The prospectus containing information for the ACL Personal Portfolio Plus2 and
the ACL Personal Portfolio(SM) Variable Annuities filed electronically in
Registrant's Post-Effective Amendment No. 5 to Registration Statement No.
333-00519 on Form N-4, filed on or about April 27, 2000, is incorporated by
reference.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
ACL PERSONAL PORTFOLIO PLUS2
and
ACL PERSONAL PORTFOLIOSM
ACL VARIABLE ANNUITY ACCOUNT 2
May 1, 2000
Revised as of July 21, 2000
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) is not a prospectus. It should be
read together with the prospectus dated the same date as this SAI, which may be
obtained from your agent, or by writing or calling us at the address and
telephone number below. The prospectus is incorporated in this SAI by reference.
American Centurion Life Assurance Company
20 Madison Avenue Extension
P.O. Box 5555
Albany, NY 12205-0555
800-504-0469
<PAGE>
TABLE OF CONTENTS
Performance Information.....................................................p.3
Calculating Annuity Payouts.................................................p.7
Rating Agencies.............................................................p.9
Principal Underwriter.......................................................p.9
Independent Auditors........................................................p.9
Financial Statements
<PAGE>
PERFORMANCE INFORMATION
The subaccounts may quote various performance figures to illustrate past
performance. We base total return and current yield quotations (if applicable)
on standardized methods of computing performance as required by the Securities
and Exchange Commission (SEC). An explanation of the methods used to compute
performance follows below.
Average Annual Total Return
We will express quotations of average annual total return for the subaccounts in
terms of the average annual compounded rate of return of a hypothetical
investment in the contract over a period of one, five and 10 years (or, if less,
up to the life of the subaccounts), calculated according to the following
formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the period, at the end of the
period (or fractional portion thereof)
We calculated the following performance figures on the basis of historical
performance of each fund. We show actual performance from the date the
subaccounts began investing in the funds. We also show performance from the
commencement date of the funds as if the contract existed at that time, which it
did not. Although we base performance on historical earnings, past performance
does not guarantee future results.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return With Withdrawal For Periods Ending Dec. 31, 1999
Performance since
commencement of the Performance since
subaccount commencement of the Fund**
<S> <C> <C> <C> <C> <C> <C> <C>
Since Since
Subaccount Investing In: 1 Year commencement 1 Year Years 10 Years commencement
AXPSM VARIABLE PORTFOLIO -
ISI Bond Fund (10/97;10/81)* -6.13% -1.99% -6.13% 5.96% 6.60% 9.11%
ICR Capital Resource Fund (10/97;10/81) 14.96 18.47 14.96 19.30 13.83 14.30
IMS Cash Management Fund (10/97;10/81) -3.32 1.27 -3.32 3.02 3.36 5.02
IIE International Fund (10/97;1/92) 36.53 21.80 36.53 14.15 -- 11.73
IMG Managed Fund (10/97;4/86) 6.17 10.50 6.17 16.17 11.89 11.24
IGD New Dimensions Fund(R)(11/98;5/96) 23.10 36.84 23.10 -- -- 23.88
IAG Strategy Aggressive Fund (10/97;1/92) 61.58 24.12 61.58 22.73 -- 15.32
AIM V.I.
IGN Growth and Income Fund (11/98;5/94) 25.31 38.58 25.31 26.10 -- 22.55
IIN International Equity Fund (11/98;5/93) 45.82 43.99 45.82 19.88 -- 17.03
IVA Value Fund (11/98;5/93) 21.02 35.50 21.02 25.16 -- 21.23
AMERICAN CENTURY VARIABLE PORTFOLIO, INC.
IIG Income and Growth (11/98;10/97) 9.31 18.56 9.31 -- -- 20.92
IVL Value (11/98;5/96) -8.44 -7.13 -8.44 -- -- 8.75
JANUS ASPEN SERIES
ISB Balanced Portfolio: Institutional 17.92 32.15 17.92 22.62 -- 18.81
Shares (11/98;9/93)
IWG Worldwide Growth Portfolio: 55.09 62.93 55.09 31.48 -- 27.78
Institutional Shares (11/98;9/93)
OCC ACCUMULATION TRUST
IEQ Equity Portfolio (11/98;8/88) -5.33 -1.59 -5.33 17.96 13.79 13.98
IMD Managed Portfolio (10/97;8/88) -3.08 4.48 -3.08 17.66 14.91 15.99
ISC Small Cap Portfolio (11/98;8/88) -9.34 -5.72 -9.34 6.31 9.50 9.86
IUS U.S. Government Income Portfolio -9.11 0.01 -9.11 -- -- 3.74
(10/97;1/95)
OPPENHEIMER VARIABLE ACCOUNT FUNDS
IGR Capital Appreciation Fund/VA 32.61 44.29 32.61 28.56 16.74 15.90
(11/98;4/85)
IHI High Income Fund/VA (11/98;4/86) -3.73 1.22 -3.73 8.22 11.02 10.03
PUTNAM VARIABLE TRUST
IDI Putnam VT Diversified Income Fund - -6.04 -3.28 -6.04 4.86 -- 3.44
Class IA Shares (10/97;9/93)
IGI Putnam VT Growth and Income Fund - -6.21 4.81 -6.21 17.34 12.34 13.51
Class IA Shares (10/97;2/88)
IHY Putnam VT High Yield Fund - Class IA -2.23 -3.62 -2.23 6.72 9.21 7.84
Shares (10/97;2/88)
INO Putnam VT New Opportunities Fund - 59.93 37.65 59.93 30.77 -- 28.31
Class IA Shares (10/97;5/94)
PUTNAM VARIABLE TRUST
IPD Putnam VT Diversified Income Fund - -6.06 -2.49 -6.06 4.71 -- 3.30
Class IB Shares (11/98;9/93)***
IPG Putnam VT Growth and Income Fund - -6.32 0.17 -6.32 17.18 12.18 13.35
Class IB Shares (11/98;2/88) ***
IPH Putnam VT High Yield Fund - Class IB -2.33 1.86 -2.33 6.58 9.07 7.69
Shares (11/98;2/88) ***
IPV Putnam VT Voyager Fund - Class IB 48.75 62.63 48.75 29.35 20.36 19.59
Shares (11/98;2/88) ***
* (Commencement dates of the subaccount; Commencement dates of the Fund)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 1.25% mortality and expense fee, a 0.15%
variable account administrative charge and applicable withdrawal charges.
*** Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to the inception of Class IB Shares, performance
information for Class IB Shares is based upon performance of the Fund's
Class IA Shares adjusted to reflect the fees paid by Class IB Shares,
including a 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return Without Withdrawal For Periods Ending Dec. 31, 1999
Performance since
commencement of the Performance since
subaccount commencement of the Fund**
<S> <C> <C> <C> <C> <C> <C> <C>
Since Since
Subaccount Investing In: 1 Year commencement 1 Year 5 Years 10 Years commencement
AXPSM VARIABLE PORTFOLIO -
ISI Bond Fund (10/97;10/81)* 0.19% 0.09% 0.19% 6.43% 6.60% 9.11%
ICR Capital Resource Fund (10/97;10/81) 21.96 20.32 21.96 19.60 13.83 14.30
IMS Cash Management Fund (10/97;10/81) 3.20 3.43 3.20 3.55 3.36 5.02
IIE International Fund (10/97;1/92) 43.53 23.60 43.53 14.50 -- 11.73
IMG Managed Fund (10/97;4/86) 13.17 12.51 13.17 16.50 11.89 11.24
IGD New Dimensions Fund(R)(11/98;5/96) 30.10 41.77 30.10 -- -- 24.50
IAG Strategy Aggressive Fund (10/97;1/92) 68.58 25.88 68.58 22.99 -- 15.32
AIM V.I.
IGN Growth and Income Fund (11/98;5/94) 32.31 43.50 32.31 26.34 -- 22.69
IIN International Equity Fund (11/98;5/93) 52.82 48.88 52.82 20.17 -- 17.10
IVA Value Fund (11/98;5/93) 28.02 40.44 28.02 25.40 -- 21.29
AMERICAN CENTURY VARIABLE PORTFOLIO, INC.
IIG Income and Growth (11/98;10/97) 16.31 23.60 16.31 -- -- 22.75
IVL Value (11/98;5/96) -2.30 -2.57 -2.30 -- -- 9.61
JANUS ASPEN SERIES
ISB Balanced Portfolio: Institutional 24.92 37.10 24.92 22.89 -- 18.87
Shares (11/98;9/93)
IWG Worldwide Growth Portfolio: 62.09 67.72 62.09 31.68 -- 27.83
Institutional Shares (11/98;9/93)
OCC ACCUMULATION TRUST
IEQ Equity Portfolio (11/98;8/88) 1.04 3.24 1.04 18.26 13.79 13.98
IMD Managed Portfolio (10/97;8/88) 3.46 6.63 3.46 17.97 14.91 15.99
ISC Small Cap Portfolio (11/98;8/88) -3.27 -1.06 -3.27 6.78 9.50 9.86
IUS U.S. Government Income Portfolio -3.02 2.14 -3.02 -- -- 4.25
(10/97;1/95)
OPPENHEIMER VARIABLE ACCOUNT FUNDS
IGR Capital Appreciation Fund/VA 39.61 49.18 39.61 28.77 16.74 15.90
(11/98;4/85)
IHI High Income Fund/VA (11/98;4/86) 2.77 6.20 2.77 8.65 11.02 10.03
PUTNAM VARIABLE TRUST
IDI Putnam VT Diversified Income Fund - 0.28 -1.22 0.28 5.35 -- 3.57
Class IA Shares (10/97;9/93)
IGI Putnam VT Growth and Income Fund - 0.10 6.95 0.10 17.66 12.34 13.51
Class IA Shares (10/97;2/88)
IHY Putnam VT High Yield Fund - Class IA 4.38 -1.56 4.38 7.17 9.21 7.84
Shares (10/97;2/88)
INO Putnam VT New Opportunities Fund - 66.93 39.20 66.93 30.97 -- 28.42
Class IA Shares (10/97;5/94)
PUTNAM VARIABLE TRUST
IPD Putnam VT Diversified Income Fund - 0.26 2.32 0.26 5.21 -- 3.43
Class IB Shares (11/98;9/93)***
IPG Putnam VT Growth and Income Fund - -0.02 5.09 -0.02 17.50 12.18 13.35
Class IB Shares (11/98;2/88)***
IPH Putnam VT High Yield Fund - Class IB 4.27 6.88 4.27 7.04 9.07 7.69
Shares (11/98;2/88)***
IPV Putnam VT Voyager Fund - Class IB 55.75 67.43 55.75 29.57 20.36 19.59
Shares (11/98;2/88)***
* (Commencement dates of the subaccount; Commencement dates of the Fund)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 1.25% mortality and expense fee and a
0.15% variable account administrative charge.
*** Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to the inception of Class IB Shares, performance
information for Class IB Shares is based upon performance of the Fund's
Class IA Shares adjusted to reflect the fees paid by Class IB Shares,
including a 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
Cumulative Total Return
Cumulative total return represents the cumulative change in value of an
investment for a given period (reflecting change in a subaccount's accumulation
unit value). We compute cumulative total return using the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the period, at the
end of the period (or fractional period thereof)
Total return figures reflect the deduction of the surrender charge which assumes
you withdraw the entire contract value at the end of the one, five and ten year
periods (or, if less, up to the life of the subaccount). We may also show
performance figures without the deduction of a surrender charge. In addition,
total return figures reflect the deduction of all other applicable charges
including the contract administrative charge and mortality and expense risk fee.
Calculation of Yield for Subaccounts Investing in Money Market Funds
Annualized Simple Yield:
For the subaccounts investing in money market funds, we base quotations of
simple yield on:
(a) the change in the value of a hypothetical subaccount
(exclusive of capital changes and income other than
investment income) at the beginning of a particular
seven-day period;
(b) less a pro rata share of the subaccount expenses accrued
over the period;
(c) dividing this difference by the value of the subaccount at
the beginning of the period to obtain the base period
return; and
(d) multiplying the base period return by 365/7.
The subaccount's value includes:
o any declared dividends,
o the value of any shares purchased with dividends paid during the period,
and o any dividends declared for such shares.
It does not include:
o the effect of any applicable withdrawal charge, or
o any realized or unrealized gains or losses.
Annualized Compound Yield:
We calculate compound yield using the base period return described above, which
we then compound according to the following formula:
Compound Yield = [(Base Period Return + 1) 365/7] -1
You must consider (when comparing an investment in subaccounts investing in
money market funds with fixed annuities) that fixed annuities often provide an
agreed-to or guaranteed yield for a stated period of time, whereas the
subaccount's yield fluctuates. In comparing the yield of the subaccount to a
money market fund, you should consider the different services that the contract
provides.
