SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 5 (File No. 333-00041) [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 6 (File No. 811-07475) [X]
---------
(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, 200 AXP Financial Center, Minneapolis, MN 55474
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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 May 1, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
<PAGE>
PROSPECTUS
MAY 1, 2000
PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
GROUP FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY.
ACL VARIABLE ANNUITY ACCOUNT 1
ISSUED BY: AMERICAN CENTURION LIFE ASSURANCE COMPANY (AMERICAN CENTURION LIFE)
20 Madison Avenue Extension
Albany, NY 12203
(518) 452-4150 (Albany area)
(800) 633-3565
This prospectus contains information that you should know before investing. You
also will receive the following prospectuses:
- - American Express-Registered Trademark- Variable Portfolio Funds,
- - American Century Variable Portfolios, Inc.,
- - INVESCO Variable Investment Funds, Inc.,
- - Janus Aspen Series: Institutional Shares, and
- - Warburg Pincus Trust -- Global Post-Venture Capital Portfolio
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY 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 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 the
last page of this prospectus. The table of contents of the SAI is on the last
page of this prospectus.
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PROSPECTUS -- MAY 1, 2000 1
<PAGE>
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CERTIFICATE IN BRIEF..................... 4
EXPENSE SUMMARY.............................. 6
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)................................ 8
FINANCIAL STATEMENTS......................... 9
PERFORMANCE INFORMATION...................... 10
THE VARIABLE ACCOUNT AND THE FUNDS........... 11
THE FIXED ACCOUNT............................ 13
BUYING YOUR CERTIFICATE...................... 13
CHARGES...................................... 15
VALUING YOUR INVESTMENT...................... 16
MAKING THE MOST OF YOUR CERTIFICATE.......... 17
SURRENDERS................................... 19
CHANGING OWNERSHIP........................... 20
BENEFITS IN CASE OF DEATH.................... 20
THE ANNUITY PAYOUT PERIOD.................... 22
TAXES........................................ 23
VOTING RIGHTS................................ 25
SUBSTITUTION OF INVESTMENTS.................. 25
ABOUT THE SERVICE PROVIDERS.................. 26
YEAR 2000.................................... 27
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION..................... 28
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2 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
KEY TERMS
THESE TERMS CAN HELP YOU UNDERSTAND DETAILS ABOUT YOUR CERTIFICATE.
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 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: Investment options under your certificate. 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 receives the certificate's benefits.
QUALIFIED ANNUITY: A certificate that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
- - Individual Retirement Annuities (IRAs) under Section 408(b) of the Internal
Revenue Code of 1986, as amended (the Code), including rollovers from
qualified plans
- - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
A qualified annuity will not provide any necessary or additional tax-deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other certificates 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.
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PROSPECTUS -- MAY 1, 2000 3
<PAGE>
THE CERTIFICATE IN BRIEF
PURPOSE: The purpose of the certificate is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments; you may
allocate your purchase payments to the fixed account and/or subaccount under the
certificate. These accounts, in turn, may earn returns that increase the value
of the certificate. Beginning at a specified time in the future called the
retirement date, the certificate provides lifetime or other forms of payouts of
your certificate value (less any applicable premium tax). 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.
A qualified annuity will not provide any necessary or additional tax-deferral if
it is used to fund a retirement plan that is tax-deferred. However the
certificate has features other than tax-deferral that may make it an appropriate
investment for your retirement plan. You should compare these features and their
costs with other investment options before deciding to purchase this contract.
FREE LOOK PERIOD: You may return your certificate 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 AXP(SM) Variable Portfolio -- Cash
Management Fund subaccount for the period we estimate or calculate your free
look right to be in existence (generally 35 days after the certificate 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
retirement 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. 13)
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. (p. 13)
- - 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.
TRANSFERS: Subject to certain restrictions you currently may redistribute your
money among the accounts without charge at any time until annuity payouts begin.
You may establish automated transfers among the accounts. (p. 18)
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. 19)
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4 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
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. 20)
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. 20)
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. 21)
TAXES: Generally, your certificate 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. 22)
CHARGES: We access certain charges in connection with your certificate:
- - $30 annual administrative charge;
- - 1.00% mortality and expense risk fee (if you allocate money to one or more
subaccounts); and
- - the operating expenses of the funds in which the subaccounts invest.
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PROSPECTUS -- MAY 1, 2000 5
<PAGE>
EXPENSE SUMMARY
The purpose of the following information 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." Please see the fund's
prospectuses for more information on the operating expenses for each fund.
ANNUAL CERTIFICATE OWNERS EXPENSES
SURRENDER CHARGE 0%
CERTIFICATE ADMINISTRATIVE CHARGE*
$30
ANNUAL SUBACCOUNT EXPENSES
(as a percentage of average subaccount value):
MORTALITY AND EXPENSE RISK FEE 1%
*We will waive this charge when purchase payments less partial surrenders is at
least $10,000.
ANNUAL OPERATING EXPENSES OF THE FUNDS (AFTER FEE WAIVERS AND/OR EXPENSE
REIMBURSEMENTS, IF APPLICABLE, AS A
PERCENTAGE OF AVERAGE DAILY NET ASSETS)
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<TABLE>
<CAPTION>
MANAGEMENT 12B-1 OTHER
FEES FEES EXPENSES TOTAL
<S> <C> <C> <C> <C>
AXP(SM) Variable Portfolio -
Bond Fund .60% .13 .08 .81%(1)
Capital Resource Fund .60% .13 .06 .79%(1)
Cash Management Fund .51% .13 .05 .69%(1)
International Fund .83% .13 .11 1.07%(1)
Managed Fund .59% .13 .04 .76%(1)
Strategy Aggressive Fund .60% .13 .07 .80%(1)
American Century VP
Capital Appreciation 1.00% -- -- 1.00%(2)
Value 1.00% -- -- 1.00%(2)
INVESCO VIF
Equity Income Fund .75% -- .44 1.19%(3)
Janus Aspen Series
Growth Portfolio:
Institutional Shares .65% -- .02 .67%(4)
Worldwide Growth
Portfolio: Institutional
Shares .65% -- .05 .70%(4)
Warburg Pincus Trust -
Global Post-Venture
Capital Portfolio 1.25% -- .15 1.40%(5)
</TABLE>
(1) The fund's expense figures are based on actual expenses for the fiscal year
ended Aug. 31, 1999 restated to include a Rule 12b-1 distribution fee of
.125% that went into effect Sept. 21, 1999.
(2) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase.
(3) Figures in "Management Fees," "Other Expenses" and "Total" are based on
actual expenses for the fiscal year ended Dec. 31, 1999.
(4) Expenses are based upon expenses for the fiscal year ended Dec. 31, 1999,
restated to reflect a reduction in the management fee for Growth and
Worldwide Growth Portfolios. All expenses are shown without the effect of
expense offset arrangements.
(5) Expense ratios are shown after fee waivers and expenses reimbursements by
the investment advisor. The total expense ratio before the waivers and
reimbursements would have been 1.58% for Warburg Pincus Global Post-Venture
Capital Portfolio.
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6 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and full surrender, no surrender or selection of an annuity payout
plan at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
AXP(SM) Variable Portfolio -
Bond Fund $19.08 $59.01 $101.46 $219.61
Capital Resource Fund 18.87 58.39 100.41 217.46
Cash Management Fund 17.85 55.28 95.15 206.62
International Fund 21.74 67.08 115.02 247.24
Managed Fund 18.56 57.46 98.84 214.22
Strategy Aggressive Fund 18.97 58.70 100.94 218.53
American Century VP
Capital Appreciation 21.02 64.91 111.38 239.87
Value 21.02 64.91 111.38 239.87
INVESCO VIF
Equity Income Fund 22.97 70.79 121.23 259.75
Janus Aspen Series
Growth Portfolio:
Institutional Shares 17.64 54.65 94.10 204.44
Worldwide Growth
Portfolio: Institutional
Shares 17.95 55.59 95.68 207.71
Warburg Pincus Trust -
Global Post-Venture
Capital Portfolio 25.12 77.26 132.02 281.30
</TABLE>
* In this example, the $30 administrative charge is approximated as a 0.051%
charge based on our average certificate size. We entered into certain
arrangement 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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PROSPECTUS -- MAY 1, 2000 7
<PAGE>
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
The following tables give per-unit information about the financial history of
each subaccount.
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996
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<S> <C> <C> <C> <C>
SUBACCOUNT DSI(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE
PORTFOLIO - BOND FUND)
Accumulation unit
value at
beginning of
period $1.07 $1.06 $0.99 $1.00
Accumulation unit
value at end of
period $1.07 $1.07 $1.06 $0.99
Number of
accumulation
units outstanding
at end of period
(000 omitted) 19 21 15 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
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SUBACCOUNT DCR(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE
PORTFOLIO - CAPITAL RESOURCE FUND)
Accumulation unit
value at
beginning of
period $1.48 $1.20 $0.98 $1.00
Accumulation unit
value at end of
period $1.81 $1.48 $1.20 $0.98
Number of
accumulation
units outstanding
at end of period
(000 omitted) 82 50 23 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
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SUBACCOUNT DMS(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE
PORTFOLIO - CASH MANAGEMENT FUND)
Accumulation unit
value at
beginning of
period $1.08 $1.04 $1.00 $1.00
Accumulation unit
value at end of
period $1.12 $1.08 $1.04 $1.00
Number of
accumulation
units outstanding
at end of period
(000 omitted) 46 170 189 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
Simple yield(2) 5.01% 3.68% 4.12% --
Compound yield(2) 5.14% 3.75% 4.20% --
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SUBACCOUNT DIE(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE
PORTFOLIO - INTERNATIONAL FUND)
Accumulation unit
value at
beginning of
period $1.17 $1.03 $1.01 $1.00
Accumulation unit
value at end of
period $1.69 $1.17 $1.03 $1.01
Number of
accumulation
units outstanding
at end of period
(000 omitted) 11 15 14 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
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SUBACCOUNT DMG(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE
PORTFOLIO - MANAGED FUND)
Accumulation unit
value at
beginning of
period $1.34 $1.17 $0.99 $1.00
Accumulation unit
value at end of
period $1.53 $1.34 $1.17 $0.99
Number of
accumulation
units outstanding
at end of period
(000 omitted) 69 63 44 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
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SUBACCOUNT DAG(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE
PORTFOLIO - STRATEGY AGGRESSIVE FUND)
Accumulation unit
value at
beginning of
period $1.13 $1.11 $1.00 $1.00
Accumulation unit
value at end of
period $1.91 $1.13 $1.11 $1.00
Number of
accumulation
units outstanding
at end of period
(000 omitted) 58 65 42 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
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</TABLE>
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8 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996
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<S> <C> <C> <C> <C>
SUBACCOUNT DGR(3) (INVESTING IN SHARES OF AMERICAN CENTURY VP
CAPITAL APPRECIATION)
Accumulation unit
value at
beginning of
period $0.90 $0.93 $0.97 $1.00
Accumulation unit
value at end of
period $1.46 $0.90 $0.93 $0.97
Number of
accumulation
units outstanding
at end of period
(000 omitted) 49 51 42 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
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SUBACCOUNT DVL(3) (INVESTING IN SHARES OF AMERICAN CENTURY VP
VALUE)
Accumulation unit
value at
beginning of
period $1.31 $1.27 $1.01 $1.00
Accumulation unit
value at end of
period $1.29 $1.31 $1.27 $1.01
Number of
accumulation
units outstanding
at end of period
(000 omitted) 53 50 33 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
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SUBACCOUNT DII(3) (INVESTING IN SHARES OF INVESCO VIF - EQUITY
INCOME FUND)
Accumulation unit
value at
beginning of
period $1.44 $1.26 $1.00 $1.00
Accumulation unit
value at end of
period $1.64 $1.44 $1.26 $1.00
Number of
accumulation
units outstanding
at end of period
(000 omitted) 194 221 155 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
- ---------------------------------------------------------------
SUBACCOUNT DSG(3) (INVESTING IN SHARES OF JANUS ASPEN SERIES
GROWTH PORTFOLIO: INSTITUTIONAL SHARES)
Accumulation unit
value at
beginning of
period $1.63 $1.21 $1.00 $1.00
Accumulation unit
value at end of
period $2.32 $1.63 $1.21 $1.00
Number of
accumulation
units outstanding
at end of period
(000 omitted) 472 352 230 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
- ---------------------------------------------------------------
SUBACCOUNT DWG(3) (INVESTING IN SHARES OF JANUS ASPEN SERIES
WORLDWIDE GROWTH PORTFOLIO: INSTITUTIONAL SHARES)
Accumulation unit
value at
beginning of
period $1.56 $1.22 $1.00 $1.00
Accumulation unit
value at end of
period $2.54 $1.56 $1.22 $1.00
Number of
accumulation
units outstanding
at end of period
(000 omitted) 462 339 252 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
- ---------------------------------------------------------------
SUBACCOUNT DVC(3) (INVESTING IN SHARES OF WARBURG PINCUS TRUST
- - GLOBAL POST-VENTURE CAPITAL PORTFOLIO)
Accumulation unit
value at
beginning of
period $1.16 $1.10 $0.98 $1.00
Accumulation unit
value at end of
period $1.87 $1.16 $1.10 $0.98
Number of
accumulation
units outstanding
at end of period
(000 omitted) 67 75 65 --
Ratio of operating
expense to
average net
assets 1.00% 1.00% 1.00% --
- ---------------------------------------------------------------
</TABLE>
(1) Operations commenced on Dec. 9, 1996. The subaccounts had no activity in
this period.
