<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 4 (File No. 333-00041) [x]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5 (File No. 811-07475) [x]
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(Check appropriate box or boxes)
ACL VARIABLE ANNUITY ACCOUNT 1
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(Exact Name of Registrant)
American Centurion Life Assurance Company
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(Name of Depositor)
20 Madison Avenue Extension, Albany NY 12203
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-3678
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Mary Ellyn Minenko, IDS Tower 10, Minneapolis, MN 55440-0010
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(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 April 30, 1999 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.
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PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
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Prospectus
April 30, 1999
Group flexible premium deferred combination fixed/variable annuity.
ACL VARIABLE ANNUITY ACCOUNT 1
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Issued by: American Centurion Life Assurance Company
(American Centurion Life),
20 Madison Avenue Extension
Albany, NY 12203
Telephone: (518) 452-4150 (Albany area)
(800) 297-9797
This prospectus contains information that you should know before investing. You
also will receive the following prospectuses:
- - American Century Variable Portfolios, Inc.,
- - IDS Life Retirement Annuity Mutual Funds,
- - INVESCO Variable Investment Funds, Inc.,
- - Janus Aspen Series, and
- - Warburg Pincus Trust -- Post-Venture Capital Portfolio
Please read the prospectuses carefully and keep them for future reference. This
contract is available for qualified and nonqualified retirement plans.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CERTIFICATE IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CERTIFICATE
INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the Securities and Exchange Commission (SEC), and is available without charge by
contacting American Centurion Life at the telephone number above or by
completing and sending the order form on page 31 of this prospectus. The table
of contents of the SAI is on page 30 of this prospectus.
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Privileged Assets-Registered Trademark- Select Annuity
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<S> <C>
Key Terms.................................................. 3
The Certificate in Brief................................... 4
Expense Summary............................................ 6
Condensed Financial Information (Unaudited)................ 8
Financial Statements....................................... 10
Performance Information.................................... 10
The Variable Account....................................... 11
The Funds.................................................. 12
The Fixed Account.......................................... 14
Buying Your Certificate.................................... 14
Charges.................................................... 17
Valuing Your Investment.................................... 18
Making the Most of Your Certificate........................ 20
Surrenders................................................. 22
Changing Ownership......................................... 23
Benefits in Case of Death.................................. 23
The Annuity Payout Period.................................. 24
Taxes...................................................... 25
Voting Rights.............................................. 27
Substitution of Investments................................ 27
About the Service Providers................................ 28
Year 2000.................................................. 29
Table of Contents of the Statement of Additional
Information................................................ 30
</TABLE>
2
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KEY TERMS
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These terms can help you understand details about your contract.
ACCUMULATION UNIT -- A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT -- The person on whose life or life expectancy the annuity payouts are
based.
ANNUITY PAYOUTS -- An amount paid at regular intervals under one of several
plans.
ANNUITY START DATE -- The date when annuity payouts are scheduled to begin. This
date is established when you start your certificate. You can change it in the
future.
BENEFICIARY -- The person you designate to receive annuity benefits in case of
the owner's or annuitant's death while the certificate is in force and before
annuity payouts begin.
CERTIFICATE VALUE -- The total value of your certificate before we deduct any
applicable charges.
CERTIFICATE YEAR -- A period of 12 months, starting on the effective date of
your 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.
FIXED ACCOUNT -- An account to which you may allocate purchase payments. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
FUNDS -- Mutual funds and/or portfolios that are investment options under your
certificate, each with a different investment objective. You may allocate your
purchase payments into subaccounts investing in shares of any or all of these
funds.
OWNER (YOU, YOUR) -- The person who controls the certificate (decides on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she controls the certificate.
QUALIFIED ANNUITY -- A certificate that you purchase for one of the following
retirement plans that is subject to applicable federal law and any rules of the
plan itself:
- - Individual Retirement Annuities (IRAs), including rollovers from qualified
plans
- - Simplified Employee Pension (SEP) plans
All other contracts are considered NONQUALIFIED ANNUITIES.
SURRENDER VALUE -- The amount you are entitled to receive if you make a full
surrender from your certificate. It is the certificate value minus any
applicable charges.
VALUATION DATE -- Any normal business day, Monday through Friday, that the NYSE
is open. Each valuation date ends at the close of business. We calculate the
value of each subaccount at the close of business on each valuation date.
VARIABLE ACCOUNT -- Consists of separate subaccounts to which you may allocate
purchase payments; each subaccount invests in shares of one fund. The value of
your investment in each subaccount changes with the performance of the
particular fund.
3
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Privileged Assets-Registered Trademark- Select Annuity
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THE CERTIFICATE IN BRIEF
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PURPOSE: The purpose of the certificate is to allow you to accumulate money for
retirement. You do this by making one or more investments (purchase payments)
that may earn returns that increase the value of the certificate. The
certificate provides lifetime or other forms of payouts beginning at a specified
date (the retirement date). As in the case of other annuities, it may not be
advantageous for you to purchase this certificate as a replacement for, or in
addition to an existing annuity.
FREE LOOK PERIOD: You may return your contract for a full refund within 30 days
after you receive it. You must invest the portion of the purchase payment you
allocate to the variable account 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 contract issue date.)
If you choose not to keep your certificate, return it to us within the free look
period. We will cancel the certificate and we promptly will refund the greater
of (1) your purchase payment without investment earnings, or (2) your
certificate value plus any amount we deducted from your payment prior to
allocation to the variable account or the fixed account.
ACCOUNTS: Currently, you may allocate your purchase payments among
any or all of:
- - the subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
annuity start date will equal or exceed the total purchase payments you
allocate to the subaccounts. (p. 11)
- - the fixed account, which earns interest at a rate that we adjust periodically.
(p. 14)
BUYING YOUR CERTIFICATE: You can purchase a certificate by submitting a complete
application. Applications are subject to acceptance at our office. You may buy a
nonqualified annuity or a qualified annuity. You must make an initial lump-sum
purchase payment. You have the option of making additional purchase payments in
the future.
- - Minimum purchase payment -- $2,000 ($1,000 for qualified annuities) unless you
pay in installments by means of a bank authorization at a rate of $100/month
or more or other payment plan acceptable to us.
- - Minimum additional purchase payment -- $100.
- - Maximum first-year purchase payments -- $50,000 to $1,000,000 depending on
your age.
- - Maximum purchase payment for each subsequent year -- $50,000. (p. 14)
TRANSFERS: Subject to certain restrictions you currently may redistribute your
money among the subaccounts and the fixed account without charge at any time
until annuity payouts begin. You may establish automated transfers among the
fixed account and subaccounts. (p. 21)
SURRENDERS: You may surrender all or part of your certificate value at any time
before the annuity start date. You may also establish systematic surrenders.
There is no surrender charge. Surrenders may be taxable (and include a 10% IRS
penalty if made prior to your reaching age 59 1/2) and may have other tax
consequences; also, certain restrictions apply. (p. 22)
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CHANGING OWNERSHIP: You may change ownership of a nonqualified annuity by
written instruction, but this may have federal income tax consequences.
Restrictions apply to changing ownership of a qualified annuity. (p. 23)
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary the greater of the certificate value or total
purchase payments made less partial surrenders. (p. 23)
ANNUITY PAYOUTS: You can apply your certificate value 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 you like. 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. 24)
TAXES: Generally, your contract 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 be taxed on the
income if you are the owner. (p. 25)
CHARGES:
- - $30 annual administrative charge;
- - 1.00% mortality and expense risk fee; and
- - the operating expenses of the funds.
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Privileged Assets-Registered Trademark- Select Annuity
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EXPENSE SUMMARY
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The purpose of this table is to help you understand the various costs and
expenses associated with your certificate.
You pay no sales charge when you purchase your certificate. We show all costs
that you bear directly or indirectly for the subaccounts and funds below. Some
expenses may vary as we explain under "Charges."
<TABLE>
<S> <C>
ANNUAL CERTIFICATE OWNER EXPENSES:
SURRENDER CHARGE 0%
ADMINISTRATIVE CHARGE* $30
ANNUAL SUBACCOUNT EXPENSES (as a
percentage of average daily net assets
of the subaccounts):
MORTALITY AND EXPENSE RISK FEE 1%
</TABLE>
* If total purchase payments (less partial surrenders) is at least $10,000 we
will waive the charge.
ANNUAL OPERATING EXPENSES OF THE FUNDS (as a percentage of average daily net
assets):
<TABLE>
<CAPTION>
AMERICAN AMERICAN IDS LIFE IDS LIFE IDS LIFE IDS
CENTURY CENTURY AGGRESSIVE CAPITAL INTERNATIONAL LIFE
VP CAPITAL VP GROWTH RESOURCE EQUITY MANAGED
APPRECIATION VALUE FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
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Management fees 1.00% 1.00% .59% .59% .83% .59%
Other expenses -- -- .09 .07 .15 .04
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Total 1.00%(1) 1.00%(1) .68%(2) .66%(2) .98%(2) .63%(2)
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</TABLE>
<TABLE>
<CAPTION>
WARBURG PINCUS
TRUST -
POST-VENTURE
JANUS ASPEN CAPITAL
IDS LIFE INVESCO VIF - SERIES PORTFOLIO
IDS LIFE SPECIAL EQUITY JANUS ASPEN WORLDWIDE (AFTER WAIVERS
MONEYSHARE INCOME INCOME SERIES GROWTH GROWTH AND/OR
FUND FUND FUND PORTFOLIO PORTFOLIO REIMBURSEMENTS)
<S> <C> <C> <C> <C> <C> <C>
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Management fees .50% .60% .75% .65% .65% 1.08%
Other expenses .06 .07 .18 .03 .07 .32
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Total .56%(2) .67%(2) .93%(3) .68%(4) .72%(4) 1.40%(5)
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</TABLE>
1 Operating expenses of the funds at Dec. 31, 1998.
2 Annualized operating expenses of funds at Dec. 31, 1998.
3 Certain expenses of each Fund are being voluntarily absorbed by INVESCO.
Accordingly, without such waivers, "Other Expenses" and "Total" that would
have been incurred for the fiscal year ended December 31, 1998 would be
0.42% and 1.17%, respectively.
4 The figures given above are based on gross expenses before expense offset
arrangements, if any, during 1998, for these funds. As of the date of this
prospectus, certain fees are being reduced by the respective investment
managers or service providers for certain of the funds, in each case on a
voluntary basis. Without such reductions, the "Management fees", "Other
expenses" and "Total" that would have been incurred for the last completed
fiscal year would be: 0.67%, 0.07%, 0.74%, respectively for Janus Aspen
Series Worlwide Growth Portfolio and 0.72%, 0.03%, and 0.75%, respectively,
for Janus Aspen Series Growth Portfolio. See the Portfolio's prospectuses
for a discussion of fee waiver and expense reimbursements.
5 Absent the waiver of fees by the Portfolio's investment advisor and
co-administrator, Management fees would equal 1.25%, Other Expenses would
equal .45%, and Total portfolio operating expenses would equal 1.70%.
Management fees, Other expenses and Total operating expenses for the
Portfolio is based on actual expenses for the fiscal year ending Dec. 31,
1998. Fee waivers and expense reimbursements may be discontinued at any
time.
6
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EXAMPLE:* You would pay the following expenses on a $1,000 investment, assuming
a 5% annual return and selection of an annuity payout plan at the end of each
time period:
<TABLE>
<CAPTION>
AMERICAN AMERICAN IDS LIFE IDS LIFE IDS LIFE
CENTURY CENTURY AGGRESSIVE CAPITAL INTERNATIONAL IDS LIFE
VP CAPITAL VP GROWTH RESOURCE EQUITY MANAGED
APPRECIATION VALUE FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
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1 Year $ 21.30 $ 21.30 $ 18.02 $ 17.81 $ 21.09 $ 17.51
3 Years 65.75 65.75 55.81 55.18 65.13 54.25
5 Years 112.79 112.79 96.05 94.99 111.75 93.41
10 Years 242.72 242.72 208.47 206.29 240.61 203.02
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN WARBURG PINCUS
IDS LIFE INVESCO VIF - SERIES TRUST -
IDS LIFE SPECIAL EQUITY JANUS ASPEN WORLDWIDE POST-VENTURE
MONEYSHARE INCOME INCOME SERIES GROWTH GROWTH CAPITAL
FUND FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
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1 Year $ 16.79 $ 17.92 $ 20.58 $ 18.02 $ 18.43 $ 25.40
3 Years 52.06 55.49 63.58 55.81 57.05 78.09
5 Years 89.71 95.52 109.15 96.05 98.15 133.40
10 Years 195.34 207.38 235.32 208.47 212.81 284.04
</TABLE>
* In this example, the $30 administrative charge is approximated as a 0.078%
charge based on our average contract size. We entered into certain
arrangements under which we are compensated by the funds' advisors and/or
distributors for the administrative services we provide to the funds.
YOU SHOULD NOT CONSIDER THIS EXAMPLE AS A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
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CONDENSED FINANCIAL INFORMATION (UNAUDITED)
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The following table gives per-unit information about the financial history of
each subaccount.