<PAGE>
<TABLE>
<CAPTION>
Annualized Yields Based on the Seven-Day Period Ending Dec. 31, 1999
<S> <C> <C> <C>
Subaccount Investing In: Simple Yield Compound Yield
---------- ------------- ------------ --------------
IMS AXPSM Variable Portfolio - Cash Management Fund 4.53% 4.63%
</TABLE>
Annualized Yield for Subaccounts Investing in Income Funds
For the subaccounts investing in income funds, we base quotations of yield on
all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and compute it by dividing net
investment income per accumulation unit by the value of an accumulation unit on
the last day of the period, according to the following formula:
YIELD = 2[( a-b + 1)6 - 1]
cd
where: a = dividends and investment income earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of accumulation units outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per accumulation unit on the last day
of the period
The subaccount earns yield from the increase in the net asset value of shares of
the fund in which it invests and from dividends declared and paid by the fund,
which are automatically invested in shares of the fund.
Annualized Yield Based on the 30-Day Period Ended Dec. 31, 1999
Subaccount Investing In: Yield
---------- ------------- -----
ISI AXPSM Variable Portfolio - Bond Fund 7.47%
Independent rating or statistical services or publishers or publications such as
those listed below may quote subaccount performance, compare it to rankings,
yields or returns, or use it in variable annuity accumulation or settlement
illustrations they publish or prepare.
The Bank Rate Monitor National Index, Barron's, Business Week, CDA
Technologies, Donoghue's Money Market Fund Report, Financial Services
Week, Financial Times, Financial World, Forbes, Fortune, Global
Investor, Institutional Investor, Investor's Business Daily,
Kiplinger's Personal Finance, Lipper Analytical Services, Money,
Morningstar, Mutual Fund Forecaster, Newsweek, The New York Times,
Personal Investor, Stanger Report, Sylvia Porter's Personal Finance,
USA Today, U.S. News & World Report, The Wall Street Journal and
Wiesenberger Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
We do the following calculations separately for each of the subaccounts of the
variable account. The separate monthly payouts, added together, make up your
total variable annuity payout.
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your contract on the valuation date; then
o apply the result to the annuity table contained in the contract or another
table at least as favorable.
<PAGE>
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: We then convert the value of your subaccount to annuity units. To
compute the number of units credited to you, we divide the first monthly payment
by the annuity unit value (see below) on the valuation date. The number of units
in your subaccount is fixed. The value of units fluctuates with the performance
of the fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date; by
o the fixed number of annuity units credited to you.
Annuity Unit Values: We originally set this value at $1 for each subaccount. To
calculate later values 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
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: We determine the net investment factor by:
o adding the fund's current net asset value per share plus the per share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
o dividing that sum by the previous adjusted 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 fund may fluctuate, the net investment factor
may be greater or less than one, and the annuity unit value may increase or
decrease. You bear this investment risk in a variable subaccount.
The Fixed Account
We guarantee your fixed annuity payout amounts. 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.
The annuity payout table we use will be the one in effect at the time your
choose to begin your annuity payouts. The values in the table will be equal to
or greater than the table in your contract.
<PAGE>
RATING AGENCIES
The following chart reflects the ratings given to us by independent rating
agencies. These agencies evaluate the financial soundness and claims-paying
ability of insurance companies based on a number of different factors. This
information does not relate to the management or performance of the variable
subaccounts of the contract. This information relates only to the fixed account
and reflects our ability to make annuity payouts and to pay death benefits and
other distributions from the contract.
Rating agency Rating
________________________________________________
A.M. Best A+
(Superior)
Duff & Phelps AAA
PRINCIPAL UNDERWRITER
The principal underwriter for the contracts is American Express Financial
Advisors Inc. (AEFA) which offers them on a continuous basis.
Withdrawal charges received by AEFA for the last two years aggregated total
$6481 and $3,628, respectively.
Commissions paid by ACL for the last two years aggregated total $673,812 and
$682,400, respectively.
INDEPENDENT AUDITORS
The financial statements appearing in this SAI have been audited by Ernst &
Young LLP (1400 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN 55402)
independent auditors, as stated in their report appearing herein.
FINANCIAL STATEMENTS
American Centurion Variable Annuity Account
Annual Financial Information
Report of Independent Auditors
The Board of Directors
American Centurion Life Insurance Company
We have audited the individual and combined statements of net assets of the
segregated asset subaccounts of American Centurion Variable Annuity Account 2
(comprised of subaccounts ISI, ICR, IMS, IIE, IMG, IGD, IAG, IGN, IIN, IVA, IIG,
IVL, ILA, IPA, ISB, IWG, IEQ, IMD, ISC, IUS, IGR, IHI, IDI, IPD, IGI, IPG, IHY,
IPH, INO and IPV) as of December 31, 1999, and the related statements of
operations and changes in net assets for the periods indicated therein. These
financial statements are the responsibility of the management of American
Centurion Life Insurance Company. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at December 31, 1999 with
the affiliated and unaffiliated mutual fund managers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial position of the
segregated asset subaccounts of American Centurion Variable Annuity Account 2
(as described above) at December 31, 1999, and the individual and combined
results of their operations and the changes in their net assets for the periods
indicated therein, in conformity with accounting principles generally accepted
in the United States.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 17, 2000
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets ISI ICR IMS IIE
Investments in shares of mutual funds
and portfolios:
<S> <C> <C> <C> <C>
at cost $ 930,323 $ 1,165,388 $-- $ 194,337
--------- ----------- - ---------
at market value $ 871,060 $ 1,302,384 $-- $ 228,743
Dividends receivable 5,397 -- -- --
Accounts receivable from American Centurion Life
for contract purchase paymentments -- 100 -- 140
Receivable from mutual funds and portfolios
for share redemptions -- -- -- --
------ ------- --- ------
Total assets 876,457 1,302,484 -- 228,883
======= ========= =======
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 933 1,429 -- 247
Administrative charge 112 171 -- 30
Contract terminations -- -- -- --
Payable to mutual funds and portfolios
for investments purchased -- -- -- --
---- ---- --- ----
Total liabilities 1,045 1,600 -- 277
----- ----- ---
Net assets applicable to contracts in
accumulation period $ 875,412 $ 1,300,884 $-- $ 228,606
========= =========== === =========
Accumulation units outstanding 898,191 861,356 -- 143,309
======= ======= ==== =======
Net asset value per accumulation unit $ 0.97 $ 1.51 $-- $ 1.60
====== ====== === ======
Assets IMG IGD IAG
Investments in shares of mutual funds
and portfolios:
at cost $ 2,293,731 $ 106,465 $ 495,089
----------- --------- ---------
at market value $ 2,387,570 $ 131,589 $ 672,739
Dividends receivable -- -- --
Accounts receivable from American Centurion Life
for contract purchase paymentments 60 100 197
Receivable from mutual funds and portfolios
for share redemptions -- -- --
------- ------- ------
Total assets 2,387,630 131,689 672,936
========= ======= =======
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 2,610 140 611
Administrative charge 640 17 73
Contract terminations -- -- --
Payable to mutual funds and portfolios
for investments purchased -- -- --
---- --- ----
Total liabilities 3,250 157 684
----- --- ---
Net assets applicable to contracts in
accumulation period $ 2,384,380 $ 131,532 $ 672,252
----------- --------- ---------
Accumulation units outstanding 1,961,883 87,802 427,306
========= ====== =======
Net asset value per accumulation unit $ 1.22 $ 1.50 $ 1.57
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets IGN IIN IVA IIG
Investments in shares of mutual funds
and portfolios:
<S> <C> <C> <C> <C>
at cost $ 477,135 $ 306,272 $ 622,139 $ 204,383
--------- --------- --------- ---------
at market value $ 579,552 $ 364,800 $ 714,243 $ 230,216
Dividends receivable -- -- -- --
Accounts receivable from American Centurion Life
for contract purchase payments 49 50,025 93 202
Receivable from mutual funds and portfolios
for share redemptions 680 303 836 274
--- --- --- ---
Total assets 580,281 415,128 715,172 230,692
======= ======= ======= =======
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 607 271 746 245
Administrative charge 73 32 90 29
Contract terminations -- -- -- --
Payable to mutual funds and portfolios
for investments purchased 49 50,025 93 202
-- ------ -- ---
Total liabilities 729 50,328 929 476
--- ------ --- ---
Net assets applicable to contracts
in accumulation period $ 579,552 $ 364,800 $ 714,243 $ 230,216
========= ========= ========= =========
Accumulation units outstanding 380,785 229,735 481,544 179,829
======= ======= ======= =======
Net asset value per accumulation unit $ 1.52 $ 1.59 $ 1.48 $ 1.28
====== ====== ====== ======
Assets IVL ISB IWG
Investments in shares of mutual funds
and portfolios:
at cost $ 120,178 $ 2,278,074 $ 352,067
--------- ----------- ---------
at market value $ 112,530 $ 2,571,831 $ 509,326
Dividends receivable -- -- --
Accounts receivable from American Centurion Life
for contract purchase payments 10 45 137
Receivable from mutual funds and portfolios
for share redemptions 134 2,923 592
--- ----- ---
Total assets 112,674 2,574,799 510,055
======= ========= =======
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 120 2,610 528
Administrative charge 14 313 63
Contract terminations -- -- --
Payable to mutual funds and portfolios
for investments purchased 10 44 137
-- -- ---
Total liabilities 144 2,967 728
--- ----- ---
Net assets applicable to contracts
in accumulation period $ 112,530 $ 2,571,832 $ 509,327
========= =========== =========
Accumulation units outstanding 115,690 1,783,055 279,685
======= ========= =======
Net asset value per accumulation unit $ 0.97 $ 1.44 $ 1.82
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets IEQ IMD ISC IUS
Investments in shares of mutual funds
and portfolios:
<S> <C> <C> <C> <C>
at cost $ 106,207 $ 1,454,739 $ 122,574 $ 1,181,105
--------- ----------- --------- -----------
at market value $ 105,198 $ 1,459,230 $ 124,147 $ 1,117,900
Dividends receivable -- -- -- 2,294
Accounts receivable from American Centurion Life
for contract purchase payments 98 1,990 355 --
Receivable from mutual funds and portfolios
for share redemptions 125 1,773 148 1,376
--- ----- --- -----
Total assets 105,421 1,462,993 124,650 1,121,570
======= ========= ======= =========
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 112 1,583 132 1,198
Administrative charge 13 190 16 144
Contract terminations -- -- -- 34
Payable to mutual funds and portfolios
for investments purchased 98 1,990 355 --
-- ----- ---
Total liabilities 223 3,763 503 1,376
--- ----- --- -----
Net assets applicable to contracts
in accumulation period $ 105,198 $ 1,459,230 $ 124,147 $ 1,120,194
========= =========== ========= ===========
Accumulation units outstanding 101,116 1,292,784 125,478 1,070,012
======= ========= ======= =========
Net asset value per accumulation unit $ 1.04 $ 1.13 $ 0.99 $ 1.05
====== ====== ====== ======
Assets IGR IHI IDI
Investments in shares of mutual funds
and portfolios:
at cost $ 409,502 $ 273,664 $ 647,230
--------- --------- ---------
at market value $ 523,107 $ 271,409 $ 598,457
Dividends receivable -- -- --
Accounts receivable from American Centurion Life
for contract purchase payments 96 63 35
Receivable from mutual funds and portfolios
for share redemptions 619 324 718
--- --- ---
Total assets 523,822 271,796 599,210
======= ======= =======
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 553 289 641
Administrative charge 66 35 77
Contract terminations -- -- --
Payable to mutual funds and portfolios
for investments purchased 96 63 35
-- -- --
Total liabilities 715 387 753
--- --- ---
Net assets applicable to contracts
in accumulation period $ 523,107 $ 271,409 $ 598,457
========= ========= =========
Accumulation units outstanding 328,913 252,767 604,703
