SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 3 (File No. 333-00519) [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 7 (File No. 811-07511) [X]
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(Check appropriate box or boxes)
ACL VARIABLE ANNUITY ACCOUNT 2
- --------------------------------------------------------------------------------
(Exact Name of Registrant)
American Centurion Life Assurance Company
- --------------------------------------------------------------------------------
(Name of Depositor)
20 Madison Avenue Extension, P.O. Box 5555, Albany NY 12205-0555
- --------------------------------------------------------------------------------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-7981
- --------------------------------------------------------------------------------
Mary Ellyn Minenko, IDS Tower 10, Minneapolis, MN 55440-0010
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[x] on Nov. 4, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
CROSS REFERENCE SHEET
Cross reference sheet showing location in the prospectus and Statement of
Additional Information of the information called for by the items enumerated in
Part A and B of Form N-4.
Negative answers omitted from the prospectus and Statement of Additional
Information are so indicated.
<TABLE>
<CAPTION>
PART A
<S> <C>
Item No. Section in Prospectus
1 Cover page
2 Key terms
3 (a) Expense summary
(b) The annuities in brief
4 (a) NA
(b) Performance information
(c) Financial statements
5 (a) Cover page; About American Centurion Life
(b) The variable account
(c) The funds
(d) Cover page; The funds
(e) Voting rights
(f) NA
(g) NA
6 (a) Charges
(b) Expense summary; Charges
(c) Charges
(d) Distribution of the contracts
(e) The funds
(f) NA
7 (a) Buying your annuity; Benefits in case of death; The annuity payout period
(b) The variable account; Transferring money between subaccounts; Transfer policies
(c) The funds; Charges
(d) Cover page
8 (a) The annuity payout period
(b) Buying your annuity
(c) The annuity payout period
(d) The annuity payout period
(e) The annuity payout period
(f) The annuity payout period
9 (a) Benefits in case of death
(b) Benefits in case of death
10 (a) Buying your annuity; Valuing your investment
(b) Valuing your investment
(c) Valuing your investment
(d) About American Centurion Life
11 (a) Withdrawals from your contract
(b) NA
(c) Withdrawals from your contract
(d) Buying your annuity
(e) The annuities in brief
12 (a) Taxes
(b) Key terms
(c) NA
13 NA
14 Table of contents of the Statement of Additional Information
PART B
Item No. Section in Statement of Additional Information
15 (a) Cover Page
(b) NA
16 Table of Contents
17 (a) NA
(b) NA
(c) About American Centurion Life*
18 (a) NA
(b) NA
(c) Independent Auditors
(d) NA
(e) NA
(f) NA
19 (a) Distribution of the contracts*
(b) NA
20 (a) Principal Underwriter
(b) Principal Underwriter
(c) NA
(d) NA
21 (a) Performance Information
(b) Performance Information
22 Calculating Annuity Payouts
23 (a) NA
(b) Financial Statements
</TABLE>
*Designates page number in the prospectus, which is hereby incorporated by
reference in this Statement of Additional Information.
<PAGE>
ACL Personal Portfolio Plus2 / ACL Personal PortfolioSM
Nov. 4, 1998
Variable Annuity Prospectus
The flexible premium variable annuity contracts described in the prospectus are
offered by American Centurion Life Assurance Company (American Centurion Life),
a subsidiary of IDS Life Insurance Company (IDS Life), which is a subsidiary of
American Express Financial Corporation (AEFC). Purchase payments may be
allocated among different accounts, providing variable and/or fixed returns and
payouts. The annuities are available for individual retirement annuities (IRAs),
simplified employee pension plans (SEPs), Roth IRAs and nonqualified retirement
plans. The information in the prospectus relates to both annuities unless we
state otherwise.
ACL Variable Annuity Account 2
Sold by: American Centurion Life Assurance Company
Home Office: 20 Madison Avenue Extension, P.O. Box 5555, Albany, NY 12205-0555
Telephone: 800-504-0469
This prospectus contains information about the variable account that you should
know before investing. Refer to "The variable account" in this prospectus. As in
the case of other annuities, it may not be advantageous to purchase one of these
annuities as a replacement for, or in addition to an existing annuity.
The prospectus is accompanied or preceded by the following prospectuses: For ACL
PERSONAL PORTFOLIO PLUS2: AIM Variable Insurance Funds, Inc.; American Century
Variable Portfolios, Inc.; IDS Life Retirement Annuity Mutual Funds; Janus Aspen
Series; OCC Accumulation Trust; Oppenheimer Variable Account Funds; and Putnam
Variable Trust - Class IB Shares. For ACL PERSONAL PORTFOLIOSM: GT Global
Variable Investment Funds; IDS Life Retirement Annuity Mutual Funds; OCC
Accumulation Trust; and Putnam Variable Trust - Class IA Shares. Please read
these documents carefully and keep them for future reference.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any state securities commission, nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
American Centurion Life is not a bank or financial institution, and the
securities it offers are not deposits or obligations of, backed or guaranteed or
endorsed by any bank or financial institution nor are they insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any other
agency. Investments in this annuity involve investment risk including the
possible loss of principal.
<PAGE>
A Statement of Additional Information (SAI), dated Nov. 4, 1998 (incorporated by
reference into this prospectus) and filed with the Securities and Exchange
Commission (SEC), 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.
<PAGE>
Table of contents
Key terms.......................................................
The annuities in brief..........................................
Expense summary.................................................
Financial statements............................................
Performance information.........................................
The variable account............................................
The funds.......................................................
AIM V.I. Growth and Income Fund............................
AIM V.I. International Equity Fund.........................
AIM V.I. Value Fund........................................
American Century VP Income and Growth......................
American Century VP Value..................................
GT Global Variable Latin America Fund......................
GT Global Variable New Pacific Fund........................
IDS Life Aggressive Growth Fund............................
IDS Life Capital Resource Fund.............................
IDS Life Growth Dimensions Fund............................
IDS Life International Equity Fund.........................
IDS Life Managed Fund......................................
IDS Life Moneyshare Fund...................................
IDS Life Special Income Fund...............................
Janus Aspen Series Balanced Portfolio......................
Janus Aspen Series Worldwide Growth Portfolio..............
OCC Accumulation Trust Equity Portfolio....................
OCC Accumulation Trust Managed Portfolio...................
OCC Accumulation Trust Small Cap Portfolio.................
OCC Accumulation Trust U.S. Government Income Portfolio....
Oppenheimer Variable Account Growth Fund...................
Oppenheimer Variable Account High Income Fund..............
Putnam VT Diversified Income Fund - Class IA and IB Shares.
Putnam VT Growth and Income Fund - Class IA and IB Shares..
Putnam VT High Yield Fund - Class IA and IB Shares.........
Putnam VT New Opportunities Fund - Class IA Shares.........
Putnam VT Voyager Fund - Class IB Shares...................
The fixed account...............................................
Buying your annuity.............................................
The retirement date........................................
Beneficiary................................................
How to make payments.......................................
<PAGE>
Charges.........................................................
Contract administrative charge.............................
Variable account administrative charge.....................
Mortality and expense risk fee.............................
Withdrawal charge..........................................
Waiver of withdrawal charge................................
Valuing your investment.........................................
Number of units............................................
Accumulation unit value....................................
Net investment factor......................................
Factors that affect variable subaccount accumulation units.
Making the most of your annuity.................................
Automated dollar-cost averaging............................
Transferring money between subaccounts.....................
Transfer policies..........................................
Two ways to request a transfer or a withdrawal.............
Withdrawals from your contract..................................
Withdrawal policies........................................
Receiving payment when you request a withdrawal............
Changing ownership..............................................
Benefits in case of death.......................................
The annuity payout period.......................................
Annuity payout plans.......................................
Death after annuity payouts begin..........................
Taxes...........................................................
Voting rights...................................................
Substitution of investments.....................................
Distribution of the contracts...................................
About American Centurion Life...................................
Year 2000.......................................................
Regular and special reports.....................................
Services...................................................
Table of contents of the Statement of Additional Information
<PAGE>
Key terms
These terms can help you understand details about your annuity.
Accumulation unit - A measure of the value of each variable subaccount before
annuity payouts begin.
Annuitant - The person on whose life or life expectancy the annuity payouts are
based.
Annuity - A contract purchased from an insurance company that offers
tax-deferred growth of the investment until earnings are withdrawn, and that can
be tailored to meet the specific needs of the individual during retirement.
Annuity payouts - An amount paid at regular intervals under one of several plans
available to the owner and/or any other payee. This amount may be paid on a
variable or fixed basis.
Annuity unit - A measure of the value of each variable subaccount used to
calculate the annuity payouts you receive.
Beneficiary - The person designated to receive annuity benefits in case of the
owner's or annuitant's death.
Close of business - When the New York Stock Exchange (NYSE) closes, normally 4
p.m. Eastern time.
Code - Internal Revenue Code of 1986, as amended.
Contract value - The total value of your annuity before any applicable
withdrawal charge and any contract administrative charge have been deducted.
Contract year - A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
Fixed account - An account to which you may allocate purchase payments. Amounts
allocated to this account earn interest at rates that are declared periodically
by American Centurion Life.
Mutual funds (funds) - Mutual funds or portfolios, each with a different
investment objective. You may allocate your purchase payments into variable
subaccounts investing in shares of any or all of these funds (See "The funds" ).
Owner (you, your) - The person who controls the annuity (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 annuity's benefits.
<PAGE>
Purchase payments - Payments made to American Centurion Life for an annuity.
Qualified annuity - An annuity purchased for one of the following retirement
plans that is subject to applicable federal law and any rules of the plan
itself:
o Individual Retirement Annuities (IRAs), including Roth IRAs
o Simplified Employee Pension Plans (SEPs)
All other annuities are considered nonqualified annuities.
Retirement date - The date when annuity payouts are scheduled to begin. This
date is first established when you start your contract. You can change it in the
future.
Valuation date - Any normal business day, Monday through Friday, that the NYSE
is open. The value of each variable subaccount is calculated at the close of
business on each valuation date.
Variable account - Consists of separate subaccounts to which you may allocate
purchase payments; each subaccount invests in shares of one mutual fund (See
"The variable account"). The value of your investment in each variable
subaccount changes with the performance of the underlying mutual fund.
Withdrawal charge - A deferred sales charge that may be applied if you make a
withdrawal from your annuity before the retirement date.
Withdrawal value - The amount you are entitled to receive if you fully withdraw
your annuity. It is the contract value minus any applicable withdrawal charge
and contract administrative charge.
The annuities in brief
Purpose: Each annuity is designed to allow you to accumulate money for
retirement. You do this by making one or more investments (purchase payments)
that may earn returns that increase the value of the annuity. Beginning at a
specified future date (the retirement date), the annuity provides lifetime or
other forms of payouts to you or to anyone you designate.
Ten-day free look: You may return your annuity to your agent or to our Albany
home office within 10 days after it is delivered to you and receive a full
refund of all your purchase payments.
<PAGE>
Accounts: You may allocate your purchase payments among any or all of:
o the subaccounts of the variable account, each of which invests in a mutual
fund with a particular investment objective. The value of each variable
subaccount varies with the performance of the particular fund in which it
invests. We cannot guarantee that the value at the retirement date will
equal or exceed the total of purchase payments allocated to the variable
subaccounts. (p. )
o one fixed account, which earns interest at a rate that is adjusted
periodically by American Centurion Life. (p. )
Buying the annuity: Your agent will help you complete and submit an application.
Applications are subject to acceptance at our Albany home office. You may buy a
nonqualified annuity or a qualified annuity. Payment must be made in a lump sum
with the option of additional payments in the future. (p. )
o Minimum initial payment - $2,000 (without prior approval)
o Minimum additional payment - $50
o Maximum total payment(s) - $1,000,000 (without prior approval)
Transfers: Subject to certain restrictions you may redistribute your money among
accounts without charge at any time until annuity payouts begin, and once per
contract year among the variable subaccounts thereafter. You may establish
automated transfers among the fixed account and variable subaccount(s). (p. )
Withdrawals: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if withdrawals are made prior to your reaching age 59 1/2) and
may have other tax consequences; also, certain restrictions apply. (p. )
Changing ownership: You may change ownership of a nonqualified annuity by
written instruction. However, such changes of nonqualified annuities may have
federal income tax consequences. Certain restrictions apply concerning change of
ownership of a qualified annuity. (p. )
Payment in case of death: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (p. )
Annuity payouts: The contract value of your investment can be applied to an
annuity payout plan that begins on the retirement date. You may choose from a
variety of plans to make sure that payouts continue as long as they are needed.
If you purchased a qualified annuity, the payout schedule must meet requirements
of the qualified plan. Payouts may be made on a fixed or variable basis, or
both. Total monthly payouts may include amounts from each variable subaccount
and the fixed account. (p. )
<PAGE>
Taxes: Generally, your annuity grows tax-deferred until you fully withdraw 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. Roth IRAs, however, may grow tax free if you meet
certain distribution requirements. (p. )
Charges: Your annuity is subject to a $30 annual contract administrative charge,
a 0.15% variable account administrative charge, a 1.25% mortality and expense
risk fee and a withdrawal charge. (p. )
Expense summary
The purpose of this table is to help you understand the various costs and
expenses associated with your annuity.
You pay no sales charge when you purchase your annuity. All costs that you bear
directly or indirectly for the variable subaccounts and underlying mutual funds
are shown below. Some expenses may vary as explained under "Charges."
Contract owner expenses for ACL Personal Portfolio Plus2 and ACL Personal
PortfolioSM:
Withdrawal charge (contingent deferred sales charge as a percentage
of purchase payment)
Contract years from Withdrawal charge
payment receipt percentage
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
<PAGE>
Annual contract administrative charge: $30
Variable account annual expenses
Variable account administrative charge
(as a percentage of average daily net assets
of the underlying fund).....................................0.15%
Mortality and expense risk fee
(as a percentage of average daily net assets
of the underlying fund).....................................1.25%
Total variable account annual expenses......................1.40%
Annual operating expenses of mutual funds underlying ACL PERSONAL PORTFOLIO
PLUS2 (management fees and other expenses deducted as a percentage of average
net assets as follows:)
<TABLE>
<CAPTION>
American
AIM V.I. AIM V.I. Century VP American IDS Life
Growth and International AIM V.I. Income and Century VP Aggressive
Income+ Equity+ Value+ Growth Value Growth
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.63% 0.75% 0.62% 0.70% 1.00% 0.60%
12b-1 fees - - - - - -
Other expenses 0.06 0.18 0.08 0.00 0.00 0.07
Total 0.69%+ 0.93%+ 0.70%+ 0.70% 1.00% 0.67%**
IDS Life IDS Life IDS Life
Capital Growth International IDS Life IDS Life IDS Life
Resource Dimensions Equity Managed Moneyshare Special Income
Management fees 0.60% 0.63% 0.83% 0.59% 0.51% 0.60%
12b-1 fees - - - - - -
Other expenses 0.07 0.08 0.11 0.05 0.06 0.07
Total 0.67%** 0.71%** 0.94%** 0.64%** 0.57%** 0.67%**
<PAGE>
OCC
OCC OCC Accumulation
Janus Aspen OCC Accumulation Accumulation Trust U.S.
Janus Aspen Series Accumulation Trust Managed Trust Small Government
Series Worldwide Trust Equity (after Cap Income
Balanced Growth (after expense (after (after
(after fee (after fee expense limitations) expense expense
reductions) reductions) limitations) limitations) limitations)
Management fees 0.76% 0.66% 0.80% 0.80% 0.80% 0.47%
12b-1 fees - - - - - -
Other expenses 0.07 0.08 0.19 0.07 0.17 0.46
Total 0.83%++ 0.74%++ 0.99%*** 0.87%*** 0.97%*** 0.93%***
Oppenheimer Oppenheimer Putnam VT Putnam VT Putnam VT
Variable Variable Diversified Growth and High Yield Putnam VT
Account Growth Account High Income Fund Income Fund - Fund - Class Voyager Fund
Income - Class IB Class IB IB - Class IB
Management fees 0.73% 0.75% 0.69% 0.47% 0.66% 0.58%
12b-1 fees - - 0.15 0.15 0.15 0.15
Other expenses 0.02 0.07 0.11 0.04 0.06 0.05
Total 0.75%+ 0.82%+ 0.95%+ 0.66%+ 0.87%+ 0.78%+
+ Operating expenses of the underlying funds at Dec. 31, 1997. A I M
Advisers, Inc. ("AIM") may from time to time voluntarily waive or reduce
its respective fees. Effective May 1, 1998, the Funds reimburse AIM in an
amount up to 0.25% of the average net asset value of each Fund, for
expenses incurred in providing, or assuring that participating insurance
companies provide, certain administrative services. Currently, the fee only
applies to the average net asset value of each Fund in excess of the net
asset value of each Fund as calculated on April 30, 1998.
** Annualized operating expenses of underlying funds at Dec. 31, 1997.
*** Total Portfolio Expenses of the OCC Accumulation Trust Portfolios are
limited by OpCap Advisors so that their respective annualized operating
expenses (net of any expense offsets) do not exceed 1.00% of average daily
net assets for the Equity, Managed, Small Cap and U.S. Government Income
Portfolios. Without such limitation and without giving effect to any
expense offsets, the Management Fees, Other Expenses and Total Portfolio
Expenses would have been: .80%, .19% and .99%, respectively, for the Equity
Portfolio, .80%, .07% and .87%, respectively, for the Managed Portfolio,
.80%, .17% and .97%, respectively, for the Small Cap Portfolio and .60%,
.46% and 1.06%, respectively, for the U.S. Government Income Portfolio for
the fiscal year ended December 31, 1997.
+ Operating expenses of the underlying funds at Dec. 31, 1997.
++ The figures given above are based on gross expenses before expense offset
arrangements, if any, during 1997, for these funds. As of the date of this
prospectus, certain fees are being reduced by the respective investment
managers or service providers for certain of the underlying funds, in each
case on a voluntary basis. Without such reductions, the "Management fees",
"Other expenses" and "Total" that would have been incurred for the last
completed fiscal year would be: .77%, .06% and .83%, respectively, for
Janus Aspen Series Balanced Portfolio, and .72%, .09% and .81%,
respectively, for Janus Aspen Series Worldwide Growth Portfolio. See the
Portfolios' prospectuses for a discussion of fee reductions.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Example:*
American
AIM V.I. AIM V.I. Century VP American IDS Life
Growth and International AIM V.I. Income and Century VP Aggressive
Income Equity Value Growth Value Growth
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return and full withdrawal at the end of each time period:
<S> <C> <C> <C> <C> <C> <C>
1 year $ 92.72 $ 95.18 $ 92.83 $ 92.83 $ 95.90 $ 92.52
3 years 120.05 127.44 120.36 120.36 129.59 119.43
5 years 149.99 162.33 150.51 150.51 165.90 148.96
10 years 257.26 281.91 258.30 258.30 288.99 255.18
You would pay the following expenses on the same investment assuming no
withdrawal or selection of an annuity payout plan at the end of each time
period:
1 year $ 22.72 $ 25.18 $ 22.83 $ 22.83 $ 25.90 $ 22.52
3 years 70.05 77.44 70.36 70.36 79.59 69.43
5 years 119.99 132.33 120.51 120.51 135.90 118.96
10 years 257.26 281.91 258.30 258.30 288.99 255.18
<PAGE>
IDS Life IDS Life IDS Life
Capital Growth International IDS Life IDS Life IDS Life
Resource Dimensions Equity Managed Moneyshare Special Income
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return and full withdrawal at the end of each time period:
1 year $ 92.52 $ 92.93 $ 95.29 $ 92.21 $ 91.49 $ 92.52
3 years 119.43 120.67 127.75 118.50 116.34 119.43
5 years 148.96 151.02 162.84 147.40 143.78 148.96
10 years 255.18 259.34 282.92 252.05 244.72 255.18
You would pay the following expenses on the same investment assuming no
withdrawal or selection of an annuity payout plan at the end of each time
period:
1 year $ 22.52 $ 22.93 $ 25.29 $ 22.21 $ 21.49 $ 22.52
3 years 69.43 70.67 77.75 68.50 66.34 69.43
5 years 118.96 121.02 132.84 117.40 113.78 118.96
10 years 255.18 259.34 282.92 252.05 244.72 255.18
<PAGE>
OCC
Janus Aspen OCC OCC Accumulation
Janus Aspen Series OCC Accumulation Accumulation Trust U.S.
Series Worldwide Accumulation Trust Managed Trust Small Government
Balanced Growth Trust Equity Cap Income
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return and full withdrawal at the end of each time period:
1 year $ 94.16 $ 93.24 $ 95.80 $ 94.57 $ 95.59 $ 95.18
3 years 124.37 121.59 129.29 125.60 128.67 127.44
5 years 157.20 152.57 165.39 159.26 164.37 162.33
10 years 271.71 262.45 287.98 275.80 285.96 281.91
You would pay the following expenses on the same investment assuming no
withdrawal or selection of an annuity payout plan at the end of each time
period:
1 year $ 24.16 $ 23.24 $ 25.80 $ 24.57 $ 25.59 $ 25.18
3 years 74.37 71.59 79.29 75.60 78.67 77.44
5 years 127.20 122.57 135.39 129.26 134.37 132.33
10 years 271.71 262.45 287.98 275.80 285.96 281.91
Oppenheimer Oppenheimer Putnam VT Putnam VT Putnam VT
Variable Variable Diversified Growth and High Yield Putnam VT
Account Growth Account High Income Fund Income Fund - Fund - Class Voyager Fund -
Income - Class IB Class IB IB Class IB
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return and full withdrawal at the end of each time period:
1 year $ 93.34 $ 94.06 $ 95.39 $ 92.42 $ 94.57 $ 93.65
3 years 121.90 124.06 128.06 119.12 125.60 122.83
5 years 153.09 156.69 163.35 148.44 159.26 154.63
10 years 263.48 270.69 283.94 254.14 275.80 266.57
You would pay the following expenses on the same investment assuming no
withdrawal or selection of an annuity payout plan at the end of each time
period:
1 year $ 23.34 $ 24.06 $ 25.39 $ 22.42 $ 24.57 $ 23.65
3 years 71.90 74.06 78.06 69.12 75.60 72.83
5 years 123.09 126.69 133.35 118.44 129.26 124.63
10 years 263.48 270.69 283.94 254.14 275.80 266.57
* In this example, the $30 annual contract administrative charge is
approximated as a .127% charge based on the estimated average contract
size. American Centurion Life has entered into certain arrangements under
which it is compensated by the funds' advisers and/or distributors for the
administrative services it provides to the funds.
</TABLE>
<PAGE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
Annual operating expenses of mutual funds underlying ACL PERSONAL PORTFOLIOSM
(management fees and other expenses deducted as a percentage of average net
assets as follows):
<TABLE>
<CAPTION>
GT Global GT Global
Variable Variable New
Latin America Pacific IDS Life IDS Life IDS Life
(after (after Aggressive Capital International IDS Life IDS Life
expense expense Growth Resource Equity Managed Moneyshare
reimbursement) reimbursement)
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 0.60% 0.60% 0.83% 0.59% 0.51%
Other expenses 0.25 0.09 0.07 0.07 0.11 0.05 0.06
Total 1.25%++ 1.09%++ 0.67%* 0.67%* 0.94%* 0.64%* 0.57%*
OCC
OCC Accumulation
Accumulation Trust U.S. Putnam VT
Trust Government Putnam VT Putnam VT Putnam VT New
IDS Life Managed Income Diversified Growth and High Yield Opportunities
Special (after (after Income Fund Income Fund Fund - Fund -
Income expense expense - Class IA - Class IA Class IA Class IA
limitations) limitations)
Management fees 0.60% 0.80% 0.47% 0.69% 0.47% 0.66% 0.58%
Other expenses 0.07 0.07 0.46 0.11 0.04 0.06 0.05
Total 0.67%* 0.87%** 0.93%** 0.80%+ 0.51%+ 0.72%+ 0.63%+
* Annualized operating expenses of underlying mutual funds at Dec. 31, 1997.
** Total portfolio expenses of the OCC Accumulation Trust Portfolios are
limited by OpCap Advisors so that their respective annualized operating
expenses (net of any expense offsets) do not exceed 1.00% of average daily
net assets for the Managed and U.S. Government Income Portfolios. Without
such limitation and without giving effect to any expense offsets, the
Management Fees, Other Expenses and Total Portfolio Expenses would have
been: .80%, .07% and .87%, respectively, for the Managed Portfolio and
.60%, .46% and 1.06%, respectively, for the U.S. Government Income
Portfolio for the fiscal year ended December 31, 1997.
+ Operating expenses of the underlying mutual funds at Dec. 31, 1997.
++ Figures in the "Other Expenses" and "Total" columns are restated from the
amounts you would have incurred in 1997 to reflect fee and reimbursement or
waiver arrangements. If there had been no reimbursement of expenses by
Chancellor LGT Asset Management and no expense reductions, the actual
expenses of each fund, expressed as a percentage of net assets, with
"Management fees" stated first, then "Other expenses," followed by "Total,"
would have been as follows: GT Global Variable Latin America Fund, 1.00%,
.40%, 1.40%; and GT Global Variable New Pacific Fund, 1.00%, .43%, 1.43%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Example:*
GT Global
Variable GT Global IDS Life IDS Life IDS Life
Latin America Variable New Aggressive Capital International IDS Life IDS Life
Pacific Growth Resource Equity Managed Moneyshare
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return and full withdrawal at the end of each time period:
<S> <C> <C> <C> <C> <C> <C> <C>
1 year $ 98.46 $ 96.82 $ 92.52 $ 92.52 $ 95.29 $ 92.21 $ 91.49
3 years 137.24 132.35 119.43 119.43 127.75 118.50 116.34
5 years 178.58 170.48 148.96 148.96 162.84 147.40 143.78
10 years 313.87 298.02 255.18 255.18 282.92 252.05 244.72
You would pay the following expenses on the same investment assuming no
withdrawal or selection of an annuity payout plan at the end of each time
period:
1 year $ 28.46 $ 26.82 $ 22.52 $ 22.52 $ 25.29 $ 22.21 $ 21.49
3 years 87.24 82.35 69.43 69.43 77.75 68.50 66.34
5 years 148.58 140.48 118.96 118.96 132.84 117.40 113.78
10 years 313.87 298.02 255.18 255.18 282.92 252.05 244.72
OCC Putnam VT Putnam VT New
OCC Accumulation Putnam VT Growth and Putnam VT Opportunities
IDS Life Accumulation Trust U.S. Diversified Income High Yield Fund -
Special Trust Managed Government Income Fund Fund - Fund - Class IA
Income Income - Class IA Class IA Class IA
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return and full withdrawal at the end of each time period:
1 year $ 92.52 $ 94.57 $ 95.18 $ 93.85 $ 90.88 $ 93.03 $ 92.11
3 years 119.43 125.60 127.44 123.44 114.48 120.98 118.19
5 years 148.96 159.26 162.33 155.66 140.66 151.54 146.89
10 years 255.18 275.80 281.91 268.63 238.39 260.38 251.01
You would pay the following expenses on the same investment assuming no
withdrawal or selection of an annuity payout plan at the end of each time
period:
1 year $ 22.52 $ 24.57 $ 25.18 $ 23.85 $ 20.88 $ 23.03 $ 22.11
3 years 69.43 75.60 77.44 73.44 64.48 70.98 68.19
5 years 118.96 129.26 132.33 125.66 110.66 121.54 116.89
10 years 255.18 275.80 281.91 268.63 238.39 260.38 251.01
</TABLE>
<PAGE>
* In this example, the $30 annual contract administrative charge is approximated
as a .127% charge based on the average contract size. American Centurion Life
has entered into certain arrangements under which it is compensated by the
funds' advisers and/or distributors for the administrative services it provides
to the funds.