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1998 1997 1996
<S> <C> <C> <C>
SUBACCOUNT DGR(1) (INVESTING IN SHARES OF AMERICAN CENTURY VP CAPITAL APPRECIATION)
Accumulation unit value at beginning of period....................................... $0.93 $0.97 $1.00
Accumulation unit value at end of period............................................. $0.90 $0.93 $0.97
Number of accumulation units outstanding at end of period (000 omitted).............. 51 42 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
SUBACCOUNT DVL(1) (INVESTING IN SHARES OF AMERICAN CENTURY VP VALUE)
Accumulation unit value at beginning of period....................................... $1.27 $1.01 $1.00
Accumulation unit value at end of period............................................. $1.31 $1.27 $1.01
Number of accumulation units outstanding at end of period (000 omitted).............. 50 33 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
SUBACCOUNT DAG(2) (INVESTING IN SHARES OF IDS LIFE AGGRESSIVE GROWTH FUND)
Accumulation unit value at beginning of period....................................... $1.11 $1.00 $1.00
Accumulation unit value at end of period............................................. $1.13 $1.11 $1.00
Number of accumulation units outstanding at end of period (000 omitted).............. 65 42 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
SUBACCOUNT DCR(2) (INVESTING IN SHARES OF IDS LIFE CAPITAL RESOURCE FUND)
Accumulation unit value at beginning of period....................................... $1.20 $0.98 $1.00
Accumulation unit value at end of period............................................. $1.48 $1.20 $0.98
Number of accumulation units outstanding at end of period (000 omitted).............. 50 23 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
SUBACCOUNT DIE(2) (INVESTING IN SHARES OF IDS LIFE INTERNATIONAL EQUITY FUND)
Accumulation unit value at beginning of period....................................... $1.03 $1.01 $1.00
Accumulation unit value at end of period............................................. $1.17 $1.03 $1.01
Number of accumulation units outstanding at end of period (000 omitted).............. 15 14 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
SUBACCOUNT DMG(2) (INVESTING IN SHARES OF IDS LIFE MANAGED FUND)
Accumulation unit value at beginning of period....................................... $1.17 $0.99 $1.00
Accumulation unit value at end of period............................................. $1.34 $1.17 $0.99
Number of accumulation units outstanding at end of period (000 omitted).............. 63 44 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
</TABLE>
8
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<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1998 1997 1996
<S> <C> <C> <C>
SUBACCOUNT DMS(2) (INVESTING IN SHARES OF IDS LIFE MONEYSHARE FUND)
Accumulation unit value at beginning of period....................................... $1.04 $1.00 $1.00
Accumulation unit value at end of period............................................. $1.08 $1.04 $1.00
Number of accumulation units outstanding at end of period (000 omitted).............. 170 189 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
Simple yield(3)...................................................................... 3.68% 4.12% --
Compound yield(3).................................................................... 3.75% 4.20% --
SUBACCOUNT DSI(2) (INVESTING IN SHARES OF IDS LIFE SPECIAL INCOME FUND)
Accumulation unit value at beginning of period....................................... $1.06 $0.99 $1.00
Accumulation unit value at end of period............................................. $1.07 $1.06 $0.99
Number of accumulation units outstanding at end of period (000 omitted).............. 21 15 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
SUBACCOUNT DII(1) (INVESTING IN SHARES OF INVESCO VIF -- EQUITY INCOME FUND)
Accumulation unit value at beginning of period....................................... $1.26 $1.00 $1.00
Accumulation unit value at end of period............................................. $1.44 $1.26 $1.00
Number of accumulation units outstanding at end of period (000 omitted).............. 221 155 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
SUBACCOUNT DSG(1) (INVESTING IN SHARES OF JANUS ASPEN SERIES GROWTH PORTFOLIO)
Accumulation unit value at beginning of period....................................... $1.21 $1.00 $1.00
Accumulation unit value at end of period............................................. $1.63 $1.21 $1.00
Number of accumulation units outstanding at end of period (000 omitted).............. 352 230 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
SUBACCOUNT DWG(1) (INVESTING IN SHARES OF JANUS ASPEN SERIES WORLDWIDE GROWTH PORTFOLIO)
Accumulation unit value at beginning of period....................................... $1.22 $1.00 $1.00
Accumulation unit value at end of period............................................. $1.56 $1.22 $1.00
Number of accumulation units outstanding at end of period (000 omitted).............. 339 252 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
SUBACCOUNT DVC(1) (INVESTING IN SHARES OF WARBURG PINCUS TRUST -- POST-VENTURE CAPITAL PORTFOLIO)
Accumulation unit value at beginning of period....................................... $1.10 $0.98 $1.00
Accumulation unit value at end of period............................................. $1.16 $1.10 $0.98
Number of accumulation units outstanding at end of period (000 omitted).............. 75 65 --
Ratio of operating expense to average net assets..................................... 1.00% 1.00% --
</TABLE>
1 For the period Dec. 10, 1996 (commencement of operations) to Dec. 31, 1996.
The subaccounts had no activity in this period.
2 For the period Dec. 9, 1996 (commencement of operations) to Dec. 31, 1996.
The subaccounts had no activity in this period.
3 Net of annual administrative charge and mortality and expense risk fee.
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FINANCIAL STATEMENTS
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You can find our audited financial statements and the audited financial
statements of the subaccounts in the SAI.
PERFORMANCE INFORMATION
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Performance information for the subaccounts may appear from time to time in
advertisements or sales literature. This information reflects the performance of
a hypothetical investment in a particular subaccount during a specified time
period. 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 certificate existed at that time. Although we base performance figures on
historical earnings, past performance does not guarantee future results.
Total return figures reflect deduction of all applicable charges, including:
- - the administrative charge, and
- - mortality and expense risk fee.
Total return quotations may be shown by means of schedules, charts or graphs.
AVERAGE ANNUAL TOTAL RETURN is the average annual compounded rate of return of
the investment over a period of one, five and 10 years (or up to the life of the
subaccount if it is less than ten years old).
CUMULATIVE TOTAL RETURN is the cumulative change in the value of an investment
over a specified time period. We assume that income earned by the investment is
reinvested. Cumulative total return will be higher than average annual total
return because it is not averaged.
ANNUALIZED SIMPLE YIELD (FOR SUBACCOUNTS INVESTING IN MONEY MARKET FUNDS)
"annualizes" the income generated by the investment over a given seven-day
period. That is, we assume the amount of income generated by the investment
during the period will be generated each seven-day period for a year. We show
this as a percentage of the investment.
ANNUALIZED COMPOUND YIELD (FOR SUBACCOUNTS INVESTING IN MONEY MARKET FUNDS) is
calculated like simple yield except that we assume the income is reinvested when
we annualize it. Compound yield will be higher than the simple yield because of
the compounding effect of the assumed reinvestment.
ANNUALIZED YIELD (FOR SUBACCOUNTS INVESTING IN INCOME FUNDS) divides the net
investment income (income less expenses) for each accumulation unit during a
given 30-day period by the value of the unit on the last day of the period. We
then convert the result to an annual percentage.
You should consider performance information in light of the investment
objectives, policies, characteristics and quality of the fund in which the
subaccount invests and the market conditions during the specified time period.
Advertised yields and total return figures include charges that reduce
advertised performance. Therefore, you should not compare subaccount performance
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 total return and
yield.)
If you would like additional information about actual performance, please
contact us at the address or telephone number on the first page of this
prospectus.
10
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THE VARIABLE ACCOUNT
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You may allocate payments to any or all the subaccounts of the variable account
that invest in shares of the following funds:
<TABLE>
<CAPTION>
SUBACCOUNT INVESTING IN:
<S> <C>
DGR American Century VP Capital Appreciation
DVL American Century VP Value
DAG IDS Life Aggressive Growth Fund
DCR IDS Life Capital Resource Fund
DIE IDS Life International Equity Fund
DMG IDS Life Managed Fund
DMS IDS Life Moneyshare Fund
DSI IDS Life Special Income Fund
DII INVESCO VIF -- Equity Income Fund
DSG Janus Aspen Series Growth Portfolio
DWG Janus Aspen Series Worldwide Growth Portfolio
DVC Warburg Pincus Trust -- Post-Venture Capital
Portfolio
</TABLE>
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business.
The U.S. Treasury and the Internal Revenue Service (IRS) indicated that they may
provide additional guidance on investment control. This concerns how many
variable subaccounts an insurance company may offer and how many exchanges among
subaccounts it may allow before the certificate owner would be currently taxed
on income earned within subaccount assets. At this time, we do not know what the
additional guidance will be or when action will be taken. We reserve the right
to modify the contract, as necessary, so that the owner will not be subject to
current taxation as the owner of the subaccount assets.
We intend to comply with all federal tax laws so that each certificate continues
to qualify as an annuity for federal income tax purposes. We reserve the right
to modify the certificate as necessary to comply with any new tax laws.
The variable account was established under New York law on Dec. 1, 1995 and the
subaccounts are registered together as a single 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 obligations arising under the certificates are general
obligations of American Centurion Life.
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<PAGE>
THE FUNDS
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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.
IDS LIFE AGGRESSIVE GROWTH FUND
Objective: capital appreciation. Invests primarily in common stocks of small-and
medium-size companies.
IDS LIFE CAPITAL RESOURCE FUND
Objective: capital appreciation. Invests primarily in U.S. common stocks.
IDS LIFE INTERNATIONAL EQUITY FUND
Objective: capital appreciation. Invests primarily in common stock of foreign
issuers.
IDS LIFE MANAGED FUND
Objective: maximum total investment return through a combination of capital
growth and current income. Invests primarily in stocks, convertible securities,
bonds and money market instruments.
IDS LIFE MONEYSHARE FUND
Objective: maximum current income consistent with liquidity and conservation of
capital. Invests in money market securities.
IDS LIFE SPECIAL INCOME FUND
Objective: high level of current income while conserving the value of the
investment for the longest time period. Invests primarily in investment-grade
bonds.
INVESCO VIF -- EQUITY INCOME FUND
Objective: high current income, with growth of capital as a secondary objective.
The Fund normally invests at least 65% of its assets in dividend-paying common
and preferred stocks, although in recent years that percentage has been somewhat
higher. Stocks held by the Fund generally are expected to produce a relatively
high level of income and a consistent, stable return. Although it focuses on the
stocks of larger companies with a strong record of paying dividends, the Fund
also may invest in companies that have not paid regular dividends. The Fund's
equity investments are limited to stocks that can be traded easily in the United
States; it may, however, invest in foreign securities in the form of American
Depository Receipts (ADRs). The rest of the Fund's assets are invested in debt
securities, generally corporate bonds that are rated investment grade or better.
The Fund also may invest up to 15% of its assets in lower-grade debt securities
commonly known as "junk bonds," which generally offer higher interest rates, but
are riskier investment grade securities.
12
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<PAGE>
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.
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.
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.
The investment objectives and policies of some of the funds are similar to the
investment objectives and policies of other mutual funds that the investment
advisor or its affiliates manage. Although the objectives and policies may be
similar, each fund will have its own portfolio holdings and its own fees and
expenses. Accordingly, each fund will have its own investment results.
All funds are available to serve as the underlying investments for variable
annuities. Some funds also are available to serve as investment options for
variable life insurance policies and qualified plans. It is possible that in the
future, it may be disadvantageous for variable annuity accounts and variable
life insurance accounts and/or qualified plans to invest in the available funds
simultaneously.
Although the insurance company 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 annuity
owners, policy owners and qualified plans and to determine what action, if any,
should be taken in response to a conflict. If a board were to conclude that it
should establish separate funds for the variable annuity, variable life
insurance and qualified plan accounts, you would not bear any expenses
associated with establishing separate funds. Please refer to the fund
prospectuses for risk disclosure regarding simultaneous investments by variable
annuity, variable life insurance and qualified plan accounts.
The IRS issued final regulations relating to the diversification requirements
under Section 817(h) of the Internal Revenue Code of 1986, as amended (the
Code). Each fund intends to comply with these requirements.
The investment advisors or managers for the funds are as follows:
- - American Century Variable Portfolios, Inc. -- American Century Investment
Management, Inc.
- - IDS Life Retirement Annuity Mutual Funds -- IDS Life. AEFC is the investment
advisor for the IDS Life Retirement Annuity Mutual 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 VIF -- Equity Income Fund -- INVESCO Funds Group, Inc.
- - Janus Aspen Series Portfolios -- Janus Capital Corporation.
- - Warburg Pincus Trust -- Warburg Pincus Asset Management, Inc.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the funds' prospectuses for facts you
should know before investing. These prospectuses are available by contacting us
at the address or telephone number on the first page of this prospectus.
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<PAGE>
THE FIXED ACCOUNT
- --------------------------------------------------------------------------------
You also may allocate purchase payments to the fixed account. We back the
principal and interest guarantees relating to the fixed account. The value of
the fixed account increases as we credit interest to the account. Purchase
payments and transfers to the fixed account become part of our general account.
We credit interest daily and compound it annually. We may change the interest
rates from time to time at our discretion.
Interests in the fixed account are not required to be registered with the SEC.
The SEC staff does not review the disclosures in this prospectus on 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. (See
"Making the Most of Your Certificate -- Transfer policies" for restrictions on
transfers involving the fixed account.)
BUYING YOUR CERTIFICATE
- --------------------------------------------------------------------------------
Our representative can help you prepare and submit your application.
Alternatively, you may ask us for the forms and prepare them yourself. As the
owner, you have all rights and may receive all benefits under the certificate.
You can own a nonqualified annuity in joint tenancy with rights of survivorship
only in spousal situations. You cannot own a qualified annuity in joint tenancy.
When you apply, you may select:
- - the fixed account and/or subaccounts in which you want to invest;
- - how you want to make purchase payments;
- - the date you want to start receiving annuity payouts (the annuity start date);
and
- - a beneficiary.
If your application is complete, we will process it and apply your purchase
payment to the fixed account and subaccounts you selected within two business
days after we receive it at our office. If we accept your application, we will
send you a certificate. 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 your accounts on the valuation date we
receive them. We will value the additional payments at the next accumulation
unit value calculated after we receive your payments at our office.
THE ANNUITY START DATE
Annuity payouts are to begin on the annuity start date. You can align this date
with your actual retirement from a job, or it can be a different future date,
depending on your needs and goals and on certain restrictions. You also can
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:
- - no earlier than the 60th day after the annuity's effective date; and
- - no later than the annuitant's 85th birthday.
