
certificate holders would not bear any expenses associated with establishing
separate funds. Please refer to the fund prospectuses for risk disclosure
regarding mixed and shared funding.
The Internal Revenue Service (IRS) has issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each mutual fund
intends to comply with these requirements.
The U.S. Treasury and the IRS have indicated that they may provide additional
guidance concerning how many variable subaccounts may be offered and how many
exchanges among variable subaccounts may be allowed before the owner is
considered to have investment control, and thus is currently taxed on income
earned within variable subaccount assets. We do not know at this time what the
additional guidance will be or when action will be taken. We reserve the right
to modify the annuity, as necessary, to ensure that the owner will not be
subject to current taxation as the owner of the variable subaccount assets.
We intend to comply with all federal tax laws to ensure that the annuity
continues to qualify as an annuity for federal income tax purposes. To the
extent permitted under applicable law, we reserve the right to modify the
contract as necessary to comply with any new tax laws.
IDS Life is the investment manager and American Express Financial Corporation
(AEFC) is the investment advisor for each of the IDS Life Funds. American
Express Asset Management International Inc., a wholly-owned subsidiary of AEFC,
is the sub-investment advisor for IDS Life International Equity Fund. INVESCO
Funds Group, Inc. is the investment advisor for the INVESCO VIF - Industrial
Income Portfolio. Janus Capital Corporation is the investment manager for Janus
Aspen Series Worldwide Growth Portfolio and Janus Aspen Series Growth Portfolio.
American Century Investment Management, Inc. serves as the investment manager of
American Century Variable Portfolios, Inc. Warburg Asset Management, Inc. is the
investment adviser of Warburg Pincus Trust-Post-Venture Capital Portfolio.
<PAGE>
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the prospectuses for the funds for
complete information on investment risks, deductions, expenses and other facts
you should know before investing. They are available by contacting American
Centurion Life at the address or telephone number on the front of this
prospectus.
The fixed account
Purchase payments also may be allocated to the fixed account. The cash value of
the fixed account increases as interest is credited to the account. Purchase
payments and transfers to the fixed account become part of the general account
of American Centurion Life, the company's main portfolio of investments.
Interest is credited daily and compounded annually. We guarantee a minimum
interest rate of 3%. We may declare interest rates above the guaranteed rate
from time to time.
Because of exemptive and exclusionary provisions, interests in the fixed account
have not been registered under the Securities Act of 1933 (1933 Act), nor is the
fixed account registered as an investment company under the 1940 Act.
Accordingly, neither the fixed account nor any interests in it are generally
subject to the provisions of the 1933 or 1940 Acts, and we have been advised
that the staff of the SEC has not reviewed the disclosures in this prospectus
that relate to the fixed account. Disclosures regarding the fixed account,
however, may be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses.
Buying the annuity
Our representative can help you prepare and submit your application.
Alternatively, you may ask us for the forms and prepare them yourself. As an
owner, you have all rights and may receive all benefits under the annuity. The
annuity can be owned in joint tenancy only in spousal situations (but not IRAs
or SEPs). Please remember that investment performance, expenses and deductions
of certain charges affect accumulation unit value.
When you apply, you can select:
o the account(s) in which you want to invest;
o how you want to make purchase payments;
o the date you want to start receiving annuity payouts (the annuity start
date); and
o a beneficiary.
If your application is complete, we will process it and apply your purchase
payment to your account(s) within two business days after we receive it at our
service office. If your application is accepted, we will send you an annuity. If
we cannot accept your application within five business days, we will decline it
and return your payment. We will credit additional purchase payments you make to
an existing annuity to your account(s) at the next close of business after we
receive your payments at our service office.
Setting the annuity start date
Annuity payouts will be scheduled to begin on the annuity start date. This date
can be aligned with your actual retirement from a job, or it can be a different
future date,
<PAGE>
depending on your needs and goals and on certain restrictions. You can also
change the date, provided you send us written instructions at least 30 days
before annuity payouts begin.
For nonqualified annuities, the annuity start date must be:
o no earlier than the 60th day after the annuity's effective date; and o no
later than the annuitant's 85th birthday.
For qualified annuities, to avoid IRS penalty taxes, the annuity start date
generally must be:
o on or after the date the annuitant reaches age 59 1/2; and
o for qualified annuities, by April 1 of the year following the calendar
year when the annuitant reaches age 70 1/2 or, if later, retires;
except that 5% business owners may not select a retirement date that is
later than April 1 of the year following the calendar year when they
reach age 70 1/2.
If you are taking the minimum IRA distributions as required by the Code from
another tax-qualified investment, or in the form of partial surrenders from this
annuity, annuity payouts can start as late as, but not later than, the
annuitant's 85th birthday.
Beneficiary
If death benefits become payable before the annuity start date, your named
beneficiary will receive all or part of the certificate value. If there is no
named beneficiary, then you or your estate will be the beneficiary. (See
"Benefits in case of death" for more about beneficiaries.)
Minimum purchase payments
If single payment:
Nonqualified: $2,000
Qualified: $1,000
If installment payments:
$100 monthly; $50.00 biweekly
Installments must total at least $1,000 in the first year.*
*If you make no purchase payments for the most recent 36 months, and your
previous payments total $1,000 or less, we have the right to give you 30 days'
written notice and pay you the total value of your annuity in a lump sum.
Minimum additional purchase payment(s): $100
<PAGE>
Maximum first-year payment(s):
This maximum is based on your age or age of the annuitant (whomever is older) on
the effective date of the annuity.
Up to age 75 $1 million
76 to 85 $500,000
Maximum payment for each subsequent year: $50,000**
**These limits apply in total to all American Centurion Life annuities you own.
We reserve the right to increase maximum limits or reduce age limits. For
qualified annuities the qualified plan's or the Code's limits on annual
contributions also apply.
Three ways to make purchase payments
1 By letter
Send your check along with your name and account number to:
Regular mail:
American Centurion Life Assurance Company
Box 5144
Albany, NY 12205
Express mail:
American Centurion Life Assurance Company
20 Madison Avenue Ext.
Albany, NY 12203
2 By scheduled payment plan
Through:
o a bank authorization.
3 Other
o wire transfer; or
o other method acceptable to us.
Charges
Administrative charge
This charge is for establishing and maintaining your records. On each annuity
anniversary we will deduct $30 from the certificate value. The deduction will be
allocated among the subaccounts on a pro-rata basis.
<PAGE>
This charge will be waived for any certificate year where the total purchase
payments (less partial surrenders) on the current annuity anniversary is $10,000
or more, or if, during the certificate year, a death benefit is payable or the
annuity is surrendered in full. This charge does not apply after annuity payouts
begin.
We do not expect to profit from the administrative charge. We reserve the right
to impose the charge on all annuities, including those with purchase payments
equal to or greater than $10,000.
Mortality and expense risk fee
This fee is to cover the mortality risk and expense risk and is applied daily to
the variable subaccounts and reflected in the unit values of the accounts.
Annually it totals 1% of their average daily net assets. Approximately
two-thirds of this amount is for our assumption of mortality risk, and one-third
is for our assumption of expense risk. This fee does not apply to the fixed
account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract and
certificates, no matter how long a specific annuitant lives and no matter how
long the entire group of American Centurion Life annuitants live. If, as a
group, American Centurion Life annuitants outlive the life expectancy we have
assumed in our actuarial tables, then we must take money from our general assets
to meet our obligations. If, as a group, American Centurion Life annuitants do
not live as long as expected, we could profit from the mortality risk fee.
Expense risk arises because the administrative charge may not cover our
expenses. Any deficit would have to be made up from our general assets. We could
profit from the expense risk fee if the annual administrative charge is more
than sufficient to meet expenses.
We may use any profits realized from the mortality and expense risk fee for any
proper corporate purpose, including, among others, payment of distribution
(selling) expenses.
Other information on charges
There is no surrender charge if you take a total or a partial surrender from
your annuity.
In some cases lower sales and administrative expenses may be incurred. In such
cases, we may be able to reduce or eliminate the administrative charge. However,
we expect this to occur infrequently.
Valuing your investment
Here is how your accounts are valued:
Fixed account: The amounts allocated to the fixed account are valued directly in
dollars and equal the sum of your purchase payments plus interest earned, less
any amounts surrendered or transferred.
<PAGE>
Variable subaccounts: Amounts allocated to the variable subaccounts are
converted into accumulation units. Each time you make a purchase payment or
transfer amounts into one of the variable subaccounts, a certain number of
accumulation units are credited to your annuity for that account. Conversely,
each time you take a partial surrender, transfer amounts out of a variable
subaccount or are assessed an administrative charge, a certain number of
accumulation units are subtracted from your annuity.
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the underlying fund.
The dollar value of each accumulation unit can rise or fall daily depending on
the performance of the underlying mutual fund and on certain fund expenses. Here
is how unit values are calculated:
Number of units
To calculate the number of accumulation units for a particular subaccount, we
divide your investment by the current accumulation unit value.
Accumulation unit value
The current accumulation unit value for each variable subaccount equals the last
value times the subaccount's current net investment factor.
Net investment factor
o Determined by adding the underlying mutual fund's current net asset
value per share plus per-share amount of any current dividend or
capital gain distribution; then
o dividing that sum by the previous net asset value per share; and
o subtracting the percentage factor representing the mortality and
expense risk fee from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the
accumulation unit value may increase or decrease. You bear this investment risk
in a variable subaccount.
Factors that affect variable subaccount accumulation units
Accumulation units may change in two ways; in number and in value. Here are the
factors that influence those changes:
The number of accumulation units you own may fluctuate due to:
o additional purchase payments allocated to the variable subaccounts;
o transfers into or out of the variable subaccount(s);
o partial surrenders; and/or
o administrative charges.
<PAGE>
Accumulation unit values will fluctuate due to:
o changes in underlying mutual fund(s) net asset value;
o dividends distributed to the variable subaccount(s);
o capital gains or losses of underlying mutual funds; o mutual fund operating
expenses; and/or o mortality and expense risk fees.
Making the most of your annuity
Automated dollar-cost averaging
You can use automated transfers to take advantage of dollar-cost averaging
(investing a fixed amount at regular intervals). For example, you might have a
set amount transferred monthly from a relatively conservative variable
subaccount to a more aggressive one, or to several others, or from the fixed
account to one or more variable accounts. There is no charge for dollar-cost
averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market value(s) of the underlying
mutual fund(s). Since you invest the same amount each period, you automatically
acquire more units when the market value falls, fewer units when it rises. The
potential effect is to lower your average cost per unit. Contact our service
office for more information.
<TABLE>
<CAPTION>
How dollar-cost averaging works
<S> <C> <C> <C> <C>
Month Amount Accumulation Number of units
invested unit value purchased
By investing an Jan $100 $20 5.00
equal number of
dollars each month... Feb 100 16 6.25
March 100 9 11.11
you automatically April 100 5 20.00
buy more units
when the per unit May 100 7 14.29
market price is
low...
June 100 10 10.00
July 100 15 6.67
Aug 100 20 5.00
and fewer units Sept 100 17 5.88
when the per unit
market price is high Oct 100 12 8.33
</TABLE>
You have paid an average price of only $10.81 per unit over the 10 months, while
the average market price actually was $13.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value,
nor will it protect against a decline in value if market prices fall. Because
this strategy involves continuous investing, your success with dollar cost
averaging will depend upon your willingness to continue to invest regularly
through periods of low price levels. Dollar cost averaging can be an effective
way to help meet your long-term goals.
<PAGE>
Transferring money between accounts
You may transfer money from any one subaccount or the fixed account to another
at any time before annuity payouts begin. We will process your transfer request
at the next close of business after we receive it. Before making a transfer, you
should consider the risks involved in switching investments.
We may suspend or modify transfer privileges at any time.
Transfer policies
o You may transfer certificate values at any time between the variable
subaccounts, from the variable subaccount(s) to the fixed account or
from the fixed account to the variable subaccount(s).
o The amount being transferred to any one account must be at least $100.
o If you make more than 12 transfers in a certificate year, we will
charge $25 for each transfer in excess of 12.
o Excessive trading activity can disrupt mutual fund management strategy
and increase expenses, which are borne by all annuity owners
participating in the mutual fund regardless of their transfer activity.
Therefore, we reserve the right to limit the number of transfers
permitted, but not to fewer than twelve per certificate year.
Two ways to request a transfer or a surrender
1 By letter
Send your name, contract number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or surrender to:
Regular mail:
American Centurion Life Assurance Company
Box 5144
Albany, NY 12205
Express mail:
American Centurion Life Assurance Company
20 Madison Avenue Ext.
Albany, NY 12203
Minimum amount
Mail transfers: $100 or entire account balance
Mail surrenders: $100 or entire account balance
Maximum amount
Mail transfers: None (up to certificate value)
Mail surrenders: None (up to certificate value)
<PAGE>
2 By automated transfers and automated partial surrenders
o You can set up automated transfers among your accounts or partial surrenders
from the accounts.
You can start or stop this service by written request or other method acceptable
to American Centurion Life. You must allow 30 days for American Centurion Life
to change any instructions that are currently in place.
o Automated transfers and automated partial surrenders are subject to all
of the annuity provisions and terms, including transfer of certificate
values between accounts. Automated surrenders may be restricted by
applicable law under some annuities.
o Automated partial surrenders may result in IRS taxes and penalties on
all or part of the amount surrendered.