======= ======= =======
Net asset value per accumulation unit $ 1.59 $ 1.07 $ 0.99
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets IPD IGI IPG IHY
Investments in shares of mutual funds
and portfolios:
<S> <C> <C> <C> <C>
at cost $ 445,094 $ 1,970,968 $ 958,557 $ 952,743
--------- ----------- --------- ---------
at market value $ 440,222 $ 1,925,898 $ 918,305 $ 847,850
Dividends receivable -- -- -- --
Accounts receivable from American Centurion Life
for contract purchase payments 9 -- 933 53
Receivable from mutual funds and portfolios
for share redemptions 522 2,534 1,028 1,032
--- ----- ----- -----
Total assets 440,753 1,928,432 920,266 848,935
======= ========= ======= =======
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 466 2,118 918 921
Administrative charge 56 254 110 111
Contract terminations -- 162 -- --
Payable to mutual funds and portfolios
for investments purchased 9 -- 933 53
- --- --
Total liabilities 531 2,534 1,961 1,085
--- ----- ----- -----
Net assets applicable to contracts
in accumulation period $ 440,222 $ 1,925,898 $ 918,305 $ 847,850
========= =========== ========= =========
Accumulation units outstanding 428,361 1,585,177 865,696 859,120
======= ========= ======= =======
Net asset value per accumulation unit $ 1.03 $ 1.21 $ 1.06 $ 0.99
====== ====== ====== ======
Combined
Variable
Assets IPH INO IPV Account
Investments in shares of mutual funds
and portfolios:
at cost $ 257,734 $ 636,268 $ 722,011 $ 19,683,977
--------- --------- --------- ------------
at market value $ 254,831 $ 1,017,527 $ 978,346 $ 21,259,010
Dividends receivable -- -- -- 7,691
Accounts receivable from American Centurion Life
for contract purchase payments 63 5 5,273 60,131
Receivable from mutual funds and portfolios
for share redemptions 302 1,032 1,095 18,370
--- ----- ----- ------
Total assets 255,196 1,018,564 984,714 21,345,202
======= ========= ======= ==========
Liabilities
Payable to American Centurion Life for:
Mortality and expense risk fee 270 921 978 22,197
Administrative charge 32 111 117 2,989
Contract terminations -- -- -- 196
Payable to mutual funds and portfolios
for investments purchased 63 5 5,273 59,533
-- - ----- ------
Total liabilities 365 1,037 6,368 84,915
--- ----- ----- ------
Net assets applicable to contracts
in accumulation period $ 254,831 $ 1,017,527 $ 978,346 $ 21,260,287
========= =========== ========= ============
Accumulation units outstanding 235,336 470,907 538,322
======= ======= =======
Net asset value per accumulation unit $ 1.08 $ 2.16 $ 1.82
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Operations
Year ended December 31, 1999
Segregated Asset Subaccounts
Investment income ISI ICR IMS IIE
Dividend income from mutual funds
<S> <C> <C> <C> <C>
and portfolios $ 51,970 $ 122,112 $ 304 $ 29,601
-------- --------- ----- --------
Expenses:
Mortality and expense risk fee 9,490 13,744 86 1,778
Administrative charge 1,139 1,649 10 213
----- ----- -- ---
Total expenses 10,629 15,393 96 1,991
------ ------ -- -----
Investment income (loss) - net 41,341 106,719 208 27,610
====== ======= === ======
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 88,356 205,584 33,355 11,699
Cost of investments sold 93,485 189,208 33,354 10,630
------ ------- ------ ------
Net realized gain (loss) on investments (5,129) 16,376 1 1,069
Net change in unrealized appreciation or
depreciation of investments (32,957) 113,510 -- 36,365
------- ------- ------
Net gain (loss) on investments (38,086) 129,886 1 37,434
------- ------- - ------
Net increase (decrease) in net assets
resulting from operations $ 3,255 $ 236,605 $ 209 $ 65,044
======= ========= ===== ========
Investment income IMG IGD IAG IGN
Dividend income from mutual funds
and portfolios $ 157,141 $ 1,250 $ 41,216 $ 4,732
--------- ------- -------- -------
Expenses:
Mortality and expense risk fee 27,208 933 4,521 3,145
Administrative charge 3,244 112 488 377
----- --- --- ---
Total expenses 30,452 1,045 5,009 3,522
------ ----- ----- -----
Investment income (loss) - net 126,689 205 36,207 1,210
======= === ====== =====
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 230,309 4,331 45,013 20,896
Cost of investments sold 226,977 3,999 42,311 19,798
------- ----- ------ ------
Net realized gain (loss) on investments 3,332 332 2,702 1,098
Net change in unrealized appreciation or
depreciation of investments 149,290 24,990 198,877 102,338
------- ------ ------- -------
Net gain (loss) on investments 152,622 25,322 201,579 103,436
------- ------ ------- -------
Net increase (decrease) in net assets
resulting from operations $ 279,311 $ 25,527 $ 237,786 $ 104,646
========= ======== ========= =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Operations
Year ended December 31, 1999
Segregated Asset Subaccounts
Investment income IIN1 IVA IIG IVL
Dividend income from mutual funds
<S> <C> <C> <C> <C>
and portfolios $ 6,235 $ 11,732 $ 11 $ 3,908
------- -------- ---- -------
Expenses:
Mortality and expense risk fee 1,166 3,700 1,642 939
Administrative charge 140 444 197 113
--- --- --- ---
Total expenses 1,306 4,144 1,839 1,052
----- ----- ----- -----
Investment income (loss) - net 4,929 7,588 (1,828) 2,856
===== ===== ====== =====
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 145,490 29,328 9,510 4,067
Cost of investments sold 132,262 28,083 9,120 4,100
------- ------ ----- -----
Net realized gain (loss) on investments 13,228 1,245 390 (33)
Net change in unrealized appreciation or
depreciation of investments 58,453 91,719 25,497 (7,725)
------ ------ ------ ------
Net gain (loss) on investments 71,681 92,964 25,887 (7,758)
------ ------ ------ ------
Net increase (decrease) in net assets
resulting from operations $ 76,610 $ 100,552 $ 24,059 $ (4,902)
======== ========= ======== ========
Investment income ILA1 IPA1 ISB IWG
Dividend income from mutual funds
and portfolios $ 2,711 $ 2,381 $ 40,723 $ 331
------- ------- -------- -----
Expenses:
Mortality and expense risk fee 544 661 14,545 2,457
Administrative charge 65 79 1,745 295
Total expenses 609 740 16,290 2,752
--- --- ------ -----
Investment income (loss) - net 2,102 1,641 24,433 (2,421)
===== ===== ====== ======
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 58,946 69,319 91,094 22,754
Cost of investments sold 66,933 60,879 86,565 20,591
------ ------ ------ ------
Net realized gain (loss) on investments (7,987) 8,440 4,529 2,163
Net change in unrealized appreciation or
depreciation of investments 12,986 (5,559) 292,607 156,868
------ ------ ------- -------
Net gain (loss) on investments 4,999 2,881 297,136 159,031
----- ----- ------- -------
Net increase (decrease) in net assets
resulting from operations $ 7,101 $ 4,522 $ 321,569 $ 156,610
======= ======= ========= =========
See accompanying notes to financial statements.
1Effective Oct.22, 1999, GT Global Variable Latin America Fund and GT Global New
Pacific Fund merged into AIM V.I. International Equity Fund. Subaccounts ILA
and IPA net assets were transferred to Subaccount IIN.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Operations
Year ended December 31, 1999
Segregated Asset Subaccounts
Investment income IEQ IMD ISC IUS
Dividend income from mutual funds
<S> <C> <C> <C> <C>
and portfolios $ 1,165 $ 65,295 $ 216 $ 55,044
------- -------- ----- --------
Expenses:
Mortality and expense risk fee 869 18,029 1,056 14,317
Administrative charge 104 2,163 127 1,718
--- ----- --- -----
Total expenses 973 20,192 1,183 16,035
--- ------ ----- ------
Investment income (loss) - net 192 45,103 (967) 39,009
=== ====== ==== ======
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 3,829 206,355 4,684 190,526
Cost of investments sold 3,843 207,384 4,623 196,483
----- ------- ----- -------
Net realized gain (loss) on investments (14) (1,029) 61 (5,957)
Net change in unrealized appreciation or
depreciation of investments (1,084) 3,998 1,433 (68,282)
------ ----- ----- -------
Net gain (loss) on investments (1,098) 2,969 1,494 (74,239)
------ ----- ----- -------
Net increase (decrease) in net assets
resulting from operations $ (906) $ 48,072 $ 527 $ (35,230)
====== ======== ===== =========
Investment income IGR IHI IDI IPD
Dividend income from mutual funds
and portfolios $ 3,471 $ 5,014 $ 43,435 $ 12,347
------- ------- -------- --------
Expenses:
Mortality and expense risk fee 2,777 2,008 7,753 3,538
Administrative charge 333 241 930 424
--- --- --- ---
Total expenses 3,110 2,249 8,683 3,962
----- ----- ----- -----
Investment income (loss) - net 361 2,765 34,752 8,385
=== ===== ====== =====
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 24,489 10,421 99,286 17,739
Cost of investments sold 23,392 10,648 106,479 18,347
------ ------ ------- ------
Net realized gain (loss) on investments 1,097 (227) (7,193) (608)
Net change in unrealized appreciation or
depreciation of investments 113,032 (2,269) (25,850) (4,902)
------- ------ ------- ------
Net gain (loss) on investments 114,129 (2,496) (33,043) (5,510)
------- ------ ------- ------
Net increase (decrease) in net assets
resulting from operations $ 114,490 $ 269 $ 1,709 $ 2,875
========= ===== ======= =======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Operations
Year ended December 31, 1999
Segregated Asset Subaccounts
Investment income IGI IPG IHY IPH
Dividend income from mutual funds
<S> <C> <C> <C> <C>
and portfolios $ 170,682 $ 18,721 $ 98,345 $ 10,848
--------- -------- -------- --------
Expenses:
Mortality and expense risk fee 25,746 5,629 11,485 2,053
Administrative charge 3,089 675 1,378 246
----- --- ----- ---
Total expenses 28,835 6,304 12,863 2,299
------ ----- ------ -----
Investment income (loss) - net 141,847 12,417 85,482 8,549
======= ====== ====== =====
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 251,833 60,812 330,749 8,604
Cost of investments sold 248,495 63,210 366,045 8,959
------- ------ ------- -----
Net realized gain (loss) on investments 3,338 (2,398) (35,296) (355)
Net change in unrealized appreciation or
depreciation of investments (138,711) (40,552) (8,734) (2,934)
-------- ------- ------ ------
Net gain (loss) on investments (135,373) (42,950) (44,030) (3,289)
-------- ------- ------- ------
Net increase (decrease) in net assets
resulting from operations $ 6,474 $ (30,533) $ 41,452 $ 5,260
======= ========= ======== =======
Combined
Variable
Investment income INO IPV Account
Dividend income from mutual funds
and portfolios $ 7,442 $ 9,950 $ 978,333
------- ------- ---------
Expenses:
Mortality and expense risk fee 7,399 4,073 193,291
Administrative charge 888 489 23,115
--- --- ------
Total expenses 8,287 4,562 216,406
----- ----- -------
Investment income (loss) - net (845) 5,388 761,927
==== ===== =======
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 74,440 31,926 2,385,744
Cost of investments sold 61,550 26,354 2,374,107
------ ------ ---------
Net realized gain (loss) on investments 12,890 5,572 11,637
Net change in unrealized appreciation or
depreciation of investments 328,748 255,278 1,626,430
------- ------- ---------
Net gain (loss) on investments 341,638 260,850 1,638,067
------- ------- ---------
Net increase (decrease) in net assets
resulting from operations $ 340,793 $ 266,238 $ 2,399,994
========= ========= ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts
Operations ISI ICR IMS IIE
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 41,341 $ 106,719 $ 208 $ 27,610
Net realized gain (loss) on investments (5,129) 16,376 1 1,069
Net change in unrealized appreciation
or depreciation of investments (32,957) 113,510 -- 36,365
------- ------- ------
Net increase (decrease) in net assets
resulting from operations 3,255 236,605 209 65,044
===== ======= === ======
Contract transactions
Contract purchase payments 401,663 185,591 (2) 106,161
Net transfers* (36,908) 8,314 (2) (340)
Contract charges (362) (729) -- (72)
Contract terminations:
Surrender benefits (24,386) (28,073) -- (4,230)
Death benefits (17,796) (32,930) (13,371) --
------- ------- -------
Increase (decrease) from contract transactions 322,211 132,173 (13,375) 101,519
------- ------- ------- -------
Net assets at beginning of year 549,946 932,106 13,166 62,043
------- ------- ------ ------
Net assets at end of year $ 875,412 $ 1,300,884 $-- $ 228,606
========= =========== = =========
Accumulation unit activity
Units outstanding at beginning of year 566,274 753,273 13,026 55,847
Contract purchase payments 423,401 144,018 -- 92,121
Net transfers* (38,331) 12,483 -- (251)
Contract terminations:
Surrender benefits and contract charges (34,699) (22,715) (4,408)
Death benefits (18,454) (25,703) (13,026) --
------- ------- ------- ------
Units outstanding at end of year 898,191 861,356 -- 143,309
======= ======= ======= =======
Operations IMG IGD IAG IGN
Investment income (loss) - net $ 126,689 $ 205 $ 36,207 $ 1,210
Net realized gain (loss) on investments 3,332 332 2,702 1,098
Net change in unrealized appreciation
or depreciation of investments 149,290 24,990 198,877 102,338
------- ------ ------- -------
Net increase (decrease) in net assets
resulting from operations 279,311 25,527 237,786 104,646
======= ====== ======= =======