(2) Net of annual contract administrative charge and mortality and expense risk
fee.
(3) Operations commenced on Dec. 10, 1996. The subaccounts had no activity in
this period.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the subaccounts in the SAI.
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PROSPECTUS -- MAY 1, 2000 9
<PAGE>
PERFORMANCE INFORMATION
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 which it did not. 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:
- - administrative charge, and
- - mortality and expense risk fee.
We may show total return quotations 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 ten 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 generally will be higher than average annual
total return.
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.
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10 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
THE VARIABLE ACCOUNT AND THE FUNDS
You may allocate payments to any or all of the subaccounts of the variable
account that invest in shares of the following funds:
<TABLE>
<CAPTION>
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES INVESTMENT ADVISOR OR MANAGER
<C> <S> <C> <C>
DSI AXP(SM) Variable Portfolio - Bond Objective: high level of current income IDS Life, investment manager; AEFC
Fund while conserving the value of the investment advisor.
investment and continuing a high level
of income for the longest time period.
Invests primarily in bonds and other
debt-obligations.
DCR AXP(SM) Variable Portfolio - Objective: capital appreciation. Invests IDS Life, investment manager; AEFC
Capital Resource Fund primarily in U.S. common stocks and investment advisor.
other securities convertible into common
stocks.
DMS AXP(SM) Variable Portfolio - Cash Objective: maximum current income IDS Life, investment manager; AEFC
Management Fund consistent with liquidity and investment advisor.
conservation of capital. Invests in
money market securities.
DIE AXP(SM) Variable Portfolio - Objective: capital appreciation. Invests IDS Life, investment manager; AEFC
International Fund primarily in common stock or convertible investment advisor. American Express
securities of foreign issuers that offer Asset Management International, Inc., a
growth potential. wholly-owned subsidiary of AEFC, is the
sub-investment advisor.
DMG AXP(SM) Variable Portfolio - Objective: maximum total investment IDS Life, investment manager; AEFC
Managed Fund return through a combination of capital investment advisor.
growth and current income. Invests
primarily in a combination of common and
preferred stocks, convertible
securities, bonds and other debt
securities.
DAG AXP(SM) Variable Portfolio - Objective: capital appreciation. Invests IDS Life, investment manager; AEFC
Strategy Aggressive Fund primarily in common stocks of small-and investment advisor.
medium-size companies.
DGR American Century VP Capital Objective: capital growth. Invests American Century Investment
Appreciation primarily in common stocks that are Management, Inc.
considered by management to have
better-than-average prospects for
appreciation.
DVL American Century VP Value Objective: long-term capital growth, American Century Investment
with income as a secondary objective. Management, Inc.
Invests primarily in securities that
management believes to be undervalued at
the time of purchase.
DII Invesco VIF - Equity Income Fund Objective: high current income, with INVESCO Funds Group, Inc.
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.
DSG Janus Aspen Series Growth Objective: long-term growth of capital Janus Capital Corporation
Portfolio: Institutional Shares in a manner consistent with the
preservation of capital. Invests
primarily in common stocks, with an
emphasis on companies with larger market
capitalizations.
DWG Janus Aspen Series Worldwide Growth Objective: long-term growth of capital Janus Capital Corporation
Portfolio: Institutional Shares in a manner consistent with the
preservation of capital. Invests
primarily in common stocks of foreign
and domestic issuers.
DVC Warburg Pincus Trust - Objective: long-term growth of capital. Credit Suisse Asset Management, LLC
Global Post-Venture Capital Invests primarily in equity securities
Portfolio of U.S. and foreign issuers in their
post-venture capital stage of
development.
</TABLE>
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PROSPECTUS -- MAY 1, 2000 11
<PAGE>
The investment objectives and policies of some of the funds are similar to the
investment objectives and policies of other mutual funds that an 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 and those
results may differ significantly from other funds with similar objectives and
policies.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the fund prospectus for facts you
should know before investing. These prospectuses are also available by
contacting us at the address or telephone number on the first page of this
prospectus.
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 tax-deferred retirement plans. It is
possible that in the future, it may be disadvantageous for variable annuity
accounts and variable life insurance accounts and/or tax-deferred retirement
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 tax-deferred retirement 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 tax-deferred retirement 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 tax-deferred retirement plan
accounts.
The Internal Revenue Service (IRS) issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each fund intends
to comply with these requirements.
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. All obligations arising under the certificates are general
obligations of American Centurion Life.
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 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 certificate 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 the 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.
- --------------------------------------------------------------------------------
12 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<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 and compound interest daily. We will change the interest rates from
time to time at our discretion. These rates will be based on various factors,
including, but not limited to, the interest rate environment, returns earned on
investments backing these annuities, the rates currently in effect for new and
existing company annuities, product design, competition, and the company's
revenues and expenses.
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
Your sales 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.
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
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 13
<PAGE>
- - 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 the
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 PAYMENTS
MINIMUM ALLOWABLE PURCHASE PAYMENTS*
<TABLE>
<S> <C>
If paying by installments under a scheduled If paying by any other method:
payment plan:
$100 per month $2,000 initial payment for nonqualified
annuities
$50 biweekly $1,000 initial payment for qualified annuities
$100 for any additional payments
</TABLE>
Installments must total at least $1,000 in the first year.
* 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 annuity in a lump
sum.
MAXIMUM ALLOWABLE PURCHASE PAYMENTS**
For the first year, this is based on your age or the age of the annuitant
(whoever is older) on the effective date of the contract.
<TABLE>
<S> <C>
For the first year: For each subsequent year:
$1,000,000 up to age 75 $50,000
$500,000 for ages 76 to 85
</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 tax-deferred plan's or the
Code's limits on annual contributions also apply.
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 5550
Albany, NY 12205
EXPRESS MAIL:
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
- --------------------------------------------------------------------------------
14 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
2 BY SCHEDULED PAYMENT PLAN
- --------------------------------------------------------------------------------
Through:
- - a bank authorization.
3 OTHER
- --------------------------------------------------------------------------------
- - wire transfer; or
- - other method acceptable to us.
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 amoung 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 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
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. This fee covers the mortality risk and expense risk that we assume.
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 could
profit from the expense risk fee if future expenses are less than expected.
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.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 15
<PAGE>
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.
VALUING YOUR INVESTMENT
We value your accounts 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 variable
account 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.
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.
- --------------------------------------------------------------------------------
16 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways - in number and in value.
The number of accumulation units you own may fluctuate due to:
- - additional purchase payments you allocate 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;
- - mutual fund operating expenses; and/or
- - mortality and expense risk fees.
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.
HOW DOLLAR-COST AVERAGING WORKS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT ACCUMULATION NUMBER OF UNITS
MONTH INVESTED UNIT VALUE PURCHASED
<S> <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
and fewer units Aug 100 19 5.26
when the per unit Sept 100 21 4.76
market price is high. Oct 100 20 5.00
</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.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 17
<PAGE>
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 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. Some restrictions may
apply.
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 certificate 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" below.
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 twelve transfers in a certificate year, we will charge
$25 for each transfer in excess of twelve.
- - We reserve the right to limit the number of transfers to twelve per
certificate year.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
- --------------------------------------------------------------------------------
Send your name, certificate number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or withdrawal to:
REGULAR MAIL:
American Centurion Life Assurance Company
P.O. Box 5550
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
- --------------------------------------------------------------------------------
18 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<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 certificate 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
3 BY PHONE
- --------------------------------------------------------------------------------
Call between 8 a.m. and 6 p.m. Central time
1-800-633-3565
MINIMUM AMOUNT
Transfers or surrenders:
$100 or entire account balance
MAXIMUM AMOUNT
Transfers: Certificate value
Surrenders: $50,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. We will not
allow a telephone surrender within 30 days of a phoned-in address change. As
long as we follow the procedures, we (and our affiliates) will not be liable for
any loss resulting from fraudulent requests.
Telephone transfers or surrenders are automatically available. You may request
that telephone transfers or surrenders NOT be authorized from your account by
writing to us.
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 can make surrenders after annuity payouts begin.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 19
<PAGE>
SURRENDER POLICIES
If you have a balance in more than one account and you request a partial
surrender, we will withdraw 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.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment 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.
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 certificate 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. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of a contract may be
transferred to the annuitant.
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.
- --------------------------------------------------------------------------------
20 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
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 age 70 1/2 or any other date permitted by the Code. To do this, the
spouse must give us written instructions within 60 days after we receive
proof of death.
PAYMENTS: Under a nonqualified annuity we will pay the beneficiary in a single
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; and
- - 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 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.")
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 21
<PAGE>
THE ANNUITY PAYOUT PERIOD
As owner of the certificate, you have the right to decide how and to whom
annuity payouts will be made starting at the annuity start date. You may select
one of the annuity payout plans outlined below, or we may mutually agree on
other payout arrangements.
The amount available to purchase payouts under the plan you select is the
certificate value on your annuity start date. We will make annuity payouts 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 certificate 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, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten 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 ten 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.")
RESTRICTIONS FOR SOME TAX-DEFERRED RETIREMENT 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;
- --------------------------------------------------------------------------------
22 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
- - 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 retirement 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 the owner 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, your certificate has a tax-deferral feature. This
means any value increase in the fixed account and/or sub accounts in which you
invest 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.
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.
QUALIFIED ANNUITIES: Your certificate may be used to find a tax-deferred
retirement plan that is already tax-deferred under the Code. The certificate
will not provide any necessary or additional tax-deferral if it is used to fund
a retirement plan that is tax-deferred. 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 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.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 23
<PAGE>
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.
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
- --------------------------------------------------------------------------------
24 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
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
amendments.
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 received instructions. We also will vote
the shares for which we have voting rights in the same proportion as the votes
for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
- - laws or regulations change,
- - the 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 certificate, we have the right to
substitute funds other than those currently listed in this prospectus.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 25
<PAGE>
We may also:
- - change the funds in which the subaccounts invest, and
- - make additional subaccounts investing in additional 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 Financial Advisors Inc. (AEFA) serves as the principal
underwriter and distributes the contracts. Its offices are located at 200 AXP
Financial Center, Minneapolis, MN 55474. AEFA is a wholly-owned subsidiary of
American Express Financial Corporation (AEFC) which is a wholly-owned subsidiary
of American Express Company.
ISSUER
American Centurion Life issues the certificate. 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. American Express
Company is a financial services company principally engaged through subsidiaries
(in addition to AEFC) in travel related services, investment services and
international banking services.
American Centurion Life is a stock life insurance company organized in 1969
under the laws of the State of New York. Our offices are located at 20 Madison
Avenue Extension, P.O. Box 5555, Albany, NY 12205-0555. 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 American Centurion Life and its affiliates do business
involving insurers' sales practices, alleged agent misconduct, failure to
properly supervise agents and other matters. IDS Life is a defendant in three
class action lawsuits of this nature. American Centurion Life is a named
defendant in one of these suits, 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 which was commenced in Minnesota State Court in October 1998. The
action was brought by individuals who purchased an annuity in a qualified plan.
The plaintiffs 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.
American Centurion Life is included as a party to preliminary settlement of all
three class action lawsuits. We believe this approach will put these cases
behind us and provide a fair outcome for our clients. Our decision to settle
does not include any admission of wrongdoing. We do not anticipate that this
proposed settlement, or any other lawsuits in which American Centurion Life is a
defendant, will have a material adverse effect on our financial condition.
- --------------------------------------------------------------------------------
26 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<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 Centurion Life
and the variable account. All of the major systems used by American Centurion
Life and the variable account are maintained by AEFC and are utilized by
multiple subsidiaries and affiliates of AEFC. American Centurion Life and the
variable account's businesses are heavily dependent upon AEFC's computer systems
and have significant interaction with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to American Centurion Life and the variable account,
was conducted to identify the major systems that could be affected by the Year
2000 issue. Steps were taken to resolve potential problems including
modification to existing software and the purchase of new software. As of
Dec. 31, 1999, AEFC had completed its program of corrective measures on its
internal systems and applications, including Year 2000 compliance testing. As of
Dec. 31, 1999, AEFC had also completed an evaluation of the Year 2000 readiness
of other third parties whose system failures could have an impact on American
Centurion Life's and the variable account's operations.