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<PAGE>
FOR QUALIFIED ANNUITIES, to avoid IRS penalty taxes, the annuity start date
generally must be:
- - on or after the date the annuitant reaches age 59 1/2; and
- - 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 take the minimum IRA distributions as required by the Code from another
tax-qualified investment, or in the form of partial surrenders from this
certificate, 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 (while this
certificate is in force and before annuity payouts begin), we will pay your
named beneficiary 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.)
PURCHASE PAYMENT AMOUNTS
MINIMUM PURCHASE PAYMENTS
<TABLE>
<S> <C>
IF SINGLE PURCHASE PAYMENT:
Nonqualified: $2,000
Qualified: $1,000
IF INSTALLMENT PURCHASE PAYMENTS:
- -Minimum installment purchase payments: $100 monthly; $50.00 biweekly
Installments must total at least $1,000 in the first year.*
</TABLE>
* If you do not make any 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 certificate in
a lump sum.
MINIMUM ADDITIONAL PURCHASE PAYMENTS: $100
MAXIMUM FIRST-YEAR PURCHASE PAYMENTS:
This maximum is based on your age or the age of the annuitant (whoever is older)
on the effective date of the certificate.
<TABLE>
<S> <C>
Up to age 75 $1 million
76 to 85 $500,000
MAXIMUM PURCHASE PAYMENT FOR EACH SUBSEQUENT YEAR**: $50,000
</TABLE>
** These limits apply in total to all American Centurion Life annuities and
certificates 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.
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<PAGE>
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and certificate number to:
REGULAR MAIL:
American Centurion Life Assurance Company
Box 5144
Albany, NY 12205
EXPRESS MAIL:
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
2 BY SCHEDULED PAYMENT PLAN
Through:
- - a bank authorization.
3 OTHER
- - wire transfer; or
- - other method acceptable to us.
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<PAGE>
CHARGES
- --------------------------------------------------------------------------------
ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $30
from the certificate value on your certificate anniversary at the end of each
certificate year. We prorate this charge among the subaccounts and the fixed
account in the same proportion your interest in each account bears to your total
certificate value.
We will waive this administrative charge for any certificate year where:
- - the total purchase payments (less partial surrenders) on the current
certificate anniversary is $10,000 or more, or
- - a death benefit is payable, or
- - you surrender the certificate in full.
This charge does not apply after annuity payouts begin.
We reserve the right to impose the administrative charge on all certificates,
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. We charge this fee
daily to the subaccounts. The unit values of your subaccounts reflect this fee
and it totals 1% of their average daily net assets on an annual basis.
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 our entire group of annuitants live. If, as a group, annuitants outlive the
life expectancy we assumed in our actuarial tables, then we must take money from
our general assets to meet our obligations. If, as a group, 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. We would have to make up any deficit from our general assets.
We may use any profits we realize from the subaccounts' payment to us of 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 certificate.
In some cases, we may incur lower sales and administrative expenses. In those
cases, we may, at our discretion, reduce or eliminate the administrative charge.
However, we expect this to occur infrequently.
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<PAGE>
VALUING YOUR INVESTMENT
- --------------------------------------------------------------------------------
We value your fixed account and subaccounts as follows:
FIXED ACCOUNT: We value the amounts allocated to the fixed account directly in
dollars. The fixed account value equals:
- - the sum of your purchase payments;
- - plus interest credited;
- - minus the sum of amounts surrendered and amounts transferred out; and
- - minus any prorated administrative charge.
SUBACCOUNTS: We convert amounts you allocated to the subaccounts into
accumulation units. Each time you make a purchase payment or transfer amounts
into one of the subaccounts, we credit a certain number of accumulation units to
your certificate for that account. Conversely, each time you take a partial
surrender, transfer amounts out of a subaccount or we assess an administrative
charge, we subtract a certain number of accumulation units from your
certificate.
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 fund in which the subaccount invests.
The dollar value of each accumulation unit can rise or fall daily depending on
the subaccount expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
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 subaccount equals the last value
times the subaccount's current net investment factor.
NET INVESTMENT FACTOR
We determine the net investment factor by:
- - adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
- - dividing that sum by the previous adjusted net asset value per share; and
- - subtracting the percentage factor representing the mortality and expense risk
fee from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
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<PAGE>
FACTORS THAT AFFECT 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:
- - additional purchase payments allocated to the subaccounts;
- - transfers into or out of the subaccounts;
- - partial surrenders; and/or
- - prorated portions of the administrative charge.
Accumulation unit values will fluctuate due to:
- - changes in funds' net asset value;
- - dividends distributed to the subaccounts;
- - capital gains or losses of funds;
- - fund operating expenses; and/or
- - mortality and expense risk fees.
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<PAGE>
MAKING THE MOST OF YOUR CERTIFICATE
- --------------------------------------------------------------------------------
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the fixed account to one or
more subaccounts. 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 values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HOW DOLLAR-COST AVERAGING WORKS
Amount Accumulation Number of units
Month invested unit value purchased
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
By investing an Jan $100 $20 5.00
equal number of Feb 100 18 5.56
dollars each month.... Mar 100 17 5.88
you automatically Apr 100 15 6.67
buy more units May 100 16 6.25
when the per unit Jun 100 18 5.56
market price is low.... Jul 100 17 5.88
Aug 100 19 5.26
and fewer units Sept 100 21 4.76
when the per unit Oct 100 20 5.00
market price is high.
</TABLE>
You paid an average price of only $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
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
dollar-cost averaging involves continuous investing, your success with this
strategy 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. For specific features contact our office.
20
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<PAGE>
TRANSFERRING MONEY BETWEEN ACCOUNTS
You may transfer money from any one subaccount, or the fixed account, to another
subaccount before annuity payouts begin. We will process your transfer request
on the valuation date we receive your request. We will value your transfer at
the next accumulation unit value calculated after we receive your request. There
is no charge for transfers. Before making a transfer, you should consider the
risks involved in switching investments.
We may suspend or modify transfer privileges at any time. Excessive trading
activity can disrupt fund management strategy and increase expenses, which are
borne by all contract owners who allocated purchase payments to the fund
regardless of their transfer activity. We may apply modifications or
restrictions in any reasonable manner to prevent transfers we believe will
disadvantage other certificate owners. (For information on transfers after
annuity payouts begin, see "Transfer policies.")
TRANSFER POLICIES
- - You may transfer certificate values at any time between the subaccounts, from
the subaccounts to the fixed account or from the fixed account to the
subaccounts.
- - The amount transferred to any one account must be at least $100.
- - If you make more than 12 transfers in a certificate year, we will charge $25
for each transfer in excess of 12.
- - We reserve the right to limit the number of transfers to twelve per
certificate year.
HOW TO REQUEST A TRANSFER OR SURRENDER
1 BY LETTER
Send your name, certificate 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 Extension
Albany, NY 12203
MINIMUM AMOUNT
Transfers or surrenders: $100 or entire account balance
MAXIMUM AMOUNT
Transfers or surrenders: Certificate value
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<PAGE>
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL SURRENDERS
You can set up automated transfers among your subaccounts or fixed account or
partial surrenders from the accounts.
You can start or stop this service by written request or other method acceptable
to us. You must allow 30 days for us to change any instructions that are
currently in place.
- - Automated transfers and automated partial surrenders are subject to all of the
certificate provisions and terms, including transfer of contract values
between accounts. Automated surrenders may be restricted by applicable law
under some certificates.
- - Automated partial surrenders may result in IRS taxes and penalties on all or
part of the amount surrendered.
MINIMUM AMOUNT
Transfers or surrenders: $100
SURRENDERS
- --------------------------------------------------------------------------------
You may surrender all or part of your certificate at any time before annuity
payouts begin by sending us a written request or calling us. We will process
your surrender request on the valuation date we receive it. For total
surrenders, we will compute the value of your certificate at the next
accumulation unit value calculated after we receive your request. We may ask you
to return the certificate. You may have to pay IRS taxes and penalties (see
"Taxes"). You cannot make surrenders after annuity payouts begin.
SURRENDER POLICIES
If you have a balance in more than one account and you request a partial
surrender, we will surrender money from all your subaccounts and/or the fixed
account in the same proportion as your value in each account correlates to your
total certificate value, unless you request otherwise.
RECEIVING PAYMENT
By regular or express mail:
- - payable to you.
- - 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;
-- 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: We will charge you a fee if you request express mail delivery.
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<PAGE>
CHANGING OWNERSHIP
- --------------------------------------------------------------------------------
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding upon us when we receive and record it. We will honor any
change of ownership request that we believe is authentic and we will use
reasonable procedures to confirm authenticity. If we follow these procedures, we
will not take any responsibility for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability 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 contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code.
BENEFITS IN CASE OF DEATH
- --------------------------------------------------------------------------------
If you or the annuitant die before annuity payouts begin while the certificate
is in force, we will pay the beneficiary the greater of:
- - the certificate value; or
- - purchase payments, minus any partial surrenders.
IF YOUR SPOUSE IS SOLE BENEFICIARY under a nonqualified annuity and you die
before the annuity start date, your spouse may keep the certificate as owner. To
do this your spouse must, within 60 days after we receive proof of death, give
us written instructions to keep the certificate in force.
Under a qualified annuity, if the annuitant dies before the Code requires
distributions to begin, and the spouse is the only beneficiary, the spouse may
keep the certificate as owner until the date on which the annuitant would have
reached 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.
PAYMENTS: Under a nonqualified annuity we will pay the beneficiary in a single
lump sum unless you give us other written instructions. We must fully distribute
the death benefit within five years of your death. However, the beneficiary may
receive payouts under any annuity payout plan available under this certificate
if:
- - the beneficiary asks us in writing within 60 days after we receive proof of
death;
- - payouts begin no later than one year after your death, or other date as
permitted by the Code; and
- - the payout period does not extend beyond the beneficiary's life or life
expectancy.
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
certificate's value at the next accumulation unit value calculated after our
death claim requirements are fulfilled. We will pay interest, if any, 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. Other rules may apply to qualified annuities (see "Taxes").
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<PAGE>
THE ANNUITY PAYOUT PERIOD
- --------------------------------------------------------------------------------
As owner of the certificate, you have the right to decide how and to who annuity
payouts will be made starting at the annuity start date. You may select one of
the annuity payout plans outlined below, or we may 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:
- - the annuity payout plan you select;
- - the annuitant's age and, in most cases, sex; and
- - the annuity table in the certificate.
For information with respect to transfers between accounts after annuity payouts
begin, see "Making the Most of Your Certificate -- Transfer policies."
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan:
- - PLAN A -- LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we have made only one monthly payout, we will not make any more
payouts.
- - PLAN B -- LIFE ANNUITY WITH FIVE, 10 OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, 10 or 15 years that you elect.
This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the annuity start date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
- - PLAN C -- LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until
the annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts 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.
- - PLAN D -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
- - PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of 10 to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, 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.")
24
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<PAGE>
RESTRICTIONS FOR SOME QUALIFIED PLANS: If you purchased a qualified annuity, you
may be required to select a payout plan that provides for payouts:
- - over the life of the annuitant;
- - over the joint lives of the annuitant and a designated beneficiary;
- - for a period not exceeding the life expectancy of the annuitant; or
- - for a period not exceeding the joint life expectancies of the annuitant and a
designated beneficiary.
You have the responsibility for electing a payout plan that complies with your
certificate and with applicable law.
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 or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN
If you or the annuitant die after annuity payouts begin, we will pay any amount
payable to the beneficiary as 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 (see detailed discussion
below). Any portion of the annuity payouts and any surrenders you request that
represent ordinary income are normally taxable. We will send you a tax
information reporting form for any year in which we made a taxable distribution
according to our records.
QUALIFIED ANNUITIES: We designed this certificate for use with qualified
retirement plans. Special rules apply to these retirement plans. Your rights to
benefits may be subject to the terms and conditions of these retirement plans
regardless of the terms of the certificate.
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the certificate comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions during your life and after your death. You should refer
to your retirement plan or adoption agreement or consult a tax advisor for more
information about your distribution rules.
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 you receive after your investment in the certificate is fully recovered
will be subject to tax.
Tax law requires that all nonqualified deferred annuities issued by the same
company (and possibly its affiliates) to the same owner during a calendar year
be taxed as a single, unified certificate when you take distributions from any
one of those certificates.
25
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Privileged Assets-Registered Trademark- Select Annuity
<PAGE>
ANNUITY PAYOUTS UNDER QUALIFIED ANNUITIES: Under a qualified annuity, the entire
payout generally is includable as ordinary income and is subject to tax except
to the extent that contributions were made with after-tax dollars. If you or
your employer invested in your certificate with deductible or pre-tax dollars as
part of a qualified retirement plan, such amounts are not considered to be part
of your investment in the certificate and will be taxed when paid to you.
SURRENDERS: If you surrender part or all of your certificate before your annuity
payouts begin, your surrender payment will be taxed to the extent that the value
of your certificate immediately before the surrender exceeds your investment.
You also may have to pay a 10% IRS penalty for surrenders you make before
reaching age 59 1/2 unless certain exceptions apply. For qualified annuities,
other penalties may apply if you surrender your certificate before your plan
specifies that you can receive payouts.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a certificate is not
tax-exempt. Any amount your beneficiary receives that represents previously
deferred earnings within the certificate is taxable as ordinary income to the
beneficiary in the years 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 income
will remain tax-deferred.
PENALTIES: If you receive amounts from your certificate 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:
- - because of your death;
- - because you become disabled (as defined in the Code);
- - if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary); or
- - 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 certificate before your plan specifies that payouts can be made.
WITHHOLDING, GENERALLY: If you receive all or part of the certificate value, we
may deduct withholding against the taxable income portion of the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual tax return.
If the payment is part of an annuity payout plan, we generally compute the
amount of withholding using payroll tables. You may 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 full
surrender), we compute withholding using 10% of the taxable portion. Similar to
above, as long as you have 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, we may deduct state
withholding from any payment from which we deduct federal withholding. The
withholding requirements may differ if we are making payment to a non-U.S.
citizen or if we deliver the payment outside the United States.