Contract transactions
Contract purchase payments 362,964 104,322 120,273 430,330
Net transfers* 63,127 (599) 78,648 41,376
Contract charges (1,393) (17) (225) (10)
Contract terminations:
Surrender benefits (49,775) (1,991) (12,836) (3,983)
Death benefits (40,106) -- (2,283) --
------- ------
Increase (decrease) from contract transactions 334,817 101,715 183,577 467,713
------- ------- ------- -------
Net assets at beginning of year 1,770,252 4,290 250,889 7,193
--------- ----- ------- -----
Net assets at end of year $ 2,384,380 $ 131,532 $ 672,252 $ 579,552
=========== ========= ========= =========
Accumulation unit activity
Units outstanding at beginning of year 1,649,611 3,727 268,836 6,256
Contract purchase payments 331,224 87,127 128,579 353,412
Net transfers* 64,220 (465) 45,282 31,325
Contract terminations:
Surrender benefits and contract charges (46,817) (2,587) (12,987) (10,208)
Death benefits (36,355) -- (2,404) --
------- ------
Units outstanding at end of year 1,961,883 87,802 427,306 380,785
========= ====== ======= =======
*Includes transfer activity from (to) other subaccounts and
andntransfersmfrom)(to)rAmericantCenturioneLife'sefixedoaccount.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts
Operations IIN1 IVA IIG IVL
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 4,929 $ 7,588 $ (1,828) $ 2,856
Net realized gain (loss) on investments 13,228 1,245 390 (33)
Net change in unrealized appreciation or
depreciation of investments 58,453 91,719 25,497 (7,725)
------ ------ ------ ------
Net increase (decrease) in net assets
resulting from operations 76,610 100,552 24,059 (4,902)
====== ======= ====== ======
Contract transactions
Contract purchase payments 107,070 589,120 190,319 113,460
Net transfers* 181,317 20,605 9,052 2,574
Contract charges (17) (5) (5) (4)
Contract terminations:
Surrender benefits (4,473) (5,305) (2,426) (1,916)
Death benefits -- -- -- --
---- ----- ------ -----
Increase (decrease) from contract transactions 283,897 604,415 196,940 114,114
------- ------- ------- -------
Net assets at beginning of year 4,293 9,276 9,217 3,318
----- ----- ----- -----
Net assets at end of year $ 364,800 $ 714,243 $ 230,216 $ 112,530
========= ========= ========= =========
Accumulation unit activity
Units outstanding at beginning of year 4,138 8,011 8,382 3,334
Contract purchase payments 102,927 475,243 171,234 112,972
Net transfers* 127,345 16,133 7,543 2,566
Contract terminations:
Surrender benefits and contract charges (4,675) (17,843) (7,330) (3,182)
Death benefits -- -- -- --
---- ----- ------ -----
Units outstanding at end of year 229,735 481,544 179,829 115,690
======= ======= ======= =======
Operations ILA1 IPA1 ISB IWG
Investment income (loss) - net $ 2,102 $ 1,641 $ 24,433 $ (2,421)
Net realized gain (loss) on investments (7,987) 8,440 4,529 2,163
Net change in unrealized appreciation or
depreciation of investments 12,986 (5,559) 292,607 156,868
------ ------ ------- -------
Net increase (decrease) in net assets
resulting from operations 7,101 4,522 321,569 156,610
===== ===== ======= =======
Contract transactions
Contract purchase payments 780 740 2,160,403 333,774
Net transfers* (52,525) (69,351) 63,447 10,599
Contract charges (52) (69) (53) (13)
Contract terminations:
Surrender benefits (699) (997) (16,078) (3,825)
Death benefits -- -- -- --
------ ---- ----- ------
Increase (decrease) from contract transactions (52,496) (69,677) 2,207,719 340,535
------- ------- --------- -------
Net assets at beginning of year 45,395 65,155 42,544 12,182
------ ------ ------ ------
Net assets at end of year $-- $-- $ 2,571,832 $ 509,327
= = =========== =========
Accumulation unit activity
Units outstanding at beginning of year 70,677 79,763 36,869 10,848
Contract purchase payments 986 850 1,755,815 274,020
Net transfers* (70,500) (79,357) 47,214 7,716
Contract terminations:
Surrender benefits and contract charges (1,163) (1,256) (56,843) (12,899)
Death benefits -- -- -- --
--- ---- ----- ------
Units outstanding at end of year -- -- 1,783,055 279,685
========= =======
*Includes transfer activity from (to) other subaccounts and
transfers from(to) American Centurion Life's fixed account.
See accompanying notes to financial statements.
1Effective Oct.22, 1999, GT Global Variable Latin America Fund and GT Global New
Pacific Fund merged into AIM V.I. International Equity Fund. Subaccounts ILA and
IPA net assets were transferred to Subaccount IIN.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts
Operations IEQ IMD ISC IUS
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 192 $ 45,103 $ (967) $ 39,009
Net realized gain (loss) on investments (14) (1,029) 61 (5,957)
Net change in unrealized appreciation
or depreciation of investments (1,084) 3,998 1,433 (68,282)
------ ----- ----- -------
Net increase (decrease) in net assets
resulting from operations (906) 48,072 527 (35,230)
==== ====== === =======
Contract transactions
Contract purchase payments 101,775 199,855 117,052 196,932
Net transfers* 2,836 (103,369) 544 (105,933)
Contract charges (4) (895) (11) (695)
Contract terminations:
Surrender benefits (1,859) (40,333) (2,390) (44,689)
Death benefits -- (32,863) -- (14,844)
------- -------
Increase (decrease) from contract transactions 102,748 22,395 115,195 30,771
------- ------ ------- ------
Net assets at beginning of year 3,356 1,388,763 8,425 1,124,653
----- --------- ----- ---------
Net assets at end of year $ 105,198 $ 1,459,230 $ 124,147 $ 1,120,194
========= =========== ========= ===========
Accumulation unit activity
Units outstanding at beginning of year 3,262 1,273,953 8,243 1,041,627
Contract purchase payments 98,155 180,531 120,443 191,109
Net transfers* 2,735 (93,821) 569 (99,550)
Contract terminations:
Surrender benefits and contract charges (3,036) (38,323) (3,777) (48,964)
Death benefits -- (29,556) -- (14,210)
------- -------
Units outstanding at end of year 101,116 1,292,784 125,478 1,070,012
======= ========= ======= =========
Operations IGR IHI IDI IPD
Investment income (loss) - net $ 361 $ 2,765 $ 34,752 $ 8,385
Net realized gain (loss) on investments 1,097 (227) (7,193) (608)
Net change in unrealized appreciation
or depreciation of investments 113,032 (2,269) (25,850) (4,902)
------- ------ ------- ------
Net increase (decrease) in net assets
resulting from operations 114,490 269 1,709 2,875
======= === ===== =====
Contract transactions
Contract purchase payments 394,411 271,008 8,473 422,584
Net transfers* 4,367 240 (34,641) 6,165
Contract charges (11) (13) (413) (24)
Contract terminations:
Surrender benefits (3,296) (6,162) (22,652) (5,685)
Death benefits -- -- (6,669) --
------
Increase (decrease) from contract transactions 395,471 265,073 (55,902) 423,040
------- ------- ------- -------
Net assets at beginning of year 13,146 6,067 652,650 14,307
------ ----- ------- ------
Net assets at end of year $ 523,107 $ 271,409 $ 598,457 $ 440,222
========= ========= ========= =========
Accumulation unit activity
Units outstanding at beginning of year 11,547 5,811 661,787 13,968
Contract purchase payments 325,692 256,276 8,605 422,578
Net transfers* 3,304 220 (35,204) 6,062
Contract terminations:
Surrender benefits and contract charges (11,630) (9,540) (23,622) (14,247)
Death benefits -- -- (6,863) --
------
Units outstanding at end of year 328,913 252,767 604,703 428,361
======= ======= ======= =======
*Includes transfer activity from (to) other subaccounts and
transfers from (to) American Centurion Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts
Operations IGI IPG IHY IPH
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 141,847 $ 12,417 $ 85,482 $ 8,549
Net realized gain (loss) on investments 3,338 (2,398) (35,296) (355)
Net change in unrealized appreciation or
depreciation of investments (138,711) (40,552) (8,734) (2,934)
-------- ------- ------ ------
Net increase (decrease) in net assets
resulting from operations 6,474 (30,533) 41,452 5,260
===== ======= ====== =====
Contract transactions
Contract purchase payments 29,292 907,600 10,189 232,137
Net transfers* 127,495 28,698 (232,913) 5,620
Contract charges (1,841) (25) (720) (20)
Contract terminations:
Surrender benefits (47,422) (5,757) (25,477) (3,079)
Death benefits (53,441) -- (31,391) --
------- -------
Increase (decrease) from contract transactions 54,083 930,516 (280,312) 234,658
------ ------- -------- -------
Net assets at beginning of year 1,865,341 18,322 1,086,710 14,913
--------- ------ --------- ------
Net assets at end of year $ 1,925,898 $ 918,305 $ 847,850 $ 254,831
=========== ========= ========= =========
Accumulation unit activity
Units outstanding at beginning of year 1,537,953 17,282 1,150,196 14,370
Contract purchase payments 22,861 857,722 10,567 222,400
Net transfers* 104,733 26,867 (242,135) 5,283
Contract terminations:
Surrender benefits and contract charges (39,052) (36,175) (27,059) (6,717)
Death benefits (41,318) -- (32,449) --
------- -------
Units outstanding at end of year 1,585,177 865,696 859,120 235,336
========= ======= ======= =======
Operations INO IPV Account
Investment income (loss) - net $ (845) $ 5,388 $ 761,927
Net realized gain (loss) on investments 12,890 5,572 11,637
Net change in unrealized appreciation or
depreciation of investments 328,748 255,278 1,626,430
------- ------- ---------
Net increase (decrease) in net assets
resulting from operations 340,793 266,238 2,399,994
======= ======= =========
Contract transactions
Contract purchase payments 5,641 666,916 8,770,833
Net transfers* 153,891 33,142 205,476
Contract charges (548) (23) (8,269)
Contract terminations:
Surrender benefits (11,362) (4,188) (385,344)
Death benefits (2,294) -- (247,988)
------ --------
Increase (decrease) from contract transactions 145,328 695,847 8,334,708
------- ------- ---------
Net assets at beginning of year 531,406 16,261 10,525,585
------- ------ ----------
Net assets at end of year $ 1,017,527 $ 978,346 $ 21,260,287
=========== ========= ============
Accumulation unit activity
Units outstanding at beginning of year 410,715 13,942
Contract purchase payments 4,022 523,883
Net transfers* 65,751 20,081
Contract terminations:
Surrender benefits and contract charges (7,893) (19,584)
Death benefits (1,688) --
------
Units outstanding at end of year 470,907 538,322
======= =======
*Includes transfer activity from (to) other subaccounts and
transfers from(to) American Centurion Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Changes in Net Assets
Year ended December 31, 1998
Segregated Asset Subaccounts
Operations ISI ICR IMS IIE
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 17,937 $ 59,844 $ 238 $ 117
Net realized gain (loss) on investments (569) (1,218) -- 88
Net change in unrealized appreciation or
depreciation of investments (26,306) 23,486 -- (1,959)
------- ------ ------
Net increase (decrease) in net assets
resulting from operations (8,938) 82,112 238 (1,754)
====== ====== === ======
Contract transactions
Contract purchase payments 576,127 865,655 22,711 66,479
Net transfers** (1,741) (1,311) (9,783) --
Contract terminations:
Surrender benefits and contract charges (13,553) (13,018) -- (2,682)
Death benefits (1,949) (1,332) -- --
------ ------
Increase (decrease) from contract transactions 558,884 849,994 12,928 63,797
------- ------- ------ ------
Net assets at beginning of year -- -- -- --
-------- ------- ------- ------
Net assets at end of year $ 549,946 $ 932,106 $ 13,166 $ 62,043
========= ========= ======== ========
Accumualtion unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 584,020 767,627 22,831 58,109
Net transfers** (1,886) (1,222) (9,805) --
Contract terminations:
Surrender benefits and contract charges (13,858) (11,946) -- (2,262)
Death benefits (2,002) (1,186) -- --
------ ------
Units outstanding at end of year 566,274 753,273 13,026 55,847
======= ======= ====== ======
Operations IMG IGD* IAG IGN*
Investment income (loss) - net $ 159,505 -- $ 13,832 $ (1)
Net realized gain (loss) on investments (2,914) -- (662) --
Net change in unrealized appreciation or
depreciation of investments (55,451) 134 (21,227) 79
------- --- ------- --
Net increase (decrease) in net assets
resulting from operations 101,140 134 (8,057) 78
======= === ====== ==
Contract transactions
Contract purchase payments 1,690,804 4,156 265,523 7,115
Net transfers** (2,260) -- (422) --
Contract terminations:
Surrender benefits and contract charges (17,219) -- (5,608) --
Death benefits (2,213) -- (547) --
------ ----
Increase (decrease) from contract transactions 1,669,112 4,156 258,946 7,115
--------- ----- ------- -----
Net assets at beginning of year -- -- -- --
Net assets at end of year $ 1,770,252 $ 4,290 $ 250,889 $ 7,193
=========== ======= ========= =======
Accumualtion unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 1,671,564 3,727 275,694 6,256
Net transfers** (2,378) -- (521) --
Contract terminations:
Surrender benefits and contract charges (17,394) -- (5,690) --
Death benefits (2,181) -- (647) --
------ ----
Units outstanding at end of year 1,649,611 3,727 268,836 6,256
========= ===== ======= =====
* For the period Nov. 4, 1998 (commencement of operations) to Dec. 31, 1998.