AEFC's Year 2000 project also included 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. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on American Centurion Life's and
the variable account's business, results of operations, or financial condition
as a result of the Year 2000 issue.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 27
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
Performance Information.......... ........... 3
Calculating Annuity Payouts.................. 6
Rating Agencies.............................. 6
Principal Underwriter........................ 6
Independent Auditors......................... 6
Financial Statements
- --------------------------------------------------------------------------------
28 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
/ / Privileged Assets-Registered Trademark- Select Annuity
/ / American Express Variable Portfolio Funds
/ / American Century Variable Portfolios, Inc.
/ / INVESCO Variable Investment Funds, Inc.
/ / Janus Aspen Series
/ / Warburg Pincus Trust -- Global 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>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
PRIVILEGED ASSETS(R) SELECT ANNUITY
ACL VARIABLE ANNUITY ACCOUNT 1
May 1, 2000
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)
800-633-3565
<PAGE>
TABLE OF CONTENTS
Performance Information..............................................p. 3
Calculating Annuity Payouts..........................................p. 6
Rating Agencies......................................................p. 6
Principal Underwriter................................................p. 7
Independent Auditors.................................................p. 7
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 the 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 ten years (or, if
less, up to the life of the 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, which
it did not. Although we base performance figures on historical earnings, past
performance does not guarantee future results.
<PAGE>
Average Annual Total Return For Periods Ending Dec. 31, 1999
<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 Investing In: 1 Year commencement 1 Year 5 Years 10 Years commencement
AXPSM VARIABLE PORTFOLIO %
DSI Bond Fund (12/96; 10/81)* 0.69% 4.42% 0.69% 6.94% 7.10% 9.62%
DCR Capital Resource Fund (12/96; 22.52 19.03 22.52 20.15 14.36 14.83
10/81)
DMS Cash Management Fund (12/96; 10/81) 3.69 3.98 3.69 4.07 3.86 5.53
DIE International Fund (12/96; 1/92) 44.18 17.03 44.18 15.04 -- 12.25
DMG Managed Fund (12/96; 4/86) 13.70 15.89 13.70 17.04 12.41 11.76
DAG Strategy Aggressive Fund (12/96; 69.33 20.97 69.33 23.56 -- 15.86
1/92)
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC.
DGR VP Capital Appreciation (12/96; 62.89 10.13 62.89 13.17 10.28 10.92
11/87)
DVL VP Value (12/96; 5/96) -1.84 11.09 -1.84 -- -- 10.00
INVESCO
DII VIF - Equity Income Fund (12/96; 13.70 19.55 13.70 20.60 -- 19.04
8/94)
JANUS ASPEN SERIES
DSG Growth Portfolio: Institutional 42.55 31.53 42.55 28.60 -- 23.03
Shares (12/96; 9/93)
DWG Worldwide Growth Portfolio: 62.82 34.14 62.82 32.27 -- 28.41
Institutional Shares (12/96; 9/93)
WARBURG PINCUS TRUST
DVC Global Post-Venture Capital 61.87 20.60 61.87 -- -- 20.58
Portfolio (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>
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).
Total return figures assume you surrender the entire certificate value at the
end of the one, five, and ten year periods (or, if less, up to the life of the
subaccount). In addition, total return figures reflect the deduction of all
other applicable charges including the administrative charge and the mortality
and expense risk fee.
<PAGE>
Calculation of Yield for Subaccounts Investing in Money Market Funds
Annualized 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, 1999
Subaccount Investing In: Simple Yield Compound Yield
- ---------- ------------- ------------ --------------
DMS AXPSM Variable Portfolio - 5.01% 5.14%
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.
<PAGE>
Annualized Yield Based on the 30-Day Period Ended Dec. 31, 1999
Subaccount Investing In: Yield
- ---------- ------------- -----
DSI AXPSM Variable Portfolio - Bond Fund 7.47%
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 Business 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 & World Report, The Wall Street Journal and Wiesenberger
Investment Companies Service.
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
A.M. Best's superior rating reflects our strong distribution network, favorable
overall balance sheet, consistently improving profitability, adequate level of
capitalization and asset/liability management expertise.
Duff & Phelps rating reflects our consistently excellent profitability record,
leadership position in chosen markets, stable operating leverage and effective
use of asset/liability management techniques.
<PAGE>
PRINCIPAL UNDERWRITER
The principal underwriter for the contract is American Express Financial
Advisors Inc. (AEFA) 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 DSI, DCR, DMS, DIE, DMG, DAG, DGR, DVL, DII, DSG, DWG,
and DVC) as of December 31, 1999, 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. 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at December 31, 1999 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 (as described
above) at December 31, 1999, and the individual and combined results of their
operations and changes in their net assets for the periods described above, in
conformity with accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 17, 2000
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets DSI DCR DMS DIE
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C> <C>
at cost $ 21,893 $ 130,675 $ 51,918 $ 14,606
-------- --------- -------- --------
at market value $ 19,972 $ 147,549 $ 51,918 $ 18,063
Dividends receivable 122 -- 204 --
Accounts receivable from American Centurion Life
for certificate purchase paymennts -- 123 -- --
Receivable from mutual funds and portfolios
for share redemptions -- -- -- --
Total assets 20,094 147,672 52,122 18,063
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 16 125 39 15
Certificate terminations -- -- -- --
Payable to mutual funds and portfolios
for investments purchased -- -- -- --
---- ----- ---- ----
Total liabilities 16 125 39 15
-- --- -- --
Net assets applicable to contracts
in accumulation period $ 20,078 $ 147,547 $ 52,083 $ 18,048
======== ========= ======== ========
Accumulation units outstanding 18,703 81,627 46,428 10,649
====== ====== ====== ======
Net asset value per accumulation unit $ 1.07 $ 1.81 $ 1.12 $ 1.69
====== ====== ====== ======
Assets DMG DAG
Investments in shares of mutual funds and portfolios:
at cost $ 99,331 $ 74,287
-------- --------
at market value $ 105,903 $ 110,353
Dividends receivable -- --
Accounts receivable from American Centurion Life
for certificate purchase paymennts 123 10
Receivable from mutual funds and portfolios
for share redemptions -- --
------ -------
Total assets 106,026 110,363
======= =======
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 92 93
Certificate terminations -- --
Payable to mutual funds and portfolios
for investments purchased -- --
---- ----
Total liabilities 92 93
-- --
Net assets applicable to contracts
in accumulation period $ 105,934 $ 110,270
========= =========
Accumulation units outstanding 69,340 57,585
====== ======
Net asset value per accumulation unit $ 1.53 $ 1.91
====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets DGR DVL DII DSG
Investments in shares of mutual funds
and portfolios:
<S> <C> <C> <C> <C>
at cost $ 45,163 $ 71,837 $ 265,278 $ 743,242
-------- -------- --------- ---------
at market value $ 72,138 $ 67,951 $ 318,667 $ 1,095,504
Dividends receivable -- -- -- --
Accounts receivable from American Centurion Life
for certificate purchase paymennts 1,480 890 788 2,107
Receivable from mutual funds and portfolios
for share redemptions 59 57 273 957
-- -- --- ---
----- ------ ------- --------
Total assets 73,677 68,898 319,728 1,098,568
====== ====== ======= =========
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 59 57 273 957
Certificate terminations -- -- -- --
Payable to mutual funds and portfolios
for investments purchased 1,480 890 788 2,107
----- --- --- -----
Total liabilities 1,539 947 1,061 3,064
----- --- ----- -----
Net assets applicable to contracts
in accumulation period $ 72,138 $ 67,951 $ 318,667 $ 1,095,504
======== ======== ========= ===========
Accumulation units outstanding 49,296 52,683 194,220 472,464
====== ====== ======= =======
Net asset value per accumulation unit $ 1.46 $ 1.29 $ 1.64 $ 2.32
====== ====== ====== ======
Combined
Variable
Assets DWG DVC Account
Investments in shares of mutual funds
and portfolios:
at cost $ 819,055 $ 67,252 $ 2,404,537
--------- -------- -----------
at market value $ 1,174,163 $ 126,272 $ 3,308,453
Dividends receivable -- -- 326
Accounts receivable from American Centurion Life
for certificate purchase paymennts 844 -- 6,365
--- ------ -----
Receivable from mutual funds and portfolios
for share redemptions 956 152 2,454
--- --- -----
Total assets 1,175,963 126,424 3,317,598
========= ======= =========
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 956 108 2,790
Certificate terminations -- 44 44
Payable to mutual funds and portfolios
for investments purchased 844 -- 6,109
--- ---- -----
Total liabilities 1,800 152 8,943
Net assets applicable to contracts
in accumulation period $ 1,174,163 $ 126,272 $ 3,308,655
=========== ========= ===========
Accumulation units outstanding 462,165 67,479
======= ======
Net asset value per accumulation unit $ 2.54 $ 1.87
====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Operations
Year ended December 31, 1999
Segregated Asset Subaccounts
Investment income DSI DCR DMS DIE
<S> <C> <C> <C> <C>
Dividend income from mutual funds and portfolios $ 1,283 $ 13,119 $ 2,278 $ 2,295
Mortality and expense risk fee 186 1,053 484 147
--- ----- --- ---
Investment income (loss) - net 1,097 12,066 1,794 2,148
===== ====== ===== =====
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 7,224 15,876 437,245 11,249
Cost of investments sold 7,706 13,843 437,245 9,960
----- ------ ------- -----
Net realized gain (loss) on investments (482) 2,033 -- 1,289
Net change in unrealized appreciation or
depreciation of investments (463) 10,440 (2) 2,223
---- ------ -- -----
Net gain (loss) on investments (945) 12,473 (2) 3,512
---- ------ -- -----
Net increase (decrease) in net assets
resulting from operations $ 152 $ 24,539 $ 1,792 $ 5,660
===== ======== ======= =======
Investment income DMG DAG
Dividend income from mutual funds and portfolios $ 7,552 $ 8,266
Mortality and expense risk fee 987 771
--- ---
Investment income (loss) - net 6,565 7,495
===== =====
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 20,545 31,112
Cost of investments sold 19,969 28,871
------ ------
Net realized gain (loss) on investments 576 2,241
Net change in unrealized appreciation or
depreciation of investments 6,094 36,821
----- ------
Net gain (loss) on investments 6,670 39,062
----- ------
Net increase (decrease) in net assets
resulting from operations $ 13,235 $ 46,557
======== ========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Operations
Year ended December 31, 1999
Segregated Asset Subaccounts
Investment income DGR DVL DII DSG
<S> <C> <C> <C> <C>
Dividend income from mutual funds and portfolios $-- $ 6,955 $ 5,445 $ 7,066
Mortality and expense risk fee 466 672 3,069 9,482
--- --- ----- -----
Investment income (loss) - net (466) 6,283 2,376 (2,416)
==== ===== ===== ======
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 15,637 7,366 92,164 443,045
Cost of investments sold 14,409 7,130 76,732 344,134
------ ----- ------ -------
Net realized gain (loss) on investments 1,228 236 15,432 98,911
Net change in unrealized appreciation or
depreciation of investments 24,787 (7,626) 23,834 251,569
------ ------ ------ -------
Net gain (loss) on investments 26,015 (7,390) 39,266 350,480
------ ------ ------ -------
Net increase (decrease) in net assets
resulting from operations $ 25,549 $ (1,107) $ 41,642 $ 348,064
======== ======== ======== =========
Combined
Variable
Investment income DWG DVC Account
Dividend income from mutual funds and portfolios $ 1,122 $-- $ 55,381