Minimum amount
Automated transfers or surrenders: $100
Maximum amount
Automated transfers or surrenders: None
Surrendering your annuity
As owner, you may surrender all or part of your annuity at any time before
annuity payouts begin by sending a written request to American Centurion Life.
For total surrenders we will compute the certificate value at the next close of
business after we receive your request. We may ask you to return the annuity.
You may have to pay IRS taxes and penalties. (See "Taxes.") No surrenders may be
made after annuity payouts begin.
Surrender policies
If you have a balance in more than one account and request a partial surrender,
we will surrender money from all your accounts in the same proportion as your
value in each account correlates to your total certificate value, unless you
request otherwise.
Receiving payment when you request a surrender
By regular or express mail:
o Payable to owner.
o Normally mailed to address of record within seven days after receiving
your request. However, we may postpone the payment if: -the surrender
amount includes a purchase payment check that has not cleared; -the
NYSE is closed, except for normal holiday and weekend closings;
<PAGE>
-trading on the NYSE is restricted, according to SEC rules;
-an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
-the SEC permits us to delay payment for the protection of security
holders.
NOTE: You will be charged a fee if you request express mail delivery.
Changing ownership
You may change ownership of your non-qualified annuity at any time by filing a
change of ownership with us at our service office. The change will become
binding upon us when we receive and record it. We will honor any change of
ownership request believed to be authentic and will use reasonable procedures to
confirm that it is. If these procedures are followed, we take no responsibility
for the validity of the change.
If you have a nonqualified annuity, you may lose your tax advantages by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your annuity as collateral for a loan, or as security for the performance
of an obligation or for any other purpose to any person except American
Centurion Life. However, if the owner is a trust or custodian, or an employer
acting in a similar capacity, ownership of an annuity may be transferred to the
annuitant.
Benefits in case of death
If you or the annuitant dies (or, for qualified annuities, if the annuitant
dies) before annuity payouts begin, we will pay the beneficiary the greater of:
o the annuity value; or
o purchase payments, minus any partial surrenders.
If your spouse is sole beneficiary under a non-qualified annuity and you die
before the annuity start date, your spouse may keep the annuity as owner. To do
this your spouse must, within 60 days after we receive proof of death, give us
written instructions to keep the annuity in force.
Under a qualified annuity if the annuitant dies before annuity payouts begin,
and the spouse is the only beneficiary, the spouse may keep the annuity in force
as owner until the date on which the spouse reaches age 70 1/2 or until the date
on which the annuitant would have reached age 70 1/2 or any other date permitted
by the Code. To do this, the spouse must give us written instructions within 60
days after we receive proof of death.
Payouts: We will pay the beneficiary in a single sum unless you have given us
other written instructions, or the beneficiary may receive payouts under any
annuity payout plan available under this annuity if:
o the beneficiary asks us in writing within 60 days after we receive proof of
death;
<PAGE>
o payouts begin no later than one year after death or other date as permitted by
the Code; and o the payout period does not extend beyond the beneficiary's life
or life expectancy.
When paying the beneficiary, we will determine the certificate's value at the
next close of business after our death claim requirements are fulfilled.
Interest, if any, will be paid from the date of death at a rate no less than
required by law. We will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled. (See "Taxes.")
The annuity payout period
As owner, you have the right to decide how and to whom annuity payouts will be
made starting at the annuity start date. You may select one of the annuity
payout plans outlined below, or we will mutually agree on other payout
arrangements. The amount available for payouts under the plan you select is the
certificate value on your annuity start date. Annuity payouts will be made on a
fixed basis.
Amounts of payouts depend on:
o the annuity payout plan you select;
o the annuitant's age and, in most cases, sex; and
o the annuity table in the annuity.
Annuity payout plans
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before certificate values are to be used to
purchase the payout plan:
o Plan A - Life annuity - no refund: Monthly payouts are made until the
annuitant's death. Payouts end with the last payout before the annuitant's
death; no further payouts will be made. This means that if the annuitant dies
after only one monthly payout has been made, no more payouts will be made.
o Plan B - Life annuity with five, 10 or 15 years certain: Monthly payouts are
made for a guaranteed payout period of five, 10 or 15 years that the annuitant
elects. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period has expired.
The guaranteed payout period is calculated from the annuity start date. If the
annuitant outlives the elected guaranteed payout period, payouts will continue
until the annuitant's death.
o Plan C - Life annuity - installment refund: Monthly payouts are made until the
annuitant's death, with our guarantee that payouts will continue for some period
of time. Payouts will be made for at least the number of months determined by
dividing the amount applied under this option by the first monthly payout,
whether or not the annuitant is living.
o Plan D - Joint and last survivor life annuity - no refund: Monthly payouts are
made while both the annuitant and a joint annuitant are living. If either
annuitant dies, monthly payouts continue at the full amount until the death of
the surviving annuitant. Payouts end with the death of the second annuitant.
<PAGE>
o Plan E - Payouts for a specified period: Monthly payouts are made for a
specific payout period of 10 to 30 years that you elect. Payouts will be made
only for the number of years specified whether the annuitant is living or not.
Depending on the time period selected, it is foreseeable that an annuitant can
outlive the payout period selected. In addition, a 10% IRS penalty tax could
apply under this payout plan. (See "Taxes.")
Restrictions for some qualified plans: If you purchased a qualified annuity, you
must select a payout plan that provides for payouts:
o over the life of the annuitant;
o over the joint lives of the annuitant and a designated beneficiary;
o for a period not exceeding the life expectancy of the annuitant; or
o for a period not exceeding the joint life expectancies of the annuitant
and a designated beneficiary.
If we do not receive instructions: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's annuity start date. If
you do not, we will make payouts under Plan B, with 120 monthly payouts
guaranteed.
If monthly payouts would be less than $20: We will calculate the amount of
monthly payouts at the time the certificate value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the certificate value to you in a lump sum.
Death after annuity payouts begin
If you or the annuitant dies after annuity payouts begin, any amount payable to
the beneficiary will be provided in the annuity payout plan in effect.
Taxes
Generally, under current law, any increase in your certificate value is taxable
to you only when you receive a payout or surrender. (However, see detailed
discussion below.) Any portion of the annuity payouts and any surrenders you
request that represent ordinary income are normally taxable. You will receive a
1099 tax information form for any year in which a taxable distribution was made
according to our records.
Annuity payouts under nonqualified annuities: A portion of each payout will be
ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment and will not be taxed. All
amounts received after your investment in the annuity is fully recovered will be
subject to tax.
Tax law requires that all nonqualified deferred annuities issued by the same
company to the same owner during a calendar year are to be taxed as a single,
unified annuity when distributions are taken from any one of such annuities.
Annuity payouts under qualified annuities: Under a qualified annuity, the entire
payout generally will be includable as ordinary income and subject to tax except
to the extent that contributions were made with after-tax dollars. If you
invested in your annuity with pre-tax dollars as part of a qualified retirement
plan, such amounts are not considered to be part of your investment in the
annuity and will be taxed when paid to you.
<PAGE>
Surrenders: If you surrender part or all of your annuity before your annuity
payouts begin, your surrender payment will be taxed to the extent that the value
of your annuity immediately before the surrender exceeds your investment. You
also may have to pay a 10% IRS penalty for surrenders before reaching age 59
1/2. For qualified annuities, other penalties may apply if you surrender your
annuity before your plan specifies that you can receive payouts.
Death benefits to beneficiaries: The death benefit under an annuity is not
tax-exempt. Any amount received by the beneficiary that represents previously
deferred income earnings within the annuity is taxable as ordinary income to the
beneficiary in the year(s) he or she receives the payments.
Annuities owned by corporations, partnerships or trusts: For nonqualified
annuities, any annual increase in the value of annuities held by such entities
generally will be treated as ordinary income received during that year. This
provision is effective for purchase payments made after Feb. 28, 1986. However,
if the trust was set up for the benefit of a natural person only, the increase
in value will be tax-deferred.
Penalties: If you receive amounts from your annuity before reaching age 59 1/2,
you may have to pay a 10% IRS penalty on the amount includable in your ordinary
income. However, this penalty will not apply to any amount received by you or
your beneficiary:
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially equal periodic
payments after separation from service, made at least annually, over
your life or life expectancy (or joint lives or life expectancies of
you and your beneficiary); or
o if it is allocable to an investment before Aug. 14, 1982 (except for
qualified annuities).
For a qualified annuity, other penalties or exceptions may apply if you
surrender your annuity before your plan specifies that payouts can be made.
Withholding, generally: If you receive all or part of the certificate value from
an annuity, withholding may be imposed against the taxable income portion of the
payment. Any withholding that is done represents a prepayment of your tax due
for the year. You take credit for such amounts on the annual tax return that you
file.
If the payment is part of an annuity payout plan, the amount of withholding
generally is computed using payroll tables. You can provide us with a statement
of how many exemptions to use in calculating the withholding. As long as you've
provided us with a valid Social Security Number or Taxpayer Identification
Number, you can elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial or total
surrender) withholding is computed using 10% of the taxable portion. Similar to
above, as long as you've provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
Some states also impose withholding requirements similar to the federal
withholding described above. If this should be the case, any payment from which
federal withholding is deducted may also have state withholding deducted.
<PAGE>
The withholding requirements may differ if payment is being made to a non-U.S.
citizen or if the payment is being delivered outside the United States.
Transfer of ownership of a nonqualified annuity: If you make such a transfer
without receiving adequate consideration, the transfer is considered a gift, and
also may be considered a surrender for federal income tax purposes. If the gift
is a currently taxable event for income tax purposes, the amount of deferred
earnings at the time of the transfer will be taxed to the original owner, who
also may be subject to a 10% IRS penalty as discussed earlier. In this case, the
new owner's investment in the annuity will be the certificate value of at the
time of the transfer.
Collateral assignment of a nonqualified certificate: If you collaterally assign
or pledge your annuity, earnings on purchase payments you made after Aug. 13,
1982 will be taxed to you like a surrender.
Important: Our discussion of federal tax laws is based upon our understanding of
these laws as they are currently interpreted. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax adviser if you have any questions about taxation of your annuity.
Tax Qualification
This annuity is intended to qualify for federal income tax purposes as an
annuity. To the extent permitted by applicable law, we will administer the
provisions to be consistent with such qualification. We reserve the right to
amend the annuity to reflect any clarifications that may be needed or are
appropriate to maintain such qualification or to conform the annuity to any
applicable changes in the tax qualification requirements. We will obtain any
necessary regulatory approvals and send you a copy of any such amendments.
Voting rights
As an owner with investments in the variable account(s), you may vote on
important mutual fund policies. We will vote fund shares according to your
instructions.
The number of votes you have is determined by applying your percentage interest
in each variable subaccount to the total number of votes allowed to the
subaccount.
We calculate votes separately for each subaccount not more than 60 days before a
shareholders' meeting. Notice of these meetings, proxy materials and a statement
of the number of votes to which the voter is entitled, will be sent.
We will vote shares for which we have not received instructions in the same
proportion as the votes for which we have received instructions. We also will
vote the shares for which we have voting rights in the same proportion as the
votes for which we have received instructions.
<PAGE>
Substitution of investments
If shares of any fund should not be available for purchase by the appropriate
variable subaccount or if, in the judgment of American Centurion Life's
Management, further investment in such shares is no longer appropriate, another
registered open-end management investment company may be substituted for fund
shares held in the subaccounts when American Centurion Life believes it would be
in the best interest of persons having voting rights under the annuity.
American Centurion Life also reserves the right to change the funds in which the
subaccounts invest and to create new subaccounts that invest in additional
funds. In the event of any such substitution or change, American Centurion Life,
without the consent or approval of the owners, may amend the annuity and take
whatever action is necessary and appropriate. However, no such substitution or
change will be made without the necessary approval of the SEC and state
insurance departments. American Centurion Life will notify owners of any
substitution or change.
Distribution of the Annuities
The annuities will be distributed by American Express Service Corporation, the
principal underwriter for the variable account.
About American Centurion Life
The Privileged Assets Select Annuity is issued by American Centurion Life.
American Centurion Life is a wholly-owned subsidiary of IDS Life Insurance
Company, which is a wholly-owned subsidiary of AEFC. AEFC is a wholly-owned
subsidiary of the American Express Company. American Express Company is a
financial services company principally engaged through subsidiaries (in addition
to AEFC) in travel related services, investment services and international
banking services.
American Centurion Life is a stock life insurance company organized in 1969
under the laws of the State of New York. Its service office is located at 20
Madison Avenue Ext., Albany, NY 12203. American Centurion Life is licensed in
the state of New York where it conducts a conventional life insurance business.
American Express Service Corporation is the principal underwriter for the
variable account. Its service office is located at 80 South 8th Street,
Minneapolis, MN 55440-0010. American Express Service Corporation is registered
with the SEC under the Securities Exchange Act of 1934 as a broker-dealer and is
a member of the National Association of Securities Dealers, Inc. American
Express Service Corporation is a wholly-owned subsidiary of American Express
Travel Related Services Company which is a wholly-owned subsidiary of American
Express Company.
The AEFC family of companies also offers mutual funds, investment certificates
and a broad range of financial management services.
Other subsidiaries provide investment management and related services for
pension, profit-sharing, employee savings and endowment funds of businesses and
institutions.
