File Nos. 333-00373
811-07501
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. _6_ [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. _7_ [X]
(Check appropriate box or boxes.)
Conseco Variable Annuity Account G
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(Exact Name of Registrant)
Conseco Variable Insurance Company
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(Name of Depositor)
11815 N. Pennsylvania Street, Carmel, Indiana 46032-4572
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (317) 817-3700
Name and Address of Agent for Service
Michael A. Colliflower
Secretary and General Counsel
Conseco Variable Insurance Company
11815 N. Pennsylvania Street
Carmel, Indiana 46032-4572
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on December 31, 2000 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
_____ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Registered:
Individual and Group Variable Annuity Contracts and Certificates
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CROSS REFERENCE SHEET
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
-------- ----------------------
PART A
Item 1. Cover Page . . . . . . . . . . . . . . . . . Cover Page
Item 2. Definitions. . . . . . . . . . . . . . . . . Index of Special Terms
<PAGE>
Item 3. Synopsis . . . . . . . . . . . . . . . . . . Highlights
Item 4. Condensed Financial Information. . . . . . . Appendix-Condensed
Financial Informa-
tion
Item 5. General Description of Registrant, Depositor,
and Portfolio Companies. . . . . . . . . . . . Conseco Variable;
The Separate
Account; Invest-
ment Options; Appendix B
Item 6. Deductions and Expenses . . . . . . . . . . . Expenses
Item 7. General Description of Variable Annuity
Contracts. . . . . . . . . . . . . . . . . . . The Annuity
Contract
Item 8. Annuity Period. . . . . . . . . . . . . . . . Annuity Payments
(The Income Phase)
Item 9. Death Benefit. . . . . . . . . . . . . . . . . Death Benefit
Item 10. Purchases and Contract Value.. . . . . . . . . Purchase
Item 11. Redemptions. . . . . . . . . . . . . . . . . . Access to Your
Money
Item 12. Taxes. . . . . . . . . . . . . . . . . . . . . Taxes
Item 13. Legal Proceedings. . . . . . . . . . . . . . . None
Item 14. Table of Contents of the Statement of
Additional Information. . . . . . . . . . . . Table of Contents of
the Statement of
Additional Information
</TABLE>
CROSS REFERENCE SHEET (CONT'D)
(REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
-------- --------------------
PART B
Item 15. Cover Page. . . . . . . . . . . . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . . . . . The Company
Item 18. Services. . . . . . . . . . . . . .. . . . . . Not Applicable
Item 19. Purchase of Securities Being Offered. . . . . Not Applicable
Item 20. Underwriters. . . . . . . . . . . . . . . . . Distributor
Item 21. Calculation of Performance Data. . . .. . . . Performance
Information
Item 22. Annuity Payments. . . . . . . . . . . . . . . Annuity Provisions
Item 23. Financial Statements. . . . . . . . . . . . . Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered, in Part C to this Registration Statement.
PART A
The Prospectus was filed in Post-Effective Amendment No. 5 to Form N-4 on April
28, 2000 and is incorporated herein by reference.
MONUMENT SERIES
CONSECO VARIABLE ANNUITY ACCOUNT G
CONSECO VARIABLE INSURANCE COMPANY
Supplement dated January 1, 2001
The following supplements certain information contained in your prospectus for
the Monument Series fixed and variable annuity:
1. Effective as of the date of this supplement, you may also invest in the
following investment portfolios:
Pioneer Variable Contracts Trust, Class II Shares
Managed by Pioneer Investment Management, Inc.
<PAGE>
Pioneer Fund VCT Portfolio
Pioneer Equity-Income VCT Portfolio
Pioneer Europe VCT Portfolio
2. As of the date of this Supplement, you may invest in the INVESCO VIF-High
Yield Fund and the INVESCO VIF-Equity-Income Fund of INVESCO Variable
Investment Funds, Inc. Information regarding these funds is contained in
the prospectus.
3. The following is added to the "Investment Portfolio Expenses" table:
<TABLE>
<CAPTION>
Other Expenses* Total Annual
(after expense Portfolio Expenses*
reimbursement, if (after expense
any, for certain reimbursement, if
portfolios) any, for certain
Management Fees 12b-1 Fees portfolios)
------------------------ --------------------- ---------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Pioneer Fund
VCT Portfolio .65% .25% .07% .97%
Pioneer Equity-
Income VCT Portfolio .65% .25% .09% .99%
Pioneer Europe
VCT Portfolio** 1.00% .25% .47% 1.72%
* Expenses for fiscal year ended December 31, 2000 are estimated.
** Absent expense offsets, other expenses are estimated to be .49% for the year
ended December 31, 2000.
</TABLE>
4. The following Examples are added to the prospectus:
You would pay the following expenses assuming a hypothetical 5% annual return on
assets, and assuming the entire $1,000 is invested in the option listed,
regardless of whether you surrender your contract: (a) assuming the current
charges are assessed; (b) assuming the maximum charges are assessed.
Time Periods
1 Year 3 Years
Pioneer Fund VCT Portfolio (a)$ 23 (a)$ 72
(b)$ 25 (b)$ 78
Pioneer Equity-Income VCT Portfolio (a)$ 24 (a)$ 73
(b)$ 26 (b)$ 79
Pioneer Europe VCT Portfolio (a)$ 31 (a)$ 95
(b)$ 33 (b)$101
5. The following accumulation unit values for the period ended September 30,
2000 are added to Appendix A:
SUB-ACCOUNT
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THE ALGER AMERICAN FUND:
Leveraged AllCap (a)
Accumulation unit value at $32.658
beginning of period
Accumulation unit value at end of $31.141
period
Number of accumulation units outstanding at 22,807
end of period
Small Capitalization (a)
Accumulation unit value at $20.367
beginning of period
Accumulation unit value at end of $18.310
period
Number of accumulation units outstanding at 7,970
end of period
Growth Portfolio (a)
Accumulation unit value at $23.190
beginning of period
Accumulation unit value at end of $22.943
period
Number of accumulation units outstanding at 36,265
end of period
Midcap Growth Portfolio (a)
Accumulation unit value at $20.032
beginning of period
Accumulation unit value at end of $24.122
<PAGE>
period
Number of accumulation units outstanding at 18,862
end of period
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AMERICAN CENTURY VARIABLE PORTFOLIO, INC.:
International Fund (b)
Accumulation unit value at $15.723
beginning of period
Accumulation unit value at end of $13.672
period
Number of accumulation units outstanding at 67,608
end of period
Value Fund (b)
Accumulation unit value at $9.120
beginning of period
Accumulation unit value at end of $9.438
period
Number of accumulation units outstanding at 13,618
end of period
Income and Growth Fund (b)
Accumulation unit value at $12.612
beginning of period
Accumulation unit value at end of $12.012
period
Number of accumulation units outstanding at 38,950
end of period
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BERGER INSTITUTIONAL PRODUCTS TRUST:
Growth Fund (b)
Accumulation unit value at $14.295
beginning of period
Accumulation unit value at end of $15.998
period
Number of accumulation units outstanding at 3,233
<PAGE>
end of period
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BERGER INSTITUTIONAL PRODUCTS TRUST: (continued)
Growth & Income Fund (b)
Accumulation unit value at $17.558
beginning of period
Accumulation unit value at end of $19.163
period
Number of accumulation units outstanding at 46,684
end of period
New Generation Fund (c)
Accumulation unit value at $10.000
beginning of period
Accumulation unit value at end of $10.403
period
Number of accumulation units outstanding at 1,513
end of period
Small Company Growth Fund (b)
Accumulation unit value at $16.690
beginning of period
Accumulation unit value at end of $19.235
period
Number of accumulation units outstanding at 24,424
end of period
BIAM International Fund (b)
Accumulation unit value at $12.961
beginning of period
Accumulation unit value at end of $11.624
period
Number of accumulation units outstanding at 0
end of period
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CONSECO SERIES TRUST:
BALANCED (a)
<PAGE>
Accumulation unit value at $17.061
beginning of period
Accumulation unit value at end of $20.615
period
Number of accumulation units outstanding at 25,333
end of period
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EQUITY (a)
Accumulation unit value at $21.755
beginning of period
Accumulation unit value at end of $27.608
period
Number of accumulation units outstanding at 16,136
end of period
FIXED INCOME (a)
Accumulation unit value at $11.034
beginning of period
Accumulation unit value at end of $11.654
period
Number of accumulation units outstanding at 15,589
end of period
Conseco 20 Focus (c)
Accumulation unit value at $10.000
beginning of period
Accumulation unit value at end of $13.363
period
Number of accumulation units outstanding at 1,830
end of period
GOVERNMENT SECURITIES (a)
Accumulation unit value at $10.812
beginning of period
Accumulation unit value at end of $11.456
period
<PAGE>
Number of accumulation units outstanding at 14,002
end of period
Conseco High Yield (c)
Accumulation unit value at $10.000
beginning of period
Accumulation unit value at end of $10.107
period
Number of accumulation units outstanding at 3,184
end of period
MONEY MARKET (a)
Accumulation unit value at $11.036
beginning of period
Accumulation unit value at end of $11.423
period
Number of accumulation units outstanding at 329,058
end of period
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DREYFUS STOCK INDEX FUND: (b)
Accumulation unit value at $13.052
beginning of period
Accumulation unit value at end of $12.726
period
Number of accumulation units outstanding at 81,410
end of period
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THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. (b)
Accumulation unit value at $14.225
beginning of period
Accumulation unit value at end of $14.349
period
Number of accumulation units outstanding at 14,215
end of period
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<PAGE>
DREYFUS VARIABLE INVESTMENT FUND:
Disciplined Stock Portfolio (b)
Accumulation unit value at $12.541
beginning of period
Accumulation unit value at end of $12.569
period
Number of accumulation units outstanding at 44,788
end of period
International Value Portfolio (b)
Accumulation unit value at $11.889
beginning of period
Accumulation unit value at end of $10.812
period
Number of accumulation units outstanding at 522
end of period
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FEDERATED INSURANCE SERIES:
High Income Bond II (b)
Accumulation unit value at $9.902
beginning of period
Accumulation unit value at end of $9.597
period
Number of accumulation units outstanding at 7,603
end of period
International Equity II (a)
Accumulation unit value at $24.656
beginning of period
Accumulation unit value at end of $20.951
period
Number of accumulation units outstanding at 8,346
end of period
Utility II (b)
Accumulation unit value at $10.948
beginning of period
<PAGE>
Accumulation unit value at end of $10.776
period
Number of accumulation units outstanding at 3,557
end of period
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INVESCO VARIABLE INVESTMENT FUND:
High Yield Portfolio (a)
Accumulation unit value at $12.260
beginning of period
Accumulation unit value at end of $11.931
period
Number of accumulation units outstanding at 12,930
end of period
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Equity Income Portfolio (a)
Accumulation unit value at $15.577
beginning of period
Accumulation unit value at end of $16.329
period
Percentage change in accumulation 4.83%
unit value
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JANUS ASPEN SERIES:
Aggressive Growth (b)
Accumulation unit value at $26.019
beginning of period
Accumulation unit value at end of $25.577
period
Number of accumulation units outstanding at 47,122
end of period
Growth (b)
Accumulation unit value at $16.437
beginning of period
<PAGE>
Accumulation unit value at end of $16.759
period
Number of accumulation units outstanding at 93,724
end of period
Worldwide Growth (b)
Accumulation unit value at $17.063
beginning of period
Accumulation unit value at end of $16.335
period
Number of accumulation units outstanding at 54,552
end of period
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LAZARD RETIREMENT SERIES INC.:
Equity Portfolio (b)
Accumulation unit value at $11.274
beginning of period
Accumulation unit value at end of $11.177
period
Number of accumulation units outstanding at 968
end of period
Small Cap Portfolio (b)
Accumulation unit value at $8.882
beginning of period
Accumulation unit value at end of $10.087
period
Number of accumulation units outstanding at 5,996
end of period
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LORD ABBETT SERIES FUND, INC. :
Growth & Income Portfolio (a)
Accumulation unit value at $14.952
beginning of period
Accumulation unit value at end of $15.716
period
Number of accumulation units outstanding at 5,545
<PAGE>
end of period
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MITCHELL HUTCHINS SERIES TRUST:
Growth & Income Portfolio (b)
Accumulation unit value at $10.787
beginning of period
Accumulation unit value at end of $10.277
period
Number of accumulation units outstanding at 119
end of period
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NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio (b)
Accumulation unit value at $10.181
beginning of period
Accumulation unit value at end of $10.513
period
Number of accumulation units outstanding at 5,938
end of period
Partners Portfolio (b)
Accumulation unit value at $9.836
beginning of period
Accumulation unit value at end of $9.755
period
Number of accumulation units outstanding at 2,049
end of period
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RYDEX VARIABLE TRUST
NOVA Portfolio (d)
Accumulation unit value at $18.407
beginning of period
Accumulation unit value at end of $17.580
period
Number of accumulation units outstanding at 795
<PAGE>
end of period
OTC Portfolio (d)
Accumulation unit value at $39.086
beginning of period
Accumulation unit value at end of $36.510
period
Number of accumulation units outstanding at 3,153
end of period
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SELIGMAN PORTFOLIOS, INC.
Communications and Information
Portfolio (c)
Accumulation unit value at $10.000
beginning of period
Accumulation unit value at end of $7.738
period
Number of accumulation units outstanding at 5,515
end of period
Global Technology Portfolio (c)
Accumulation unit value at $10.000
beginning of period
Accumulation unit value at end of $8.462
period
Number of accumulation units outstanding at 3,095
end of period
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STRONG VARIABLE INSURANCE FUNDS, INC.:
Mid Cap Growth Fund II (d)
Accumulation unit value at $21.617
beginning of period
Accumulation unit value at end of $23.882
period
Number of accumulation units outstanding at 33,925
end of period
<PAGE>
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STRONG OPPORTUNITY FUND II (b):
Accumulation unit value at $12.713
beginning of period
Accumulation unit value at end of $13.322
period
Number of accumulation units outstanding at 12,508
end of period
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THE VAN ECK WORLDWIDE INSURANCE TRUST:
Worldwide Hard Assets Fund (a)
Accumulation unit value at $8.523
beginning of period
Accumulation unit value at end of $9.177
period
Number of accumulation units outstanding at 884
end of period
Worldwide Bond (a)
Accumulation unit value at $9.872
beginning of period
Accumulation unit value at end of $9.469
period
Number of accumulation units outstanding at 4,710
end of period
Worldwide Emerging Markets Fund (b)
Accumulation unit value at $10.357
beginning of period
Accumulation unit value at end of $7.754
period
Number of accumulation units outstanding at 7,256
end of period
Real Estate (b)
Accumulation unit value at $8.240
beginning of period
<PAGE>
Accumulation unit value at end of $9.320
period
Number of accumulation units outstanding at 703
end of period
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(a) This unit value was $10.000 on the inception date of May 1, 1997.
(b) This unit value was $10.000 on the inception date of May 1, 1998.
(c) This unit value was $10.000 on the inception date of May 1, 2000.
(d) These unit values were $18.407 for Rydex Nova and $39.086 for Rydex OTC on
the inception date of May 1, 2000.
There are no accumulation unit values shown for the sub-accounts investing
Pioneer Fund VCT Portfolio, Pioneer Equity-Income VCT Portfolio and Pioneer
Europe VCT Portfolio because they were not available under your contract until
the date of this supplement.
6. The following is added to Appendix B:
Pioneer Variable Contracts Trust
Pioneer Variable Contracts Trust is managed by Pioneer Investment Management,
Inc. The Pioneer Variable Contracts Trust is a mutual fund with multiple
portfolios. The following Class II portfolios are available under the contract:
Pioneer Fund VCT Portfolio
The Pioneer Fund VCT Portfolio seeks reasonable income and capital growth. The
Portfolio invests the major portion of its assets in equity securities,
primarily of U.S. issuers.
Pioneer Equity-Income VCT Portfolio
The Pioneer Equity-Income VCT Portfolio seeks current income and long-term
growth of capital from a portfolio consisting primarily of income producing
equity securities of U.S. corporations.