Mortality and expense risk fee 6,486 848 24,651
----- --- ------
Investment income (loss) - net (5,364) (848) 30,730
====== ==== ======
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 672,427 22,684 1,776,574
Cost of investments sold 604,660 18,578 1,583,237
------- ------ ---------
Net realized gain (loss) on investments 67,767 4,106 193,337
Net change in unrealized appreciation or
depreciation of investments 306,625 43,976 698,278
------- ------ -------
Net gain (loss) on investments 374,392 48,082 891,615
------- ------ -------
Net increase (decrease) in net assets
resulting from operations $ 369,028 $ 47,234 $ 922,345
========= ======== =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACL Variable Annuity Account 1
Statements of Changes in Net Assets
Year ended December 31, 1999
Segregated Asset Subaccounts
Operations DSI DCR DMS DIE
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 1,097 $ 12,066 $ 1,794 $ 2,148
Net realized gain (loss) on investments (482) 2,033 -- 1,289
Net change in unrealized appreciation or
depreciation of investments (463) 10,440 (2) 2,223
---- ------ -- -----
Net increase (decrease) in net assets
resulting from operations 152 24,539 1,792 5,660
=== ====== ===== =====
Certificate transactions
Certificate purchase payments 2,618 19,672 350,846 2,003
Net transfers* (4,761) 35,444 (484,337) (6,162)
Certificate charges (30) (136) (11) (57)
Certificate terminations:
Surrender benefits (322) (7,144) (57) (442)
Death benefits -- -- -- --
---- ----- ------ ----
Increase (decrease) from certificate transactions (2,495) 47,836 (133,559) (4,658)
------ ------ -------- ------
Net assets at beginning of year 22,421 75,172 183,850 17,046
------ ------ ------- ------
Net assets at end of year $ 20,078 $ 147,547 $ 52,083 $ 18,048
======== ========= ======== ========
Accumulation unit activity
Units outstanding at beginning of year 21,035 50,716 169,770 14,542
Certificate purchase payments 2,458 12,425 317,757 1,594
Net transfers* (4,456) 22,914 (441,037) (5,064)
Certificate charges (29) (85) (10) (44)
Certificate terminations:
Surrender benefits (305) (4,343) (52) (379)
Death benefits -- -- -- --
---- ----- ------ -----
Units outstanding at end of year 18,703 81,627 46,428 10,649
====== ====== ====== ======
Operations DMG DAG
Investment income (loss) - net $ 6,565 $ 7,495
Net realized gain (loss) on investments 576 2,241
Net change in unrealized appreciation or
depreciation of investments 6,094 36,821
----- ------
Net increase (decrease) in net assets
resulting from operations 13,235 46,557
====== ======
Certificate transactions
Certificate purchase payments 12,737 7,874
Net transfers* 11,182 (9,954)
Certificate charges (150) (147)
Certificate terminations:
Surrender benefits (15,884) (6,966)
Death benefits -- --
---- -----
Increase (decrease) from certificate transactions 7,885 (9,193)
----- ------
Net assets at beginning of year 84,814 72,906
------ ------
Net assets at end of year $ 105,934 $ 110,270
========= =========
Accumulation unit activity
Units outstanding at beginning of year 62,875 64,794
Certificate purchase payments 9,145 6,454
Net transfers* 8,233 (9,230)
Certificate charges (108) (121)
Certificate terminations:
Surrender benefits (10,805) (4,312)
Death benefits -- --
---- -----
Units outstanding at end of year 69,340 57,585
====== ======
*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 December 31, 1999
Segregated Asset Subaccounts
Operations DGR DVL DII DSG
<S> <C> <C> <C> <C>
Investment income (loss) - net $ (466) $ 6,283 $ 2,376 $ (2,416)
Net realized gain (loss) on investments 1,228 236 15,432 98,911
Net change in unrealized appreciation or
depreciation of investments 24,787 (7,626) 23,834 251,569
------ ------ ------ -------
Net increase (decrease) in net assets
resulting from operations 25,549 (1,107) 41,642 348,064
====== ====== ====== =======
Certificate transactions
Certificate purchase payments 6,814 4,773 25,209 67,877
Net transfers* 2,976 1,057 8,922 144,587
Certificate charges (103) (56) (323) (570)
Certificate terminations:
Surrender benefits (9,293) (2,056) (75,247) (37,478)
Death benefits -- -- -- --
----- ------ ----- ------
Increase (decrease) from certificate transactions 394 3,718 (41,439) 174,416
--- ----- ------- -------
Net assets at beginning of year 46,195 65,340 318,464 573,024
------ ------ ------- -------
Net assets at end of year $ 72,138 $ 67,951 $ 318,667 $ 1,095,504
======== ======== ========= ===========
Accumulation unit activity
Units outstanding at beginning of year 51,413 49,686 220,592 352,386
Certificate purchase payments 6,372 3,570 16,213 36,385
Net transfers* 1,639 933 5,388 104,110
Certificate charges (109) (41) (210) (315)
Certificate terminations:
Surrender benefits (10,019) (1,465) (47,763) (20,102)
Death benefits -- -- -- --
----- ------ ------- -----
Units outstanding at end of year 49,296 52,683 194,220 472,464
====== ====== ======= =======
Combined
Variable
Operations DWG DVC Account
Investment income (loss) - net $ (5,364) $ (848) $ 30,730
Net realized gain (loss) on investments 67,767 4,106 193,337
Net change in unrealized appreciation or
depreciation of investments 306,625 43,976 698,278
------- ------ -------
Net increase (decrease) in net assets
resulting from operations 369,028 47,234 922,345
======= ====== =======
Certificate transactions
Certificate purchase payments 45,315 5,669 551,407
Net transfers* 276,262 (12,393) (37,177)
Certificate charges (585) (40) (2,208)
Certificate terminations:
Surrender benefits (41,999) (563) (197,451)
Death benefits (2,756) -- (2,756)
------ ------ ------
Increase (decrease) from certificate transactions 276,237 (7,327) 311,815
------- ------ -------
Net assets at beginning of year 528,898 86,365 2,074,495
------- ------ ---------
Net assets at end of year $ 1,174,163 $ 126,272 $ 3,308,655
=========== ========= ===========
Accumulation unit activity
Units outstanding at beginning of year 339,084 74,697
Certificate purchase payments 25,191 4,615
Net transfers* 123,216 (11,328)
Certificate charges (336) (33)
Certificate terminations:
Surrender benefits (23,350) (472)
Death benefits (1,640) --
------ -----
Units outstanding at end of year 462,165 67,479
======= ======
*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 December 31, 1998
Segregated Asset Subaccounts
Operations DSI DCR DMS DIE
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 1,361 $ 4,304 $ 4,761 $ 52
Net realized gain (loss) on investments (257) 94 1 223
Net change in unrealized appreciation or
depreciation of investments (1,222) 5,923 2 1,882
------ ----- - -----
Net increase (decrease) in net assets
resulting from operations (118) 10,321 4,764 2,157
==== ====== ===== =====
Certificate transactions
Certificate purchase payments 3,159 6,247 423,167 2,107
Net transfers* 5,586 34,931 (440,645) (1,009)
Certificate charges (32) (80) (2) (54)
Certificate terminations:
Surrender benefits (2,005) (4,076) -- (886)
------ ------ ----
Increase (decrease) from certificate transactions 6,708 37,022 (17,480) 158
----- ------ ------- ---
Net assets at beginning of year 15,831 27,829 196,566 14,731
------ ------ ------- ------
Net assets at end of year $ 22,421 $ 75,172 $ 183,850 $ 17,046
======== ======== ========= ========
Accumulation unit activity
Units outstanding at beginning of year 14,926 23,022 188,943 14,411
Certificate purchase payments 2,938 4,760 399,642 1,864
Net transfers* 5,041 26,094 (418,814) (871)
Certificate charges (30) (64) (1) (48)
Certificate terminations:
Surrender benefits (1,840) (3,096) -- (814)
------ ------ ----
Units outstanding at end of year 21,035 50,716 169,770 14,542
====== ====== ======= ======
Operations DMG DAG
Investment income (loss) - net $ 8,558 $ 4,027
Net realized gain (loss) on investments 2,697 1,885
Net change in unrealized appreciation or
depreciation of investments 824 (647)
--- ----
Net increase (decrease) in net assets
resulting from operations 12,079 5,265
====== =====
Certificate transactions
Certificate purchase payments 6,484 6,904
Net transfers* 17,594 14,251
Certificate charges (105) (117)
Certificate terminations:
Surrender benefits (2,814) (239)
------ ----
Increase (decrease) from certificate transactions 21,159 20,799
------ ------
Net assets at beginning of year 51,576 46,842
------ ------
Net assets at end of year $ 84,814 $ 72,906
======== ========
Accumulation unit activity
Units outstanding at beginning of year 43,796 42,084
Certificate purchase payments 5,255 6,256
Net transfers* 16,151 16,789
Certificate charges (84) (99)
Certificate terminations:
Surrender benefits (2,243) (236)
------ ----
Units outstanding at end of year 62,875 64,794
====== ======
*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 December 31, 1998
Segregated Asset Subaccounts
Operations DGR DVL DII DSG
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 1,859 $ 3,001 $ 13,515 $ 23,815
Net realized gain (loss) on investments (6,909) 569 3,090 (4,862)
Net change in unrealized appreciation or
depreciation of investments 2,844 (1,870) 15,916 82,115
----- ------ ------ ------
Net increase (decrease) in net assets
resulting from operations (2,206) 1,700 32,521 101,068
====== ===== ====== =======
Certificate transactions
Certificate purchase payments 6,866 4,082 20,730 35,395
Net transfers* 2,832 18,238 74,558 175,149
Certificate charges (89) (9) (171) (204)
Certificate terminations:
Surrender benefits -- -- (4,747) (10,164)
----- ------- ------ -------
Increase (decrease) from certificate transactions 9,609 22,311 90,370 200,176
----- ------ ------ -------
Net assets at beginning of year 38,792 41,329 195,573 271,780
------ ------ ------- -------
Net assets at end of year $ 46,195 $ 65,340 $ 318,464 $ 573,024
======== ======== ========= =========
Accumulation unit activity
Units outstanding at beginning of year 41,823 32,637 154,631 229,764
Certificate purchase payments 7,620 3,035 15,382 26,249
Net transfers* 2,066 14,021 54,277 104,139
Certificate charges (96) (7) (126) (155)
Certificate terminations:
Surrender benefits -- -- (3,572) (7,611)
----- ------ ------ ------
Units outstanding at end of year 51,413 49,686 220,592 352,386
====== ====== ======= =======
Combined
Variable
Operations DWG DVC Account
Investment income (loss) - net $ 13,700 $ (771) $ 55,119
Net realized gain (loss) on investments 29,016 (12) 20,892
Net change in unrealized appreciation or
depreciation of investments 31,627 5,155 135,787
------ ----- -------
Net increase (decrease) in net assets
resulting from operations 74,343 4,372 211,798
====== ===== =======
Certificate transactions
Certificate purchase payments 32,002 4,027 103,102
Net transfers* 134,946 7,404 413,127
Certificate charges (465) (34) (972)
Certificate terminations:
Surrender benefits (18,342) (246) (33,499)
------- ---- -------
Increase (decrease) from certificate transactions 148,141 11,151 481,758
------- ------ -------
Net assets at beginning of year 306,414 70,842 924,730
------- ------ -------
Net assets at end of year $ 528,898 $ 86,365 $ 1,618,286
========= ======== ===========
Accumulation unit activity
Units outstanding at beginning of year 251,604 64,614
Certificate purchase payments 22,301 3,737
Net transfers* 78,497 6,612
Certificate charges (336) (30)
Certificate terminations:
Surrender benefits (12,982) (236)
------- ----
Units outstanding at end of year 339,084 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
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>
DSI AXP SM Variable Portfolio-- Bond Fund IDS Life Insurance Company 1
DCR AXPSM Variable Portfolio-- Capital Resource Fund IDS Life Insurance Company 1
DMS AXP SM Variable Portfolio-- Cash Management Fund IDS Life Insurance Company 1
DIE AXPSM Variable Portfolio-- International Fund IDS Life Insurance Company 2
DMG AXPSM Variable Portfolio-- Managed Fund IDS Life Insurance Company 1
DAG AXPSM Variable Portfolio-- Strategy Aggressive IDS Life Insurance Company 1
Fund
DGR American Century VP Capital Appreciation American Century Investment Management, Inc.
DVL American Century VP Value American Century Investment Management, Inc.
DII INVESCO VIF -- Equity Income Fund INVESCO Funds Group, Inc.
DSG Janus Aspen Series Growth Portfolio: Institutional Janus Capital Corporation
Shares
DWG Janus Aspen Series Worldwide Growth Portfolio: Janus Capital Corporation
Institutional Shares
DVC Warburg Pincus Trust-- Global Post-Venture Capital Warburg Pincus Asset Management, Inc.