This example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
Financial statements
The SAI dated Nov. 4, 1998 contains the audited financial statements of American
Centurion Life including:
- balance sheets as of Dec. 31, 1997 and Dec. 31, 1996; and
- related statements of income, stockholder's equity and cash flows for
the years ended Dec. 31, 1997, 1996, and 1995.
The SAI does not include financial statements of the variable account
because this new account had no activity in 1997.
Performance information
Performance information for the variable subaccounts may appear from time to
time in advertisements or sales literature. In all cases, such information
reflects the performance of a hypothetical investment in a particular subaccount
during a particular time period. We show performance from the commencement date
of the funds as if the annuity had existed at that time. Past performance does
not guarantee future results. No performance information provided for the
subaccounts because they had no activity in 1997.
Calculations are performed as follows:
Simple yield - IDS Life Moneyshare Subaccount: Income over a given seven-day
period (not counting any change in the capital value of the investment) is
annualized (multiplied by 52) by assuming that the same income is received for
52 weeks. This annual income is then stated as an annual percentage return on
the investment.
Compound yield - IDS Life Moneyshare Subaccount: Calculated like simple yield,
except that, when annualized, the income is assumed to be reinvested.
Compounding of reinvested returns increases the yield as compared to a simple
yield.
Yield - For subaccounts investing in income funds: Net investment income (income
less expenses) per accumulation unit during a given 30-day period is divided by
the value of the unit on the last day of the period. The result is converted to
an annual percentage.
Average annual total return: Expressed as an average annual compounded rate of
return of a hypothetical investment over a period of one, five and 10 years (or
up to the life of the subaccount if it is less than 10 years old). This figure
reflects deduction of all applicable charges, including the contract
administrative charge, variable account
<PAGE>
administrative charge, mortality and expense risk fee, and withdrawal charge,
assuming a full withdrawal at the end of the illustrated period. Optional
average annual total return quotations may be made that do not reflect a
withdrawal charge deduction (assuming no withdrawal).
Aggregate total return: Represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in a subaccount's
accumulation unit value). The calculation assumes reinvestment of investment
earnings and reflects the deduction of all applicable charges, including the
contract administrative charge, mortality and expense risk fee, variable account
administrative charge and withdrawal charge, assuming a withdrawal at the end of
the illustrated period. Optional aggregate total return quotations may be made
that do not reflect a withdrawal charge deduction (assuming no withdrawal).
Aggregate total return may be shown by means of schedules, charts or graphs.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the fund in which the
subaccount invests and the market conditions during the given time period. Such
information is not intended to indicate future performance. Because advertised
yields and total return figures include all annuity charges that have the effect
of decreasing advertised performance, subaccount performance should not be
compared to that of mutual funds that sell their shares directly to the public.
(See the SAI for a further description of methods used to determine yield and
total return for the subaccounts.)
If you would like additional information about actual performance, contact
American Centurion Life at the address or telephone number on the cover.
The variable account
Under your ACL PERSONAL PORTFOLIO PLUS2 contract, purchase payments can be
allocated to any or all of the subaccounts of the variable account that invest
in shares of the following funds:
Subaccount
AIM V.I. Growth and Income Fund IGN
AIM V.I. International Equity Fund IIN
AIM V.I. Value Fund IVA
American Century VP Income and Growth IIG
American Century VP Value IVL
IDS Life Aggressive Growth Fund IAG
IDS Life Capital Resource Fund ICR
IDS Life Growth Dimensions Fund IGD
IDS Life International Equity Fund IIE
IDS Life Managed Fund IMG
IDS Life Moneyshare Fund IMS
<PAGE>
IDS Life Special Income Fund ISI
Janus Aspen Series Balanced Portfolio ISB
Janus Aspen Series Worldwide Growth Portfolio IWG
OCC Accumulation Trust Equity Portfolio IEQ
OCC Accumulation Trust Managed Portfolio IMD
OCC Accumulation Trust Small Cap Portfolio ISC
OCC Accumulation Trust U.S. Government Income Portfolio IUS
Oppenheimer Variable Account Growth Fund IGR
Oppenheimer Variable Account High Income Fund IHI
Putnam VT Diversified Income Fund - Class IB Shares IPD
Putnam VT Growth and Income Fund - Class IB Shares IPG
Putnam VT High Yield Fund - Class IB Shares IPH
Putnam VT Voyager - Class IB Shares IPV
Under your ACL PERSONAL PORTFOLIOSM contract, purchase payments can be allocated
to any or all of the subaccounts of the variable account that invest in shares
of the following funds:
Subaccount
GT Global Variable Latin America Fund ILA
GT Global Variable New Pacific Fund IPA
IDS Life Aggressive Growth Fund IAG
IDS Life Capital Resource Fund ICR
IDS Life International Equity Fund IIE
IDS Life Managed Fund IMG
IDS Life Moneyshare Fund IMS
IDS Life Special Income Fund ISI
OCC Accumulation Trust Managed Portfolio IMD
OCC Accumulation Trust U.S. Government Income Portfolio IUS
Putnam VT Diversified Income Fund - Class IA Shares IDI
Putnam VT Growth and Income Fund - Class IA Shares IGI
Putnam VT High Yield Fund - Class IA Shares IHY
Putnam VT New Opportunities Fund - Class IA Shares INO
Each variable subaccount meets the definition of a separate account under
federal securities laws. Income, capital gains and capital losses of each
subaccount are credited or charged to that subaccount alone. No variable
subaccount will be charged with liabilities of any other variable subaccount or
of our general business.
The variable account was established under New York law on October 12, 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 contracts are general obligations
of American Centurion Life.
<PAGE>
The funds
AIM V.I. Growth and Income Fund
Objective: growth of capital, with current income as a secondary objective. The
fund seeks to achieve its objective by generally investing at least 65% of its
net assets in stocks of companies believed by management to have the potential
for above average growth in revenues and earnings.
AIM V.I. International Equity Fund
Objective: long-term growth of capital. Invests in international equity
securities, the issuers of which are considered by AIM to have strong earnings
momentum.
AIM V.I. Value Fund
Objective: long-term growth of capital. Invests primarily in equity securities
judged by AIM to be undervalued relative to the current or projected earnings of
the companies issuing the securities or relative to the equity markets
generally. Income is a secondary objective.
American Century VP Income and Growth
Objective: dividend growth, current income and capital appreciation. Invests
primarily in common stocks.
American Century VP Value
Objective: long-term capital growth with income as a secondary objective.
Invests primarily in securities that management believes to be undervalued at
the time of purchase.
GT Global Variable Latin America Fund
Objective: capital appreciation. Normally invests at least 65% of its total
assets in the securities of a broad range of Latin American issuers. The Fund
may invest in common stock, preferred stock, rights, warrants and securities
convertible into common stock, and other substantially similar forms of equity
securities with comparable risk characteristics, as well as bonds, notes,
debentures or other forms of indebtedness that may be developed in the future.
GT Global Variable New Pacific Fund
Objective: long-term growth of capital. Normally invests at least 65% of its
total assets in equity securities of issuers domiciled in Australia, Hong Kong,
India, Indonesia, Malaysia, New Zealand, Pakistan, the Philippines, Singapore,
South Korea, Taiwan and Thailand. Equity securities in which the Fund may invest
include common stock, preferred stock, convertible debt securities and warrants
to acquire such securities.
IDS Life Aggressive Growth Fund
Objective: capital appreciation. Invests primarily in common stock of small- and
medium-size companies.
<PAGE>
IDS Life Capital Resource Fund
Objective: capital appreciation. Invests primarily in U.S. common stocks and
other securities convertible into common stock, diversified over many different
companies in a variety of industries.
IDS Life Growth Dimensions Fund
Objective: long-term growth of capital. Invests primarily in common stocks of
U.S. and foreign companies showing potential for significant growth.
IDS Life International Equity Fund
Objective: capital appreciation. Invests primarily in common stock of foreign
issuers and foreign securities convertible into common stock.
IDS Life Managed Fund
Objective: maximum total investment return. Invests primarily in U.S. common
stocks, securities convertible into common stock, warrants, fixed income
securities (primarily high-quality corporate bonds) and money market
instruments.
IDS Life Moneyshare Fund
Objective: maximum current income consistent with liquidity and conservation of
capital. Invests in high-quality money market securities with remaining
maturities of 13 months or less. The fund also will maintain a dollar-weighted
average portfolio maturity not exceeding 90 days. The fund attempts to maintain
a constant net asset value of $1 per share.
IDS Life Special Income Fund
Objective: high level of current income while conserving the value of the
investment for the longest time period. Invests primarily in high-quality,
lower-risk corporate bonds issued by many different companies in a variety of
industries, and in government bonds.
Janus Aspen Series Balanced Portfolio
Objective: long-term growth of capital, balanced by current income. The
Portfolio normally invests 40-60% of its assets in securities selected primarily
for their growth potential and 40-60% of its assets in securities selected
primarily for their income potential.
Janus Aspen Series Worldwide Growth Portfolio
Objective: long-term growth of capital in a manner consistent with the
preservation of capital. Invests primarily in common stocks of foreign and
domestic issuers.
OCC Accumulation Trust Equity Portfolio
Objective: long term capital appreciation. Invests in a diversified portfolio of
equity securities selected on the basis of a value-oriented approach to
investing.
<PAGE>
OCC Accumulation Trust Managed Portfolio
Objective: growth of capital over time. Invests primarily in common stocks,
bonds and money market and cash equivalent securities, the percentages of which
will vary based on management's assessment of relative investment values.
OCC Accumulation Trust Small Cap Portfolio
Objective: capital appreciation. Invests in a diversified portfolio of equity
securities of companies with market capitalizations of under $1 billion.
OCC Accumulation Trust U.S. Government Income Portfolio
Objective: high level of current income together with protection of capital.
Invests exclusively in debt obligations, including mortgage-backed securities,
issued or guaranteed by the United States government, its agencies or
instrumentalities.
Oppenheimer Variable Account Growth Fund
Objective: capital appreciation. Invests in securities of well-known established
companies.
Oppenheimer Variable Account High Income Fund
Objective: high level of current income. Invests in high-yield, fixed-income
securities, including unrated securities or high-risk securities in the lower
rating categories, commonly known as "junk bonds". These securities are subject
to a greater risk of loss of principal and nonpayment of interest than
higher-rated securities.
Putnam VT Diversified Income Fund - Class IA and IB Shares
Objective: high current income consistent with capital preservation by investing
in the following three sectors of the fixed income securities markets: a U.S.
Government Sector, a High Yield Sector (which invests primarily in securities
commonly known as "junk bonds"), and an International Sector. Consult the Putnam
Variable Trust prospectus for further information on the risks associated with
this fund's investments in high yield higher-risk fixed income securities.
Putnam VT Growth and Income Fund - Class IA and IB Shares
Objective: capital growth and current income by investing primarily in common
stocks that offer potential for capital growth, current income or both.
Putnam VT High Yield Fund - Class IA and IB Shares
Objective: high current income and, when consistent with this objective, a
secondary objective of capital growth, by investing primarily in high-yielding,
lower-rated fixed income securities constituting a portfolio which Putnam
Investment Management, Inc. ("Putnam Management") believes does not involve
undue risk to income or principal. See the special considerations for
investments in high yield securities described in the Putnam Variable Trust
prospectus.
<PAGE>
Putnam VT New Opportunities Fund - Class IA Shares
Objective: long-term capital appreciation by investing principally in common
stocks of companies in sectors of the economy which Putnam Management believes
possess above average long-term growth potential.
Putnam VT Voyager Fund - Class IB Shares
Objective: capital appreciation by investing primarily in common stocks of
companies that Putnam Management believes have potential for capital
appreciation that is significantly greater than that of market averages.
More comprehensive information regarding each fund is contained in that fund's
prospectus. You should read the fund prospectus and consider carefully, and on a
continuing basis, which fund or combination of funds is best suited to your
long-term investment needs. There is no assurance that the investment objectives
of the funds will be attained nor is there any guarantee that the contract value
will equal or exceed the total purchase payments made. Some funds may involve
more risk than others. Please monitor your investment accordingly.
All funds are available to serve as the underlying investment for variable
annuities, and some funds also are available to serve as the underlying
investment for variable life insurance contracts and qualified plans. It is
conceivable that in the future it may be disadvantageous for variable annuity
separate accounts and variable life insurance separate accounts and/or qualified
plans to invest in the available funds simultaneously.
Although American Centurion Life and the funds do not currently foresee any such
disadvantages, the boards of directors or trustees of the appropriate funds will
monitor events in order to identify any material conflicts between such contract
owners, policy owners and qualified plans and to determine what action, if any,
should be taken in response to a conflict. If a board were to conclude that
separate funds should be established for the variable annuity, variable life
insurance and qualified plan separate accounts, the variable annuity contract
holders would not bear any expenses associated with establishing separate funds.
Please refer to the fund prospectuses for risk disclosure regarding mixed and
shared funding.
The Internal Revenue Service (IRS) has issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each mutual fund
intends to comply with these requirements.
The U.S. Treasury and the IRS have indicated that they may provide additional
guidance concerning how many variable subaccounts may be offered and how many
exchanges among variable subaccounts may be allowed before the owner is
considered to have investment control, and thus is currently taxed on income
earned within variable subaccount assets. We do not know at this time what the
additional guidance will be or when action will be taken. We reserve the right
to modify the contracts, as necessary, to ensure that the owner will not be
subject to current taxation as the owner of the variable subaccount assets.
<PAGE>
We intend to comply with all federal tax laws to ensure that each contract
continues to qualify as an annuity for federal income tax purposes. We reserve
the right to modify each contract as necessary to comply with any new tax laws.
The investment managers for the funds are as follows:
o AIM Variable Insurance Funds - A I M Advisors, Inc.
o American Century Variable Portfolios, Inc. - American Century Investment
Management, Inc.
o GT Global Variable Investment Funds - Chancellor LGT Asset Management, Inc.
o IDS Life Retirement Annuity Mutual Funds - IDS Life. American Express
Financial Corporation is the investment advisor for the IDS Life Retirement
Annuity Mutual Funds. American Express Asset Management International Inc.,
a wholly-owned subsidiary of AEFC, is the sub-investment advisor for IDS
Life International Equity Fund.
o Janus Aspen Series Portfolios - Janus Capital Corporation.
o OCC Accumulation Trust Portfolios - OpCap Advisors.
o Oppenheimer Variable Account Funds - OppenheimerFunds, Inc.
o Putnam Variable Trust - Putnam Investment Management, Inc.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the funds' prospectuses for complete
information on investment risks, deductions, expenses and other facts you should
know before investing. These prospectuses are available by contacting American
Centurion Life at the administrative offices address or telephone number on the
front of this prospectus.
The fixed account
Purchase payments also may be allocated to the fixed account. The value of the
fixed account increases as interest is credited to the account. Purchase
payments and transfers to the fixed account become part of the general account
of American Centurion Life, the company's main portfolio of investments.
Interest is credited and compounded daily to produce an effective annual
interest rate. We will change the interest rate from time to time at our
discretion.
Because of exemptive and exclusionary provisions, interests in the fixed account
have not been registered under the Securities Act of 1933 (1933 Act), nor is the
fixed account registered as an investment company under the 1940 Act.
Accordingly, neither the fixed
<PAGE>
account nor any interests in it are generally subject to the provisions of the
1933 or 1940 Acts, and we have been advised that the staff of the SEC has not
reviewed the disclosures in this prospectus that relate to the fixed account.
Disclosures regarding the fixed account, however, may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
Buying your annuity
Your agent will help you prepare and submit your application, and send it along
with your initial purchase payment to our Albany home office. As the owner, you
have all rights and may receive all benefits under the contract. You cannot buy
a nonqualified annuity or become an annuitant if you are 86 or older (age 76 or
older for qualified annuities).
When you apply, you may select:
o the fixed account and/or subaccount(s) in which you want to invest;
o how you want to make purchase payments;
o the date you want to start receiving annuity payouts (the retirement
date); and
o a beneficiary.
If your application is complete, we will process it and apply your purchase
payment to the fixed account and subaccount(s) you selected within two business
days after we receive it at our Albany home office. If your application is
accepted, we will send you a contract. If we cannot accept your application
within five business days, we will decline it and return your payment. We will
credit additional purchase payments to your account(s) at the next close of
business after we receive your payments at our Albany home office. Additional
purchase payments may be made to nonqualified and qualified annuities until the
retirement date.
The retirement date
Annuity payouts will be scheduled to begin on the retirement date. This date can
be aligned 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
can also change the date, provided you send us written instructions at least 30
days before annuity payouts begin.
For nonqualified annuities and Roth IRAs, the retirement date must be:
o no earlier than the 60th day after the contract's effective date; and
o no later than the annuitant's 90th birthday.
<PAGE>
For qualified annuities (except Roth IRAs), to avoid IRS penalty taxes, the
retirement date generally must be:
o on or after the annuitant reaches age 59 1/2; and
o by April 1 of the year following the calendar year when the annuitant
reaches age 701/2.
If you are taking the minimum IRA distribution as required by the Code from
another tax-qualified investment, or in the form of partial withdrawals from
this annuity, annuity payouts can start as late as the annuitant's 90th
birthday.
Beneficiary
If death benefits become payable before the retirement date, your named
beneficiary will receive all or part of the contract value. If there is no named
beneficiary, then you or your estate will be the beneficiary. (See "Payment in
case of death" for more about beneficiaries.)
Minimum payment amounts
Initial payment: $2,000 (We reserve the right to decrease the minimum payment.)
Minimum additional purchase payment(s): $50
Maximum payment(s):........$1,000,000 of cumulative payments (We reserve the
right to increase the maximum payment.)
How to make payments
By letter
Send your check along with your name and contract number to:
Regular mail:
American Centurion Life Assurance Company
P.O. Box 5555
Albany, NY 12205-0555
Express mail:
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
<PAGE>
Charges
Contract administrative charge
This fee is for establishing and maintaining your records. We deduct $30 from
the contract value on your contract anniversary at the end of each contract
year. We will waive this charge when the contract value is $50,000 or more on
the current contract anniversary. If you take a full withdrawal from your
contract, the $30 annual charge will be deducted at the time of withdrawal
regardless of contract value. The annual charge cannot be increased and does not
apply after annuity payouts begin.
Variable account administrative charge
This charge is applied daily to the variable subaccounts and reflected in the
unit values of the subaccounts. Annually, it totals 0.15% of their average daily
net assets. It covers certain administrative and operating expenses of the
subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. The
variable account administrative charge cannot be increased.
Mortality and expense risk fee
This fee is to cover the mortality risk and expense risk and is applied daily to
the variable subaccounts and reflected in the unit values of the subaccounts.
The subaccounts pay this fee at the time dividends are distributed from the
funds in which they invest. Annually, the fee totals 1.25% of the subaccounts'
average daily net assets. Approximately two-thirds of this amount is for our
assumption of mortality risk, and one-third is for our assumption of expense
risk. This fee does not apply to the fixed account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific annuitant lives and no matter how long the entire
group of American Centurion Life annuitants live. If, as a group, American
Centurion Life annuitants outlive the life expectancy we have assumed in our
actuarial tables, then we must take money from our general assets to meet our
obligations. If, as a group, American Centurion Life annuitants do not live as
long as expected, we could profit from the mortality risk fee. Expense risk
arises because the contract administrative charge and variable account
administrative charge cannot be increased and may not cover our expenses. Any
deficit would have to be made up from our general assets.
We may use any profits realized from the mortality and expense risk fee for any
proper corporate purpose, including, among others, payment of distribution
(selling) expenses. We do not expect that the withdrawal charge, discussed in
the following paragraphs, will cover sales and distribution expenses.
<PAGE>
Withdrawal charge
If you withdraw part or all of your contract, you may be subject to a withdrawal
charge. The withdrawal amount you request is determined by drawing from your
total contract value in the following order:
1. First, we withdraw up to 10% of your prior anniversary contract value not yet
withdrawn this contract year. There is no withdrawal charge on withdrawals
totaling up to 10% of your prior anniversary contract value each contract year.
2. Next, we withdraw any contract earnings (contract value minus all purchase
payments received and not previously withdrawn) in excess of the annual 10% free
withdrawal amount. There is no withdrawal charge on contract earnings.
3. Next, we withdraw purchase payments received eight or more contract years
before the withdrawal and not previously withdrawn. There is no withdrawal
charge on purchase payments received eight or more contract years before
withdrawal.
4. Finally, if necessary, we withdraw purchase payments received in the seven
contract years before the withdrawal. There is a withdrawal charge on these
payments. We determine your withdrawal charges by multiplying each of these
payments by the applicable withdrawal charge percentage, and then totaling the
withdrawal charges.
The withdrawal charge percentage depends on the number of contract years since
you made the payment(s).
Contract years from Withdrawal charge
payment receipt percentage
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
Withdrawal charge calculation example
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with this history:
o The contract date is July 1, 1998 with a contract year of July 1
through June 30 and with an anniversary date of July 1 each year; and
o We received these payments - $10,000 July 1, 1998, $8,000 Dec. 31,
2004 and $6,000 Feb. 20, 2006; and
<PAGE>
o The owner withdraws the contract for its total withdrawal value of
$38,101 on Aug. 5, 2008 and had not made any other withdrawals during
that contract year; and
o The prior anniversary July 1, 2008 contract value was $38,488.
Withdrawal charge Explanation
$0 $3,848.80 is 10% of the prior anniversary
contract value withdrawn
without withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the
10% free withdrawal amount withdrawn without
withdrawal charge; and
0 $10,000 July 1, 1998 payment was received eight or
more contract years before withdrawal and is
withdrawn without withdrawal charge; and
240 $8,000 Dec. 31, 2004 payment is in its fifth
contract year from receipt,
withdrawn with a 3% withdrawal charge; and
240 $6,000 Feb. 20, 2006 payment is in its fourth
contract year from receipt,
withdrawn with a 4% withdrawal charge.
- -----------------------------
$480
The withdrawal charge is calculated so that the total amount minus any
withdrawal charge equals the amount you request. If you take a full withdrawal
from your contract, the $30 contract charge also will be deducted.
Waiver of withdrawal charge There are no withdrawal charges for:
o withdrawals during the year totaling up to 10% of your prior contract
anniversary contract value;
o contract earnings - if any - in excess of the annual 10% free
withdrawal amount;
o required minimum distributions from a qualified annuity after you
reach age 70 1/2 (for those amounts required to be distributed from
this annuity only);
o contracts settled using an annuity payout plan; and
o death benefits.
Possible group reductions: In some cases, lower sales and administrative
expenses may be incurred due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges.
However, we expect this to occur infrequently.
<PAGE>
Valuing your investment
Here is how your fixed account and variable subaccounts are valued:
Fixed account: The amounts allocated to the fixed account are valued directly in
dollars and equal the sum of your purchase payments and transfer amounts plus
interest earned, less any amounts withdrawn or transferred and any contract
administrative charge.
Variable subaccounts: Amounts allocated to the variable subaccounts are
converted into accumulation units. Each time you make a purchase payment or
transfer amounts into one of the variable subaccounts, a certain number of
accumulation units are credited to your contract for that subaccount.
Conversely, each time you take a partial withdrawal, transfer amounts out of a
variable subaccount or are assessed a contract administrative charge, a certain
number of accumulation units are subtracted from your contract. Please remember
that investment performance, expenses and deductions of certain charges affect
accumulation unit value.
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the underlying fund.
The dollar value of each accumulation unit can rise or fall daily depending on
the performance of the underlying mutual fund and on certain fund expenses. Here
is how unit values are calculated:
Number of units
To calculate the number of accumulation units for a particular subaccount, we
divide your investment, after deduction of any premium taxes, by the current
accumulation unit value.
Accumulation unit value
The current accumulation unit value for each variable subaccount equals the last
value times the subaccount's current net investment factor.
Net investment factor
Determined by:
o adding the underlying mutual fund's current net asset value per share
plus per-share amount of any current dividend or capital gain
distribution; then
o dividing that sum by the previous net asset value per share; and
o subtracting the percentage factor representing the mortality and
expense risk fee and the variable account administrative charge from
the result.
Because the net asset value of the underlying mutual fund may fluctuate, the
accumulation unit value may increase or decrease. You bear this investment risk
in a variable subaccount.
<PAGE>
Factors that affect variable subaccount accumulation units
Accumulation units may change in two ways: in number and in value. Here are the
factors that influence those changes:
The number of accumulation units you own may fluctuate due to:
o additional purchase payments allocated to the variable subaccount(s);
o transfers into or out of the variable subaccount(s);
o partial withdrawals;
o withdrawal charges; and/or
o contract administrative charges.
Accumulation unit values will fluctuate due to:
o changes in net asset value of underlying mutual fund(s);
o dividends distributed to the variable subaccount(s);
o capital gains or losses of underlying mutual fund(s);
o mutual fund operating expenses;
o mortality and expense risk fees; and/or
o variable account administrative charges.
Making the most of your annuity
Automated dollar-cost averaging*
You can use automated transfers to take advantage of dollar-cost averaging
(investing a fixed amount at regular intervals). For example, you might have a
set amount transferred monthly from a relatively conservative variable
subaccount to a more aggressive one, or to several others, or from the fixed
account to one or more variable 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 value(s) of the underlying
mutual fund(s). Since you invest the same amount each period, you automatically
acquire more units when the market value falls, fewer units when it rises. The
potential effect is to lower your average cost per unit. For specific features
contact your agent.
<PAGE>
<TABLE>
<CAPTION>
How dollar-cost averaging works
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
dollars each month... Feb 100 18 5.56
Mar 100 17 5.88
you automatically Apr 100 15 6.67
buy more units
when the per unit May 100 16 6.25
market price is low...
Jun 100 18 5.56
Jul 100 17 5.88
Aug 100 19 5.26
and fewer units Sept 100 21 4.76
when the per unit
market price is Oct 100 20 5.00
high
</TABLE>
You have paid an average price of only $17.91 per unit over the 10 months, while
the average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any variable subaccount will gain
in value, nor will it protect against a decline in value if market prices fall.
Because this strategy involves continuous investing, your success with
dollar-cost averaging will depend upon your willingness to continue to invest
regularly through periods of low price levels. Dollar-cost averaging can be an
effective way to help meet your long-term goals.
* Some restrictions may apply.
Transferring money between subaccounts
You may transfer money from any one subaccount, or the fixed account, to another
before annuity payouts begin. (Certain restrictions apply to transfers involving
the fixed account.) We will process your transfer request at the next close of
business after we receive it. 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 as follows:
o Limit the number of transfers to 12 per contract year; and/or
o Require up to 10 valuation dates between each transfer; and/or
o Limit the maximum transfer amount on any valuation date to $2,000,000;
and/or
o Upon 30 days written notice, only accept transfer instructions from
you and not from your representative, agent or any person acting under
a power of attorney from you.
<PAGE>
We may make these transfer privilege modifications on a uniform basis for all
contractholders in a class, if we determine, in our sole discretion, that the
exercise of transfer rights by one or more contract owners is, or would be, to
the disadvantage of other contract owners.
(For information on transfers after annuity payouts begin, see "Transfer
policies.")
Transfer policies
o You may transfer contract values between the variable subaccounts or
from the subaccount(s) to the fixed account at any time. However, if
you have made a transfer from the fixed account to the subaccount(s),
you may not make a transfer from any subaccount back to the fixed
account for six months following that transfer.
o You may transfer contract values from the fixed account to the
variable subaccount(s) on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set
up for certain transfer periods subject to certain minimums).
o If we receive your request on or within 30 days before or after the
contract anniversary date, the transfer from the fixed account to the
variable subaccount(s) will be effective on the day we receive it.
o We will not accept requests for transfers from the fixed account at
any other time.
o Once annuity payouts begin no transfers may be made to or from the
fixed account, but transfers may be made once per contract year among
the variable subaccounts.