<PAGE>
Year 2000
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Separate Account.
The Separate Account has no computer systems of its own but is dependent upon
the systems maintained by AEFC and certain other third parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification of existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999. The year 2000 readiness of
unaffiliated investment managers and other third parties whose system failures
could have an impact on the Separate Account's operation currently is being
evaluated. The potential materiality of any such impact is not known at this
time.
Regular and special reports
Services
To help you track and evaluate the performance of your annuity, American
Centurion Life provides:
Quarterly statements showing the value of your investment.
Annual reports containing required information on the certificate and its
underlying investments.
<PAGE>
Table of contents of the Statement of Additional Information
Performance information.......................................................
Calculating annuity payouts...................................................
Rating Agencies...............................................................
Principal underwriter.........................................................
Independent auditors..........................................................
Retirement planning...........................................................
Prospectus....................................................................
Financial statements -
ACL Variable Annuity Account 1
American Centurion Life Assurance Company
- -------------------------------------------------------------------
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
____ Privileged Assets Select Annuity
____ IDS Life Retirement Annuity Mutual Funds
____ INVESCO Variable Investment Funds, Inc.
____ Janus Aspen Series
____ American Century Variable Portfolios, Inc.
____ Warburg Pincus Trust-Post-Venture Capital Portfolio
Please return this request to:
American Centurion Life Assurance Company
20 Madison Avenue Ext.
Albany, NY 12203
Your name
Address
City State Zip
<PAGE>
Privileged Assets Select Annuity
STATEMENT OF ADDITIONAL INFORMATION
for
PRIVILEGED ASSETS(R) SELECT ANNUITY
ACL VARIABLE ANNUITY ACCOUNT 1
May 1, 1998
ACL Variable Annuity Account 1 is a separate account established and maintained
by American Centurion Life Assurance Company (American Centurion Life).
This Statement of Additional Information, dated May 1, 1998, is not a
prospectus. It should be read together with the account's prospectus, dated May
1, 1998, which may be obtained by writing or calling American Centurion Life at
the address or telephone number below.
American Centurion Life Assurance Company
20 Madison Avenue Ext.
Albany, NY 12203
Phone (518) 452-4150
<PAGE>
Privileged Assets Select Annuity
TABLE OF CONTENTS
Performance Information..............................................p. 3
Calculating Annuity Payouts..........................................p. 5
Rating Agencies......................................................p. 5
Principal Underwriter................................................p. 6
Independent Auditors.................................................p. 6
Retirement Planning..................................................p. 6
Prospectus...........................................................p. 6
Financial Statements
- ACL Variable Annuity Account 1
- American Centurion Life Assurance Company
<PAGE>
PERFORMANCE INFORMATION
We show actual performance from the date the subaccounts began investing in
funds. We also show performance from the commencement date of the funds as if
the annuity had existed at that time.
Calculation of yield for IDS Life Moneyshare Subaccount
Simple yield for the IDS Life Moneyshare subaccount (DMS) will be based on the:
(a) change in the value of a hypothetical investment (exclusive of capital
changes) at the beginning of a seven-day period for which yield is to be quoted;
(b) subtracting a pro rata share of subaccount expenses accrued over the
seven-day period; (c) dividing the difference by the value of the subaccount at
the beginning of the period to obtain the base period return; and (d)
annualizing the results (i.e., multiplying the base period return by 365/7).
Calculation of compound yield begins with the same base period return used in
the calculation of yield, which is then annualized to reflect compounding
according to the following formula:
Compound Yield = [(return for seven-day period + 1) x (365/7)] - 1
On Dec. 31, 1997, the account's annualized yield was 4.11% and its compound
yield was 4.20%.
The rate of return, or yield, on the subaccount's accumulation unit may
fluctuate daily and does not provide a basis for determining future yields.
Investors must consider, when comparing an investment in subaccount DMS with
fixed annuities, that fixed annuities often provide an agreed-to or guaranteed
fixed yield for a stated period of time, whereas the variable subaccount's yield
fluctuates. In comparing the yield of subaccount DMS to a money market fund, you
should consider the different services that the annuity provides.
Calculation of yield for Subaccounts (Investing in income funds)
Quotations of yield will be based on all investment income earned during a
particular 30-day period, less expenses accrued during the period (net
investment income) and will be computed by dividing net investment income per
accumulation unit by the value of an accumulation unit on the last day of the
period, according to the following formula:
YIELD = 2[(a-b + 1)6 - 1]
cd
where: a = dividends and investment income earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of accumulation units outstanding
during the period that were entitled to receive dividends.
d = the maximum offering price per accumulation unit on the last
day of the period.
Yield on the subaccount is earned from the increase in the net asset value of
shares of the fund in which the subaccount invests and from dividends declared
and paid by the fund, which are automatically invested in shares of the fund.
<PAGE>
Annualized yield based on 30-Day period ended Dec. 31, 1997
Subaccount investing in: Yield
IDS Life Special Income Fund 6.76%
INVESCO VIF - Industrial Income Portfolio 6.54%
Calculation of average annual total return
Quotations of average annual total return for a subaccount will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in the annuity contract over a period of one, five and ten years (or,
if less, up to the life of the subaccount), calculated according to the
following formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the one, five, or ten year (or
other) period at the end of the one, five, or ten year (or
other) period (or fractional portion thereof).
The Securities and Exchange Commission requires that an assumption be made that
the owner surrenders the entire annuity at the end of the one, five and ten year
periods (or, if less, up to the life of the subaccount) for which performance is
required to be calculated.
Average Annual Total Return Period Ended: Dec. 31, 1997
Average Annual Total Return with or without Surrender
<TABLE>
<CAPTION>
Performance Since Performance Since
Commencement Commencement
of the Subaccount of the Fund
Since Since
Commencement Commencement
Subaccount investing in: 1 Year (Subaccount) 1 Year 5 Years 10 Years (Fund)
IDS Life
<S> <C> <C> <C> <C> <C>
Aggressive Growth Fund (12/96; 1/92)* 11.39% 10.40% 11.39% 11.59% -- 11.11%
Capital Resource Fund (12/96; 10/81) 22.76% 18.58% 22.76% 11.17% 13.42% --
International Equity Fund (12/96; 1.57% 2.14% 1.57% 9.12% -- 7.22%
1/92)
Managed Fund (12/96; 4/86) 18.18% 15.87% 18.18% 12.02% 12.66% --
Moneyshare Fund (12/96; 10/81) 3.99% 3.50% 3.99% 3.29% 4.40% --
Special Income Fund (12/96; 10/81) 7.62% 5.51% 7.62% 8.39% 8.63% --
INVESCO VIF
Industrial Income Portfolio (12/96; 26.75% 24.53% 26.75% -- -- 22.00%
8/94)
Janus Aspen Series
Worldwide Growth Portfolio (12/96; 20.80% 20.60% 20.80% -- -- 21.54%
9/93)
Growth Portfolio (12/96; 9/93) 21.38% 19.53% 21.38% -- -- 16.36%
American Century
VP Capital Appreciation (12/96; 11/87) -4.33% -7.16% -4.33% 4.56% 7.47% --
VP Value (12/96; 5/96) 24.68% 24.60% 24.68% -- -- 21.80%
Warburg Pincus Trust
Post-Venture Capital Portfolio 12.08% 8.79% 12.08% -- -- 6.73%
(12/96; 9/96)
* commencement date of the subaccount; commencement date of the fund.
</TABLE>
<PAGE>
Aggregate Total Return
Aggregate total return represents the cumulative change in value of an
investment for a given period (reflecting change in a subaccount's accumulation
unit value) and is computed by the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000.
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the one, five, or ten year (or
other) period at the end of the one, five, or ten year (or
other) period (or fractional portion thereof).
Subaccount total return figures reflect the deduction of the administrative
charge and mortality and expense risk fee.
Performance of the subaccounts may be quoted or compared to rankings, yields, or
returns or used in variable annuity accumulation or settlement illustrations as
published or prepared by independent rating or statistical services or
publishers or publications such as The Bank Rate Monitor National Index,
Barron's, Business Week, CDA Technologies, Donoghue's Money Market Fund Report,
Financial Services Week, Financial Times, Financial World, Forbes, Fortune,
Global Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
Your fixed annuity payout amounts are guaranteed. Once calculated, your payout
will remain the same and never change. To calculate your annuity payouts we:
o take the total value of your fixed account and the subaccounts at the
annuity start date or the date you have selected to begin receiving
your annuity payouts; then
o using an annuity table we apply the value according to the annuity
payout plan you select.
o The annuity payout table we use will be the one in effect at the time
you choose to begin your annuity payouts. The table will be equal to
or greater than the table in the annuity.
RATING AGENCIES
The following chart reflects the ratings given to American Centurion Life by
independent rating agencies. These agencies evaluate the financial soundness and
claims-paying ability of insurance companies based on a number of different
factors. This information does not relate to the management or performance of
the variable subaccounts of the Privileged Assets Select Annuity.
<PAGE>
This information relates only to the fixed account and reflects American
Centurion Life's ability to make annuity payouts and to pay death benefits and
other distributions from the annuity.
Rating agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
PRINCIPAL UNDERWRITER
The principal underwriter for the accounts is American Express Service
Corporation which offers the variable contracts on a continuous basis.
INDEPENDENT AUDITORS
The financial statements of ACL Variable Annuity Account 1 including the
statements of net assets as of Dec. 31, 1997 and the related statements of
operations for the year then ended, except for subaccounts DGR and DWG which are
for the period Jan. 29, 1997 (commencement of operations) to Dec. 31, 1997 and
subaccounts DSG, DVL and DVC which are for the period Sept. 3, 1997
(commencement of operations) to Dec. 31, 1997, and the statements of changes in
net assets for the year ended Dec. 31, 1997, except for the DGR and DWG
subaccounts which are for the period Jan. 29, 1997 (commencement of operations)
to Dec. 31, 1997 and subaccounts DSG,DVL and DVC which are for the period Sept.
3, 1997 (commencement of operations) to Dec. 31, 1997, and the financial
statements of American Centurion Life Insurance Company (a wholly owned
subsidiary of IDS Life Insurance Company) as of Dec. 31, 1997 and 1996, and for
each of the three years in the period then ended 1997, 1996, and 1995, appearing
in this prospectus and Statement of Additional Information have been audited by
Ernst & Young LLP, independent auditors, as stated in their report appearing
herein.
RETIREMENT PLANNING
You may have to save more for retirement because social security and employee
savings plans are estimated to cover only 40% of your retirement savings. The
remaining 60% must come from personal investments, savings and other income.*
One way to help save for retirement is by purchasing a variable annuity. From
1995 to 1996, variable annuity sales climbed 47 percent to $72.5 billion,
shattering the previous high of $51.7 billion in 1994.**
Sources:
* Social Security Administration
** LIMRA 1996 Individual Annuity Market Report
PROSPECTUS
The prospectus dated May 1, 1998, is hereby incorporated in this Statement of
Additional Information by reference.
<PAGE>
ACL Variable Annuity Account 1
Annual Financial Information
Report of Independent Auditors
The Board of Directors
American Centurion Life Assurance Company
We have audited the accompanying individual and combined statements of net
assets of the segregated asset subaccounts of ACL Variable Annuity Account 1
(comprised of subaccounts DCR, DIE, DAG, DSI, DMS, DMG, DII, DWG, DSG, DGR, DVL
and DVC) as of December 31, 1997, and the related statements of operations and
statements of changes in net assets for the year then ended, except for
subaccounts DGR and DWG which are for the period January 29, 1997 (commencement
of operations) to December 31, 1997 and subaccounts DSG, DVL and DVC which are
for the period September 3, 1997 (commencement of operations) to December 31,
1997. These financial statements are the responsibility of the management of
American Centurion Life Assurance Company. 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. Our procedures included
confirmation of securities owned at December 31, 1997 with the affiliated and
unaffiliated mutual fund managers. 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 individual and combined financial position of the
segregated asset subaccounts of ACL Variable Annuity Account 1 at December 31,
1997, and the individual and combined results of their operations and changes in
their net assets for the periods described above, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
March 13, 1998
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets Dec. 31, 1997
Assets Segregated Asset Subaccount
-----------------------------------------------------------------------------------
DCR DIE DAG DSI DMS
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund
975 shares at net asset value
<S> <C> <C> <C> <C> <C>
of $28.58 per share (cost $27,340) $ 27,851 $ - $ - $ - $ -
IDS Life International Equity Fund
1,082 shares at net asset value
of $13.63 per share (cost $15,392) - 14,744 - - -
IDS Life Aggressive Growth Fund
2,917 shares at net asset value
of $16.07 per share (cost $46,992) - - 46,884 - -
IDS Life Special Income Fund
1,342 shares at net asset value
of $11.80 per share (cost $16,067) - - - 15,831 -
IDS Life Moneyshare Fund, Inc.
196,583 shares at net asset value
of $1.00 per share (cost $196,566) - - - - 196,566
IDS Life Managed Fund, Inc.