Pioneer Europe VCT Portfolio
The Pioneer Europe VCT Portfolio seeks long-term growth of capital. The
portfolio invests primarily in equity securities of European issuers.
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL AND GROUP FIXED AND VARIABLE DEFERRED
ANNUITY CONTRACTS
ISSUED BY
CONSECO VARIABLE ANNUITY ACCOUNT G
AND
CONSECO VARIABLE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED JANUARY 1, 2001, FOR THE
INDIVIDUAL AND GROUP FIXED AND VARIABLE DEFERRED ANNUITY CONTRACTS WHICH ARE
REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE THE
COMPANY AT ITS ADMINISTRATIVE OFFICE: 11815 N. PENNSYLVANIA STREET, CARMEL,
INDIANA 46032 (317) 817-3700.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED JANUARY 1, 2001.
<PAGE>
TABLE OF CONTENTS
PAGE
COMPANY .................................................................
INDEPENDENT ACCOUNTANTS .................................................
LEGAL OPINIONS ..........................................................
DISTRIBUTION ............................................................
CALCULATION OF PERFORMANCE INFORMATION ..................................
FEDERAL TAX STATUS ......................................................
General ................................................................
Diversification ........................................................
Multiple Contracts .....................................................
Partial 1035 Exchanges .................................................
Contracts Owned by Other than Natural Persons ..........................
Tax Treatment of Assignments ...........................................
Death Benefits .........................................................
Income Tax Withholding .................................................
Tax Treatment of Withdrawals-- Non-Qualified Contracts .................
Qualified Plans ........................................................
Tax Treatment of Withdrawals-- Qualified Contracts .....................
Tax-Sheltered Annuities-- Withdrawal Limitations .......................
Mandatory Distributions-- Qualified Plans ..............................
<PAGE>
ANNUITY PROVISIONS ......................................................
Variable Annuity Payout ................................................
Annuity Unit ...........................................................
Fixed Annuity Payout ...................................................
FINANCIAL STATEMENTS ....................................................
<PAGE>
COMPANY
Information regarding Conseco Variable Insurance Company ("Company" or "Conseco
Variable") and its ownership is contained in the prospectus. On October 7, 1998,
the Company changed its name from Great American Reserve Insurance Company to
its present name.
INDEPENDENT ACCOUNTANTS
The financial statements of Conseco Variable as of December 31, 1999 and 1998,
and for the years ended December 31, 1999, 1998 and 1997 included in the
prospectus, have been audited by PricewaterhouseCoopers LLP, 2900 One American
Square, Indianapolis, Indiana 46282, independent accountants, as set forth in
their report appearing therein, and have been so included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
LEGAL OPINIONS
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided advice on
certain matters relating to the federal securities and income tax laws in
connection with the Contracts.
DISTRIBUTOR
Conseco Equity Sales, Inc., an affiliate of the Company, acts as the
distributor. The offering is on a continuous basis.
CALCULATION OF PERFORMANCE INFORMATION
From time to time, we may advertise performance data. Such data will show the
percentage change in the value of an Accumulation Unit based on the performance
of an investment portfolio over a period of time, usually a calendar year,
determined by dividing the increase (decrease) in value for that unit by the
Accumulation Unit value at the beginning of the period.
Any such advertisement will include standardized average annual total return
figures for the time periods indicated in the advertisement. Such total return
figures will reflect the deduction of a 1.15% Mortality and Expense Risk Charge,
a .15% Administrative Charge, the expenses for the underlying investment
portfolio being advertised and any applicable Contract Maintenance Charges.
The hypothetical value of a Contract purchased for the time periods described in
the advertisement will be determined by using the actual Accumulation Unit
<PAGE>
values for an initial $1,000 purchase payment, and deducting any applicable
Contract Maintenance Charges to arrive at the ending hypothetical value. The
average annual total return is then determined by computing the fixed interest
rate that a $1,000 purchase payment would have to earn annually, compounded
annually, to grow to the hypothetical value at the end of the time periods
described. The formula used in these calculations is:
n
P (1+T) = ERV
Where:
P = beginning purchase payment of $1,000
T = average annual total return
n = number of years in period
ERV = ending redeemable value of a hypothetical $1,000
purchase payment made at the beginning of the one-,
five-or 10-year period at the end of the one-, five-
or 10-year period (or fractional portion thereof).
1
<PAGE>
The Company may also advertise performance data which will be calculated in the
same manner as described above but which will not reflect the deduction of any
Contract Maintenance Charge. The deduction of any Contract Maintenance Charge
would reduce any percentage increase or make greater any percentage decrease.
You should note that the investment results of each investment portfolio will
fluctuate over time, and any presentation of the investment portfolio's total
return for any period should not be considered as a representation of what an
investment may earn or what your total return may be in any future period.
PERFORMANCE INFORMATION
The Contracts are relatively new. However, certain corresponding Portfolios have
been in existence for some time and consequently have investment performance
history. In order to demonstrate how the actual investment experience of the
Portfolios affects Accumulation Unit values, the Company has developed
performance information. The information is based upon the historical experience
of the Portfolios and is for the periods shown.
Future performance of the portfolios will vary and the results shown are not
necessarily representative of future results. Performance for periods ending
after those shown may vary substantially from the examples shown. The
performance of the portfolios is calculated for a specified period of time by
assuming an initial purchase payment of $1,000 allocated to the portfolio. The
percentage increases (decreases) are determined by subtracting the initial
purchase payment from the ending value and dividing the remainder by the
beginning value.
<PAGE>
The following charts reflect performance information for the investment
portfolios of the Separate Account for the periods shown. Chart 1 reflects
performance information commencing from the date the Separate Account first
invested in the portfolio. Chart 2 reflects performance information commencing
from the inception date of the underlying portfolio (which date may precede the
inception date that the Separate Account first invested in the underlying
portfolio). For Chart 1, Column A is standardized average annual total return
which reflects the deduction of the insurance charges, contract maintenance
charge and the fees and expenses of the portfolios; Column B reflects the
deduction of the insurance charges and the fees and expenses of the portfolios.
For Chart 2, the performance reflects the deduction of the insurance charges,
contract maintenance charges and the fees and expenses of the portfolio.
CHART 1: TOTAL RETURN FOR THE PERIODS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
SEPARATE
ACCOUNT COLUMN A COLUMN B
INCEPTION 10 YRS/ 10 YRS/
DATE IN SINCE SINCE
PORTFOLIO 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ---- ----- ----- --------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio ............................... 5/1/97 45.64 18.45 N/A 23.52 45.73 18.50 N/A 23.58
Equity Portfolio ................................. 5/1/97 66.32 26.31 N/A 34.54 66.42 26.37 N/A 34.62
Fixed Income Portfolio ........................... 5/1/97 5.73 3.44 N/A 4.54 5.81 3.49 N/A 4.58
Government Securities Portfolio .................. 5/1/97 4.83 3.24 N/A 4.01 4.91 3.29 N/A 4.06
Conseco 20 Focus Portfolio ....................... 5/1/00 N/A N/A N/A 33.60 N/A N/A N/A 33.63
High Yield Portfolio ............................. 5/1/00 N/A N/A N/A 1.03 N/A N/A N/A 1.07
THE ALGER AMERICAN FUND
Alger American Growth Portfolio .................. 5/1/97 19.89 22.44 N/A 27.45 19.97 22.48 N/A 27.51
Alger American Leveraged AllCap Portfolio ........ 5/1/97 33.13 34.84 N/A 39.36 33.21 34.89 N/A 39.44
Alger American MidCap Growth Portfolio ........... 5/1/97 50.67 23.01 N/A 29.33 50.75 23.06 N/A 29.40
Alger American Small Capitalization Portfolio .... 5/1/97 17.36 10.65 N/A 19.31 17.44 10.69 N/A 19.37
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income & Growth ............................... 5/1/98 7.96 N/A N/A 7.83 8.03 N/A N/A 7.88
VP International ................................. 5/1/98 27.83 N/A N/A 13.75 27.92 N/A N/A 13.82
VP Value ......................................... 5/1/98 1.55 N/A N/A (2.41) 1.62 N/A N/A (2.37)
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT-- Growth Fund ......................... 5/1/98 58.40 N/A N/A 21.38 58.49 N/A N/A 21.46
Berger IPT-- Growth and Income Fund .............. 5/1/98 51.83 N/A N/A 30.79 51.92 N/A N/A 30.89
Berger IPT--New Generation Fund ............ . . . 5/1/00 N/A N/A N/A 3.99 N/A N/A N/A 4.03
Berger IPT-- Small Company Growth Fund ........... 5/1/98 78.28 N/A N/A 30.99 78.38 N/A N/A 31.09
Berger/BIAM IPT-- International Fund ............. 5/1/98 8.40 N/A N/A 6.37 8.48 N/A N/A 6.43
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC. ................................ 5/1/98 20.51 N/A N/A 16.05 20.58 N/A N/A 16.12
DREYFUS STOCK INDEX FUND ......................... 5/1/98 11.49 N/A N/A 10.43 11.56 N/A N/A 10.49
<PAGE>
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus VIF Disciplined Stock Portfolio .......... 5/1/98 14.41 N/A N/A 9.87 14.48 N/A N/A 9.92
Dreyfus VIF International Value Portfolio ........ 5/1/98 ( .93) N/A N/A 3.24 ( .85) N/A N/A 3.28
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............... 5/1/98 (1.45) N/A N/A (1.73) (1.38) N/A N/A (1.69)
Federated Utility Fund II ........................ 5/1/98 1.36 N/A N/A 3.09 1.43 N/A N/A 3.14
Federated International Equity Fund II ........... 5/1/97 34.06 22.77 N/A 24.11 34.15 22.81 N/A 24.17
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-- High Yield Fund .................... 5/1/97 .43 2.23 N/A 5.26 .50 2.28 N/A 5.30
INVESCO VIF-- Equity Income Fund ................. 5/1/97 12.77 11.23 N/A 15.38 12.84 11.27 N/A 15.43
<PAGE>
JANUS ASPEN SERIES
Aggressive Growth Portfolio ...................... 5/1/98 56.04 N/A N/A 47.37 56.13 N/A N/A 47.50
Growth Portfolio ................................. 5/1/98 25.48 N/A N/A 23.74 25.56 N/A N/A 23.82
Worldwide Growth Portfolio ....................... 5/1/98 35.64 N/A N/A 22.44 35.73 N/A N/A 22.52
</TABLE>
<TABLE>
<CAPTION>
SEPARATE
ACCOUNT COLUMN A COLUMN B
INCEPTION 10 YRS/ 10 YRS/
DATE IN SINCE SINCE
PORTFOLIO 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ---- ----- ----- --------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............... 5/1/98 5.77 N/A N/A 4.66 5.84 N/A N/A 4.71
Lazard Retirement Small Cap Portfolio ............ 5/1/98 14.59 N/A N/A .31 14.67 N/A N/A .36
LORD ABBETT SERIES FUND, INC.
Growth & Income Portfolio ........................ 5/1/98 15.62 10.35 N/A 14.10 15.69 10.40 N/A 14.15
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio ...................... 5/1/97 6.94 M/A N/A 1.09 7.01 N/A N/A 1.14
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio .................. 5/1/98 3.24 N/A N/A 2.04 3.32 N/A N/A 2.09
Partners Portfolio ............................... 5/1/98 7.49 N/A N/A (1.06)7.55 N/A N/A (1.02)
RYDEX VARIABLE TRUST
OTC Fund ......................................... 5/1/00 N/A N/A N/A (6.68) N/A N/A N/A (6.59)
NOVA Fund ........................................ 5/1/00 N/A N/A N/A (4.56) N/A N/A N/A (4.49)
SELIGMAN PORTFOLIOS, INC.
<PAGE>
Seligman Communications and Information
Portfolio ...................................... 5/1/00 N/A N/A N/A (22.65)N/A N/A N/A (22.62)
Seligman Global Technology Portfolios ............ 5/1/00 N/A N/A N/A (15.41)N/A N/A N/A (15.38)
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II .............................. 5/1/98 23.09 N/A N/A 12.54 23.16 N/A N/A 12.60
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong MidCap Growth Fund II ..................... 5/1/98 58.93 N/A N/A 43.25 59.02 N/A N/A 43.37
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund .............................. 5/1/98 (6.48) N/A N/A (2.27)(6.41) N/A N/A (2.23)
Worldwide Emerging Markets Fund .................. 5/1/97 16.99 (10.78) N/A (7.22) 17.06 (10.72) N/A (7.18)
Worldwide Hard Assets Fund ....................... 5/1/97 10.47 ( 9.12) N/A (2.52) 10.55 ( 9.07) N/A (2.48)
Worldwide Real Estate Trust ...................... 5/1/98 8.39 N/A N/A (2.92) 8.46 N/A N/A (2.87)
</TABLE>
CHART 2: TOTAL RETURN FOR THE PERIODS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
PORTFOLIO 10 YRS/
INCEPTION SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio ............................. 07/25/94 45.73 18.50 13.07 15.62
Equity Portfolio ............................... 07/25/94 66.42 26.37 25.18 26.83
Fixed Income Portfolio ......................... 07/25/94 5.81 3.49 4.73 5.01
Government Securities Portfolio ................ 07/25/94 4.91 3.29 4.06 6.34
Money Market Portfolio ......................... 07/25/94 4.56 3.97 2.35 1.68
Conseco 20 Focus Portfolio ..................... 05/01/00 N/A N/A N/A 33.63
High Yield Portfolio ........................... 05/01/00 N/A N/A N/A 1.07
THE ALGER AMERICAN FUND
Alger American Growth Portfolio ................ 1/09/89 19.97 22.48 20.22 22.17
Alger American Leveraged AllCap Portfolio ...... 01/25/95 33.21 34.89 27.45 36.80
Alger American MidCap Growth Portfolio ......... 05/03/93 50.75 23.06 18.94 23.54
Alger American Small Capitalization Portfolio .. 09/20/88 17.44 10.69 8.63 16.72
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income & Growth ............................. 02/06/98 8.03 N/A N/A 11.43
VP International ............................... 05/02/94 27.92 16.66 17.67 16.71
VP Value ....................................... 05/01/96 1.62 1.19 N/A 14.49
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO 10 YRS/
INCEPTION SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C>
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT - Growth Fund ...................... 05/01/96 58.49 21.60 N/A 19.57
Berger IPT - Growth and Income Fund ........... 05/01/96 51.92 27.70 N/A 27.15
Berger IPT - Small Company Growth Fund ........ 05/01/96 78.38 28.69 N/A 24.17
Berger IPT - New Generation Fund ............ 05/01/00 N/A N/A N/A 4.03
Berger/BIAM IPT -- International Fund ...... 04/30/97 8.48 7.69 N/A 7.51
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC. .............................. 10/07/93 20.58 18.03 21.06 21.81
DREYFUS STOCK INDEX FUND ....................... 10/02/89 11.56 14.66 19.71 19.79
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus VIF Disciplined Stock Portfolio ........ 04/30/96 14.48 11.68 N/A 18.03
Dreyfus VIF International Value Portfolio ...... 05/01/96 -0.85 3.26 N/A 5.93
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............. 03/01/94 -1.38 0.39 5.45 6.91
Federated Utility Fund II ...................... 02/10/94 1.43 7.82 10.21 10.58
Federated International Equity Fund II ......... 05/08/95 34.15 22.81 17.94 16.74
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-- High Yield Fund .................. 05/27/94 0.50 2.28 4.76 7.11
INVESCO VIF-- Equity Income Fund ............... 08/10/94 12.84 11.27 15.06 15.30
JANUS ASPEN SERIES
Aggressive Growth Portfolio .................... 09/13/93 56.13 43.39 29.49 30.83
Growth Portfolio ............................... 09/13/93 25.56 27.68 30.17 27.66
Worldwide Growth Portfolio ..................... 09/13/93 35.73 23.95 26.31 26.49
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............. 03/19/98 5.84 N/A N/A 5.85
Lazard Retirement Small Cap Portfolio .......... 11/04/97 14.67 N/A N/A 3.60
LORD ABBETT SERIES FUND, INC.