Two ways to request a transfer or a withdrawal
1 By letter
Send your name, contract 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 5555
Albany, NY 12205-0555
Express mail:
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
<PAGE>
Minimum amount
Transfers or withdrawals: $500 or entire variable subaccount or fixed account
balance
Maximum amount
Transfers or withdrawals: Contract value
2 By automated transfers and automated partial withdrawals
Your agent can help you set up automated transfers among your subaccount(s) or
fixed account or partial withdrawals from the accounts.
You can start or stop this service by written request or other method acceptable
to American Centurion Life. You must allow 30 days for American Centurion Life
to change any instructions that are currently in place.
o Automated transfers may not exceed an amount that, if continued, would
deplete the fixed account or subaccount(s) from which you are
transferring within 12 months.
o Automated transfers and automated partial withdrawals are subject to
all of the contract provisions and terms, including transfer of
contract values between accounts. Automated withdrawals may be
restricted by applicable law under some contracts.
o Automated partial withdrawals may result in IRS taxes and penalties on
all or part of the amount withdrawn.
Minimum amount
Automated transfers or withdrawals: $100 monthly/$250 quarterly,
semiannually or annually
Maximum amount
Automated transfers or withdrawals: Contract value (except for
automated transfers from
the fixed account)
Withdrawals from your contract
As owner, you may withdraw all or part of your contract at any time before
annuity payouts begin by sending a written request to American Centurion Life.
For total withdrawals we will compute the value of your contract at the next
close of business after we receive your request. We may ask you to return the
contract. You may have to pay withdrawal charges (see "Withdrawal charge") and
IRS taxes and penalties (see "Taxes"). No withdrawals may be made after annuity
payouts begin.
<PAGE>
Withdrawal policies
If you have a balance in more than one account and request a partial withdrawal,
we will withdraw money from all your subaccounts and/or the fixed account in the
same proportion as your value in each correlates to your total contract value,
unless you request otherwise.
Receiving payment when you request a withdrawal By regular or express mail:
o Payable to owner.
o Normally mailed to address of record within seven days after receiving
your request. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has
not cleared;
- the NYSE is closed, except for normal holiday and weekend
closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to
sell securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of
security holders.
NOTE: You will be charged a fee if you request express mail delivery.
Changing ownership
You may change ownership of your nonqualified annuity at any time by filing a
change of ownership on a form approved by us and sent to our Albany home office.
The change will become binding upon us when we receive and record it. We will
honor any change of ownership request believed to be authentic and will use
reasonable procedures to confirm authenticity. If these procedures are followed,
we take no responsibility for the validity of the change.
If you have a nonqualified annuity, you may lose your tax advantages by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose to any person except
American Centurion Life. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of a contract may be
transferred to the annuitant.
<PAGE>
Benefits in case of death
Your ACL PERSONAL PORTFOLIO PLUS2 contract includes the death benefit described
below.
If you or the annuitant die before annuitization while this contract is in
force, and both you and the annuitant are age 80 or younger on the date of
death, we will pay the beneficiary the greater of:
1. the contract value; or
2. the total purchase payments less any "death benefit adjustment"; or
3. the highest contract value on any prior contract anniversary, plus any
purchase payments paid and less any "death benefit adjustment" since the
contract anniversary.
If either you or the annuitant are age 81 or older on the date of death, we will
pay the beneficiary the contract value.
We calculate the "death benefit adjustment" for any and each partial withdrawal
by multiplying (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal to the contract value
on the date of (but prior to) the partial withdrawal; and
(b) is the death benefit on the date of (but prior to) the partial withdrawal.
The result is subtracted from the death benefit otherwise payable had there not
been a partial withdrawal.
Example:
o The owner purchases an annuity contract for $20,000 on January 1, 1999.
o On January 1, 2000 (the first contract anniversary) the contract value has
grown to $24,000.
o On March 1, 2000 the contract value has fallen to $22,000, at which point
the owner takes a $1,500 partial withdrawal, leaving a contract value of
$20,500.
<PAGE>
<TABLE>
<CAPTION>
The death benefit on March 1, 2000 is calculated as follows:
<S> <C>
The highest contract value on any prior contract anniversary: $24,000.00
plus any purchase payments paid since that anniversary: +0.00
less any "death benefit adjustment" taken since that anniversary, calculated as:
$1,500 x $24,000 = -1,636.36
------ ---------
$22,000
resulting in a benefit of: $22,363.64
</TABLE>
Your ACL PERSONAL PORTFOLIOSM contract includes the death benefit described
below.
If you or the annuitant die before annuitization while this contract is in
force, and both you and the annuitant were age 75 or younger on the date the
annuity was issued and if all withdrawals you have made from this contract have
been without withdrawal charges, we will pay the beneficiary the greatest of:
1. the contract value; or
2. the total purchase payments paid less any amounts withdrawn; or
3. on or after the fifth contract anniversary, the death benefit as of the
most recent fifth contract anniversary adjusted by adding any purchase
payments made since that most recent fifth contract anniversary and by
subtracting any amounts withdrawn since that most recent fifth contract
anniversary.
For annuities where both you and the annuitant were 75 or younger on the date
the annuity was issued and you have made withdrawals subject to withdrawal
charges, we will pay the beneficiary the contract value.
For annuities where either you or the annuitant were 76 or older on the date the
annuity was issued, we will pay the beneficiary the contract value.
Example:
o The owner purchases an annuity contract for $20,000 on January 1, 1999.
o On June 1, 2004 the owner takes a $1,500 partial withdrawal, leaving a
contract value of $31,500.
o On July 15, 2004 the owner makes an additional payment of $1,000.
o On March 1, 2005 the contract value has fallen to $31,000.
<PAGE>
<TABLE>
<CAPTION>
The death benefit on March 1, 2005 is calculated as follows:
<S> <C>
The closest fifth anniversary contract value: $33,000.00
plus any purchase payments paid since that anniversary + 1,000.00
less any partial withdrawals taken since that anniversary: - 1,500.00
----------
for a death benefit of: $32,500.00
</TABLE>
If your spouse is sole beneficiary under a nonqualified annuity and you die
before the retirement date, your spouse may keep the annuity as owner. To do
this your spouse must, within 60 days after we receive proof of death, give us
written instructions to keep the contract in force.
Under a qualified annuity, if the annuitant dies before annuity payouts begin,
and the spouse is the only beneficiary, the spouse may keep the annuity as owner
until the date on which the spouse reaches 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: We will pay the beneficiary in a single sum unless you have given us
other written instructions, or the beneficiary may receive payouts under any
annuity payout plan available under this contract if:
o the beneficiary asks us in writing within 60 days after we receive
proof of death; and
o payouts begin no later than one year after death, or other date as
permitted by the Code; and
o the payout period does not extend beyond the beneficiary's life or
life expectancy.
When paying the beneficiary, we will determine the contract's value at the next
close of business after our death claim requirements are fulfilled. Interest, if
any, will be paid from the date of death at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled. (See "Taxes.")
The annuity payout period
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we will mutually agree on other payout
arrangements. The amount available for payouts under the plan you select is the
contract value on your retirement date. No withdrawal charges are deducted under
the payout plans listed below.
<PAGE>
You also decide whether annuity payouts are to be made on a fixed or variable
basis, or a combination of fixed and variable. Amounts of fixed and variable
payouts depend on:
o the annuity payout plan you select;
o the annuitant's age and, in most cases, sex;
o the annuity table in the contract; and
o the amounts you allocated to the account(s) at settlement.
In addition, for variable payouts only, amounts depend on the investment
performance of the subaccount(s) you select. These payouts will vary from month
to month because the performance of the underlying mutual funds will fluctuate.
(In the case of fixed annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin, see "Transfer policies."
Annuity payout plans
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are to be used to purchase
the payout plan:
o Plan A - Life annuity - no refund: Monthly payouts are made until the
annuitant's death. Payouts end with the last payout before the annuitant's
death; no further payouts will be made. This means that if the annuitant dies
after only one monthly payout has been made, no more payouts will be made.
o Plan B - Life annuity with five, 10 or 15 years certain: Monthly payouts are
made for a guaranteed payout period of five, 10 or 15 years that you elect. This
election will determine the length of the payout period to the beneficiary if
the annuitant should die before the elected period has expired. The guaranteed
payout period is calculated from the retirement date. If the annuitant outlives
the elected guaranteed payout period, payouts will continue until the
annuitant's death.
o Plan C - Life annuity - installment refund: Monthly payouts are made until the
annuitant's death, with our guarantee that payouts will continue for some period
of time. Payouts will be made for at least the number of months determined by
dividing the amount applied under this option by the first monthly payout,
whether or not the annuitant is living.
o Plan D - Joint and last survivor life annuity - no refund: Monthly payouts are
made while both the annuitant and a joint annuitant are living. If either
annuitant dies, monthly payouts continue at the full amount until the death of
the surviving annuitant. Payouts end with the death of the second annuitant.
<PAGE>
o Plan E - Payouts for a specified period (available as a fixed payout only):
Monthly payouts are made for a specific payout period of 10 to 30 years that you
elect. Payouts will be made only for the number of years specified whether the
annuitant is living or not. Depending on the time period selected, it is
foreseeable that an annuitant can outlive the payout period selected. In
addition, a 10% IRS penalty tax could apply under this payout plan. (See
"Taxes.")
Restrictions for some qualified plans: If you purchased a qualified annuity, you
must select a payout plan that provides for payouts:
o over the life of the annuitant;
o over the joint lives of the annuitant and a designated beneficiary;
o for a period not exceeding the life expectancy of the annuitant; or
o for a period not exceeding the joint life expectancies of the
annuitant and a designated beneficiary.
If we do not receive instructions: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's 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 contract 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 contract 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, any amount payable to
the beneficiary will be provided in the annuity payout plan in effect.
Taxes
Generally, under current law, any increase in your contract value is taxable to
you only when you receive a payout or withdrawal. (However, see detailed
discussion below.) Any portion of the annuity payouts and any withdrawals you
request that represent ordinary income are normally taxable. You will receive a
1099 tax information form for any year in which a taxable distribution was made
according to our records. Roth IRAs may grow tax free if you meet certain
distribution requirements.
Annuity payouts under nonqualified annuities: A portion of each payout will be
ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment and will not be taxed. All
amounts received after your investment in the annuity is fully recovered will be
subject to tax.
Tax law requires that all nonqualified deferred annuity contracts issued by the
same company to the same owner during a calendar year are to be taxed as a
single, unified contract when distributions are taken from any one of such
contracts.
<PAGE>
Annuity payouts under qualified annuities (except Roth IRAs): Under a qualified
annuity, the entire payout generally will be includable as ordinary income and
subject to tax except to the extent that contributions were made with after-tax
dollars. If you or your employer invested in your contract with pre-tax dollars
as part of a qualified retirement plan, such amounts are not considered to be
part of your investment in the contract and will be taxed when paid to you.
Withdrawals: If you withdraw part or all of your contract before your annuity
payouts begin, your withdrawal payment will be taxed to the extent that the
value of your contract immediately before the withdrawal exceeds your
investment. You also may have to pay a 10% IRS penalty for withdrawals made
prior to age 59 1/2. For qualified annuities, other penalties may apply if you
make withdrawals from your annuity before your plan specifies that you can
receive payouts.
Death benefits to beneficiaries: The death benefit under an annuity (except a
Roth IRA) is not tax exempt. Any amount received by the beneficiary that
represents previously deferred earnings within the contract is taxable as
ordinary income to the beneficiary in the year(s) he or she receives the
payments. The death benefit under a Roth IRA generally is not taxable as
ordinary income to the beneficiary.
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 contract before reaching age 59 1/2,
you may have to pay a 10% IRS penalty on the amount includable in your ordinary
income. However, this penalty will not apply to any amount received by you or
your beneficiary:
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or
joint lives or life expectancies of you and your beneficiary); or
o if it is allocable to an investment before Aug. 14, 1982 (except for
qualified annuities).
For a qualified annuity, other penalties or exceptions may apply if you make
withdrawals from your annuity before your plan specifies that payouts can be
made.
Withholding, generally: If you receive all or part of the contract value from an
annuity, withholding may be imposed against the taxable income portion of the
payment. Any withholding that is done represents a prepayment of your tax due
for the year. You take credit for such amounts on your annual tax return.
<PAGE>
If the payment is part of an annuity payout plan, the amount of withholding
generally is computed 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 may elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial or full
withdrawal) withholding is computed 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 may elect not to have this withholding
occur.
Some states also may impose withholding requirements similar to the federal
withholding described above. If this should be the case, any payment from which
federal withholding is deducted also may have state withholding deducted. The
withholding requirements may differ if payment is being made to a non-U.S.
citizen or if the payment is being delivered outside the United States.
Transfer of ownership of a nonqualified annuity: If you make such a transfer
without receiving adequate consideration, the transfer is considered a gift, and
also may be considered a withdrawal for federal income tax purposes. If the gift
is a currently taxable event for income tax purposes, the amount of deferred
earnings at the time of the transfer will be taxed to the original owner, who
also may be subject to a 10% IRS penalty as discussed earlier. In this case, the
new owner's investment in the annuity will be the value of the annuity at the
time of the transfer.
Collateral assignment of a nonqualified annuity: If you collaterally assign or
pledge your contract, earnings on purchase payments you made after Aug. 13, 1982
will be taxed to you like a withdrawal.
Important: Our discussion of federal tax laws is based upon our understanding of
these laws as they are currently interpreted. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
Tax qualification
Each contract is intended to qualify as an annuity for federal income tax
purposes. To that end, the provisions of the contracts are to be interpreted to
ensure or maintain such tax qualification, notwithstanding any other provisions
of the contract. We reserve the right to amend the contracts to reflect any
clarifications that may be needed or are appropriate to maintain such
qualification or to conform the contracts to any applicable changes in the tax
qualification requirements. We will send you a copy of any such amendments.
<PAGE>
Voting rights
As a contract owner with investments in the variable subaccount(s), you may vote
on important mutual fund policies until annuity payouts begin. Once they begin,
the person receiving them has voting rights. We will vote fund shares according
to the instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each variable subaccount to the total
number of votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
o the reserve held in each subaccount for your contract
o divided by the net asset value of one share of the applicable
underlying mutual fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each account. Notice of these meetings, proxy
materials and a statement of the number of votes to which the voter is entitled
will be sent. We will vote shares for which we have not received instructions in
the same proportion as the votes for which we have received instructions. We
also will vote the shares for which we have voting rights in the same proportion
as the votes for which we have received instructions.
Substitution of investments
If shares of any mutual fund should not be available for purchase by the
appropriate variable subaccount or if, in the judgment of American Centurion
Life's Management, further investment in such shares is no longer appropriate,
another registered open-end management investment company may be substituted for
mutual fund shares held in the subaccount(s) when American Centurion Life
believes it would be in the best interest of persons having voting rights under
the contract. American Centurion Life also reserves the right to change the
mutual funds in which the subaccounts invest and to create new subaccounts that
invest in additional funds.
In the event of any such substitution or change, American Centurion Life,
without the consent or approval of the owners, may amend the contract and take
whatever action is necessary and appropriate. However, no such substitution or
change will be made without the necessary approval of the SEC and state
insurance department. American Centurion Life will notify owners of any
substitution or change.
<PAGE>
Distribution of the contracts
The contracts will be distributed by banks and financial institutions either
directly or through a network of third-party marketers. American Express
Financial Advisors Inc., the principal underwriter for the variable account,
will pay commissions for the distribution of the contracts to the broker-dealers
of the banks or financial institutions or the broker-dealers of the third-party
marketers who have entered into distribution agreements with American Express
Financial Advisors Inc. These commissions will not be more than 7.5% of purchase
payments received on the contracts.
From time to time, American Centurion Life will pay or permit other promotional
incentives, in cash or credit or other compensation.
About American Centurion Life
The annuities are issued by American Centurion Life. 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. Its home office is located at 20
Madison Avenue Extension, P.O. Box 5555, Albany, NY 12205-0555. American
Centurion Life is licensed in the states of Alabama, Delaware, and New York and
conducts a conventional life insurance business in New York.
American Express Financial Advisors Inc. is the principal underwriter for the
variable account. Its home office is IDS Tower 10, Minneapolis, MN 55440-0010.
American Express Financial Advisors is registered with the SEC under the
Securities Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. American Express Financial
Advisors is a wholly-owned subsidiary of AEFC.
The AEFC family of companies offers not only insurance and annuities, but also
mutual funds, investment certificates and a broad range of financial management
services.
Other subsidiaries provide investment management and related services for
pension, profit-sharing, employee savings and endowment funds of businesses and
institutions.
<PAGE>
Year 2000
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the variable account.
The variable account has no computer systems of its own but is dependent upon
the systems maintained by AEFC and certain other third parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999. The Year 2000 readiness of
unaffiliated investment managers and other third parties whose system failures
could have an impact on the variable account's operations currently is being
evaluated. The potential materiality of any such impact is not known at this
time.
Regular and special reports
Services
To help you track and evaluate the performance of your annuity, American
Centurion Life provides:
Quarterly statements showing the value of your investment.
Annual reports containing required information on the annuity and its underlying
investments.
Table of contents of the Statement of Additional Information
Performance Information.......................................
Calculating Annuity Payouts...................................
Rating Agencies...............................................
Principal Underwriter.........................................
Independent Auditors..........................................
Saving for Retirement.........................................
Prospectus....................................................
Financial Statements -
.........American Centurion Life Assurance Company
<PAGE>
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
_______ ACL Personal Portfolio Plus2 / ACL Personal PortfolioSM
_______ AIM Variable Insurance Funds, Inc.
_______ American Century Variable Portfolios, Inc.
_______ GT Global Variable Investment Funds
_______ IDS Life Retirement Annuity Mutual Funds
_______ Janus Aspen Series Portfolios
_______ OCC Accumulation Trust Portfolios
_______ Oppenheimer Variable Account Funds
_______ Putnam Variable Trust - Class IA Shares
_______ Putnam Variable Trust - Class IB Shares
Mail your request to:
American Centurion Life Assurance Company
20 Madison Avenue Extension
P.O. Box 5555
Albany, NY 12205-0555
800-504-0469
American Centurion Life will mail your request to:
Your name_____________________________________________________________________
Address_______________________________________________________________________
City______________________________ State____________________ Zip _____________
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
ACL Personal Portfolio Plus2
and
ACL PERSONAL PORTFOLIOSM
ACL VARIABLE ANNUITY ACCOUNT 2
Nov. 4, 1998
ACL Variable Annuity Account 2 is a separate account established and maintained
by American Centurion Life Assurance Company (American Centurion Life).
This Statement of Additional Information (SAI), dated Nov. 4, 1998, is not a
prospectus. It should be read together with the prospectus dated Nov. 4, 1998,
which may be obtained from your agent, or by writing or calling American
Centurion Life at the address or telephone number below.
American Centurion Life Assurance Company
20 Madison Avenue Extension
P.O. Box 5555
Albany, NY 12205-0555
800-504-0469
<PAGE>
TABLE OF CONTENTS
Performance Information........................................3
Calculating Annuity Payouts....................................6
Rating Agencies................................................7
Principal Underwriter..........................................8
Independent Auditors...........................................8
Saving for Retirement..........................................8
Prospectus.....................................................8
Financial Statements
.........- American Centurion Life Assurance Company
<PAGE>
PERFORMANCE INFORMATION
Calculation of Yield for the Subaccount investing in IDS Life Moneyshare Fund
Simple yield for the subaccount investing in the IDS Life Moneyshare Fund will
be based on the: (a) change in the value of a hypothetical investment (exclusive
of capital changes) at the beginning of a seven-day period for which yield is to
be quoted; (b) subtracting a pro rata share of subaccount expenses accrued over
the seven-day period; (c) dividing the difference by the value of the subaccount
at the beginning of the period to obtain the base period return; and (d)
annualizing the results (i.e., multiplying the base period return by 365/7).
The value of the hypothetical subaccount includes the amount of any declared
dividends, the value of any shares purchased with any dividend paid during the
period and any dividends declared for such shares. The variable subaccount's
yield does not include any realized or unrealized gains or losses, nor does it
include the effect of any applicable surrender charge.
Calculation of compound yield begins with the same base period return used in
the calculation of yield, which is then annualized to reflect compounding
according to the following formula:
Compound Yield =[(Base Period Return + 1) x (365/7)] - 1
Calculation of Yield for the subaccounts investing in income funds
For the subaccounts investing in income funds quotations of yield will be based
on all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and will be computed by
dividing net investment income per accumulation unit by the value of an
accumulation unit on the last day of the period, according to the following
formula:
YIELD = 2[(a-b + 1)6 - 1]
cd
where: a = dividends and investment income earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of accumulation units
outstanding during the period that were entitled to
receive dividends
d = the maximum offering price per accumulation unit on the
last day of the period
Yield on the subaccount is earned from the increase in the net asset value of
shares of the fund in which the subaccount invests and from dividends declared
and paid by the fund, which are automatically invested in shares of the fund.
<PAGE>
Calculation of Average Annual Total Return
Quotations of average annual total return for a subaccount will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in the annuity over a period of one, five and 10 years (or, if less,
up to the life of the account), calculated according to the following formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the one-, five-, or
10-year (or other) period at the end of the one,
five-, or 10-year (or other) period (or fractional
portion thereof)
The following performance figures are calculated on the basis of historical
performance of each fund. We show performance from the commencement date of the
funds as if the annuity had existed at that time. Past performance does not
guarantee future results. No performance information is provided for the
subaccounts because they had no activity in 1997.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Period Ended Dec. 31, 1997
Average Annual Total Return with Withdrawal
Performance Since
Commencement of the Fund**
Since
Commencement
Subaccount investing in: 1 Year 5 Year 10 Year (Fund)
- -----------------------
<S> <C> <C>
AIM V.I.
Growth and Income Fund (5/94)* 16.82% -- -- 19.68%
International Equity Fund (5/93) -1.37% -- -- 10.47%
Value Fund (5/93) 14.87% -- -- 17.45%
AMERICAN CENTURY
VP Income and Growth (10/97) -- -- -- 0.72%
VP Value (5/96) 17.22% -- -- 15.29%
GT GLOBAL
Variable Latin America Fund (2/93) 5.76% -- -- 9.13%
Variable New Pacific Fund (2/93) -45.46% -- -- -5.39%
IDS LIFE
Aggressive Growth Fund (1/92) 3.90% 10.66% -- 10.42%
Capital Resource Fund (10/81) 15.24% 10.17% 12.92% --
Growth Dimensions Fund (4/96) 15.46% -- -- 17.20%
International Equity Fund (1/92) -5.27% 8.19% -- 6.49%
Managed Fund (4/86) 10.67% 10.95% 11.91% --
Moneyshare Fund (10/81) -3.02% 2.20% 3.65% --
Special Income Fund (10/81) 0.34% 7.40% 7.96% --
JANUS ASPEN SERIES
Balanced Portfolio (9/93) 13.28% -- -- 13.07%
Worldwide Growth Portfolio (9/93) 13.33% -- -- 20.05%
OCC ACCUMULATION TRUST
Equity Portfolio (8/88) 17.74% 17.27% -- 16.22%
Managed Portfolio (8/88) 13.42% 17.60% -- 18.61%
Small Cap Portfolio (8/88) 13.42% 12.40% -- 14.05%
U.S. Government Income Portfolio (1/95) -1.29% -- -- 4.16%
OPPENHEIMER VARIABLE ACCOUNT
Growth Fund (4/85) 17.80% 16.47% 14.53% --
High Income Fund (4/86) 3.56% 11.62% 12.36% --
PUTNAM VT - Class IA Shares
Diversified Income Fund (9/93) -0.99% -- -- 5.32%
Growth and Income Fund (2/88) 15.25% 16.73% -- 14.30%
High Yield Fund (2/88) 5.58% 10.45% -- 9.82%
New Opportunities Fund (5/94) 14.40% -- -- 21.14%
PUTNAM VT - Class IB Shares
Diversified Income Fund (9/93) -1.08% -- -- 5.05%
Growth and Income Fund (2/88) 15.12% 16.50% -- 14.63%
High Yield Fund (2/88) 5.47% 10.23% -- 9.55%
Voyager Fund (2/88) 17.45% 16.89% -- 16.03%
* (Commencement date of the fund)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 1.25% mortality and expense risk fee and a
0.15% variable account administrative charge.
<PAGE>
Average Annual Total Return without Withdrawal
Performance Since
Commencement of the Fund**
Since
Commencement
Subaccount investing in: 1 Year 5 Year 10 Year (Fund)
- -----------------------
AIM V.I.
Growth and Income Fund (5/94)* 23.82% -- -- 20.37%
International Equity Fund (5/93) 5.30% -- -- 10.92%
Value Fund (5/93) 21.87% -- -- 17.81%
AMERICAN CENTURY
VP Income and Growth (10/97) -- -- -- 7.54%
VP Value (5/96) 24.22% -- -- 21.29%
GT GLOBAL
Variable Latin America Fund (2/93) 12.76% -- -- 9.57%
Variable New Pacific Fund (2/93) -42.11% -- -- -4.90%
IDS LIFE
Aggressive Growth Fund (1/92) 10.90% 11.06% -- 10.63%
Capital Resource Fund (10/81) 22.24% 10.58% 12.92% --
Growth Dimensions Fund (4/96) 22.46% -- -- 20.62%
International Equity Fund (1/92) 1.11% 8.63% -- 6.74%
Managed Fund (4/86) 17.67% 11.34% 11.91% --
Moneyshare Fund (10/81) 3.52% 2.75% 3.65% --
Special Income Fund (10/81) 7.14% 7.85% 7.96% --
JANUS ASPEN SERIES
Balanced Portfolio (9/93) 20.28% -- -- 13.54%
Worldwide Growth Portfolio (9/93) 20.33% -- -- 20.43%
OCC ACCUMULATION TRUST
Equity Portfolio (8/88) 24.74% 17.59% -- 16.22%
Managed Portfolio (8/88) 20.42% 17.91% -- 18.61%
Small Cap Portfolio (8/88) 20.42% 12.77% -- 14.05%
U.S. Government Income Portfolio (1/95) 5.39% -- -- 5.72%
OPPENHEIMER VARIABLE ACCOUNT
Growth Fund (4/85) 24.80% 16.79% 14.53% --
High Income Fund (4/86) 10.56% 12.01% 12.36% --
PUTNAM VT - Class IA Shares
Diversified Income Fund (9/93) 5.71% -- -- 5.91%
Growth and Income Fund (2/88) 22.25% 17.05% -- 14.30%
High Yield Fund (2/88) 12.58% 10.85% -- 9.82%
New Opportunities Fund (5/94) 21.40% -- -- 21.81%
PUTNAM VT - Class IB Shares
Diversified Income Fund (9/93) 5.61% -- -- 5.64%
Growth and Income Fund (2/88) 22.12% 16.83% -- 14.63
High Yield Fund (2/88) 12.47% 10.64% -- 9.55%
Voyager Fund (2/88) 24.45% 17.21% -- 16.03%
*(Commencement date of the fund)
**Current applicable charges deducted from fund performance include a 1.25%
mortality and expense risk fee and a 0.15% variable account administrative
charge.
</TABLE>
<PAGE>
Aggregate Total Return
Aggregate total return represents the cumulative change in value of an
investment for a given period (reflecting change in a subaccount's accumulation
unit value) and is computed by the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the one-, five-, or
10-year (or other) period at the end of the one-,
five-, or 10-year (or other) period (or fractional
portion thereof)
The Securities and Exchange Commission (SEC) requires that an assumption be made
that the contract owner withdraws the entire contract at the end of the one-,
five- and 10- year periods (or, if less, up to the life of the subaccount) for
which performance is required to be calculated. In addition, performance figures
may be shown without the deduction of a withdrawal charge.
Total return figures reflect the deduction of all applicable charges including
the contract administrative charge, the variable account administrative charge,
and mortality and expense risk fee.
