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CONSECO(R)
Conseco Variable Insurance Company
Formerly
Great American Reserve Insurance Company
Annual Report to
Contract Owners
December 31, 1998
(Commenced operations April 29, 1998)
Great American Reserve Variable Annuity Account G
<PAGE>
ANNUAL REPORT TO CONTRACT OWNERS
Table of Contents
December 31, 1998
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Great American Reserve Variable Annuity Account G Page
Statement of Assets and Liabilities as of December 31, 1998................. 2
Statement of Operations for the Period
April 29, 1998, through December 31, 1998.................................. 4
Statement of Changes in Net Assets for the Period
April 29, 1998, through December 31, 1998.................................. 4
Notes to Financial Statements............................................... 5
Report of Independent Accountants............................................7
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GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT G
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
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SHARES COST VALUE
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<S> <C> <C> <C>
Assets:
Investments in portfolio shares, at net asset value (Note 2):
The Alger American Fund:
Growth Portfolio ........................................................ 1,934.6 $ 87,218 $ 102,961
Leveraged AllCap Portfolio .............................................. 1,393.6 42,191 48,635
MidCap Growth Portfolio ................................................. 967.9 23,792 27,943
Small Capitalization Portfolio .......................................... 210.6 9,230 9,262
American Century Variable Portfolios, Inc.:
Income and Growth Fund .................................................. 11,092.2 69,585 75,205
International Fund ...................................................... 978.9 7,176 7,459
Value Fund .............................................................. 6,462.9 42,683 43,496
Berger Institutional Products Trust:
Growth and Income Fund .................................................. 2,873.7 41,626 47,789
Conseco Series Trust:
Asset Allocation Portfolio .............................................. 13,022.3 174,406 177,990
Common Stock Portfolio .................................................. 1,649.0 33,139 35,594
Corporate Bond Portfolio ................................................ 8,858.5 89,094 88,983
Government Securities Portfolio ......................................... 2,185.9 26,531 26,550
Money Market Portfolio .................................................. 16,893.4 16,893 16,893
Dreyfus Stock Index Fund .................................................. 1,598.1 49,490 51,972
The Dreyfus Socially Responsible Growth Fund, Inc. ........................ 121.3 3,182 3,769
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio ............................................. 1,084.2 21,451 24,883
International Value Portfolio ........................................... 572.2 7,830 7,695
Federated Insurance Series:
High Income Bond Fund II ................................................ 2,931.5 31,267 32,012
Utility Fund II ......................................................... 1,808.6 24,960 27,617
Invesco Variable Investment Funds, Inc.:
High Yield Portfolio .................................................... 657.3 8,261 7,440
Janus Aspen Series:
Aggressive Growth Portfolio ............................................. 117.4 2,406 3,239
Growth Portfolio ........................................................ 3,925.7 78,858 92,411
Worldwide Growth Portfolio .............................................. 2,692.7 72,466 78,332
Lazard Retirement Series, Inc.:
Equity Portfolio ........................................................ 6,354.5 65,779 70,217
Small Cap Portfolio ..................................................... 786.0 7,255 7,483
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio ............................................. 2,307.5 47,045 47,648
Neuberger & Berman Advisers Management Trust:
Limited Maturity Bond Portfolio ......................................... 1,710.1 23,518 23,634
Partners Portfolio ...................................................... 1,013.2 18,455 19,179
Strong Variable Insurance Funds, Inc.:
Growth Fund II .......................................................... 557.1 7,425 8,924
Strong Opportunity Fund II, Inc. .......................................... 916.6 18,503 19,909
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund ..................................................... 1,165.9 14,434 14,318
Worldwide Emerging Markets Fund ......................................... 180.6 1,024 1,286
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Total assets .......................................................... 1,250,728
Liabilities:
Amounts due to Conseco Variable Insurance Company ........................... 1,330
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Net assets (Note 6) ................................................... $1,249,398
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</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT G
Statement of Assets and Liabilities - Continued
December 31, 1998
<TABLE>
<CAPTION>
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Reported
Units Unit Value Value
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<S> <C> <C> <C>
Net assets attributable to:
Contract owners' deferred annuity reserves:
The Alger American Fund:
Growth Portfolio .................................................. 5,855.2 $17.565771 $ 102,850
Leveraged AllCap Portfolio ........................................ 2,615.3 18.580433 48,593
MidCap Growth Portfolio ........................................... 1,813.4 15.392143 27,912
Small Capitalization Portfolio .................................... 643.0 14.386676 9,251
American Century Variable Portfolios, Inc.:
Income and Growth Fund ............................................ 6,939.5 10.826435 75,130
International Fund ................................................ 767.4 9.709633 7,451
Value Fund ........................................................ 4,662.7 9.318051 43,447
Berger Institutional Products Trust:
Growth and Income Fund ............................................ 4,268.5 11.183646 47,737
Conseco Series Trust:
Asset Allocation Portfolio ........................................ 13,460.6 13.208721 177,797
Common Stock Portfolio ............................................ 2,408.2 14.764220 35,556