Growth & Income Portfolio ...................... 12/11/89 15.69 10.40 15.47 16.27
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio .................... 02/06/98 7.01 N/A N/A 5.29
<PAGE>
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio ................ 06/09/86 3.32 2.51 3.61 6.90
Partners Portfolio ............................. 03/22/94 7.55 -0.83 10.94 13.80
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Fund VCT Portfolio ..................... 05/01/00 N/A N/A N/A -1.05
Pioneer Equity-Income VCT Portfolio ............ 09/14/99 -3.50 N/A N/A -6.72
Pioneer Europe VCT Portfolio ................... 01/02/01 N/A N/A N/A N/A
RYDEX VARIABLE TRUST
OTC Fund ....................................... 05/07/97 43.78 45.28 N/A 45.59
Nova Fund ...................................... 05/07/97 10.11 13.24 N/A 17.44
SELIGMAN PORTFOLIOS, INC.
Seligman Communications and Information
Portfolio .................................... 04/28/00 N/A N/A N/A -22.62
Seligman Global Technology Portfolio ........... 04/28/00 N/A N/A N/A -15.38
</TABLE>
<TABLE>
<CAPTION>
5
PORTFOLIO 10 YRS/
INCEPTION SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C>
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II ............................ 05/08/92 23.16 15.52 22.07 23.46
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong MidCap Growth Fund II ................... 12/31/96 59.02 36.82 N/A 38.50
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund ............................ 09/01/89 -6.41 -0.54 0.36 6.21
Worldwide Emerging Markets Fund ................ 12/27/95 17.06 -10.72 N/A 0.83
Worldwide Hard Assets Fund ..................... 09/01/89 10.55 -9.07 -2.39 5.24
Worldwide Real Estate Trust .................... 02/06/98 8.46 N/A N/A -2.04
</TABLE>
HISTORICAL UNIT VALUES
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the investment
portfolios against established market indices such as the Standard & Poor's 500
Composite Stock Price Index, the Dow Jones Industrial Average or other
management investment companies which have investment objectives similar to the
investment portfolio being compared. The Standard & Poor's 500 Composite Stock
Price Index is an unmanaged, unweighted average of 500 stocks, the majority of
which are listed on the New York Stock Exchange. The Dow Jones Industrial
Average is an unmanaged, weighted average of thirty blue chip industrial
corporations listed on the New York Stock Exchange. Both the Standard & Poor's
500 Composite Stock Price Index and the Dow Jones Industrial Average assume
quarterly reinvestment of dividends.
REPORTING AGENCIES
The Company may also distribute sales literature which compares the performance
of the Accumulation Unit values of the Contracts with the unit values of
variable annuities issued by other insurance companies. Such information will be
derived from the Lipper Variable Insurance Products Performance Analysis
Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is published
by Lipper Analytical Services, Inc., a publisher of statistical data which
currently tracks the performance of almost 4,000 investment companies. The
rankings compiled by Lipper may or may not reflect the deduction of asset-based
insurance charges. The Company's sales literature utilizing these rankings will
indicate whether or not such charges have been deducted. Where the charges have
not been deducted, the sales literature will indicate that if the charges had
been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking may address the question as to which funds
provide the highest total return with the least amount of risk. Other ranking
services may be used as sources of performance comparison, such as
CDA/Weisenberger.
Morningstar rates a variable annuity against its peers with similar investment
objectives. Morningstar does not rate any variable annuity that has less than
three years of performance data.
6
<PAGE>
FEDERAL TAX STATUS
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE POSSIBILITY
OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO
ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended ("Code") governs
taxation of annuities in general. An Owner is not taxed on increases in the
value of a Contract until distribution occurs, either in the form of a lump sum
payment or as annuity payments under the annuity option selected. For a lump sum
payment received as a total withdrawal (total surrender), the recipient is taxed
on the portion of the payment that exceeds the cost basis of the Contract. For
non-qualified Contracts, this cost basis is generally the purchase payments,
while for qualified Contracts there may be no cost basis. The taxable portion of
the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period or refund feature) bears
to the expected return under the Contract. The exclusion amount for payments
based on a variable annuity option is determined by dividing the cost basis of
the Contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the Contract has been recovered (i.e. when the total of the
excludable amount equals the investment in the Contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the meaning of
Section 72 of the Code.
Owners, annuitants and beneficiaries under the Contracts should seek competent
financial advice about the tax consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
<PAGE>
Contract as an annuity contract would result in the imposition of federal income
tax to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the
underlying assets meet the diversification standards for a regulated
investment company and no more than fifty-five percent (55%) of the total
assets consist of cash, cash items, U.S. Government securities and
securities of other regulated investment companies.
Regulation issued by the Treasury Department ("the Regulations") amplify the
diversification requirements for variable contracts set forth in the Code and
provide an alternative to the safe harbor provision described above. Under the
Regulations, an investment portfolio will be deemed adequately diversified if:
(1) no more than 55% of the value of the total assets of the portfolio is
represented by any one investment; (2) no more than 70% of the value of the
total assets of the portfolio is represented by any two investments; (3) no more
than 80% of the value of the total assets of the portfolio is represented by any
three investments; and (4) no more than 90% of the value of the total assets of
the portfolio is represented by any four investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all investment portfolios underlying the Contracts will
be managed in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.
<PAGE>
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Owners being
retroactively determined to be the owners of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year.
PARTIAL 1035 EXCHANGES
Section 1035 of the Code provides that an annuity contract may be exchanged in a
tax-free transaction for another annuity contract. In 1998 in CONWAY VS.
COMMISSIONER, the Tax Court held that the direct transfer of a portion of an
annuity contract into another annuity contract qualified as a non-taxable
exchange. On November 22, 1999, the Internal Revenue Service filed an Action on
Decision which indicated that it acquiesced in the Tax Court decision in CONWAY.
However, in its acquiescence with the decision of the Tax Court, the Internal
Revenue Service stated that it will challenge transactions where taxpayers enter
into a series of partial exchanges and annuitizations as part of a design to
avoid application of the 10% premature distribution penalty or other limitations
imposed on annuity contracts under the Code. In the absence of further guidance
from the Internal Revenue Service it is unclear what specific types of partial
exchange designs and transactions will be challenged by the Internal Revenue
Service. Due to the uncertainty in this area, owners should consult their own
tax advisers prior to entering into a partial exchange of an annuity contract
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation or certain other entities. Such Contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a Contract held by a trust or other entity as an
agent for a natural person nor to Contracts held by Qualified Plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. You should
therefore consult competent tax advisers should you wish to assign or pledge
your Contracts.
If the Contract is issued pursuant to a retirement plan which receives favorable
treatment under the provision of Sections 403(b) or 408 of the Code, it may not
be assigned, pledged or otherwise transferred except as allowed under applicable
law.
DEATH BENEFITS
Any death benefits paid under the Contract are taxable to the beneficiary. The
rules governing the taxation of payments from an annuity contract, as discussed
above, generally apply to the payment of death benefits and depend on whether
the death benefits are paid as a lump sum or as annuity payments. Estate taxes
may also apply.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross income
of the Owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the Owner, in many cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Certain distributions from retirement plans qualified under Section 401 or
Section 403(b) of the Code, which are not directly rolled over to another
eligible retirement plan or individual retirement account or individual
retirement annuity, are subject to a mandatory 20% withholding for federal
income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for
the life or life expectancy of the participant or joint and last survivor
expectancy of the participant and a designated beneficiary or for a specified
period of 10 years or more; or b) distributions which are required minimum
distributions; or c) the portion of the distributions not includible in gross
income (i.e. returns of after-tax contributions); or d) hardship
withdrawals. Participants should consult their own tax counsel or other
tax adviser regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS -- NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after you reach age 59 1/2; (b) after your death; (c) if you
become totally disabled (for this purpose disability is as defined in Section
72(m)(7) of the Code); (d) in a series of substantially equal periodic payments
made not less frequently than annually for your life (or life expectancy) or for
the joint lives (or joint life expectancies) of you and your Beneficiary; (e)
under an immediate annuity; or (f) which are allocable to purchase payments made
prior to August 14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals -- Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts offered by the Prospectus are designed to be suitable for use
under certain types of Qualified plans. Generally, participants in a Qualified
plan are not taxed on increases to the value of the contributions to the plan
until distribution occurs, regardless of whether the plan assets are held under
an annuity contract. Taxation of participants in each Qualified plan varies with
the type of plan and terms and conditions of each specific plan. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the Contract issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into the Company's administrative procedures. The Company is not
bound by the terms and conditions of such plans to the extent such terms
conflict with the terms of a Contract, unless the Company specifically consents
to be bound. Owners, participants and Beneficiaries are responsible for
determining whether contributions, distributions and other transactions with
respect to the Contracts comply with applicable law.
A Qualified Contract will not provide any necessary or additional tax deferral
if it is used to fund a Qualified plan that is tax deferred. However, the
Contract has features and benefits other than tax deferral that may make it an
appropriate investment for a Qualified plan. The following are general
descriptions of the types of Qualified plans with which the Contracts may be
used. Such descriptions are not exhaustive and are for general informational
purposes only. The tax rules regarding Qualified plans are very complex and will
have differing applications depending on individual facts and circumstances.
Each purchaser should obtain competent tax advice prior to purchasing a Contract
issued under a Qualified plan.
10
<PAGE>
Contracts issued pursuant to Qualified plans include special provisions
restricting Contract provisions that may otherwise be available as described in
the Prospectus. Generally, Contracts issued pursuant to Qualified plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals -- Qualified Contracts")
A. TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employees until the
employees receive distributions from the Contracts. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals -- Qualified Contracts" and "Tax Sheltered Annuities --
Withdrawal Limitations" below.) Any employee should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
B. INDIVIDUAL RETIREMENT ANNUITIES
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's taxable income. These IRAs
are subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals -- Qualified Contracts"
below.) Under certain conditions, distributions from other IRAs and other
Qualified Plans may be rolled over or transferred on a tax-deferred basis into
an IRA. Sales of Contracts for use with IRAs are subject to special requirements
imposed by the Code, including the requirement that certain informational
disclosure be given to persons desiring to establish an IRA. Purchasers of
Contracts to be qualified as Individual Retirement Annuities should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
ROTH IRAS
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues to apply to all
of a taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held a Roth IRA for at
least five taxable years and, in addition, that the distribution is made: (i)
after the individual reaches age 59 1/2, (ii) on the individual's death or
disability, or (iii) as a qualified first-time home purchase (subject to a
$10,000 lifetime maximum) for the individual, a spouse, child, grandchild, or
ancestor. Any distribution which is not a qualified distribution is taxable to
the extent of earnings in the distribution. Distributions are treated as made
from contributions first and therefore no distributions are taxable until
distributions exceed the amount of contributions and conversions to the Roth
IRA. The 10% penalty tax and the regular IRA exceptions to the 10% penalty tax
apply to taxable distributions from a Roth IRA.
11
<PAGE>
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth IRA
("conversion deposits"), unless the individual has adjusted gross income over
$100,000 or the individual is a married taxpayer filing a separate return. The
individual must pay tax on any portion of the IRA being rolled over that
represents income or a previously deductible IRA contribution. However, for
rollovers in 1998, the individual may pay that tax ratably over the four taxable
year period beginning with tax year 1998. In addition, distribution of amounts
attributable to conversion deposits held for less than 5 taxable years will also
be subject to the penalty tax.
Purchasers of Contracts intended to be qualified as a Roth IRA should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
TAX TREATMENT OF WITHDRAWALS -- QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of (i) the individual's
cost basis to (ii) the individual's total accrued benefit under the retirement
plan. Special tax rules may be available for certain distributions from a
Qualified Contract. Section 72(t) of the Code imposes a 10% penalty tax on the
taxable portion of any distribution from qualified retirement plans, including
Contracts issued and qualified under Code Sections 403(b) (Tax-Sheltered
Annuities) and 408 and 408A (Individual Retirement Annuities). To the extent
amounts are not includible in gross income because they have been rolled over to
an IRA or to another eligible qualified plan, no tax penalty will be imposed.
The tax penalty will not apply to the following distributions: (a) made on or
after the date on which the Owner or Annuitant (as applicable) reaches age 59
1/2; (b) following the death or disability of the Owner or Annuitant (as
applicable) (for this purpose disability is as defined in Section 72(m)(7) of
the Code); (c) after separation from service, distributions that are part of
substantially equal periodic payments made not less frequently than annually for
the life (or life expectancy) of the Owner or Annuitant (as applicable) or the
joint lives (or joint life expectancies) of such Owner or Annuitant (as
applicable) and his or her designated Beneficiary; (d) to an Owner or Annuitant
(as applicable) who has separated from service after he or she has attained age
55; (e) made to the Owner or Annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the Owner or Annuitant (as applicable) for amounts paid during
the taxable year for medical care; (f) made to an alternate payee pursuant to a
Qualified Domestic Relations Order; (g) made on account of an IRS levy upon the
qualified contract, (h) from an Individual Retirement Annuity for the purchase
of medical insurance (as described in Section 213(d)(1)(D) of the Code) for the
Owner or Annuitant (as applicable) and his or her spouse and dependents if the
Owner or Annuitant (as applicable) has received unemployment compensation for at
least 12 weeks (this exception will no longer apply after the Owner or Annuitant
(as applicable) has been re-employed for at least 60 days); (i) from an
Individual Retirement Annuity made to the Owner or Annuitant (as applicable) to
the extent such distributions do not exceed the qualified higher education
expenses (as defined in Section 72(t)(7) of the Code) of the Owner or Annuitant
(as applicable) for the taxable year; and (j) distributions up to $10,000 from
an Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
which are qualified first-time home buyer distributions (as defined in Section
72(t)(8) of the Code). The exceptions stated in (d) and (f) above do not apply
in the case of an Individual Retirement Annuity. The exception stated in (c)
above applies to an Individual Retirement Annuity without the requirement that
there be a separation from service. With respect to (c) above, if the series of
substantially equal periodic payments is modified before the later of your
attaining age 59 1/2 or 5 years from the date of the first periodic payment,
then the tax for the year of the modification is increased by an amount equal to
the tax which would have been imposed (the 10% penalty tax) but for the
exception, plus interest for the tax years in which the exception was used.
TAX-SHELTERED ANNUITIES -- WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only on or after when the Owner: (1) attains age 59
1/2; (2) separates from service; (3) dies; (4) becomes disabled (within the
meaning of Section 72(m)(7) of the Code); (5) in the case of hardship; or (6)
pursuant to a qualified domestic relations order, if otherwise permissible.
<PAGE>
However, withdrawals for hardship are restricted to the portion of the Owner's
Contract Value which represents contributions made by the Owner and does not
include any investment results. The limitations on withdrawals became effective
on January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, to income attributable to such contributions and to income
attributable to amounts held as if December 31, 1988. The limitations on
withdrawals do not affect transfers between certain Qualified Plans. Owners
should consult their own tax counsel or other tax adviser regarding any
distributions.
MANDATORY DISTRIBUTIONS -- QUALIFIED PLANS
Generally, distributions from a qualified plan must commence no later than April
1 of the calendar year following the later of: (a) the year in which the
employee attains age 70 1/2, or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. There are no mandatory distribution requirements for Roth IRAs prior to
death. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
ANNUITY PROVISIONS
The Company makes available payment plans on a fixed and variable basis.
VARIABLE ANNUITY PAYOUT
A variable annuity is an annuity with payments which: (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable Sub-Accounts of the Separate Account. Annuity payments also
depend upon the age of the Annuitant and any Joint Annuitant and the assumed
interest factor utilized. The annuity table used will depend upon the Annuity
Option chosen. The dollar amount of annuity payments after the first is
determined as follows:
1. The dollar amount of the first variable annuity payment is divided by the
value of an Annuity Unit for each applicable Sub-Account as of the annuity date.
This sets the number of Annuity Units for each monthly payment for the
applicable Sub-Account.