Performance of the subaccount may be quoted or compared to rankings, yields, or
returns or used in variable annuity accumulation or settlement illustrations as
published or prepared by independent rating or statistical services or
publishers or publications such as The Bank Rate Monitor National Index,
Barron's, Business Week, CDA Technologies, Donoghue's Money Market Fund Report,
Financial Services Week, Financial Times, Financial World, Forbes, Fortune,
Global Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News & World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
The following calculations are done separately for each of the subaccounts of
the variable account. The separate monthly payouts, added together, make up your
total variable annuity payout.
<PAGE>
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your annuity as of the valuation date seven
days before the retirement date; then
o apply the result to the annuity table contained in the contract or another
table at least as favorable. The annuity table shows the amount of the
first monthly payment for each $1,000 of value which depends on factors
built into the table, as described below.
Annuity Units: The value of your subaccount is then converted to annuity units.
To compute the number credited to you, we divide the first monthly payment by
the annuity unit value (see below) on the valuation date on (or next day
preceding) the seventh calendar day before the retirement date. The number of
units in your subaccount is fixed. The value of the units fluctuates with the
performance of the underlying mutual fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date on or immediately preceding
the seventh calendar day before the payout is due; by
o the fixed number of annuity units credited to you.
Annuity Table: The table shows the amount of the first monthly payment for each
$1,000 of contract value according to the age and, when applicable, the sex of
the annuitant. (Where required by law, we will use a unisex table of settlement
rates.) The table assumes that the contract value is invested at the beginning
of the annuity payout period and earns a 5% rate of return, which is reinvested
and helps to support future payouts.
Annuity Unit Values: This value was originally set at $1 for each subaccount.
To calculate later value we multiply the last annuity value by the product of:
o the net investment factor; and
o the neutralizing factor. The purpose of the neutralizing factor is to
offset the effect of the assumed investment rate built into the annuity
table. With an assumed investment rate of 5%, the neutralizing factor is
0.999866 for a one day valuation period.
Net Investment Factor:
This value is determined by:
o adding the underlying mutual fund's current net asset value per share plus
per-share amount of any current dividend or capital gain distribution; then
o dividing that sum by the previous net asset value per share; and
o subtracting the percentage factor representing the mortality and expense
risk fee and the variable account administrative charge from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the net
investment factor may be greater or less than one, and the accumulation unit
value may increase or decrease. You bear this investment risk in a variable
subaccount.
<PAGE>
The Fixed Account
Your fixed annuity payout amounts are guaranteed. Once calculated, your payout
will remain the same and never change. To calculate your annuity payouts we:
o take the value of your fixed account at the retirement date or the date you
have selected to begin receiving your annuity payouts; then
o using an annuity table, we apply the value according to the annuity payout
plan you select; and
o the annuity payout table we use will be the one in effect at the time you
choose to begin your annuity payouts. The values in the table will be equal
to or greater than the table in your contract.
RATING AGENCIES
The following chart reflects the ratings given to American Centurion Life by
independent rating agencies. These agencies evaluate the financial soundness and
claims-paying ability of insurance companies based on a number of different
factors. This information does not relate to the management or performance of
the variable subaccounts of the annuities. This information relates only to the
fixed account and reflects American Centurion Life's ability to make annuity
payouts and to pay death benefits and other distributions from the annuity.
Rating agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
PRINCIPAL UNDERWRITER
The principal underwriter for the variable accounts is American Express
Financial Advisors Inc. which offers the variable contracts on a continuous
basis.
INDEPENDENT AUDITORS
The financial statements of American Centurion Life Assurance Company (a
wholly-owned subsidiary of IDS Life Insurance Company) as of December 31, 1997
and 1996, and for each of the three years in the period ended December 31, 1997
appearing in this Statement of Additional Information have been audited by Ernst
& Young LLP, independent auditors, as stated in their report appearing herein.
<PAGE>
SAVING FOR RETIREMENT
You may have to save more for retirement because the average person lives 17
years in retirement. Social security and pensions will not cover your expenses
in retirement. Sixty cents of every retirement dollar must come from your
personal savings.
Sources: Social Security Administration, U.S. Department of Health
and Human Services, 1994, p. 88.
PROSPECTUS
The prospectus, dated Nov. 4, 1998, is hereby incorporated in this SAI by
reference.
<PAGE>
Report of Independent Auditors
The Board of Directors
American Centurion Life Assurance Company
We have audited the accompanying balance sheets of American Centurion Life
Assurance Company (a wholly owned subsidiary of IDS Life Insurance Company) as
of December 31, 1997 and 1996, and the related statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Centurion Life
Assurance Company at December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
Ernst & Young LLP
February 5, 1998
Minneapolis, Minnesota
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
BALANCE SHEETS
December 31,
<TABLE><CAPTION>
ASSETS 1997 1996
- ------ ---- ----
(thousands)
<S> <C> <C>
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1997, $18,153; 1996, $19,958) $ 17,698 $ 19,579
Available for sale, at fair value (Amortized cost:
1997, $210,940; 1996, $134,631) 216,161 136,091
--------- ---------
Total Investments 233,859 155,670
Cash and cash equivalents 3,756 13,856
Amounts recoverable from reinsurance 2,728 2,728
Accrued investment income 3,120 2,104
Deferred policy acquisition costs 9,280 4,364
Other assets 1,591 55
Assets held in separate accounts 1,280 --
--------------------
Total assets $255,614 $178,777
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Future policy benefits:
Fixed annuities $206,531 $139,362
Traditional life insurance 1,884 1,883
Disability income insurance 225 225
Policy claims and other policyholders' funds 2,305 691
Amounts due to broker 4,941 4,916
Deferred income taxes 2,391 592
Other liabilities 741 34
Liabilities related to separate accounts 1,280 --
---------------------
Total liabilities 220,298 147,703
---------- ----------
Stockholder's equity:
Capital stock, $10 par value per share;
100,000 shares authorized,
issued and outstanding 1,000 1,000
Additional paid-in capital 16,600 16,600
Net unrealized gain on investments 3,139 863
Retained earnings 14,577 12,611
----------- ----------
Total stockholder's equity 35,316 31,074
----------- ----------
Total liabilities and stockholder's equity $255,614 $178,777
=========== ==========
See accompanying notes.
</TABLE>
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF INCOME
Years ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -----
(thousands)
<S> <C> <C> <C>
Revenues:
Net investment income $ 13,331 $ 8,851 $ 7,734
Contractholder charges 318 306 299
Management and other fees 8 -- --
Net realized gain (loss) on investments 25 (57) 112
-------- ------- -------
Total revenues 13,682 9,100 8,145
-------- ------ ------
Benefits and expenses:
Death and other benefits on
investment contracts 2 -- --
Interest credited on investment contracts 8,887 5,849 4,670
Amortization of deferred policy
acquisition costs 114 21 294
Other operating expenses 1,324 1,387 710
-------- ------ -------
Total expenses 10,327 7,257 5,674
------- ------ ------
Income before income taxes 3,355 1,843 2,471
Income taxes 1,389 678 885
------- ------- -------
Net income $1,966 $ 1,165 $ 1,586
======= ======= =======
See accompanying notes.
</TABLE>
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended December 31, 1997
(thousands)
<TABLE>
<CAPTION>
Additional Net Unrealized
Capital Paid-In Gain (Loss) on Retained
Stock Capital Investments Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $1,000 $ 6,600 $ (1,730) $ 9,860 $15,730
Net income -- -- -- 1,586 1,586
Change in net unrealized
gain (loss) on investments -- -- 3,934 -- 3,934
-------- ---------- ------ ----------- --------
Balance, December 31, 1995 1,000 6,600 2,204 11,446 21,250
Net income -- -- -- 1,165 1,165
Change in net unrealized
gain (loss) on investments -- -- (1,341) (1,341)
--
Capital contribution from parent -- 10,000 -- -- 10,000
-------- ------- ---------- ------------ ---------
Balance, December 31, 1996 1,000 16,600 863 12,611 31,074
Net income -- -- -- 1,966 1,966
Change in net unrealized
gain (loss) on investments -- -- 2,276 -- 2,276
--------- ---------- ------- ------------ --------
Balance, December 31, 1997 $1,000 $16,600 $ 3,139 $14,577 $35,316
======== ========== ======= ========== ======
See accompanying notes.
</TABLE>
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF CASH FLOWS
Years ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ------
(thousands)
<S>
Cash flows from operating activities: <C> <C> <C>
Net income $ 1,966 $ 1,165 $ 1,586
Adjustments to reconcile net income to
net cash (used in) provided by operating activities:
Change in amounts recoverable from reinsurers -- 674 166
Change in accrued investment income (1,016) (604) (270)
Change in deferred policy acquisition
costs, net (5,175) (3,177) 252
Change in other assets (1,536) 75 1,015
Change in liabilities for future policy
benefits for traditional life and
disability income insurance 1 (1,696) --
Change in policy claims and other
policyholders' funds 1,614 428 (97)
Deferred income tax provision (benefit) 574 1,457 (640)
Change in other liabilities 707 (1,087) 386
Amortization of premium
(accretion of discount), net 7 56 101
Net realized (gain) loss on investments (25) 57 (112)
Other, net 7 -- (75)
----------- ----------- ----------
Net cash (used in) provided by operating activities (2,876) (2,652) 2,312
----------- ----------- ----------
Cash flows from investing activities: Fixed maturities held to maturity:
Purchases -- -- (1,980)
Maturities 1,847 2,603 3,443
Sales -- 477 --
Fixed maturities available for sale:
Purchases (86,006) (59,425) (22,290)
Maturities 8,438 7,261 4,819
Sales 1,303 1,572 496
Change in due to brokers 24 4,916 (1,446)
----------- --------- ---------
Net cash used in investing activities (74,394) (42,596) (16,958)
----------- --------- ---------
Cash flows from financing activities: Activity related to investment contracts:
Considerations received 82,656 55,594 20,876
Surrenders and other benefits (24,373) (14,870) (12,691)
Interest credited to account balances 8,887 5,849 4,670
Capital contribution from parent -- 10,000 --
------------ -------- -------------
Net cash provided by financing activities 67,170 56,573 12,855
------ -------- --------
Net (decrease) increase in cash and cash equivalents (10,100) 11,325 (1,791)
Cash and cash equivalents at beginning of year 13,856 2,531 4,322
-------- ----------- -----------
Cash and cash equivalents at end of year $ 3,756 $ 13,856 $ 2,531
======== =========== ===========
See accompanying notes.
</TABLE>
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
($ thousands)
1. Summary of significant accounting policies
Nature of business
American Centurion Life Assurance Company (the Company) is a stock life
insurance company that is domiciled in New York and licensed to transact
insurance business in New York, Alabama and Delaware. The Company's
principal product is deferred annuities which are issued primarily to
individuals who are New York residents. It offers single premium and
installment premium deferred annuities on both a fixed and variable dollar
basis. Immediate annuities are offered as well.
Basis of presentation
The Company is a wholly owned subsidiary of IDS Life Insurance Company (IDS
Life), which is a wholly owned subsidiary of American Express Financial
Corporation (AEFC). AEFC is a wholly owned subsidiary of American Express
Company. The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which vary in
certain respects from reporting practices prescribed or permitted by the
New York Department of Insurance (see Note 8).
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and carried
at amortized cost. All other fixed maturities are classified as available
for sale and carried at fair value. Unrealized gains and losses on
securities classified as available for sale are reported as a separate
component of stockholder's equity, net of deferred income taxes.
Realized investment gain or loss is determined on an identified cost basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to recognize
interest income. Prepayment estimates are based on information received
from brokers who deal in mortgage-backed securities.
When evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost which approximates
fair value.
<PAGE>
1. Summary of significant accounting policies (continued)
Supplementary information to the statements of cash flows for the years
ended December 31, is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ------
<S> <C> <C> <C>
Cash paid during the year for:
Income taxes $2,404 $257 $531
Interest on borrowings 7 -- --
</TABLE>
Recognition of profits on fixed annuity contracts
Profits on certain fixed deferred annuities are recognized by the Company
over the lives of the contracts, using primarily the retrospective deposit
method. This method recognizes profits over the lives of the policies in
proportion to the estimated gross profits expected to be realized. Profits
on other fixed deferred annuities are recognized by the Company over the
lives of the contracts, using the interest method. Under the interest
method, profits represent the excess of investment income earned from
investment of contract considerations over interest credited to contract
owners and other expenses.
Contractholder charges include fees collected regarding the issue and
administration of annuity contracts.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation, policy
issue costs, and certain sales expenses, including direct response
advertising costs, have been deferred on annuity contracts. The deferred
acquisition costs for single premium deferred annuities and certain
installment annuities are amortized in relation to accumulation values and
surrender charge revenue. The costs for other installment annuities are
amortized as a percentage of the estimated gross profits expected to be
realized on the policies.
Liabilities for future policy benefits
Liabilities for single premium deferred annuities and installment annuities
are accumulation values. Liabilities for fixed annuities in a benefit
status are based on the 1983a Table with interest at 6.25%.
Federal income taxes
The Company's taxable income is included in the consolidated federal income
tax return of American Express Company. The Company provides for income
taxes on a separate return basis, except that, under an agreement between
AEFC and American Express Company, tax benefit is recognized for losses to
the extent they can be used on the consolidated tax return. It is the
policy of AEFC and its subsidiaries that AEFC will reimburse subsidiaries
for all tax benefits.
<PAGE>
Included in other liabilities at December 31, 1997 and 1996 are $1,532 and
$185, respectively, receivable from IDS Life for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity contract owners. The Company
receives mortality and expense risk fees from the variable annuity separate
accounts.
<PAGE>
1. Summary of significant accounting policies (continued)
The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of
the annuitants and the beneficiaries from the mortality assumptions
implicit in the annuity contracts. The Company makes periodic fund
transfers to, or withdrawals from, the separate accounts for such actuarial
adjustments for variable annuities that are in the benefit payment period.
Reclassifications
Certain 1996 and 1995 amounts have been reclassfied to conform to the 1997
presentation.
2. Investments
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available. Estimated
values are determined by established procedures involving, among other
things, review of market indices, price levels of current offerings of
comparable issues, price estimates and market data from independent brokers
and financial files.
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C>
Corporate bonds and obligations $ 16,176 $ 368 $ 26 $ 16,518
Mortgage-backed securities 1,522 113 -- 1,635
---------- -------- --------- ----------
$ 17,698 $ 481 $ 26 $ 18,153
========= ======== ========= =========
Available for sale
U.S. Government agency obligations $ 2,085 $ 15 $ 1 $ 2,099
State and municipal obligations 1,000 31 -- 1,031
Corporate bonds and obligations 118,450 4,141 356 122,235
Mortgage-backed securities 89,405 1,544 153 90,796
---------- -------- --------- ----------
$210,940 $ 5,731 $ 510 $216,161
======== ======= ========= ========
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1996 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Corporate bonds and obligations $ 17,995 $ 421 $ 154 $ 18,262
Mortgage-backed securities 1,584 112 -- 1,696
---------- -------- --------- ----------
$ 19,579 $ 533 $ 154 $ 19,958
========= ======== ======== =========
Available for sale
U.S. Government agency obligations $ 2,095 $ -- $ 32 $ 2,063
State and municipal obligations 1,000 21 -- 1,021
Corporate bonds and obligations 74,327 1,808 369 75,766
Mortgage-backed securities 57,209 638 606 57,241
--------- -------- ------- ---------
$134,631 $ 2,467 $ 1,007 $136,091
======== ======= ======= ========
</TABLE>
<PAGE>
2. Investments (continued)
The amortized cost and fair value of investments in fixed maturities at
December 31, 1997 by contractual maturity are shown below. Actual
maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
Amortized Fair
Held to maturity Cost Value
<S> <C> <C>
Due in one year or less $ 3,499 $ 3,570
Due from one to five years 9,260 9,440
Due from five to ten years 1,945 2,041
Due in more than ten years 1,472 1,467
Mortgage-backed securities 1,522 1,635
--------- ---------
$ 17,698 $ 18,153
========= =========
Amortized Fair
Available for sale Cost Value
Due in one year or less $ 2,598 $ 2,613
Due from one to five years 19,710 20,467
Due from five to ten years 55,879 58,219
Due in more than ten years 43,348 44,066
Mortgage-backed securities 89,405 90,796
----------- ----------
$ 210,940 $ 216,161
=========== ==========
</TABLE>
There were no sales of fixed maturities classified as held to maturity in
1997 and 1995. During the year ended December 31, 1996, fixed maturities
classified as held to maturity were sold with amortized cost of $500,
respectively. Net gains and losses on these sales were not significant. The
sales of these fixed maturities were due to significant deterioration in
the issuers' credit worthiness.
In addition, fixed maturities available for sale were sold during 1997 with
proceeds of $1,303 and gross realized gains and losses of $14 and $nil,
respectively. Fixed maturities available for sale were sold during 1996
with proceeds of $1,572 and gross realized gains and losses of $36 and $71,
respectively. Fixed maturities available for sale were sold during 1995
with proceeds of $496 and gross realized gains and losses of $nil and $4,
respectively.
At December 31, 1997, bonds carried at $1,085 were on deposit with various
states as required by law.
Securities are rated by Moody's and Standard & Poor's (S&P), except for
approximately $28 million of securities which are rated by American Express
Financial Corporation's internal analysts using criteria similar to Moody's
and S&P. A summary of investments in fixed maturities, at amortized cost,
by rating on December 31 is as follows:
<TABLE>
<CAPTION>
Rating 1997 1996
---------------------- -------- -------
<S> <C> <C>
Aaa/AAA $ 92,682 $ 60,374
Aa/AA 3,890 4,648
Aa/A 1,952 1,469
A/A 28,258 26,768
A/BBB 7,802 4,988
Baa/BBB 61,661 35,071
Baa/BB 4,011 6,977
Below investment grade 28,382 13,915
-------- --------
$228,638 $154,210
======== ========
</TABLE>
<PAGE>
2. Investments (continued)
At December 31, 1997, approximately 89 percent of the securities rated
Aaa/AAA are GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of
any other issuer are greater than ten percent of stockholder's equity.
Net investment income for the years ended December 31 is summarized as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Interest on fixed maturities $ 13,818 $ 9,170 $ 7,561
Interest on cash equivalents 276 308 157
Other 1 16 21
--------- --------- --------
14,095 9,494 7,739
Less investment expenses 764 643 5
--------- --------- --------
$ 13,331 $ 8,851 $ 7,734
========= ========= ========
</TABLE>
Net realized gain (loss) on investments was $25, $(57) and $112 for the
years ended December 31, 1997, 1996 and 1995, respectively, and was
entirely due to sales of fixed maturities.
Changes in net unrealized appreciation (depreciation) of investments for
the years ended December 31 are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Fixed maturities available for sale $ 3,761 $ (1,931) $ 6,408
</TABLE>
3. Income taxes
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the Internal Revenue Code
provisions applicable to life insurance companies.
The income tax expense (benefit) for the years ended December 31, consists
of the following:
<TABLE>
<CAPTION>
1997 1996 1995
------- ----- ------
<S> <C> <C> <C>
Federal income taxes:
Current $ 486 $ (819) $1,495
Deferred 574 1,457 (640)
------- ----- ------
1,060 638 855
State income taxes-current 329 40 30
------- ----- ------
Income tax expense $ 1,389 $ 678 $ 885
======= ===== ======
</TABLE>
<PAGE>
3. Income taxes (continued)
Increases to the federal income tax provision applicable to pretax income
based on the statutory rate for the years ended December 31, are
attributable to:
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------------------------------------
Provision Rate Provision Rate Provision Rate
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes based
on the statutory rate $1,174 35.0% $645 35.0% $ 865 35.0%
Increases are
attributable to :
State tax, net 214 6.4 26 1.4 19 0.6
Other, net 1 -- 7 0.4 1
------ ---- ----- ----- ------ ----
--
Federal income taxes $1,389 41.4% $678 36.8% $ 885 35.6%
====== ===== ===== ==== ====== ====
</TABLE>
Significant components of the Company's deferred income tax assets and
liabilities as of December 31 are as follows:
Deferred income tax assets: 1997 1996
------ -----
Policy reserves $ 1,616 $ 738
Deferred tax income liabilities:
Deferred policy acquisition costs 2,144 802
Investments 1,703 478
Other 160 50
-------- -------
Total deferred income tax liabilities 4,007 1,330
------ ------
Net deferred income tax liabilities $ 2,391 $ 592
======= =====
The Company is required to establish a valuation allowance for any portion
of the deferred income tax assets that management believes will not be
realized. In the opinion of management, it is more likely than not that the
Company will realize the benefit of the deferred income tax assets and,
therefore, no such valuation allowance has been established.
4. Stockholder's equity
Retained earnings available for distribution as dividends to the parent are
limited to the Company's surplus as determined in accordance with
accounting practices prescribed by the New York Department of Insurance.
All dividend distributions must be approved by the New York Department of
Insurance. Statutory unassigned surplus aggregated $6,278 and $7,220 as of
December 31, 1997 and 1996, respectively (see note 8 for a reconciliation
of net income and stockholder's equity per the accompanying financial
statements to statutory net income and surplus).
<PAGE>
5. Related party transactions
The Company participates in the American Express Retirement Plan which
covers all permanent employees age 21 and over who have met certain
employment requirements. Employer contributions to the plan are based on
participants' age, years of service and total compensation for the year.
Funding of retirement costs for this plan complies with the applicable
minimum funding requirements specified by ERISA. The Company's share of the
total net periodic pension cost was $nil in 1997, 1996 and 1995.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a percent
of either each employee's eligible compensation or basic contributions.
Costs of these plans charged to operations in 1997, 1996 and 1995 were $23,
$19 and $13, respectively.
The Company participates in defined benefit health care plans of AEFC that
provide health care and life insurance benefits to retired employees. The
plans include participant contributions and service related eligibility
requirements. Upon retirement, such employees are considered to have been
employees of AEFC. AEFC expenses these benefits and allocates the expenses
to its subsidiaries. Accordingly, costs of such benefits to the Company are
included in employee compensation and benefits and cannot be identified on
a separate company basis.
Charges by IDS Life for use of joint facilities and other services
aggregated $2,536, $3,142 and $105 for 1997, 1996 and 1995, respectively.
Certain of these costs are included in deferred policy acquisition costs.
6. Commitments and contingencies
The Company has an agreement whereby it ceded 100 percent of a block of
individual life insurance and individual annuities to an unaffiliated
company. At December 31, 1997 and 1996, traditional life insurance in-force
aggregated $216,961 and $242,209, respectively, of which $216,726 and
$241,974 were reinsured at the respective year ends. Under all reinsurance
agreements, premiums ceded to reinsurers amounted to $1,346, $1,351 and
$1,384 for the years ended December 31, 1997, 1996 and 1995. Reinsurance
recovered from reinsurers amounted to $718, $2,027 and $929 for the years
ended December 31, 1997, 1996 and 1995. Reinsurance contracts do not
relieve the Company from its primary obligations to policyholders.
The economy and other factors have caused an increase in the number of
insurance companies that are under regulatory supervision. This
circumstance has resulted in substantial assessments by state guaranty
associations to cover losses to policyholders of insolvent or rehabilitated
companies. The Company expects additional future assessments related to
past insolvencies and rehabilitations. Management has estimated the impact
of future assessments on the Company's financial position and recorded a
reserve for such future assessments.
<PAGE>
7. Fair values of financial instruments
The Company discloses fair value information for most on- and off-balance
sheet financial instruments for which it is practicable to estimate that
value. Fair value of life insurance obligations, receivables and all
non-financial instruments, such as deferred acquisition costs are excluded.
Off-balance sheet intangible assets are also excluded. Management believes
the value of excluded assets and liabilities is significant. The fair value
of the Company, therefore, cannot be estimated by aggregating the amounts
presented.
<TABLE>
<CAPTION>
1997 1996
------- ------
Carrying Fair Carrying Fair
Financial Assets Amount Value Amount Value
<S> <C> <C> <C> <C>
Investments in fixed maturities (Note 2)
Held to maturity $ 17,698 $ 18,153 $ 19,579 $ 19,958
Available for sale 216,161 216,161 136,091 136,091
Cash and cash equivalents (Note 1) 3,756 3,756 13,856 13,856
Separate account assets 1,280 1,280 -- --
Financial Liabilities
Future policy benefits for fixed
annuities 206,516 200,209 139,352 136,332
Separate account liabilities 1,280 1,233 -- --
</TABLE>
At December 31, 1997 and 1996, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related
contracts carried at $15 and $10, respectively. The fair value of these
benefits is based on the status of the annuities at December 31, 1997 and
1996. The fair values of deferred annuities and separate account
liabilities are estimated as the carrying amount less applicable surrender
charges. The fair value for annuities in non-life contingent payout status
is estimated as the present value of projected benefit payments at rates
appropriate for contracts issued in 1997 and 1996.
<PAGE>
8. Statutory insurance accounting practices
Reconciliations of net income for the years ended December 31, 1997, 1996
and 1995 and stockholder's equity at December 31, 1997 and 1996, as shown
in the accompanying financial statements, to that determined using
statutory accounting practices are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ------
<S> <C> <C> <C>
Net income, per accompanying
financial statements $ 1,966 $ 1,165 $ 1,586
Deferred policy acquisition costs (5,175) (3,177) 252
Adjustments of future policy
benefit liabilities 2,222 (57) (356)
Deferred federal income taxes 574 1,457 (640)
Provision for losses on investments -- -- (12)
IMR gain/loss transfer and amortization (16) 47 (46)
Provision for other losses -- -- (837)
Prior period adjustment -- (313) 328
Other, net 255 16 (27)
------- ------- -------
Net (loss) income, on basis of
statutory accounting practices $ (174) $ (862) $ 248
======= ======= =======
Stockholder's equity, per accompanying
financial statements $35,316 $31,074
Deferred policy acquisition costs (9,280) (4,364)
Adjustments of future policy benefit liabilities 5,367 3,145
Adjustments of reinsurance ceded reserves (2,728) (2,728)
Deferred federal income taxes 2,391 592
Asset valuation reserve (2,107) (1,287)
Net unrealized gain on investments (5,220) (1,460)
Interest maintenance reserve (79) (62)
Other, net 219 (90)
------- -------
Stockholder's equity on basis of statutory
accounting practices $23,879 $24,820
======= =======
</TABLE>
<PAGE>
9. Year 2000 Issue (unaudited)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Company. All of the
systems used by the Company are maintained by AEFC and are utilized by multiple
subsidiaries and affiliates of AEFC. The Company's business is heavily dependent
upon AEFC's computer systems and has significant interactions with systems of
third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to the Company, has been conducted to identify the
major systems that could be affected by the Year 2000 issue. Steps are being
taken to resolve any potential problems including modification to existing
software and the purchase of new software. These measures are scheduled to be
completed and tested on a timely basis. AEFC's goal is to complete internal
remediation and testing of each system by the end of 1998 and to continue
compliance efforts through 1999.
AEFC is evaluating the Year 2000 readiness of advisors and other third parties
whose system failures could have an impact on the Company's operations. The
potential materiality of any such impact is not known at this time.
<PAGE>
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B of this Registration Statement:
The audited financial statements of American Centurion Life Assurance
Company:
- Balance sheets as of Dec. 31, 1997 and 1996; and
- Related statements of income, stockholder's equity and cash flows
for the years ended Dec. 31, 1997, 1996, and 1995.
- Notes to Financial Statements
- Report of Independent Auditors dated Feb. 5, 1998
(b) Exhibits:
1. Certificate establishing the ACL Variable Annuity Account 2 dated
December 1, 1995, filed electronically as Exhibit 1 to Pre-Effective
Amendment No. 1 to Registration Statement No. 333-00519, filed on or
about February 5, 1997, is incorporated herein by reference.
2. Not applicable.
3. Form of Variable Annuity Distribution Agreement filed electronically
as Exhibit 3 to Pre-Effective Amendment No. 2 to Registration
Statement No. 333-00519, filed on or about April 30, 1997, is
incorporated herein by reference.