Corporate Bond Portfolio .......................................... 7,920.6 11.222389 88,888
Government Securities Portfolio ................................... 2,361.9 11.230428 26,525
Money Market Portfolio ............................................ 1,582.5 10.659412 16,869
Dreyfus Stock Index Fund ............................................ 4,735.3 10.963876 51,917
The Dreyfus Socially Responsible Growth Fund, Inc. .................. 339.9 11.078197 3,765
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio ....................................... 2,317.1 10.726492 24,855
International Value Portfolio ..................................... 815.7 9.423371 7,687
Federated Insurance Series:
High Income Bond Fund II .......................................... 3,261.5 9.805723 31,982
Utility Fund II ................................................... 2,529.7 10.906294 27,590
Invesco Variable Investment Funds, Inc.:
High Yield Portfolio .............................................. 653.4 11.374298 7,432
Janus Aspen Series:
Aggressive Growth Portfolio ....................................... 276.7 11.693693 3,236
Growth Portfolio .................................................. 7,982.4 11.564882 92,316
Worldwide Growth Portfolio ........................................ 7,444.2 10.511276 78,248
Lazard Retirement Series, Inc.:
Equity Portfolio .................................................. 6,642.2 10.559753 70,140
Small Cap Portfolio ............................................... 873.3 8.559454 7,475
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio ....................................... 3,668.3 12.974780 47,596
Neuberger & Berman Advisers Management Trust:
Limited Maturity Bond Portfolio ................................... 2,322.9 10.163534 23,609
Partners Portfolio ................................................ 2,063.4 9.280992 19,150
Strong Variable Insurance Funds, Inc.:
Growth Fund II .................................................... 772.9 11.533441 8,914
Strong Opportunity Fund II, Inc. .................................... 2,083.1 9.546853 19,887
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund ............................................... 1,318.7 10.850072 14,308
Worldwide Emerging Markets Fund ................................... 245.2 5.238886 1,285
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Net assets ...................................................... $1,249,398
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</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT G
Statement of Operations
For the Period April 29, 1998, through December 31, 1998
<TABLE>
<CAPTION>
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<S> <C>
Investment income:
Dividends from investments in portfolio shares .......................................................... $ 14,460
Expenses:
Mortality and expense risk fees ......................................................................... 4,243
Administrative fees ..................................................................................... 509
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Total expenses ........................................................................................ 4,752
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Net investment income ............................................................................... 9,708
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Net realized gains (losses) and unrealized appreciation (depreciation) on
investments:
Net realized losses on sales of investments in portfolio shares ......................................... (17,454)
Net change in unrealized appreciation of investments in portfolio shares ................................ 83,555
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Net gain on investments in portfolio shares ........................................................... 66,101
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Net increase in net assets from operations .......................................................... $ 75,809
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</TABLE>
Statement of Changes in Net Assets
For the Period April 29, 1998, through December 31, 1998
<TABLE>
<CAPTION>
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<S> <C>
Changes from operations:
Net investment income ................................................................................... $ 9,708
Net realized losses on sales of investments in portfolio shares ......................................... (17,454)
Net change in unrealized appreciation of investments in portfolio shares ................................ 83,555
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Net increase in net assets from operations ............................................................ 75,809
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Changes from contract owners' transactions:
Net contract purchase payments .......................................................................... 1,205,517
Contract redemptions .................................................................................... (31,928)
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Net increase in net assets from contract owners' transactions ......................................... 1,173,589
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Net increase in net assets .......................................................................... 1,249,398
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Net assets, beginning of period ............................................................................ --
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Net assets, end of period (Note 6) .................................................................. $ 1,249,398
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</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT G
Notes to Financial Statements
December 31, 1998
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(1) General
Conseco Variable Insurance Company (the "Company") (formerly Great American
Reserve Insurance Company prior to its name change in October 1998) established
two separate accounts within Great American Reserve Variable Annuity Account G
("Account G"). It is anticipated that on May 1, 1999, a filing will be made with
the Securities and Exchange Commission to change the name of Great American
Reserve Variable Account G to Conseco Variable Account G. Both accounts were
established on September 26, 1997, and commenced operations on April 29, 1998.