**Includes transfer activity from (to) other subaccounts and transfers from (to)
American Centurion Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Changes in Net Assets
Year ended December 31, 1998
Segregated Asset Subaccounts
Operations IIN* IVA* IIG* IVL*
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 5 $ 253 $ 19 $ (1)
Net realized gain (loss) on investments -- -- -- --
Net change in unrealized appreciation or
depreciation of investments 75 385 336 77
-- --- --- --
Net increase (decrease) in net assets
resulting from operations 80 638 355 76
== === === ==
Contract transactions
Contract purchase payments 4,213 8,638 8,862 3,242
Net transfers** -- -- -- --
Contract terminations:
Surrender benefits and contract charges -- -- -- --
Death benefits -- -- -- --
--- --- --- ---
Increase (decrease) from contract transactions 4,213 8,638 8,862 3,242
----- ----- ----- -----
Net assets at beginning of year -- -- -- --
----- ----- ----- -----
Net assets at end of year $ 4,293 $ 9,276 $ 9,217 $ 3,318
======= ======= ======= =======
Accumualtion unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 4,138 8,011 8,382 3,334
Net transfers** -- -- -- --
Contract terminations:
Surrender benefits and contract charges -- -- -- --
Death benefits -- -- -- --
----- ----- ----- -----
Units outstanding at end of year 4,138 8,011 8,382 3,334
===== ===== ===== =====
Operations ILA IPA ISB* IWG*
Investment income (loss) - net $ 67 $ 42 $ 405 $ 3
Net realized gain (loss) on investments (339) (71) -- --
Net change in unrealized appreciation or
depreciation of investments (12,986) 5,559 1,150 391
------- ----- ----- ---
Net increase (decrease) in net assets
resulting from operations (13,258) 5,530 1,555 394
======= ===== ===== ===
Contract transactions
Contract purchase payments 61,792 62,912 40,989 11,788
Net transfers** (435) (681) -- --
Contract terminations:
Surrender benefits and contract charges (2,704) (2,606) -- --
Death benefits -- -- -- --
---- ----- ----- -----
Increase (decrease) from contract transactions 58,653 59,625 40,989 11,788
------ ------ ------ ------
Net assets at beginning of year -- -- -- --
------- ------ ------ -------
Net assets at end of year $ 45,395 $ 65,155 $ 42,544 $ 12,182
======== ======== ======== ========
Accumualtion unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 74,439 83,976 36,869 10,848
Net transfers** (667) (841) -- --
Contract terminations:
Surrender benefits and contract charges (3,095) (3,372) -- --
Death benefits -- -- -- --
----- ----- ----- ------
Units outstanding at end of year 70,677 79,763 36,869 10,848
====== ====== ====== ======
*For the period Nov. 4, 1998 (commencement of operations) to Dec. 31, 1998.
**Includes transfer activity from (to) other subaccounts and transfers from (to)
American Centurion Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Changes in Net Assets
Year ended December 31, 1998
Segregated Asset Subaccounts
Operations IEQ* IMD ISC* IUS
<S> <C> <C> <C> <C>
Investment income (loss) - net $ (1) $ (8,116) $ (7) $ 36,001
Net realized gain (loss) on investments -- (4,073) -- 668
Net change in unrealized appreciation or
depreciation of investments 75 493 140 5,077
-- --- --- -----
Net increase (decrease) in net assets
resulting from operations 74 (11,696) 133 41,746
== ======= === ======
Contract transactions
Contract purchase payments 3,282 1,442,406 8,292 1,116,209
Net transfers** -- (2,193) -- (4,329)
Contract terminations:
Surrender benefits and contract charges -- (37,628) -- (24,313)
Death benefits -- (2,126) -- (4,660)
------ ------
Increase (decrease) from contract transactions 3,282 1,400,459 8,292 1,082,907
----- --------- ----- ---------
Net assets at beginning of year -- -- -- --
---- --------- ---- ---------
Net assets at end of year $ 3,356 $ 1,388,763 $ 8,425 $ 1,124,653
======= =========== ======= ===========
Accumualtion unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 3,262 1,314,197 8,243 1,072,494
Net transfers** -- (2,086) -- (3,866)
Contract terminations:
Surrender benefits and contract charges -- (36,162) -- (22,701)
Death benefits -- (1,996) -- (4,300)
------ ------
Units outstanding at end of year 3,262 1,273,953 8,243 1,041,627
===== ========= ===== =========
Operations IGR* IHI* IDI IPD*
Investment income (loss) - net $ (8) $ (2) $ (634) $ (3)
Net realized gain (loss) on investments -- -- (2,033) --
Net change in unrealized appreciation or
depreciation of investments 573 14 (22,923) 30
--- -- ------- --
Net increase (decrease) in net assets
resulting from operations 565 12 (25,590) 27
=== == ======= ==
Contract transactions
Contract purchase payments 12,581 6,055 695,879 14,280
Net transfers** -- -- (1,610) --
Contract terminations:
Surrender benefits and contract charges -- -- (14,129) --
Death benefits -- -- (1,900) --
------
Increase (decrease) from contract transactions 12,581 6,055 678,240 14,280
------ ----- ------- ------
Net assets at beginning of year -- -- -- --
------ ---- ------- ------
Net assets at end of year $ 13,146 $ 6,067 $ 652,650 $ 14,307
======== ======= ========= ========
Accumualtion unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 11,547 5,811 679,470 13,968
Net transfers** -- -- (1,749) --
Contract terminations:
Surrender benefits and contract charges -- -- (14,013) --
Death benefits -- -- (1,921) --
------
Units outstanding at end of year 11,547 5,811 661,787 13,968
====== ===== ======= ======
*For the period Nov. 4, 1998 (commencement of operations) to Dec. 31, 1998.
**Includes transfer activity from (to) other subaccounts and transfers from (to)
American Centurion Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Statements of Changes in Net Assets
Year ended December 31, 1998
Segregated Asset Subaccounts
Operations IGI IPG* IHY IPH*
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 6,368 $ (12) $ (1,754) $ (4)
Net realized gain (loss) on investments (3,971) -- (7,209) --
Net change in unrealized appreciation or
depreciation of investments 93,641 300 (96,159) 31
------ --- ------- --
Net increase (decrease) in net assets
resulting from operations 96,038 288 (105,122) 27
====== === ======== ==
Contract transactions
Contract purchase payments 1,809,462 18,034 1,209,995 14,886
Net transfers** (1,614) -- (2,191) --
Contract terminations:
Surrender benefits and contract charges (37,192) -- (14,168) --
Death benefits (1,353) -- (1,804) --
------ ------
Increase (decrease) from contract transactions 1,769,303 18,034 1,191,832 14,886
--------- ------ --------- ------
Net assets at beginning of year -- -- -- --
------- ------- ------- -------
Net assets at end of year $ 1,865,341 $ 18,322 $ 1,086,710 $ 14,913
=========== ======== =========== ========
Accumualtion unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 1,574,334 17,282 1,168,801 14,370
Net transfers** (1,454) -- (2,453) --
Contract terminations:
Surrender benefits and contract charges (33,771) -- (14,256) --
Death benefits (1,156) -- (1,896) --
------ ------
Units outstanding at end of year 1,537,953 17,282 1,150,196 14,370
========= ====== ========= ======
Combined
Variable
Operations INO IPV* Account
Investment income (loss) - net $ (2,825) $ (11) $ 281,257
Net realized gain (loss) on investments (731) -- (23,034)
Net change in unrealized appreciation or
depreciation of investments 52,511 1,057 (51,397)
------ ----- -------
Net increase (decrease) in net assets
resulting from operations 48,955 1,046 206,826
====== ===== =======
Contract transactions
Contract purchase payments 497,803 15,215 10,565,385
Net transfers** 594 -- (27,976)
Contract terminations:
Surrender benefits and contract charges (15,309) -- (200,129)
Death benefits (637) -- (13,027)
---- -------
Increase (decrease) from contract transactions 482,451 15,215 6,900,942
------- ------ ---------
Net assets at beginning of year -- -- --
---- ---- ----
Net assets at end of year $ 531,406 $ 16,261 $ 6,942,893
========= ======== ===========
Accumualtion unit activity
Units outstanding at beginning of year -- --
Contract purchase payments 423,873 13,942
Net transfers** 421 --
Contract terminations:
Surrender benefits and contract charges (13,018) --
Death benefits (561) --
----
Units outstanding at end of year 410,715 13,942
======= ======
*For the period Nov. 4, 1998 (commencement of operations) to Dec. 31, 1998.
**Includes transfer activity from (to) other subaccounts and transfers from (to)
American Centurion Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Centurion Variable Annuity Account
Notes to Financial Statements
1. ORGANIZATION
American Centurion Variable Annuity Account (the Account) was established under
New York law on Oct.12, 1995 and the subaccounts are registered together as a
single unit investment trust of American Centurion Life Insurance Company
(American Centurion Life) under the Investment Company Act of 1940, as amended
(the 1940 Act).
The Account is comprised of various subaccounts. Each subaccount invests
exclusively in shares of the following mutual funds or portfolios (collectively,
the Funds), which are registered under the 1940 Act as diversified
(non-diversified for GT Global Variable Latin America Fund), open-end management
investment companies and have the following investment managers.
Subaccount Invests exclusively in shares of Investment Manager
<S> <C> <C>
ISI AXPSM Variable Portfolio-- Bond Fund IDS Life Insurance Company 1
ICR AXPSM Variable Portfolio-- Capital Resource Fund IDS Life Insurance Company 1
IMS AXPSM Variable Portfolio-- Cash Management Fund IDS Life Insurance Company 1
IIE AXPSM Variable Portfolio-- International Fund IDS Life Insurance Company 2
IMG AXPSM Variable Portfolio-- Managed Fund IDS Life Insurance Company 1
IGD AXPSM Variable Portfolio-- New Dimensions Fund(R) IDS Life Insurance Company 1
IAG AXPSM Variable Portfolio-- Strategy Aggressive Fund IDS Life Insurance Company 1
IGN AIM V.I. Growth and Income Fund A I M Advisors, Inc.
IIN AIM V.I. International Equity Fund3 A I M Advisors, Inc.
IVA AIM V.I. Value Fund A I M Advisors, Inc.
IIG American Century VP Income and Growth American Century Investment Management, Inc.
IVL American Century VP Value American Century Investment Management, Inc.
ILA GT Global Variable Latin America Fund3 A I M Advisors, Inc.
IPA GT Global Variable New Pacific Fund3 A I M Advisors, Inc.
ISB Janus Aspen Series Balanced Portfolio: Institutional Janus Capital Corporation
Shares
IWG Janus Aspen Series Worldwide Growth Portfolio: Janus Capital Corporation
Institutional Shares
IEQ OCC Accumulation Trust Equity Portfolio OpCap Advisors
IMD OCC Accumulation Trust Managed Portfolio OpCap Advisors
ISC OCC Accumulation Trust Small Cap Portfolio OpCap Advisors
IUS OCC Accumulation Trust U.S. Government Income Portfolio OpCap Advisors
IGR Oppenheimer Capital Appreciation Fund/VA Oppenheimer Funds, Inc.
IHI Oppenheimer High Income Fund/VA Oppenheimer Funds, Inc.
IDI Putnam VT Diversified Income Fund - Class IA Shares Putnam Investment Management, Inc.
IPD Putnam VT Diversified Income Fund - Class IB Shares Putnam Investment Management, Inc.
IGI Putnam VT Growth and Income Fund - Class IA Shares Putnam Investment Management, Inc.
IPG Putnam VT Growth and Income Fund - Class IB Shares Putnam Investment Management, Inc.
IHY Putnam VT High Yield Fund - Class IA Shares Putnam Investment Management, Inc.
IPH Putnam VT High Yield Fund - Class IB Shares Putnam Investment Management, Inc.
INO Putnam VT New Opportunities Fund - Class IA Shares Putnam Investment Management, Inc.
IPV Putnam VT Voyager Fund - Class IB Shares Putnam Investment Management, Inc.
1 American Express Financial Corporation (AEFC) is the investment advisor.
2 AEFC is the investment advisor and American Express Asset Management
International Inc. is the sub-investment advisor.
3 Effective Oct. 22, 1999, GT Global Variable Latin America Fund and GT Global
Variable New Pacific Fund merged into AIM V.I. International Equity
Fund. Subaccount ILA and IPA net assets were transferred to subaccount IIN.
The assets of each subaccount of the Account are not chargeable with liabilities
arising out of the business conducted by any other segregated asset account or
by American Centurion Life.