26
- --------------------------------------------------------------------------------
<PAGE>
TRANSFER OF OWNERSHIP OF A NONQUALIFIED ANNUITY: If you transfer a nonqualified
annuity without receiving adequate consideration, the transfer is a gift and
also may be a surrender for federal income tax purposes. If the gift is a
currently taxable event for income tax purposes, the original owner will be
taxed on the amount of deferred earnings at the time of the transfer and also
may be subject to the 10% IRS penalty discussed earlier. In this case, the new
owner's investment in the certificate will be the value of the certificate at
the time of the transfer.
COLLATERAL ASSIGNMENT OF A NONQUALIFIED ANNUITY: If you collaterally assign or
pledge your certificate, 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
current interpretations of these laws. 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 advisor if you have any questions about taxation of your
certificate.
TAX QUALIFICATION: We intend that the certificate qualify as an annuity for
federal income tax purposes. To that end, the provisions of the certificate are
to be interpreted to ensure or maintain such tax qualification, in spite of any
other provisions of the certificate. We reserve the right to amend the
certificate to reflect any clarifications that may be needed or are appropriate
to maintain such qualification or to conform the certificate to any applicable
changes in the tax qualification requirements. We will send you a copy of any
such amendment.
VOTING RIGHTS
- --------------------------------------------------------------------------------
As an owner with investments in the subaccounts, you may vote on important 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 subaccount to the total number of votes allowed to the subaccount.
We calculate votes separately for each subaccount. We will send notice of these
meetings, proxy materials and a statement of the number of votes to which the
voter is entitled.
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.
SUBSTITUTION OF INVESTMENTS
- --------------------------------------------------------------------------------
We may substitute the funds in which the subaccounts invest if:
- - laws or regulations change,
- - existing funds become unavailable, or
- - in our judgment, the funds no longer are suitable for the subaccounts.
If any of these situations occur and if we believe it is in the best interest of
persons having voting rights under the contract, we have the right to substitute
funds other than those currently listed in this prospectus.
We may also:
- - change the funds in which the subaccounts invest, and
27
- --------------------------------------------------------------------------------
Privileged Assets-Registered Trademark- Select Annuity
<PAGE>
- - add additional subaccounts investing in other funds.
In the event of substitution of any of these changes, we may amend the
certificate and take whatever action is necessary and appropriate without your
consent or approval. However, we will not make any substitution or change
without the necessary approval of the SEC and state insurance departments. We
will notify you of any substitution or change.
ABOUT THE SERVICE PROVIDERS
- --------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER
American Express Service Corporation (AESC) is the principal underwriter for the
contracts. Its offices are located at 80 South Eighth Street, Minneapolis, MN
55440-0010. AESC is a wholly-owned subsidiary of American Express Travel Related
Services Company, which is a wholly-owned subsidiary of American Express
Company, a financial services company headquartered in New York City.
ISSUER
American Centurion Life issues the certificates. American Centurion Life is a
wholly-owned subsidiary of IDS Life, which is a wholly-owned subsidiary of AEFC.
AEFC is a wholly-owned subsidiary of American Express Company. The AEFC family
of companies offers not only insurance and annuities, but also mutual funds,
investment certificates and a broad range of financial management services.
American Centurion Life is a stock life insurance company organized in 1969
under the laws of the State of New York and is located at 20 Madison Avenue
Extension, Albany, NY 12203. American Centurion Life conducts a conventional
life insurance business in New York.
LEGAL PROCEEDINGS
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which we do business involving insurers' sales practices,
alleged agent misconduct, failure to properly supervise agents, and other
matters. We, like other life and health insurers, from time to time are involved
in such litigation. On October 13, 1998, an action entitled Richard W. And
Elizabeth J. Thoresen vs. American Express Financial Corporation, American
Centurion Life Assurance Company, American Enterprise Life Insurance Company,
American Partners Life Insurance Company, IDS Life Insurance Company and IDS
Life Insurance Company of New York was commenced in Minnesota state court. The
action was brought by individuals who purchased an annuity in a qualified plan.
They allege that the sale of annuities in tax-deferred contributory retirement
investment plans (e.g., IRAs) is never appropriate. The plaintiffs purport to
represent a class consisting of all persons who made similar purchases. The
plaintiffs seek damages in an unspecified amount. We also are defendants in
various other lawsuits. In our opinion, none of these lawsuits will have a
material adverse effect on our financial condition.
28
- --------------------------------------------------------------------------------
<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 American Centurian Life
Assurance Company and the variable account. American Centurian Life Assurance
Company and the variable account have no computer systems of their own but are
dependent upon the systems of 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
target date for substantially completing corrective measures on business
critical systems was Dec. 31, 1998. Substantial testing of these systems was
targeted for completion early in 1999. AEFC currently is on track with this
schedule and also is on track to finish the work on non-critical systems by June
30, 1999. The Year 2000 readiness of unaffiliated investment managers and other
third parties whose system failures could have an impact on American Centurian
Life Assurance Company's and the variable account's operations continues to be
evaluated. The potential materiality of any such impact is not known at this
time.
AEFC's Year 2000 project includes establishing Year 2000 contingency plans for
all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. These plans are being amended to include specific Year 2000
considerations and will continue to be refined throughout 1999 as additional
information related to potential Year 2000 exposure is gathered.
29
- --------------------------------------------------------------------------------
Privileged Assets-Registered Trademark- Select Annuity
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Performance Information........................... p. 3
Calculating Annuity Payouts....................... p. 6
Rating Agencies................................... p. 6
Principal Underwriter............................. p. 6
Independent Auditors.............................. p. 6
Financial Statements
</TABLE>
30
- --------------------------------------------------------------------------------
<PAGE>
Please check the box to receive a copy of the Statement of Additional
Information for:
- ------------ Privileged Assets-Registered Trademark- Select Annuity
- ------------ American Century Variable Portfolios, Inc.
- ------------ IDS Life Retirement Annuity Mutual Funds
- ------------ INVESCO Variable Investments Funds, Inc.
- ------------ Janus Aspen Series
- ------------ Warburg Pincus Trust -- Post-Venture Capital Portfolio
MAIL YOUR REQUEST TO:
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
WE WILL MAIL YOUR REQUEST TO:
<TABLE>
<S> <C> <C>
Your name ---------------------
Address ---------------------
City --------------------- State ------------ Zip ------------
</TABLE>
31
- --------------------------------------------------------------------------------
Privileged Assets-Registered Trademark- Select Annuity
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
PRIVILEGED ASSETS(R) SELECT ANNUITY
ACL VARIABLE ANNUITY ACCOUNT 1
April 30, 1999
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 (SAI) is not a prospectus. It should be
read together with the prospectus dated the same date as this SAI, which may be
obtained by writing or calling us at the address and telephone number below. The
prospectus is incorporated in this SAI by reference.
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
518-452-4150 (Albany area)
800-297-9797
<PAGE>
Privileged Assets(R) Select Annuity
ACL Variable Annuity Account 1
TABLE OF CONTENTS
Performance Information...................................p.3
Calculating Annuity Payouts...............................p.6
Rating Agencies...........................................p.6
Principal Underwriter.....................................p.6
Independent Auditors......................................p.6
Financial Statements
<PAGE>
PERFORMANCE INFORMATION
The subaccounts may quote various performance figures to illustrate past
performance. We base total return and current yield quotations (if applicable)
on standardized methods of computing performance as required by the Securities
and Exchange Commission (SEC). An explanation of the methods used to compute
performance follows below.
Average Annual Total Return
We will express quotations of average annual total return for all the products
subaccounts in terms of the average annual compounded rate of return of a
hypothetical investment in the certificate over a period of one, five and 10
years (or, if less, up to the life of the variable subaccounts), 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 period, at the end of the
period (or fractional portion thereof)
We calculated the following performance figures on the basis of historical
performance of each fund. We show actual performance from the date the
subaccounts began investing in the funds. We also show performance from the
commencement date of the funds as if the certificate existed at that time. Past
performance does not guarantee future results.
Average Annual Total Return For Periods Ending Dec. 31, 1998
<TABLE>
<CAPTION>
Performance since
commencement of the Performance since
subaccount commencement of the Fund**
<S> <C> <C> <C> <C> <C> <C> <C>
Since Since
Subaccount ------------------------------------- 1 Year commencement --------- --------- --------- commencement
Investing in: 1 Year 5 Years 10 Years
-------------------------------------
AMERICAN CENTURY
DGR VP Capital Appreciation (12/96; -3.13% -5.16% -3.13% 2.20% 7.61% -- %
11/87)*
DVL VP Value (12/96; 5/96) 3.77 14.19 3.77 -- -- 14.79
-------------------------------------
IDS LIFE
DAG Aggressive Growth Fund (12/96; 1.60 6.15 1.60 9.55 -- 9.73
1/92)
DCR Capital Resource Fund (12/96; 22.88 20.77 22.88 15.40 14.67% --
10/81)
DIE International Equity Fund (12/96; 14.67 8.16 14.67 6.29 -- 8.30
1/92)
DMG Managed Fund (12/96; 4/86) 14.64 15.42 14.64 12.80 13.42% --
DMS Moneyshare Fund (12/96; 10/81) 4.09 4.10 4.09 3.89 4.28% --
DSI Special Income Fund (12/96; 10/81) 0.49 3.86 0.49 5.72 7.85% --
INVESCO VIF
DII Equity Income Fund (12/96; 8/94) 14.16 19.43 14.16 -- -- 20.28
JANUS ASPEN SERIES
DSG Growth Portfolio (12/96; 9/93) 34.31 26.57 34.31 20.21 -- 19.66
DWG Worldwide Growth Portfolio (12/96; 27.64 24.05 27.64 20.11 -- 22.78
9/93)
WARBURG PINCUS TRUST
DVC Post-Venture Capital Portfolio 5.45 6.91 5.45 -- -- 6.24
(12/96; 9/96)
* (Commencement dates of the subaccounts; Commencement dates of the Funds)
** Current applicable charges deducted from fund performance include a $30
administrative charge and a 1% mortality and expense risk fee.
</TABLE>
<PAGE>
Cumulative Total Return
Cumulative total return represents the cumulative change in the value of an
investment for a given period (reflecting change in a subaccount's accumulation
unit value). We compute cumulative total return by using 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 period, at the
end of the period (or fractional portion thereof).
The SEC requires that we assume that you surrender the entire certificate at the
end of the one, five and ten year periods (or, if less, up to the life of the
subaccount). All total return figures reflect the deduction of all applicable
charges including the administrative charge and mortality and expense risk fee.
Calculation of Yield for Subaccounts Investing in Money Market Funds
Simple Yield:
For the subaccounts investing in money market funds, we base quotations of
simple yield on:
(a) the change in the value of a hypothetical subaccount (exclusive of
capital changes and income other than investment income) at the
beginning of a particular seven-day period;
(b) less a pro rata share of the subaccount expenses accrued over the
period;
(c) dividing this difference by the value of the subaccount at the
beginning of the period to obtain the base period return; and
(d) multiplying the base period return by 365/7.
The subaccount's value includes:
o any declared dividends,
o the value of any shares purchased with dividends paid during the period, and
o any dividends declared for such shares.
It does not include any realized or unrealized gains or losses.
Annualized Compound Yield:
We calculate compound yield using the base period return described above, which
we then compound according to the following formula:
Compound Yield = [(Base Period Return + 1)365/7] -1
Annualized Yields Based on the Seven-Day Period Ending Dec. 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Subaccount Investing In: Simple Yield Compound Yield
DMS IDS Life Moneyshare Fund 3.68% 3.75%
</TABLE>
<PAGE>
You must consider (when comparing an investment in subaccounts investing in
money market funds with fixed annuities) that fixed annuities often provide an
agreed-to or guaranteed yield for a stated period of time, whereas the
subaccount's yield fluctuates. In comparing the yield of the subaccount to a
money market fund, you should consider the different services that the
certificate provides.
Annualized Yield for Subaccounts Investing in Income Funds
For the subaccounts investing in income funds, we base quotations of yield on
all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and compute it 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
The subaccount earns yield from the increase in the net asset value of shares of
the fund in which it invests and from dividends declared and paid by the fund,
which are automatically invested in shares of the fund.
Annualized Yield Based on the 30-Day Period Ended Dec. 31, 1998
Subaccount Investing in: Yield
DSI IDS Life Special Income Fund 7.11%
The yield on the subaccount's accumulation unit may fluctuate daily and does not
provide a basis for determining future yields.
Independent rating or statistical services or publishers or publications such as
those listed below may quote subaccount performance, compare it to rankings,
yields or returns, or use it in variable annuity accumulation or settlement
illustrations they publish or prepare.
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.
<PAGE>
CALCULATING ANNUITY PAYOUTS
We guarantee the fixed annuity payout amounts. Once calculated, the payout will
remain the same and never change. To calculate annuity payouts we:
o take the total value of the fixed account and the subaccounts at the
annuity start date or the date selected to begin receiving annuity payouts;
then
o using an annuity table we apply the value according to the annuity payout plan
selected.
The annuity payout table we use will be the one in effect at the time chosen to
begin annuity payouts. The table will be equal to or greater than the table in
the contract.
RATING AGENCIES
The following chart reflects the ratings given to us 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 subaccounts
of the certificate. This information relates only to the fixed account and
reflects our ability to make annuity payouts and to pay death benefits and other
distributions from the certificate.
Rating agency Rating
A.M. Best A+
(Superior)
- -----------------------
Duff & Phelps AAA
PRINCIPAL UNDERWRITER
The principal underwriter for the contract is American Express Service
Corporation (AESC) which offers the contract on a continuous basis.
INDEPENDENT AUDITORS
The financial statements appearing in this SAI have been audited by Ernst &
Young LLP (1400 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN
55402), independent auditors, as stated in their report appearing herein.