2. The fixed number of Annuity Units per payment in each Sub-Account is
multiplied by the Annuity Unit value for that Sub-Account for the last valuation
period of the month preceding the month for which the payment is due. This
result is the dollar amount of the payment for each applicable Sub-Account.
The total dollar amount of each variable annuity payment is the sum of all
Sub-Account variable annuity payments reduced by the applicable portion of the
Contract Maintenance Charge.
The calculation of the first annuity payment is made on the annuity date. The
Company assesses the insurance charges during both the accumulation phase and
the annuity phase. The deduction of the insurance charges will affect the amount
of the first and any subsequent annuity payments. In addition, the Company
assesses the contract maintenance charge on the annuity date which would affect
the amount of the first annuity payment (see "Expenses" and "Annuity Payments"
in the prospectus).
13
<PAGE>
ANNUITY UNIT
The value of any Annuity Unit for each Sub-Account of the Separate Account was
arbitrarily set initially at $10.
The Sub-Account Annuity Unit Value at the end of any subsequent valuation period
is determined as follows:
1. The Net Investment Factor for the current valuation period is multiplied by
the value of the Annuity Unit for the Sub-Account for the immediately preceding
valuation period.
2. The result in (1) is then divided by the assumed investment rate factor which
equals 1.00 plus the assumed investment rate for the number of days since the
preceding valuation date. The Owner can choose either a 5% or a 3% assumed
investment rate.
FIXED ANNUITY PAYOUT
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Company and do not vary with the investment experience of the
Separate Account. The dollar amount of each fixed annuity payment is determined
in accordance with annuity tables contained in your Contract.
FINANCIAL STATEMENTS
The financial statements of the Company included in this Statement of Additional
Information should be considered only as bearing upon the ability of the Company
to meet its obligations under the Contracts.
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
Unaudited
--------------------------------------------------------------------------------
ASSETS:
Investments in portfolio shares, at net asset value (Note 2):
Shares Cost Value
-------- ---------- -----------
The Alger American Fund:
Growth Portfolio 15,029.2 $ 856,852 $ 832,765
Leveraged AllCap Portfolio 14,305.5 789,060 710,986
MidCap Growth Portfolio 13,356.2 437,525 455,448
Small Capitalization Portfolio 4,987.0 198,574 146,069
American Century Variable
Portfolios, Inc:
Income & Growth Fund 61,225.2 478,412 468,373
International Fund 85,609.2 926,520 924,579
Value Fund 21,807.8 123,271 128,666
Berger Institutional
Products Trust:
Growth Fund 2,383.6 46,453 51,771
Growth and Income Fund 30,721.3 850,410 895,527
International Fund 0.8 11 11
New Generation Fund 1,506.4 14,988 15,757
Small Company Growth Fund 17,188.7 454,695 470,284
Conseco Series Trust:
Balanced Portfolio 29,810.9 471,871 522,790
Conseco 20 Focus Portfolio 1,821.8 22,563 24,479
Equity Portfolio 15,024.7 374,710 445,966
Fixed Income Portfolio 19,137.7 179,797 181,869
Government Securities Portfolio 14,330.9 158,819 160,568
High Yield Portfolio 3,203.6 32,260 32,193
Money Market Portfolio 3,763,321.3 3,763,321 3,763,321
The Dreyfus Socially Responsible
Growth Fund, Inc. 5,131.4 195,207 204,177
Dreyfus Stock Index Fund 27,617.8 1,058,166 1,037,049
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio 20,681.7 567,512 563,368
International Value Portfolio 401.5 5,933 5,649
Federated Insurance Series:
High Income Bond Fund II 8,027.2 78,248 73,048
International Equity Fund II 8,547.7 174,971 175,228
Utility Fund II 2,825.3 39,947 38,368
Invesco Variable Investment
Funds, Inc:
Equity Income Fund 740.9 153,310 16,477
High Yield Fund 13,655.0 15,870 154,438
Janus Aspen Series:
Aggressive Growth Portfolio 22,829.1 1,351,237 1,206,519
Growth Portfolio 49,240.7 1,597,501 1,572,254
Worldwide Growth Portfolio 21,018.4 899,586 892,440
Lazard Retirement Series, Inc:
Equity Portfolio 938.7 10,658 10,832
Small Cap Portfolio 5,375.2 60,740 60,525
Lord Abbett Series Fund, Inc:
Growth and Income Portfolio 3,708.6 79,432 87,227
Mitchell Hutchins Series Trust:
Growth and Income Portfolio 83.8 1,301 1,227
Neuberger Berman Advisers
Management Trust:
Limited Maturity Bond Portfolio 4,851.6 62,915 62,489
Partners Portfolio 1,248.1 19,715 20,069
Rydex Variable Trust:
Nova Portfolio 870.7 15,641 13,992
OTC Portfolio 3,279.5 124,045 115,241
Seligman Portfolios, Inc.:
Communications and Information
Portfolio 1,804.7 45,041 42,718
Global Technology Portfolio 1,000.9 27,722 26,213
Strong Variable Insurance
Funds, Inc:
Mid Cap Growth Fund II 23,938.8 783,446 811,047
Strong Opportunity Fund II, Inc. 6,065.3 167,390 166,796
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund 4,528.1 45,378 44,647
Worldwide Emerging Markets Fund 5,241.6 56,714 56,504
Worldwide Hard Assets Fund 689.4 7,576 8,121
Worldwide Real Estate Fund 642.0 6,023 6,561
===============================================================================
TOTAL ASSETS 17,704,646
LIABILITIES:
Amounts due to Conseco Variable Insurance Company 18,580
-------------------------------------------------------------------------------
NET ASSETS (NOTE 6) $ 17,686,066
===============================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
Unaudited
--------------------------------------------------------------------------------
NET ASSETS ATTRIBUTABLE TO:
Contract owners' deferred
annuity reserves: Units Unit Value Reported Value
-------- ---------- --------------
The Alger American Fund:
Growth Portfolio 36,264.8 $22.942640 $ 832,009
Leveraged AllCap Portfolio 22,806.6 31.141148 710,224
MidCap Growth Portfolio 18,861.8 24.121743 454,979
Small Capitalization Portfolio 7,969.5 18.309593 145,918
American Century Variable
Portfolios, Inc:
Income & Growth Fund 38,949.9 12.012397 467,882
International Fund 67,608.1 13.672175 924,350
Value Fund 13,618.5 9.437991 128,531
Berger Institutional Products Trust:
Growth Fund 3,232.8 15.997670 51,717
Growth and Income Fund 46,683.5 19.163308 894,610
International Fund 0.0 11.624464 0
New Generation Fund 1,513.1 10.402829 15,741
Small Company Growth Fund 24,424.2 19.235347 469,808
Conseco Series Trust:
Balanced Portfolio 25,333.4 20.614965 522,247
Conseco 20 Focus Portfolio 1,830.2 13.363378 24,458
Equity Portfolio 16,136.3 27.608461 445,498
Fixed Income Portfolio 15,588.7 11.654427 181,677
Government Securities Portfolio 14,001.6 11.455966 160,402
High Yield Portfolio 3,183.8 10.106632 32,177
Money Market Portfolio 329,057.6 11.423043 3,758,840
The Dreyfus Socially Responsible
Growth Fund, Inc. 14,215.0 14.348712 203,967
Dreyfus Stock Index Fund 81,410.1 12.726345 1,036,053
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio 44,788.2 12.569095 562,947
International Value Portfolio 521.9 10.812272 5,643
Federated Insurance Series:
High Income Bond Fund II 7,603.3 9.596801 72,967
International Equity Fund II 8,346.5 20.950739 174,865
Utility Fund II 3,556.7 10.776217 38,328
Invesco Variable Investment
Funds, Inc,:
Equity Income Fund 1,008.0 16.329359 16,460
High Yield Fund 12,930.0 11.930539 154,262
Janus Aspen Series:
Aggressive Growth Portfolio 47,122.1 25.577220 1,205,252
Growth Portfolio 93,724.0 16.759236 1,570,743
Worldwide Growth Portfolio 54,551.5 16.334898 891,093
Lazard Retirement Series, Inc:
Equity Portfolio 968.2 11.176821 10,821
Small Cap Portfolio 5,996.2 10.087385 60,486
Lord Abbett Series Fund, Inc:
Growth and Income Portfolio 5,544.6 15.715761 87,138
Mitchell Hutchins Series Trust:
Growth and Income Portfolio 119.3 10.276733 1,226
Neuberger Berman Advisers
Management Trust:
Limited Maturity Bond Portfolio 5,937.8 10.512985 62,424
Partners Portfolio 2,049.1 9.754856 19,989
Rydex Variable Trust:
Nova Portfolio 795.0 17.580377 13,976
OTC Portfolio 3,153.3 36.510315 115,128
Seligman Portfolios, Inc.:
Communications and Information
Portfolio 5,515.1 7.738439 42,678
Global Technology Portfolio 3,095.0 8.462204 26,191
Strong Variable Insurance
Funds, Inc:
Mid Cap Growth Fund II 33,925.5 23.881935 810,207
Strong Opportunity Fund II, Inc. 12,507.6 13.321697 166,622
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund 4,710.1 9.469211 44,601
Worldwide Emerging Markets Fund 7,256.3 7.753837 56,264
Worldwide Hard Assets Fund 884.1 9.176761 8,113
Worldwide Real Estate Fund 703.3 9.319505 6,554
================================================================================
NET ASSETS ..........................................$ 17,686,066
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
THE ALGER AMERICAN FUNDS
------------------------------------------------
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 Leveraged Small
Unaudited Growth All Cap Midcap Capitalization
============================================================================================================================
<S> <C> <C> <C> <C>
Investment income:
Dividends from investments in portfolio shares $177,805 $71,241 $46,013 $53,868
------------------------------------------------
Expenses:
Mortality and expense risk fees 9,252 5,831 3,059 996
Administrative fees 1,207 761 399 130
----------------------------------------------------------------------------------------------------------------------------
Total expenses 10,459 6,592 3,458 1,126
----------------------------------------------------------------------------------------------------------------------------
Net investment income 167,346 64,649 42,555 52,742
----------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized appreciation (depreciation)
on investments:
Net realized gains (losses) on sales of investments in portfolio shares (227,673) 100,487 29,105 (1,224)
Net change in unrealized appreciation (depreciation)
of investments in portfolio shares (46,111) (219,637) (7,219) (63,078)
----------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments in portfolio shares (273,784) (119,150) 21,886 (64,302)
----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $(106,438) $(54,501) $64,441 $(11,560)
============================================================================================================================
AMERICAN CENTURY CONSECO SERIES TRUST
VARIABLE PORTFOLIOS BERGER INSTITUTIONAL PRODUCTS TRUST PORTFOLIOS
------------------------------ ---------------------------------------------------------- ----------------------
Income
and Growth and New Small Conseco
Growth International Value Growth Income International Generation Company Balanced 20 Focus
========================================================================================== ======================
$3,233 $50,065 $4,609 $0 $0 $0 $0 $0 $9,209 $0
-----------------------------------------------------------------------------------------------------------------
4,931 5,807 931 455 7,728 112 26 1,485 3,875 44
643 757 121 59 1,008 15 3 194 505 6
-----------------------------------------------------------------------------------------------------------------
5,574 6,564 1,052 514 8,736 127 29 1,679 4,380 50
-----------------------------------------------------------------------------------------------------------------
(2,341) 43,501 3,557 (514) (8,736) (127) (29) (1,679) 4,829 (50)
=================================================================================================================
(42,003) 823,647 (6,919) 1,733 161,194 (634) 1 7,294 27,831 35
(30,511) (2,419) 9,697 2,470 (122,963) (484) 768 6,052 41,482 1,915
-----------------------------------------------------------------------------------------------------------------
(72,514) 821,228 2,778 4,203 38,231 (1,118) 769 13,346 69,313 1,950
-----------------------------------------------------------------------------------------------------------------
$(74,855) $864,729 $6,335 $3,689 $29,495 $(1,245) $740 $11,667 $74,142 $1,900
=================================================================================================================
CONSECO SERIES TRUST PORTFOLIOS DREYFUS VARIABLE
(CONTINUED) INVESTMENT FUNDS
------------------------------------------------------- --------------------------
DREYFUS
SOCIALLY DREYFUS
Fixed Government High Money RESPONSIBLE STOCK Disciplined International
Equity Income Securities Yield Market GROWTH INDEX Stock Value
================================================================================================================
$101 $7,510 $6,606 $178 $197,994 $24 $12,689 $157 $636
----------------------------------------------------------------------------------------------------------------
2,523 1,226 1,238 23 39,271 1,582 11,124 5,456 128
329 160 161 3 5,123 206 1,451 712 17
----------------------------------------------------------------------------------------------------------------
2,852 1,386 1,399 26 44,394 1,788 12,575 6,168 145
----------------------------------------------------------------------------------------------------------------
(2,751) 6,124 5,207 152 153,600 (1,764) 114 (6,011) 491
----------------------------------------------------------------------------------------------------------------
14,128 (2,004) (1,254) 4 0 9,625 (3,229) 3,483 (1,855)
72,940 4,677 4,708 (67) 0 (3,892) (39,328) (8,669) (819)
----------------------------------------------------------------------------------------------------------------
87,068 2,673 3,454 (63) 0 5,733 (42,557) (5,186) (2,674)
----------------------------------------------------------------------------------------------------------------
$84,317 $ 8,797 $8,661 $89 $153,600 $3,969 $(42,443) $(11,197) $(2,183)
================================================================================================================
<PAGE>
INVESCO VARIABLE
FEDERATED INSURANCE SERIES INSURANCE FUNDS
-------------------------------------- -----------------------
High Income International Equity
Bond II Equity II Utility II Income High Yield
====================================================================
$14,786 $2,784 $1,617 $0 $0
--------------------------------------------------------------------
1,163 2,127 302 142 1,760
152 277 39 19 230
--------------------------------------------------------------------
1,315 2,404 341 161 1,990
--------------------------------------------------------------------
13,471 380 1,276 (161) (1,990)
--------------------------------------------------------------------
(12,817) 125,070 (688) 893 (10,647)
(4,876) (2,455) (1,325) 272 7,162
--------------------------------------------------------------------
(17,693) 122,615 (2,013) 1,165 (3,485)
--------------------------------------------------------------------
$(4,222) $122,995 $(737) $1,004 $(5,475)
====================================================================
NEUBERGER BERMAN
LAZARD RETIREMENT ADVISERS MANAGEMENT
JANUS ASPEN SERIES PORTFOLIOS SERIES PORTFOLIOS LORD MITCHELL TRUST PORTFOLIOS
--------------------------------------- --------------------- ABBETT HUTCHINS -------------------------
SERIES SERIES
TRUST TRUST
Aggressive Worldwide GROWTH GROWTH Limited
Growth Growth Growth Equity Small Cap AND INCOME AND INCOME Maturity Bond Partners
=======================================================================================================================
$128,110 $124,745 $95,584 $2 $1 $0 $83 $3,485 $3,305
-----------------------------------------------------------------------------------------------------------------------
7,845 13,188 11,512 100 63 641 8 473 478
1,023 1,720 1,502 13 8 84 1 62 62
-----------------------------------------------------------------------------------------------------------------------
8,868 14,908 13,014 113 71 725 9 535 540
-----------------------------------------------------------------------------------------------------------------------
119,242 109,837 82,570 (111) (70) (725) 74 2,950 2,765
-----------------------------------------------------------------------------------------------------------------------
128,293 (136,396) 293,198 (105) 782 1,596 0 (320) (731)
(285,562) (75,127) (216,187) 761 (103) 4,264 (135) (701) 147
-----------------------------------------------------------------------------------------------------------------------
(157,269) (211,523) 77,011 656 679 5,860 (135) (1,021) (584)
-----------------------------------------------------------------------------------------------------------------------