Portfolio
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 accounting principles
generally accepted in the United States 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, 1999 were as follows:
Subaccount Investment Shares NAV
<S> <C> <C> <C>
DSI AXP SM Variable Portfolio-- Bond Fund 1,894 $10.54
DCR AXPSM Variable Portfolio-- Capital Resource Fund 4,054 36.40
DMS AXP SM Variable Portfolio-- Cash Management Fund 51,924 1.00
DIE AXPSM Variable Portfolio-- International Fund 932 19.38
DMG AXPSM Variable Portfolio-- Managed Fund 5,344 19.82
DAG AXPSM Variable Portfolio-- Strategy Aggressive Fund 4,614 23.92
DGR American Century VP Capital Appreciation 4,861 14.84
DVL American Century VP Value 11,420 5.95
DII INVESCO VIF-- Equity Income Fund 15,167 21.01
DSG Janus Aspen Series Growth Portfolio: Institutional Shares 32,556 33.65
DWG Janus Aspen Series Worldwide Growth Portfolio: Institutional 24,590 47.75
Shares
DVC Warburg Pincus Trust-- Global Post-Venture Capital Portfolio 6,556 19.26
6. INVESTMENT TRANSACTIONS
The subaccounts' purchases of Funds' shares, including reinvestment of dividend
distributions, were as follows:
Year ended Dec. 31,
Subaccount Investment 1999 1998
<S> <C> <C> <C>
DSI AXP SM Variable Portfolio-- Bond Fund $ 5,720 $ 44,944
DCR AXPSM Variable Portfolio-- Capital Resource Fund 75,780 47,786
DMS AXP SM Variable Portfolio-- Cash Management Fund 305,315 844,529
DIE AXPSM Variable Portfolio-- International Fund 8,754 5,319
DMG AXPSM Variable Portfolio-- Managed Fund 34,964 90,990
DAG AXPSM Variable Portfolio-- Strategy Aggressive Fund 29,497 67,818
DGR American Century VP Capital Appreciation 15,526 48,257
DVL American Century VP Value 17,303 50,336
DII INVESCO VIF-- Equity Income Fund 52,828 157,145
DSG Janus Aspen Series Growth Portfolio: Institutional Shares 614,577 672,558
DWG Janus Aspen Series Worldwide Growth Portfolio: 942,876 1,145,676
Institutional Shares
DVC Warburg Pincus Trust-- Global Post-Venture Capital 14,436 10,956
Portfolio
Combined Variable Account $2,117,576 $3,186,314
7. 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 American Centurion Life
and the Account. All of the major systems used by the American Centurion Life
and the Account are maintained by AEFC and are utilized by multiple subsidiaries
and affiliates of AEFC. American Centurion Life's businesses are heavily
dependent upon AEFC's computer systems and have significant interactions with
systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to American Centurion Life, was conducted to identify
the major systems that could be affected by the Year 2000 issue. Steps were
taken to resolve potential problems including modification to existing software
and the purchase of new software. As of Dec. 31, 1999, AEFC had completed its
program of corrective measures on its internal systems and applications,
including Year 2000 compliance testing. As of Dec. 31, 1999, AEFC had also
completed an evaluation of the Year 2000 readiness of other third parties whose
system failures could have an impact on American Centurion Life's and the
Account's operations.
AEFC's Year 2000 project also included 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. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on American Centurion Life's and
the variable account's business, results of operations, or financial condition
as a result of the Year 2000 issue.
</TABLE>
<PAGE>
<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, 1999 and 1998, and the related statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1999. 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
February 3, 2000
Minneapolis, Minnesota
- --------------------------------------------------------------------------------
1
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
BALANCE SHEETS
DECEMBER 31,
($ THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
- ------------------------------------------------------------
Investments:
Fixed maturities:
Held to maturity, at amortized cost
(fair value:
1999, $10,939; 1998, $14,307) $ 10,971 $ 13,894
Available for sale, at fair value
(amortized cost:
1999, $315,486; 1998, $269,483) 297,251 273,873
------------------
308,222 287,767
Mortgage loans on real estate 11,691 --
- ------------------------------------------------------------
Total investments 319,913 287,767
Cash and cash equivalents 7,159 13,992
Amounts recoverable from reinsurers 2,389 2,515
Accrued investment income 4,974 4,364
Deferred policy acquisition costs 16,823 12,864
Deferred income taxes 6,201 --
Other assets 77 69
Separate account assets 24,597 12,614
- ------------------------------------------------------------
Total assets $382,133 $334,185
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------------------------------
Liabilities:
Future policy benefits:
Fixed annuities $317,709 $268,348
Traditional life insurance 1,653 1,724
Disability income insurance 85 225
Policy claims and other policyholders'
funds 672 2,048
Deferred income taxes -- 1,758
Other liabilities 701 463
Separate account liabilities 24,597 12,614
- ------------------------------------------------------------
Total liabilities 345,417 287,180
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 26,600
Accumulated other comprehensive (loss)
income:
Net unrealized securities (losses)
gains (11,102) 2,512
Retained earnings 20,218 16,893
- ------------------------------------------------------------
Total stockholder's equity 36,716 47,005
- ------------------------------------------------------------
Total liabilities and
stockholder's equity $382,133 $334,185
- ------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
2
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
($ THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Revenues:
Net investment income $23,693 $18,990 $13,331
Contractholder charges 760 568 318
Mortality and expense risk fees 242 87 8
Net realized gain on investments 153 39 25
- ----------------------------------------------------------------------
Total revenues 24,848 19,684 13,682
Benefits and expenses:
Death and other benefits on investment
contracts (117) 72 2
Interest credited on investment
contracts 15,290 12,838 8,887
Amortization of deferred policy
acquisition costs 1,413 624 114
Other operating expenses 2,511 2,260 1,324
- ----------------------------------------------------------------------
Total expenses 19,097 15,794 10,327
- ----------------------------------------------------------------------
Income before income taxes 5,751 3,890 3,355
Income taxes 2,426 1,574 1,389
- ----------------------------------------------------------------------
Net income $ 3,325 $ 2,316 $ 1,966
- ----------------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
3
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
THREE YEARS ENDED DECEMBER 31, 1999
($ THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
TOTAL ADDITIONAL COMPREHENSIVE
STOCKHOLDER'S CAPITAL PAID-IN (LOSS) INCOME, RETAINED
EQUITY STOCK CAPITAL NET OF TAX EARNINGS
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $31,074 $1,000 $16,600 $ 863 $12,611
Comprehensive income:
Net income 1,966 -- -- -- 1,966
Unrealized holding losses arising
during the year, net of 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
of $5 (10) -- -- (10) --
- -------------------------------------------------------------------------------------------------------
Other comprehensive income 2,276 -- -- 2,276 --
- -------------------------------------------------------------------------------------------------------
Comprehensive income 4,242
Capital contribution from parent 10,000 -- 10,000 -- --
- -------------------------------------------------------------------------------------------------------
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 deferred
policy acquisition costs of $135
and taxes of $327 (608) -- -- (646) --
Reclassification adjustment for gains
included in net income, net of tax
of $10 (19) -- -- 19 --
- -------------------------------------------------------------------------------------------------------
Other comprehensive loss (627) -- -- (627) --
- -------------------------------------------------------------------------------------------------------
Comprehensive income 1,689
Capital contribution from IDS Life 10,000 -- 10,000 -- --
- -------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 47,005 1,000 26,600 2,512 16,893
Comprehensive income:
Net income 3,325 -- -- -- 3,325
Unrealized holding losses arising
During the year, net of deferred
policy acquisition costs of
$1,680, and taxes of $7,216 (13,401) -- -- (13,401) --
Reclassification adjustment for gains
included in net income, net of tax
of $114 (213) -- -- (213) --
- -------------------------------------------------------------------------------------------------------
Other comprehensive loss (13,614) -- -- (13,614) --
- -------------------------------------------------------------------------------------------------------
Comprehensive loss (10,289)
- -------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $36,716 $1,000 $26,600 ($11,102) $20,218
- -------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
- --------------------------------------------------------------------------------
4
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
($ THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,325 $ 2,316 $ 1,966
Adjustments to reconcile net income to
net cash used in operating
activities:
Change in amounts recoverable from
reinsurers 126 213 --
Change in accrued investment income (610) (1,244) (1,016)
Change in deferred policy
acquisition costs, net (2,279) (3,718) (5,175)
Change in other assets (8) 1,522 (1,536)
Change in liabilities for future
policy benefits for traditional
life and disability income
insurance (211) (160) 1
Change in policy claims and other
policyholders' funds (1,376) (257) 1,614
Deferred income tax (benefit)
provision (629) (295) 574
Change in other liabilities 238 (278) 707
(Accretion of discount) amortization
of premium, net (408) (46) 7
Net realized gain on investments (153) (39) (25)
Other, net (125) (1) 7
- ----------------------------------------------------------------------
Net cash used in operating
activities (2,110) (1,987) (2,876)
- ----------------------------------------------------------------------
Cash flows from investing activities:
Fixed maturities held to maturity:
Maturities 2,884 3,770 1,847
Fixed maturities available for sale:
Purchases (83,722) (87,699) (86,006)
Maturities 24,965 22,581 8,438
Sales 13,480 6,695 1,303
Other investments:
Purchases (11,744) --
Sales 53 -- --
Change in due to brokers -- (4,941) 24
- ----------------------------------------------------------------------
Net cash used in investing
activities (54,084) (59,594) (74,394)
- ----------------------------------------------------------------------
Cash flows from financing activities:
Activity related to investment
contracts:
Considerations received 69,806 78,367 82,656
Surrenders and other benefits (35,735) (29,388) (24,373)
Interest credited to account
balances 15,290 12,838 8,887
Capital contribution from parent -- 10,000 --
- ----------------------------------------------------------------------
Net cash provided by financing
activities 49,361 71,817 67,170
- ----------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (6,833) 10,236 (10,100)
Cash and cash equivalents at beginning
of year 13,992 3,756 13,856
- ----------------------------------------------------------------------
Cash and cash equivalents at end of year $ 7,159 $ 13,992 $ 3,756
- ----------------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 accounting principles generally accepted in the United States 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 accounting principles
generally accepted in the United States 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 (loss) 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.
Mortgage loans on real estate are carried at amortized cost less an allowance
for mortgage loan losses. The estimated fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities.
Impairment of mortgage loans is measured as the excess of the loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate, or the fair value of
collateral. The amount of the impairment is recorded in an allowance for
mortgage loan losses. The allowance for mortgage loan losses is maintained at a
level that management believes is adequate to absorb estimated losses in the
portfolio. The level of the allowance account is determined based on several
factors, including historical experience, expected future principal and interest
payments, estimated collateral values, and current and anticipated economic and
political conditions. Management regularly evaluates the adequacy of the
allowance for mortgage loan losses.
- --------------------------------------------------------------------------------
6
<PAGE>
The Company generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on management's
judgment as to the ultimate collectibility of principal, interest payments
received are either recognized as income or applied to the recorded investment
in the loan.
The cost of interest rate caps and floors is amortized to investment income over
the life of the contracts and payments received as a result of these agreements
are recorded as investment income when realized. The amortized cost of interest
rate caps and floors is included in other investments
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.
Supplementary information to the statements of cash flows for the years ended
December 31, is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ---------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Income taxes $2,700 $ 42 $2,404
Interest on borrowings 11 332 7
</TABLE>
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, have been deferred on annuity
contracts. These costs are amortized using primarily the interest method.
For variable annuities and variable universal life insurance, the amortization
of deferred acquisition costs can be impacted by separate account asset
performance. The Company generally assumes assets will appreciate at a constant
rate, and considers whether recent fluctuations from that rate are temporary and
likely to correct.
LIABILITIES FOR FUTURE POLICY BENEFITS
Liabilities for universal-life type insurance and fixed and variable deferred
annuities are accumulation values.
Liabilities for equity indexed deferred annuities are determined as the present
value of guaranteed benefits and the intrinsic value of index-based benefits.
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, 1999 and 1998 are $335 receivable
from and $178 payable to IDS Life for federal income taxes, respectively.
- --------------------------------------------------------------------------------
7
<PAGE>
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.
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 contractual maximums.
ACCOUNTING CHANGES
American Institute of Certified Public Accountants (AICPA) Statement of Position
(SOP) 98-1, "Accounting for Costs of Computer Software Developed or Obtained for
Internal Use" became effective January 1, 1999. The SOP 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 capitalized by AEFC. As a result, the new rule did not have a
material impact on the Company's results of operations or financial condition.
Effective January 1, 1999, the Company adopted AICPA 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. Adoption of the SOP did not have a material impact on the Company's
results of operations or financial condition.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective January 1, 2001. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation. The
ultimate financial effect of the new rule will be measured based on the
derivatives in place at adoption and cannot be estimated at this time.
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company's statutory-basis financial statements are prepared in accordance
with accounting practices prescribed or permitted by the New York Insurance
Department. Currently, "prescribed" statutory practices are interspersed
throughout state insurance laws and regulations, the NAIC's ACCOUNTING PRACTICES
AND PROCEDURES MANUAL and a variety of other NAIC publications. "Permitted"
statutory accounting practices encompass all accounting practices that are not
prescribed; such practices may differ from state to state, may differ from
company to company within a state, and may change in the future.
In 1998, the NAIC adopted codified statutory accounting principles
("Codification") effective January 1, 2001. Codification will likely change, to
some extent, prescribed statutory accounting practices and may result in changes
to the accounting practices that the Company uses to prepare its statutory-basis
financial statements. Codification will require adoption by the various states
before it becomes the prescribed statutory basis of accounting for insurance
companies domesticated within those states. Accordingly, before Codification
becomes effective for the Company, the State of New York must adopt Codification
as the prescribed basis of accounting on which domestic insurers must report
their statutory-basis results to the Insurance Department. New York has not yet
- --------------------------------------------------------------------------------
8
<PAGE>
made a decision regarding whether or not it will accept Codification. While
management has not yet determined the impact of Codification to the Company's
statutory-basis financial statements, it does not believe the impact will be
material.