FINANCIAL STATEMENTS
<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 DGR, DVL, DAG, DCR, DIE, DMG, DMS, DSI, DII, DSG, DWG,
and DVC) as of December 31, 1998, and the related statements of operations for
the year then ended and statements of changes in net assets for each of the two
years in the period then ended, except for subaccounts DGR and DWG which are for
the year ended December 31, 1998 and for the period January 29, 1997
(commencement of operations) to December 31, 1997 and subaccounts DSG, DVL and
DVC which are for the year ended December 31, 1998 and 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, 1998 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,
1998, 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.
/s/Ernst & Young LLP
Ernst & Young LLP
Minneapolis, Minnesota
March 12, 1999
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Net Assets Dec. 31, 1998
Segregated Asset Subaccount
Assets DGR DVL DAG DCR
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C> <C>
at cost $ 44,046 $ 61,664 $ 73,661 $68,738
-------- -------- -------- -------
at market value $ 46,234 $ 65,404 $ 72,906 $75,172
Dividends receivable - - - -
Accounts receivable from American Centurion Life
for certificate purchase payments - - 62 57
Receivable from mutual funds and portfolios
for share redemptions - - - -
------ ------ ------ ------
Total assets 46,234 65,404 72,968 75,229
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 39 64 62 57
Certificate terminations - - - -
Payable to mutual funds and portfolios
for investments purchased - - - -
--- --- --- ---
Total liabilities 39 64 62 57
-- -- -- --
Net assets applicable to contracts in
accumulation period $ 46,195 $ 65,340 $ 72,906 $75,172
-------- -------- -------- -------
Accumulation units outstanding 51,413 49,686 64,794 50,716
------ ------ ------ ------
Net asset value per accumulation unit $ 0.90 $ 1.31 $ 1.13 $ 1.48
====== ====== ====== ======
Assets DIE DMG DMS
Investments in shares of mutual funds and portfolios:
at cost $ 15,812 $ 84,336 $ 183,848
-------- -------- ---------
at market value $ 17,046 $ 84,814 $ 183,850
Dividends receivable - - 773
Accounts receivable from American Centurion Life
for certificate purchase payments 15 71 2,000
Receivable from mutual funds and portfolios
for share redemptions - - -
--- --- ---
Total assets 17,061 84,885 186,623
====== ====== =======
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 15 71 162
Certificate terminations - - -
Payable to mutual funds and portfolios
for investments purchased - - 2,611
--- --- -----
Total liabilities 15 71 2,773
-- -- -----
Net assets applicable to contracts in
accumulation period $ 17,046 $ 84,814 $ 183,850
-------- -------- ---------
Accumulation units outstanding 14,542 62,875 169,770
------ ------ -------
Net asset value per accumulation unit $ 1.18 $ 1.34 $ 1.08
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Net Assets (continued) Dec. 31, 1998
Segregated Asset Subaccount
Assets DSI DII DSG DWG
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C> <C>
at cost $23,879 $ 289,182 $472,799 $ 480,839
------- --------- -------- ---------
at market value $22,421 $ 318,737 $573,492 $ 529,322
Dividends receivable 137 - - -
Accounts receivable from American Centurion Life
for certificate purchase payments - - - -
Receivable from mutual funds and portfolios
for share redemptions - 14 - 15
-- --
Total assets 22,558 318,751 573,492 529,337
====== ======= ======= =======
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 19 273 468 424
Certificate terminations - 14 - 15
Payable to mutual funds and portfolios
for investments purchased 118 - - -
--- --- --- ---
Total liabilities 137 287 468 439
--- --- --- ---
Net assets applicable to contracts in
accumulation period $22,421 $ 318,464 $573,024 $ 528,898
------- --------- -------- ---------
Accumulation units outstanding 21,035 220,592 352,386 339,084
------ ------- ------- -------
Net asset value per accumulation unit $ 1.07 $ 1.44 $ 1.63 $ 1.56
====== ====== ====== ======
Combined
Variable
Assets DVC Account
Investments in shares of mutual funds and portfolios:
at cost $ 71,394 $ 1,870,198
-------- -----------
at market value $ 86,438 $ 2,075,836
Dividends receivable - 910
Accounts receivable from American Centurion Life -
for certificate purchase payments - 2,205
Receivable from mutual funds and portfolios
for share redemptions - 29
----- --
Total assets 86,438 2,078,980
====== =========
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 73 1,727
Certificate terminations - 29
Payable to mutual funds and portfolios
for investments purchased - 2,729
--- -----
Total liabilities 73 4,485
-- -----
Net assets applicable to contracts in
accumulation period $ 86,365 $ 2,074,495
Accumulation units outstanding 74,697 1,471,590
------ ---------
Net asset value per accumulation unit $ 1.16
======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Operations Year ended Dec. 31, 1998
Segregated Asset Subaccount
Investment income DGR DVL DAG DCR
<S> <C> <C> <C> <C>
Dividend income from mutual funds and portfolios $ 2,302 $ 3,592 $ 4,631 $ 4,746
Mortality and expense risk fee 443 591 604 442
--- --- --- ---
Investment income (loss) - net 1,859 3,001 4,027 4,304
----- ----- ----- -----
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 36,783 24,996 43,034 6,482
Cost of investments sold 43,692 24,427 41,149 6,388
------ ------ ------ -----
Net realized gain (loss) on investments (6,909) 569 1,885 94
Net change in unrealized appreciation or
depreciation of investments 2,844 (1,870) (647) 5,923
----- ------ ---- -----
Net gain (loss) on investments (4,065) (1,301) 1,238 6,017
------ ------ ----- -----
Net increase (decrease) in net assets
resulting from operations $ (2,206) $ 1,700 5,265 10,321
======== ======= ===== ======
Investment income DIE DMG DMS
Dividend income from mutual funds and portfolios $ 215 $ 9,344 $ 5,961
Mortality and expense risk fee 163 786 1,200
--- --- -----
Investment income (loss) - net 52 8,558 4,761
-- ----- -----
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 5,122 61,317 857,248
Cost of investments sold 4,899 58,620 857,247
----- ------ -------
Net realized gain (loss) on investments 223 2,697 1
Net change in unrealized appreciation or
depreciation of investments 1,882 824 2
----- --- -
Net gain (loss) on investments 2,105 3,521 3
----- ----- -
Net increase (decrease) in net assets
resulting from operations 2,157 12,079 4,764
===== ====== =====
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Operations (continued) Year ended Dec. 31, 1998
Segregated Asset Subaccount
Investment income DSI DII DSG DWG
<S> <C> <C> <C> <C>
Dividend income from mutual funds and portfolios $ 1,572 $ 16,102 $ 27,972 $ 18,352
Mortality and expense risk fee 211 2,587 4,157 4,652
--- ----- ----- -----
Investment income (loss) - net 1,361 13,515 23,815 13,700
----- ------ ------ ------
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 36,875 53,161 448,345 983,686
Cost of investments sold 37,132 50,071 453,207 954,670
------ ------ ------- -------
Net realized gain (loss) on investments (257) 3,090 (4,862) 29,016
Net change in unrealized appreciation or
depreciation of investments (1,222) 15,916 82,115 31,627
------ ------ ------ ------
Net gain (loss) on investments (1,479) 19,006 77,253 60,643
------ ------ ------ ------
Net increase (decrease) in net assets
resulting from operations $ (118) $ 32,521 $101,068 $ 74,343
====== ======== ======== ========
Combined
Variable
Investment income DVC Account
Dividend income from mutual funds and portfolios $ - $ 94,789
Mortality and expense risk fee 771 16,607
--- ------
Investment income (loss) - net (771) 78,182
---- ------
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 566 2,557,615
Cost of investments sold 578 2,532,080
--- ---------
Net realized gain (loss) on investments (12) 25,535
Net change in unrealized appreciation or
depreciation of investments 5,155 142,549
----- -------
Net gain (loss) on investments 5,143 168,084
----- -------
Net increase (decrease) in net assets
resulting from operations $ 4,372 $ 246,266
======= =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Changes in Net Assets Year ended Dec. 31, 1998
Segregated Asset Subaccount
Operations DGR DVL DAG DCR
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 1,859 $ 3,001 $ 4,027 $ 4,304
Net realized gain (loss) on investments (6,909) 569 1,885 94
Net change in unrealized appreciation or
depreciation of investments 2,844 (1,870) (647) 5,923
----- ------ ---- -----
Net increase (decrease) in net assets
resulting from operations (2,206) 1,700 5,265 10,321
====== ===== ===== ======
Certificate transactions
Certificate purchase payments 6,866 4,082 6,904 6,247
Net transfers* 2,832 18,238 14,251 34,931
Certificate charges (89) (9) (117) (80)
Certificate terminations:
Surrender benefits - - (239) (4,076)
----- ------ ---- ------
Increase (decrease) from certificate transactions 9,609 22,311 20,799 37,022
Net assets at beginning of year 38,792 41,329 46,842 27,829
------ ------ ------ ------
Net assets at end of year $ 46,195 $ 65,340 $ 72,906 $75,172
======== ======== ======== =======
Accumulation unit activity
Units outstanding at beginning of year 41,823 32,637 42,084 23,022
Certificate purchase payments 7,620 3,035 6,256 4,760
Net transfers* 2,066 14,021 16,789 26,094
Certificate charges (96) (7) (99) (64)
Certificate terminations:
Surrender benefits - - (236) (3,096)
------ ------ ---- ------
Units outstanding at end of year 51,413 49,686 64,794 50,716
====== ====== ====== ======
Operations DIE DMG DMS
Investment income (loss) - net $ 52 $ 8,558 $ 4,761
Net realized gain (loss) on investments 223 2,697 1
Net change in unrealized appreciation or
depreciation of investments 1,882 824 2
----- --- -
Net increase (decrease) in net assets
resulting from operations 2,157 12,079 4,764
===== ====== =====
Certificate transactions
Certificate purchase payments 2,107 6,484 423,167
Net transfers* (1,009) 17,594 (440,645)
Certificate charges (54) (105) (2)
Certificate terminations:
Surrender benefits (886) (2,814) -
---- ------ ------
Increase (decrease) from certificate transactions 158 21,159 (17,480)
--- ------ -------
Net assets at beginning of year 14,731 51,576 196,566
------ ------ -------
Net assets at end of year $ 17,046 $ 84,814 $ 183,850
======== ======== =========
Accumulation unit activity
Units outstanding at beginning of year 14,411 43,796 188,943
Certificate purchase payments 1,864 5,255 399,642
Net transfers* (871) 16,151 (418,814)
Certificate charges (48) (84) (1)
Certificate terminations:
Surrender benefits (814) (2,243) -
---- ------ ------
Units outstanding at end of year 14,542 62,875 169,770
====== ====== =======
*Includes transfer activity from (to) other subaccounts and transfers from (to)
American Centurion Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Changes in Net Assets (continued) Year ended Dec. 31, 1998
Segregated Asset Subaccount
Operations DSI DII DSG DWG
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 1,361 $ 13,515 $ 23,815 $ 13,700
Net realized gain (loss) on investments (257) 3,090 (4,862) 29,016
Net change in unrealized appreciation or
depreciation of investments (1,222) 15,916 82,115 31,627
------ ------ ------ ------
Net increase (decrease) in net assets
resulting from operations (118) 32,521 101,068 74,343
==== ====== ======= ======
Certificate transactions
Certificate purchase payments 3,159 20,730 35,395 32,002
Net transfers* 5,586 74,558 175,149 134,946
Certificate charges (32) (171) (204) (465)
Certificate terminations:
Surrender benefits (2,005) (4,747) (10,164) (18,342)
------ ------ ------- -------
Increase (decrease) from certificate transactions 6,708 90,370 200,176 148,141
----- ------ ------- -------
Net assets at beginning of year 15,831 195,573 271,780 306,414
------ ------- ------- -------
Net assets at end of year $22,421 $ 318,464 $573,024 $ 528,898
======= ========= ======== =========
Accumulation unit activity
Units outstanding at beginning of year 14,926 154,631 229,764 251,604
Certificate purchase payments 2,938 15,382 26,249 22,301
Net transfers* 5,041 54,277 104,139 78,497
Certificate charges (30) (126) (155) (336)
Certificate terminations:
Surrender benefits (1,840) (3,572) (7,611) (12,982)
------ ------ ------ -------
Units outstanding at end of year 21,035 220,592 352,386 339,084
====== ======= ======= =======
Combined
Variable