$(38,027) $(101,686) $159,581 $545 $609 $5,135 $(61) $1,929 $2,181
=======================================================================================================================
STRONG
VARIABLE
INSURANCE
RYDEX VARIABLE TRUST SELIGMAN PORTFOLIOS FUNDS
----------------------- --------------------- ----------------
Communications
and Global Mid Cap
Nova OTC Information Technology Growth II
=====================================================================
$905 $4,263 $0 $0 $0
---------------------------------------------------------------------
25 286 96 43 4,146
3 37 12 6 541
---------------------------------------------------------------------
28 323 108 49 4,687
---------------------------------------------------------------------
877 3,940 (108) (49) (4,687)
---------------------------------------------------------------------
0 218 (789) (462) 59,807
(1,649) (8,804) (2,323) (1,508) (27,816)
---------------------------------------------------------------------
(1,649) (8,586) (3,112) (1,970) 31,991
---------------------------------------------------------------------
$(772) $(4,646) $(3,220) $(2,019) $27,304
=====================================================================
<PAGE>
VAN ECK WORLDWIDE INSURANCE TRUST FUNDS
------------------------------------------
STRONG Combined
OPPORTUNITY Emerging Hard Real Total
FUND II Bond Markets Assets Estate
===================================================================
$0 $1,067 $0 $246 $101 $1,023,022
-------------------------------------------------------------------
1,325 374 1,637 90 50 154,977
173 49 213 12 7 20,215
-------------------------------------------------------------------
1,498 423 1,850 102 57 175,192
-------------------------------------------------------------------
(1,498) 644 (1,850) 144 44 847,830
-------------------------------------------------------------------
19,659 (2,694) 104,011 (1,000) (14) 1,458,636
(13,123) 973 (21,595) 454 779 (1,048,965)
-------------------------------------------------------------------
6,536 (1,721) 82,416 (546) 765 409,671
-------------------------------------------------------------------
$5,038 $(1,077) $80,566 $(402) $809 $1,257,501
===================================================================
</TABLE>
<TABLE>
THE ALGER AMERICAN FUNDS
------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS Leveraged Small
Unaudited Growth All Cap Midcap Capitalization
============================================================================================================================
<S> <C> <C> <C> <C>
Changes from operations:
Net investment income $167,346 $64,649 $42,555 $52,742
Net realized gains (losses) on sales of investments
in portfolio shares (227,673) 100,487 29,105 (1,224)
Net change in unrealized appreciation (depreciation) of investment
in portfolio sharesc (46,111) (219,637) (7,219) (63,078)
----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (106,438) (54,501) 64,441 (11,560)
----------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments 246,370 435,629 168,798 110,454
Contract redemptions (1,193,732) (209,850) (28,713) (4,323)
Net transfers (to) from fixed account 1,506,160 (35,444) 64,196 1,980
----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from contract
owners' transactions 558,798 190,335 204,281 108,111
----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 452,360 135,834 268,722 96,551
----------------------------------------------------------------------------------------------------------------------------
Net assets, beginning of period 379,650 574,388 186,258 49,367
----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period $832,010 $710,222 $454,980 $145,918
============================================================================================================================
AMERICAN CENTURY CONSECO SERIES TRUST
VARIABLE PORTFOLIOS BERGER INSTITUTIONAL PRODUCTS TRUST PORTFOLIOS
------------------------------ --------------------------------------------------------- -------------------------
Income
and Growth and New Small Conseco
Growth International Value Growth Income International Generation Company Balanced 20 Focus
========================================================================================== =========================
$(2,341) $43,501 $3,557 $(514) $(8,736) $(127) $(29) $(1,679) $4,829 $(50)
(42,003) 823,647 (6,919) 1,733 161,194 (634) 1 7,294 27,831 35
(30,511) (2,419) 9,697 2,470 (122,963) (484) 768 6,052 41,482 1,915
-------------------------------------------------------------------------------------------------------------------
(74,855) 864,729 6,335 3,689 29,495 (1,245) 740 11,667 74,142 1,900
-------------------------------------------------------------------------------------------------------------------
62,323 169,744 24,199 4,886 396,261 0 15,001 409,923 182,382 17,311
(84,826) (1,200) (4,092) (2,100) (381,310) (2,667) 0 (14,814) (40,960) (450)
27,705 (659,653) 13,098 1,866 67,270 1,142 0 23,941 (2,494) 5,697
-------------------------------------------------------------------------------------------------------------------
5,202 (491,109) 33,205 4,652 82,221 (1,525) 15,001 419,050 138,928 22,558
-------------------------------------------------------------------------------------------------------------------
(69,653) 373,620 39,540 8,341 111,716 (2,770) 15,741 430,717 213,070 24,458
-------------------------------------------------------------------------------------------------------------------
537,534 550,730 88,992 43,377 782,895 2,770 0 39,090 309,178 0
-------------------------------------------------------------------------------------------------------------------
$467,881 $924,350 $128,532 $51,718 $894,611 $0 $15,741 $469,807 $522,248 $24,458
===================================================================================================================
<PAGE>
CONSECO SERIES TRUST PORTFOLIOS DREYFUS VARIABLE
(CONTINUED) INVESTMENT FUNDS
------------------------------------------------------- -----------------------
DREYFUS
SOCIALLY DREYFUS
Fixed Government High Money RESPONSIBLE STOCK Disciplined International
Equity Income Securities Yield Market GROWTH INDEX Stock Value
==========================================================================================================
$(2,751) $6,124 $5,207 $152 $153,600 $(1,764) $114 $(6,011) $491
14,128 (2,004) (1,254) 4 0 9,625 (3,229) 3,483 (1,855)
72,940 4,677 4,708 (67) 0 (3,892) (39,328) (8,669) (819)
----------------------------------------------------------------------------------------------------------
84,317 8,797 8,661 89 153,600 3,969 (42,443) (11,197) (2,183)
----------------------------------------------------------------------------------------------------------
225,844 59,545 30,726 8 2,417,893 64,036 223,444 45,050 0
(20,073) (5,605) (3,257) 0 (1,375,870) (9,123) (1,279,156) (1,021,686) (1,350)
61,096 30,069 8,659 32,081 (5,432,886) 29,376 1,629,750 1,491,800 (17,305)
----------------------------------------------------------------------------------------------------------
266,867 84,009 36,128 32,089 (4,390,863) 84,289 574,038 515,164 (18,655)
----------------------------------------------------------------------------------------------------------
351,184 92,806 44,789 32,178 (4,237,263) 88,258 531,595 503,967 (20,838)
----------------------------------------------------------------------------------------------------------
94,314 88,871 115,614 0 7,996,100 115,709 504,459 58,980 26,481
----------------------------------------------------------------------------------------------------------
$445,498 $181,677 $160,403 $32,178 $3,758,837 $203,967 $1,036,054 $562,947 $5,643
==========================================================================================================
INVESCO VARIABLE
FEDERATED INSURANCE SERIES INSURANCE FUNDS
-------------------------------------- -----------------------
High Income International Equity
Bond II Equity II Utility II Income High Yield
====================================================================
$13,471 $380 $1,276 $(161) $(1,990)
(12,817) 125,070 (688) 893 (10,647)
(4,876) (2,455) (1,325) 272 7,162
--------------------------------------------------------------------
(4,222) 122,995 (737) 1,004 (5,475)
--------------------------------------------------------------------
7,282 153,595 3,081 2,717 27,851
(89,996) (904) (1,390) (469) (89,416)
(1,704) (110,429) 8,616 (282) 19,130
--------------------------------------------------------------------
(84,418) 42,262 10,307 1,966 (42,435)
--------------------------------------------------------------------
(88,640) 165,257 9,570 2,970 (47,910)
--------------------------------------------------------------------
161,607 9,609 28,758 13,490 202,172
--------------------------------------------------------------------
$72,967 $174,866 $38,328 $16,460 $154,262
====================================================================
NEUBERGER BERMAN
LAZARD RETIREMENT ADVISERS MANAGEMENT
JANUS ASPEN SERIES PORTFOLIOS SERIES PORTFOLIOS LORD MITCHELL TRUST PORTFOLIOS
--------------------------------------- --------------------- ABBETT HUTCHINS -------------------------
SERIES SERIES
TRUST TRUST
Aggressive Worldwide GROWTH GROWTH Limited
Growth Growth Growth Equity Small Cap AND INCOME AND INCOME Maturity Bond Partners
=======================================================================================================================
$119,242 $109,837 $82,570 $(111) $(70) $(725) $74 $2,950 $2,765
128,293 (136,396) 293,198 (105) 782 1,596 0 (320) (731)
(285,562) (75,127) (216,187) 761 (103) 4,264 (135) (701) 147
--------------------------------------------------------------------------------------------------------------------
(38,027) (101,686) 159,581 545 609 5,135 (61) 1,929 2,181
--------------------------------------------------------------------------------------------------------------------
983,821 572,287 424,095 0 (414) 23,167 0 15,476 60,278
(252,159) (1,163,099) (262,127) 0 (768) (2,700) 0 (6,837) (4,320)
(48,704) 1,540,737 (234,775) 74 57,364 (7,884) 0 1,291 (56,443)
--------------------------------------------------------------------------------------------------------------------
682,958 949,925 (72,807) 74 56,182 12,583 0 9,930 (485)
--------------------------------------------------------------------------------------------------------------------
644,931 848,239 86,774 619 56,791 17,718 (61) 11,859 1,696
--------------------------------------------------------------------------------------------------------------------
560,320 722,502 804,321 10,202 3,695 69,419 1,287 50,565 18,294
--------------------------------------------------------------------------------------------------------------------
$1,205,251 $1,570,741 $891,095 $10,821 $60,486 $87,137 $1,226 $62,424 $19,990
=======================================================================================================================
<PAGE>
STRONG
VARIABLE
INSURANCE
RYDEX VARIABLE TRUST SELIGMAN PORTFOLIOS FUNDS
----------------------- --------------------- ----------------
Communications
and Global Mid Cap
Nova OTC Information Technology Growth II
=====================================================================
$877 $3,940 $(108) $(49) $(4,687)
0 218 (789) (462) 59,807
(1,649) (8,804) (2,323) (1,508) (27,816)
---------------------------------------------------------------------
(772) (4,646) (3,220) (2,019) 27,304
---------------------------------------------------------------------
6,999 82,597 45,898 20,489 543,643
0 (4,718) 0 0 (36,714)
7,749 41,895 0 7,720 39,400
---------------------------------------------------------------------
14,748 119,774 45,898 28,209 546,329
---------------------------------------------------------------------
13,976 115,128 42,678 26,190 573,633
---------------------------------------------------------------------
0 0 0 0 236,573
---------------------------------------------------------------------
$13,976 $115,128 $42,678 $26,190 $810,206
=====================================================================
VAN ECK WORLDWIDE INSURANCE TRUST FUNDS
------------------------------------------
STRONG Combined
OPPORTUNITY Emerging Hard Real Total
FUND II Bond Markets Assets Estate
===================================================================
$(1,498) $644 $(1,850) $144 $44 $847,830
19,659 (2,694) 104,011 (1,000) (14) 1,458,636
(13,123) 973 (21,595) 454 779 (1,048,965)
-------------------------------------------------------------------
5,038 (1,077) 80,566 (402) 809 1,257,501
-------------------------------------------------------------------
58,670 (196) 8,969 (305) (9) 8,349,818
(7,469) (278) (3,127) (166) (59) (7,611,873)
(26,293) 23,310 (96,491) (13,588) 1,203 0
-------------------------------------------------------------------
24,908 22,836 (90,649) (14,059) 1,135 737,945
-------------------------------------------------------------------
29,946 21,759 (10,083) (14,461) 1,944 1,995,446
-------------------------------------------------------------------
136,677 22,841 66,347 22,574 4,610 15,690,620
-------------------------------------------------------------------
$166,623 $44,600 $56,264 $8,113 $6,554 $17,686,066
===================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
NOTES TO FINANCIAL STATEMENTS
Unaudited
(1) GENERAL
Conseco Variable Insurance Company (the "Company") established two
separate accounts within Conseco Variable Annuity Account G ("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 Conseco 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 Interest Adjustment
Account ("IAA"), 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 IAA. The IAA 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 IAA 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
Growth Fund
Growth and Income Fund
International Fund
New Generation Fund
Small Company Growth Fund
CONSECO SERIES TRUST
Balanced Portfolio
Conseco 20 Focus Portfolio
Equity Portfolio
Fixed Income Portfolio
Government Securities Portfolio
High Yield 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.
Equity Income Fund
High Yield Fund
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
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
NOTES TO FINANCIAL STATEMENTS
Unaudited
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio
Partners Portfolio
RYDEX VARIABLE TRUST
Nova Fund
OTC Fund
SELIGMAN PORTFOLIOS, INC.
Communications and Information Portfolio
Global Technology Portfolio
STRONG VARIABLE INSURANCE FUNDS, INC.
Mid Cap 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.
FEDERAL INCOME TAXES
No provision for federal income taxes has been made in the accompanying
financial statements because the operations of Account G 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 Account G 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
$275,867,199 and $77,960,412 for the nine months ended September 30, 2000 and
the year ended December 31, 1999, respectively. The aggregate proceeds from
sales of investments in portfolio shares were $274,278,464 and $65,241,882 for
the nine months ended September 30, 2000 and the year ended December 31, 1999,
respectively.
(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.
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
NOTES TO FINANCIAL STATEMENTS
Unaudited
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 $154,978 and $66,903 for the nine months ended September 30,
2000 and the year ended December 31, 1999, respectively.
Pursuant to an agreement between Account G and the Company (which may be
terminated by the Company at any time), the Company provides sales and
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 Statements of Changes in Net
Assets. There were no sales and administrative charges for the nine months ended
September 30, 2000 and for the year ended December 31, 1999. 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 $20,215 and $8,726 for the nine
months ended September 30, 2000 and the year ended December 31, 1999,
respectively.
The IAA account is subject to an interest adjustment if the amounts are
withdrawn prior to the end of the guarantee period with certain exceptions. This
adjustment can be positive or negative depending on the changes in the U.S.
Treasury rates during the holding period of the IAA contract. There were no
charges for the nine months ended September 30, 2000 and for the year ended
December 31, 1999.
(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 Securities,
Inc., an affiliate of the Company.