2,862 shares at net asset value
of $18.04 per share (cost $51,966) - - - - -
INVESCO VIF- Industrial
Income Portfolio
11,487 shares at net asset value
of $17.04 per share (cost $182,108) - - - - -
Janus Aspen Series Worldwide Growth Portfolio
13,112 shares at net asset value
of $23.39 per share (cost $289,833) - - - - -
Janus Aspen Series Growth Portfolio
14,720 shares at net asset value
of $18.48 per share (cost $253,448) - - - - -
American Century VP
Capital Appreciation - - - - -
4,011 shares at net asset value
of $9.68 per share (cost $39,481) - - - - -
American Century VP Value
5,969 shares at net asset value
of $6.93 per share (cost $35,755) - - - - -
Warburg Pincus Trust--Post-Venture Capital Portfolio
6,411 shares at net asset value
of $11.06 per share (cost $61,016) - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
27,851 14,744 46,884 15,831 196,566
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends receivable - - - 97 905
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 27,851 14,744 46,884 15,928 197,471
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable to American Centurion Life for
mortality and expense risk fee 22 13 42 14 174
Payable to mutual funds for investments
purchased - - - 83 731
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 22 13 42 97 905
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period $ 27,829 $ 14,731 $ 46,842 $ 15,831 $ 196,566
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 23,022 14,411 42,084 14,926 188,943
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $ 1.20 $ 1.03 $ 1.11 $ 1.06 $ 1.04
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets - continued Dec. 31, 1997
Assets Segregated Asset Subaccount
----------------------------------------------------------------------------------
DMG DII DWG DSG DGR
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund
975 shares at net asset value
<S> <C> <C> <C> <C> <C>
of $28.58 per share (cost $27,340) $ - $ - $ - $ - $ -
IDS Life International Equity Fund
1,082 shares at net asset value
of $13.63 per share (cost $15,392) - - - - -
IDS Life Aggressive Growth Fund
2,917 shares at net asset value
of $16.07 per share (cost $46,992) - - - - -
IDS Life Special Income Fund
1,342 shares at net asset value
of $11.80 per share (cost $16,067) - - - - -
IDS Life Moneyshare Fund, Inc.
196,583 shares at net asset value
of $1.00 per share (cost $196,566) - - - - -
IDS Life Managed Fund, Inc.
2,862 shares at net asset value
of $18.04 per share (cost $51,966) 51,620 - - - -
INVESCO VIF- Industrial
Income Portfolio
11,487 shares at net asset value
of $17.04 per share (cost $182,108) - 195,747 - - -
Janus Aspen Series Worldwide Growth Portfolio
13,112 shares at net asset value
of $23.39 per share (cost $289,833)
Janus Aspen Series Growth Portfolio - - 306,689 - -
14,720 shares at net asset value
of $18.48 per share (cost $253,448)
American Century VP - - - 272,026 -
Capital Appreciation
4,011 shares at net asset value
of $9.68 per share (cost $39,481) - - - - 38,825
American Century VP Value
5,969 shares at net asset value
of $6.93 per share (cost $35,755) - - - - -
Warburg Pincus Trust--Post-Venture Capital Portfolio
6,411 shares at net asset value
of $11.06 per share (cost $61,016) - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
51,620 195,747 306,689 272,026 38,825
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends receivable - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 51,620 195,747 38,825 272,026 38,825
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable to American Centurion Life for
mortality and expense risk fee 44 174 275 246 33
Payable to mutual funds for investments
purchased - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 44 174 275 246 33
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period $ 51,576 $ 195,573 $ 306,414 $ 271,780 $ 38,792
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 43,796 154,631 251,604 229,764 41,823
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $ 1.17 $ 1.26 $ 1.22 $ 1.21 $ 0.93
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
- ----------------------------------------------------------------------------------------------------
Statements of Net Assets - continued Dec. 31, 1997
Segregated Asset Subaccount
---------------------------------- Combined
Assets DVL DVC Variable
Account
- ----------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund-
975 shares at net asset value
<S> <C> <C> <C>
of $28.58 per share (cost $27,340) $ - $ - $ 27,851
IDS Life International Equity Fund
1,082 shares at net asset value
of $13.63 per share (cost $15,392) - - 14,744
IDS Life Aggressive Growth Fund
2,917 shares at net asset value
of $16.07 per share (cost $46,992) - - 46,884
IDS Life Special Income Fund
1,342 shares at net asset value
of $11.80 per share (cost $16,067) - - 15,831
IDS Life Moneyshare Fund, Inc.
196,583 shares at net asset value
of $1.00 per share (cost $196,566) - - 196,566
IDS Life Managed Fund, Inc.
2,862 shares at net asset value
of $18.04 per share (cost $51,966) - - 51,620
INVESCO VIF- Industrial
Income Portfolio
11,487 shares at net asset value
of $17.04 per share (cost $182,108) - - 195,747
Janus Aspen Series Worldwide Growth Portfolio
13,112 shares at net asset value
of $23.39 per share (cost $289,833)
Janus Aspen Series Growth Portfolio - - 306,689
14,720 shares at net asset value
of $18.48 per share (cost $253,448)
American Century VP - - 272,026
Capital Appreciation
4,011 shares at net asset value
of $9.68 per share (cost $39,481) - - 38,825
American Century VP Value
5,969 shares at net asset value
of $6.93 per share (cost $35,755) 41,365 - 41,365
Warburg Pincus Trust--Post-Venture Capital Portfolio
6,411 shares at net asset value
of $11.06 per share (cost $61,016) - 70,905 70,905
- ----------------------------------------------------------------------------------------------------
41,365 70,905 1,279,053
- ----------------------------------------------------------------------------------------------------
Dividends receivable - - 1,002
- ----------------------------------------------------------------------------------------------------
Total assets 41,365 70,905 1,280,055
- ----------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------
Payable to American Centurion Life for
mortality and expense risk fee 36 63 1,136
Payable to mutual funds for investments
purchased - - 814
- ----------------------------------------------------------------------------------------------------
Total liabilities 36 63 1,950
- ----------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period $ 41,329 $ 70,842 $ 1,278,105
- ----------------------------------------------------------------------------------------------------
Accumulation units outstanding 32,637 64,614
- ------------------------------------------------------------------------------------
Net asset value per accumulation unit $ 1.27 $ 1.10
- ------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Operations For the year ended Dec. 31, 1997
Segregated Asset Subaccounts
----------------------------------------------------------------------------------
DCR DIE DAG DSI DMS
Investment income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds $ 451 $ 605 $ 3,975 $ 1,028 $ 7,015
Mortality and expense risk fee 66 119 293 103 1,402
- ------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net 385 486 3,682 925 5,613
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments - net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments in mutual funds:
Proceeds from sales 57 29,095 34,998 22,302 1,237,509
Cost of investments sold 54 27,111 32,828 22,242 1,237,510
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 3 1,984 2,170 60 (1)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments 511 (648) (108) (236) -
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 514 1,336 2,062 (176) (1)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 899 $ 1,822 $ 5,744 $ 749 $ 5,612
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Operations - continued For the year ended Dec. 31, 1997
Segregated Asset Subaccount
----------------------------------------------------------------------------------
DMG DII DWG** DSG* DGR**
Investment income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds $ 4,400 $ 13,739 $ 3,912 $ 6,643 $ 147
Mortality and expense risk fee 445 1,078 2,016 1,965 237
- ------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net 3,955 12,661 1,896 4,678 (90)
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments - net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments in mutual funds:
Proceeds from sales 71,381 33,958 189,158 214,853 53,206
Cost of investments sold 66,173 33,058 181,412 207,753 52,013
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 5,208 900 7,746 7,100 1,193
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments (346) 13,639 16,856 18,578 (656)
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 4,862 14,539 24,602 25,678 537
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 8,817 $ 27,200 $ 26,498 $ 30,356 $ 447
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
* For the period Sept. 3, 1997 (commencement of operations) to Dec. 31, 1997.
** For the period Jan. 29, 1997 (commencement of operations) to Dec. 31, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
- ----------------------------------------------------------------------------------------------------
Statements of Operations - continued For the year ended Dec. 31, 1997
Segregated Asset Subaccount
------------------------------ Combined
DVL* DVC* Variable
Investment income Account
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend income from mutual funds $ 2 $ 10 $ 41,927
Mortality and expense risk fee 201 472 8,397
- ----------------------------------------------------------------------------------------------------
Investment income (loss) - net (199) (462) 33,530
- ----------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments - net
- ----------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments in mutual funds:
Proceeds from sales 103 91 1,886,711
Cost of investments sold 90 83 1,860,327
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 13 8 26,384
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments 5,610 9,889 63,089
- ----------------------------------------------------------------------------------------------------
Net gain (loss) on investments 5,623 9,897 89,473
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 5,424 $ 9,435 $ 123,003
- ----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
* For the period Sept. 3, 1997 (commencement of operations) to Dec. 31, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets For the year ended Dec. 31, 1997
Segregated Asset Subaccount
----------------------------------------------------------------------------------
Operations DCR DIE DAG DSI DMS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 385 $ 486 $ 3,682 $ 925 $ 5,613
Net realized gain (loss) on investments 3 1,984 2,170 60 (1)
Net change in unrealized appreciation or
depreciation of investments 511 (648) (108) (236) -
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 899 1,822 5,744 749 5,612
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 3,046 2,399 4,505 4,193 1,139,815
Net transfers* 23,884 10,552 44,950 11,921 (918,713)
Contract charges - - - - -
Surrender benefits - (42) (8,357) (1,032) (30,148)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from contract transactions 26,930 12,909 41,098 15,082 190,954
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 27,829 $ 14,731 $ 46,842 $ 15,831 $ 196,566
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year - - - - -
Contract purchase payments 2,623 2,280 4,331 4,102 1,127,356
Net transfers* 20,399 12,172 45,362 11,810 (908,656)
Contract charges - - - - -
Surrender benefits - (41) (7,609) (986) (29,757)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 23,022 14,411 42,804 14,926 188,943
- ------------------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other subaccounts and transfers (from) to
American Centurion Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued For the year ended Dec. 31, 1997
Segregated Asset Subaccount
----------------------------------------------------------------------------------
Operations DMG DII DWG** DSG*** DGR**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 3,955 $ 12,661 $ 1,896 $ 4,678 $ (90)
Net realized gain (loss) on investments 5,208 900 7,746 7,100 1,193
Net change in unrealized appreciation or
depreciation of investments (346) 13,639 16,856 18,578 (656)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 8,817 27,200 26,498 30,356 447
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 8,633 12,358 20,785 14,805 3,846
Net transfers* 34,209 161,167 260,351 237,890 41,857
Contract charges - (15) (15) - -
Surrender benefits (83) (5,137) (1,205) (11,271) (7,358)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from contract transactions 42,759 168,373 279,916 241,424 38,345
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 51,576 $ 195,573 $ 306,414 $ 271,780 $ 38,792
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year - - - - -
Contract purchase payments 7,680 10,445 17,382 12,628 4,034
Net transfers* 36,188 148,447 235,235 226,581 44,923
Contract charges - (12) (12) - -
Surrender benefits (72) (4,249) (1,001) (9,445) (7,134)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 43,796 154,631 251,604 229,764 41,823
- ------------------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other subaccounts and transfers (from) to
American Centurion Life for conversion from (to) fixed account.
**For the period Jan. 29, 1997 (commencement of operations) to Dec. 31, 1997.
***For the period Sept. 3, 1997 (commencement of operations) to Dec. 31, 1997.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
- ---------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued For the year ended Dec. 31, 1997
Segregated Asset Subaccount
---------------------------------- Combined
Operations DVL*** DVC*** Variable
Account
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income (loss) - net $ (199) $ (462) $ 33,530
Net realized gain (loss) on investments 13 8 26,384
Net change in unrealized appreciation or
depreciation of investments 5,610 9,889 63,089
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 5,424 9,435 123,003
- ----------------------------------------------------------------------------------------------------
Contract Transactions
- ----------------------------------------------------------------------------------------------------
Contract purchase payments 890 2,383 1,217,658
Net transfers* 35,015 59,105 2,188
Contract charges - - (30)
Surrender benefits - (81) (64,714)
- ----------------------------------------------------------------------------------------------------
Increase (decrease) from contract transactions 35,905 61,407 1,155,102
- ----------------------------------------------------------------------------------------------------
Net assets at beginning of year - - -
- ----------------------------------------------------------------------------------------------------
Net assets at end of year $ 41,329 $ 70,842 $ 1,278,105
- ----------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------
Units outstanding at beginning of year - -
Contract purchase payments 730 2,259
Net transfers* 31,907 62,433
Contract charges - -
Surrender benefits - (78)
- ------------------------------------------------------------------------------------
Units outstanding at end of year 32,637 64,614
- ------------------------------------------------------------------------------------
*Includes transfer activity from (to) other Accounts and transfers (from) to
American Centurion Life for conversion from (to) fixed account.
***For the period Sept. 3, 1997 (commencement of operations) to Dec. 31, 1997.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
ACL Variable Annuity Account 1
Notes to Financial Statements
- -------------------------------------------------------------------
1. Organization
ACL Variable Annuity Account 1 (the Account) was established as a segregated
asset account of American Centurion Life Assurance Company (American Centurion
Life) under New York law and is registered as a unit investment trust under the
Investment Company Act of 1940. The Account was established on Feb. 9, 1995 and
commenced operations on Jan. 1, 1997. American Centurion Life is a wholly-owned
subsidiary of IDS Life Insurance Company (IDS Life).