Operations DVC Account
Investment income (loss) - net $ (771) $ 78,182
Net realized gain (loss) on investments (12) 25,535
Net change in unrealized appreciation or
depreciation of investments 5,155 142,549
----- -------
Net increase (decrease) in net assets
resulting from operations 4,372 246,266
Certificate transactions
Certificate purchase payments 4,027 551,170
Net transfers* 7,404 43,835
Certificate charges (34) (1,362)
Certificate terminations:
Surrender benefits (246) (43,519)
---- -------
Increase (decrease) from certificate transactions 11,151 550,124
------ -------
Net assets at beginning of year 70,842 1,278,105
------ ---------
Net assets at end of year $ 86,365 $ 2,074,495
======== ===========
Accumulation unit activity
Units outstanding at beginning of year 64,614
Certificate purchase payments 3,737
Net transfers* 6,612
Certificate charges (30)
Certificate terminations:
Surrender benefits (236)
----
Units outstanding at end of year 74,697
======
*Includes transfer activity from (to) other subaccounts and transfers from (to)
American Centurion Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Changes in Net Assets Year ended Dec. 31, 1997
Segregated Asset Subaccount
Operations DGR** DVL*** DAG DCR
<S> <C> <C> <C> <C>
Investment income (loss) - net $ (90) $ (199) $ 3,682 $ 385
Net realized gain (loss) on investments 1,193 13 2,170 3
Net change in unrealized appreciation or
depreciation of investments (656) 5,610 (108) 511
---- ----- ---- ---
Net increase (decrease) in net assets resulting
from operations 447 5,424 5,744 899
=== ===== ===== ===
Certificate transactions
Certificate purchase payments 3,846 890 4,505 3,046
Net transfers* 41,857 35,015 44,950 23,884
Certificate charges - - - -
Certificate terminations:
Surrender benefits (7,358) - (8,357) -
------ ------ ------ ------
Increase (decrease) from certificate transactions 38,345 35,905 41,098 26,930
------ ------ ------ ------
Net assets at beginning of year - - - -
------ ------ ------ ------
Net assets at end of year $ 38,792 $ 41,329 $ 46,842 $ 27,829
======== ======== ======== ========
Accumulation unit activity
Units outstanding at beginning of year - - - -
Certificate purchase payments 4,034 730 4,331 2,623
Net transfers* 44,923 31,907 45,362 20,399
Certificate charges - - - -
Certificate terminations:
Surrender benefits (7,134) - (7,609) -
------ ------ ------ ------
Units outstanding at end of year 41,823 32,637 42,084 23,022
====== ====== ====== ======
Operations DIE DMG DMS
Investment income (loss) - net $ 486 $ 3,955 $ 5,613
Net realized gain (loss) on investments 1,984 5,208 (1)
Net change in unrealized appreciation or
depreciation of investments (648) (346) -
---- ---- -----
Net increase (decrease) in net assets resulting
from operations 1,822 8,817 5,612
===== ===== =====
Certificate transactions
Certificate purchase payments 2,399 8,633 1,139,815
Net transfers* 10,552 34,209 (918,713)
Certificate charges - - -
Certificate terminations:
Surrender benefits (42) (83) (30,148)
--- --- -------
Increase (decrease) from certificate transactions 12,909 42,759 190,954
------ ------ -------
Net assets at beginning of year - - -
------ ----- -------
Net assets at end of year $ 14,731 $ 51,576 $196,566
======== ======== ========
Accumulation unit activity
Units outstanding at beginning of year - - -
Certificate purchase payments 2,280 7,680 1,127,356
Net transfers* 12,172 36,188 (908,656)
Certificate charges - - -
Certificate terminations:
Surrender benefits (41) (72) (29,757)
--- --- -------
Units outstanding at end of year 14,411 43,796 188,943
====== ====== =======
*Includes transfer activity from (to) other subaccounts and transfers (from) to American Centurion Life's 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) Year ended Dec. 31, 1997
Segregated Asset Subaccount
Operations DSI DII DSG*** DWG**
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 925 $12,661 $ 4,678 $ 1,896
Net realized gain (loss) on investments 60 900 7,100 7,746
Net change in unrealized appreciation or
depreciation of investments (236) 13,639 18,578 16,856
---- ------ ------ ------
Net increase (decrease) in net assets resulting
from operations 749 27,200 30,356 26,498
=== ====== ====== ======
Certificate transactions
Certificate purchase payments 4,193 12,358 14,805 20,785
Net transfers* 11,921 161,167 237,890 260,351
Certificate charges - (15) - (15)
Certificate terminations:
Surrender benefits (1,032) (5,137) (11,271) (1,205)
------ ------ ------- ------
Increase (decrease) from certificate transactions 15,082 168,373 241,424 279,916
------ ------- ------- -------
Net assets at beginning of year - - - -
------ ------- ------- -------
Net assets at end of year $ 15,831 $195,573 $271,780 $ 306,414
======== ======== ======== =========
Accumulation unit activity
Units outstanding at beginning of year - - - -
Certificate purchase payments 4,102 10,445 12,628 17,382
Net transfers* 11,810 148,447 226,581 235,235
Certificate charges - (12) - (12)
Certificate terminations:
Surrender benefits (986) (4,249) (9,445) (1,001)
---- ------ ------ ------
Units outstanding at end of year 14,926 154,631 229,764 251,604
====== ======= ======= =======
Combined
Variable
Operations DVC*** Account
Investment income (loss) - net $ (462) $ 33,530
Net realized gain (loss) on investments 8 26,384
Net change in unrealized appreciation or
depreciation of investments 9,889 63,089
----- ------
Net increase (decrease) in net assets resulting
from operations 9,435 123,003
===== =======
Certificate transactions
Certificate purchase payments 2,383 1,217,658
Net transfers* 59,105 2,188
Certificate charges - (30)
Certificate terminations:
Surrender benefits (81) (64,714)
--- -------
Increase (decrease) from certificate transactions 61,407 1,155,102
------ ---------
Net assets at beginning of year - -
------ ---------
Net assets at end of year $ 70,842 $1,278,105
======== ==========
Accumulation unit activity
Units outstanding at beginning of year -
Certificate purchase payments 2,259
Net transfers* 62,433
Certificate charges -
Certificate terminations:
Surrender benefits (78)
---
Units outstanding at end of year 64,614
======
*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
Notes to Financial Statements
1. Organization
ACL Variable Annuity Account 1 (the Account) was established under New York law
on Feb. 9, 1995 and the subaccounts are registered together as a single unit
investment trust of American Centurion Life Assurance Company (American
Centurion Life) under the Investment Company Act of 1940, as amended (the 1940
Act). Operations of the Account commenced on Jan. 1, 1997.
The Account is comprised of various subaccounts. Each subaccount invests
exclusively in shares of the following funds or portfolios (collectively, the
Funds), which are registered under the 1940 Act as diversified, open-end
management investment companies and have the following investment managers.
Subaccount Invests exclusively in shares of Investment Manager
<S> <C> <C>
DGR American Century VP Capital Appreciation American Century Investment Management Inc.
DVL American Century VP Value American Century Investment Management Inc.
DAG IDS Life Aggressive Growth Fund IDS Life Insurance Company 1
DCR IDS Life Capital Resource Fund IDS Life Insurance Company 1
DIE IDS Life International Equity Fund IDS Life Insurance Company 2
DMG IDS Life Managed Fund IDS Life Insurance Company 1
DMS IDS Life Moneyshare Fund IDS Life Insurance Company 1
DSI IDS Life Special Income Fund IDS Life Insurance Company 1
DII INVESTCO VIF - Equity Income Fund INVESTCO Funds Group, Inc.
DSG Janus Aspen Series Growth Portfolio Janus Capital Corporation
DWG Janus Aspen Series Worldwide Growth Portfolio Janus Capital Corporation
DVC Warburg Pincus Trust-- Post-Venture Capital Portfolio Warburg Pincus Counsellors, Inc.
1 American Express Financial Corporation (AEFC) is the investment advisor.
2 AEFC is the investment advisor. American Express Asset Management
International Inc. is the sub-investment advisor.
The assets of each subaccount of the Account are not chargeable with liabilities
arising out of the business conducted by any other segregated asset account or
by American Centurion Life.
American Centurion Life serves as issuer of the contracts.
2. Summary of Significant Accounting Policies
Investments in the Funds
Investments in shares of the Funds are stated at market value which is the net
asset value per share as determined by the respective Funds. 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 are reinvested in
additional shares of the Funds 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'
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
American Centurion Life makes contractual assurances to the Account that
possible future adverse changes in administrative expenses and mortality
experience of the contract owners and
annuitants 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% of the average daily net assets of the subaccounts.
4. Certificate Administrative Charges
An annual charge of $30 is deducted from the certificate value of each
Privileged Assets Select Annuity certificate. The annual charges are deducted on
each certificate anniversary for administrative services provided to the Account
by American Centurion Life. The deduction is allocated to the subaccounts on a
pro-rata basis. American Centurion Life does not anticipate that it will make
any profit on this charge. If the total purchase payments (less partial
surrenders) on a certificate 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.
5. Investment in Shares
The subaccounts' investment in shares of the Funds as of Dec. 31, 1998 were as follows:
Subaccount Investment Shares NAV
<S> <C> <C> <C>
DGR American Century VP Capital Appreciation 5,126 $ 9.02
DVL American Century VP Value 9,718 6.73
DAG IDS Life Aggressive Growth Fund 4,755 15.33
DCR IDS Life Capital Resource Fund 2,302 32.65
DIE IDS Life International Equity Fund 1,094 15.58
DMG IDS Life Managed Fund 4,580 18.52
DMS IDS Life Moneyshare Fund 183,865 1.00
DSI IDS Life Special Income Fund 2,019 11.11
DII INVESCO VIF - Equity Income Fund 17,127 18.61
DSG Janus Aspen Series Growth Portfolio 24,362 23.54
DWG Janus Aspen Series Worldwide Growth Portfolio 18,196 29.09
DVC Warburg Pincus Trust--Post-Venture Capital Portfolio 7,338 11.78
6. Investment Transactions
The subaccounts' purchases of Funds' shares, including reinvestment of dividend
distributions, were as follows:
Year ended Dec. 31,
Subaccount Investment 1998 1997
<S> <C> <C> <C>
DGR American Century VP Capital Appreciation $ 48,257 $ 91,494
DVL American Century VP Value 50,336 35,845
DAG IDS Life Aggressive Growth Fund 67,818 79,820
DCR IDS Life Capital Resource Fund 47,786 27,394
DIE IDS Life International Equity Fund 5,319 42,503
DMG IDS Life Managed Fund 90,990 118,139
DMS IDS Life Moneyshare Fund 844,529 1,434,076
DSI IDS Life Special Income Fund 44,944 38,309
DII INVESCO VIF - Equity Income Fund 157,145 215,166
DSG Janus Aspen Series Growth Portfolio 672,558 461,201
DWG Janus Aspen Series Worldwide Growth Portfolio 1,145,676 471,245
DVC Warburg Pincus Trust--Post-Venture Capital Portfolio 10,956 61,099
Combined Variable Account $3,186,314 $3,076,291
7. 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 American Centurion Life
and the Account. American Centurion Life and the Account have no computer
systems of their own but are dependent upon the systems of 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
target date for substantially completing corrective measures on business
critical systems was Dec. 31, 1998. Substantial testing of these systems was
targeted for completion early in 1999. AEFC is currently on track with this
schedule and is also on track to finish the work on non-critical systems by June
30, 1999. The Year 2000 readiness of unaffiliated investment managers and other
third parties whose system failures could have an impact on American Centurion
Life's and the Account's operations continues to be evaluated. The potential
materiality of any such impact is not known at this time.
AEFC's Year 2000 project includes establishing Year 2000 contingency plans for
all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. These plans are being amended to include specific Year 2000
considerations and will continue to be refined throughout 1999 as additional
information related to potential Year 2000 exposure is gathered.