(6) NET ASSETS
Net assets consisted of the following at September 30, 2000:
Proceeds from the sales of units since organization,
less cost of units redeemed $14,395,531
Undistributed net investment income 1,077,767
Undistributed net realized gains on sales of investments 2,339,459
Net unrealized depreciation of investments (126,691)
-----------
Net assets $17,686,066
===========
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
===================================================================================================
NET ASSET
SHARES COST VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments in portfolio shares, at net asset value (Note 2):
The Alger American Fund:
Growth Portfolio...................................... 5,917.2 $ 358,923 $ 380,947
Leveraged AllCap Portfolio............................ 9,918.5 433,415 574,978
MidCap Growth Portfolio............................... 5,784.1 161,279 186,420
Small Capitalization Portfolio........................ 896.1 38,845 49,418
American Century Variable Portfolios, Inc.:
Income and Growth Fund................................ 67,354.6 518,365 538,837
International Fund.................................... 44,177.5 551,741 552,219
Value Fund............................................ 14,971.5 93,382 89,080
Berger Institutional Products Trust:
100 Fund.............................................. 2,257.5 40,542 43,389
Growth and Income Fund................................ 29,627.7 615,571 783,652
Small Company Growth Fund............................. 1,664.1 29,586 39,123
BIAM International Fund............................... 189.3 2,286 2,769
Conseco Series Trust:
Balanced Portfolio.................................... 21,123.7 300,043 309,480
Equity Portfolio...................................... 4,072.4 96,084 94,401
Fixed Income Portfolio................................ 9,479.4 91,574 88,969
Government Securities Portfolio....................... 10,559.3 118,700 115,741
Money Market Portfolio................................ 7,999,930.0 7,999,930 7,999,930
Dreyfus Stock Index Fund................................ 13,156.2 487,644 505,855
The Dreyfus Socially Responsible Growth Fund, Inc....... 2,964.7 102,968 115,830
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio........................... 2,192.8 54,504 59,030
<PAGE>
International Value Portfolio......................... 1,691.1 25,964 26,499
Federated Insurance Series:
High Income Bond Fund II.............................. 15,797.0 162,085 161,761
International Equity Fund II.......................... 347.9 6,904 9,616
Utility Fund II....................................... 2,006.2 29,044 28,790
Invesco Variable Investment Funds, Inc.:
Equity Income Fund.................................... 642.6 13,166 13,501
High Yield Fund....................................... 17,580.7 208,388 202,354
Janus Aspen Series:
Aggressive Growth Portfolio........................... 9,395.2 419,959 560,802
Growth Portfolio...................................... 21,517.0 674,168 724,048
Worldwide Growth Portfolio............................ 16,860.2 596,034 805,074
Lazard Retirement Series, Inc.:
Equity Portfolio...................................... 885.8 10,801 10,214
Small Cap Portfolio................................... 376.7 3,812 3,699
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio........................... 3,135.8 65,959 69,490
Mitchell Hutchins Series Trust:
Growth and Income Portfolio........................... 78.8 1,227 1,288
Neuberger Berman Advisers Management Trust:
Limited Maturity Bond Portfolio....................... 3,822.4 50,333 50,609
Partners Portfolio.................................... 932.3 18,104 18,311
Strong Variable Insurance Funds, Inc.:
Mid Cap Growth Fund II................................ 7,798.1 181,411 236,828
Strong Opportunity Fund II, Inc......................... 5,263.6 124,271 136,801
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund................................... 2,139.0 24,570 22,866
Worldwide Emerging Markets Fund....................... 4,657.8 45,035 66,420
Worldwide Hard Assets Fund............................ 2,062.0 22,509 22,600
Worldwide Real Estate Fund............................ 504.4 4,856 4,616
---------------------------------------------------------------------------------------------------
Total assets................................................................ 15,706,255
Liabilities:
Amounts due to Conseco Variable Insurance Company............................... 15,635
---------------------------------------------------------------------------------------------------
Net assets (Note 6)......................................................... $15,690,620
===================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
<PAGE>
====================================================================================================
TOTAL VALUE
UNITS UNIT VALUE OF UNITS
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets attributable to:
Contract owners' deferred annuity reserves:
The Alger American Fund:
Growth Portfolio...................................... 16,371.5 $23.189882 $ 379,650
Leveraged AllCap Portfolio............................ 17,588.0 32.657950 574,388
MidCap Growth Portfolio............................... 9,297.9 20.032232 186,258
Small Capitalization Portfolio........................ 2,423.9 20.366734 49,367
American Century Variable Portfolios, Inc.:
Income and Growth Fund................................ 42,619.5 12.612406 537,534
International Fund.................................... 35,027.7 15.722703 550,730
Value Fund............................................ 9,758.4 9.119531 88,992
Berger Institutional Products Trust:
100 Fund.............................................. 3,034.5 14.294697 43,377
Growth and Income Fund................................ 44,588.5 17.558227 782,895
Small Company Growth Fund............................. 2,342.1 16.690233 39,090
BIAM International Fund............................... 213.7 12.960694 2,770
Conseco Series Trust:
Balanced Portfolio.................................... 18,121.9 17.061023 309,178
Equity Portfolio...................................... 4,335.2 21.755292 94,314
Fixed Income Portfolio................................ 8,054.0 11.034411 88,871
Government Securities Portfolio....................... 10,693.4 10.811727 115,614
Money Market Portfolio................................ 724,556.2 11.035857 7,996,100
Dreyfus Stock Index Fund................................ 38,649.3 13.052208 504,459
The Dreyfus Socially Responsible Growth Fund, Inc....... 8,134.5 14.224514 115,709
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio........................... 4,702.8 12.541406 58,980
International Value Portfolio......................... 2,227.3 11.889474 26,481
Federated Insurance Series:
High Income Bond Fund II.............................. 16,320.3 9.902221 161,607
International Equity Fund II.......................... 389.7 24.656483 9,609
Utility Fund II....................................... 2,626.8 10.947785 28,758
Invesco Variable Investment Funds, Inc.:
Equity Income Fund.................................... 866.0 15.576930 13,490
High Yield Fund....................................... 16,490.2 12.260149 202,172
Janus Aspen Series:
Aggressive Growth Portfolio........................... 21,535.4 26.018575 560,320
Growth Portfolio...................................... 43,956.4 16.436786 722,502
Worldwide Growth Portfolio............................ 47,138.6 17.062892 804,321
Lazard Retirement Series, Inc.:
Equity Portfolio...................................... 904.9 11.274220 10,202
Small Cap Portfolio................................... 416.0 8.882039 3,695
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio........................... 4,642.9 14.951608 69,419
Mitchell Hutchins Series Trust:
Growth and Income Portfolio........................... 119.3 10.787063 1,287
Neuberger Berman Advisers Management Trust:
<PAGE>
Limited Maturity Bond Portfolio....................... 4,966.8 10.180512 50,565
Partners Portfolio.................................... 1,859.8 9.836308 18,294
Strong Variable Insurance Funds, Inc.:
Mid Cap Growth Fund II................................ 10,943.8 21.617066 236,573
Strong Opportunity Fund II, Inc......................... 10,750.8 12.713201 136,677
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund................................... 2,313.7 9.872061 22,841
Worldwide Emerging Markets Fund....................... 6,405.8 10.357402 66,347
Worldwide Hard Assets Fund............................ 2,648.7 8.522860 22,574
WorldwideReal Estate Fund............................. 559.5 8.240317 4,610
----------------------------------------------------------------------------------------------------
Net assets...................................................................... $15,690,620
====================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
=================================================================================================================================
AMERICAN
CENTURY
VARIABLE
THE ALGER AMERICAN FUNDS PORTFOLIOS
---------------------------------------------- -----------
LEVERAGED SMALL INCOME AND
GROWTH ALL CAP MIDCAP CAPITALIZATION GROWTH
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends from investments in portfolio shares .................... $34,014 $ 9,526 $ 6,642 $ 1,455 $ 2
Expenses:
Mortality and expense risk fees ................................... 4,482 2,637 663 249 3,348
Administrative fees ............................................... 585 344 87 33 437
--------------------------------------------------------------------------------------------------------------------------------
Total expenses ................................................... 5,067 2,981 750 282 3,785
--------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .................................. 28,947 6,545 5,892 1,173 (3,783)
--------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized appreciation (depreciation) on
investments:
Net realized gains (losses) on sales of
investments in portfolio shares ................................ 54,246 23,355 27 716 24,340
<PAGE>
Net change in unrealized appreciation
(depreciation) of investments in portfolio shares .............. 6,282 135,119 20,990 10,541 14,852
--------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments in portfolio shares ............ 60,528 158,474 21,017 11,257 39,192
--------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations ....... $89,475 $165,019 $26,909 $12,430 $ 35,409
=================================================================================================================================
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
=================================================================================================================================
AMERICAN
CENTURY
VARIABLE
THE ALGER AMERICAN FUNDS PORTFOLIOS
---------------------------------------------- -----------
LEVERAGED SMALL INCOME AND
GROWTH ALL CAP MIDCAP CAPITALIZATION GROWTH
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Changes from operations:
Net investment income (loss) ................................. $ 28,947 $ 6,545 $ 5,892 $ 1,173 $ (3,783)
Net realized gains (losses) on sales of
investments in portfolio shares ............................. 54,246 23,355 27 716 24,340
Net change in unrealized appreciation (depreciation)
of investments in portfolio shares .......................... 6,282 135,119 20,990 10,541 14,852
--------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations ..... 89,475 165,019 26,909 12,430 35,409
--------------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments ............................... 366,463 347,459 128,866 46,543 546,284
Contract redemptions ......................................... (8,924) (1,041) (288) -- (8,762)
Net transfers ................................................ (170,214) 14,358 2,859 (18,857) (110,527)
--------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from contract owners' transactions ....................... 187,325 360,776 131,437 27,686 426,995
--------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets .................. 276,800 525,795 158,346 40,116 462,404
--------------------------------------------------------------------------------------------------------------------------------
Net assets, beginning of year .................................. 102,850 48,593 27,912 9,251 75,130
--------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (Note 6) ....................... $ 379,650 $ 574,388 $ 186,258 $ 49,367 $ 537,534
================================================================================================================================
</TABLE>
<PAGE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================
AMERICAN CENTURY
VARIABLE PORTFOLIOS
(CONTINUED) BERGER INSTITUTIONAL PRODUCTS TRUST CONSECO SERIES TRUST PORTFOLIOS
------------------------ -------------------------------------------- ----------------------------------
GROWTH AND SMALL BIAM FIXED
INTERNATIONAL VALUE 100 INCOME COMPANY INTERNATIONAL BALANCED EQUITY INCOME
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ -- $ 5,873 $ 2 $ -- $ -- $ 15 $54,308 $26,474 $ 7,238
3,993 668 97 2,282 106 12 2,205 518 1,287
521 87 13 298 14 2 288 68 168
-----------------------------------------------------------------------------------------------------------
4,514 755 110 2,580 120 14 2,493 586 1,455
-----------------------------------------------------------------------------------------------------------
(4,514) 5,118 (108) (2,580) (120) 1 51,815 25,888 5,783
-----------------------------------------------------------------------------------------------------------
596,369 590 916 13,140 (28) 1 (993) 248 (4,807)
194 (5,115) 2,848 161,916 9,537 483 5,856 (4,139) (2,494)
-----------------------------------------------------------------------------------------------------------
596,563 (4,525) 3,764 175,056 9,509 484 4,863 (3,891) (7,301)
-----------------------------------------------------------------------------------------------------------
$592,049 $ 593 $3,656 $172,476 $9,389 $485 $56,678 $21,997 $(1,518)
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===========================================================================================================
AMERICAN CENTURY
VARIABLE PORTFOLIOS
(CONTINUED) BERGER INSTITUTIONAL PRODUCTS TRUST CONSECO SERIES TRUST PORTFOLIOS
------------------------ -------------------------------------------- ----------------------------------
GROWTH AND SMALL BIAM FIXED
INTERNATIONAL VALUE 100 INCOME COMPANY INTERNATIONAL BALANCED EQUITY INCOME
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (4,514) $ 5,118 $ (108) $ (2,580) $ (120) $ 1 $ 51,815 $25,888 $ 5,783
<PAGE>
596,369 590 916 13,140 (28) 1 (993) 248 (4,807)
194 (5,115) 2,848 161,916 9,537 483 5,856 (4,139) (2,494)
-----------------------------------------------------------------------------------------------------------
592,049 593 3,656 172,476 9,389 485 56,678 21,997 (1,518)
-----------------------------------------------------------------------------------------------------------
33,844 33,934 48,542 551,218 29,129 2,285 110,524 43,528 41,424
(60) (745) (225) (4,025) -- -- (85) (43) (12,695)
(82,554) 11,763 (8,596) 15,489 572 -- (35,736) (6,724) (27,228)
-----------------------------------------------------------------------------------------------------------
(48,770) 44,952 39,721 562,682 29,701 2,285 74,703 36,761 1,501
-----------------------------------------------------------------------------------------------------------
543,279 45,545 43,377 735,158 39,090 2,770 131,381 58,758 (17)
-----------------------------------------------------------------------------------------------------------
7,451 43,447 -- 47,737 -- -- 177,797 35,556 88,888
-----------------------------------------------------------------------------------------------------------
$550,730 $88,992 $43,377 $782,895 $39,090 $2,770 $309,178 $94,314 $ 88,871
===========================================================================================================
</TABLE>
5
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENTS OF OPERATIONS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
===============================================================================================================================
CONSECO SERIES DREYFUS
TRUST PORTFOLIOS VARIABLE
(CONTINUED) INVESTMENT
----------------------- -----------
DREYFUS
SOCIALLY DREYFUS
GOVERNMENT MONEY RESPONSIBLE STOCK DISCIPLINED
SECURITIES MARKET GROWTH INDEX STOCK
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends from investments in portfolio shares .................... $ 5,600 $90,490 $ 3,871 $ 5,898 $ 571
Expenses:
Mortality and expense risk fees ................................... 869 20,687 419 5,018 303
Administrative fees ............................................... 113 2,695 55 655 40
-------------------------------------------------------------------------------------------------------------------------------
Total expenses ................................................... 982 23,382 474 5,673 343
-------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .................................. 4,618 67,108 3,397 225 228
<PAGE>
-------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized appreciation (depreciation) of
investments:
Net realized gains (losses) on sales of
investments in portfolio shares ................................ (3,771) -- 263 38,312 2,815
Net change in unrealized appreciation
(depreciation) of investments in portfolio shares .............. (2,978) -- 12,275 15,730 1,095
-------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments in portfolio shares ............ (6,749) -- 12,538 54,042 3,910
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations ....... $(2,131) $67,108 $15,935 $54,267 $4,138
===============================================================================================================================
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
================================================================================================================================
CONSECO SERIES DREYFUS
TRUST PORTFOLIOS VARIABLE
(CONTINUED) INVESTMENT
----------------------- -----------
DREYFUS
SOCIALLY DREYFUS
GOVERNMENT MONEY RESPONSIBLE STOCK DISCIPLINED
SECURITIES MARKET GROWTH INDEX STOCK
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Changes from operations:
Net investment income (loss) ............................... $ 4,618 $ 67,108 $ 3,397 $ 225 $ 228
Net realized gains (losses) on sales of
investments in portfolio shares ........................... (3,771) 00 263 38,312 2,815
Net change in unrealized appreciation (depreciation)
of investments in portfolio shares ........................ (2,978) 00 12,275 15,730 1,095
--------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations ... (2,131) 67,108 15,935 54,267 4,138
--------------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments ............................. 70,696 7,805,123 75,767 451,148 54,742
Contract redemptions ....................................... (410) (464,912) (696) (13,538) -
Net transfers .............................................. 20,934 571,912 20,938 (39,335) (24,755)
--------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from contract owners' transactions ..................... 91,220 7,912,123 96,009 398,275 29,987
--------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets ........................... 89,089 7,979,231 111,944 452,542 34,125
<PAGE>
--------------------------------------------------------------------------------------------------------------------------------
Net assets, beginning of year ................................ 26,525 16,869 3,765 51,917 24,855
--------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (Note 6) ..................... $ 115,614 $7,996,100 $115,709 $504,459 $ 58,980
================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
DREYFUS
VARIABLE
INVESTMENT
(CONTINUED) FEDERATED INSURANCE SERIES FUNDS INVESCO VARIABLE INV. FUNDS JANUS ASPEN SERIES PORTFOLIOS
-------------- ------------------------------------------- ------------------------------ ---------------------------------------
INTERNATIONAL HIGH INCOME INTERNATIONAL EQUITY AGGRESSIVE WORLDWIDE
VALUE BOND II EQUITY II UTILITY II INCOME HIGH YIELD GROWTH GROWTH GROWTH
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$2,026 $ 7,013 $ 79 $ 4,054 $ 109 $ 10,894 $ 3,490 $ 1,700 $ 410
96 1,675 34 644 107 467 1,404 4,902 2,908
12 219 4 84 14 61 183 639 379