The assets of the Account are held for the exclusive benefit of the Privileged
Assets Select Annuity contract owners and are not chargeable with liabilities
arising out of the business conducted by any other segregated asset accounts or
by American Centurion Life. Contract owners allocate their variable purchase
payments to one or more of the twelve segregated asset subaccounts. Such funds
are then invested in shares of six mutual funds organized by IDS Life or in
shares of one mutual fund portfolio organized by INVESCO Funds Group, Inc.; or
in shares of two mutual fund portfolios organized by American Century Investment
Management Inc.; or in shares of two mutual fund portfolios organized by Janus
Capital Corporation or in shares of one mutual fund portfolio organized by
Warburg Pincus Counsellors, Inc.
Each fund is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company or series of an open-end
management investment company. IDS Life Capital Resource Fund, IDS Life Special
Income Fund and IDS Life Moneyshare Fund, Inc. commenced operations Oct. 13,
1981. IDS Life Managed Fund, Inc. commenced operations April 30, 1986. IDS Life
Aggressive Growth Fund and IDS Life International Equity Fund commenced
operations on Jan. 13, 1992. INVESCO Variable Investment Funds, Inc. (INVESCO -
VIF) Industrial Income Portfolio commenced operations Aug. 10, 1994. American
Century VP Capital Appreciation commenced operations on Nov. 20, 1987. American
Century VP Value commenced operations on May 1, 1996. Janus Aspen Series
Worldwide Growth Portfolio and Janus Aspen Series Growth Portfolio commenced
operations on Sept. 13, 1993. Warburg Pincus Trust -- Post-Venture Capital
Portfolio commenced operations on Sept. 30, 1996. Funds allocated to the DCR
Subaccount are invested in shares of IDS Life Capital Resource Fund; Subaccount
DIE invests in the shares of IDS Life International Equity Fund; Subaccount DAG
invests in the shares of IDS Life Aggressive Growth Fund; Subaccount DSI invests
in the shares of IDS Life Special Income Fund; Subaccount DMS invests in the
shares of IDS Life Moneyshare Fund, Inc.; Subaccount DMG invests in the shares
of IDS Life Managed Fund, Inc.; Subaccount DII invests in shares of INVESCO VIF
- - Industrial Income Portfolio; Subaccount DWG invests in shares of Janus Aspen
Series Worldwide Growth Portfolio; Subaccount DSG invests in shares of Janus
Aspen Series Growth Portfolio; Subaccount DGR invests in shares of American
Century VP Capital Appreciation; Subaccount DVL invests in shares of American
Century VP Value and Subaccount DVC invests in shares of Warburg Pincus Trust --
Post-Venture Capital Portfolio.
IDS Life is the investment manager and American Express Financial Corporation
(AEFC), an affiliated company, is the investment advisor for each of the IDS
Life funds. American Express Asset Management International, Inc., a
wholly-owned subsidiary of AEFC, is the sub-investment advisor for IDS Life
International Equity Fund. INVESCO Funds Group, Inc. is the investment advisor
for the INVESCO VIF - Industrial Income Portfolio. Janus Capital Corporation is
the investment manager for Janus Aspen Series Worldwide Growth Portfolio and
Janus Aspen Series Growth Portfolio. American Century Investment Management Inc.
serves as the investment manager of American Century Variable Portfolios, Inc.
Warburg Pincus Counsellors, Inc. is the investment advisor of Warburg Pincus
Trust -- Post-Venture Capital Portfolio. American Centurion Life serves as
issuer of the contracts investing in the Account.
- -------------------------------------------------------------------
2. Summary of Significant Accounting Policies
Investments in Mutual Funds
Investments in shares of the IDS Life funds, the INVESCO VIF portfolio, the
Janus Aspen Series portfolios, the American Century portfolios, or the Warburg
Pincus Trust portfolio are stated at market value, which is the net asset value
per share as determined by the respective fund or portfolio. Investment
transactions are accounted for on the date the shares are purchased and sold.
The cost of investments sold and redeemed is determined on the average cost
method. Dividend distributions received from the funds or portfolios are
reinvested in additional shares of the funds and portfolios and are recorded as
income by the subaccounts on the ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the funds' and
portfolios' undistributed net investment income, undistributed realized gain or
loss and the unrealized appreciation or depreciation on their investment
securities.
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 reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Federal Income Taxes
American Centurion Life is taxed as a life insurance company. The Account is
treated as part of American Centurion Life for federal income tax purposes.
Under existing tax law, no income taxes are payable with respect to any
investment income of the Account.
- -----------------------------------------------------------------
3. Mortality and Expense Risk Fee and Contract Charges
American Centurion Life makes contractual assurances to the Account that
possible future adverse changes in administrative expenses and mortality
experience of the annuitants and beneficiaries will not affect the Account. The
mortality and expense risk fee paid to American Centurion Life is computed daily
and is equal, on an annual basis, to 1 percent of the average daily net assets
of the subaccounts.
An annual charge of $30 is deducted from the contract value of each Privileged
Assets Select Annuity contract. The annual charges are deducted on each contract
anniversary for administrative services provided to the Account by American
Centurion Life. The deduction will be allocated to the subaccounts on a pro-rata
basis. If the total purchase payments (less partial surrenders) on a contract
anniversary are at least $10,000 the charge will be waived. American Centurion
Life reserves the right to increase the charge in the future, however, in no
event will the charge exceed $50 per year.
- -------------------------------------------------------------------
4. Investment Transactions
The subaccounts' purchases of fund or portfolio shares including reinvestment of
dividend distributions, were as follows:
Year
ended
Dec. 31,
Subaccount Investment 1997
------------------------------------------------------------------------
DCR IDS Life Capital Resource Fund................... $ 27,394
DIE IDS Life International Equity Fund............... 42,503
DAG IDS Life Aggressive Growth Fund.................. 79,820
DSI IDS Life Special Income Fund..................... 38,309
DMS IDS Life Moneyshare Fund, Inc.................... 1,434,076
DMG IDS Life Managed Fund, Inc....................... 118,139
DII INVESCO VIF - Industrial Income Portfolio........ 215,166
DWG Janus Aspen Series Worldwide Growth Portfolio.... 471,245*
DSG Janus Aspen Series Growth Portfolio.............. 461,201**
DGR American Century VP Capital Appreciation......... 91,494*
DVL American Century VP Value........................ 35,845**
DVC Warburg-Pincus Trust-- Post-Venture
Capital Portfolio................................ 61,099**
------------------------------------------------------------------------
Combined Variable Account $3,076,291
------------------------------------------------------------------------
*For the period Jan. 29, 1997(commencement of operations)to Dec. 31, 1997.
**For the period Sept. 3, 1997(commencement of operations)to Dec. 31, 1997.
- -------------------------------------------------------------------
5. Year 2000 Issue (Unaudited)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Variable Account.
The Variable Account has no computer systems of its own but is dependent upon
the systems maintaned by AEFC and certain other third parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999.
The Year 2000 readiness of unaffiliated investment managers and other third
parties whose system failures could have an impact on the Variable Account's
operations is currently being evaluated. The potential materiality of any such
impact is not known at this time.
<PAGE>
Report of Independent Auditors
The Board of Directors
American Centurion Life Assurance Company
We have audited the accompanying balance sheets of American Centurion Life
Assurance Company (a wholly owned subsidiary of IDS Life Insurance Company) as
of December 31, 1997 and 1996, and the related statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1997. 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 American Centurion Life
Assurance Company at December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
Ernst & Young LLP
February 5, 1998
Minneapolis, Minnesota
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
BALANCE SHEETS
December 31,
<TABLE><CAPTION>
ASSETS 1997 1996
- ------ ---- ----
(thousands)
<S> <C> <C>
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1997, $18,153; 1996, $19,958) $ 17,698 $ 19,579
Available for sale, at fair value (Amortized cost:
1997, $210,940; 1996, $134,631) 216,161 136,091
--------- ---------
Total Investments 233,859 155,670
Cash and cash equivalents 3,756 13,856
Amounts recoverable from reinsurance 2,728 2,728
Accrued investment income 3,120 2,104
Deferred policy acquisition costs 9,280 4,364
Other assets 1,591 55
Assets held in separate accounts 1,280 --
--------------------
Total assets $255,614 $178,777
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Future policy benefits:
Fixed annuities $206,531 $139,362
Traditional life insurance 1,884 1,883
Disability income insurance 225 225
Policy claims and other policyholders' funds 2,305 691
Amounts due to broker 4,941 4,916
Deferred income taxes 2,391 592
Other liabilities 741 34
Liabilities related to separate accounts 1,280 --
---------------------
Total liabilities 220,298 147,703
---------- ----------
Stockholder's equity:
Capital stock, $10 par value per share;
100,000 shares authorized,
issued and outstanding 1,000 1,000
Additional paid-in capital 16,600 16,600
Net unrealized gain on investments 3,139 863
Retained earnings 14,577 12,611
----------- ----------
Total stockholder's equity 35,316 31,074
----------- ----------
Total liabilities and stockholder's equity $255,614 $178,777
=========== ==========
See accompanying notes.
</TABLE>
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF INCOME
Years ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -----
(thousands)
<S> <C> <C> <C>
Revenues:
Net investment income $ 13,331 $ 8,851 $ 7,734
Contractholder charges 318 306 299
Management and other fees 8 -- --
Net realized gain (loss) on investments 25 (57) 112
-------- ------- -------
Total revenues 13,682 9,100 8,145
-------- ------ ------
Benefits and expenses:
Death and other benefits on
investment contracts 2 -- --
Interest credited on investment contracts 8,887 5,849 4,670
Amortization of deferred policy
acquisition costs 114 21 294
Other operating expenses 1,324 1,387 710
-------- ------ -------
Total expenses 10,327 7,257 5,674
------- ------ ------
Income before income taxes 3,355 1,843 2,471
Income taxes 1,389 678 885
------- ------- -------
Net income $1,966 $ 1,165 $ 1,586
======= ======= =======
See accompanying notes.
</TABLE>
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended December 31, 1997
(thousands)
<TABLE>
<CAPTION>
Additional Net Unrealized
Capital Paid-In Gain (Loss) on Retained
Stock Capital Investments Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $1,000 $ 6,600 $ (1,730) $ 9,860 $15,730
Net income -- -- -- 1,586 1,586
Change in net unrealized
gain (loss) on investments -- -- 3,934 -- 3,934
-------- ---------- ------ ----------- --------
Balance, December 31, 1995 1,000 6,600 2,204 11,446 21,250
Net income -- -- -- 1,165 1,165
Change in net unrealized
gain (loss) on investments -- -- (1,341) (1,341)
--
Capital contribution from parent -- 10,000 -- -- 10,000
-------- ------- ---------- ------------ ---------
Balance, December 31, 1996 1,000 16,600 863 12,611 31,074
Net income -- -- -- 1,966 1,966
Change in net unrealized
gain (loss) on investments -- -- 2,276 -- 2,276
--------- ---------- ------- ------------ --------
Balance, December 31, 1997 $1,000 $16,600 $ 3,139 $14,577 $35,316
======== ========== ======= ========== ======
See accompanying notes.
</TABLE>
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF CASH FLOWS
Years ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ------
(thousands)
<S>
Cash flows from operating activities: <C> <C> <C>
Net income $ 1,966 $ 1,165 $ 1,586
Adjustments to reconcile net income to
net cash (used in) provided by operating activities:
Change in amounts recoverable from reinsurers -- 674 166
Change in accrued investment income (1,016) (604) (270)
Change in deferred policy acquisition
costs, net (5,175) (3,177) 252
Change in other assets (1,536) 75 1,015
Change in liabilities for future policy
benefits for traditional life and
disability income insurance 1 (1,696) --
Change in policy claims and other
policyholders' funds 1,614 428 (97)
Deferred income tax provision (benefit) 574 1,457 (640)
Change in other liabilities 707 (1,087) 386
Amortization of premium
(accretion of discount), net 7 56 101
Net realized (gain) loss on investments (25) 57 (112)
Other, net 7 -- (75)
----------- ----------- ----------
Net cash (used in) provided by operating activities (2,876) (2,652) 2,312
----------- ----------- ----------
Cash flows from investing activities: Fixed maturities held to maturity:
Purchases -- -- (1,980)
Maturities 1,847 2,603 3,443
Sales -- 477 --
Fixed maturities available for sale:
Purchases (86,006) (59,425) (22,290)
Maturities 8,438 7,261 4,819
Sales 1,303 1,572 496
Change in due to brokers 24 4,916 (1,446)
----------- --------- ---------
Net cash used in investing activities (74,394) (42,596) (16,958)
----------- --------- ---------
Cash flows from financing activities: Activity related to investment contracts:
Considerations received 82,656 55,594 20,876
Surrenders and other benefits (24,373) (14,870) (12,691)
Interest credited to account balances 8,887 5,849 4,670
Capital contribution from parent -- 10,000 --
------------ -------- -------------
Net cash provided by financing activities 67,170 56,573 12,855
------ -------- --------
Net (decrease) increase in cash and cash equivalents (10,100) 11,325 (1,791)
Cash and cash equivalents at beginning of year 13,856 2,531 4,322
-------- ----------- -----------
Cash and cash equivalents at end of year $ 3,756 $ 13,856 $ 2,531
======== =========== ===========
See accompanying notes.