American Centurion Life issues the contracts that are distributed by banks and
financial institutions either directly or through a network of third-party
marketers.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in the Funds
Investments in shares of the Funds are stated at market value which is the net
asset value per share as determined by the respective Funds. Investment
transactions are accounted for on the date the shares are purchased and sold.
The cost of investments sold and redeemed is determined on the average cost
method. Dividend distributions received from the Funds are reinvested in
additional shares of the Funds and are recorded as income by the subaccounts on
the ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the Funds'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from those estimates.
Federal Income Taxes
American Centurion Life is taxed as a life insurance company. The Account is
treated as part of American Centurion Life for federal income tax purposes.
Under existing federal income tax law, no income taxes are payable with respect
to any investment income of the Account.
3. MORTALITY AND EXPENSE RISK FEE
American Centurion Life makes contractual assurances to the Account that
possible future adverse changes in administrative expenses and mortality
experience of the contract owners and annuitants will not affect the Account.
The mortality and expense risk fee paid to American Centurion Life is computed
daily and is equal, on an annual basis, to 1.25% of the average daily net assets
of the subaccounts.
4. ADMINISTRATIVE CHARGE
American Centurion Life deducts a daily charge equal, on an annual basis, to
0.15% of the average daily net assets of each subaccount as an administrative
charge. This charge covers certain administrative and operating expenses of the
subaccounts incurred by American Centurion Life such as accounting, legal and
data processing fees, and expenses involved in the preparation and distribution
of reports and prospectuses. This charge cannot be increased.
5. CONTRACT ADMINISTRATIVE CHARGE
American Centurion Life deducts a contract administrative charge of $30 per year
on each contract anniversary. This charge cannot be increased and does not apply
after annuity payouts begin. American Centurion Life does not expect to profit
from this charge. This charge reimburses American Centurion Life for expenses
incurred in establishing and maintaining the annuity records. This charge is
waived when the contract value is $50,000 or more on the current contract
anniversary. The $30 annual charge is deducted at the time of any full
surrender.
6. WITHDRAWAL CHARGE
American Centurion Life will use a withdrawal charge to help it recover certain
expenses relating to the sale of the annuity. The withdrawal charge is deducted
for withdrawals up to the first seven payment years following a purchase
payment. Charges by American Centurion Life for withdrawals are not identified
on an individual segregated asset account basis. Charges for all segregated
asset accounts amounted to $6,481 in 1999 and $3,628 in 1998. Such charges are
not treated as a separate expense of the subaccounts. They are ultimately
deducted from contract withdrawal benefits paid by American Centurion Life. This
charge is waived if the withdrawal meets certain provisions as stated in the
contract.
7. INVESTMENT IN SHARES
The subaccounts' investment in shares of the Funds as of Dec. 31, 1999 were as follows:
Subaccount Investment Shares NAV
<S> <C> <C> <C>
ISI AXPSM Variable Portfolio-- Bond Fund 82,611 $10.54
ICR AXPSM Variable Portfolio-- Capital Resource Fund 35,784 36.40
IMS AXPSM Variable Portfolio-- Cash Management Fund -- 1.00
IIE AXPSM Variable Portfolio-- International Fund 11,802 19.38
IMG AXPSM Variable Portfolio-- Managed Fund 120,486 19.82
IGD AXPSM Variable Portfolio-- New Dimensions Fund(R) 5,757 22.86
IAG AXPSM Variable Portfolio-- Strategy Aggressive Fund 28,129 23.92
IGN AIM V.I. Growth and Income Fund 18,346 31.59
IIN AIM V.I. International Equity Fund 12,455 29.29
IVA AIM V.I. Value Fund 21,321 33.50
IIG American Century VP Income and Growth 28,777 8.00
IVL American Century VP Value 18,913 5.95
ISB Janus Aspen Series Balanced Portfolio: Institutional Shares 92,114 27.92
IWG Janus Aspen Series Worldwide Growth Portfolio:
Institutional Shares 10,667 47.75
IEQ OCC Accumulation Trust Equity Portfolio 2,801 37.56
IMD OCC Accumulation Trust Managed Portfolio 33,430 43.65
ISC OCC Accumulation Trust Small Cap Portfolio 5,513 22.52
IUS OCC Accumulation Trust U.S. Government Income Portfolio 111,790 10.00
IGR Oppenheimer Capital Appreciation Fund/VA 10,496 49.84
IHI Oppenheimer High Income Fund/VA 25,318 10.72
IDI Putnam VT Diversified Income Fund - Class IA Shares 60,268 9.93
IPD Putnam VT Diversified Income Fund - Class IB Shares 44,422 9.91
IGI Putnam VT Growth and Income Fund - Class IA Shares 71,862 26.80
IPG Putnam VT Growth and Income Fund - Class IB Shares 34,329 26.75
IHY Putnam VT High Yield Fund - Class IA Shares 76,452 11.09
IPH Putnam VT High Yield Fund - Class IB Shares 22,999 11.08
INO Putnam VT New Opportunities Fund - Class IA Shares 23,370 43.54
IPV Putnam VT Voyager Fund - Class IB Shares 14,799 66.11
8. INVESTMENT TRANSACTIONS
The subaccounts' purchases of Funds' shares, including reinvestment of dividend
distributions, were as follows:
Year ended Dec. 31,
Subaccount Investment 1999 1998
<S> <C> <C> <C>
ISI AXPSM Variable Portfolio-- Bond Fund $ 447,556 $ 595,032
ICR AXPSM Variable Portfolio-- Capital Resource Fund 445,976 42,488
IMS AXPSM Variable Portfolio-- Cash Management Fund 20,188 970,850
IIE AXPSM Variable Portfolio-- International Fund 140,965 67,355
IMG AXPSM Variable Portfolio-- Managed Fund 695,004 1,931,514
IGD1 AXPSM Variable Portfolio-- New Dimensions Fund(R) 106,308 4,156
IAG AXPSM Variable Portfolio-- Strategy Aggressive Fund 265,284 280,630
IGN1 AIM V.I. Growth and Income Fund 489,818 7,115
IIN1 AIM V.I. International Equity Fund 434,314 4,220
IVA1 AIM V.I. Value Fund 641,323 8,899
IIG1 American Century VP Income and Growth 204,615 8,888
IVL1 American Century VP Value 121,036 3,242
ILA2 GT Global Variable Latin America Fund 8,498 62,128
IPA2 GT Global Variable New Pacific Fund 1,205 63,321
ISB1 Janus Aspen Series Balanced Portfolio: Institutional Shares 2,323,228 41,411
IWG1 Janus Aspen Series Worldwide Growth Portfolio: Institutional 360,860 11,798
Shares
IEQ1 OCC Accumulation Trust Equity Portfolio 106,768 3,282
IMD OCC Accumulation Trust Managed Portfolio 272,213 1,479,737
ISC1 OCC Accumulation Trust Small Cap Portfolio 118,905 8,292
IUS OCC Accumulation Trust U.S. Government Income Portfolio 258,642 1,157,565
IGR1 Oppenheimer Capital Appreciation Fund/VA 420,313 12,581
IHI1 Oppenheimer High Income Fund/VA 278,257 6,055
IDI Putnam VT Diversified Income Fund - Class IA Shares 77,360 719,282
IPD1 Putnam VT Diversified Income Fund - Class IB Shares 449,161 14,280
IGI Putnam VT Growth and Income Fund - Class IA Shares 445,566 1,877,566
IPG1 Putnam VT Growth and Income Fund - Class IB Shares 1,003,733 18,034
IHY Putnam VT High Yield Fund - Class IA Shares 134,627 1,292,921
IPH1 Putnam VT High Yield Fund - Class IB Shares 251,807 14,886
INO Putnam VT New Opportunities Fund - Class IA Shares 218,297 498,101
IPV1 Putnam VT Voyager Fund - Class IB Shares 733,150 15,215
Combined Variable Account $11,474,977 $11,220,844
1 Operations commenced on Nov. 4, 1998.
2 Effective Oct. 22, 1999, GT Global Variable Latin America Fund and GT Global
Variable New Pacific Fund merged into AIM V.I. International Equity Fund.
Subaccount ILA and IPA net assets were transferred to subaccount IIN.
9. YEAR 2000 (UNAUDITED)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of American Centurion Life
and the Account. All of the major systems used by American Centurion Life and
the Account are maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. American Centurion Life and the Account's businesses are
heavily dependent upon AEFC's computer systems and have significant interactions
with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to American Centurion Life and the Account, was
conducted to identify the major systems that could be affected by the Year 2000
issue. Steps were taken to resolve potential problems including modification to
existing software and the purchase of new software. As of Dec. 31, 1999, AEFC
had completed its program of corrective measures on its internal systems and
applications, including Year 2000 compliance testing. As of Dec. 31, 1999, AEFC
had also completed an evaluation of the Year 2000 readiness of other third
parties whose system failures could have an impact on American Centurion Life's
and the Account's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on American Centurion Life's and
the Account's business, results of operations, or financial condition as a
result of the Year 2000 issue.
</TABLE>
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS
AMERICAN CENTURION LIFE ASSURANCE COMPANY
We have audited the accompanying balance sheets of American Centurion Life
Assurance Company (a wholly-owned subsidiary of IDS Life Insurance Company) as
of December 31, 1999 and 1998, and the related statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Centurion Life
Assurance Company at December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
February 3, 2000
Minneapolis, Minnesota
--------------------------------------------------------------------------------
1
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
BALANCE SHEETS
DECEMBER 31,
($ THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
------------------------------------------------------------
Investments:
Fixed maturities:
Held to maturity, at amortized cost
(fair value:
1999, $10,939; 1998, $14,307) $ 10,971 $ 13,894
Available for sale, at fair value
(amortized cost:
1999, $315,486; 1998, $269,483) 297,251 273,873
------------------
308,222 287,767
Mortgage loans on real estate 11,691 --
------------------------------------------------------------
Total investments 319,913 287,767
Cash and cash equivalents 7,159 13,992
Amounts recoverable from reinsurers 2,389 2,515
Accrued investment income 4,974 4,364
Deferred policy acquisition costs 16,823 12,864
Deferred income taxes 6,201 --
Other assets 77 69
Separate account assets 24,597 12,614
------------------------------------------------------------
Total assets $382,133 $334,185
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------------------------------
Liabilities:
Future policy benefits:
Fixed annuities $317,709 $268,348
Traditional life insurance 1,653 1,724
Disability income insurance 85 225
Policy claims and other policyholders'
funds 672 2,048
Deferred income taxes -- 1,758
Other liabilities 701 463
Separate account liabilities 24,597 12,614
------------------------------------------------------------
Total liabilities 345,417 287,180
Stockholder's equity:
Capital stock, $10 par value per
share;
100,000 shares authorized, issued
and outstanding 1,000 1,000
Additional paid-in capital 26,600 26,600
Accumulated other comprehensive (loss)
income:
Net unrealized securities (losses)
gains (11,102) 2,512
Retained earnings 20,218 16,893
------------------------------------------------------------
Total stockholder's equity 36,716 47,005
------------------------------------------------------------
Total liabilities and
stockholder's equity $382,133 $334,185
------------------------------------------------------------
</TABLE>
See accompanying notes.
--------------------------------------------------------------------------------
2
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
($ THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Revenues:
Net investment income $23,693 $18,990 $13,331
Contractholder charges 760 568 318
Mortality and expense risk fees 242 87 8
Net realized gain on investments 153 39 25
----------------------------------------------------------------------
Total revenues 24,848 19,684 13,682
Benefits and expenses:
Death and other benefits on investment
contracts (117) 72 2
Interest credited on investment
contracts 15,290 12,838 8,887
Amortization of deferred policy
acquisition costs 1,413 624 114
Other operating expenses 2,511 2,260 1,324
----------------------------------------------------------------------
Total expenses 19,097 15,794 10,327
----------------------------------------------------------------------
Income before income taxes 5,751 3,890 3,355
Income taxes 2,426 1,574 1,389
----------------------------------------------------------------------
Net income $ 3,325 $ 2,316 $ 1,966
----------------------------------------------------------------------
</TABLE>
See accompanying notes.