4.1 Form of Flexible Payment Deferred Annuity Contract (form 45054), filed
electronically as Exhibit 4.1 to Pre-Effective Amendment No. 2 to
Registration Statement No. 333-00519, filed on or about April 30,
1997, is incorporated herein by reference.
4.2 Form of Annuity Endorsement (form 45065) is filed electronically
herewith.
5. Application for American Centurion Life Variable Annuity (form 45055),
filed electronically as Exhibit 5.1 to Pre-Effective Amendment No. 2
to Registration Statement No. 333-00519, filed on or about April 30,
1997, is incorporated herein by reference.
6.1 Amended and Restated By-Laws of American Centurion Life Assurance
Company, filed electronically as Exhibit 6.1 to Pre-Effective
Amendment No. 1 to Registration Statement No. 333-00519, filed on or
about February 5, 1997, is incorporated herein by reference.
<PAGE>
6.2 Amended and Restated Articles of Incorporation of American Centurion
Life Assurance Company, filed electronically as Exhibit 6.2 to
Pre-Effective Amendment No. 1 to Registration Statement No. 333-00519,
filed on or about February 5, 1997, is incorporated herein by
reference.
6.3 Emergency By-Laws of American Centurion Life Assurance Company, filed
electronically as Exhibit 6.3 to Pre-Effective Amendment No. 1 to
Registration Statement No. 333-00519, filed on or about February 5,
1997, is incorporated herein by reference.
7. Not applicable.
8.1 Copy of Amendment 1 to Participation Agreement among Putnam Variable
Trust, Putnam Mutual Funds Corp. and American Centurion Life Assurance
Company, dated October 14, 1998, is filed electronically herewith.
Copy of Participation Agreement among Putnam Variable Trust, Putnam
Mutual Funds Corp. and American Centurion Life Assurance Company,
dated April 30, 1997, filed electronically as Exhibit 8.1 to
Pre-Effective Amendment No. 3 to Registration Statement No. 333-00519,
is incorporated herein by reference.
8.2 Copy of Amendment No. 1 to Participation Agreement by and among OCC
Accumulation Trust, American Centurion Life Assurance Company and OCC
Distributors, dated October 14, 1998, is filed electronically
herewith. Copy of Participation Agreement by and among OCC
Accumulation Trust and American Centurion Life Assurance Company and
OCC Distributors, dated September 17, 1997, filed electronically as
Exhibit 8.2 to Pre-Effective Amendment No. 3 to Registration Statement
No. 333-00519, is incorporated herein by reference.
8.3 Form of Extension of Participation Agreement Termination date among
American Centurion Life Assurance Company, G.T. Global Variable
Investment Trust, G.T. Global Variable Investment Series and G.T.
Global Inc., dated October 29, 1998, is filed electronically herewith.
Copy of Notice of Termination of Participation Agreement among
American Centurion Life Assurance Company, G.T. Global Variable
Investment Trust, G.T. Global Variable Investment Series and G.T.
Global, Inc., dated August 25, 1998, is filed electronically herewith.
Copy of Participation Agreement among American Centurion Life
Assurance Company and GT Global Variable Investment Trust and GT
Global Variable Investment Series and GT Global, Inc., dated May 30,
1997, filed electronically as Exhibit 8.3 to Pre-Effective Amendment
No. 3 to Registration Statement No. 333-00519, is incorporated herein
by reference.
<PAGE>
8.4 Copy of Amendment No. 1 to Fund Participation Agreement, by and among
American Centurion Life Assurance Company, American Century Investment
Management, Inc. and American Century Variable Portfolios Inc., dated
August 21, 1998, is filed electronically herewith. Copy of
Participation Agreement by and among American Centurion Life Assurance
Company, TCI Portfolios, Inc. and Investors Research Corporation,
dated July 31, 1996, filed electronically as Exhibit 8.2 to
Post-Effective Amendment No. 2 to Registration Statement No.
333-00041, is incorporated herein by reference.
8.5 Copy of Amendment to Participation Agreement dated October 23, 1996
between Janus Aspen Series and American Centurion Life Assurance
Company, dated October 8, 1997, is filed electronically herewith. Copy
of Participation Agreement between Janus Aspen Series and American
Centurion Life Assurance Company, dated October 23, 1997, filed
electronically as Exhibit 8.3 to Post-Effective Amendment No. 2 to
Registration Statement No. 333-00041, is incorporated herein by
reference.
8.6 Copy of Participation Agreement among AIM Variable Insurance Funds,
Inc., AIM Distributors, Inc., American Centurion Life Assurance
Company and American Express Financial Advisors Inc., dated October
30, 1997, is filed electronically herewith.
8.7 Copy of Participation Agreement among Oppenheimer Variable Account
Funds, Oppenheimerfunds, Inc., and American Centurion Life Assurance
Company, dated September 4, 1998, is filed electronically herewith.
9. Opinion of counsel and consent to its use as to the legality of the
securities being registered is filed electronically herewith.
10. Consent of Independent Auditors is filed electronically herewith.
11. Financial Statement Schedules and Report of Independent Auditors is
filed electronically herewith.
Financial Statement Schedules:
Schedule I - Consolidated Summary Of Investments Other
Than Investments In Related Parties
Schedule IV - Reinsurance
Report of Independent Auditors dated Feb. 5, 1998.
All other schedules to the Financial Statements required by Article 7
of Regulation S-X are not required under the related instructions or
are inapplicable and, therefore, have been omitted.
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 Pre-Effective Amendment No. 1 to
Registration Statement No. 333-00519, filed on or about February 5,
1997, is incorporated herein by reference.
<PAGE>
14. Financial Data Schedule is filed electronically herewith.
15.1 Power of Attorney to sign Amendments to this Registration Statement,
dated March 25, 1997, filed electronically as Exhibit 14.2 to
Pre-Effective Amendment No. 2 to Registration Statement No. 333-00519,
filed on or about April 30, 1997, is incorporated herein by reference.
15.2 Power of Attorney to sign Amendments to this Registration Statement,
dated April 8, 1998, filed electronically as Exhibit 15.2 to
Post-Effective Amendment No. 1 to Registration Statement No 333-00519,
filed on or about April 30, 1998, is incorporated herein by reference.
<PAGE>
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor (American Centurion Life Assurance Company)
Name Principal Business Address Positions and Offices with
Depositor
- ------------------------------------- ---------------------------------------- -----------------------------------
<S> <C> <C>
Doris A. Anfinson IDS Tower 10 Vice President
Minneapolis, MN 55440
Robert C. Auriema Technical Consultants Ltd. Director
Bayview Tower
Apt. 8G
80 Bay Street Landing
Staten Island, NY 10301
Timothy V. Bechtold IDS Tower 10 Director
Minneapolis, MN 55440
Maureen A. Buckley IDS Tower 10 Director, Chief Administrative
Minneapolis, MN 55440 Officer and Consumer Affairs
Officer
John R. Cattau American Express Tower Director
World Financial Center
New York, NY 10285
Douglas L. Forsberg IDS Tower 10 Director
Minneapolis, MN 55440
Clarence E. Galston IDS Tower 10 Director
Minneapolis, MN 55440
Jay C. Hatlestad IDS Tower 10 Vice President and Controller
Minneapolis, MN 55440
Jeffrey S. Horton IDS Tower 10 Vice President and Treasurer
Minneapolis, MN 55440
Richard W. Kling IDS Tower 10 Director
Minneapolis, MN 55440
Bruce A. Kohn IDS Tower 10 Counsel and Assistant Secretary
Minneapolis, MN 55440
David M. Kuplic IDS Tower 10 Vice President-Investments
Minneapolis, MN 55440
Eric L. Marhoun IDS Tower 10 General Counsel and Secretary
Minneapolis, MN 55440
Edward J. Muhl IDS Tower 10 Director
Minneapolis, MN 55440
Kenneth W. Nelson Tech Products, Inc. Director
15 Beach Street
Suite 304
Staten Island, NY 10304
Anne L. Segal IDS Tower 10 Director
Minneapolis, MN 55440
<PAGE>
Item 25. Directors and Officers of the Depositor (American Centurion Life Assurance Company) (continued)
Daniel J. Segner IDS Tower 10 Vice President-Investments
Minneapolis, MN 55440
Guerdon D. Smith Guerdon D. Smith & Company Director
P.O. Box 91739
Santa Barbara, CA 93190-1739
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
American Centurion Life Assurance Company is a wholly-owned
subsidiary of IDS Life Insurance Company which is a
wholly-owned subsidiary of American Express Financial
Corporation. American Express Financial Corporation is a
wholly-owned subsidiary of American Express Company (American
Express).
The following list includes the names of major subsidiaries of American Express.
<TABLE>
<CAPTION>
<S> <C>
Jurisdiction of
Name of Subsidiary Incorporation
I. Travel Related Services
American Express Travel Related Services Company, Inc. New York
II. International Banking Services
American Express Bank Ltd. Connecticut
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant (Con't)
III. Companies engaged in Financial Services
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 Corporation Minnesota
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 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
IDS Futures Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc. Massachusetts
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Utah Inc. Utah
IDS Insurance Agency of Wyoming Inc. Wyoming
IDS Life Insurance Company Minnesota
IDS Life Insurance Company of New York New York
IDS Management Corporation Minnesota
IDS Partnership Services Corporation Minnesota
IDS Plan Services of California, Inc. Minnesota
IDS Property Casualty Insurance Company Wisconsin
IDS Real Estate Services, Inc. Delaware
IDS Realty Corporation Minnesota
IDS Sales Support Inc. Minnesota
IDS Securities Corporation Delaware
Investors Syndicate Development Corp. Nevada
North Dakota Public Employee Payment Company Minnesota
</TABLE>
<PAGE>
Item 27. Number of Contract owners
As of Sept. 30, 1998, there were 93 contract owners of
qualified contracts and there were 232 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 directors, 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>
<TABLE>
<CAPTION>
Item 29(c).
Net Underwriting
Name of Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
<S> <C> <C> <C> <C>
American Express None None None None
Financial Advisors
Inc.
</TABLE>
Item 30. Location of Accounts and Records
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12205-0555
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Registrant undertakes that it will file a
post-effective amendment to this registration
statement as frequently as is necessary to ensure
that the audited financial statements in the
registration statement are never more than 16 months
old for so long as payments under the variable
annuity contracts may be accepted.
(b) Registrant undertakes that it will include either (1)
as part of any application to purchase a contract
offered by the prospectus, a space that an applicant
can check to request a Statement of Additional
Information, or (2) a post card or similar written
communication affixed to or included in the
prospectus that the applicant can remove to send for
a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of
Additional Information and any financial statements
required to be made available under this Form
promptly upon written or oral request to American
Centurion Life Contract Owner Service at the address
or phone number listed in the prospectus.
(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 all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Minneapolis, and State of Minnesota, on the 2nd day
of November, 1998.
ACL VARIABLE ANNUITY ACCOUNT 2
(Registrant)
By American Centurion Life Assurance Company
(Depositor)
By /s/ Stuart A. Sedlacek*
Stuart A. Sedlacek
Chairman and President
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed by the following persons in the capacities indicated
on the 2nd day of November, 1998.
Signature Title
/s/ Robert C. Auriema* Director
Robert C. Auriema
Director
Timothy V. Bechtold
Director
Maureen A. Buckley
Director
John R. Cattau
/s/ Douglas L. Forsberg* Director
Douglas L. Forsberg
/s/ Clarence E. Galston* Director
Clarence E. Galston
/s/ Jay C. Hatlestad* Vice President and Controller
Jay C. Hatlestad
/s/ Jeffrey S. Horton** Vice President
Jeffrey S. Horton and Treasurer
/s/ Richard W. Kling* Director
Richard W. Kling
<PAGE>
Signature Title
Director
Edward J. Muhl
/s/ Kenneth W. Nelson* Director
Kenneth W. Nelson
/s/ Stuart A. Sedlacek* Chairman and
Stuart A. Sedlacek President
/s/ Anne L. Segal* Director
Anne L. Segal
/s/ Guerdon D. Smith* Director
Guerdon D. Smith
*Signed pursuant to Power of Attorney, dated March 25, 1997, filed
electronically as Exhibit 14.2 to Pre-Effective Amendment No. 2 to Registration
Statement No. 333-00519, incorporated herein by reference.
**Signed pursuant to Power of Attorney, dated April 9, 1998, filed
electronically as Exhibit 15.2 to Post-Effective Amendment No. 1 to Registration
Statement No. 333-00519, incorporated herein by reference..
By: /s/ Mary Ellyn Minenko
Mary Ellyn Minenko
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 3
TO REGISTRATION STATEMENT NO. 333-00519
This Amendment to the Registration Statement is comprised of the following
papers and documents:
The Cover Page.
Cross-reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements
Part C.
Other Information.
The signatures.
Exhibit Description
4.2 Form of Annuity Endorsement (form 45065).
8.1 Copy of Amendment 1 to Participation Agreement among Putnam Variable
Trust, Putnam Mutual Funds Corp. and American Centurion Life Assurance
Company, dated October 14, 1998.
8.2 Copy of Amendment No. 1 to Participation Agreement by and among OCC
Accumulation Trust, American Centurion Life Assurance Company and OCC
Distributors, dated October 14, 1998.
8.3 Form of Extension of Participation Agreement Termination date among
American Centurion Life Assurance Company, G.T. Global Variable
Investment Trust, G.T. Global Variable Investment Series and G.T.
Global Inc., dated October 29, 1998. Copy of Notice of Termination of
Participation Agreement among American Centurion Life Assurance
Company, G.T. Global Variable Investment Trust, G.T. Global Variable
Investment Series and G.T. Global, Inc., dated August 25, 1998.
8.4 Copy of Amendment No. 1 to Fund Participation Agreement, by and among
American Centurion Life Assurance Company, American Century Investment
Management, Inc. and American Century Variable Portfolios Inc., dated
August 21, 1998.
8.5 Copy of Amendment to Participation Agreement dated October 23, 1996
between Janus Aspen Series and American Centurion Life Assurance
Company, dated October 8, 1997.
8.6 Copy of Participation Agreement among AIM Variable Insurance Funds,
Inc., AIM Distributors, Inc., American Centurion Life Assurance
Company and American Express Financial Advisors Inc., dated October
30, 1997.
8.7 Copy of Participation Agreement among Oppenheimer Variable Account
Funds, Oppenheimerfunds, Inc., and American Centurion Life Assurance
Company, dated September 4, 1998.
9. Opinion of counsel and consent to its use as to the legality of the
securities being registered.
10. Consent of Independent Auditors.
11. Financial Statement Schedules and Report of Independent Auditors.
14. Financial Data Schedule.
Annuity Endorsement
This endorsement is made part of this contract to which it is attached. It
changes the contract provisions as follows:
I. The following sentence is added to the Withdrawal provision of the
"Withdrawal Provisions" Section of the contract and reads as follows:
"Taking a partial withdrawal may affect the death benefit."
II. The Death Benefit Annuitization provision of the "Payments to Beneficiary"
Section of the contract is modified to change the death amount as follows:
Payments to Beneficiary
Death Benefits Before Annuitization
If you or the annuitant die before annuitization while this contract is in
force, and both you and the annuitant are age 80 or younger on the date of
death, we will pay the beneficiary the greater of:
1. the contract value; or
2. the total purchase payments paid less any "Death Benefit Adjustment"; or
3. the highest contract value on any prior contract anniversary, plus any
purchase payments paid and less any "Death Benefit Adjustment" since the
contract anniversary.
If either you or the annuitant are age 81 or older on the date of death, we will
pay the beneficiary the contract value.
"Death Benefit Adjustment"
For any and each partial withdrawal we calculate an amount by multiplying (a)
times (b) where:
(a) is the ratio of the amount of the partial withdrawal to the contract value
on the date of (but prior to) the partial withdrawal; and
(b) is the death benefit on the date of (but prior to) the partial withdrawal.
The result is subtracted from the death benefit otherwise payable had there not
been a partial withdrawal.
Example:
o The contract is purchased with a payment of $20,000 on January 1, 1999.
o On January 1, 2000 (the first contract anniversary) the contract value has
grown to $24,000.
o On March 1, 2000 the contract value has fallen to $22,000, at which point
the owner takes a $1,500 partial withdrawal, leaving a contract value of
$20,500.
The death benefit on March 1, 2000 is calculated as follows:
The highest contract value on any prior
contract anniversary: $24,000.00
plus any purchase payments paid since that anniversary: +0.00
less any "death benefit adjustment" taken since that anniversary, calculated as:
$1,500 x $24,000 = -1,636.36
-------- ---------
$22,000
resulting in a death benefit of: $22,363.64
This endorsement is effective as of the contract date of this contract.
American Centurion Life Assurance Company
/s/ Eric L. Marhoun
Secretary
AMENDMENT 1 TO
PARTICIPATION AGREEMENT
Among
PUTNAM VARIABLE TRUST
PUTNAM MUTUAL FUNDS CORP.
and
AMERICAN CENTURION LIFE ASSURANCE COMPANY
THIS AMENDMENT 1 TO PARTICIPATION AGREEMENT ("Amendment 1") is made and entered
into this 14th day of October, 1998 by and among Putnam Variable Trust (the
"Fund"); Putnam Mutual Funds Corp. (the "Distributor"); and American Centurion
Life Assurance Company (the "Company").
WHEREAS, the Company, the Fund and the Distributor are parties to the
Participation Agreement dated April 30, 1997 (the "Agreement"); and
WHEREAS, the parties now desire to amend the Agreement so that an enhanced
flexible premium variable annuity contract may invest in the Authorized Funds
and to provide that such annuity will invest in Class IB Shares of the
Authorized Funds;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund
and the Distributor agree as follows:
<PAGE>
1. Amendment to Schedule A. In accordance with the terms of the Agreement, the
parties hereby amend Schedule A to read as follows:
Schedule A
Contracts
ACL Variable Annuity Account 2, established October 12, 1995.
ACL Personal Portfoliosm offers the following Authorized Funds as
investment options:
Putnam VT Diversified Income Fund - Class IA Shares
Putnam VT Growth and Income Fund - Class IA Shares
Putnam VT New Opportunities Fund - Class IA Shares
Putnam VT High Yield Fund - Class IA Shares
ACL Personal Portfolio Plus2 offers the following Authorized Funds as
investment options:
Putnam VT Diversified Income Fund - Class IB Shares
Putnam VT Growth and Income Fund - Class IB Shares
Putnam VT High Yield Fund - Class IB Shares
Putnam VT Voyager Fund - Class IB Shares
2. Service Fees. With respect to any investment in Class IB Shares of the
Authorized Funds:
a) Provided the Company complies with its obligations under the
Agreement, the Distributor will pay the Company a service fee (the
"Service Fee") on shares of the Authorized Funds held in the Account
at the rate of 0.15% per annum.
b) The Company understands and agrees that all Service Fee payments are
subject to the limitations contained in each Authorized Fund's
Distribution Plan, which may be varied or discontinued at any time,
and understands and agrees that it will cease to receive such Service
Fee Payments with respect to an Authorized Fund if the Authorized Fund
ceases to pay fees to the Distributor pursuant to its Distribution
Plan.
c) The Company's failure to provide the services described in Section
2(e) below or otherwise to comply with the terms of the Agreement will
render it ineligible to receive Service Fees.
d) Except as described in Sections 2(b) and 2(c) above, the Distributor
will pay the Company the Service Fees unless it is not permissible to
continue such Service Fee arrangement under applicable laws, rules or
regulations. The Service Fee arrangement may be terminated: (A) in
writing by either party upon sixty (60) days' advance written notice
to the other party; or (B) if the Agreement is terminated, however,
the Service Fee will continue to be due and payable with respect to
shares of the Authorized Funds attributable to Contracts in effect on
the effective date of termination of the Service Fee arrangement.
e) The Company will provide the following services to Contract owners who
allocate purchase payments to subaccounts of the Account investing in
the Authorized Funds:
i) Maintain regular contact with Contract owners and assist in
answering inquiries concerning the Authorized Funds;
ii) Assist in printing and/or distributing shareholder reports,
prospectuses, service literature and sales literature or other
promotional materials provided by the Distributor;
iii) Assist the Distributor and its affiliates in the establishment
and maintenance of Contract owner and shareholder accounts and
records;
iv) Assist Contract owners in effecting administrative changes, such
as exchanging into or out of the subaccounts of the Account
investing in shares of the Authorized Funds;
v) Assist in processing purchase and redemption transactions; and
vi) Provide any other information or services as the Contract owners
of the Distributor may reasonably request.
The Company will support the Distributor's marketing and servicing
efforts for granting reasonable requests for visits to the Company's
offices by representatives of the Distributor.
f) The Company's compliance with the service requirement set forth in
this Amendment 1 will be evaluated from time to time by the
Distributor's monitoring of redemption levels of Authorized Fund
shares held in the Account and by such other methods as the
Distributor deems appropriate.
3. Definitions. Terms not defined in this Amendment 1 will have the meaning as
those terms defined in the Agreement.
4. Counterparts. This Amendment 1 may be executed simultaneously in two or
more counterparts, each of which taken together will constitute one and the
same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment 1 to be
executed in its name and behalf by its duly authorized representatives as of the
date specified above.
PUTNAM VARIABLE TRUST PUTNAM MUTUAL FUNDS CORP.
By: /s/ John R. Verani By:/s/ Eric S. Levy
Name: John R. Verani Name: Eric S. Levy
Title: Vice President Title: Senior Vice President
AMERICAN CENTURION LIFE ASSURANCE COMPANY
ATTEST:
By: /s/ Stuart Sedlacek By: /s/ Eric L. Marhoun
Name: Stuart Sedlacek Name: Eric L. Marhoun
Title: President Title: General Counsel & Secretary
AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT
by and among
OCC ACCUMULATION TRUST,
AMERICAN CENTURION LIFE ASSURANCE COMPANY and
OCC DISTRIBUTORS
This is an amendment to the September 17, 1997 Participation Agreement
("Agreement") among OCC Accumulation Trust, American Centurion Life Assurance
Company and OCC Distributors.
Schedule 1 to the Agreement is amended to read as follows:
The following separate accounts of American Centurion Life Assurance
Company are permitted in accordance with the provisions of this
Agreement to invest in Portfolios of the Fund shown in Schedule 2:
ACL Variable Annuity Account 2, established October 12, 1995 as used to
fund the flexible premium variable annuity contracts known as ACL
Personal Portfoliosm and ACL Personal Portfolio Plus2.
Schedule 2 to the Agreement is amended to read as follows:
The separate account(s) shown on Schedule 1 may invest in the following
Portfolios of the OCC Accumulation Trust:
Managed Portfolio
U.S. Government Income Portfolio
Small Cap Portfolio
Equity Portfolio
OCC ACCUMULATION TRUST OCC DISTRIBUTORS
Signature: /s/ Bernard H. Garil Signature: /s/Thomas E. Duggan
By: Bernard H. Garil By: Thomas E. Duggan
Title: Vice President Title: Secretary
AMERICAN CENTURION LIFE ATTEST:
ASSURANCE COMPANY
Signature: /s/ Stuart Sedlacek Signature: /s/ Eric L. Marhoun
By: Stuart Sedlacek By: Eric L. Marhoun
Title: President Title: General Counsel & Secretary
Date: October 14, 1998
October 29, 1998
Mr. W. Gary Littlepage
Senior Vice President
Marketing and Product Development
AIM Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston TX 77446-1173
RE: EXTENSION OF PARTICIPATION AGREEMENT TERMINATION DATE
Dear Mr. Littlepage:
On August 25, 1998 American Centurion Life Assurance Company ("Company") gave
G.T. Global Variable Investment Trust, G.T. Global Variable Investment Series
and GT Global, Inc. sixty (60) days' notice of termination ("Notice") of the
Participation Agreement among the parties dated May 30, 1997 ("Agreement"). In
accordance with this Notice, the Agreement would terminate on October 26, 1998.
Company hereby requests an extension of the termination date specified in the
Notice to November 4, 1998. Under this extension, the GT Global New Pacific Fund
and the GT Global Variable Latin American Fund ("Funds") will continue to be
offered as investment options under variable annuity contracts ("Contracts")
purchased prior to November 4, 1998. The Funds no longer will be offered as
investment options under Contracts purchased on or after November 4, 1998.
<PAGE>
If you agree to the extension of the termination date to November 4, 1998,
please sign below. Please retain one copy of this letter for your records and
return on signed copy for our files to:
Mary Ellyn Minenko Vice President and Group Counsel American Centurion
Life Assurance Company c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Very truly yours,
By: /s/ Jay C. Hatlestad
Jay C. Hatlestad
Vice President
I agree to the extension of the termination date to November 4, 1998 as outlined
in this letter:
By:
W. Gary Littlepage
Senior Vice President
cc: Mr. Pete Slattery
Mr. Pat Carey
<PAGE>
August 25, 1998
Mr. Ray Cunningham
Senior Vice President
GT Global, Inc.
50 California Street
San Francisco, CA 94111
RE: NOTICE OF TERMINATION OF PARTICIPATION AGREEMENT
Dear Mr. Cunningham:
In accordance with Section 11(a) of the Participation Agreement dated May 30,
1997 among AmericanCenturion Life Assurance Company ("Company"), G.T. Global
Variable Investment Trust, G.T. Global Variablr Investment Series and GT Global
("Agreement"), the Company hereby gives the other parties sixty (60) days'
notice of termination of the Agreement. In accordance with Section 11(o) of the
Agreement, the reason for this termination is disappointing investment
performance of the GT Global Variable New Pacific Fund and the GT Global
Variable Latin American Fund ("Funds") offered as investment options under
variable annuity contracts ("Contracts") issued by the Company. The termination
of the Agreement will become effective as of October 26, 1998. The Funds no
longer will be offered as investment options under Contracts purchased on or
after October 26, 1998. The Funds will continue to be offered as investment
options under Contracts purchased prior to October 26, 1998.
Very truly yours,
Stuart A. Sedlacek
President and Chairman
cc: Mr. Gary Littlepage
Senior Vice President
Marketing and Product Development
AIM Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77446-1173
Mr. Pete Slattery
Mr. Pat Carey
AMENDMENT NO. 1 TO FUND PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 1 TO FUND PARTICIAPTION AGREEMENT (the "Amendment")
is effective as of August 21, 1998, by and among AMERICAN CENTURION LIFE
ASSURANCE COMPANY (the "Company"), AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
("ACIM"), and AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., ("ACVP"). Capitalized
terms not otherwise defined herein shall have the meaning ascribed to them in
the Agreement (defined below).
WHEREAS, the Company, TCI Portfolios, Inc. and Investors Research
Corporation are parties to that certain Fund Participation Agreement dated July
31, 1996 (the "Agreement") in connection with the participation by the Funds in
Contracts offered by the Company to its clients; and
WHEREAS, since the date of the Agreement, Investors Research
Corporation has changed its name to American Century Variable Portfolios, Inc.;
and
WHEREAS, the Company now desires to add an Account to those which offer
certain American Century funds and to expand the number of American Century
funds made available as underlying investment media for the Contracts; and
WHEREAS, the parties to this Amendment now desire to modify the
Agreement as provided herein.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
1. Addition of Fund. The second "Whereas clause of the Agreement is
hereby deleted in its entirety and replaced with the following language:
"WHEREAS, the Company wishes to offer as investment options
under the Contracts, American Century VP Capital Appreciation, American
Century VP Income and Growth and American Century VP Value (each a
"Fund" and collectively, the "Funds", each a series of mutual fund
shares registered under the Investment Company Act of 1940, as amended,
and issued by the Issuer; and"
2. Provision of Prospectuses. The second sentence of Section 4(b) is
hereby amended by adding the words "camera-ready art and/or" before the words
"electronic format" in the existing sentence.