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, 1999 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 $ 10,006 $ 53 $ 115 $ 9,944
Mortgage-backed securities 965 30 -- 995
- ----------------------------------------------------------------------------
$ 10,971 $ 83 $ 115 $ 10,939
- ----------------------------------------------------------------------------
AVAILABLE FOR SALE
- ----------------------------------------------------------------------------
U.S. Government agency
obligations $ 1,064 $ -- $ 21 $ 1,043
State and municipal
obligations 900 6 -- 906
Corporate bonds and
obligations 211,606 632 14,716 197,522
Mortgage-backed securities 101,916 113 4,249 97,780
- ----------------------------------------------------------------------------
$315,486 $ 751 $18,986 $297,251
- ----------------------------------------------------------------------------
</TABLE>
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>
- --------------------------------------------------------------------------------
9
<PAGE>
The amortized cost and fair value of investments in fixed maturities at December
31, 1999 by contractual maturity are shown below. Actual maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
HELD TO MATURITY COST VALUE
- -------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 5,052 $ 5,057
Due from one to five years 3,557 3,585
Due in more than ten years 1,397 1,302
Mortgage-backed securities 965 995
- -------------------------------------------------------------
$ 10,971 $ 10,939
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AMORTIZED FAIR
AVAILABLE FOR SALE COST VALUE
- -------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 6,531 $ 6,553
Due from one to five years 19,017 18,661
Due from five to ten years 124,664 116,727
Due in more than ten years 63,358 57,530
Mortgage-backed securities 101,916 97,780
- -------------------------------------------------------------
$315,486 $297,251
- -------------------------------------------------------------
</TABLE>
Fixed maturities available for sale were sold during 1999 with proceeds of
$13,480 and gross realized gains and losses of $419 and $92, respectively. 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.
At December 31, 1999, bonds carried at $1,064 were on deposit with various
states as required by law.
At 12/31/99, fixed maturities comprised 96 percent of the Company's total
invested assets.
Securities are rated by Moody's and Standard & Poor's (S&P), except for
approximately $51 million of securities which are rated by AEFC's internal
analysts using criteria similar to Moody's and S&P. A summary of investments in
fixed maturities, at amortized cost, by rating on December 31 is as follows:
<TABLE>
<CAPTION>
RATING 1999 1998
- ------------------------------------------------------------
<S> <C> <C>
Aaa/AAA $103,877 $ 88,286
Aa/AA 6,297 4,942
Aa/A 4,751 2,509
A/A 30,560 26,700
A/BBB 8,903 13,439
Baa/BBB 129,337 104,236
Baa/BB 4,427 5,651
Below investment grade 38,305 37,614
- ------------------------------------------------------------
$326,457 $283,377
- ------------------------------------------------------------
</TABLE>
At December 31, 1999, approximately 79 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.
- --------------------------------------------------------------------------------
10
<PAGE>
At December 31, 1999, approximately 4 percent of the Company's invested assets
were mortgage loans on real estate. Summaries of mortgage loans by region of the
United States and by type of real estate are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------
ON COMMITMENTS
REGION BALANCE SHEET TO PURCHASE
- --------------------------------------------------------------------
<S> <C> <C>
South Atlantic $ -- $2,544
Middle Atlantic 1,279 --
East North Central 4,483 106
Mountain 2,000 --
West North Central 2,284 --
New England 1,645 --
- --------------------------------------------------------------------
$11,691 $2,650
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------
ON COMMITMENTS
PROPERTY TYPE BALANCE SHEET TO PURCHASE
- --------------------------------------------------------------------
<S> <C> <C>
Department/retail stores $ 4,527 $ --
Apartments 1,093 1,299
Office buildings 5,035 1,245
Industrial buildings 1,036 106
- --------------------------------------------------------------------
$11,691 $2,650
- --------------------------------------------------------------------
</TABLE>
Mortgage loan fundings are restricted by state insurance regulatory authorities
to 80 percent or less of the market value of the real estate at the time of
origination of the loan. The Company holds the mortgage document, which gives it
the right to take possession of the property if the borrower fails to perform
according to the terms of the agreement. Commitments to purchase mortgages are
made in the ordinary course of business. The fair value of the mortgage
commitments is $nil.
At December 31, 1999, the Company's recorded investment in impaired loans was
$nil.
Net investment income for the years ended December 31 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Interest on fixed maturities $22,822 $19,338 $13,818
Interest on mortgage loans 281 -- --
Interest on cash equivalents 277 131 276
Other 585 132 1
- --------------------------------------------------------------
23,965 19,601 14,095
Less investment expenses 272 611 764
- --------------------------------------------------------------
$23,693 $18,990 $13,331
- --------------------------------------------------------------
</TABLE>
Net realized gain on investments was $153, $39 and $25 for the years ended
December 31, 1999, 1998 and 1997, 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:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities available for sale $(22,625) $(831) $3,761
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
3. INCOME TAXES
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the Internal Revenue Code
provisions applicable to life insurance companies.
The income tax expense (benefit) for the years ended December 31, consists of
the following:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes:
Current $2,417 $1,544 $ 486
Deferred (629) (295) 574
- -----------------------------------------------------------
1,788 1,249 1,060
State income taxes -- current 638 325 329
- -----------------------------------------------------------
Income tax expense $2,426 $1,574 $1,389
- -----------------------------------------------------------
</TABLE>
Increases to the income tax provision applicable to pretax income based on the
statutory rate for the years ended December 31, are attributable to:
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ------------------ ------------------
PROVISION RATE PROVISION RATE PROVISION RATE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes
based on the statutory
rate $2,013 35.0% $1,361 35.0% $1,174 35.0%
Increases are
attributable to:
State tax, net 415 7.2 211 5.4 214 6.4
Other, net (2) -- 2 0.1 1 0
- -------------------------------------------------------------------------------------
Total income taxes $2,426 42.2% $1,574 40.5% $1,389 41.4%
- -------------------------------------------------------------------------------------
</TABLE>
Significant components of the Company's deferred income tax assets and
liabilities as of December 31 are as follows:
<TABLE>
<CAPTION>
1999 1998
- ----------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Policy reserves $ 4,326 $ 3,049
Investments 6,070 --
- ----------------------------------------------------------
Total deferred income tax assets 10,396 3,049
- ----------------------------------------------------------
Deferred income tax liabilities:
Deferred policy acquisition costs 3,900 3,234
Investments -- 1,518
Other 295 55
- ----------------------------------------------------------
Total deferred income tax
liabilities 4,195 4,807
- ----------------------------------------------------------
Net deferred income tax
assets/(liabilities) $ 6,201 $(1,758)
- ----------------------------------------------------------
</TABLE>
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
- --------------------------------------------------------------------------------
12
<PAGE>
approved by the New York Department of Insurance. Statutory unassigned surplus
aggregated $9,149 and $7,512 as of December 31, 1999 and 1998, 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 $4, $3 and $nil in 1999, 1998 and 1997, 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 1999, 1998 and 1997 were $19, $19 and $23,
respectively.
The Company participates in defined benefit health care plans of AEFC that
provide health care and life insurance benefits to retired employees. The plans
include participant contributions and service related eligibility requirements.
Upon retirement, such employees are considered to have been employees of AEFC.
Costs of these plans charged to operations in 1999, 1998 and 1997 were $nil.
Charges by IDS Life and AEFC for use of joint facilities, marketing services and
other services aggregated $2,751, $2,910 and $2,536 for 1999, 1998 and 1997,
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 established by reference
to various indicies plus 20 to 45 basis points, depending on the term. There
were no borrowings outstanding under this agreement at December 31, 1999 or
1998.
7. COMMITMENTS AND CONTINGENCIES
In January 2000, AEFC reached an agreement in principle to settle three
class-action lawsuits. The Company had been named as a co-defendant in one of
these lawsuits. It is expected the settlement will provide $215 million of
benefits to more than 2 million participants. The agreement in principle to
settle also provides for release by class members of all insurance and annuity
market conduct claims dating back to 1985 and is subject to a number of
contingencies including a definitive agreement and court approval. The portion
of the settlement allocated to the Company did not have a material impact on the
Company's financial position or results from operations.
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, 1999 and 1998, traditional life insurance in-force aggregated
$168,830 and $191,972, respectively, of which $168,595 and $191,737 were
reinsured at the respective year ends. Under all reinsurance agreements,
premiums ceded to reinsurers amounted to $1,289, $1,354 and $1,346 for the years
ended December 31, 1999, 1998 and 1997. Reinsurance recovered from reinsurers
amounted to $1,602, $601 and $718 for the years ended December 31, 1999, 1998
and 1997. Reinsurance contracts do not relieve the Company from its primary
obligations to policyholders.
- --------------------------------------------------------------------------------
13
<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,
--------------------------------------
1999 1998
------------------ ------------------
CARRYING FAIR CARRYING FAIR
FINANCIAL ASSETS AMOUNT VALUE AMOUNT VALUE
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments in fixed
maturities (Note 2)
Held to maturity $ 10,971 $ 10,939 $ 13,894 $ 14,307
Available for sale 297,251 297,251 273,873 273,873
Mortgage loans on real estate
(Note 2) 11,691 11,182 -- --
Cash and cash equivalents
(Note 1) 7,159 7,159 13,992 13,992
Separate account assets 24,597 24,597 12,614 12,614
FINANCIAL LIABILITIES
- ----------------------------------------------------------------------
Future policy benefits for
fixed Annuities $317,600 $305,733 $268,285 $258,578
Separate account liabilities 24,597 23,394 12,614 11,851
</TABLE>
At December 31, 1999 and 1998, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related contracts
carried at $109 and $63, respectively. The fair value of these benefits is based
on the status of the annuities at December 31, 1999 and 1998. 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 1999 and
1998.
- --------------------------------------------------------------------------------
14
<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>
1999 1998 1997
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net income, per accompanying
financial statements $ 3,325 $ 2,316 $ 1,966
Deferred policy acquisition costs (2,279) (3,719) (5,175)
Adjustments of future policy
benefit liabilities 2,793 2,540 2,222
Deferred federal income taxes (629) (295) 574
IMR gain/loss transfer and
amortization (230) (148) (16)
Deferred surrender charge 513 665 --
Other, net 175 (252) 255
- ----------------------------------------------------------------
Net income (loss), on basis of
statutory accounting practices $ 3,668 $ 1,107 $ (174)
- ----------------------------------------------------------------
Stockholder's equity, per
accompanying financial statements $ 36,716 $ 47,005
Deferred policy acquisition costs (16,823) (12,864)
Adjustments of future policy
benefit liabilities 10,361 8,694
Adjustments of reinsurance ceded
reserves (2,390) (2,515)
Deferred federal income taxes (6,201) 1,758
Asset valuation reserve (4,021) (2,986)
Net unrealized gain on investments 18,408 (4,390)
Interest maintenance reserve (456) (227)
Other, net 1,155 637
- ----------------------------------------------------------------
Stockholder's equity on basis of
statutory accounting practices $ 36,749 $ 35,112
- ----------------------------------------------------------------
</TABLE>
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
major systems used by the Company are maintained by AEFC and are utilized by
multiple subsidiaries and affiliates of AEFC. The Company's businesses are
heavily dependent upon AEFC's computer systems and have significant interaction
with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to the Company, was conducted to identify the major
systems that could be affected by the Year 2000 issue. Steps were taken to
resolve potential problems including modification to existing software and the
purchase of new software. As of December 31, 1999, AEFC had completed its
program of corrective measures on its internal systems and applications,
including Year 2000 compliance testing. As of December 31, 1999, AEFC had also
completed an evaluation of the Year 2000 readiness of other third parties whose
system failures could have an impact on the Company's operations.
AEFC's Year 2000 project also included 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. At December 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since January 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on the Company's business, results
of operations, or financial condition as a result of the Year 2000 issue.
- --------------------------------------------------------------------------------
15
<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, 1999;
Statements of Operations for years ended Dec. 31. 1999;
Statements of Changes in Net Assets for year ended Dec. 31, 1999 and
1998.
Notes to Financial Statements.
Report of Independent Auditors for ACL Variable Annuity Account 1 dated
March 17, 2000.
American Centurion Life Insurance Company:
Balance Sheets as of Dec. 31, 1999 and 1998.
Statements of Income for years ended Dec. 31, 1999, 1998 and 1997.
Statements of Stockholders Equity, for years ended Dec. 31, 1999, 1998
and 1997.
Statements of Cash Flows for years ended Dec. 31, 1999, 1998 and 1997.
Notes to Financial Statements.
Report of Independent Auditors dated February 3, 2000.
(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.
<PAGE>
6.1 Amended and Restated Articles of Incorporation of American Centurion
Life, filed electronically as Exhibit 6.1 to Registrant's Initial
Registration Statement No. 333-00041, is incorporated herein by
reference.