Account G is a segregated investment account for individual and group variable
annuity contracts which are registered under the Securities Act of 1933. One
account, also named Great American Reserve Variable Annuity Account G ("Variable
Account"), which serves the variable annuity portion of the contract, is
registered under the Investment Company Act of 1940, as amended, as a unit
investment trust. The other account, Conseco Variable Market Value Adjustment
Account ("MVA"), offers investment options which pay fixed rates of interest as
declared by the company for specified periods (one, three and five years) from
the date amounts are allocated to the MVA. The MVA is not registered as an
investment company under the Investment Company Act of 1940. The operations of
Account G are included in the operations of the Company pursuant to the
provisions of the Texas Insurance Code. The Company is an indirect wholly owned
subsidiary of Conseco, Inc., a publicly-held specialized financial services
holding company listed on the New York Stock Exchange.
Besides the three guarantee periods of the MVA option, the following
investment Variable Account options are currently available:
THE ALGER AMERICAN FUND
Growth Portfolio
Leveraged AllCap Portfolio
MidCap Growth Portfolio
Small Capitalization Portfolio
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
Income and Growth Fund
International Fund
Value Fund
BERGER INSTITUTIONAL PRODUCTS TRUST
100 Fund
Growth and Income Fund
Small Company Growth Fund
BIAM International Fund
CONSECO SERIES TRUST
Asset Allocation Portfolio
Common Stock Portfolio
Corporate Bond Portfolio
Government Securities Portfolio
Money Market Portfolio
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
DREYFUS STOCK INDEX FUND
DREYFUS VARIABLE INVESTMENT FUND
International Value Portfolio
Disciplined Stock Portfolio
FEDERATED INSURANCE SERIES
High Income Bond Fund II
International Equity Fund II
Utility Fund II
INVESCO VARIABLE INVESTMENT FUNDS, INC.
High Yield Portfolio
Industrial Income Portfolio
JANUS ASPEN SERIES
Aggressive Growth Portfolio
Growth Portfolio
Worldwide Growth Portfolio
LAZARD RETIREMENT SERIES, INC.
Equity Portfolio
Small Cap Portfolio
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio
Partners Portfolio
STRONG VARIABLE INSURANCE FUNDS, INC.
Growth Fund II
STRONG OPPORTUNITY FUND II, INC.
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund
Worldwide Emerging Markets Fund
Worldwide Hard Assets Fund
Worldwide Real Estate Fund
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported increases and decreases in net assets from
operations during the reporting period. Actual results could differ from those
estimates.
(2) Summary of Significant Accounting Policies
INVESTMENT VALUATION, TRANSACTIONS AND INCOME
Investments in portfolio shares are valued using the net asset value of the
respective portfolios at the end of each New York Stock Exchange business day.
Investment share transactions are accounted for on a trade date basis (the date
the order to purchase or redeem shares is executed) and dividend income is
recorded on the ex-dividend date. The cost of investments in portfolio shares
sold is determined on a first-in first-out basis. Account G does not hold any
investments which are restricted as to resale.
Net investment income and net realized gains (losses) and unrealized
appreciation (depreciation) on investments are allocated to the contracts on
each valuation date based on each contract's pro rata share of the assets of
Account G as of the beginning of the valuation date.
5
<PAGE>
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT G
Notes to Financial Statements - Continued
December 31, 1998
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(2) Summary of Significant Accounting Policies
(Continued)
FEDERAL INCOME TAXES
No provision for federal income taxes has been made in the accompanying
financial statements because the operations of the Contract are included in the
total operations of the Company, which is treated as a life insurance company
for federal income tax purposes under the Internal Revenue Code. Net investment
income and realized gains (losses) are retained in the Contract and are not
taxable until received by the contract owner or beneficiary in the form of
annuity payments or other distributions.
ANNUITY RESERVES
Deferred annuity contract reserves are comprised of net contract purchase
payments less redemptions and benefits. These reserves are adjusted daily for
the net investment income and net realized gains (losses) and unrealized
appreciation (depreciation) on investments.