-----------------------------------------------------------------------------------------------------------------------------------
108 1,894 38 728 121 528 1,587 5,541 3,287
-----------------------------------------------------------------------------------------------------------------------------------
1,918 5,119 41 3,326 (12) 10,366 1,903 (3,841) (2,877)
-----------------------------------------------------------------------------------------------------------------------------------
48 (6,718) 24 (1,129) 659 (290) 12,001 119,617 6,918
669 (1,069) 2,711 (2,912) 335 (5,213) 140,010 36,327 203,173
-----------------------------------------------------------------------------------------------------------------------------------
717 (7,787) 2,735 (4,041) 994 (5,503) 152,011 155,944 210,091
-----------------------------------------------------------------------------------------------------------------------------------
$2,635 $(2,668) $2,776 $ (715) $ 982 $ 4,863 $153,914 $152,103 $207,214
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
===================================================================================================================================
DREYFUS
VARIABLE
INVESTMENT
(CONTINUED) FEDERATED INSURANCE SERIES FUNDS INVESCO VARIABLE INV. FUNDS JANUS ASPEN SERIES PORTFOLIOS
-------------- ------------------------------------------- ------------------------------ ---------------------------------------
INTERNATIONAL HIGH INCOME INTERNATIONAL EQUITY AGGRESSIVE WORLDWIDE
VALUE BOND II EQUITY II UTILITY II INCOME HIGH YIELD GROWTH GROWTH GROWTH
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,918 $ 5,119 $ 41 $ 3,326 $ (12) $ 10,366 $ 1,903 $ (3,841) $ (2,877)
48 (6,718) 24 (1,129) 659 (290) 12,001 119,617 6,918
669 (1,069) 2,711 (2,912) 335 (5,213) 140,010 36,327 203,173
-----------------------------------------------------------------------------------------------------------------------------------
2,635 (2,668) 2,776 (715) 982 4,863 153,914 152,103 207,214
-----------------------------------------------------------------------------------------------------------------------------------
17,939 203,258 7,237 63,856 19,037 134,822 311,095 607,627 505,696
(1,780) (1,776) (404) (3,740) -- (1,994) (1,457) (9,223) (3,717)
-- (69,189) -- (58,233) (6,529) 57,049 93,532 (120,321) 16,880
-----------------------------------------------------------------------------------------------------------------------------------
16,159 132,293 6,833 1,883 12,508 189,877 403,170 478,083 518,859
-----------------------------------------------------------------------------------------------------------------------------------
18,794 129,625 9,609 1,168 13,490 194,740 557,084 630,186 726,073
-----------------------------------------------------------------------------------------------------------------------------------
7,687 31,982 -- 27,590 -- 7,432 3,236 92,316 78,248
-----------------------------------------------------------------------------------------------------------------------------------
$26,481 $161,607 $9,609 $ 28,758 $ 13,490 $202,172 $560,320 $722,502 $804,321
===================================================================================================================================
</TABLE>
7
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENTS OF OPERATIONS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
===================================================================================================================================
NEUBERGER
BERMAN
ADVISERS
MANAGEMENT
<PAGE>
LAZARD RETIREMENT TRUST
SERIES PORTFOLIOS PORTFOLIOS
------------------ ----------
MITCHELL
LORD ABBETT HUTCHINS
SERIES TRUST SERIES TRUST LIMITED
GROWTH AND GROWTH AND MATURITY
EQUITY SMALL CAP INCOME INCOME BOND
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends from investments in portfolio shares ................. $ 388 $ 66 $ 5,517 $ -- $ 309
Expenses:
Mortality and expense risk fees ................................ 315 27 616 6 264
Administrative fees ............................................ 40 4 80 1 34
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses ................................................ 355 31 696 7 298
-----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) ............................... 33 35 4,821 (7) 11
-----------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized appreciation (depreciation) of
investments:
Net realized gains (losses) on sales of investments
in portfolio shares ........................................ 3,161 (115) 138 -- (84)
Net change in unrealized appreciation (depreciation)
of investments in portfolio shares ......................... (5,024) (340) 2,927 61 160
-----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments in portfolio shares ....... (1,863) (455) 3,065 61 76
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations .. $ (1,830) $ (420) $ 7,886 $ 54 $ 87
===================================================================================================================================
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
===================================================================================================================================
NEUBERGER
BERMAN
ADVISERS
MANAGEMENT
LAZARD RETIREMENT TRUST
SERIES PORTFOLIOS PORTFOLIOS
------------------ ---------
MITCHELL
LORD ABBETT HUTCHINS
SERIES TRUST SERIES TRUST LIMITED
GROWTH AND GROWTH AND MATURITY
EQUITY SMALL CAP INCOME INCOME BOND
-----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
<S> <C> <C> <C> <C> <C>
Changes from operations:
Net investment income (loss) ................................... $ 33 $ 35 $ 4,821 $ (7) $ 11
Net realized gains (losses) on sales of investments
in portfolio shares ........................................... 3,161 (115) 138 -- (84)
Net change in unrealized appreciation
(depreciation) of investments in portfolio shares ............ (5,024) (340) 2,927 61 160
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations ....... (1,830) (420) 7,886 54 87
-----------------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments ................................. 10,037 3,831 17,497 1,233 47,922
Contract redemptions ........................................... (847) (37) (3,560) -- (2,109)
Net transfers .................................................. (67,298) (7,154) -- -- (18,944)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from contract owners' transactions ......................... (58,108) (3,360) 13,937 1,233 26,869
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets .................... (59,938) (3,780) 21,823 1,287 26,956
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, beginning of year .................................... 70,140 7,475 47,596 -- 23,609
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (Note 6) ......................... $ 10,202 $ 3,695 $ 69,419 $ 1,287 $ 50,565
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
NEUBERGER
BERMAN
ADVISERS
MANAGEMENT STRONG
TRUST VARIABLE
PORTFOLIOS INSURANCE
(CONTINUED) FUNDS VAN ECK WORLDWIDE INSURANCE TRUST FUNDS
----------- --------- ----------------------------------------------------------------
STRONG
MID CAP OPPORTUNITY EMERGING HARD REAL COMBINED
PARTNERS GROWTH II FUND II BOND MARKETS ASSETS ESTATE TOTAL
--------------------------------------------------------------------------------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 707 $ 51 $ 6,235 $ 832 $ -- $ -- $ -- $ 295,859
175 971 1,876 232 214 107 20 66,903
23 127 245 30 28 13 3 8,726
--------------------------------------------------------------------------------------------- ----------
<PAGE>
198 1,098 2,121 262 242 120 23 75,629
--------------------------------------------------------------------------------------------- ----------
509 (1,047) 4,114 570 (242) (120) (23) 220,230
--------------------------------------------------------------------------------------------- ----------
1,695 16,039 1,523 (786) 379 (525) (17) 898,277
(518) 53,918 11,123 (1,587) 21,124 91 (240) 838,718
--------------------------------------------------------------------------------------------- ----------
1,177 69,957 12,646 (2,373) 21,503 (434) (257) 1,736,995
--------------------------------------------------------------------------------------------- ----------
$ 1,686 $ 68,910 $ 16,760 $ (1,803) $ 21,261 $ (554) $ (280) $1,957,225
============================================================================================= ==========
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
NEUBERGER
BERMAN
ADVISERS
MANAGEMENT STRONG
TRUST VARIABLE
PORTFOLIOS INSURANCE
(CONTINUED) FUNDS VAN ECK WORLDWIDE INSURANCE TRUST FUNDS
----------- --------- -----------------------------------------------------------------
STRONG
MID CAP OPPORTUNITY EMERGING HARD REAL COMBINED
PARTNERS GROWTH II FUND II BOND MARKETS ASSETS ESTATE TOTAL
--------------------------------------------------------------------------------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 509 $ (1,047) $ 4,114 $ 570 $ (242) $ (120) $ (23) $ 220,230
1,695 16,039 1,523 (786) 379 (525) (17) 898,277
(518) 53,918 11,123 (1,587) 21,124 91 (240) 838,718
--------------------------------------------------------------------------------------------- ----------
1,686 68,910 16,760 (1,803) 21,261 (554) (280) 1,957,225
--------------------------------------------------------------------------------------------- ----------
17,340 117,223 126,886 6,718 34,646 (140) 1,015 13,042,294
(43) (2,366) (8,456) -- (179) (141) (19) (558,297)
(19,839) 43,892 (18,400) 3,618 9,334 23,409 3,894 --
--------------------------------------------------------------------------------------------- ----------
(2,542) 158,749 100,030 10,336 43,801 23,128 4,890 12,483,997
--------------------------------------------------------------------------------------------- ----------
<PAGE>
(856) 227,659 116,790 8,533 65,062 22,574 4,610 14,441,222
--------------------------------------------------------------------------------------------- ----------
19,150 8,914 19,887 14,308 1,285 -- -- 1,249,398
--------------------------------------------------------------------------------------------- ----------
$ 18,294 $236,573 $136,677 $ 22,841 $ 66,347 $ 22,574 $ 4,610 $15,690,620
============================================================================================= ==========
</TABLE>
9
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENTS OF OPERATIONS
FOR THE PERIOD APRIL 29, 1998 THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
=================================================================================================================================
AMERICAN
CENTURY
VARIABLE
THE ALGER AMERICAN FUNDS PORTFOLIOS
-------------------------------------------------- ----------
LEVERAGED SMALL INCOME AND
GROWTH ALL CAP MIDCAP CAPITALIZATION GROWTH
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends from investments in portfolio shares .............. $ 772 $ 220 $ 1 $ 608 $ 369
Expenses:
Mortality and expense risk fees ............................. 211 119 75 97 150
Administrative fees ......................................... 28 16 10 13 20
-------------------------------------------------------------------------------------------------------------------------------
Total expenses ............................................. 239 135 85 110 170
-------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) ............................ 533 85 (84) 498 199
-------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized appreciation (depreciation) of
investments:
Net realized gains (losses) on sales of investments
in portfolio shares .................................... (1,963) (1,829) (14) (1,224) (565)
Net change in unrealized appreciation (depreciation)
of investments in portfolio shares ..................... 15,743 6,444 4,151 32 5,620
-------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments in portfolio shares ....... 13,780 4,615 4,137 (1,192) 5,055
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations .. $ 14,313 $ 4,700 $ 4,053 $ (694) $ 5,254
=================================================================================================================================
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD APRIL 29, 1998 THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
===============================================================================================================================
AMERICAN
CENTURY
VARIABLE
THE ALGER AMERICAN FUNDS PORTFOLIOS
-------------------------------------------------- ---------
LEVERAGED SMALL INCOME AND
GROWTH ALL CAP MIDCAP CAPITALIZATION GROWTH
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Changes from operations:
Net investment income (loss)................................ $ 533 $ 85 $ (84) $ 498 $ 199
Net realized gains (losses) on sales of investments
in portfolio shares........................................ (1,963) (1,829) (14) (1,224) (565)
Net change in unrealized appreciation
(depreciation) of investments in portfolio shares........... 15,743 6,444 4,151 32 5,620
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 14,313 4,700 4,053 (694) 5,254
-------------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments.............................. 21,483 18,860 23,859 15,306 16,194
Contract redemptions ....................................... (359) -- -- (23) (411)
Net transfers............................................... 67,413 25,033 -- (5,338) 54,093
-------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
from contract owners' transactions...................... 88,537 43,893 23,859 9,945 69,876
-------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets ........................... 102,850 48,593 27,912 9,251 75,130
-------------------------------------------------------------------------------------------------------------------------------
Net assets, beginning of period .............................. -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ............................ $102,850 $ 48,593 $ 27,912 $ 9,251 $ 75,130
=================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================
AMERICAN CENTURY
VARIABLE PORTFOLIOS
(CONTINUED) BERGER INSTITUTIONAL PRODUCTS TRUST CONSECO SERIES TRUST PORTFOLIOS
<PAGE>
------------------------ -------------------------------------------- ----------------------------------
GROWTH AND SMALL BIAM FIXED
INTERNATIONAL VALUE 100 INCOME COMPANY INTERNATIONAL BALANCED EQUITY INCOME
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ -- $ -- $ -- $ 316 $ -- $ -- $ 3,141 $ 150 $ 1,767
43 123 -- 184 40 -- 732 221 309
6 16 -- 24 5 -- 95 29 40
-----------------------------------------------------------------------------------------------------------
49 139 -- 208 45 -- 827 250 349
-----------------------------------------------------------------------------------------------------------
(49) (139) -- 108 (45) -- 2,314 (100) 1,418
-----------------------------------------------------------------------------------------------------------
(1,155) (1) -- (653) (4,450) -- (1,428) (2,515) (61)
284 813 -- 6,163 -- -- 3,582 2,456 (111)
-----------------------------------------------------------------------------------------------------------
(871) 812 -- 5,510 (4,450) -- 2,154 (59) (172)
-----------------------------------------------------------------------------------------------------------
$ (920) $ 673 $ -- $ 5,618 $ (4,495) $ -- $ 4,468 $ (159) $ 1,246
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===========================================================================================================
AMERICAN CENTURY
VARIABLE PORTFOLIOS
(CONTINUED) BERGER INSTITUTIONAL PRODUCTS TRUST CONSECO SERIES TRUST PORTFOLIOS
------------------------ -------------------------------------------- ----------------------------------
GROWTH AND SMALL BIAM FIXED
INTERNATIONAL VALUE 100 INCOME COMPANY INTERNATIONAL BALANCED EQUITY INCOME
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (49) $ (139) $ -- $ 108 $ (45) $ -- $ 2,314 $ (100) $ 1,418
(1,155) (1) -- (653) (4,450) -- (1,428) (2,515) (61)
284 813 -- 6,163 -- -- 3,582 2,456 (111)
-----------------------------------------------------------------------------------------------------------
(920) 673 -- 5,618 (4,495) -- 4,468 (159) 1,246
-----------------------------------------------------------------------------------------------------------
13,493 (1,099) -- 61,371 6,911 -- 219,964 51,835 66,678
(22) -- -- (1,483) (20) -- (81) (70) (3,366)
<PAGE>
(5,100) 43,873 -- (17,769) (2,396) -- (46,554) (16,050) 24,330
-----------------------------------------------------------------------------------------------------------
8,371 42,774 -- 42,119 4,495 -- 173,329 35,715 87,642
-----------------------------------------------------------------------------------------------------------
7,451 43,447 -- 47,737 -- -- 177,797 35,556 88,888
-----------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------
$ 7,451 $ 43,447 $ -- $ 47,737 $ -- $ -- $177,797 $ 35,556 $ 88,888
===========================================================================================================
</TABLE>
11
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENTS OF OPERATIONS - CONTINUED
FOR THE PERIOD APRIL 29, 1998 THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
===============================================================================================================================
CONSECO SERIES DREYFUS
TRUST PORTFOLIOS VARIABLE
(CONTINUED) INVESTMENT
----------------------- -----------
DREYFUS
SOCIALLY DREYFUS
GOVERNMENT MONEY RESPONSIBLE STOCK DISCIPLINED
SECURITIES MARKET GROWTH INDEX STOCK
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends from investments in portfolio shares ................... $ 618 $ 1,118 $ 137 $ 323 $ 117
Expenses:
Mortality and expense risk fees .................................. 119 258 11 221 49
Administrative fees .............................................. 15 34 2 29 6
-------------------------------------------------------------------------------------------------------------------------------
Total expenses .................................................. 134 292 13 250 55
-------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) ................................. 484 826 124 73 62
-------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized appreciation (depreciation) of
investments:
Net realized gains (losses) on sales of investments
in portfolio shares ......................................... 62 -- 1 104 17
Net change in unrealized appreciation (depreciation)
of investments in portfolio shares .......................... 19 -- 587 2,482 3,431
-------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Net gain (loss) on investments in portfolio shares ......... 81 -- 588 2,586 3,448
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations .... $ 565 $ 826 $ 712 $ 2,659 $ 3,510
===============================================================================================================================
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED
FOR THE PERIOD APRIL 29, 1998 THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
===============================================================================================================================
CONSECO SERIES DREYFUS
TRUST PORTFOLIOS VARIABLE
(CONTINUED) INVESTMENT
----------------------- -----------
DREYFUS
SOCIALLY DREYFUS
GOVERNMENT MONEY RESPONSIBLE STOCK DISCIPLINED
SECURITIES MARKET GROWTH INDEX STOCK
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Changes from operations:
Net investment income (loss) ..................................... $ 484 $ 826 $ 124 $ 73 $ 62
Net realized gains (losses) on sales of investments
in portfolio shares ............................................ 62 -- 1 104 17
Net change in unrealized appreciation
(depreciation) of investments in portfolio shares .............. 19 -- 587 2,482 3,431
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations ........ 565 826 712 2,659 3,510
-------------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments ................................... 52,528 292,964 3,053 48,640 56
Contract redemptions ............................................. (33) (12,500) -- (152) (293)
Net transfers .................................................... (26,535) (264,421) -- 770 21,582
-------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
from contract owners' transactions .......................... 25,960 16,043 3,053 49,258 21,345
-------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets ................................ 26,525 16,869 3,765 51,917 24,855