6.2 Amended By-Laws of American Centurion Life, filed electronically as
Exhibit 6.2 to Registrant's Initial Registration Statement
No. 333-00041, is incorporated herein by reference.
6.3 Emergency By-Laws of American Centurion Life, filed electronically as
Exhibit 6.3 to Registrant's Initial Registration Statement
No. 333-00041, is incorporated herein by reference.
7. Not applicable.
8.1 Participation Agreement, dated Oct. 7, 1996, by and among American
Centurion Life and Warburg Pincus Trust and Warburg, Pincus
Counsellors, Inc. and Counsellors Securities, Inc., filed
electronically as Exhibit 8.1 to Post-Effective Amendment No. 2 to
Registration Statement No. 333-00041, is incorporated herein by
reference.
8.2 Fund Participation Agreement, dated July 31, 1996, by and among
American Centurion Life, TCI Portfolios, Inc. and Investors
Research Corporation, filed electronically as Exhibit 8.2 to
Post-Effective Amendment No. 2 to Registration Statement
No. 333-00041, is incorporated herein by reference.
8.3 Fund Participation Agreement, dated Oct. 23, 1996, between Janus Aspen
Series and American Centurion Life, filed electronically as Exhibit 8.3
to Post-Effective Amendment No. 2 to Registration Statement
No. 333-00041, is incorporated herein by reference.
8.4 Participation Agreement, dated Dec. 4, 1996, among INVESCO Variable
Investment Funds, Inc., INVESCO Funds Group, Inc. and American
Centurion Life, filed electronically as Exhibit 8.4 to
Post-Effective Amendment No. 2 to Registration Statement No. 333-00041,
is incorporated herein by reference.
9. Opinion of counsel and consent to its use as to the legality of the
securities being registered, filed electronically herewith.
10. Consent of Independent Auditors, filed electronically herewith.
11. 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 as Exhibit 14 to Post-Effective Amendment
No. 4 to Registration Statement No. 333-00041, is incorporated herein
by reference.
14.2 Power of Attorney to sign this Registration Statement dated April 21,
2000, filed electronically herewith.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Item 25. Directors and Officers of the Depositor (American Centurion Life
Assurance Company)
Name Principal Business Address Positions and Offices with
Depositor
- ------------------------------------- ---------------------------------------- -----------------------------------
Timothy V. Bechtold 200 AXP Financial Center Director and President
Minneapolis, MN 55474
Maureen A. Buckley 200 AXP Financial Center Director, Vice President, Chief
Minneapolis, MN 55474 Operating Officer and Consumer
Affairs Officer
Rodney P. Burwell 200 AXP Financial Center Director
Minneapolis, MN 55474
John R. Cattau American Express Tower Director
World Financial Center
New York, NY 10285
James E. Choat 200 AXP Financial Center Executive Vice
Minneapolis, MN 55474 President-Institutional
Products Group
Robert R. Grew 200 AXP Financial Center Director
Minneapolis, MN 55474
Lorraine R. Hart 200 AXP Financial Center Vice President-Investments
Minneapolis, MN 55474
Jeffrey S. Horton 200 AXP Financial Center Vice President and Treasurer
Minneapolis, MN 55474
Jean B. Keffeler 200 AXP Financial Center Director
Minneapolis, MN 55474
Richard W. Kling 200 AXP Financial Center Director and Chairman of the Board
Minneapolis, MN 55474
Eric L. Marhoun 200 AXP Financial Center General Counsel and Secretary
Minneapolis, MN 55474
Thomas R. McBurney 200 AXP Financial Center Director
Minneapolis, MN 55474
Edward J. Muhl 200 AXP Financial Center Director
Minneapolis, MN 55474
Thomas V. Nicolosi 200 AXP Financial Center Director
Minneapolis, MN 55474
Stephen P. Norman 200 AXP Financial Center Director
Minneapolis, MN 55474
Richard M. Starr 200 AXP Financial Center Director
Minneapolis, MN 55474
Philip C. Wentzel 200 AXP Financial Center Vice President and Controller
Minneapolis, MN 55474
Michael R. Woodward 200 AXP Financial Center Director
Minneapolis, MN 55474
</TABLE>
<PAGE>
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>
<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
IDS Cable II Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
Jurisdiction of
<PAGE>
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, 2000, there were 9 contract owners of qualified
Privileged Assets(R) Select Annuity contracts and 174 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 Financial Advisors acts as principal underwriter for the
following investment companies:
AXP Bond Fund, Inc.; AXP California Tax-Exempt Trust; AXP Discovery
Fund, Inc.; AXP Equity Select Fund, Inc.; AXP Extra Income Fund, Inc.;
AXP Federal Income Fund, Inc.; AXP Global Series, Inc.; AXP Growth
Series, Inc.; AXP High Yield Tax-Exempt Fund, Inc.; AXP International
Fund, Inc.; AXP Investment Series, Inc.; AXP Managed Series, Inc.; AXP
Market Advantage Series, Inc.; AXP Money Market Series, Inc.; AXP New
Dimensions Fund, Inc.; AXP Precious Metals Fund, Inc.; AXP Progressive
Fund, Inc.; AXP Selective Fund, Inc.; AXP Special Tax-Exempt Series
Trust; AXP Stock Fund, Inc.; AXP Strategy Series, Inc.; AXP Tax-Exempt
Series, Inc.; AXP Tax-Free Money Fund, Inc.; AXP Utilities Income Fund,
Inc., Growth Trust; Growth and Income Trust; Income Trust; Tax-Free
Income Trust; World Trust; IDS Certificate Company; Strategist Income
Fund, Inc.; Strategist Growth Fund, Inc.; Strategist Growth and Income
Fund, Inc.; Strategist World Fund, Inc. and Strategist Tax-Free Income
Fund, Inc.
(b) As to each director, officer or partner of the principal underwriter:
Name and Principal Business Address Position and Offices with
Underwriter
- ------------------------------------- -----------------------------------
Ronald. G. Abrahamson Vice President - Business
200 AXP Financial Center Transformation
Minneapolis, MN 55474
Douglas A. Alger Senior Vice President - Human
200 AXP Financial Center Resources
Minneapolis, MN 55474
Peter J. Anderson Senior Vice President -
200 AXP Financial Center Investment Operations
Minneapolis, MN 55474
Ward D. Armstrong Senior Vice President -
200 AXP Financial Center Retirement Services
Minneapolis, MN 55474
John M. Baker Vice President - Plan Sponsor
200 AXP Financial Center Services
Minneapolis, MN 55474
Joseph M. Barsky, III Vice President - Mutual Fund
200 AXP Financial Center Equities
Minneapolis, MN 55474
Timothy V. Bechtold Vice President - Risk Management
200 AXP Financial Center Products
Minneapolis, MN 55474
John D. Begley Group Vice President -
Suite 100 Ohio/Indiana
7760 Olentangy River Rd.
Columbus, OH 43235
<PAGE>
Brent L. Bisson Group Vice President - Los
Suite 900 Angeles Metro
E. Westside Twr
11835 West Olympic Blvd.
Los Angeles, CA 90064
John C. Boeder Vice President - Nonproprietary
200 AXP Financial Center Products
Minneapolis, MN 55474
Walter K. Booker Group Vice President - New Jersey
200 AXP Financial Center
Minneapolis, MN 55474
Bruce J. Bordelon Group Vice President - San
1333 N. California Blvd., Suite 200 Francisco Bay Area
Walnut Creek, CA 94596
Charles R. Branch Group Vice President - Northwest
Suite 200
West 111 North River Dr.
Spokane, WA 99201
<PAGE>
Douglas W. Brewers Vice President - Sales Support
200 AXP Financial Center
Minneapolis, MN 55474
Karl J. Breyer Corporate Senior Vice President
200 AXP Financial Center
Minneapolis, MN 55474
Cynthia M. Carlson Vice President - American Express
200 AXP Financial Center Securities Services
Minneapolis, MN 55474
Mark W. Carter Senior Vice President and Chief
200 AXP Financial Center Marketing Officer
Minneapolis, MN 55474
James E. Choat Senior Vice President - Third
200 AXP Financial Center Party Distribution
Minneapolis, MN 55474
Kenneth J. Ciak Vice President and General
IDS Property Casualty Manager - IDS Property Casualty
1400 Lombardi Avenue
Green Bay, WI 54304
Paul A. Connolly Vice President - Advisor
200 AXP Financial Center Staffing, Training and Support
Minneapolis, MN 55474
Henry J. Cormier Group Vice President - Connecticut
Commerce Center One
333 East River Drive
East Hartford, CT 06108
<PAGE>
John M. Crawford Group Vice President -
Suite 200 Arkansas/Springfield/Memphis
10800 Financial Ctr Pkwy
Little Rock, AR 72211
Kevin F. Crowe Group Vice President -
Suite 312 Carolinas/Eastern Georgia
7300 Carmel Executive Pk
Charlotte, NC 28226
Colleen Curran Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
Luz Maria Davis Vice President - Communications
200 AXP Financial Center
Minneapolis, MN 55474
Arthur E. DeLorenzo Group Vice President - Upstate
4 Atrium Drive, #100 New York
Albany, NY 12205
Scott M. DiGiammarino Group Vice President -
Suite 500 Washington/Baltimore
8045 Leesburg Pike
Vienna, VA 22182
Bradford L. Drew Group Vice President - Eastern
Two Datran Center Florida
Penthouse One B
9130 S. Dadeland Blvd.
Miami, FL 33156
Douglas K. Dunning Vice President - Assured Assets
200 AXP Financial Center Product Development and Management
Minneapolis, MN 55474
James P. Egge Group Vice President - Western
4305 South Louise, Suite 202 Iowa, Nebraska, Dakotas
Sioux Falls, SD 57103
Gordon L. Eid Senior Vice President, General
200 AXP Financial Center Counsel and Chief Compliance
Minneapolis, MN 55474 Officer
Robert M. Elconin Vice President - Government
200 AXP Financial Center Relations
Minneapolis, MN 55474
Phillip W. Evans, Group Vice President - Rocky
Suite 600 Mountain
6985 Union Park Center
Midvale, UT 84047-4177
Gordon M. Fines Vice President - Mutual Fund
200 AXP Financial Center Equity Investments
Minneapolis, MN 55474
<PAGE>
Douglas L. Forsberg Vice President - International
200 AXP Financial Center
Minneapolis, MN 55474
Jeffrey P. Fox Vice President and Corporate
200 AXP Financial Center Controller
Minneapolis, MN 55474
William P. Fritz Group Vice President - Gateway
Suite 160
12855 Flushing Meadows Dr.
St. Louis, MO 63131
Carl W. Gans Group Vice President - Twin City
8500 Tower Suite 1770 Metro
8500 Normandale Lake Blvd.
Bloomington, MN 55437
Peter A. Gallus Vice President-Investment
200 AXP Financial Center Administration
Minneapolis, MN 55474
Derek G. Gledhill Vice President - Integrated
200 AXP Financial Center Financial Services Field
Minneapolis, MN 55474 Implementation
David A. Hammer Vice President and Marketing
200 AXP Financial Center Controller
Minneapolis, MN 55474
Teresa A. Hanratty Senior Vice President-Field
Suites 6&7 Management
169 South River Road
Bedford, NH 03110
Robert L. Harden Group Vice President - Boston
Two Constitution Plaza Metro
Boston, MA 02129
Lorraine R. Hart Vice President - Insurance
200 AXP Financial Center Investments
Minneapolis, MN 55474
Scott A. Hawkinson Vice President and Controller -
200 AXP Financial Center Private Client Group
Minneapolis, MN 55474
Brian M. Heath Senior Vice President and General
Suite 150 Sales Manager
801 E. Campbell Road
Richardson, TX 75081
Janis K. Heaney Vice President - Incentive
200 AXP Financial Center Management
Minneapolis, MN 55474
Jon E. Hjelm Group Vice President - Rhode
310 Southbridge Street Island/Central - Western
Auburn, MA 01501 Massachusetts
<PAGE>
David J. Hockenberry Group Vice President - Tennessee
30 Burton Hills Blvd. Valley
Suite 175
Nashville, TN 37215
Jeffrey S. Horton Vice President and Treasurer
200 AXP Financial Center
Minneapolis, MN 55474
David R. Hubers Chairman, President and Chief
200 AXP Financial Center Executive Officer
Minneapolis, MN 55474
Debra A. Hutchinson Vice President - Relationship
200 AXP Financial Center Leader
Minneapolis, MN 55474
James M. Jensen Vice President and
200 AXP Financial Center Controller-Advice and Retail
Minneapolis, MN 55474 Distribution Group
Marietta L. Johns Senior Vice President - Field
200 AXP Financial Center Management
Minneapolis, MN 55474
Nancy E. Jones Vice President - Business
200 AXP Financial Center Development
Minneapolis, MN 55474
Ora J. Kaine Vice President - Financial
200 AXP Financial Center Advisory Services
Minneapolis, MN 55474
Linda B. Keene Vice President - Market
200 AXP Financial Center Development
Minneapolis, MN 55474
G. Michael Kennedy Vice President - Senior Portfolio
200 AXP Financial Center Manager
Minneapolis, MN 55474
Richard W. Kling Senior Vice President - Products
200 AXP Financial Center
Minneapolis, MN 55474
John M. Knight Vice President - Investment
200 AXP Financial Center Accounting
Minneapolis, MN 55474
Paul F. Kolkman Vice President - Actuarial Finance
200 AXP Financial Center
Minneapolis, MN 55474
Claire Kolmodin Vice President - Service Quality
200 AXP Financial Center
Minneapolis, MN 55474
<PAGE>
David S. Kreager Group Vice President - Greater
Suite 108 Michigan
Trestle Bridge V
5126 Lovers Lane
Kalamazoo, MI 49002
Steven C. Kumagai Director and Senior Vice
200 AXP Financial Center President-Direct and Interactive
Minneapolis, MN 55474 Group
Mitre Kutanovski Group Vice President - Chicago
Suite 680 Metro
8585 Broadway
Merrillville, IN 48410
Kurt A. Larson Vice President - Senior Portfolio
200 AXP Financial Center Manager
Minneapolis, MN 55474
Lori J. Larson Vice President - Brokerage and
200 AXP Financial Center Direct Services
Minneapolis, MN 55474
Daniel E. Laufenberg Vice President and Chief U.S.