3. Addition of Account. Section 6(1)(ii) is hereby amended by adding,
after the reference to the ACL Variable Annuity Account 1, the following words:
"and the ACL Variable Annuity Account 2." After the date of this amendment, each
reference to the "Account" in the Agreement shall be deemed to include both the
ACL Variable Annuity Account 1 and the ACL Variable Annuity Account 2. The ACL
Variable Annuity Account 1 shall offer VP Capital Appreciation and VP Value as
investment options, and the ACL Variable Annuity Account 2 shall offer VP income
and Growth and VP Value as investment options.
4. Amendment to Termination Provision. Section 12(a) is hereby amended
by adding the words "or such other date as agreed to by the parties" at the end
of the Section.
5. Amendment to Notice Provision. In Section 17, the reference under
notices "to the Company" to Jim Mortensen, Manager Product Development, and the
telecopy number provided are hereby deleted in their entirety and replaced with
a reference to "President." In addition, the reference under "with a
simultaneous copy to" to Mary Ellyn Minenko, Counsel, is hereby deleted and
replaced with a reference to Mary Ellyn Minenko, Vice President and Group
Counsel.
6. Ratification and Confirmation of Agreement. In the event of a
conflict between the terms of this Amendment and the Agreement, it is the
intention of the parties that the terms of this Amendment shall control and the
Agreement shall be interpreted on that basis. To the extent the provisions of
the Agreement have not been amended by this Amendment, the parties hereby
confirm and ratify the Agreement.
7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be and all of which together shall constitute
one instrument.
8. Full Force and Effect. Except as expressly supplemented, amended or
consented to hereby, all of the representations, warranties, terms, covenants
and conditions of the Agreement shall remain unamended and shall continue to be
in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
as of the date first above written.
AMERICAN CENTURION LIFE AMERICAN CENTURY INVESTMENT
ASSURANCE COMPANY MANAGEMENT, INC.
By: /s/ Stuart Sedlacek By: /s/ William M. Lyons
Name: Stuart Sedlacek Name: William M. Lyons
Title: President Title: Executive Vice President
Attest: AMERICAN CENTURY VARIABLE PORTFOLIOS
By: /s/ Eric L. Marhoun By: /s/ Patrick A. Looby
Name: Eric L. Marhoun Name: Patrick A. Looby
Title: General Counsel & Secretary Title: Vice President
AMENDMENT TO THE FUND PARTICIPATION AGREEMENT
DATED OCTOBER 23, 1996
BETWEEN
JANUS ASPEN SERIES
AND
AMERICAN CENTURION LIFE ASSURANCE COMPANY
In accordance with the provisions of the Fund Participation Agreement dated
October 23, 1996 between Janus Aspen Series and American Centurion Life
Assurance Company, attached Schedule A is hereby amended to add a new segregated
asset account and attached Schedule B is hereby amended to add a new Portfolio.
JANUS ASPEN SERIES
By: /s/ Bonnie Howe
Name Bonnie Howe
Title: Assistant Vice President
AMERICAN CENTURION LIFE
ASSURANCE COMPANY ATTEST
By: /s/ Ryan Larson By: /s/ Eric L. Marhoun
Name: Ryan Larson Name: Eric L. Marhoun
Title: Vice President - Product Development Title: Secretary
Date: October 8, 1997
<PAGE>
Schedule A
Separate Accounts and Associated Contract and Certificates
Name of Separate Account and Contract and Certificates
Date Established by Board of Directors Funded by Separate Account
ACL Variable Annuity Account 1, Contract Form 38501
established October 12, 1995 Certificate Form 38502-NY
Certificate Form 38503-IRA-NY
ACL Variable Annuity Account 2, Contract Form 45054
established October 12, 1995
Date: October 8, 1997
<PAGE>
Schedule B
Portfolios of Janus Aspen Series
Available as an Investment Vehicle of the Accounts
Under ACL Variable Annuity Account 1:
Growth Portfolio
Worldwide Growth Portfolio
Under ACL Variable Annuity Account 2:
Worldwide Growth Portfolio
Balanced Portfolio
Date: October 8, 1997
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
AMERICAN CENTURION LIFE ASSURANCE COMPANY
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
<PAGE>
TABLE OF CONTENTS
Description Page
Section 1. Available Funds 2
1.1 Availability 2
1.2 Addition, Deletion or Modification of Funds 2
1.3 No Sales to the General Public 2
Section 2. Processing Transactions 2
2.1 Timely Pricing and Orders 2
2.2 Timely Payments 3
2.3 Applicable Price 3
2.4 Dividends and Distributions 4
2.5 Book Entry4
Section 3. Costs and Expenses 4
3.1 General 4
3.2 Registration 4
3.3 Other (Non-Sales-Related) 5
3.4 Other (Sales-Related) 5
3.5 Parties To Cooperate 5
Section 4. Legal Compliance 5
4.1 Tax Laws 5
4.2 Insurance and Certain Other Laws 8
4.3 Securities Laws 8
4.4 Notice of Certain Proceedings and Other Circumstance 9
4.5 American Centurion Life To Provide Documents;
Information About AVIF 10
4.6 AVIF To Provide Documents; Information About
American Centurion Life 11
Section 5. Mixed and Shared Funding 12
5.1 General 12
5.2 Disinterested Directors 12
5.3 Monitoring for Material Irreconcilable Conflicts 13
5.4 Conflict Remedies 13
5.5 Notice to American Centurion Life 15
5.6 Information Requested by Board of Directors 15
5.7 Compliance with SEC Rules 15
5.8 Other Requirements 15
<PAGE>
Description Page
Section 6. Termination 15
6.1 Events of Termination 15
6.2 Notice Requirement for Termination 16
6.3 Funds To Remain Available 17
6.4 Survival of Warranties and Indemnifications 17
6.5 Continuance of Agreement for Certain Purposes 17
Section 7. Parties To Cooperate Respecting Termination 17
Section 8. Assignment 18
Section 9. Notices 18
Section 10. Voting Procedures 19
Section 11. Foreign Tax Credits 19
Section 12. Indemnification 20
12.1 Of AVIF and AIM by American Centurion Life and AEFA 20
12.2 Of American Centurion Life and AEFA by AVIF and AIM 22
12.3 Effect of Notice 24
12.4 Successors 24
Section 13. Applicable Law 24
Section 14. Execution in Counterparts 25
Section 15. Severability 25
Section 16. Rights Cumulative 25
Section 17. Headings 25
Section 18. Confidentiality 25
Section 19. Trademarks and Fund Names 26
Section 20. Parties to Cooperate 27
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 30th day of October, 1997
("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); AIM Distributors, Inc., a Delaware corporation ("AIM");
IDS Life Insurance Company of New York, a New York life insurance company
("American Centurion Life"), on behalf of itself and each of its segregated
asset accounts listed in Schedule A hereto, as the parties hereto may amend from
time to time (each, an "Account," and collectively, the "Accounts"); and
American Express Financial Advisors Inc. ("AEFA"), an affiliate of American
Centurion Life and the principal underwriter of the Contracts (collectively, the
"Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of nine separate series ("Series"),
shares ("Shares") of each of which are registered under the Securities Act of
1933, as amended (the "1933 Act") and are currently sold to one or more separate
accounts of life insurance companies to fund benefits under variable annuity
contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto
as the Parties hereto may amend from time to time (each a "Fund"; reference
herein to "AVIF" includes reference to each Fund, to the extent the context
requires) available for purchase by the Accounts; and
WHEREAS, American Centurion Life will be the issuer of certain variable
annuity contracts and/or variable life insurance contracts ("Contracts") as set
forth on Schedule A hereto, as the Parties hereto may amend from time to time,
which Contracts (hereinafter collectively, the "Contracts"), if required by
applicable law, will be registered under the 1933 Act; and
WHEREAS, American Centurion Life will fund the Contracts through the
Accounts, each of which may be divided into two or more subaccounts
("Subaccounts"; reference herein to an "Account" includes reference to each
Subaccount thereof to the extent the context requires); and
WHEREAS, American Centurion Life will serve as the depositor of the
Accounts, each of which is registered as a unit investment trust investment
company under the 1940 Act (or exempt therefrom), and the security interests
deemed to be issued by the Accounts under the Contracts will be registered as
securities under the 1933 Act (or exempt therefrom); and
<PAGE>
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, American Centurion Life intends to purchase Shares in one or more
of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, AEFA is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc.
("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
Section 1. Available Funds
1.1 Availability.
AVIF will make Shares of each Fund available to American Centurion Life
for purchase and redemption at net asset value and with no sales charges,
subject to the terms and conditions of this Agreement. The Board of Directors of
AVIF may refuse to sell Shares of any Fund to any person, or suspend or
terminate the offering of Shares of any Fund if such action is required by law
or by regulatory authorities having jurisdiction or if, in the sole discretion
of the Directors acting in good faith and in light of their fiduciary duties
under federal and any applicable state laws, such action is deemed in the best
interests of the shareholders of such Fund.
1.2 Addition, Deletion or Modification of Funds.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
1.3 No Sales to the General Public.
AVIF represents and warrants that no Shares of any Fund have been or will
be sold to the general public.
<PAGE>
Section 2. Processing Transactions
2.1 Timely Pricing and Orders.
(a) AVIF or its designated agent will use its best efforts to provide
American Centurion Life with the net asset value per Share for each Fund by 5:30
p.m. Central Time on each Business Day. As used herein, "Business Day" shall
mean any day on which (i) the New York Stock Exchange is open for regular
trading, (ii) AVIF calculates the Fund's net asset value, and (iii) American
Centurion Life is open for business.
(b) American Centurion Life will use the data provided by AVIF each
Business Day pursuant to paragraph (a) immediately above to calculate Account
unit values and to process transactions that receive that same Business Day's
Account unit values. American Centurion Life will perform such Account
processing the same Business Day, and will place corresponding orders to
purchase or redeem Shares with AVIF by 9:00 a.m. Central Time the following
Business Day; provided, however, that AVIF shall provide additional time to
American Centurion Life in the event that AVIF is unable to meet the 5:30 p.m.
time stated in paragraph (a) immediately above. Such additional time shall be
equal to the additional time that AVIF takes to make the net asset values
available to American Centurion Life.
(c) With respect to payment of the purchase price by American Centurion
Life and of redemption proceeds by AVIF, American Centurion Life and AVIF shall
net purchase and redemption orders with respect to each Fund and shall transmit
one net payment per Fund in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), American Centurion Life shall
be entitled to an adjustment to the number of Shares purchased or redeemed to
reflect the correct net asset value per Share. Any material error in the
calculation or reporting of net asset value per Share, dividend or capital gain
information shall be reported promptly upon discovery to American Centurion
Life.
2.2 Timely Payments.
American Centurion Life will wire payment for net purchases to a
custodial account designated by AVIF by 1:00 p.m. Central Time on the same day
as the order for Shares is placed, to the extent practicable. AVIF will wire
payment for net redemptions to an account designated by American Centurion Life
by 1:00 p.m. Central Time on the same day as the Order is placed, to the extent
practicable, but in any event within five (5) calendar days after the date the
order is placed in order to enable American Centurion Life to pay redemption
proceeds within the time specified in Section 22(e) of the 1940 Act or such
shorter period of time as may be required by law.
<PAGE>
2.3 Applicable Price.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, "Contract transactions") and that American Centurion
Life receives prior to the close of regular trading on the New York Stock
Exchange on a Business Day will be executed at the net asset values of the
appropriate Funds next computed after receipt by AVIF or its designated agent of
the orders. For purposes of this Section 2.3(a), American Centurion Life shall
be the designated agent of AVIF for receipt of orders relating to Contract
transactions on each Business Day and receipt by such designated agent shall
constitute receipt by AVIF; provided that AVIF receives notice of such orders by
9:00 a.m. Central Time on the next following Business Day or such later time as
computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by American Centurion Life
will be effected at the net asset values of the appropriate Funds next computed
after receipt by AVIF or its designated agent of the order therefor, and such
orders will be irrevocable.
2.4 Dividends and Distributions.
AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to American Centurion Life of any
income dividends or capital gain distributions payable on the Shares of any
Fund. American Centurion Life hereby elects to reinvest all dividends and
capital gains distributions in additional Shares of the corresponding Fund at
the ex-dividend date net asset values until American Centurion Life otherwise
notifies AVIF in writing, it being agreed by the Parties that the ex-dividend
date and the payment date with respect to any dividend or distribution will be
the same Business Day. American Centurion Life reserves the right to revoke this
election and to receive all such income dividends and capital gain distributions
in cash.
2.5 Book Entry.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to American Centurion Life. Shares ordered from
AVIF will be recorded in an appropriate title for American Centurion Life, on
behalf of its Account.
<PAGE>
Section 3. Costs and Expenses
3.1 General.
Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.
3.2 Registration.
(a) AVIF will bear the cost of its registering as a management investment
company under the 1940 Act and registering its Shares under the 1933 Act, and
keeping such registrations current and effective; including, without limitation,
the preparation of and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices
with respect to AVIF and its Shares and payment of all applicable registration
or filing fees with respect to any of the foregoing.
(b) American Centurion Life will bear the cost of registering, to the
extent required, each Account as a unit investment trust under the 1940 Act and
registering units of interest under the Contracts under the 1933 Act and keeping
such registrations current and effective; including, without limitation, the
preparation and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with
respect to each Account and its units of interest and payment of all applicable
registration or filing fees with respect to any of the foregoing.
3.3 Other (Non-Sales-Related).
(a) AVIF will bear, or arrange for others to bear, the costs of
preparing, filing with the SEC and setting for printing AVIF's prospectus,
statement of additional information and any amendments or supplements thereto
(collectively, the "AVIF Prospectus"), periodic reports to shareholders, AVIF
proxy material and other shareholder communications.
(b) American Centurion Life will bear the costs of preparing, filing with
the SEC and setting for printing each Account's prospectus, statement of
additional information and any amendments or supplements thereto (collectively,
the "Account Prospectus"), any periodic reports to Contract owners, annuitants,
insureds or participants (as appropriate) under the Contracts (collectively,
"Participants"), voting instruction solicitation material, and other Participant
communications.
(c) American Centurion Life will print in quantity and deliver to
existing Participants the documents described in Section 3.3(b) above and the
prospectus provided by AVIF in camera ready or computer diskette form. AVIF will
print the AVIF statement of additional information, proxy materials relating to
AVIF and periodic reports of AVIF.
<PAGE>
3.4 Other (Sales-Related).
American Centurion Life will bear the expenses of distribution. These
expenses would include by way of illustration, but are not limited to, the costs
of distributing to Participants the following documents, whether they relate to
the Account or AVIF: prospectuses, statements of additional information, proxy
materials and periodic reports. These costs would also include the costs of
preparing, printing, and distributing sales literature and advertising relating
to the Funds, as well as filing such materials with, and obtaining approval
from, the SEC, NASD, any state insurance regulatory authority, and any other
appropriate regulatory authority, to the extent required.
3.5 Parties To Cooperate.
Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of AVIF and the Accounts.
Section 4. Legal Compliance
4.1 Tax Laws.
(a) AVIF represents and warrants that each Fund is currently qualified as
a regulated investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and represents that it will use
its best efforts to qualify and to maintain qualification of each Fund as a RIC.
AVIF will notify American Centurion Life immediately upon having a reasonable
basis for believing that a Fund has ceased to so qualify or that it might not so
qualify in the future.
(b) AVIF represents that it will use its best efforts to comply and to
maintain each Fund's compliance with the diversification requirements set forth
in Section 817(h) of the Code and Section 1.817-5(b) of the regulations under
the Code. AVIF will notify American Centurion Life immediately upon having a
reasonable basis for believing that a Fund has ceased to so comply or that a
Fund might not so comply in the future. In the event of a breach of this Section
4.1(b) by AVIF, it will take all reasonable steps to adequately diversify the
Fund so as to achieve compliance within the grace period afforded by Section
1.817-5 of the regulations under the Code.
(c) American Centurion Life agrees that if the Internal Revenue Service
("IRS") asserts in writing in connection with any governmental audit or review
of American Centurion Life or, to American Centurion Life's knowledge, of an
Participant, that any Fund has failed to comply with the diversification
requirements of Section 817(h) of the Code or American Centurion Life otherwise
becomes aware of any facts that could give rise to any claim against AVIF or its
affiliates as a result of such a failure or alleged failure:
<PAGE>
(i) American Centurion Life shall promptly notify AVIF of such
assertion or potential claim (subject to the Confidentiality
provisions of Section 18 as to any Participant);
(ii) American Centurion Life shall consult with AVIF as to how to
minimize any liability that may arise as a result of such failure
or alleged failure;
(iii)American Centurion Life shall use its best efforts to minimize
any liability of AVIF or its affiliates resulting from such
failure, including, without limitation, demonstrating, pursuant
to Treasury Regulations Section 1.817-5(a)(2), to the
Commissioner of the IRS that such failure was inadvertent;
(iv) American Centurion Life shall permit AVIF, its affiliates and
their legal and accounting advisors to participate in any
conferences, settlement discussions or other administrative or
judicial proceeding or contests (including judicial appeals
thereof) with the IRS, any Participant or any other claimant
regarding any claims that could give rise to liability to AVIF or
its affiliates as a result of such a failure or alleged failure;
provided, however, that American Centurion Life will retain
control of the conduct of such conferences discussions,
proceedings, contests or appeals;
(v) any written materials to be submitted by American Centurion Life
to the IRS, any Participant or any other claimant in connection
with any of the foregoing proceedings or contests (including,
without limitation, any such materials to be submitted to the IRS
pursuant to Treasury Regulations Section 1.8175(a)(2)), (a) shall
be provided by American Centurion Life to AVIF (together with any
supporting information or analysis); subject to the
confidentiality provisions of Section 18, at least ten (10)
business days or such shorter period to which the Parties hereto
agree prior to the day on which such proposed materials are to be
submitted, and (b) shall not be submitted by American Centurion
Life to any such person without the express written consent of
AVIF which shall not be unreasonably withheld;
<PAGE>
(vi) American Centurion Life shall provide AVIF or its affiliates and
their accounting and legal advisors with such cooperation as AVIF
shall reasonably request (including, without limitation, by
permitting AVIF and its accounting and legal advisors to review
the relevant books and records of American Centurion Life) in
order to facilitate review by AVIF or its advisors of any written
submissions provided to it pursuant to the preceding clause or
its assessment of the validity or amount of any claim against its
arising from such a failure or alleged failure;
(vii)American Centurion Life shall not with respect to any claim of
the IRS or any Participant that would give rise to a claim
against AVIF or its affiliates (a) compromise or settle any
claim, (b) accept any adjustment on audit, or (c) forego any
allowable administrative or judicial appeals, without the express
written consent of AVIF or its affiliates, which shall not be
unreasonably withheld, provided that American Centurion Life
shall not be required, after exhausting all administrative
penalties, to appeal any adverse judicial decision unless AVIF or
its affiliates shall have provided an opinion of independent
counsel to the effect that a reasonable basis exists for taking
such appeal; and provided further that the costs of any such
appeal shall be borne equally by the Parties hereto; and
(viii) AVIF and its affiliates shall have no liability as a result of
such failure or alleged failure if American Centurion Life fails
to comply with any of the foregoing clauses (i) through (vii),
and such failure could be shown to have materially contributed to
the liability.
Should AVIF or any of its affiliates refuse to give its written consent
to any compromise or settlement of any claim or liability hereunder, American
Centurion Life may, in its discretion, authorize AVIF or its affiliates to act
in the name of American Centurion Life in, and to control the conduct of, such
conferences, discussions, proceedings, contests or appeals and all
administrative or judicial appeals thereof, and in that event AVIF or its
affiliates shall bear the fees and expenses associated with the conduct of the
proceedings that it is so authorized to control; provided, that in no event
shall American Centurion Life have any liability resulting from AVIF's refusal
to accept the proposed settlement or compromise with respect to any failure
caused by AVIF. As used in this Agreement, the term "affiliates" shall have the
same meaning as "affiliated person" as defined in Section 2(a)(3) of the 1940
Act.
<PAGE>
(d) American Centurion Life represents and warrants that the Contracts
currently are and will be treated as annuity contracts or life insurance
contracts under applicable provisions of the Code and that it will use its best
efforts to maintain such treatment; American Centurion Life will notify AVIF
immediately upon having a reasonable basis for believing that any of the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
(e) American Centurion Life represents and warrants that each Account is
a "segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract,"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. American Centurion Life will use its best efforts to
continue to meet such definitional requirements, and it will notify AVIF
immediately upon having a reasonable basis for believing that such requirements
have ceased to be met or that they might not be met in the future.
4.2 Insurance and Certain Other Laws.
(a) AVIF will use its best efforts to comply with any applicable state
insurance laws or regulations, to the extent specifically requested in writing
by American Centurion Life, including, the furnishing of information not
otherwise available to American Centurion Life which is required by state
insurance law to enable American Centurion Life to obtain the authority needed
to issue the Contracts in any applicable state.
(b) American Centurion Life represents and warrants that (i) it is an
insurance company duly organized, validly existing and in good standing under
the laws of the State of New York and has full corporate power, authority and
legal right to execute, deliver and perform its duties and comply with its
obligations under this Agreement, (ii) it has legally and validly established
and maintains each Account as a segregated asset account under Section 4240 of
the New York Insurance Law and the regulations thereunder, and (iii) the
Contracts comply in all material respects with all other applicable federal and
state laws and regulations.
(c) AVIF represents and warrants that it is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Maryland
and has full power, authority, and legal right to execute, deliver, and perform
its duties and comply with its obligations under this Agreement.
<PAGE>
4.3 Securities Laws.
(a) American Centurion Life represents and warrants that (i) interests in
each Account pursuant to the Contracts will be registered under the 1933 Act to
the extent required by the 1933 Act, (ii) the Contracts will be duly authorized
for issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and New
York law, (iii) each Account is and will remain registered under the 1940 Act,
to the extent required by the 1940 Act, (iv) each Account does and will comply
in all material respects with the requirements of the 1940 Act and the rules
thereunder, to the extent required, (v) each Account's 1933 Act registration
statement relating to the Contracts, together with any amendments thereto, will
at all times comply in all material respects with the requirements of the 1933
Act and the rules thereunder, (vi) American Centurion Life will amend the
registration statement for its Contracts under the 1933 Act and for its Accounts
under the 1940 Act from time to time as required in order to effect the
continuous offering of its Contracts or as may otherwise be required by
applicable law, and (vii) each Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to this
Agreement will be registered under the 1933 Act to the extent required by the
1933 Act and duly authorized for issuance and sold in compliance with Maryland
law, (ii) AVIF is and will remain registered under the 1940 Act to the extent
required by the 1940 Act, (iii) AVIF will amend the registration statement for
its Shares under the 1933 Act and itself under the 1940 Act from time to time as
required in order to effect the continuous offering of its Shares, (iv) AVIF
does and will comply in all material respects with the requirements of the 1940
Act and the rules thereunder, (v) AVIF's 1933 Act registration statement,
together with any amendments thereto, will at all times comply in all material
respects with the requirements of the 1933 Act and rules thereunder, and (vi)
AVIF's Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
(d) AVIF currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
AVIF undertakes to have its Board of Directors, a majority of whom are not
"interested" persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
<PAGE>
(e) AVIF represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having access to
the funds and/or securities of the Fund are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimal coverage as required currently by
Rule 17g-(1) of the 1940 Act or related provisions as maybe promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
4.4 Notice of Certain Proceedings and Other Circumstances.
(a) AVIF will immediately notify American Centurion Life of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to AVIF's registration statement
under the 1933 Act or AVIF Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or AVIF Prospectus that may affect the
offering of Shares of AVIF, (iii) the initiation of any proceedings for that
purpose or for any other purpose relating to the registration or offering of
AVIF's Shares, or (iv) any other action or circumstances that may prevent the
lawful offer or sale of Shares of any Fund in any state or jurisdiction,
including, without limitation, any circumstances in which (a) such Shares are
not registered and, in all material respects, issued and sold in accordance with
applicable state and federal law, or (b) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by American Centurion Life. AVIF will make every reasonable effort to
prevent the issuance, with respect to any Fund, of any such stop order, cease
and desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) American Centurion Life will immediately notify AVIF of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to each Account's registration
statement under the 1933 Act relating to the Contracts or each Account
Prospectus, (ii) any request by the SEC for any amendment to such registration
statement or Account Prospectus that may affect the offering of Shares of AVIF,
(iii) the initiation of any proceedings for that purpose or for any other
purpose relating to the registration or offering of each Account's interests
pursuant to the Contracts, or (iv) any other action or circumstances that may
prevent the lawful offer or sale of said interests in any state or jurisdiction,
including, without limitation, any circumstances in which said interests are not
registered and, in all material respects, issued and sold in accordance with
applicable state and federal law. American Centurion Life will make every
reasonable effort to prevent the issuance of any such stop order, cease and
desist order or similar order and, if any such order is issued, to obtain the
lifting thereof at the earliest possible time.
<PAGE>
4.5 American Centurion Life To Provide Documents; Information
About AVIF.
(a) American Centurion Life will provide to AVIF or its designated agent
at least one (1) complete copy of all SEC registration statements, Account
Prospectuses, reports, any preliminary and final voting instruction solicitation
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) American Centurion Life will provide to AVIF or its designated agent
at least one (1) complete copy of each piece of sales literature or other
promotional material in which AVIF or any of its affiliates is named, at least
five (5) Business Days prior to its use or such shorter period as the Parties
hereto may, from time to time, agree upon. No such material shall be used if
AVIF or its designated agent objects to such use within five (5) Business Days
after receipt of such material or such shorter period as the Parties hereto may,
from time to time, agree upon. AVIF hereby designates A I M as the entity to
receive such sales literature, until such time as AVIF appoints another
designated agent by giving notice to American Centurion Life in the manner
required by Section 9 hereof.
(c) Neither American Centurion Life nor any of its affiliates, will give
any information or make any representations or statements on behalf of or
concerning AVIF or its affiliates in connection with the sale of the Contracts
other than (i) the information or representations contained in the registration
statement, including the AVIF Prospectus contained therein, relating to Shares,
as such registration statement and AVIF Prospectus may be amended from time to
time; or (ii) in reports or proxy materials for AVIF; or (iii) in published
reports for AVIF that are in the public domain and approved by AVIF for
distribution; or (iv) in sales literature or other promotional material approved
by AVIF, except with the express written permission of AVIF.
(d) American Centurion Life shall adopt and implement procedures
reasonably designed to ensure that information concerning AVIF and its
affiliates that is intended for use only by brokers or agents selling the
Contracts (i.e., information that is not intended for distribution to
Participants) ("broker only materials") is so used, and neither AVIF nor any of
its affiliates shall be liable for any losses, damages or expenses relating to
the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (e.g.,
on-line networks such as the Internet or other electronic messages), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public,
<PAGE>
including brochures, circulars, research reports, market letters, form letters,
seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD rules, the 1933 Act
or the 1940 Act.
4.6 AVIF To Provide Documents; Information About IDS Life of
New York.
(a) AVIF will provide to American Centurion Life at least one (1)
complete copy of all SEC registration statements, AVIF Prospectuses, reports,
any preliminary and final proxy material, applications for exemptions, requests
for no-action letters, and all amendments to any of the above, that relate to
AVIF or the Shares of a Fund, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
(b) AVIF will provide to American Centurion Life camera ready or computer
diskette copies of all AVIF prospectuses and printed copies, in an amount
specified by American Centurion Life, of AVIF statements of additional
information, proxy materials, periodic reports to shareholders and other
materials required by law to be sent to Participants who have allocated any
Contract value to a Fund. AVIF will provide such copies to American Centurion
Life in a timely manner so as to enable American Centurion Life to print and
distribute such materials within the time required by law to be furnished to
Participants.