--------------------------------------------------------------------------------
3
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
THREE YEARS ENDED DECEMBER 31, 1999
($ THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
TOTAL ADDITIONAL COMPREHENSIVE
STOCKHOLDER'S CAPITAL PAID-IN (LOSS) INCOME, RETAINED
EQUITY STOCK CAPITAL NET OF TAX EARNINGS
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $31,074 $1,000 $16,600 $ 863 $12,611
Comprehensive income:
Net income 1,966 -- -- -- 1,966
Unrealized holding losses arising
during the year, net of deferred
policy acquisition costs of $(259)
and taxes of $(1,231) 2,286 -- -- 2,286 --
Reclassification adjustment for gains
included in net income, net of tax
of $5 (10) -- -- (10) --
-------------------------------------------------------------------------------------------------------
Other comprehensive income 2,276 -- -- 2,276 --
-------------------------------------------------------------------------------------------------------
Comprehensive income 4,242
Capital contribution from parent 10,000 -- 10,000 -- --
-------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 35,316 1,000 16,600 3,139 14,577
Comprehensive income:
Net income 2,316 -- -- -- 2,316
Unrealized holding losses arising
During the year, net of deferred
policy acquisition costs of $135
and taxes of $327 (608) -- -- (646) --
Reclassification adjustment for gains
included in net income, net of tax
of $10 (19) -- -- 19 --
-------------------------------------------------------------------------------------------------------
Other comprehensive loss (627) -- -- (627) --
-------------------------------------------------------------------------------------------------------
Comprehensive income 1,689
Capital contribution from IDS Life 10,000 -- 10,000 -- --
-------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 47,005 1,000 26,600 2,512 16,893
Comprehensive income:
Net income 3,325 -- -- -- 3,325
Unrealized holding losses arising
During the year, net of deferred
policy acquisition costs of
$1,680, and taxes of $7,216 (13,401) -- -- (13,401) --
Reclassification adjustment for gains
included in net income, net of tax
of $114 (213) -- -- (213) --
-------------------------------------------------------------------------------------------------------
Other comprehensive loss (13,614) -- -- (13,614) --
-------------------------------------------------------------------------------------------------------
Comprehensive loss (10,289)
-------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $36,716 $1,000 $26,600 ($11,102) $20,218
-------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
--------------------------------------------------------------------------------
4
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
($ THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,325 $ 2,316 $ 1,966
Adjustments to reconcile net income to
net cash used in operating
activities:
Change in amounts recoverable from
reinsurers 126 213 --
Change in accrued investment income (610) (1,244) (1,016)
Change in deferred policy
acquisition costs, net (2,279) (3,718) (5,175)
Change in other assets (8) 1,522 (1,536)
Change in liabilities for future
policy benefits for traditional
life and disability income
insurance (211) (160) 1
Change in policy claims and other
policyholders' funds (1,376) (257) 1,614
Deferred income tax (benefit)
provision (629) (295) 574
Change in other liabilities 238 (278) 707
(Accretion of discount) amortization
of premium, net (408) (46) 7
Net realized gain on investments (153) (39) (25)
Other, net (125) (1) 7
----------------------------------------------------------------------
Net cash used in operating
activities (2,110) (1,987) (2,876)
----------------------------------------------------------------------
Cash flows from investing activities:
Fixed maturities held to maturity:
Maturities 2,884 3,770 1,847
Fixed maturities available for sale:
Purchases (83,722) (87,699) (86,006)
Maturities 24,965 22,581 8,438
Sales 13,480 6,695 1,303
Other investments:
Purchases (11,744) --
Sales 53 -- --
Change in due to brokers -- (4,941) 24
----------------------------------------------------------------------
Net cash used in investing
activities (54,084) (59,594) (74,394)
----------------------------------------------------------------------
Cash flows from financing activities:
Activity related to investment
contracts:
Considerations received 69,806 78,367 82,656
Surrenders and other benefits (35,735) (29,388) (24,373)
Interest credited to account
balances 15,290 12,838 8,887
Capital contribution from parent -- 10,000 --
----------------------------------------------------------------------
Net cash provided by financing
activities 49,361 71,817 67,170
----------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (6,833) 10,236 (10,100)
Cash and cash equivalents at beginning
of year 13,992 3,756 13,856
----------------------------------------------------------------------
Cash and cash equivalents at end of year $ 7,159 $ 13,992 $ 3,756
----------------------------------------------------------------------
</TABLE>
See accompanying notes.
--------------------------------------------------------------------------------
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
American Centurion Life Assurance Company (the Company) is a stock life
insurance company that is domiciled in New York and licensed to transact
insurance business in New York, Alabama and Delaware. The Company's principal
product is deferred annuities which are issued primarily to individuals who are
New York residents. It offers single premium and installment premium deferred
annuities on both a fixed and variable dollar basis. Immediate annuities are
offered as well.
BASIS OF PRESENTATION
The Company is a wholly-owned subsidiary of IDS Life Insurance Company (IDS
Life), which is a wholly owned subsidiary of American Express Financial
Corporation (AEFC), which is a wholly owned subsidiary of American Express
Company. The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States which vary in
certain respects from reporting practices prescribed or permitted by the New
York Department of Insurance (see Note 4).
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVESTMENTS
Fixed maturities that the Company has both the positive intent and the ability
to hold to maturity are classified as held to maturity and carried at amortized
cost. All other fixed maturities are classified as available for sale and
carried at fair value. Unrealized gains and losses on securities classified as
available for sale are reported as a separate component of accumulated other
comprehensive (loss) income, net of deferred policy acquisition costs and
deferred income taxes.
Realized investment gain or loss is determined on an identified cost basis.
Prepayments are anticipated on certain investments in mortgage-backed securities
in determining the constant effective yield used to recognize interest income.
Prepayment estimates are based on information received from brokers who deal in
mortgage-backed securities.
Mortgage loans on real estate are carried at amortized cost less an allowance
for mortgage loan losses. The estimated fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities.
Impairment of mortgage loans is measured as the excess of the loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate, or the fair value of
collateral. The amount of the impairment is recorded in an allowance for
mortgage loan losses. The allowance for mortgage loan losses is maintained at a
level that management believes is adequate to absorb estimated losses in the
portfolio. The level of the allowance account is determined based on several
factors, including historical experience, expected future principal and interest
payments, estimated collateral values, and current and anticipated economic and
political conditions. Management regularly evaluates the adequacy of the
allowance for mortgage loan losses.
--------------------------------------------------------------------------------
6
<PAGE>
The Company generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on management's
judgment as to the ultimate collectibility of principal, interest payments
received are either recognized as income or applied to the recorded investment
in the loan.
The cost of interest rate caps and floors is amortized to investment income over
the life of the contracts and payments received as a result of these agreements
are recorded as investment income when realized. The amortized cost of interest
rate caps and floors is included in other investments
When evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such investments
are written down to the fair value by a charge to income.
STATEMENTS OF CASH FLOWS
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These securities are
carried principally at amortized cost which approximates fair value.
Supplementary information to the statements of cash flows for the years ended
December 31, is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Income taxes $2,700 $ 42 $2,404
Interest on borrowings 11 332 7
</TABLE>
CONTRACTHOLDER CHARGES
Contractholder charges include surrender charges and fees collected regarding
the issue and administration of annuity contracts.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally sales compensation, policy
issue costs, and certain sales expenses, have been deferred on annuity
contracts. These costs are amortized using primarily the interest method.
For variable annuities and variable universal life insurance, the amortization
of deferred acquisition costs can be impacted by separate account asset
performance. The Company generally assumes assets will appreciate at a constant
rate, and considers whether recent fluctuations from that rate are temporary and
likely to correct.
LIABILITIES FOR FUTURE POLICY BENEFITS
Liabilities for universal-life type insurance and fixed and variable deferred
annuities are accumulation values.
Liabilities for equity indexed deferred annuities are determined as the present
value of guaranteed benefits and the intrinsic value of index-based benefits.
FEDERAL INCOME TAXES
The Company's taxable income is included in the consolidated federal income tax
return of American Express Company. The Company provides for income taxes on a
separate return basis, except that, under an agreement between AEFC and American
Express Company, tax benefit is recognized for losses to the extent they can be
used on the consolidated tax return. It is the policy of AEFC and its
subsidiaries that AEFC will reimburse subsidiaries for all tax benefits.
Included in other liabilities at December 31, 1999 and 1998 are $335 receivable
from and $178 payable to IDS Life for federal income taxes, respectively.
--------------------------------------------------------------------------------
7
<PAGE>
SEPARATE ACCOUNT BUSINESS
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity contract owners. The Company receives
mortality and expense risk fees from the variable annuity separate accounts.
The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of the
annuitants and the beneficiaries from the mortality assumptions implicit in the
annuity contracts. The Company makes periodic fund transfers to, or withdrawals
from, the separate accounts for such actuarial adjustments for variable
annuities that are in the benefit payment period. The Company also guarantees
that the rates at which administrative fees are deducted from contract funds
will not exceed contractual maximums.
ACCOUNTING CHANGES
American Institute of Certified Public Accountants (AICPA) Statement of Position
(SOP) 98-1, "Accounting for Costs of Computer Software Developed or Obtained for
Internal Use" became effective January 1, 1999. The SOP requires the
capitalization of certain costs incurred after the date of adoption to develop
or obtain software for internal use. Software utilized by the Company is owned
by AEFC and capitalized by AEFC. As a result, the new rule did not have a
material impact on the Company's results of operations or financial condition.
Effective January 1, 1999, the Company adopted AICPA SOP 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments," providing
guidance for the timing of recognition of liabilities related to guaranty fund
assessments. Adoption of the SOP did not have a material impact on the Company's
results of operations or financial condition.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective January 1, 2001. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation. The
ultimate financial effect of the new rule will be measured based on the
derivatives in place at adoption and cannot be estimated at this time.
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company's statutory-basis financial statements are prepared in accordance
with accounting practices prescribed or permitted by the New York Insurance
Department. Currently, "prescribed" statutory practices are interspersed
throughout state insurance laws and regulations, the NAIC's ACCOUNTING PRACTICES
AND PROCEDURES MANUAL and a variety of other NAIC publications. "Permitted"
statutory accounting practices encompass all accounting practices that are not
prescribed; such practices may differ from state to state, may differ from
company to company within a state, and may change in the future.
In 1998, the NAIC adopted codified statutory accounting principles
("Codification") effective January 1, 2001. Codification will likely change, to
some extent, prescribed statutory accounting practices and may result in changes
to the accounting practices that the Company uses to prepare its statutory-basis
financial statements. Codification will require adoption by the various states
before it becomes the prescribed statutory basis of accounting for insurance
companies domesticated within those states. Accordingly, before Codification
becomes effective for the Company, the State of New York must adopt Codification
as the prescribed basis of accounting on which domestic insurers must report
their statutory-basis results to the Insurance Department. New York has not yet
--------------------------------------------------------------------------------
8
<PAGE>
made a decision regarding whether or not it will accept Codification. While
management has not yet determined the impact of Codification to the Company's
statutory-basis financial statements, it does not believe the impact will be
material.
2. INVESTMENTS
Fair values of investments in fixed maturities represent quoted market prices
and estimated values when quoted prices are not available. Estimated values are
determined by established procedures involving, among other things, review of
market indices, price levels of current offerings of comparable issues, price
estimates and market data from independent brokers and financial files.
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1999 are
as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
HELD TO MATURITY COST GAINS LOSSES VALUE
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate bonds and
obligations $ 10,006 $ 53 $ 115 $ 9,944
Mortgage-backed securities 965 30 -- 995
----------------------------------------------------------------------------
$ 10,971 $ 83 $ 115 $ 10,939
----------------------------------------------------------------------------
AVAILABLE FOR SALE
----------------------------------------------------------------------------
U.S. Government agency
obligations $ 1,064 $ -- $ 21 $ 1,043
State and municipal
obligations 900 6 -- 906
Corporate bonds and
obligations 211,606 632 14,716 197,522
Mortgage-backed securities 101,916 113 4,249 97,780
----------------------------------------------------------------------------
$315,486 $ 751 $18,986 $297,251
----------------------------------------------------------------------------
</TABLE>
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1998 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
HELD TO MATURITY COST GAINS LOSSES VALUE
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate bonds and
obligations $ 12,483 $ 352 $ -- $ 12,835
Mortgage-backed securities 1,411 61 -- 1,472
----------------------------------------------------------------------------
$ 13,894 $ 413 $ -- $ 14,307
----------------------------------------------------------------------------
AVAILABLE FOR SALE
----------------------------------------------------------------------------
U.S. Government agency
obligations $ 1,075 $ 70 $ -- $ 1,145
State and municipal
obligations 1,000 48 -- 1,048
Corporate bonds and
obligations 181,622 6,050 3,782 183,890
Mortgage-backed securities 85,786 2,036 32 87,790
----------------------------------------------------------------------------
$269,483 $8,204 $3,814 $273,873
----------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
9
<PAGE>
The amortized cost and fair value of investments in fixed maturities at December
31, 1999 by contractual maturity are shown below. Actual maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
HELD TO MATURITY COST VALUE
-------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 5,052 $ 5,057
Due from one to five years 3,557 3,585
Due in more than ten years 1,397 1,302
Mortgage-backed securities 965 995
-------------------------------------------------------------
$ 10,971 $ 10,939
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AMORTIZED FAIR
AVAILABLE FOR SALE COST VALUE
-------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 6,531 $ 6,553
Due from one to five years 19,017 18,661
Due from five to ten years 124,664 116,727
Due in more than ten years 63,358 57,530
Mortgage-backed securities 101,916 97,780
-------------------------------------------------------------
$315,486 $297,251
-------------------------------------------------------------
</TABLE>
Fixed maturities available for sale were sold during 1999 with proceeds of
$13,480 and gross realized gains and losses of $419 and $92, respectively. Fixed
maturities available for sale were sold during 1998 with proceeds of $6,695 and
gross realized gains and losses of $253 and $224, respectively. Fixed maturities
available for sale were sold during 1997 with proceeds of $1,303 and gross
realized gains and losses of $14 and $nil, respectively.