200 AXP Financial Center Economist
Minneapolis, MN 55474
Jane W. Lee Vice President - New Business
200 AXP Financial Center Development and Marketing
Minneapolis, MN 55474
Peter A. Lefferts Senior Vice President - Corporate
200 AXP Financial Center Strategy and Development
Minneapolis, MN 55474
Douglas A. Lennick Director and Executive Vice
200 AXP Financial Center President - Private Client Group
Minneapolis, MN 55474
Fred A. Mandell Vice President - Field Marketing
200 AXP Financial Center Readiness
Minneapolis, MN 55474
Daniel E. Martin Group Vice President - Pittsburgh
Suite 650 Metro
5700 Corporate Drive
Pittsburgh, PA 15237
Timothy J. Masek Vice President and Director of
200 AXP Financial Center Global Research
Minneapolis, MN 55474
Sarah A. Mealey Vice President - Mutual Funds
200 AXP Financial Center
Minneapolis, MN 55474
Paula R. Meyer Vice President - Assured Assets
200 AXP Financial Center
Minneapolis, MN 55474
<PAGE>
William P. Miller Vice President and Senior
200 AXP Financial Center Portfolio Manager
Minneapolis, MN 55474
Shashank B. Modak Vice President - Technology Leader
200 AXP Financial Center
Minneapolis, MN 55474
Pamela J. Moret Vice President - Variable Assets
200 AXP Financial Center
Minneapolis, MN 55474
Barry J. Murphy Senior Vice President - Client
200 AXP Financial Center Service
Minneapolis, MN 55474
Mary Owens Neal Vice President-Consumer Marketing
200 AXP Financial Center
Minneapolis, MN 55474
Thomas V. Nicolosi Group Vice President - New York
Suite 220 Metro Area
500 Mamaroneck Avenue
Harrison, NY 10528
Michael J. O'Keefe Vice President - Advisory
200 AXP Financial Center Business Systems
Minneapolis, MN 55474
James R. Palmer Vice President - Taxes
200 AXP Financial Center
Minneapolis, MN 55474
Marc A. Parker Group Vice President -
10200 SW Greenburg Road Portland/Eugene
Suite 110
Portland, OR 97223
Carla P. Pavone Vice President-Compensation
200 AXP Financial Center Services and ARD Product
Minneapolis, MN 55474 Distribution
Thomas P. Perrine Senior Vice President - Group
200 AXP Financial Center Relationship Leader/American
Minneapolis, MN 55474 Express Technologies Financial
Services
Susan B. Plimpton Vice President - Marketing
200 AXP Financial Center Services
Minneapolis, MN 55474
Larry M. Post Group Vice President -
One Tower Bridge Philadelphia Metro and Northern
100 Front Street, 8th Fl New England
West Conshohocken, PA 19428
Ronald W. Powell Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
<PAGE>
Diana R. Prost Group Vice President -
3030 N.W. Expressway Kansas/Oklahoma
Suite 900
Oklahoma City, OK 73112
James M. Punch Vice President and Project
200 AXP Financial Center Manager - Platform I Value
Minneapolis, MN 55474 Enhanced
Frederick C. Quirsfeld Senior Vice President - Fixed
200 AXP Financial Center Income
Minneapolis, MN 55474
Rollyn C. Renstrom Vice President - Corporate
200 AXP Financial Center Planning and Analysis
Minneapolis, MN 55474
R. Daniel Richardson Group Vice President - Southern
Suite 800 Texas
Arboretum Plaza One
9442 Capital of Texas Hwy. N
Austin, TX 78759
ReBecca K. Roloff Senior Vice President - Field
200 AXP Financial Center Management and Financial Advisory
Minneapolis, MN 55474 Service
Stephen W. Roszell Senior Vice President -
200 AXP Financial Center Institutional
Minneapolis, MN 55474
Max G. Roth Group Vice President -
Suite 201 S. IDS Ctr Wisconsin/Upper Michigan
1400 Lombardi Avenue
Green Bay, WI 54304
Erven A. Samsel Senior Vice President - Field
45 Braintree Hill Park Management
Suite 402
Braintree, MA 02184
Theresa M. Sapp Vice President - Relationship
200 AXP Financial Center Leader
Minneapolis, MN 55474
Russell L. Scalfano Group Vice President -
Suite 201 Illinois/Indiana/Kentucky
101 Plaza East Blvd.
Evansville, IN 47715
William G. Scholz Group Vice President -
Suite 205 Arizona/Las Vegas
7333 E. Doubletree Ranch Rd
Scottsdale, AZ 85258
Stuart A. Sedlacek Senior Vice President and Chief
200 AXP Financial Center Financial Officer
Minneapolis, MN 55474
<PAGE>
Donald K. Shanks Vice President - Property Casualty
200 AXP Financial Center
Minneapolis, MN 55474
Judy P. Skoglund Vice President - Quality and
200 AXP Financial Center Service Support
Minneapolis, MN 55474
James B. Solberg Group Vice President - Eastern
466 Westdale Mall Iowa Area
Cedar Rapids, IA 52404
Bridget Sperl Vice President - Geographic
200 AXP Financial Center Service Teams
Minneapolis, MN 55474
Paul J. Stanislaw Group Vice President - Southern
Suite 1100 California
Two Park Plaza
Irvine, CA 92714
Lisa A. Steffes Vice President - Marketing Offer
200 AXP Financial Center Development
Minneapolis, MN 55474
Lois A. Stilwell Group Vice President - Outstate
Suite 433 Minnesota Area/North
9900 East Bren Road Dakota/Western Wisconsin
Minnetonka, MN 55343
William A. Stoltzmann Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
James J. Strauss Vice President and General Auditor
200 AXP Financial Center
Minneapolis, MN 55474
Jeffrey J. Stremcha Vice President - Information
200 AXP Financial Center Resource Management/ISD
Minneapolis, MN 55474
Barbara Stroup Stewart Vice President - Channel
200 AXP Financial Center Development
Minneapolis, MN 55474
Craig P. Taucher Group Vice President -
Suite 150 Orlando/Jacksonville
4190 Belfort Road
Jacksonville, FL 32216
Neil G. Taylor Group Vice President -
Suite 425 Seattle/Tacoma/Hawaii
101 Elliott Avenue West
Seattle, WA 98119
John R. Thomas Senior Vice President
200 AXP Financial Center
Minneapolis, MN 55474
<PAGE>
Keith N. Tufte Vice President and Director of
200 AXP Financial Center Equity Research
Minneapolis, MN 55474
Peter S. Velardi Group Vice President -
Suite 180 Atlanta/Birmingham
1200 Ashwood Parkway
Atlanta, GA 30338
Charles F. Wachendorfer Group Vice President - Detroit
Suite 100 Metro
Stanford Plaza II
7979 East Tufts Ave. Pkwy
Denver, CO 80237
Donald F. Weaver Group Vice President - Greater
3500 Market Street, Suite 200 Pennsylvania
Camp Hill, PA 17011
Norman Weaver Jr. Senior Vice President - Alliance
1010 Main St., Suite 2B Group
Huntington Beach, CA 92648
Michael L. Weiner Vice President - Tax Research and
200 AXP Financial Center Audit
Minneapolis, MN 55474
Jeffry M. Welter Vice President - Equity and Fixed
200 AXP Financial Center Income Trading
Minneapolis, MN 55474
Thomas L. White Group Vice President - Cleveland
Suite 200 Metro
28601 Chagrin Blvd.
Woodmere, OH 44122
Eric S. Williams Group Vice President - Virginia
Suite 250
3951 Westerre Parkway
Richmond, VA 23233
William J. Williams Group Vice President - Western
Two North Tamiami Trail Florida
Suite 702
Sarasota, FL 34236
<PAGE>
Edwin M. Wistrand Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
Michael D. Wolf Vice President - Senior Portfolio
200 AXP Financial Center Manager
Minneapolis, MN 55474
<PAGE>
Michael R. Woodward Senior Vice President - Field
32 Ellicott St. Management
Suite 100
Batavia, NY 14020
Rande L. Zellers Group Vice President-Gulf States
1 Galleria Blvd., Suite 1900
Metairie, LA 70001
Item 29 (c).
<TABLE>
<S> <C> <C> <C> <C>
Net Underwriting
Name of Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
American Express $673,812 $6,481 None None
Financial Advisors
Inc.
</TABLE>
Item 30. Location of Accounts and Records
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
Item 31. Management Services
Not Applicable
Item 32. Undertakings
(a) (b) & (c) These undertakings were filed with
Registrant's Initial Registration Statement,
File No. 333-00041.
(d) The sponsoring insurance company represents
that the fees and charges deducted under the
contract, in the aggregate, are reasonable
in relation to the services rendered, the
expenses expected to be incurred, and the
risks assumed by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, American Centurion Life Assurance Company, on behalf of the Registrant
certifies that it meets the requirements of Securities Act Rule 485(b) for
effectiveness of this Registration Statement and has duly caused this
Registration Statement to be signed on its behalf in the City of Minneapolis,
and State of Minnesota, on the 27th day of April, 2000.
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 27th day of
April, 2000.
Signature Title
/s/ Timothy V. Bechtold* Director and President
Timothy V. Bechtold
/s/ Maureen A. Buckley* Director, Vice President,
Maureen A. Buckley Chief Operating Officer,
Consumer Affairs Officer
and Claims 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/ Jeffrey S. Horton* Vice President &
Jeffrey S. Horton Treasurer
/s/ Jean B. Keffeler* Director
Jean B. Keffeler
/s/ Richard W. Kling* Director and Chairman of
Richard W. Kling the Board
/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/ Philip C. Wentzel** Vice President and
Philip C. Wentzel Controller
/s/ Michael R. Woodward* Director
Michael R. Woodward
*Signed pursuant to Power of Attorney dated April 14, 1999, filed electronically
as Exhibit 14 to Post-Effective Amendment No. 4,
By /s/ Mary Ellyn Minenko
Mary Ellyn Minenko
**Signed pursuant to Power of Attorney dated April 21, 2000, filed
electronically herewith.
By /s/ Mary Ellyn Minenko
Mary Ellyn Minenko
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 5
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.
ACL VARIABLE ANNUITY ACCOUNT 1 (PASA-NY)
Registration No. 333-00041
EXHIBIT INDEX
Exhibit 9: Opinion of Counsel, dated April 27, 2000.
Exhibit 10: Consent of Independent Auditors, dated April 24, 2000.
Exhibit 14.2: American Centurion Life Power of Attorney, dated April 21,
2000.
April 27, 2000
American Partners Life Insurance Company
80 South 8th Street
P.O. Box 59197
Minneapolis, MN 55459-0197
RE: APL Variable Annuity Account 1
File No.: 33-57731/811-07247
Ladies and Gentlemen:
I am familiar with the establishment of the APL Variable Annuity Account I
("Account"), which is a separate account of American Partners Life Insurance
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
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
in the Statement of Additional Information and to the use of our report dated
February 3, 2000 with respect to the financial statements of American Centurion
Life Assurance Company and to the use of our report dated March 17, 2000 with
respect to the financial statements of American Centurion Variable Annuity
Account 1, included in Post-Effective Amendment No. 5 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 24, 2000
AMERICAN CENTURION LIFE ASSURANCE COMPANY
POWER OF ATTORNEY
City of Albany
State of New York
The undersigned, as an 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:
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)
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 21st day of April, 2000.
/s/ Philip C. Wentzel
Philip C. Wentzel
Vice President and Controller