(c) AVIF will provide to American Centurion Life or its designated agent
at least one (1) complete copy of each piece of sales literature or other
promotional material in which American Centurion Life, or any of its respective
affiliates is named, or that refers to the Contracts, at least five (5) Business
Days prior to its use or such shorter period as the Parties hereto may, from
time to time, agree upon. No such material shall be used if American Centurion
Life or its designated agent objects to such use within five (5) Business Days
after receipt of such material or such shorter period as the Parties hereto may,
from time to time, agree upon. American Centurion Life shall receive all such
sales literature until such time as it appoints a designated agent by giving
notice to AVIF in the manner required by Section 9 hereof.
(d) Neither AVIF nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning American
Centurion Life, each Account, or the Contracts other than (i) the information or
representations contained in the registration statement, including each Account
Prospectus contained therein, relating to the Contracts, as such registration
statement and Account Prospectus may be amended from time to time; or (ii) in
published reports for the Account or the Contracts that are in the public domain
and approved by American Centurion Life for
<PAGE>
distribution; or (iii) in sales literature or other promotional material
approved by American Centurion Life or its affiliates, except with the express
written permission of American Centurion Life.
e) AVIF shall cause its principal underwriter to adopt and implement
procedures reasonably designed to ensure that information concerning American
Centurion Life, and its respective affiliates that is intended for use only by
brokers or agents selling the Contracts (i.e., information that is not intended
for distribution to Participants) ("broker only materials") is so used, and
neither American Centurion Life, nor any of its respective affiliates shall be
liable for any losses, damages or expenses relating to the improper use of such
broker only materials.
(f) For purposes of this Section 4.6, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (e.g.,
on-line networks such as the Internet or other electronic messages), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.
Section 5. Mixed and Shared Funding
5.1 General.
The SEC has granted an order to AVIF exempting it from certain provisions
of the 1940 Act and rules thereunder so that AVIF may be available for
investment by certain other entities, including, without limitation, separate
accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with American
Centurion Life, and trustees of qualified pension and retirement plans
(collectively, "Mixed and Shared Funding"). The Parties recognize that the SEC
has imposed terms and conditions for such orders that are substantially
identical to many of the provisions of this Section 5. Sections 5.2 through 5.8
below shall apply pursuant to such an exemptive order granted to AVIF. AVIF
hereby notifies American Centurion Life that, in the event that AVIF implements
Mixed and Shared Funding, it may be appropriate to include in the prospectus
pursuant to which a Contract is offered disclosure regarding the potential risks
of Mixed and Shared Funding.
<PAGE>
5.2 Disinterested Directors.
AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the
Rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board; (b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
5.3 Monitoring for Material Irreconcilable Conflicts.
AVIF agrees that its Board of Directors will monitor for the existence of
any material irreconcilable conflict between the interests of the Participants
in all separate accounts of life insurance companies utilizing AVIF
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). American Centurion Life agrees to inform the Board of Directors of AVIF
of the existence of or any potential for any such material irreconcilable
conflict of which it is aware. The concept of a "material irreconcilable
conflict" is not defined by the 1940 Act or the rules thereunder, but the
Parties recognize that such a conflict may arise for a variety of reasons,
including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax or securities
regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Fund are being managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by Participants of
different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
<PAGE>
Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 5.1 hereof, American Centurion Life
will assist the Board of Directors in carrying out its responsibilities by
providing the Board of Directors with all information reasonably necessary for
the Board of Directors to consider any issue raised, including information as to
a decision by American Centurion Life to disregard voting instructions of
Participants.
5.4 Conflict Remedies.
(a) It is agreed that if it is determined by a majority of the members of
the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, American Centurion Life will, if it is
a Participating Insurance Company for which a material irreconcilable conflict
is relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, which
steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the Accounts
from AVIF or any Fund and reinvesting such assets in a different
investment medium, including another Fund of AVIF, or submitting
the question whether such segregation should be implemented to a
vote of all affected Participants and, as appropriate,
segregating the assets of any particular group (e.g., annuity
Participants, life insurance Participants or all Participants)
that votes in favor of such segregation, or offering to the
affected Participants the option of making such a change; and
(ii) establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940 Act
or a new separate account that is operated as a management
company.
(b) If the material irreconcilable conflict arises because of American
Centurion Life's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote,
American Centurion Life may be required, at AVIF's election, to withdraw each
Account's investment in AVIF or any Fund. No charge or penalty will be imposed
as a result of such withdrawal. Any such withdrawal must take place within six
(6) months after AVIF gives notice to American Centurion Life that this
provision is being implemented, and until such withdrawal AVIF shall continue to
accept and implement orders by American Centurion Life for the purchase and
redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to American Centurion Life
conflicts with the majority of other state
<PAGE>
regulators, then American Centurion Life will withdraw each Account's investment
in AVIF within six (6) months after AVIF's Board of Directors informs American
Centurion Life that it has determined that such decision has created a material
irreconcilable conflict, and until such withdrawal AVIF shall continue to accept
and implement orders by American Centurion Life for the purchase and redemption
of Shares of AVIF. No charge or penalty will be imposed as a result of such
withdrawal.
(d) American Centurion Life agrees that any remedial action taken by it
in resolving any material irreconcilable conflict will be carried out at its
expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Contracts.
American Centurion Life will not be required by the terms hereof to establish a
new funding medium for any Contracts if an offer to do so has been declined by
vote of a majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 Notice to American Centurion Life.
AVIF will promptly make known in writing to American Centurion Life the
Board of Directors' determination of the existence of a material irreconcilable
conflict, a description of the facts that give rise to such conflict and the
implications of such conflict.
5.6 Information Requested by Board of Directors.
American Centurion Life and AVIF (or its investment adviser) will at
least annually submit to the Board of Directors of AVIF such reports, materials
or data as the Board of Directors may reasonably request so that the Board of
Directors may fully carry out the obligations imposed upon it by the provisions
hereof or any exemptive order granted by the SEC to permit Mixed and Shared
Funding, and said reports, materials and data will be submitted at any
reasonable time deemed appropriate by the Board of Directors. All reports
received by the Board of Directors of potential or existing conflicts, and all
Board of Directors actions with regard to determining the existence of a
conflict, notifying Participating Insurance Companies and Participating Plans of
a conflict, and determining whether any proposed action adequately remedies a
conflict, will be properly recorded in the minutes of the Board of Directors or
other appropriate records, and such minutes or other records will be made
available to the SEC upon request.
<PAGE>
5.7 Compliance with SEC Rules.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 Other Requirements.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.
Section 6. Termination
6.1 Events of Termination.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the
Fund, upon six (6) months advance written notice to the other parties, or, if
later, upon receipt of any required exemptive relief from the SEC, unless
otherwise agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings against
American Centurion Life or its affiliates by the NASD, the SEC, any state
insurance regulator or any other regulatory body regarding American Centurion
Life's obligations under this Agreement or related to the sale of the Contracts,
the operation of each Account, or the purchase of Shares, if, in each case, AVIF
reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on the Fund with respect to which the Agreement is to be
terminated; or
<PAGE>
(c) at the option of American Centurion Life upon institution of formal
proceedings against AVIF, its principal underwriter, or its investment adviser
by the NASD, the SEC, or any state insurance regulator or any other regulatory
body regarding AVIF's obligations under this Agreement or related to the
operation or management of AVIF or the purchase of AVIF Shares, if, in each
case, American Centurion Life reasonably determines that such proceedings, or
the facts on which such proceedings would be based, have a material likelihood
of imposing material adverse consequences on American Centurion Life, or the
Subaccount corresponding to the Fund with respect to which the Agreement is to
be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares
are not registered and, in all material respects, issued and sold in accordance
with any applicable federal or state law, or (ii) such law precludes the use of
such Shares as an underlying investment medium of the Contracts issued or to be
issued by American Centurion Life; or
(e) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
(f) at the option of American Centurion Life if the Fund ceases to
qualify as a RIC under Subchapter M of the Code or under successor or similar
provisions, or if American Centurion Life reasonably believes that the Fund may
fail to so qualify; or
(g) at the option of American Centurion Life if the Fund fails to comply
with Section 817(h) of the Code or with successor or similar provisions, or if
American Centurion Life reasonably believes that the Fund may fail to so comply;
or
(h) at the option of AVIF if the Contracts issued by American Centurion
Life cease to qualify as annuity contracts or life insurance contracts under the
Code (other than by reason of the Fund's noncompliance with Section 817(h) or
Subchapter M of the Code) or if interests in an Account under the Contracts are
not registered, where required, and, in all material respects, are not issued or
sold in accordance with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of this
Agreement.
<PAGE>
6.2 Notice Requirement for Termination.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at
least six (6) months in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at
least ninety (90) days in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions of
Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.
6.3 Funds To Remain Available.
Notwithstanding any termination of this Agreement, AVIF will, at the
option of American Centurion Life, continue to make available additional shares
of the Fund pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as ("Existing Contracts."). Specifically, without
limitation, the owners of the Existing Contracts will be permitted to reallocate
investments in the Fund (as in effect on such date), redeem investments in the
Fund and/or invest in the Fund upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 6.3 will not
apply to any terminations under Section 5 and the effect of such terminations
will be governed by Section 5 of this Agreement.
6.4 Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of this
Agreement.
<PAGE>
6.5 Continuance of Agreement for Certain Purposes.
If any Party terminates this Agreement with respect to any Fund pursuant
to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof,
this Agreement shall nevertheless continue in effect as to any Shares of that
Fund that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that American Centurion Life may, by written notice shorten said six (6) month
period in the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g),
6.1(h) or 6.1(i).
Section 7. Parties To Cooperate Respecting Termination
The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.
Section 8. Assignment
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
<PAGE>
Section 9. Notices
Notices and communications required or permitted by Section 9 hereof will be
given by means mutually acceptable to the Parties concerned. Each other notice
or communication required or permitted by this Agreement will be given to the
following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
American Express Financial Advisors Inc.
American Centurion Life Assurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Facsimile: 612-671-2269
Attn: Mr. Peter L. Slattery, Director, Variable Assets Product
Management
cc: Mary Ellyn Minenko, Esq.
Senior Counsel
AIM Variable Insurance Funds, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046
Facsimile: 713-993-9185
Attn: Nancy L. Martin, Esq.
AIM Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046
Facsimile: 713-993-9185
Attn: Mr. Gary Littlepage
cc: Nancy L. Martin, Esq.
Assistant General Counsel
<PAGE>
Section 10. Voting Procedures
Subject to the cost allocation procedures set forth in Section 3 hereof,
American Centurion Life will distribute all proxy material furnished by AVIF to
Participants to whom pass-through voting privileges are required to be extended
and will solicit voting instructions from Participants. American Centurion Life
will vote Shares in accordance with timely instructions received from
Participants. American Centurion Life will vote Shares that are (a) not
attributable to Participants to whom pass-through voting privileges are
extended, or (b) attributable to Participants, but for which no timely
instructions have been received, in the same proportion as Shares for which said
instructions have been received from Participants, so long as and to the extent
that the SEC continues to interpret the 1940 Act to require pass through voting
privileges for Participants. Neither American Centurion Life nor any of its
affiliates will in any way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Participants. American Centurion Life reserves the right to vote shares held in
any Account in its own right, to the extent permitted by law. American Centurion
Life shall be responsible for assuring that each of its Accounts holding Shares
calculates voting privileges in a manner consistent with that of other
Participating Insurance Companies or in the manner required by the Mixed and
Shared Funding exemptive order obtained by AVIF. AVIF will notify American
Centurion Life of any changes of interpretations or amendments to Mixed and
Shared Funding exemptive order it has obtained. AVIF will comply with all
provisions of the 1940 Act requiring voting by shareholders, and in particular,
AVIF either will provide for annual meetings (except insofar as the SEC may
interpret Section 16 of the 1940 Act not to require such meetings) or will
comply with Section 16(c) of the 1940 Act (although AVIF is not one of the
trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, AVIF will act in accordance with
the SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors and with whatever rules the SEC may promulgate
with respect thereto.
Section 11. Foreign Tax Credits
AVIF agrees to consult in advance with American Centurion Life concerning
any decision to elect or not to elect pursuant to Section 853 of the Code to
pass through the benefit of any foreign tax credits to its shareholders.
<PAGE>
Section 12. Indemnification
12.1 Of AVIF and AIM by American Centurion Life and AEFA.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below,
American Centurion Life and AEFA agree to indemnify and hold harmless AVIF, AIM,
their respective affiliates, and each person, if any, who controls AVIF, AIM, or
their affiliates within the meaning of Section 15 of the 1933 Act and each of
their respective directors and officers, (collectively, the "Indemnified
Parties" for purposes of this Section 12.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of American Centurion Life and AEFA) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise; provided, the Account owns shares of the Fund and insofar as
such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided, that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to American
Centurion Life or AEFA by or on behalf of AVIF for use in any
Account's 1933 Act registration statement, any Account
Prospectus, the Contracts, or sales literature or advertising or
otherwise for use in connection with the sale of Contracts or
Shares (or any amendment or supplement to any of the foregoing);
or
<PAGE>
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in AVIF's 1933 Act registration statement, AVIF
Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, not supplied for
use therein by or on behalf of American Centurion Life, AEFA or
their respective affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent
conduct of American Centurion Life, AEFA or their respective
affiliates or persons under their control (including, without
limitation, their employees and "Associated Persons," as that
term is defined in paragraph (m) of Article I of the NASD's
By-Laws), in connection with the sale or distribution of the
Contracts or Shares; or
(iii)arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to AVIF, AIM or their respective affiliates
by or on behalf of American Centurion Life, AEFA or their
respective affiliates for use in AVIF's 1933 Act registration
statement, AVIF Prospectus, sales literature or advertising of
AVIF, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by American Centurion Life or
AEFA to perform the obligations, provide the services and furnish
the materials required of them under the terms of this Agreement,
or any material breach of any representation and/or warranty made
by American Centurion Life or AEFA in this Agreement or arise out
of or result from any other material breach of this Agreement by
American Centurion Life or AEFA; or
(v) arise as a result of failure by the Contracts issued by American
Centurion Life to qualify as annuity contracts or life insurance
contracts under the Code, otherwise than by reason of any Fund's
failure to comply with Subchapter M or Section 817(h) of the
Code.
<PAGE>
(b) Neither American Centurion Life nor AEFA shall be liable under this
Section 12.1 with respect to any losses, claims, damages, liabilities or actions
to which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii) to
AVIF.
(c) Neither American Centurion Life nor AEFA shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified American Centurion Life and AEFA in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the action shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify American Centurion
Life and AEFA of any such action shall not relieve American Centurion Life and
AEFA from any liability which they may have to the Indemnified Party against
whom such action is brought otherwise than on account of this Section 12.1.
Except as otherwise provided herein, in case any such action is brought against
an Indemnified Party, American Centurion Life and AEFA shall be entitled to
participate, at their own expense, in the defense of such action and also shall
be entitled to assume the defense thereof, with counsel approved by the
Indemnified Party named in the action, which approval shall not be unreasonably
withheld. After notice from American Centurion Life or AEFA to such Indemnified
Party of American Centurion Life's or AEFA's election to assume the defense
thereof, the Indemnified Party will cooperate fully with American Centurion Life
and AEFA and shall bear the fees and expenses of any additional counsel retained
by it, and neither American Centurion Life nor AEFA will be liable to such
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection with
the defense thereof, other than reasonable costs of investigation.
12.2 Of American Centurion Life and AEFA by AVIF and AIM.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF and AIM agree to indemnify and hold harmless American
Centurion Life, AEFA, their respective affiliates, and each person, if any, who
controls American Centurion Life, AEFA or their respective affiliates within the
meaning of Section 15 of the 1933 Act and each of their respective directors and
officers, (collectively, the "Indemnified Parties" for purposes of this Section
12.2) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of AVIF and AIM) or actions
in respect thereof (including, to the extent reasonable, legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law, or otherwise; provided, the Account owns
shares of the Fund and insofar as such losses, claims, damages, liabilities or
actions:
<PAGE>
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus or sales literature
or advertising of AVIF (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to AVIF, AIM or
their respective affiliates by or on behalf of American Centurion
Life, AEFA or their respective affiliates for use in AVIF's 1933
Act registration statement, AVIF Prospectus, or in sales
literature or advertising or otherwise for use in connection with
the sale of Contracts or Shares (or any amendment or supplement
to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement, any
Account Prospectus, sales literature or advertising for the
Contracts, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of AVIF,
AIM or their respective affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent
conduct of AVIF, AIM, their respective affiliates or persons
under their control (including, without limitation, their
employees and "Associated Persons" as that Term is defined in
Section (n) of Article 1 of the NASD By-Laws), in connection with
the sale or distribution of AVIF Shares; or
<PAGE>
(iii)arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, sales
literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if such statement or omission was made in reliance
upon and in conformity with information furnished to American
Centurion Life, AEFA or their respective affiliates by or on
behalf of AVIF or AIM for use in any Account's 1933 Act
registration statement, any Account Prospectus, sales literature
or advertising covering the Contracts, or any amendment or
supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF or AIM to perform the
obligations, provide the services and furnish the materials
required of them under the terms of this Agreement, or any
material breach of any representation and/or warranty made by
AVIF or AIM in this Agreement or arise out of or result from any
other material breach of this Agreement by AVIF or AIM.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF and AIM agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with, the written
consent of AVIF or AIM) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses) to which the Indemnified Parties may
become subject directly or indirectly under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions
directly or indirectly result from or arise out of the failure of any Fund to
operate as a regulated investment company in compliance with (i) Subchapter M of
the Code and regulations thereunder, or (ii) Section 817(h) of the Code and
regulations thereunder, including, without limitation, any income taxes and
related penalties, rescission charges, liability under state law to Participants
asserting liability against American Centurion Life pursuant to the Contracts,
the costs of any ruling and closing agreement or other settlement with the IRS,
and the cost of any substitution by American Centurion Life of Shares of another
investment company or portfolio for those of any adversely affected Fund as a
funding medium for each Account that American Centurion Life reasonably deems
necessary or appropriate as a result of the noncompliance.
<PAGE>
(c) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
obligations and duties (i) under this Agreement, or (ii) to American Centurion
Life, AEFA, each Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified AVIF and AIM in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify AVIF and AIM of any such action shall not relieve
AVIF and AIM from any liability which they may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.2. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, AVIF and AIM will be entitled to participate, at
their own expense, in the defense of such action and also shall be entitled to
assume the defense thereof (which shall include, without limitation, the conduct
of any ruling request and closing agreement or other settlement proceeding with
the IRS), with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from AVIF or AIM
to such Indemnified Party of AVIF's or AIM's election to assume the defense
thereof, the Indemnified Party will cooperate fully with AVIF and AIM and shall
bear the fees and expenses of any additional counsel retained by it, and neither
AVIF nor AIM will be liable to such Indemnified Party under this Agreement for
any legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof, other than reasonable
costs of investigation.
(e) In no event shall AVIF or AIM be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including,
without limitation, American Centurion Life, AEFA or any other Participating
Insurance Company or any Participant, with respect to any losses, claims,
damages, liabilities or expenses that arise out of or result from (i) a breach
of any representation, warranty, and/or covenant made by American Centurion Life
or AEFA hereunder or by any Participating Insurance Company under an agreement
containing substantially similar representations, warranties and covenants; (ii)
the failure by American Centurion Life or any Participating Insurance Company to
maintain its segregated asset account (which invests in any Fund) as a legally
and validly established segregated asset account under applicable state law and
as a duly registered unit investment trust under the provisions of the 1940 Act
(unless exempt therefrom); or (iii) the failure by American Centurion Life or
any Participating Insurance Company to maintain its variable annuity or life
insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as annuity contracts or life insurance contracts under
applicable provisions of the Code.
<PAGE>
12.3 Effect of Notice.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or control
of any action by the indemnifying Party will in no event be deemed to be an
admission by the indemnifying Party of liability, culpability or responsibility,
and the indemnifying Party will remain free to contest liability with respect to
the claim among the Parties or otherwise.
12.4 Successors.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
Section 13. Applicable Law
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law, without regard for that state's
principles of conflict of laws.
Section 14. Execution in Counterparts
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
Section 15. Severability
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
Section 16. Rights Cumulative
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
Section 17. Headings
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
<PAGE>
Section 18. Confidentiality
AVIF acknowledges that the identities of the customers of American
Centurion Life or any of its affiliates (collectively, the "American Centurion
Life Protected Parties" for purposes of this Section 18), information maintained
regarding those customers, and all computer programs and procedures or other
information developed by the American Centurion Life Protected Parties or any of
their employees or agents in connection with American Centurion Life's
performance of its duties under this Agreement are the valuable property of the
American Centurion Life Protected Parties. AVIF agrees that if it comes into
possession of any list or compilation of the identities of or other information
about the American Centurion Life Protected Parties' customers, or any other
information or property of the American Centurion Life Protected Parties, other
than such information as may be independently developed or compiled by AVIF from
information supplied to it by the American Centurion Life Protected Parties'
customers who also maintain accounts directly with AVIF, AVIF will hold such
information or property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a) with American
Centurion Life's prior written consent; or (b) as required by law or judicial
process. American Centurion Life acknowledges that the identities of the
customers of AVIF or any of its affiliates (collectively the "AVIF Protected
Parties" for purposes of this Section 18), information maintained regarding
those customers, and all computer programs and procedures or other information
developed by the AVIF Protected Parties or any of their employees or agents in
connection with AVIF's performance of its duties under this Agreement are the
valuable property of the AVIF Protected Parties. American Centurion Life agrees
that if it comes into possession of any list or compilation of the identities of
or other information about the AVIF Protected Parties' customers or any other
information or property of the AVIF Protected Parties, other than such
information as may be independently developed or compiled by American Centurion
Life from information supplied to it by the AVIF Protected Parties' customers
who also maintain accounts directly with American Centurion Life, American
Centurion Life will hold such information or property in confidence and refrain
from using, disclosing or distributing any of such information or other property
except: (a) with AVIF's prior written consent; or (b) as required by law or
judicial process. Each party acknowledges that any breach of the agreements in
this Section 18 would result in immediate and irreparable harm to the other
parties for which there would be no adequate remedy at law and agree that in the
event of such a breach, the other parties will be entitled to equitable relief
by way of temporary and permanent injunctions, as well as such other relief as
any court of competent jurisdiction deems appropriate.
<PAGE>
Section 19. Trademarks and Fund Names
(a) AIM, or its affiliates, owns all right, title and interest in and to
the name, trademark and service mark "AIM" and such other tradenames, trademarks
and service marks as may be set forth on Schedule B, as amended from time to
time by written notice from AIM to American Centurion Life (the "AIM licensed
marks" or the "licensor's licensed marks") and is authorized to use and to
license other persons to use such marks. AIM hereby grants to American Centurion
Life and its affiliates a non-exclusive license to use the AIM licensed marks in
connection with American Centurion Life's performance of the services
contemplated under this Agreement, subject to the terms and conditions set forth
in this Section 19.
(b) The grant of license by AIM (a "licensor") to American Centurion Life
and its affiliates (the "licensee") shall terminate automatically upon
termination of this Agreement. Upon automatic termination, the licensee shall
cease to use the licensor's licensed marks, except that American Centurion Life
shall have the right to continue to service any outstanding Contracts bearing
any of the AIM licensed marks. Upon AIM's elective termination of this license,
American Centurion Life and its affiliates shall immediately cease to issue any
new annuity or life insurance contracts bearing any of the AIM licensed marks
and shall likewise cease any activity which suggests that it has any right under
any of the AIM licensed marks or that it has any association with AIM, except
that American Centurion Life shall have the right to continue to service
outstanding Contracts bearing any of the AIM licensed marks.
(c) The licensee shall obtain the prior written approval of the licensor
for the public release by such licensee of any materials bearing the licensor's
licensed marks. The licensor's approvals shall not be unreasonably withheld.
(d) During the term of this grant of license, a licensor may request that
a licensee submit samples of any materials bearing any of the licensor's
licensed marks which were previously approved by the licensor but, due to
changed circumstances, the licensor may wish to reconsider. If, on
reconsideration, or on initial review, respectively, any such samples fail to
meet with the written approval of the licensor, then the licensee shall
immediately cease distributing such disapproved materials. The licensor's
approval shall not be unreasonably withheld, and the licensor, when requesting
reconsideration of a prior approval, shall assume the reasonable expenses of
withdrawing and replacing such disapproved materials. The licensee shall obtain
the prior written approval of the licensor for the use of any new materials
developed to replace the disapproved materials, in the manner set forth above.
<PAGE>
(e) The licensee hereunder: (i) acknowledges and stipulates that, to the
best of the knowledge of the licensee, the licensor's licensed marks are valid
and enforceable trademarks and/or service marks and that such licensee does not
own the licensor's licensed marks and claims no rights therein other than as a
licensee under this Agreement; (ii) agrees never to contend otherwise in legal
proceedings or in other circumstances; and (iii) acknowledges and agrees that
the use of the licensor's licensed marks pursuant to this grant of license shall
inure to the benefit of the licensor.
Section 20. Parties to Cooperate
Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including, without limitation, the SEC,
the NASD and state insurance regulators) and will permit each other and such
authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in
their names and on their behalf by and through their duly authorized officers
signing below.
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ Nancy L. Martin By: /s/Robert H. Graham
Nancy L. Martin Name: Robert H. Graham
Assistant Secretary Title: President
AIM DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/W. Gary Littlepage
Nancy L. Martin Name: W. Gary Littlepage
Assistant General Title: Sr. Vice President
Counsel & Assistant
Secretary
AMERICAN CENTURION LIFE ASSURANCE
COMPANY, on behalf of itself and its
separate accounts
Attest: /s/ Eric L. Marhoun By: /s/Richard W. Kling
Name: Eric L. Marhoun Name: Richard W. Kling
Title: Secretary/General Counsel Title: Chairman of the
AMERICAN EXPRESS FINANCIAL ADVISORS
INC.
Attest: /s/ William A. Stoltzmann By: /s/ Stuart A. Sedlacek
Name: William A. Stolzmann Name: Stuart A. Sedlacek
Title: Vice President Title: Vice Treasurer
<PAGE>
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
o AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
o ACL Variable Annuity Account 2
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
o Flexible Premium Deferred Variable Annuity Contract Form No. 45054
<PAGE>
SCHEDULE B
o AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
o AIM and Design
PARTICIPATION AGREEMENT
Among
OPPENHEIMER VARIABLE ACCOUNT FUNDS,
OPPENHEIMERFUNDS, INC.
and
AMERICAN CENTURION LIFE ASSURANCE COMPANY
THIS AGREEMENT (the "Agreement") made and entered into as of
the 4th day of September, 1998 by and among American Centurion Life Assurance
Company (hereinafter the "Company"), on its own behalf and on behalf of each
separate account of the Company named in Schedule 1 to this Agreement, as may be
amended from time to time by mutual consent (hereinafter collectively the
"Accounts"), Oppenheimer Variable Account Funds (hereinafter the "Fund") and
OppenheimerFunds, Inc. (hereinafter the "Adviser").