</TABLE>
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
($ thousands)
1. Summary of significant accounting policies
Nature of business
American Centurion Life Assurance Company (the Company) is a stock life
insurance company that is domiciled in New York and licensed to transact
insurance business in New York, Alabama and Delaware. The Company's
principal product is deferred annuities which are issued primarily to
individuals who are New York residents. It offers single premium and
installment premium deferred annuities on both a fixed and variable dollar
basis. Immediate annuities are offered as well.
Basis of presentation
The Company is a wholly owned subsidiary of IDS Life Insurance Company (IDS
Life), which is a wholly owned subsidiary of American Express Financial
Corporation (AEFC). AEFC is a wholly owned subsidiary of American Express
Company. The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which vary in
certain respects from reporting practices prescribed or permitted by the
New York Department of Insurance (see Note 8).
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and carried
at amortized cost. All other fixed maturities are classified as available
for sale and carried at fair value. Unrealized gains and losses on
securities classified as available for sale are reported as a separate
component of stockholder's equity, net of deferred income taxes.
Realized investment gain or loss is determined on an identified cost basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to recognize
interest income. Prepayment estimates are based on information received
from brokers who deal in mortgage-backed securities.
When evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost which approximates
fair value.
<PAGE>
1. Summary of significant accounting policies (continued)
Supplementary information to the statements of cash flows for the years
ended December 31, is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ------
<S> <C> <C> <C>
Cash paid during the year for:
Income taxes $2,404 $257 $531
Interest on borrowings 7 -- --
</TABLE>
Recognition of profits on fixed annuity contracts
Profits on certain fixed deferred annuities are recognized by the Company
over the lives of the contracts, using primarily the retrospective deposit
method. This method recognizes profits over the lives of the policies in
proportion to the estimated gross profits expected to be realized. Profits
on other fixed deferred annuities are recognized by the Company over the
lives of the contracts, using the interest method. Under the interest
method, profits represent the excess of investment income earned from
investment of contract considerations over interest credited to contract
owners and other expenses.
Contractholder charges include fees collected regarding the issue and
administration of annuity contracts.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation, policy
issue costs, and certain sales expenses, including direct response
advertising costs, have been deferred on annuity contracts. The deferred
acquisition costs for single premium deferred annuities and certain
installment annuities are amortized in relation to accumulation values and
surrender charge revenue. The costs for other installment annuities are
amortized as a percentage of the estimated gross profits expected to be
realized on the policies.
Liabilities for future policy benefits
Liabilities for single premium deferred annuities and installment annuities
are accumulation values. Liabilities for fixed annuities in a benefit
status are based on the 1983a Table with interest at 6.25%.
Federal income taxes
The Company's taxable income is included in the consolidated federal income
tax return of American Express Company. The Company provides for income
taxes on a separate return basis, except that, under an agreement between
AEFC and American Express Company, tax benefit is recognized for losses to
the extent they can be used on the consolidated tax return. It is the
policy of AEFC and its subsidiaries that AEFC will reimburse subsidiaries
for all tax benefits.
<PAGE>
Included in other liabilities at December 31, 1997 and 1996 are $1,532 and
$185, respectively, receivable from IDS Life for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity contract owners. The Company
receives mortality and expense risk fees from the variable annuity separate
accounts.
<PAGE>
1. Summary of significant accounting policies (continued)
The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of
the annuitants and the beneficiaries from the mortality assumptions
implicit in the annuity contracts. The Company makes periodic fund
transfers to, or withdrawals from, the separate accounts for such actuarial
adjustments for variable annuities that are in the benefit payment period.
Reclassifications
Certain 1996 and 1995 amounts have been reclassfied to conform to the 1997
presentation.
2. Investments
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available. Estimated
values are determined by established procedures involving, among other
things, review of market indices, price levels of current offerings of
comparable issues, price estimates and market data from independent brokers
and financial files.
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C>
Corporate bonds and obligations $ 16,176 $ 368 $ 26 $ 16,518
Mortgage-backed securities 1,522 113 -- 1,635
---------- -------- --------- ----------
$ 17,698 $ 481 $ 26 $ 18,153
========= ======== ========= =========
Available for sale
U.S. Government agency obligations $ 2,085 $ 15 $ 1 $ 2,099
State and municipal obligations 1,000 31 -- 1,031
Corporate bonds and obligations 118,450 4,141 356 122,235
Mortgage-backed securities 89,405 1,544 153 90,796
---------- -------- --------- ----------
$210,940 $ 5,731 $ 510 $216,161
======== ======= ========= ========
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1996 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Corporate bonds and obligations $ 17,995 $ 421 $ 154 $ 18,262
Mortgage-backed securities 1,584 112 -- 1,696
---------- -------- --------- ----------
$ 19,579 $ 533 $ 154 $ 19,958
========= ======== ======== =========
Available for sale
U.S. Government agency obligations $ 2,095 $ -- $ 32 $ 2,063
State and municipal obligations 1,000 21 -- 1,021
Corporate bonds and obligations 74,327 1,808 369 75,766
Mortgage-backed securities 57,209 638 606 57,241
--------- -------- ------- ---------
$134,631 $ 2,467 $ 1,007 $136,091
======== ======= ======= ========
</TABLE>
<PAGE>
2. Investments (continued)
The amortized cost and fair value of investments in fixed maturities at
December 31, 1997 by contractual maturity are shown below. Actual
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 Fair
Held to maturity Cost Value
<S> <C> <C>
Due in one year or less $ 3,499 $ 3,570
Due from one to five years 9,260 9,440
Due from five to ten years 1,945 2,041
Due in more than ten years 1,472 1,467
Mortgage-backed securities 1,522 1,635
--------- ---------
$ 17,698 $ 18,153
========= =========
Amortized Fair
Available for sale Cost Value
Due in one year or less $ 2,598 $ 2,613
Due from one to five years 19,710 20,467
Due from five to ten years 55,879 58,219
Due in more than ten years 43,348 44,066
Mortgage-backed securities 89,405 90,796
----------- ----------
$ 210,940 $ 216,161
=========== ==========
</TABLE>
There were no sales of fixed maturities classified as held to maturity in
1997 and 1995. During the year ended December 31, 1996, fixed maturities
classified as held to maturity were sold with amortized cost of $500,
respectively. Net gains and losses on these sales were not significant. The
sales of these fixed maturities were due to significant deterioration in
the issuers' credit worthiness.
In addition, fixed maturities available for sale were sold during 1997 with
proceeds of $1,303 and gross realized gains and losses of $14 and $nil,
respectively. Fixed maturities available for sale were sold during 1996
with proceeds of $1,572 and gross realized gains and losses of $36 and $71,
respectively. Fixed maturities available for sale were sold during 1995
with proceeds of $496 and gross realized gains and losses of $nil and $4,
respectively.
At December 31, 1997, bonds carried at $1,085 were on deposit with various
states as required by law.
Securities are rated by Moody's and Standard & Poor's (S&P), except for
approximately $28 million of securities which are rated by American Express
Financial Corporation's internal analysts using criteria similar to Moody's
and S&P. A summary of investments in fixed maturities, at amortized cost,
by rating on December 31 is as follows:
<TABLE>
<CAPTION>
Rating 1997 1996
---------------------- -------- -------
<S> <C> <C>
Aaa/AAA $ 92,682 $ 60,374
Aa/AA 3,890 4,648
Aa/A 1,952 1,469
A/A 28,258 26,768
A/BBB 7,802 4,988
Baa/BBB 61,661 35,071
Baa/BB 4,011 6,977
Below investment grade 28,382 13,915
-------- --------
$228,638 $154,210
======== ========
</TABLE>
2. Investments (continued)
At December 31, 1997, approximately 89 percent of the securities rated
Aaa/AAA are GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of
any other issuer are greater than ten percent of stockholder's equity.
Net investment income for the years ended December 31 is summarized as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Interest on fixed maturities $ 13,818 $ 9,170 $ 7,561
Interest on cash equivalents 276 308 157
Other 1 16 21
--------- --------- --------
14,095 9,494 7,739
Less investment expenses 764 643 5
--------- --------- --------
$ 13,331 $ 8,851 $ 7,734
========= ========= ========
</TABLE>
Net realized gain (loss) on investments was $25, $(57) and $112 for the
years ended December 31, 1997, 1996 and 1995, respectively, and was
entirely due to sales of fixed maturities.
Changes in net unrealized appreciation (depreciation) of investments for
the years ended December 31 are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Fixed maturities available for sale $ 3,761 $ (1,931) $ 6,408
</TABLE>
3. Income taxes
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the Internal Revenue Code
provisions applicable to life insurance companies.
The income tax expense (benefit) for the years ended December 31, consists
of the following:
<TABLE>
<CAPTION>
1997 1996 1995
------- ----- ------
<S> <C> <C> <C>
Federal income taxes:
Current $ 486 $ (819) $1,495
Deferred 574 1,457 (640)
------- ----- ------
1,060 638 855
State income taxes-current 329 40 30
------- ----- ------
Income tax expense $ 1,389 $ 678 $ 885
======= ===== ======
</TABLE>
<PAGE>
3. Income taxes (continued)
Increases to the federal income tax provision applicable to pretax income
based on the statutory rate for the years ended December 31, are
attributable to:
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------------------------------------
Provision Rate Provision Rate Provision Rate
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes based
on the statutory rate $1,174 35.0% $645 35.0% $ 865 35.0%
Increases are
attributable to :
State tax, net 214 6.4 26 1.4 19 0.6
Other, net 1 -- 7 0.4 1
------ ---- ----- ----- ------ ----
--
Federal income taxes $1,389 41.4% $678 36.8% $ 885 35.6%
====== ===== ===== ==== ====== ====
</TABLE>
Significant components of the Company's deferred income tax assets and
liabilities as of December 31 are as follows:
Deferred income tax assets: 1997 1996
------ -----
Policy reserves $ 1,616 $ 738
Deferred tax income liabilities:
Deferred policy acquisition costs 2,144 802
Investments 1,703 478
Other 160 50
-------- -------
Total deferred income tax liabilities 4,007 1,330
------ ------
Net deferred income tax liabilities $ 2,391 $ 592
======= =====
The Company is required to establish a valuation allowance for any portion
of the deferred income tax assets that management believes will not be
realized. In the opinion of management, it is more likely than not that the
Company will realize the benefit of the deferred income tax assets and,
therefore, no such valuation allowance has been established.
4. Stockholder's equity
Retained earnings available for distribution as dividends to the parent are
limited to the Company's surplus as determined in accordance with
accounting practices prescribed by the New York Department of Insurance.
All dividend distributions must be approved by the New York Department of
Insurance. Statutory unassigned surplus aggregated $6,278 and $7,220 as of
December 31, 1997 and 1996, respectively (see note 8 for a reconciliation
of net income and stockholder's equity per the accompanying financial
statements to statutory net income and surplus).
<PAGE>
5. Related party transactions
The Company participates in the American Express Retirement Plan which
covers all permanent employees age 21 and over who have met certain
employment requirements. Employer contributions to the plan are based on
participants' age, years of service and total compensation for the year.
Funding of retirement costs for this plan complies with the applicable
minimum funding requirements specified by ERISA. The Company's share of the
total net periodic pension cost was $nil in 1997, 1996 and 1995.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a percent
of either each employee's eligible compensation or basic contributions.
Costs of these plans charged to operations in 1997, 1996 and 1995 were $23,
$19 and $13, respectively.
The Company participates in defined benefit health care plans of AEFC that
provide health care and life insurance benefits to retired employees. The
plans include participant contributions and service related eligibility
requirements. Upon retirement, such employees are considered to have been
employees of AEFC. AEFC expenses these benefits and allocates the expenses
to its subsidiaries. Accordingly, costs of such benefits to the Company are
included in employee compensation and benefits and cannot be identified on
a separate company basis.
Charges by IDS Life for use of joint facilities and other services
aggregated $2,536, $3,142 and $105 for 1997, 1996 and 1995, respectively.
Certain of these costs are included in deferred policy acquisition costs.
6. Commitments and contingencies
The Company has an agreement whereby it ceded 100 percent of a block of
individual life insurance and individual annuities to an unaffiliated
company. At December 31, 1997 and 1996, traditional life insurance in-force
aggregated $216,961 and $242,209, respectively, of which $216,726 and
$241,974 were reinsured at the respective year ends. Under all reinsurance
agreements, premiums ceded to reinsurers amounted to $1,346, $1,351 and
$1,384 for the years ended December 31, 1997, 1996 and 1995. Reinsurance
recovered from reinsurers amounted to $718, $2,027 and $929 for the years
ended December 31, 1997, 1996 and 1995. Reinsurance contracts do not
relieve the Company from its primary obligations to policyholders.
The economy and other factors have caused an increase in the number of
insurance companies that are under regulatory supervision. This
circumstance has resulted in substantial assessments by state guaranty
associations to cover losses to policyholders of insolvent or rehabilitated
companies. The Company expects additional future assessments related to
past insolvencies and rehabilitations. Management has estimated the impact
of future assessments on the Company's financial position and recorded a
reserve for such future assessments.
<PAGE>
7. Fair values of financial instruments
The Company discloses fair value information for most on- and off-balance
sheet financial instruments for which it is practicable to estimate that
value. Fair value of life insurance obligations, receivables and all
non-financial instruments, such as deferred acquisition costs are excluded.