</TABLE>
<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, 1998 and 1997, and the related statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1998. 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, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
February 4, 1999
Minneapolis, Minnesota
<PAGE>
<TABLE>
<CAPTION>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
BALANCE SHEETS
December 31,
($ thousands, except share amounts)
ASSETS 1998 1997
- ------ ---- ------- ---- ----
<S> <C> <C>
Investments:
Fixed maturities:
Held to maturity, at amortized cost (fair value:
1998, $14,307; 1997, $18,153) $ 13,894 $ 17,698
Available for sale, at fair value (amortized cost:
1998, $269,483; 1997, $210,940) 273,873 216,161
--------- ---------
Total Investments 287,767 233,859
Cash and cash equivalents 13,992 3,756
Amounts recoverable from reinsurers 2,515 2,728
Accrued investment income 4,364 3,120
Deferred policy acquisition costs 12,864 9,280
Other assets 69 1,591
Assets held in separate accounts 12,614 1,280
---------- -----------
Total assets $334,185 $255,614
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Future policy benefits:
Fixed annuities $268,348 $206,531
Traditional life insurance 1,724 1,884
Disability income insurance 225 225
Policy claims and other policyholders' funds 2,048 2,305
Amounts due to broker -- 4,941
Deferred income taxes 1,758 2,391
Other liabilities 463 741
Liabilities related to separate accounts 12,614 1,280
---------- -----------
Total liabilities 287,180 220,298
--------- ---------
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 26,600 16,600
Accumulated other comprehensive income:
Net unrealized securities gains 2,512 3,139
Retained earnings 16,893 14,577
---------- ----------
Total stockholder's equity 47,005 35,316
---------- ----------
Total liabilities and stockholder's equity $334,185 $255,614
======== ========
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF INCOME
Years ended December 31,
($ thousands)
1998 1997 1996
- ----- - ----- - ----
Revenues:
<S> <C> <C> <C>
Net investment income $ 18,990 $ 13,331 $ 8,851
Contractholder charges 568 318 306
Mortality and expense risk fees 87 8 --
Net realized gain (loss) on investments 39 25 (57)
----------- ----------- -------
Total revenues 19,684 13,682 9,100
-------- -------- ------
Benefits and expenses:
Death and other benefits on investment contracts 72 2 --
Interest credited on investment contracts 12,838 8,887 5,849
Amortization of deferred policy acquisition costs 624 114 21
Other operating expenses 2,260 1,324 1,387
-------- -------- -------
Total expenses 15,794 10,327 7,257
------- ------- -------
Income before income taxes 3,890 3,355 1,843
Income taxes 1,574 1,389 678
-------- -------- --------
Net income $ 2,316 $ 1,966 $ 1,165
======= ======= =======
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended December 31, 1998
($ thousands)
Accumulated Other
Comprehensive
Total Additional
Stockholder's Capital Paid-In Income, Retained
Equity Stock Capital Net of Tax Earnings
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $ 21,250 $ 1,000 $ 6,600 $ 2,204 $ 11,446
Comprehensive income (loss):
Net income 1,165 -- -- -- 1,165
Unrealized holding losses arising
during the year, net of effect on
deferred policy acquisition costs of
$132 and taxes of $734 (1,364) -- -- (1,364) --
Reclassification adjustment for losses
included in net income, net of tax 23
of $(12) -- -- 23 --
-------------------
----------------
Other comprehensive loss (1,341) -- -- (1,341) --
----------------
Comprehensive loss (176)
Capital contribution from parent 10,000 -- 10,000 -- --
--------------------------------------------------------------------------
Balance, December 31, 1996 31,074 1,000 16,600 863 12,611
Comprehensive income:
Net income 1,966 -- -- -- 1,966
Unrealized holding gains arising
during the year, net of effect on
deferred policy acquisition costs of
$(259) and taxes of $(1,231) 2,286 -- -- 2,286 --
Reclassification adjustment for gains
included in net income, net of tax (10)
of $5 -- -- (10) --
-------------------
----------------
Other comprehensive income 2,276 -- -- 2,276 --
----------------
Comprehensive income 4,242
--------------------------------------------------------------------------
Balance, December 31, 1997 35,316 1,000 16,600 3,139 14,577
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY (continued)
Three years ended December 31, 1998
($ thousands)
Accumulated
Other
Total Additional Comprehensive
Stockholder's Capital Paid-In Income, Retained
Equity Stock Capital Net of Tax Earnings
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $ 35,316 $ 1,000 $ 16,600 $ 3,139 $ 14,577
Comprehensive income:
Net income 2,316 -- -- -- 2,316
Unrealized holding losses arising
during the year, net of effect on
deferred policy acquisition costs of
$135, and taxes of $327 (608) -- -- (646) --
Reclassification adjustment for gains
included in net income, net of tax (19)
of $10 -- -- 19 --
-------------------
----------------
Other comprehensive loss (627) -- -- (627) --
----------------
Comprehensive income 1,689
Capital contribution from parent 10,000 -- 10,000 -- --
--------------------------------------------------------------------------
Balance, December 31, 1998 $ 47,005 $ 1,000 $ 26,600 $ 2,512 $ 16,893
==========================================================================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF CASH FLOWS
Years ended December 31,
($ thousands)
1998 1997 1996
-------- -------- ------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $ 2,316 $ 1,966 $ 1,165
Adjustments to reconcile net income to net cash
used in operating activities:
Change in amounts recoverable from reinsurers 213 -- 674
Change in accrued investment income (1,244) (1,016) (604)
Change in deferred policy acquisition costs, net (3,718) (5,175) (3,177)
Change in other assets 1,522 (1,536) 75
Change in liabilities for future policy benefits for
traditional life and disability income insurance (160) 1 (1,696)
Change in policy claims and other
policyholders' funds (257) 1,614 428
Deferred income tax (benefit) provision (295) 574 1,457
Change in other liabilities (278) 707 (1,087)
(Accretion of discount)
amortization of premium, net (46) 7 56
Net realized (gain) loss on investments (39) (25) 57
Other, net (1) 7 --
----------- ----------- -----------
Net cash used in operating activities (1,987) (2,876) (2,652)
-------- -------- --------
Cash flows from investing activities: Fixed maturities held to maturity:
Maturities 3,770 1,847 2,603
Sales -- -- 477
Fixed maturities available for sale:
Purchases (87,699) (86,006) (59,425)
Maturities 22,581 8,438 7,261
Sales 6,695 1,303 1,572
Change in due to brokers (4,941) 24 4,916
---------- ----------- ---------
Net cash used in investing activities (59,594) (74,394) (42,596)
-------- -------- --------
Cash flows from financing activities: Activity related to investment contracts:
Considerations received 78,367 82,656 55,594
Surrenders and other benefits (29,388) (24,373) (14,870)
Interest credited to account balances 12,838 8,887 5,849
Capital contribution from parent 10,000 -- 10,000
--------- ------------ --------
Net cash provided by financing activities 71,817 67,170 56,573
--------- ------ --------
Net increase (decrease) in cash and cash equivalents 10,236 (10,100) 11,325
Cash and cash equivalents at beginning of year 3,756 13,856 2,531
---------- -------- -----------
Cash and cash equivalents at end of year $ 13,992 $ 3,756 $ 13,856
========= ========= =========
</TABLE>
See accompanying notes.
<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), which 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 4).
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 accumulated other comprehensive income, net of deferred policy
acquisition costs and 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:
1998 1997 1996
-------- -------- --------
Cash paid during the year for:
Income taxes $42 $2,404 $257
Interest on borrowings 332 7 --
Contractholder charges
Contractholder charges include surrender charges and 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 primarily using the interest method.
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 established industry mortality tables and interest
rates of 5.75% to 6.25%, depending on the year of issue.
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.
Included in Other liabilities at December 31, 1998 and 1997 are $178
payable to and $1,532 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.
The Company also guarantees that the rates at which administrative fees are
deducted from contract funds will not exceed contractural maximums.
Accounting Changes
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income." SFAS
No. 130 requires the reporting and display of comprehensive income and its
components. Comprehensive income is defined as the aggregate change in
stockholder's equity excluding changes in ownership interests. For the
Company, it is net income and the unrealized gains or losses on
available-for-sale securities net of effect on deferred policy acquisition
costs, taxes and reclassification adjustment.
In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-1, "Accounting for Costs of
Computer Software Developed or Obtained for Internal Use." The SOP, which
is effective January 1, 1999, requires the capitalization of certain costs
incurred after the date of adoption to develop or obtain software for
internal use. Software utilized by the Company is owned by AEFC and will be
capitalized on AEFC's financial statements. A result, the new rule will not
have a material impact on the Company's results of operations or financial
condition.
In December 1997, the AICPA issued SOP 97-3, "Accounting by Insurance and
Other Enterprises for Insurance-Related Assessments," providing guidance
for the timing of recognition of liabilities related to guaranty fund
assessments. The Company will adopt the SOP on January 1, 1999. Adoption of
the SOP will not have a material impact on the Company's results of
operations or financial condition. The ultimate financial impact of the new
rule will be measured based on the derivatives in place at adoption and
cannot be estimated at this time.
<PAGE>
1. Summary of significant accounting policies (continued)
Reclassification
Certain 1997 and 1996 amounts have been reclassified to conform to the 1998
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, 1998 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 $ 12,483 $ 352 $ -- $ 12,835
Mortgage-backed securities 1,411 61 -- 1,472
------------ ---------- ------------ ----------
$ 13,894 $ 413 $ -- $ 14,307
========= ======== =========== =========
Available for sale
U.S. Government agency obligations $ 1,075 $ 70 $ -- $ 1,145
State and municipal obligations 1,000 48 -- 1,048
Corporate bonds and obligations 181,622 6,050 3,782 183,890
Mortgage-backed securities 85,786 2,036 32 87,790
---------- -------- ---------- ----------
$269,483 $ 8,204 $ 3,814 $273,873
======== ======= ======= ========
</TABLE>
<PAGE>
2. Investments (continued)
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
======== ======= ========= ========
</TABLE>
The amortized cost and fair value of investments in fixed maturities at
December 31, 1998 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>
<S> <C> <C>
Amortized Fair
Held to maturity Cost Value
Due in one year or less $ 2,249 $ 2,258
Due from one to five years 8,433 8,748
Due from five to ten years 357 361
Due in more than ten years 1,444 1,468
Mortgage-backed securities 1,411 1,472
------------ ------------
$ 13,894 $ 14,307
========== ==========
Amortized Fair
Available for sale Cost Value
Due in one year or less $ 6,661 $ 6,752
Due from one to five years 18,872 19,735
Due from five to ten years 97,693 100,962
Due in more than ten years 60,471 58,634
Mortgage-backed securities 85,786 87,790
---------- -----------
$ 269,483 $ 273,873
========= =========
</TABLE>
<PAGE>
2. Investments (continued)
There were no sales of fixed maturities classified as held to maturity in
1998 and 1997. During the year ended December 31, 1996, fixed maturities
classified as held to maturity were sold with amortized cost of $500. 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 1998 with
proceeds of $6,695 and gross realized gains and losses of $253 and $224,
respectively. 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.
At December 31, 1998, bonds carried at $1,075 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 $53 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:
Rating 1998 1997
---------------------- - --------- - ------
Aaa/AAA $ 88,286 $ 92,682
Aa/AA 4,942 3,890
Aa/A 2,509 1,952
A/A 26,700 28,258
A/BBB 13,439 7,802
Baa/BBB 104,236 61,661
Baa/BB 5,651 4,011
Below investment grade 37,614 28,382
--------- ---------
$283,377 $228,638
======== ========
At December 31, 1998, approximately 83 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:
1998 1997 1996
-------- -------- ------
Interest on fixed maturities $ 19,338 $ 13,818 $ 9,170
Interest on cash equivalents 131 276 308
Other 132 1 16
------------ ------------- ----------
19,601 14,095 9,494
Less investment expenses 611 764 643
----------- ----------- ----------
$ 18,990 $ 13,331 $ 8,851
========= ========= =========
<PAGE>
2. Investments (continued)
Net realized gain (loss) on investments was $39, $25 and $(57) for the
years ended December 31, 1998, 1997 and 1996, respectively, and was
entirely due to sales of fixed maturities.
Changes in net unrealized (depreciation) appreciation of investments for
the years ended December 31 are summarized as follows:
1998 1997 1996
------- ------- ------
Fixed maturities available for sale $(831) $ 3,761 $ (1,931)
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:
1998 1997 1996
------ -- ------ ------
Federal income taxes:
Current $ 1,544 $ 486 $ (819)
Deferred (295) 574 1,457
--------- ------ -----
1,249 1,060 638
State income taxes-current 325 329 40
--------- ------ -------
Income tax expense $ 1,574 $1,389 $ 678
======= ====== ======
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>
1998 1997 1996
------------ ------------ --------------------
Provision Rate Provision Rate Provision Rate
Federal income taxes based
<S> <C> <C> <C> <C> <C> <C>
on the statutory rate $1,361 35.0% $1,174 35.0% $ 645 35.0%
Increases are attributable to:
State tax, net 211 5.4 214 6.4 26 1.4
Other, net 2 0.1 1 0 7 .4
------ ----- -------- ------ -------- ----
Federal income taxes $1,574 40.5% $1,389 41.4% $ 678 36.8%
------ ---- ------ ---- ----- ----
</TABLE>
<PAGE>
3. Income taxes (continued)
Significant components of the Company's deferred income tax assets and
liabilities as of December 31 are as follows:
Deferred income tax assets: 1998 1997
----- -----
Policy reserves $ 3,049 $ 1,616
------- -------
Deferred income tax liabilities:
Deferred policy acquisition costs 3,234 2,144
Investments 1,518 1,703
Other 55 160
----------- --------
Total deferred income tax liabilities 4,807 4,007
--------- -------
Net deferred income tax liabilities $ 1,758 $2,391
======= ======
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 $7,512 and $6,278 as of
December 31, 1998 and 1997, respectively (see note 9 for a reconciliation
of net income and stockholder's equity per the accompanying financial
statements to statutory net income and surplus).
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 $3, $nil and $nil in 1998, 1997 and
1996, respectively.
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 1998, 1997 and 1996 were $19,
$23 and $19, respectively.
<PAGE>
5. Related party transactions (continued)
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. Costs of these plans charged to operations in 1998, 1997
and 1996 were $nil.
Charges by IDS Life and AEFC for use of joint facilities, marketing
services and other services aggregated $2,910, $2,536 and $3,142 for 1998,
1997 and 1996, respectively. Certain of these costs are included in
deferred policy acquisition costs.
6. Lines of credit
The Company has an available line of credit with AEFC of $10,000 at AEFC's
cost of funds. The interest rate for the line of credit is AEFC's cost of
funds, ranging from 20 to 45 basis points over an established index. There
were no borrowings outstanding under this agreement at December 31, 1998 or
1997.
7. Commitments and contingencies
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which the Company conducts business involving insurers'
sales practices, alleged agent misconduct, failure to properly supervise
agents, and other matters. The Company, along with AEFC and its insurance
subsidiaries, has been named as a defendant in one of these types of
actions.
The plaintiffs purport to represent a class consisting of all persons who
purchased policies or contracts from IDS Life and its subsidiaries. The
complaint puts at issue various alleged sales practices and
misrepresentations, alleged breaches of fiduciary duties and alleged
violations of consumer fraud statutes. IDS Life and its subsidiaries
believe they have meritorious defenses to the claims raised in this
lawsuit.
The outcome of any litigation cannot be predicted with certainty. In the
opinion of management, however, the ultimate resolution of this lawsuit
should not have a material adverse effect on the Company's financial
position.
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, 1998 and 1997, traditional life insurance in-force
aggregated $191,972 and $216,961, respectively, of which $191,737 and
$216,726 were reinsured at the respective year ends. Under all reinsurance
agreements, premiums ceded to reinsurers amounted to $1,354, $1,346 and
$1,351 for the years ended December 31, 1998, 1997 and 1996. Reinsurance
recovered from reinsurers amounted to $601, $718 and $2,027 for the years
ended December 31, 1998, 1997 and 1996. Reinsurance contracts do not
relieve the Company from its primary obligations to policyholders.
<PAGE>
8. 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>
December 31,
1998 1997
Carrying Fair Carrying Fair
Financial Assets Amount Value Amount Value
---------------- -- -------- ------ - ------ ------
Investments in fixed maturities (Note 2)
<S> <C> <C> <C> <C>
Held to maturity $ 13,894 $ 14,307 $ 17,698 $ 18,153
Available for sale 273,873 273,873 216,161 216,161
Cash and cash equivalents (Note 1) 13,992 13,992 3,756 3,756
Separate account assets 12,614 12,614 1,280 1,280
Financial Liabilities
Future policy benefits for fixed
Annuities $268,285 $ 258,578 $206,516 $200,209
Separate account liabilities 12,614 11,851 1,280 1,233
</TABLE>
At December 31, 1998 and 1997, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related
contracts carried at $63 and $15, respectively. The fair value of these
benefits is based on the status of the annuities at December 31, 1998 and
1997. 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 1998 and 1997.