WHEREAS, the Fund is an open-end management investment company
and is available to act as the investment vehicle for separate accounts now in
existence or to be established at any date hereafter for variable life insurance
policies and variable annuity contracts (collectively, the "Variable Insurance
Products") offered by insurance companies (hereinafter "Participating Insurance
Companies");
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each designated a "Portfolio", and each representing
the interests in a particular managed pool of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities
and Exchange commission, dated July 16, 1986 (File No. 812-6324) granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a) and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Mixed and Shared Funding Exemptive Order");
<PAGE>
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Adviser is duly registered as an investment
adviser under the federal Investment Advisers Act of 1940;
WHEREAS, the Company has registered or will register certain
variable annuity and/or life insurance contracts under the 1933 Act (hereinafter
"Contracts") (unless an exemption from registration is available);
WHEREAS, the Accounts are or will be duly organized, validly
existing segregated asset accounts, established by resolution of the Board of
Directors of the Company, to set aside and invest assets attributable to the
aforesaid variable contracts (the Contract(s) covered by this Agreement are
specified in Schedule 2 attached hereto, as may be modified by mutual consent
from time to time);
WHEREAS, the Company has registered or will register the
Accounts as unit investment trusts under the 1940 Act (unless an exemption from
registration is available);
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios (the
Portfolios covered by this Agreement are specified in Schedule 3 attached hereto
as may be modified by mutual consent from time to time), on behalf of the
Accounts to fund the Contracts named in Schedule 2, as may be amended from time
to time by mutual consent, and the Fund is authorized to sell such shares to
unit investment trusts such as the Accounts at net asset value; and
NOW, THEREFORE, in consideration of their mutual promises, the
Fund, the Adviser and the Company agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of
the Fund which the Company orders on behalf of the Account, executing such
orders on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the order for the shares of the Fund. For purposes
of this Section 1.1, the Company shall be the designee of the Fund for receipt
of such orders from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives written (or facsimile)
notice of such order by 10:00 a.m. New York time on the next following Business
Day. "Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Fund calculates its net asset value pursuant
to the rules of the Securities and Exchange Commission.
<PAGE>
1.2. The Company shall pay for Fund shares on the next
Business Day after it places an order to purchase Fund shares in accordance with
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire
pursuant to the instructions of the Fund's treasurer or by a credit for any
shares redeemed or by any other method agreed to by the parties.
1.3. The Fund agrees to make Fund shares available
indefinitely for purchase at the applicable net asset value per share by the
Company for its Accounts listed in Schedule 1 on those days on which the Fund
calculates its net asset value pursuant to rules of the SEC; provided, however,
that the Board of Trustees of the Fund (hereinafter the "Trustees") may refuse
to sell shares of any Portfolio to any person, or suspend or terminate the
offering of shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of the
Trustees, acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, in the best interests of the shareholders
of any Portfolio.
1.4. The Fund agrees to redeem, upon the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.4, the Company shall be the designee of the Fund for receipt of
requests for redemption and receipt by such designee shall constitute receipt by
the Fund; provided that the Fund receives written (or facsimile) notice of such
request for redemption by 10:00 a.m. New York time on the next following
Business Day.
1.5. The Fund shall endeavor to pay for the Fund shares
redeemed on the same Business Day the Fund receives notice of the redemption
order in accordance with Section 1.4 hereof, but in no event shall payment be
made beyond the time period specified in the Fund's prospectus or statement of
additional information. Payment shall be in federal funds transmitted by wire to
the Company's account as designated by the Company in writing from time to time
or by any other method agreed to by the parties.
1.6. The Company agrees to purchase and redeem the shares of
the Portfolios named in Schedule 3 offered by the then current prospectus and
statement of additional information of the Fund in accordance with the
provisions of such prospectus and statement of additional information
1.7. The Fund shall furnish same-day notice (by wire or
telephone followed by written confirmation) to the Company of any income
dividends or capital gain distributions payable on the Portfolios' shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election on ten
Business Days' notice to the Fund and the Adviser and
<PAGE>
thereafter to receive all such dividends and distributions in cash. The Fund
will notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.8. The Fund shall make the net asset value per share for
each Portfolio available to the Company on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated and will use its
best efforts to make such net asset value per share available by 6:00 p.m. New
York time, but in no event later than 7:00 p.m. New York time each Business Day.
1.9. The Fund agrees that its shares will be sold only to
Participating Insurance Companies and their separate accounts or to such other
persons permitted under applicable tax laws and/or regulations, a Revenue Ruling
or private letter ruling granted by the Internal Revenue Service on which the
Fund may rely.
ARTICLE II. Sales Material, Prospectuses and Other Reports
2.1. The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee a copy of each Contract prospectus or
statement of additional information in which the Fund or the Adviser is named
prior to the filing of such document with the Securities and Exchange
Commission. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least ten Business Days
prior to its use. No such material shall be used if the Fund or its designee
reasonably object to such use within ten Business Days after receipt of such
material.
2.2. The Fund and/or the Adviser shall furnish, or shall cause
to be furnished, to the Company or its designee a copy of each Fund prospectus
or statement of additional information in which the Company is named prior to
the filing of such document with the Securities and Exchange Commission. The
Fund shall furnish, or shall cause to be furnished, to the Company or its
designee, each piece of sales literature or other promotional material in which
the Company is named, at least ten Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably object to such
use within ten Business Days after receipt of such material.
2.3. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser in connection with the sale of the Contracts other than the
information or representations contained in the registration statement,
prospectus or statement of additional information for the Fund shares, as such
registration statement, prospectus and statement of additional information may
be amended or supplemented from time to time, or in reports or proxy statements
for the Fund, or in sales literature, published reports in the public domain or
other promotional materials approved by the Fund or its designee, except as
required by
<PAGE>
legal process or regulatory authorities or with the permission of the Fund.
Nothing in this Section 2.3 will be construed as preventing the Company or its
agents from giving advice on investments in the Fund.
2.4. The Fund and/or the Adviser shall not give any
information or make any representations or statements on behalf of the Company
or concerning the Company, the Accounts or the Contracts other than the
information or representations contained in the registration statement,
prospectus or statement of additional information for the Contracts, as such
registration statement, prospectus and statement of additional information may
be amended or supplemented from time to time, in reports or proxy statements for
the Company, or in materials approved by the Company for distribution including
sales literature or other promotional materials, except as required by legal
process or regulatory authorities or with the permission of the Company.
2.5. For purposes of this Article II, the phrase "sales
literature or other promotional material" includes, without limitation,
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboard or electronic media), and sales literature
(such as brochures, circulars, market letters and form letters), distributed or
made generally available to customers or the public.
2.6. The Fund and the Adviser hereby consent to the Company's
use of the names "Oppenheimer Variable Account Funds" and OppenheimerFunds" in
connection with the marketing of the Contracts, subject to the terms of Sections
2.1 and 2.3 of this Agreement. Such consent will terminate with the termination
of this Agreement.
2.7. The Fund or the Adviser shall provide a camera-ready copy
of and/or a computer diskette containing its current prospectus within a
reasonable period of its filing date, and provide other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is supplemented or amended) to have the
prospectus for the Fund and the prospectuses for the other investment options
under the Contracts printed together in one document. The Adviser shall be
permitted to review and approve the typeset form of the Fund's prospectus prior
to such printing provided the prospectus has been provided within a reasonable
period.
2.8. At the option of the Company, the Fund or the Adviser
shall either: (i) provide the Company with as many copies of the Fund's
statement of additional information, reports to shareholders, other information
relating to the Fund necessary to prepare financial reports, and other
communications to shareholders as the Company shall reasonably require for
distribution to existing and/or prospective Contract owners; or (ii)
camera-ready, computer diskette and/or a printed copy, if appropriate, of such
materials for printing and distribution to existing and/or prospective Contract
owners, within a
<PAGE>
reasonable period of the filing date for definitive copies of such material. The
Adviser shall be permitted to review and approve the typeset form of such
materials prior to such printing provided such materials have been provided
within a reasonable period.
ARTICLE III. Fees and Expenses
3.1. The Fund and Adviser shall pay no fee or other
compensation to the Company under this Agreement, and the Company shall pay no
fee or other compensation to the Fund or Adviser under this Agreement, except as
provided herein.
3.2. All expenses incident to performance by each party of its
respective duties under this Agreement shall be paid by that party. The Fund
shall see to it that all its shares are registered and authorized for issuance
in accordance with applicable federal law and, if and to the extent advisable by
the Fund, in accordance with applicable state laws prior to their sale. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, and the preparation of all statements
and notices required by any federal or state law. The Fund shall bear the
expenses of printing the Fund's statement of additional information and proxy
materials.
3.3. The Company shall bear the expenses of printing and
distributing to existing and prospective Contract owners the Fund's prospectus
and reports to owners of Contracts issued by the Company and the expenses of
distributing the Fund's statement of additional information to existing and
prospective Contract owners, distributing proxy materials to existing Contract
owners and tabulation of proxy votes.
3.4. In the event the Fund adds one or more additional
Portfolios and the parties desire to make such Portfolios available to the
respective Contract owners as an underlying investment medium, the parties may
agree to execute a new Schedule 3 or an amendment to this Agreement authorizing
the issuance of shares of the new Portfolios to the particular Account. The
amendment may also provide for the sharing of expenses for the establishment of
new Portfolios among Participating Insurance Companies desiring to invest in
such Portfolios and the provision of funds as the initial investment in the new
Portfolios.
ARTICLE IV. Representations and Warranties
4.1. The Company represents and warrants that it is an
insurance company duly organized and in good standing under the laws of the
State of New York.
4.2. The Fund represents and warrants that it is duly
organized and validly existing under the laws of the State of Massachusetts.
<PAGE>
4.3. The Fund represents and warrants that the investments of
each Portfolio will comply with the diversification requirements set forth in
Section 817(h) of the Internal Revenue Code of 1986, as amended (hereinafter the
"Code"), and the rules and regulations thereunder, or any successor or similar
provision, or Revenue Ruling or private letter ruling granted by the Internal
Revenue Service on which the Fund may rely. In the event the Fund fails to
comply with these diversification requirements, the Fund shall take all
reasonable steps to notify the Company of such noncompliance and to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Treasury Regulation 1.817-5, or any successor or similar provision, or
Revenue Ruling or private letter ruling granted by the Internal Revenue Service
on which the Fund may rely.
4.4. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that it will
make every effort to maintain such qualification (under Subchapter M or any
successor or similar provision) and that it will notify the Company immediately
upon having a reasonable basis for believing that it has ceased to so qualify or
that it might not so qualify in the future.
4.5. The Fund represents that its investment objectives,
policies and restrictions comply in all material respects with any applicable
state laws of which the Fund is aware as they may apply to the Fund. The Fund
agrees that it will endeavor to furnish the information required by state
insurance laws and requested by the Company to assist the Company in obtaining
the authority needed to issue the Contracts in the various states.
4.6. The Fund represents and warrants that all of its
Trustees, officers, employees, investment advisers and other
individuals/entities having access to the funds and/or securities of the Fund
are and continue to be at all times covered by a blanket fidelity bond or
similar coverage (which may, at the Fund's election, be in the form of a joint
insured bond) for the benefit of the Fund in an amount not less than the minimal
coverage as required by Rule 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding or insurance
company.
ARTICLE V. Potential Conflicts
5.1. The Board of Trustees of the Fund (the "Board") will
monitor the Fund for the existence of any material irreconcilable conflict
between the interests of the Contract owners of all separate accounts investing
in the Fund. An irreconcilable material conflict may arise for a variety of
reasons, including: (a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or securities laws
or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in
<PAGE>
voting instructions given by variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to disregard the
voting instructions of Contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
5.2. The Company has reviewed a copy of the Mixed and Shared
Funding Exemptive Order, and in particular, has reviewed the conditions to the
requested relief set forth therein. The Company agrees to be bound by the
responsibilities of a participating insurance company as set forth in the Mixed
and Shared Funding Exemptive Order, including without limitation the requirement
that the Company report any potential or existing conflicts of which it is aware
to the Board. The Company will assist the Board in carrying out its
responsibilities in monitoring such conflicts under the Mixed and Shared Funding
Exemptive Order, by providing the Board in a timely manner with all information
reasonably necessary for the Board to consider any issues raised. This includes,
but is not limited to, an obligation by the Company to inform the Board whenever
Contract owner voting instructions are disregarded and by confirming in writing,
at the Fund's request, that the Company is unaware of any such potential or
existing material irreconcilable conflicts.
5.3. If it is determined by a majority of the Board, or a
majority of its disinterested Trustees, that a material irreconcilable conflict
exists, the Company shall, at its expense and to the extent reasonably
practicable (as determined by a majority of the disinterested Trustees), take
whatever steps are necessary to remedy or eliminate the irreconcilable material
conflict up to and including: (1) withdrawing the assets allocable to some or
all of the subaccounts of the Accounts from the Fund or any Portfolio and
reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Fund, or submitting the question whether
such segregation should be implemented to a vote of all affected Contract owners
and, as appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or variable contract
owners of one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected Contract owners the option of
making such a change; and (2) establishing a new registered management
investment company or managed separate account.
5.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the subaccount of
the Account's investment in the Fund and terminate this Agreement; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. No charge or penalty will be
imposed as a result of such withdrawal. Any such withdrawal and termination must
take place within six (6) months after the Fund gives written notice that this
<PAGE>
provision is being implemented, and until the end of the six month period the
Fund shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Fund.
5.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the subaccount of the Account's investment in the Fund and terminate
this Agreement within six months after the Board informs the Company in writing
that it has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. No charge
or penalty will be imposed as a result of such withdrawal. Until the end of the
foregoing six month period, the Fund shall continue to accept and implement
orders by the Company for the purchase and redemption of shares of the Fund,
subject to applicable regulatory limitation.
5.6. For purposes of Sections 5.3 through 5.6 of this
Agreement, a majority of the disinterested members of the Board shall determine
whether any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new funding
medium for the Contracts. The Company shall not be required by Section 5.3 to
establish a new funding medium for Contracts if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely affected
by the irreconcilable material conflict. In the event that the Board determines
that any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the particular subaccount of the
Account's investment in the Fund and terminate this Agreement within six (6)
months after the Board informs the Company in writing of the foregoing
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. No charge or
penalty will be imposed as a result of such withdrawal.
ARTICLE VI. Indemnification
6.1. The Company agrees to indemnify and hold harmless the
Fund and the Adviser and each person, if any, who controls or is associated with
the Fund and the Adviser within the meaning of such terms under applicable
federal securities laws and any Trustees, officers, employees and agents of the
foregoing (collectively, the "Indemnified Parties" for purposes of this Article
VI) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees
<PAGE>
incurred in connection therewith) (collectively, the "Losses"), to which the
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any
untrue statements or alleged untrue statements of
material fact contained in a registration statement,
prospectus or statement of additional information for
the Contracts or in the Contracts themselves or in
sales literature generated by the Company on behalf
of the Contracts or Accounts (or any amendment or
supplement to any of the foregoing) (collectively,
the "Company Documents" for purposes of this Article
VI), or arise out of or are based upon the omission
or the alleged omission to state therein a material
fact required to be stated therein or necessary to
make the statements therein not misleading, provided
that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or
such alleged statement or omission was made in
reliance upon and was accurately derived from
information furnished to the Company by or on behalf
of the Fund or the Adviser for use in Company
Documents or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(b) arise out of or result from statements
or representations (other than statements or
representations contained in and accurately derived
from Fund Documents as defined in Section 6.2(a)) or
wrongful conduct of the Company or persons under its
control, with respect to the sale or acquisition of
the Contracts or Fund shares; or
(c) arise out of or result from any untrue
statement or alleged untrue statement of a material
fact contained in Fund Documents as defined in
Section 6.2(a) or the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein
not misleading if such statement or omission was made
in reliance upon and accurately derived from
information furnished to the Fund or the Adviser by
or on behalf of the Company; or
(d) arise out of or result from any
material breach of any representation and/or warranty
made by the Company in this Agreement or arise out of
or result from any other material breach of this
Agreement by the Company.
<PAGE>
6.2. The Fund and the Adviser agree to indemnify and hold
harmless the Company and each person, if any, who controls or is associated with
the Company within the meaning of such terms under applicable federal securities
laws and any directors, trustees, officers, employees and agents of the
foregoing (collectively, the "Indemnified Parties" for purposes of this Article
VI) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Fund and/or the Adviser) or
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, the "Losses"), to which
the Indemnified Parties may become subject under any statute or regulation, or
at common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of material fact contained in a
registration statement, prospectus or statement of additional
information for the Fund or in sales literature generated by the
Fund and/or the Adviser (or any amendment or supplement to any of
the foregoing) (collectively, the "Fund Documents" for purposes
of this Article VI), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and was accurately derived from information furnished to the Fund
or the Adviser by or on behalf of the Company for use in Fund
Documents or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(b) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Company Documents) or
wrongful conduct of the Fund or the Adviser or persons under
their control, with respect to the sale or acquisition of the
Contracts or Fund shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or
omission was made in reliance upon and accurately derived from
written information furnished to the Company by or on behalf of
the Fund; or
<PAGE>
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund or the Adviser.
6.3. Neither the Company nor the Fund or the Adviser shall be
liable under the indemnification provisions of Sections 6.1 or 6.2, as
applicable, with respect to any Losses incurred or assessed against an
Indemnified Party that arise from such Indemnified Party's willful misfeasance,
bad faith or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement.
6.4. Neither the Company nor the Fund or the Adviser shall be
liable under the indemnification provisions of Sections 6.1 or 6.2, as
applicable, with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the other party in writing within a
reasonable time after the summons, or other first written notification, giving
information of the nature of the claim, complaint or action by a regulatory
authority shall have been served upon or otherwise received by such Indemnified
Party (or after such Indemnified Party shall have received notice of service
upon or other notification to any designated agent), but failure to notify the
party against whom indemnification is sought of any such claim shall not relieve
that party from any liability which it may have to the Indemnified Party in the
absence of Sections 6.1 and 6.2.
6.5. In case any such action is brought against the
Indemnified Parties, the indemnifying party shall be entitled to participate, at
its own expense, in the defense of such action. The indemnifying party also
shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to the party named in the action. After notice from the
indemnifying party to the Indemnified Party of an election to assume such
defense, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the indemnifying party will not be liable
to the Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
ARTICLE VII. Applicable Law
7.1. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of New
York.
7.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange
<PAGE>
Commission may grant (including, but not limited to, the Mixed and Shared
Funding Exemptive Order) and the terms hereof shall be interpreted and construed
in accordance therewith.
ARTICLE VIII. Termination
8.1. This Agreement shall terminate with respect to some or
all Portfolios:
(a) at the option of any party upon six months' advance
written notice to the other parties or as otherwise agreed in
writing by all parties; or
(b) at the option of the Company to the extent that shares
of Portfolios are not reasonably available to meet the
requirements of its Contracts or are not appropriate funding
vehicles for the Contracts, as determined by the Company
reasonably and in good faith. Prompt notice of the election to
terminate for such cause and an explanation of such cause shall
be furnished by the Company; or
(c) as provided in Article V.
8.2. It is understood and agreed that the right of any party
hereto to terminate this Agreement pursuant to Section 8.1(a) may be exercised
for cause or for no cause.
8.3. Notwithstanding any termination of this Agreement, the
Fund shall, at the option of the Company, continue to make available additional
shares of the Fund (or any Portfolio) pursuant to the terms and conditions of
this Agreement for all Contracts in effect on the effective date of termination
of this Agreement for which shares of the Fund (or any Portfolio) serve as the
underlying medium unless such further sale of additional shares of the Fund is
prohibited by law or by regulatory authorities, or as determined by the Fund's
Board to be necessary to remedy or eliminate an irreconcilable conflict pursuant
to Article V hereof.
8.4. The provisions of this Article VIII shall survive the
termination of this Agreement, and as long as shares of the Fund are held on
behalf of Contract owners in accordance with Section 8.3, the provisions of this
Agreement shall survive the termination of this Agreement with respect to those
Contract owners.
<PAGE>
ARTICLE IX. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify to
the other party.
If to the Fund:
Oppenheimer Variable Account Funds
c/o OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0203
Attn: Legal Department
If to the Adviser:
OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0203
Attn: General Counsel
If to the Company:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Attn: Peter L. Slattery
Director - Variable Assets Product Management
with a copy to:
Mary Ellyn Minenko
Vice President and Group Counsel
ARTICLE X. Miscellaneous
10.1. The Fund and the Adviser acknowledge that the identities
of the customers of the Company or any of its affiliates (collectively the
"Protected Parties" for purposes of this Section 10.1), information maintained
regarding those customers, and all computer programs and procedures or other
information developed or used by the Protected Parties or any of their employees
or agents in connection with the Company's performance of its duties under this
Agreement are the valuable property of the Protected Parties. The Fund and the
Adviser agree that if they come into possession of any list or compilation of
the identities of or other information about the Protected Parties' customers,
or any other information or property of the Protected Parties, other than such
<PAGE>
information as may be independently developed or compiled by the Fund or the
Adviser from information supplied to them by the Protected Parties' customers
who also maintain accounts with the Fund, the Adviser or the Fund's transfer
agent other than as Contract owners, the Fund and the Adviser will hold such
information or property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a) with the
Company's prior written consent; or (b) as required by legal or judicial process
or regulatory authority. The Fund and the Adviser acknowledge that any breach of
the agreements in this Section 10.1 would result in immediate and irreparable
harm to the Protected Parties for which there would be no adequate remedy at law
and agree that in the event of such a breach, the Protected Parties will be
entitled to equitable relief by way of temporary and permanent injunctions, as
well as such other relief as any court of competent jurisdiction deems
appropriate.
10.2. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
10.3. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
10.4. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
10.5. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state securities and insurance
regulators) and shall permit such authorities reasonable access to its books and
records in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
10.6. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
10.7. It is understood by the parties that this Agreement is
not an exclusive arrangement in any respect.
10.8. The Company and the Adviser each understand and agree
that the obligations of the Fund under this Agreement are not binding upon any
shareholder of the Fund personally, but bind only the Fund and the Fund's
property; the Company and the Adviser each represent that it has notice of the
provisions of the Declaration of Trust of the Fund disclaiming shareholder
liability for acts or obligations of the Fund.
<PAGE>
10.9. This Agreement shall not be assigned by any party hereto
without the prior consent of all the parties.
10.10. No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized and
executed by all parties.
10.11. This Agreement sets forth the entire agreement between
the parties and supercedes all prior communications, agreements and
understandings, oral or written, between the parities regarding the subject
matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed as of the date specified
below.
<TABLE>
<CAPTION>
Date: September 4, 1998
<S> <C>
AMERICAN CENTURION LIFE ATTEST:
ASSURANCE COMPANY
By: /s/ Jay C. Hatlestad By: /s/ Eric L Marhoun
--------------------------------------- ---------------------------------------
Name: Jay C. Hatlestad Name: Eric L. Marhoun
Title: Vice President & Contoller Title: General Counsel & Secretary
OPPENHEIMER VARIABLE
ACCOUNT FUNDS
By: /s/ Andrew J. Donahue
Name: Andrew J. Donahue
Title: Vice President
OPPENHEIMERFUNDS, INC.
By: /s/ Wesley W. Mayer
Name: Wesley W. Mayer
Title: Vice President
</TABLE>
<PAGE>
SCHEDULE 1
Separate Accounts
ACL Variable Annuity Account 2
<PAGE>
SCHEDULE 2
Contracts
Contract Form 45055
<PAGE>
SCHEDULE 3
Portfolios
Oppenheimer Variable Account Funds/Oppenheimer Growth Fund
Oppenheimer Variable Account Funds/Oppenheimer High Income Fund
November 2, 1998
American Centurion Life Assurance Company
20 Madison Avenue Extension
P.O. Box 5555
Albany, NY 12205-0555
RE: Registration Statement on Form N-4
File No.: 333-00519
Ladies and Gentlemen:
I am familiar with the establishment of the ACL Variable Annuity Account 2
("Account"), which is a separate account of American Centurion Life Assurance
Company ("Company") established by the Company's Board of Directors according to
applicable insurance law. I also am familiar with the above-referenced
Registration Statement filed by the Company on behalf of the Account with the
Securities and Exchange Commission.
I have made such examination of law and examined such documents and records as
in my judgment are necessary and appropriate to enable me to give the following
opinion:
1. The Company is duly incorporated, validly existing and in good standing
under applicable state law and is duly licensed or qualified to do business
in each jurisdiction where it transacts business. The Company has all
corporate powers required to carry on its business and to issue the
contracts.
2. The Account is a validly created and existing separate account of the
Company and is duly authorized to issue the securities registered.
3. The contracts issued by the Company, when offered and sold in accordance
with the prospectus contained in the Registration Statement and in
compliance with applicable law, will be legally issued and represent
binding obligations of the Company in accordance with their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Mary Ellyn Minenko
Mary Ellyn Minenko
Senior Counsel
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our reports dated February 5, 1998 on the financial statements
and schedules of American Centurion Life Assurance Company in Post-Effective
Amendment No. 3 to the Registration Statement (Form N-4, No. 333-00519) and
related Prospectus for the registration of the ACL Personal Portfolio Plus2/ACL
Personal Portfolio for ACL Variable Annuity Account 2 to be offered by American
Centurion Life Assurance Company.
Ernst & Young LLP
Minneapolis, Minnesota
October 30, 1998
Report of Independent Auditors
The Board of Directors
American Centurion Life Assurance Company
We have audited the financial statements of American Centurion Life Assurance
Company (a wholly owned subsidiary of IDS Life Insurance Company) as of December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997, and have issued our report thereon dated February 5, 1998 (included
elsewhere in this Registration Statement). Our audits also included the
financial statement schedules listed in Item 24(b) of this Registration
Statement. These schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
February 5, 1998
Minneapolis, Minnesota
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1997
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -----------------------------------------------------------------------------------------------------------------------
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
<S> <C> <C> <C>
authorities (a) $ 1,522 $ 1,635 $ 1,522
States, municipalities and
political subdivisions 0 0 0
All other corporate bonds 16,176 16,518 16,176
----------------- ------------------- ----------------------
Total held to maturity 17,698 18,153 17,698
Available for sale:
United States Government and
government agencies and
authorities (b) 80,996 82,191 82,191
States, municipalities and
political subdivisions 1,000 1,031 1,031
All other corporate bonds (c) 128,944 132,939 132,939
----------------- ------------------- ----------------------
Total available for sale 210,940 216,161 216,161
Total investments $ 228,638 $ XXXXXXXXX $ 233,859
================= ======================
</TABLE>
(a) - Includes mortgage-backed securities with a cost and market value of $1,522
and $1,635, respectively.
(b) - Includes mortgage-backed securities with a cost and market value of
$78,911 and $80,092, respectively.
(c) - Includes mortgage-backed securities with a cost and market value of
$10,494 and $10,704, respectively.
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
Life insurance in force $ 216,961 $ 216,726 $ -- $235 0.00%
Premiums:
Life insurance $ 1,346 $ 1,346 $ -- $ -- 0.00%
Total premiums $ 1,346 $ 1,346 $ -- $ -- 0.00%
- -------------------------------------------------------------------------------------------------------------------
For the year ended
December 31, 1996
Life insurance in force $ 242,209 $ 241,974 $ -- $235 0.00%
Premiums:
Life insurance $ 1,351 $ 1,351 $ -- $ -- 0.00%
Total premiums $ 1,351 $ 1,351 $ -- $ -- 0.00%
- -------------------------------------------------------------------------------------------------------------------
For the year ended
December 31, 1995
Life insurance in force $ 265,799 $ 265,564 $ -- $ 235 0.00%
Premiums:
Life insurance $ 1,384 $ 1,384 $ -- $ -- 0.00%
Total premiums $ 1,384 $ 1,384 $ -- $ -- 0.00%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 216161
<DEBT-CARRYING-VALUE> 17698
<DEBT-MARKET-VALUE> 18153
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 233859
<CASH> 3756
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 9280
<TOTAL-ASSETS> 255614
<POLICY-LOSSES> 208640
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 2305
<NOTES-PAYABLE> 0
<COMMON> 1000
0
0
<OTHER-SE> 34316
<TOTAL-LIABILITY-AND-EQUITY> 255614
0
<INVESTMENT-INCOME> 13331
<INVESTMENT-GAINS> 25
<OTHER-INCOME> 326
<BENEFITS> 8889
<UNDERWRITING-AMORTIZATION> 114
<UNDERWRITING-OTHER> 1324
<INCOME-PRETAX> 3355
<INCOME-TAX> 1389
<INCOME-CONTINUING> 1966
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1966
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