Off-balance sheet intangible assets are also excluded. Management believes
the value of excluded assets and liabilities is significant. The fair value
of the Company, therefore, cannot be estimated by aggregating the amounts
presented.
<TABLE>
<CAPTION>
1997 1996
------- ------
Carrying Fair Carrying Fair
Financial Assets Amount Value Amount Value
<S> <C> <C> <C> <C>
Investments in fixed maturities (Note 2)
Held to maturity $ 17,698 $ 18,153 $ 19,579 $ 19,958
Available for sale 216,161 216,161 136,091 136,091
Cash and cash equivalents (Note 1) 3,756 3,756 13,856 13,856
Separate account assets 1,280 1,280 -- --
Financial Liabilities
Future policy benefits for fixed
annuities 206,516 200,209 139,352 136,332
Separate account liabilities 1,280 1,233 -- --
</TABLE>
At December 31, 1997 and 1996, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related
contracts carried at $15 and $10, respectively. The fair value of these
benefits is based on the status of the annuities at December 31, 1997 and
1996. The fair values of deferred annuities and separate account
liabilities are estimated as the carrying amount less applicable surrender
charges. The fair value for annuities in non-life contingent payout status
is estimated as the present value of projected benefit payments at rates
appropriate for contracts issued in 1997 and 1996.
<PAGE>
8. Statutory insurance accounting practices
Reconciliations of net income for the years ended December 31, 1997, 1996
and 1995 and stockholder's equity at December 31, 1997 and 1996, as shown
in the accompanying financial statements, to that determined using
statutory accounting practices are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ------
<S> <C> <C> <C>
Net income, per accompanying
financial statements $ 1,966 $ 1,165 $ 1,586
Deferred policy acquisition costs (5,175) (3,177) 252
Adjustments of future policy
benefit liabilities 2,222 (57) (356)
Deferred federal income taxes 574 1,457 (640)
Provision for losses on investments -- -- (12)
IMR gain/loss transfer and amortization (16) 47 (46)
Provision for other losses -- -- (837)
Prior period adjustment -- (313) 328
Other, net 255 16 (27)
------- ------- -------
Net (loss) income, on basis of
statutory accounting practices $ (174) $ (862) $ 248
======= ======= =======
Stockholder's equity, per accompanying
financial statements $35,316 $31,074
Deferred policy acquisition costs (9,280) (4,364)
Adjustments of future policy benefit liabilities 5,367 3,145
Adjustments of reinsurance ceded reserves (2,728) (2,728)
Deferred federal income taxes 2,391 592
Asset valuation reserve (2,107) (1,287)
Net unrealized gain on investments (5,220) (1,460)
Interest maintenance reserve (79) (62)
Other, net 219 (90)
------- -------
Stockholder's equity on basis of statutory
accounting practices $23,879 $24,820
======= =======
</TABLE>
<PAGE>
9. Year 2000 Issue (unaudited)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Company. All of the
systems used by the Company are maintained by AEFC and are utilized by multiple
subsidiaries and affiliates of AEFC. The Company's business is heavily dependent
upon AEFC's computer systems and has significant interactions with systems of
third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to the Company, has been conducted to identify the
major systems that could be affected by the Year 2000 issue. Steps are being
taken to resolve any potential problems including modification to existing
software and the purchase of new software. These measures are scheduled to be
completed and tested on a timely basis. AEFC's goal is to complete internal
remediation and testing of each system by the end of 1998 and to continue
compliance efforts through 1999.
AEFC is evaluating the Year 2000 readiness of advisors and other third parties
whose system failures could have an impact on the Company's operations. The
potential materiality of any such impact is not known at this time.
<PAGE>
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B of this Registration Statement:
ACL Variable Annuity Account 1
Statements of Net Assets, as of Dec. 31, 1997;
Statements of Operations, for the year ended Dec. 31. 1997;
and
Statements of Changes in Net Assets for the years ended Dec.
31, 1997 and 1996.
Notes to Financial Statements.
Report of Independent Auditors for ACL Variable Annuity
Account 1 dated March 13, 1998.
American Centurion Life Insurance Company:
Balance Sheets as of Dec. 31, 1997 and 1996.
Statements of Income for the years ended Dec. 31, 1997, 1996
and 1995.
Statements of Stockholders Equity, for the three years ended
Dec. 31, 1997, 1996 and 1995.
Statements of Cash Flows for the years ended Dec. 31, 1997,
1996 and 1995.
Notes to Financial Statements.
Report of Independent Auditors dated February 5, 1998.
Exhibits to Financial Statements included in Part C:
Financial Statement Schedules I and IV as required by Regulation S-X:
Schedule I - Consolidated Summary of Investments other
than Investments in Related Parties
Schedule IV - Reinsurance
(b) Exhibits:
1. Certificate, establishing the ACL Variable Annuity Account 1 dated
December 1, 1995, filed electronically as Exhibit 1 to Registrant's
Initial Registration Statement No. 333-00041, is incorporated herein by
reference.
2. Not applicable.
3. Variable Annuity and Life Insurance Distribution and Administrative
Services Agreement, dated April 10, 1997, is filed electronically as
Exhibit 3 to Post-Effective Amendment No. 2, to Registration Statement
No. 333-00041, is incorporated herein by reference.
4.1 Form of Group Deferred Annuity Certificate for nonqualified contract
(form 38502-NY 10/95), filed electronically as Exhibit 4.1 to
Registrant's Initial Registration Statement No.
333-00041, is incorporated herein by reference.
<PAGE>
4.2 Form of Group Deferred Annuity Certificate for qualified contract (form
38503-IRA-NY 10/95), filed electronically as Exhibit 4.2 to Registrant's
Initial Registration Statement No. 333-00041, is incorporated herein by
reference.
4.3 Form of Group Deferred Annuity Contract (form 38501 10/95), filed
electronically as Exhibit 4.3 to Registrant's Initial Registration
Statement No. 333-00041, is incorporated herein by reference.
5.1 Form of Group Deferred Variable Annuity Application (form 32041 10/95),
filed electronically as Exhibit 5.1 to Registrant's Initial Registration
Statement No. 333-00041, is incorporated herein by reference.
5.2 Form of Variable Annuity Participant Enrollment Form (form 32027C 10/95),
filed electronically as Exhibit 5.2 to Registrant's Initial Registration
Statement No. 333-00041, is incorporated herein by reference.
6.1 Amended and Restated Articles of Incorporation of American Centurion Life,
filed electronically as Exhibit 6.1 to Registrant's Initial Registration
Statement No. 333-00041, is incorporated herein by reference.
6.2 Amended By-Laws of American Centurion Life, filed electronically as Exhibit
6.2 to Registrant's Initial Registration Statement No. 333-00041, is
incorporated herein by reference.
6.3 Emergency By-Laws of American Centurion Life, filed electronically as
Exhibit 6.3 to Registrant's Initial Registration Statement No. 333-00041,
is incorporated herein by reference.
7. Not applicable.
8.1 Participation Agreement, dated Oct. 7, 1996, by and among American
Centurion Life and Warburg Pincus Trust and Warburg, Pincus Counsellors,
Inc. and Counsellors Securities, Inc., filed electronically as Exhibit 8.1
to Post-Effective Amendment No. 2, to Registration Statement No. 333-00041,
is incorporated herein by reference.
8.2 Fund Participation Agreement, dated July 31, 1996, by and among American
Centurion Life, TCI Portfolios, Inc. and Investors Research Corporation,
filed electronically as Exhibit 8.2 to Post-Effective Amendment No. 2, to
Registration Statement No. 333-00041, is incorporated herein by reference.
8.3 Fund Participation Agreement, dated Oct. 23, 1996, between Janus Aspen
Series and American Centurion Life, filed electronically as Exhibit 8.3 to
Post-Effective Amendment No. 2, to Registration Statement No. 333-00041, is
incorporated herein by reference.
8.4 Participation Agreement, dated Dec. 4, 1996, among INVESCO Variable
Investment Funds, Inc., INVESCO Funds Group, Inc. and American Centurion
Life, filed electronically as Exhibit 8.4 to Post-Effective Amendment No.
2, to Registration Statement No. 333-00041, is incorporated herein by
reference.
<PAGE>
9. Opinion of counsel and consent to its use as to the legality of the
securities being registered, filed electronically herewith.
10. Consent of Independent Auditors, filed electronically herewith.
11. Financial Statement Schedules and Report of Independent Auditors, filed
electronically herewith.
12. Not applicable.
13. Copy of schedule for computation of each performance quotation provided in
the Registration Statement in response to Item 21, filed electronically as
Exhibit 13 to Registrant's Initial Registration Statement No. 333-00041, is
incorporated by reference.
14.1 Financial Data Schedule, filed electronically herewith.
14.2 Power of Attorney to sign this Registration Statement dated March 25, 1997,
filed electronically as Exhibit 14.2 to Post-Effective Amendment No. 2, to
Registration Statement No. 333-00041, is incorporated herein by reference.
14.3 Power of Attorney to sign this Registration Statement dated April 8, 1998,
filed electronically herewith.
<PAGE>
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor (American Centurion Life Assurance Company)
<S> <C> <C>
Positions and Offices with
Name Principal Business Address Depositor
- ------------------------------------ ---------------------------------------- -----------------------------------
Doris A. Anfinson IDS Tower 10 Vice President
Minneapolis, MN 55440
Robert C. Auriema Technical Consultants Ltd. Director
Bayview Tower
Apt. 8G
80 Bay Street Landing
Staten Island, NY 10301
Maureen A. Buckley IDS Tower 10 Chief Administrative Officer and
Minneapolis, MN 55440 Consumer Affairs Officer
Douglas L. Forsberg IDS Tower 10 Director
Minneapolis, MN 55440
Clarence E. Galston IDS Tower 10 Director
Minneapolis, MN 55440
Jay C. Hatlestad IDS Tower 10 Vice President and Controller
Minneapolis, MN 55440
Robert A. Hatton IDS Tower 10 Director
Minneapolis, MN 55440
Jeffrey S. Horton IDS Tower 10 Vice President and Treasurer
Minneapolis, MN 55440
Richard W. Kling IDS Tower 10 Director
Minneapolis, MN 55440
David M. Kuplic IDS Tower 10 Vice President-Investments
Minneapolis, MN 55440
Eric L. Marhoun IDS Tower 10 General Counsel and Secretary
Minneapolis, MN 55440
Sarah A. Mealey IDS Tower 10 Vice President-Variable Product
Minneapolis, MN 55440 Development
</TABLE>
<PAGE>
Item 25. Directors and Officers of the Depositor (American Centurion Life
Assurance Company (cont'd)
<TABLE>
<CAPTION>
<S> <C> <C>
Positions and Offices with
Name Principal Business Address Depositor
- ------------------------------------ ---------------------------------------- -----------------------------------
Edward J. Muhl IDS Tower 10 Director
Minneapolis, MN 55440
Kenneth W. Nelson Tech Products, Inc. Director
15 Beach Street
Suite 304
Staten Island, NY 10304
Stuart A. Sedlacek IDS Tower 10 Director, Chairman and President
Minneapolis, MN 55440
Anne L. Segal IDS Tower 10 Director
Minneapolis, MN 55440
Daniel J. Segner IDS Tower 10 Vice President-Investments
Minneapolis, MN 55440
Guerdon D. Smith Guerdon D. Smith & Company Director
P.O. Box 91739
Santa Barbara, CA 93190-1739
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
American Centurion Life Assurance Company is a wholly-owned
subsidiary of IDS Life Insurance Company which is a
wholly-owned subsidiary of American Express Financial
Corporation. American Express Financial Corporation is a
wholly-owned subsidiary of American Express Company (American
Express).
The following list includes the names of major subsidiaries of
American Express.
<TABLE>
<CAPTION>
<S> <C>
Jurisdiction of
Name of Subsidiary Incorporation
I. Travel Related Services
American Express Travel Related Services Company, New York
Inc.
II. International Banking Services
American Express Bank Ltd. Connecticut
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
III. Companies engaged in Financial Services
Advisory Capital Strategies Group Inc. Minnesota
Advisory Capital Strategies Group Inc. New York
American Centurion Life Assurance Company Minnesota
American Enterprise Investment Services Inc. Minnesota
American Enterprise Life Insurance Company Indiana
American Express Asset Management Group Inc. Minnesota
American Express Asset Management International Inc. Delaware
American Express Asset Management International Ltd. England
American Express Asset Management International (Japan) Ltd. Japan
American Express Client Service Corporation Minnesota
American Express Corporation Delaware
American Express Financial Advisors Inc. Delaware
American Express Insurance Agency of Arizona Inc. Arizona
American Express Insurance Agency of Idaho Inc. Idaho
American Express Insurance Agency of Nevada Inc. Nevada
American Express Minnesota Foundation Minnesota
American Express Property Casualty Insurance Agency Kentucky
of Kentucky Inc.
American Express Property Casualty Insurance Agency Maryland
of Maryland Inc.
American Express Property Casualty Insurance Agency Pennsylvania
of Pennsylvania Inc.