(3) Purchases and Sales of Investments in
Portfolio Shares
The aggregate cost of purchases of investments in portfolio shares were
$1,908,738 for the period April 29, 1998, through December 31, 1998. The
aggregate proceeds from sales of investments in portfolio shares were $724,111
for the period April 29, 1998, through December 31, 1998.
(4) Deductions and Expenses
Although periodic retirement payments to contract owners vary according to
the investment performance of the portfolios, such payments are not affected by
mortality or expense experience because the Company assumes the mortality and
expense risks under the contracts.
The mortality risk assumed by the Company results from the life annuity
payment option in the contracts in which the Company agrees to make annuity
payments regardless of how long a particular annuitant or other payee lives. The
annuity payments are determined in accordance with annuity purchase rate
provisions established at the time the contracts are issued. Based on the
actuarial determination of expected mortality, the Company is required to fund
any deficiency in the annuity payment reserves from its general account assets.
The expense risk assumed by the Company is the risk that the deductions for
sales and administrative expenses may prove insufficient to cover the actual
sales and administrative expenses. The Company deducts daily from Account G a
fee, which is equal on an annual basis to 1.15 percent of the daily value of the
total investments of Account G, for assuming the mortality and expense risks.
These fees were $4,243 for the period April 29, 1998, through December 31, 1998.
Pursuant to an agreement between Account G and the Company (which may be
terminated by the Company at any time), the Company provides administrative
services to Account G, as well as a minimum death benefit prior to retirement
for the contracts. In addition, the Company deducts units from individual
contracts annually and upon full surrender to cover an administrative fee of
$30, unless the value of the contract is $25,000 or greater. This fee is
recorded as a redemption in the accompanying Statement of Changes of Net Assets.
There were no administrative charges for the period April 29, 1998, through
December 31, 1998. The Company also deducts daily from Account G a fee, which is
equal on an annual basis to 0.15 percent of the daily value of the total
investments of Account G, for administrative expenses. These expenses were $509
for the period April 29, 1998, through December 31, 1998.
The MVA account is subject to a market value adjustment if the amounts are
withdrawn prior to the end of the guarantee period with certain exceptions. The
adjustment can be positive or negative depending on the changes in the U.S.
Treasury rates during the holding period of the MVA contract. There were no
charges for the period April 29, 1998, through December 31, 1998.
(5) Other Transactions With Affiliates
Conseco Equity Sales, Inc., an affiliate of the Company, is the principal
underwriter and performs all variable annuity sales functions on behalf of the
Company through various retail broker/dealers including Conseco Financial
Services, Inc., an affiliate of the Company.
(6) Net Assets
Net assets consisted of the following at December 31, 1998:
================================================================================
Proceeds from the sales of units since organization,
less cost of units redeemed ................................ $ 1,173,589
Undistributed net investment income ........................... 9,708
Undistributed net realized loss on sales of investments ....... (17,454)
Net unrealized appreciation of investments .................... 83,555
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Net assets ............................................. $ 1,249,398
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6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
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To The Board of Directors of Conseco Variable
Insurance Company and Contract Owners of
Great American Reserve Variable Annuity
Account G
In our opinion, the accompanying statement of assets and liabilities and
the related statements of operations and of changes in net assets present
fairly, in all material respects, the financial position of the Great American
Reserve Variable Annuity Account G (the "Account") at December 31, 1998, and the
results of its operations and the changes in its net assets from inception
(April 29, 1998) through December 31, 1998, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Account's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of portfolio shares owned at December 31,
1998 by correspondence with the custodians, provides a reasonable basis for the
opinion expressed above.
/s/PricewaterhouseCoopers LLP
Indianapolis, Indiana
February 10, 1999>>
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8
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Great American Reserve
Variable Annuity Account G
Sponsor
Conseco Variable Insurance Company - Carmel, Indiana.
DISTRIBUTOR
Conseco Equity Sales, Inc. - Carmel, Indiana.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP - Indianapolis, Indiana.
9
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[LOGO]
CONSECO(R)
Conseco Variable Insurance Company is a
subsidiary of Conseco, Inc., a financial services
organization headquartered in Carmel, Indiana.
Conseco is dedicated to providing its customers
with solutions for both wealth protection and
wealth creation. Through its subsidiaries,
Conseco is one of the nation's leading providers
of supplemental health insurance, retirement
annuities, universal life insurance, and consumer
and commercial finance products and services.
Conseco Variable Insurance Company
11815 North Pennsylvania Street
Carmel, Indiana 46032
(C) 1999, Conseco Variable Insurance Company
05-8437 (2/99) 03859>>