At December 31, 1999, bonds carried at $1,064 were on deposit with various
states as required by law.
At 12/31/99, fixed maturities comprised 96 percent of the Company's total
invested assets.
Securities are rated by Moody's and Standard & Poor's (S&P), except for
approximately $51 million of securities which are rated by AEFC's internal
analysts using criteria similar to Moody's and S&P. A summary of investments in
fixed maturities, at amortized cost, by rating on December 31 is as follows:
<TABLE>
<CAPTION>
RATING 1999 1998
------------------------------------------------------------
<S> <C> <C>
Aaa/AAA $103,877 $ 88,286
Aa/AA 6,297 4,942
Aa/A 4,751 2,509
A/A 30,560 26,700
A/BBB 8,903 13,439
Baa/BBB 129,337 104,236
Baa/BB 4,427 5,651
Below investment grade 38,305 37,614
------------------------------------------------------------
$326,457 $283,377
------------------------------------------------------------
</TABLE>
At December 31, 1999, approximately 79 percent of the securities rated Aaa/AAA
are GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of any other
issuer are greater than ten percent of stockholder's equity.
--------------------------------------------------------------------------------
10
<PAGE>
At December 31, 1999, approximately 4 percent of the Company's invested assets
were mortgage loans on real estate. Summaries of mortgage loans by region of the
United States and by type of real estate are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------
ON COMMITMENTS
REGION BALANCE SHEET TO PURCHASE
--------------------------------------------------------------------
<S> <C> <C>
South Atlantic $ -- $2,544
Middle Atlantic 1,279 --
East North Central 4,483 106
Mountain 2,000 --
West North Central 2,284 --
New England 1,645 --
--------------------------------------------------------------------
$11,691 $2,650
--------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------
ON COMMITMENTS
PROPERTY TYPE BALANCE SHEET TO PURCHASE
--------------------------------------------------------------------
<S> <C> <C>
Department/retail stores $ 4,527 $ --
Apartments 1,093 1,299
Office buildings 5,035 1,245
Industrial buildings 1,036 106
--------------------------------------------------------------------
$11,691 $2,650
--------------------------------------------------------------------
</TABLE>
Mortgage loan fundings are restricted by state insurance regulatory authorities
to 80 percent or less of the market value of the real estate at the time of
origination of the loan. The Company holds the mortgage document, which gives it
the right to take possession of the property if the borrower fails to perform
according to the terms of the agreement. Commitments to purchase mortgages are
made in the ordinary course of business. The fair value of the mortgage
commitments is $nil.
At December 31, 1999, the Company's recorded investment in impaired loans was
$nil.
Net investment income for the years ended December 31 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------------------
<S> <C> <C> <C>
Interest on fixed maturities $22,822 $19,338 $13,818
Interest on mortgage loans 281 -- --
Interest on cash equivalents 277 131 276
Other 585 132 1
--------------------------------------------------------------
23,965 19,601 14,095
Less investment expenses 272 611 764
--------------------------------------------------------------
$23,693 $18,990 $13,331
--------------------------------------------------------------
</TABLE>
Net realized gain on investments was $153, $39 and $25 for the years ended
December 31, 1999, 1998 and 1997, respectively, and was entirely due to sales of
fixed maturities.
Changes in net unrealized (depreciation) appreciation of investments for the
years ended December 31 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities available for sale $(22,625) $(831) $3,761
</TABLE>
--------------------------------------------------------------------------------
11
<PAGE>
3. INCOME TAXES
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the Internal Revenue Code
provisions applicable to life insurance companies.
The income tax expense (benefit) for the years ended December 31, consists of
the following:
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes:
Current $2,417 $1,544 $ 486
Deferred (629) (295) 574
-----------------------------------------------------------
1,788 1,249 1,060
State income taxes -- current 638 325 329
-----------------------------------------------------------
Income tax expense $2,426 $1,574 $1,389
-----------------------------------------------------------
</TABLE>
Increases to the income tax provision applicable to pretax income based on the
statutory rate for the years ended December 31, are attributable to:
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ------------------ ------------------
PROVISION RATE PROVISION RATE PROVISION RATE
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes
based on the statutory
rate $2,013 35.0% $1,361 35.0% $1,174 35.0%
Increases are
attributable to:
State tax, net 415 7.2 211 5.4 214 6.4
Other, net (2) -- 2 0.1 1 0
-------------------------------------------------------------------------------------
Total income taxes $2,426 42.2% $1,574 40.5% $1,389 41.4%
-------------------------------------------------------------------------------------
</TABLE>
Significant components of the Company's deferred income tax assets and
liabilities as of December 31 are as follows:
<TABLE>
<CAPTION>
1999 1998
----------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Policy reserves $ 4,326 $ 3,049
Investments 6,070 --
----------------------------------------------------------
Total deferred income tax assets 10,396 3,049
----------------------------------------------------------
Deferred income tax liabilities:
Deferred policy acquisition costs 3,900 3,234
Investments -- 1,518
Other 295 55
----------------------------------------------------------
Total deferred income tax
liabilities 4,195 4,807
----------------------------------------------------------
Net deferred income tax
assets/(liabilities) $ 6,201 $(1,758)
----------------------------------------------------------
</TABLE>
The Company is required to establish a valuation allowance for any portion of
the deferred income tax assets that management believes will not be realized. In
the opinion of management, it is more likely than not that the Company will
realize the benefit of the deferred income tax assets and, therefore, no such
valuation allowance has been established.
4. STOCKHOLDER'S EQUITY
Retained earnings available for distribution as dividends to the parent are
limited to the Company's surplus as determined in accordance with accounting
practices prescribed by the New York Department of Insurance. All dividend
distributions must be
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<PAGE>
approved by the New York Department of Insurance. Statutory unassigned surplus
aggregated $9,149 and $7,512 as of December 31, 1999 and 1998, respectively (see
note 9 for a reconciliation of net income and stockholder's equity per the
accompanying financial statements to statutory net income and surplus).
5. RELATED PARTY TRANSACTIONS
The Company participates in the American Express Retirement Plan which covers
all permanent employees age 21 and over who have met certain employment
requirements. Employer contributions to the plan are based on participants' age,
years of service and total compensation for the year. Funding of retirement
costs for this plan complies with the applicable minimum funding requirements
specified by ERISA. The Company's share of the total net periodic pension cost
was $4, $3 and $nil in 1999, 1998 and 1997, respectively.
The Company also participates in defined contribution pension plans of American
Express Company which cover all employees who have met certain employment
requirements. Company contributions to the plans are a percent of either each
employee's eligible compensation or basic contributions. Costs of these plans
charged to operations in 1999, 1998 and 1997 were $19, $19 and $23,
respectively.
The Company participates in defined benefit health care plans of AEFC that
provide health care and life insurance benefits to retired employees. The plans
include participant contributions and service related eligibility requirements.
Upon retirement, such employees are considered to have been employees of AEFC.
Costs of these plans charged to operations in 1999, 1998 and 1997 were $nil.
Charges by IDS Life and AEFC for use of joint facilities, marketing services and
other services aggregated $2,751, $2,910 and $2,536 for 1999, 1998 and 1997,
respectively. Certain of these costs are included in deferred policy acquisition
costs.
6. LINES OF CREDIT
The Company has an available line of credit with AEFC of $10,000 at AEFC's cost
of funds. The interest rate for the line of credit is established by reference
to various indicies plus 20 to 45 basis points, depending on the term. There
were no borrowings outstanding under this agreement at December 31, 1999 or
1998.
7. COMMITMENTS AND CONTINGENCIES
In January 2000, AEFC reached an agreement in principle to settle three
class-action lawsuits. The Company had been named as a co-defendant in one of
these lawsuits. It is expected the settlement will provide $215 million of
benefits to more than 2 million participants. The agreement in principle to
settle also provides for release by class members of all insurance and annuity
market conduct claims dating back to 1985 and is subject to a number of
contingencies including a definitive agreement and court approval. The portion
of the settlement allocated to the Company did not have a material impact on the
Company's financial position or results from operations.
The Company has an agreement whereby it ceded 100 percent of a block of
individual life insurance and individual annuities to an unaffiliated company.
At December 31, 1999 and 1998, traditional life insurance in-force aggregated
$168,830 and $191,972, respectively, of which $168,595 and $191,737 were
reinsured at the respective year ends. Under all reinsurance agreements,
premiums ceded to reinsurers amounted to $1,289, $1,354 and $1,346 for the years
ended December 31, 1999, 1998 and 1997. Reinsurance recovered from reinsurers
amounted to $1,602, $601 and $718 for the years ended December 31, 1999, 1998
and 1997. Reinsurance contracts do not relieve the Company from its primary
obligations to policyholders.
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13
<PAGE>
8. FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company discloses fair value information for most on- and off-balance sheet
financial instruments for which it is practicable to estimate that value. Fair
value of life insurance obligations, receivables and all non-financial
instruments, such as deferred acquisition costs are excluded. Off-balance sheet
intangible assets are also excluded. Management believes the value of excluded
assets and liabilities is significant. The fair value of the Company, therefore,
cannot be estimated by aggregating the amounts presented.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1999 1998
------------------ ------------------
CARRYING FAIR CARRYING FAIR
FINANCIAL ASSETS AMOUNT VALUE AMOUNT VALUE
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments in fixed
maturities (Note 2)
Held to maturity $ 10,971 $ 10,939 $ 13,894 $ 14,307
Available for sale 297,251 297,251 273,873 273,873
Mortgage loans on real estate
(Note 2) 11,691 11,182 -- --
Cash and cash equivalents
(Note 1) 7,159 7,159 13,992 13,992
Separate account assets 24,597 24,597 12,614 12,614
FINANCIAL LIABILITIES
----------------------------------------------------------------------
Future policy benefits for
fixed Annuities $317,600 $305,733 $268,285 $258,578
Separate account liabilities 24,597 23,394 12,614 11,851
</TABLE>
At December 31, 1999 and 1998, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related contracts
carried at $109 and $63, respectively. The fair value of these benefits is based
on the status of the annuities at December 31, 1999 and 1998. The fair values of
deferred annuities and separate account liabilities are estimated as the
carrying amount less applicable surrender charges. The fair value for annuities
in non-life contingent payout status is estimated as the present value of
projected benefit payments at rates appropriate for contracts issued in 1999 and
1998.
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14
<PAGE>
9. STATUTORY INSURANCE ACCOUNTING PRACTICES
Reconciliations of net income for the years ended December 31 and stockholder's
equity at December 31, as shown in the accompanying financial statements, to
that determined using statutory accounting practices are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------------------------------------------------------------
<S> <C> <C> <C>
Net income, per accompanying
financial statements $ 3,325 $ 2,316 $ 1,966
Deferred policy acquisition costs (2,279) (3,719) (5,175)
Adjustments of future policy
benefit liabilities 2,793 2,540 2,222
Deferred federal income taxes (629) (295) 574
IMR gain/loss transfer and
amortization (230) (148) (16)
Deferred surrender charge 513 665 --
Other, net 175 (252) 255
----------------------------------------------------------------
Net income (loss), on basis of
statutory accounting practices $ 3,668 $ 1,107 $ (174)
----------------------------------------------------------------
Stockholder's equity, per
accompanying financial statements $ 36,716 $ 47,005
Deferred policy acquisition costs (16,823) (12,864)
Adjustments of future policy
benefit liabilities 10,361 8,694
Adjustments of reinsurance ceded
reserves (2,390) (2,515)
Deferred federal income taxes (6,201) 1,758
Asset valuation reserve (4,021) (2,986)
Net unrealized gain on investments 18,408 (4,390)
Interest maintenance reserve (456) (227)
Other, net 1,155 637
----------------------------------------------------------------
Stockholder's equity on basis of
statutory accounting practices $ 36,749 $ 35,112
----------------------------------------------------------------
</TABLE>
10. YEAR 2000 (UNAUDITED)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Company. All of the
major systems used by the Company are maintained by AEFC and are utilized by
multiple subsidiaries and affiliates of AEFC. The Company's businesses are
heavily dependent upon AEFC's computer systems and have significant interaction
with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to the Company, was conducted to identify the major
systems that could be affected by the Year 2000 issue. Steps were taken to
resolve potential problems including modification to existing software and the
purchase of new software. As of December 31, 1999, AEFC had completed its
program of corrective measures on its internal systems and applications,
including Year 2000 compliance testing. As of December 31, 1999, AEFC had also
completed an evaluation of the Year 2000 readiness of other third parties whose
system failures could have an impact on the Company's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. At December 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since January 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on the Company's business, results
of operations, or financial condition as a result of the Year 2000 issue.
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