American Express Tax and Business Services Inc. Minnesota
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
IDS Aircraft Services Corporation Minnesota
IDS Cable Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
IDS Futures Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc. Massachusetts
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Utah Inc. Utah
IDS Insurance Agency of Wyoming Inc. Wyoming
IDS Life Insurance Company Minnesota
IDS Life Insurance Company of New York New York
IDS Management Corporation Minnesota
IDS Partnership Services Corporation Minnesota
IDS Plan Services of California, Inc. Minnesota
IDS Property Casualty Insurance Company Wisconsin
IDS Real Estate Services, Inc. Delaware
IDS Realty Corporation Minnesota
IDS Sales Support Inc. Minnesota
IDS Securities Corporation Delaware
Investors Syndicate Development Corp. Delaware
North Dakota Public Employee Payment Company Minnesota
</TABLE>
<PAGE>
Item 27. Number of Contractowners
As of February 28, 1998, there were 7 contract owners
of qualified Privileged Assets Select Annuity contracts and 83
contract owners of non-qualified contracts.
Item 28. Indemnification
The By-Laws of the depositor provide that it shall
indemnify a director, officer, agent or employee of the
depositor pursuant to the provisions of applicable statutes or
pursuant to contract.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to director, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 29. Principal Underwriters.
(a) American Express Service Corporation acts as principal underwriter for
the following investment companies:
Strategist Income Fund, Inc.; Strategist Growth Fund, Inc.; Strategist
Growth and Income Fund, Inc.; Strategist World Fund, Inc.; Strategist
Tax-Free Income Fund, Inc., APL Variable Annuity Account 1, ACL
Variable Annuity Account 1 and IDS Certificate Company.
(b) As to each director, officer or partner of the principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Business Address Position and Offices with
Underwriter Offices with Registrant
- ----------------------------------------- --------------------------------- ---------------------------------
<S> <C> <C>
Ann M. Buffie Vice President and Chief None
IDS Tower 10 Compliance Officer
Minneapolis, MN 55440
Cynthia M. Carlson Vice President None
IDS Tower 10
Minneapolis, MN 55440
</TABLE>
<PAGE>
Item 29(b). As to each director, officer or partner of the principal
underwriter(American Express Service Corporation): (cont'd)
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Principal Business Address Position and Offices with
Underwriter Offices with Registrant
- ----------------------------------------- --------------------------------- ---------------------------------
Colleen Curran Vice President and Chief Legal None
IDS Tower 10 Counsel
Minneapolis, MN 55440
Mark A. Ernst Senior Vice President-Third None
IDS Tower 10 Party Distribution
Minneapolis, MN 55440
David R. Hubers Director and President None
IDS Tower 10
Minneapolis, MN 55440
James A. Jacobs Vice President-Sales and Service None
IDS Tower 10
Minneapolis, MN 55440
Verna J. Kaufman Vice President None
IDS Tower 10
Minneapolis, MN 55440
Brian C. Kleinberg Director None
IDS Tower 10
Minneapolis, MN 55440
Richard W. Kling Vice President None
IDS Tower 10
Minneapolis, MN 55440
Timothy S. Meehan Secretary None
IDS Tower 10
Minneapolis, MN 55440
James A. Mitchell Director and Senior Vice Board member and President
IDS Tower 10 President
Minneapolis, MN 55440
Julia K. Morton Vice President and Chief None
IDS Tower 10 Financial Officer
Minneapolis, MN 55440
Richard L. Solseth Vice President and Treasurer None
IDS Tower 10
Minneapolis, MN 55440
</TABLE>
<PAGE>
(c)
<TABLE>
<CAPTION>
Net Underwriting
Name of Principal Discounts and Compensation Brokerage
Underwriter Commissions Redemption Commissions Compensation
- ---------------------- -------------------- --------------------- --------------------- --------------------
<S> <C> <C> <C> <C>
American Express None None None None
Financial Advisors
Inc.
</TABLE>
Item 30. Location of Accounts and Records
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
Item 31. Management Services
Not Applicable
Item 32. Undertakings
(a) (b) & (c) These undertakings were filed with
Registrant's Initial Registration
Statement, File No. 333-00041.
(d) The sponsoring insurance company represents
that the fees and charges deducted under the
contract, in the aggregate, are reasonable
in relation to the services rendered, the
expenses expected to be incurred, and the
risks assumed by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, American Centurion Life Assurance Company, on behalf of the Registrant
certifies that it meets the requirements of Securities Act Rule 485(b) for
effectiveness of this Registration Statement and has duly caused this
Registration Statement to be signed on its behalf in the City of Minneapolis,
and State of Minnesota, on the 27th day of April, 1998.
ACL VARIABLE ANNUITY ACCOUNT 1
(Registrant)
By American Centurion Life Assurance Company
(Sponsor)
By /s/ Stuart A. Sedlacek*
Stuart A. Sedlacek
Chairman and President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities indicated on the 27th day of
April, 1998.
Signature Title
/s/ Stuart A. Sedlacek* Director, Chairman and
Stuart A. Sedlacek President
/s/ Jay C. Hatlestad* Vice President and
Jay C. Hatlestad Controller
/s/ Robert C. Auriema* Director
Robert C. Auriema
/s/ Douglas L. Forsberg* Director
Douglas L. Forsberg
/s/ Clarence E. Galston* Director
Clarence E. Galston
/s/ Robert A. Hatton* Director
Robert A. Hatton
/s/ Jeffrey S. Horton** Vice President and
Jeffrey S. Horton Treasurer
/s/ Richard W. Kling* Director
Richard W. Kling
<PAGE>
Signature Title
/s/ Kenneth W. Nelson* Director
Kenneth W. Nelson
/s/ Anne L. Segal* Director
Anne L. Segal
/s/ Guerdon D. Smith* Director
Guerdon D. Smith
*Signed pursuant to Power of Attorney dated March 25, 1997 filed electronically
as Exhibit 14.2 to Post-Effective Amendment No. 2, to Registration Statement
No. 333-00041.
**Signed pursuant to Power of Attorney dated April 8, 1998, filed electronically
herewith.
Sherilyn K. Beck
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 3
This Registration Statement is comprised of the following papers and documents:
The Cover Page.
Cross-reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other Information.
The signatures.
Exhibits.
<PAGE>
ACL VARIABLE ANNUITY ACCOUNT I (PASA-NY)
Registration No. 333-00041
EXHIBIT INDEX
Exhibit 9. Opinion of Counsel
Exhibit 10. Consent of Independent Auditors
Exhibit 11. Financial Statement Schedules
Exhibit 14.1 Financial Data Schedules
Exhibit 14.3 Power of Attorney dated April 8, 1998
<PAGE>
April 27, 1998
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12003
RE: Registration Statement on Form N-4
File No.: 333-00041
Ladies and Gentlemen:
I am familiar with the establishment of the ACL Variable Annuity Account 1
("Account"), which is a separate account of American Centurion Life Assurance
Company ("Company") established by the Company's Board of Directors according to
applicable insurance law. I also am familiar with the above-referenced
Registration Statement filed by the Company on behalf of the Account with the
Securities and Exchange Commission.
I have made such examination of law and examined such documents and records as
in my judgment are necessary and appropriate to enable me to give the following
opinion:
1. The Company is duly incorporated, validly existing and in good standing
under applicable state law and is duly licensed or qualified to do business
in each jurisdiction where it transacts business. The Company has all
corporate powers required to carry on its business and to issue the
contracts.
2. The Account is a validly created and existing separate account of the
Company and is duly authorized to issue the securities registered.
3. The contracts issued by the Company during the past fiscal year, when
offered and sold in accordance with the prospectus contained in the
Registration Statement and in compliance with applicable law, were legally
issued and represent binding obligations of the Company in accordance with
their terms.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
Sherilyn K. Beck
Associate Counsel
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our reports dated February 5, 1998 on the financial statements
and schedules of American Centurion Life Assurance Company and our report dated
March 13, 1998 on the financial statements of ACL Variable Annuity Account 1, in
Post-Effective Amendment No. 3 to the Registration Statement (Form N-4, File No.
333-00041) and related Prospectus for the registration of the Privileged Assets
Select Annuity to be offered by American Centurion Life Assurance Company.
Ernst & Young LLP
Minneapolis, Minnesota
April 27, 1998
<PAGE>
Report of Independent Auditors
The Board of Directors
American Centurion Life Assurance Company
We have audited the financial statements of American Centurion Life Assurance
Company (a wholly owned subsidiary of IDS Life Insurance Company) as of December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997, and have issued our report thereon dated February 5, 1998 (included
elsewhere in this Registration Statement). Our audits also included the
financial statement schedules listed in Item 24(b) of this Registration
Statement. These schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statements schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
February 5, 1998
Minneapolis, Minnesota
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1997
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -----------------------------------------------------------------------------------------------------------------------
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
<S> <C> <C> <C>
authorities (a) $ 1,522 $ 1,635 $ 1,522
States, municipalities and
political subdivisions 0 0 0
All other corporate bonds 16,176 16,518 16,176
----------------- ------------------- ----------------------
Total held to maturity 17,698 18,153 17,698
Available for sale:
United States Government and
government agencies and
authorities (b) 80,996 82,191 82,191
States, municipalities and
political subdivisions 1,000 1,031 1,031
All other corporate bonds (c) 128,944 132,939 132,939
----------------- ------------------- ----------------------
Total available for sale 210,940 216,161 216,161
Total investments $ 228,638 $ XXXXXXXXX $ 233,859
================= ======================
</TABLE>
(a) - Includes mortgage-backed securities with a cost and market value of $1,522
and $1,635, respectively.
(b) - Includes mortgage-backed securities with a cost and market value of
$78,911 and $80,092, respectively.
(c) - Includes mortgage-backed securities with a cost and market value of
$10,494 and $10,704, respectively.
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
Life insurance in force $ 216,961 $ 216,726 $ -- $235 0.00%
Premiums:
Life insurance $ 1,346 $ 1,346 $ -- $ -- 0.00%
Total premiums $ 1,346 $ 1,346 $ -- $ -- 0.00%
- -------------------------------------------------------------------------------------------------------------------
For the year ended
December 31, 1996
Life insurance in force $ 242,209 $ 241,974 $ -- $235 0.00%
Premiums:
Life insurance $ 1,351 $ 1,351 $ -- $ -- 0.00%
Total premiums $ 1,351 $ 1,351 $ -- $ -- 0.00%
- -------------------------------------------------------------------------------------------------------------------
For the year ended
December 31, 1995
Life insurance in force $ 265,799 $ 265,564 $ -- $ 235 0.00%
Premiums:
Life insurance $ 1,384 $ 1,384 $ -- $ -- 0.00%
Total premiums $ 1,384 $ 1,384 $ -- $ -- 0.00%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001004871
<NAME> ACL Variable Annuity Account 1
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1215964
<INVESTMENTS-AT-VALUE> 1279053
<RECEIVABLES> 1002
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1280055
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (1950)
<TOTAL-LIABILITIES> (1950)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1102975
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1278105
<DIVIDEND-INCOME> 41927
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (8397)
<NET-INVESTMENT-INCOME> 33530
<REALIZED-GAINS-CURRENT> 26384
<APPREC-INCREASE-CURRENT> 63089
<NET-CHANGE-FROM-OPS> 123003
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2071307
<NUMBER-OF-SHARES-REDEEMED> (969052)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1278105
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (8397)
<AVERAGE-NET-ASSETS> 639052
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 216161
<DEBT-CARRYING-VALUE> 17698
<DEBT-MARKET-VALUE> 18153
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 233859
<CASH> 3756
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 9280
<TOTAL-ASSETS> 255614
<POLICY-LOSSES> 208640
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 2305
<NOTES-PAYABLE> 0
<COMMON> 1000
0
0
<OTHER-SE> 34316
<TOTAL-LIABILITY-AND-EQUITY> 255614
0
<INVESTMENT-INCOME> 13331
<INVESTMENT-GAINS> 25
<OTHER-INCOME> 326
<BENEFITS> 8889
<UNDERWRITING-AMORTIZATION> 114
<UNDERWRITING-OTHER> 1324
<INCOME-PRETAX> 3355
<INCOME-TAX> 1389
<INCOME-CONTINUING> 1966
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1966
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
ACL Variable Annuity Account 1
ACL Variable Annuity Account 2
POWER OF ATTORNEY
City of Albany
State of New York
The undersigned, as a principal financial officer of American Centurion Life
Assurance Company (ACL), sponsor of the unit investment trusts consisting of the
ACL Variable Annuity Account 1 and ACL Variable Annuity Account 2 in connection
with the filing of registration statements on Form N-4 under the Securities Act
of 1933 and the Investment Company Act of 1940, hereby constitutes and appoints
William A. Stoltzmann, Mary Ellyn Minenko, Sherilyn Beck, Colin Lancaster and
Eric L. Marhoun or any one of them, as his attorney-in-fact and agent, to sign
for him in his name, place and stead any and all filings, applications
(including applications for exemptive relief), periodic reports, registration
statements (with all exhibits and other documents required or desirable in
connection therewith), other documents, and amendments thereto and to file such
filings, applications periodic reports, registration statements, other
documents, and amendments thereto with the Securities and Exchange Commission,
and any necessary states, and grants to any or all of them the full power and
authority to do and perform each and every act required or necessary in
connection therewith.
Dated the 8th day of April, 1998.
/s/ Jeffrey S. Horton April 8, 1998
- ------------------------------------
Jeffrey S. Horton
Vice President and Treasurer