<PAGE>
9. Statutory insurance accounting practices
Reconciliations of net income for the years ended December 31 and
stockholder's equity at December 31, as shown in the accompanying financial
statements, to that determined using statutory accounting practices are as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
-- ---- -- ---- -- ----
<S> <C> <C> <C>
Net income, per accompanying financial statements $ 2,316 $ 1,966 $ 1,165
Deferred policy acquisition costs (3,719) (5,175) (3,177)
Adjustments of future policy benefit liabilities 3,540 2,222 (57)
Deferred federal income taxes (295) 574 1,457
IMR gain/loss transfer and amortization (148) (16) 47
Deferred surrender charge 665 -- --
Prior period adjustment -- -- (313)
Other, net (252) 255 16
--------- -------- ---------
Net income (loss), on basis of statutory
accounting practices $ 2,107 $ (174) $ (862)
======= ======= =======
Stockholder's equity, per accompanying
financial statements $47,005 $35,316
Deferred policy acquisition costs (12,864) (9,280)
Adjustments of future policy benefit liabilities 8,694 5,367
Adjustments of reinsurance ceded reserves (2,515) (2,728)
Deferred federal income taxes 1,758 2,391
Asset valuation reserve (2,986) (2,107)
Net unrealized gain on investments (4,390) (5,220)
Interest maintenance reserve (227) (79)
Other, net 637 219
---------- ----------
Stockholder's equity on basis of statutory
accounting practices $35,112 $23,879
======= =======
</TABLE>
<PAGE>
10. Year 2000 (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 target date
for substantially completing corrective measures on business critical
systems was December 31, 1998. Substantial testing of these systems was
targeted for completion early in 1999. AEFC is currently on track with this
schedule and is also on track to finish the work on non-critical systems by
June 30, 1999.
AEFC continues to evaluate 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.
AEFC's Year 2000 project includes establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address
business continuation in the event of a system disruption, are in place for
all key business units. These plans are being amended to include specific
Year 2000 considerations and will continue to be refined throughout 1999 as
additional information related to potential Year 2000 exposure is gathered.
<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 for year ended Dec. 31, 1998;
Statements of Operations for years ended Dec. 31. 1998;
Statements of Changes in Net Assets for year ended Dec. 31, 1998 and
1997.
Notes to Financial Statements.
Report of Independent Auditors for ACL Variable Annuity Account 1 dated
March 12, 1999.
American Centurion Life Insurance Company:
Balance Sheets as of Dec. 31, 1998 and 1997.
Statements of Income for years ended Dec. 31, 1998, 1997 and 1996.
Statements of Stockholders Equity, for years ended Dec. 31, 1998, 1997
and 1996.
Statements of Cash Flows for years ended Dec. 31, 1998, 1997 and 1996.
Notes to Financial Statements.
Report of Independent Auditors dated February 4, 1999.
(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.
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.
<PAGE>
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.
9. Opinion of counsel and consent to its use as to the legality of the
securities being registered, dated April 23, 1999, filed electronically
herewith.
10. Consent of Independent Auditors, filed electronically herewith.
11. None.
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 Power of Attorney to sign this Registration Statement dated April 14, 1999,
filed electronically herewith.
<PAGE>
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor (American Centurion Life Assurance Company)
<S> <C> <C>
Name Principal Business Address Positions and Offices with
Depositor
- ------------------------------------- ---------------------------------------- -----------------------------------
Timothy V. Bechtold IDS Tower 10 Director and President
Minneapolis, MN 55440
Maureen A. Buckley IDS Tower 10 Director, Vice President, Chief
Minneapolis, MN 55440 Operating Officer and Consumer
Affairs Officer
Rodney P. Burwell IDS Tower 10 Director
Minneapolis, MN 55440
John R. Cattau American Express Tower Director
World Financial Center
New York, NY 10285
James E. Choat IDS Tower 10 Executive Vice
Minneapolis, MN 55440 President-Institutional
Products Group
Robert R. Grew IDS Tower 10 Director
Minneapolis, MN 55440
Lorraine R. Hart IDS Tower 10 Vice President-Investments
Minneapolis, MN 55440
Jay C. Hatlestad IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Assured Assets
Jeffrey S. Horton IDS Tower 10 Vice President and Treasurer
Minneapolis, MN 55440
Jean B. Keffeler IDS Tower 10 Director
Minneapolis, MN 55440
Richard W. Kling IDS Tower 10 Director and Chairman of the Board
Minneapolis, MN 55440
Eric L. Marhoun IDS Tower 10 General Counsel and Secretary
Minneapolis, MN 55440
Thomas R. McBurney IDS Tower 10 Director
Minneapolis, MN 55440
Edward J. Muhl IDS Tower 10 Director
Minneapolis, MN 55440
Thomas V. Nicolosi IDS Tower 10 Director
Minneapolis, MN 55440
Stephen P. Norman IDS Tower 10 Director
Minneapolis, MN 55440
F. Dale Simmons IDS Tower 10 Vice President-Real Estate Loan
Minneapolis, MN 55440 Management
Richard M. Starr IDS Tower 10 Director
Minneapolis, MN 55440
<PAGE>
Name Principal Business Address Positions and Offices with
Depositor
- ------------------------------------- ---------------------------------------- -----------------------------------
Philip C. Wentzel IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Risk Management
Michael R. Woodward
IDS Tower 10 Director
Minneapolis, MN 55440
</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, Inc. New York
II. International Banking Services
American Express Bank Ltd. Connecticut
III. Companies engaged in Financial Services
Advisory Capital Partners LLC Delaware
Advisory Capital Strategies Group Inc. Minnesota
American Centurion Life Assurance Company New York
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 (Japan) Ltd. Japan
American Express Asset Management Ltd. England
American Express Client Service Corporation Minnesota
American Express Corporation Delaware
American Express Financial Advisors Inc. Delaware
American Express Financial Advisors Japan Inc. Delaware
American Express Financial Corporation 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 Insurance Agency of Oregon Inc. Oregon
American Express Minnesota Foundation Minnesota
American Express Property Casualty Insurance Agency of Kentucky Inc. Kentucky
American Express Property Casualty Insurance Agency of Maryland Inc. Maryland
American Express Property Casualty Insurance Agency of Mississippi Inc. Mississippi
American Express Property Casualty Insurance Agency of Pennsylvania Inc. Pennsylvania
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
IDS Cable Corporation Minnesota
<PAGE>
IDS Cable II Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
Jurisdiction of
Name of Subsidiary Incorporation
IDS Futures Brokerage Group Minnesota
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 Mississippi Ltd. Mississippi
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Ohio Inc. Ohio
IDS Insurance Agency of Texas Inc. Texas
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
Investors Syndicate Development Corp. Nevada
Public Employee Payment Company Minnesota
</TABLE>
Item 27. Number of Contractowners
As of March 31, 1999, there were 8 contract owners of qualified
Privileged Assets(R) Select Annuity contracts and 125 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.
<PAGE>
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>
<S> <C> <C>
Name and Principal Business Address Position and Offices with Underwriter Offices with Registrant
- ------------------------------------------ --------------------------------------- ---------------------------
Ward D. Armstrong Vice President None
IDS Tower 10
Minneapolis, MN 55440
John C. Boeder Vice President None
IDS Tower 10
Minneapolis, MN 55440
Cynthia M. Carlson Vice President None
IDS Tower 10
Minneapolis, MN 55440
John R. Cattau Vice President None
American Express Tower
World Financial Center
New York, NY 10285
Colleen Curran Vice President and Chief Legal Counsel None
IDS Tower 10
Minneapolis, MN 55440
David R. Hubers Director and President None
IDS Tower 10
Minneapolis, MN 55440
<PAGE>
Item 29(b). As to each director, officer or partner of the principal underwriter
(American Express Service Corporation): (cont'd)
Name and Principal Business Address Position and Offices with Underwriter Offices with Registrant
- ------------------------------------------ --------------------------------------- ---------------------------
James A. Jacobs Vice President None
IDS Tower 10
Minneapolis, MN 55440
Nancy E. Jones Vice President None
IDS Tower 10
Minneapolis, MN 55440
Verna J. Kaufman Vice President 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 President Board member and President
IDS Tower 10
Minneapolis, MN 55440
Julia K. Morton Vice President and Chief Financial None
IDS Tower 10 Officer
Minneapolis, MN 55440
Ann M. Richter Vice President and Chief Compliance None
IDS Tower 10 Officer
Minneapolis, MN 55440
</TABLE>
(c)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net Underwriting
Name of Principal Discounts and Compensation Brokerage
Underwriter Commissions Redemption Commissions Compensation
- ----------------------- --------------------- -------------------- --------------------- --------------------
American Express None None None None
Service Corporation
</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
<PAGE>
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 28th day of April, 1999.
ACL VARIABLE ANNUITY ACCOUNT 1
(Registrant)
By American Centurion Life Assurance Company
(Sponsor)
By /s/ Timothy V. Bechtold*
Timothy V. Bechtold
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 28th day of
April, 1999.
Signature Title
/s/ Timothy V. Bechtold* Director and President
Timothy V. Bechtold
/s/ Maureen A. Buckley* Director, Vice President, Chief Operating
Maureen A. Buckley Officer and Consumer Affairs Officer
/s/ Rodney P. Burwell* Director
Rodney P. Burwell
/s/ John R. Cattau* Director
John R. Cattau
/s/ Robert R. Grew* Director
Robert R. Grew
/s/ Jay C. Hatlestad* Vice President and
Jay C. Hatlestad Controller - Assured Assets
/s/ Jeffrey S. Horton* Vice President and Treasurer
Jeffrey S. Horton
/s/ Jean B. Keffeler* Director
Jean B. Keffeler
/s/ Richard W. Kling* Director and Chairman of the Board
Richard W. Kling
/s/ Thomas R. McBurney* Director
Thomas R. McBurney
/s/ Edward J. Muhl* Director
Edward J. Muhl
<PAGE>
Signature Title
/s/ Thomas V. Nicolosi* Director
Thomas V. Nicolosi
/s/ Stephen P. Norman* Director
Stephen P. Norman
/s/ Richard Starr* Director
Richard Starr
/s/ Michael R. Woodward* Director
Michael R. Woodward
*Signed pursuant to Power of Attorney dated April 14, 1999, filed electronically
herewith.
/s/Mary Ellyn Minenko
Mary Ellyn Minenko
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 4
This Registration Statement is comprised of the following papers and documents:
The Cover Page.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other Information.
The signatures.
Exhibits.
<PAGE>
Exhibit Index
9. Opinion of counsel and consent to its use as to the legality of the
securities being registered.
10. Consent of Independent Auditors
14.1 Power of Attorney
<PAGE>
April 23, 1999
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
RE: ACL Variable Annuity Account 1
Post-Effecitve Amendment No. 4
File No. 333-00041/811-07475
I am familiar with the establishment of the ACL Variable Annuity Account I
("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, when offered and sold in
accordance with the prospectus contained in the Registration Statement
and in compliance with applicable law, will be 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,
/s/Mary Ellyn Minenko
Mary Ellyn Minenko
Counsel
MEM/CLGE/arw
<PAGE>
Consent of Independent Auditors
We consent to the use of our report dated February 4, 1999 on the financial
statements American Centurion Life Assurance Company and our report dated March
12, 1999 on the financial statements of American Centurion Variable Annuity
Account 1 in Post-Effective Amendment No. 4 to the Registration Statement (Form
N-4, No. 333-00041) and related Prospectus for the registration of the ACL
Privileged Assets Select Annuity Certificates to be offered by American
Centurion Life Assurance Company.
/s/Ernst & Young LLP
Minneapolis, Minnesota
April 27, 1999
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
POWER OF ATTORNEY
City of Albany
State of New York
Each of the undersigned, as a director and/or officer of American Centurion Life
Assurance Company (ACL) on behalf of the below listed registrants previously
have filed registration statements and amendments thereto pursuant to the
requirements of the Securities Act of 1933 and the Investment Company Act of
1940 with the Securities and Exchange Commission:
<TABLE>
<CAPTION>
<S> <C> <C>
1933 Act 1940 Act
Reg. Number Reg. Number
ACL Variable Annuity Account 1 333-00041 811-07475
Privileged Assets Select Annuity (PASA-NY)
- -------------------------------------------------------------------------
ACL Variable Annuity Account 2 333-00519 811-07511
ACL Personal PortfolioSM/
ACL Personal Portfolio Plus2 (ACL-PLUS 2)
</TABLE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko,
Eileen J. Newhouse, Christopher R. Long, Timothy S. Meehan and Eric L. Marhoun
or any one of them, as his/her attorney-in-fact and agent, to sign for him/her
in his/her name, place and stead any and all filings, applications (including
applications for exemptive relief), periodic reports, registration statements
for existing or future products (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 14 day of April, 1999.
/s/ Timothy V. Bechtold
Timothy V. Bechtold
Director and President
/s/ Maureen A. Buckley
Maureen A. Buckley
Director, Vice President, Chief Operating Officer
and Consumer Affairs Officer
/s/ Rodney P. Burwell
Rodney P. Burwell
Director
/s/ John R. Cattau
John R. Cattau
Director
<PAGE>
/s/ Robert R. Grew
Robert R. Grew
Director
/s/ Jay C. Hatlestad
Jay C. Hatlestad
Vice President and Controller
/s/ Jeffrey S. Horton
Jeffrey S. Horton
Vice President and Treasurer
/s/ Jean B. Keffeler
Jean B. Keffeler
Director
/s/ Richard W. Kling
Richard W. Kling
Director and Chairman of the Board
/s/ Thomas R. McBurney
Thomas R. McBurney
Director
/s/ Edward J. Muhl
Edward J. Muhl
Director
/s/ Thomas V. Nicolosi
Thomas V. Nicolosi
Director
/s/ Stephen P. Norman
Stephen P. Norman
Director
/s/ Richard M. Starr
Richard M. Starr
Director
/s/ Michael R. Woodward
Michael R. Woodward
Director