-------------------------------------------------------------------------------------------------------------------------------
Net assets, beginning of period .................................... -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ................................. $ 26,525 $ 16,869 $ 3,765 $ 51,917 $ 24,855
===============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
12
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
DREYFUS
VARIABLE
INVESTMENT
(CONTINUED) FEDERATED INSURANCE SERIES FUNDS INVESCO VARIABLE INV. FUNDS JANUS ASPEN SERIES PORTFOLIOS
-------------- ------------------------------------------- ------------------------------ ---------------------------------------
INTERNATIONAL HIGH INCOME INTERNATIONAL EQUITY AGGRESSIVE WORLDWIDE
VALUE BOND II EQUITY II UTILITY II INCOME HIGH YIELD GROWTH GROWTH GROWTH
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 604 $ -- $ -- $ -- $ -- $ 792 $ -- $ 39 $ 108
33 124 2 86 -- 31 19 126 234
4 16 -- 11 -- 4 3 17 31
-----------------------------------------------------------------------------------------------------------------------------------
37 140 2 97 -- 35 22 143 265
-----------------------------------------------------------------------------------------------------------------------------------
567 (140) (2) (97) -- 757 (22) (104) (157)
-----------------------------------------------------------------------------------------------------------------------------------
111 (706) 2 385 -- (63) (2,381) 379 (431)
(134) 745 -- 2,657 -- (821) 834 13,553 5,866
-----------------------------------------------------------------------------------------------------------------------------------
(23) 39 2 3,042 -- (884) (1,547) 13,932 5,435
-----------------------------------------------------------------------------------------------------------------------------------
$ 544 $ (101) $ -- $ 2,945 $ -- $ (127) $ (1,569) $ 13,828 $ 5,278
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
DREYFUS
VARIABLE
INVESTMENT
(CONTINUED) FEDERATED INSURANCE SERIES FUNDS INVESCO VARIABLE INV. FUNDS JANUS ASPEN SERIES PORTFOLIOS
-------------- ------------------------------------------- ------------------------------ ---------------------------------------
<PAGE>
INTERNATIONAL HIGH INCOME INTERNATIONAL EQUITY AGGRESSIVE WORLDWIDE
VALUE BOND II EQUITY II UTILITY II INCOME HIGH YIELD GROWTH GROWTH GROWTH
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 567 $ (140) $ (2) $ (97) $ -- $ 757 $ (22) $ (104) $ (157)
111 (706) 2 385 -- (63) (2,381) 379 (431)
(134) 745 -- 2,657 -- (821) 834 13,553 5,866
-----------------------------------------------------------------------------------------------------------------------------------
544 (101) -- 2,945 -- (127) (1,569) 13,828 5,278
-----------------------------------------------------------------------------------------------------------------------------------
7,843 47,326 -- 28,678 -- 8,259 2,351 16,592 49,723
(700) (3,393) -- (4,033) -- (700) -- (359) (771)
-- (11,850) -- -- -- -- 2,454 62,255 24,018
-----------------------------------------------------------------------------------------------------------------------------------
7,143 32,083 -- 24,645 -- 7,559 4,805 78,488 72,970
-----------------------------------------------------------------------------------------------------------------------------------
7,687 31,982 -- 27,590 -- 7,432 3,236 92,316 78,248
-----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
$ 7,687 $ 31,982 $ -- $ 27,590 $ -- $ 7,432 $ 3,236 $ 92,316 $ 78,248
===================================================================================================================================
</TABLE>
13
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENTS OF OPERATIONS - CONTINUED
FOR THE PERIOD APRIL 29, 1998 THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
===================================================================================================================================
NEUBERGER
BERMAN
ADVISERS
MANAGEMENT
LAZARD RETIREMENT TRUST
SERIES PORTFOLIOS PORTFOLIOS
------------------ ----------
MITCHELL
LORD ABBETT HUTCHINS
<PAGE>
SERIES TRUST SERIES TRUST LIMITED
GROWTH AND GROWTH AND MATURITY
EQUITY SMALL CAP INCOME INCOME BOND
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends from investments in portfolio shares .................. $ 238 $ -- $ 2,982 $ -- $ --
Expenses:
Mortality and expense risk fees ................................. 106 11 245 -- 31
Administrative fees ............................................. 14 1 32 -- 4
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses ................................................. 120 12 277 -- 35
-----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) ................................ 118 (12) 2,705 -- (35)
-----------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized appreciation (depreciation) of
investments:
Net realized gains (losses) on sales of investments
in portfolio shares .......................................... 20 -- (142) -- --
Net change in unrealized appreciation (depreciation)
of investments in portfolio shares ........................... 4,437 230 603 -- 116
-----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments in portfolio shares .......... 4,457 230 461 -- 116
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations ..... $ 4,575 $ 218 $ 3,166 $ -- $ 81
===================================================================================================================================
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED
FOR THE PERIOD APRIL 29, 1998 THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
===================================================================================================================================
NEUBERGER
BERMAN
ADVISERS
MANAGEMENT
LAZARD RETIREMENT TRUST
SERIES PORTFOLIOS PORTFOLIOS
------------------ ----------
MITCHELL
LORD ABBETT HUTCHINS
SERIES TRUST SERIES TRUST LIMITED
GROWTH AND GROWTH AND MATURITY
EQUITY SMALL CAP INCOME INCOME BOND
<PAGE>
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Changes from operations:
Net investment income (loss) .................................... $ 118 $ (12) $ 2,705 $ -- $ (35)
Net realized gains (losses) on sales of investments
in portfolio shares ............................................ 20 -- (142) -- --
Net change in unrealized appreciation
(depreciation) of investments in portfolio shares ............. 4,437 230 603 -- 116
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations ........ 4,575 218 3,166 -- 81
-----------------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments .................................. (89) (82) 45,830 -- 3,656
Contract redemptions ............................................ (359) -- (1,400) -- --
Net transfers ................................................... 66,013 7,339 -- -- 19,872
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from contract owners' transactions .......................... 65,565 7,257 44,430 -- 23,528
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets ................................ 70,140 7,475 47,596 -- 23,609
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, beginning of period ................................... -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ................................. $ 70,140 $ 7,475 $ 47,596 $ -- $ 23,609
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
NEUBERGER
BERMAN
ADVISERS
MANAGEMENT STRONG
TRUST VARIABLE
PORTFOLIOS INSURANCE
(CONTINUED) FUNDS VAN ECK WORLDWIDE INSURANCE TRUST FUNDS
----------- --------- ----------------------------------------------------------------
STRONG
MID CAP OPPORTUNITY EMERGING HARD REAL COMBINED
PARTNERS GROWTH II FUND II BOND MARKETS ASSETS ESTATE TOTAL
--------------------------------------------------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ -- $ -- $ 40 $ -- $ -- $ -- $ -- $ 14,460
63 33 84 9 4 (1) -- 4,202
<PAGE>
8 4 11 1 1 -- -- 550
--------------------------------------------------------------------------------------------- ------------
71 37 95 10 5 (1) -- 4,752
--------------------------------------------------------------------------------------------- ------------
(71) (37) (55) (10) (5) 1 -- 9,708
--------------------------------------------------------------------------------------------- ------------
1,111 (13) (52) -- -- -- -- (17,454)
724 1,499 1,405 (117) 262 -- -- 83,555
--------------------------------------------------------------------------------------------- ------------
1,835 1,486 1,353 (117) 262 -- -- 66,101
--------------------------------------------------------------------------------------------- ------------
$ 1,764 $ 1,449 $ 1,298 $ (127) $ 257 $ 1 $ -- $ 75.809
============================================================================================= ============
</TABLE>
<TABLE>
<CAPTION>
=====================================================================================================================
NEUBERGER
BERMAN
ADVISERS
MANAGEMENT STRONG
TRUST VARIABLE
PORTFOLIOS INSURANCE
(CONTINUED) FUNDS VAN ECK WORLDWIDE INSURANCE TRUST FUNDS
----------- --------- ----------------------------------------------------------------
STRONG
MID CAP OPPORTUNITY EMERGING HARD REAL COMBINED
PARTNERS GROWTH II FUND II BOND MARKETS ASSETS ESTATE TOTAL
--------------------------------------------------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (71) $ (37) $ (55) $ (10) $ (5) $ 1 $ -- $ 9,708
1,111 (13) (52) -- -- -- -- (17,454)
724 1,499 1,405 (117) 262 -- -- 83,555
--------------------------------------------------------------------------------------------- ------------
1,764 1,449 1,298 (127) 257 1 -- 75,809
--------------------------------------------------------------------------------------------- ------------
18,499 8,165 19,289 14,435 1,028 21,918 -- 1,205,517
-- (700) (700) -- -- -- -- (31,928)
(1,113) -- -- -- -- (21,919) -- --
<PAGE>
--------------------------------------------------------------------------------------------- ------------
17,386 7,465 18,589 14,435 1,028 (1) -- 1,173,589
--------------------------------------------------------------------------------------------- ------------
19,150 8,914 19,887 14,308 1,285 -- -- 1,249,398
--------------------------------------------------------------------------------------------- ------------
-- -- -- -- -- -- -- --
--------------------------------------------------------------------------------------------- ------------
$ 19,150 $ 8,914 $ 19,887 $ 14,308 $ 1,285 $ -- $ -- $ 1,249,398
============================================================================================= ============
</TABLE>
15
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
================================================================================
(1) GENERAL
Conseco Variable Insurance Company (the "Company") established two separate
accounts within Conseco Variable Annuity Account G ("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 Conseco 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
<PAGE>
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
Balanced Portfolio
Equity Portfolio
Fixed Income 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.
Equity Income Fund
High Yield Fund
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
<PAGE>
Partners Portfolio
STRONG VARIABLE INSURANCE FUNDS, INC.
Mid Cap 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.
FEDERAL INCOME TAXES
No provision for federal income taxes has been made in the accompanying
financial statements because the operations of Account G 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 Account G and are not taxable
until received by the contract owner or beneficiary in the form of annuity
payments or other distributions.
16
<PAGE>
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT G
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999 AND 1998
================================================================================
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 was
$77,960,412 and $1,908,738 for the year ended December 31, 1999 and for the
period April 29, 1998 through December 31, 1998, respectively. The aggregate
proceeds from sales of investments in portfolio shares were $65,241,882 and
$724,111 for the year ended December 31, 1999 and for the period April 29, 1998
through December 31, 1998, respectively.
(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 $66,903 and $4,202 for the year ended December 31, 1999 and for
the period April 29, 1998 through December 31, 1998, respectively.
Pursuant to an agreement between Account G and the Company (which may be
terminated by the Company at any time), the Company provides sales and
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
<PAGE>
fee of $30, unless the value of the contract is $25,000 or greater. This fee is
recorded as a redemption in the accompanying Statements of Changes in Net
Assets. There were no sales and administrative charges for both the year ended
December 31, 1999, and 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 $8,726 and $550 for the year
ended December 31, 1999, and for the period April 29, 1998 through December 31,
1998, respectively.
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. This
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 both the year ended December 31, 1999, and 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 Securities, Inc.
(formerly Conseco Financial Services, Inc. prior to its name change in August
1999), an affiliate of the Company.
(6) NET ASSETS
Net assets consisted of the following at December 31, 1999:
--------------------------------------------------------------------------------
Proceeds from the sales of units since organization,
less cost of units redeemed .................................... $13,657,586
Undistributed net investment income .............................. 229,938
Undistributed net realized gains on sales of investments ......... 880,823
Net unrealized appreciation of investments ....................... 922,273
--------------------------------------------------------------------------------
Net assets ................................................... $15,690,620
================================================================================
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
TO THE BOARD OF DIRECTORS OF CONSECO VARIABLE
INSURANCE COMPANY AND CONTRACT OWNERS OF
CONSECO VARIABLE ANNUITY ACCOUNT G
<PAGE>
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 Conseco Variable Annuity
Account G (the "Account") at December 31, 1999, and the results of its
operations and the changes in its net assets for the year ended December 31,
1999 and from inception (April 29, 1998) through December 31, 1998, in
conformity with accounting principles generally accepted in the United States.
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 audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States,
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 audits, which included
confirmation of portfolio shares owned at December 31, 1999 by correspondence
with the funds, provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
---------------------------------
Indianapolis, Indiana
February 10, 2000
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Board of Directors
Conseco Variable Insurance Company
In our opinion, the accompanying balance sheet and the related statements
of operations, shareholder's equity and cash flows present fairly, in all
material respects, the financial position of Conseco Variable Insurance Company
(the "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. 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 of these statements in
accordance with auditing standards generally accepted in the United States 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 audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
--------------------------------
PricewaterhouseCoopers LLP
April 13, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
BALANCE SHEET
December 31, 1999 and 1998
(Dollars in millions)
ASSETS
1999 1998
---- ----
<S> <C> <C>
Investments:
Actively managed fixed maturities at fair value (amortized cost:
1999 - $1,491.8; 1998 - $1,520.5)............................................... $1,398.7 $1,524.1
Equity securities at fair value (cost: 1999 - $47.8 million; 1998 - $46.0 million). 49.8 45.7
Mortgage loans..................................................................... 108.0 110.2
Policy loans....................................................................... 75.5 79.6
Other invested assets ............................................................. 50.8 120.3
-------- --------
Total investments............................................................ 1,682.8 1,879.9
Cash and cash equivalents.............................................................. 81.5 48.4
Accrued investment income.............................................................. 35.6 30.5
Cost of policies purchased............................................................. 131.6 98.0
Cost of policies produced.............................................................. 147.6 82.5
Reinsurance receivables................................................................ 26.4 22.2
Goodwill............................................................................... 45.3 46.7
Assets held in separate accounts....................................................... 1,457.0 696.4
Other assets........................................................................... 6.0 7.1
-------- --------
Total assets................................................................. $3,613.8 $2,911.7
======== ========
</TABLE>
(continued on next page)
The accompanying notes are an
integral part of the financial
statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
BALANCE SHEET (Continued)
December 31, 1999 and 1998
(Dollars in millions, except per share amount)
LIABILITIES AND SHAREHOLDER'S EQUITY
1999 1998
---- ----
<S> <C> <C>
Liabilities:
Insurance liabilities:
Interest-sensitive products..................................................... $1,289.2 $1,365.2
Traditional products............................................................ 242.8 246.2
Claims payable and other policyholder funds..................................... 64.1 62.6
Liabilities related to separate accounts........................................ 1,457.0 696.4
Income tax liabilities............................................................. 33.4 37.5
Investment borrowings.............................................................. 135.1 65.7
Other liabilities.................................................................. 16.5 33.0
-------- --------
Total liabilities.......................................................... 3,238.1 2,506.6
-------- --------
Shareholder's equity:
Common stock and additional paid-in capital (par value $4.80 per share, 1,065,000
shares authorized, 1,043,565 shares issued and outstanding).................... 380.8 380.8
Accumulated other comprehensive loss............................................... (28.4) (.8)
Retained earnings.................................................................. 23.3 25.1
-------- --------
Total shareholder's equity................................................. 375.7 405.1
-------- --------
Total liabilities and shareholder's equity................................. $3,613.8 $2,911.7
======== ========
</TABLE>
The accompanying notes are an
integral part of the financial
statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
STATEMENT OF OPERATIONS
for the years ended December 31, 1999, 1998 and 1997
(Dollars in millions)
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Revenues:
Insurance policy income.......................................... $ 72.1 $ 73.6 $ 75.7
Net investment income............................................ 297.6 198.0 222.6
Net gains (losses) from sale of investments...................... (10.0) 18.5 13.3
------ ------ ------
Total revenues............................................. 359.7 290.1 311.6
------ ------ ------
Benefits and expenses:
Insurance policy benefits........................................ 266.8 170.6 191.0
Amortization..................................................... 13.8 33.6 27.1
Other operating costs and expenses............................... 40.3 38.7 32.2
------ ------ ------
Total benefits and expenses................................ 320.9 242.9 250.3
------ ------ ------
Income before income taxes................................. 38.8 47.2 61.3
Income tax expense................................................... 13.6 16.6 22.1
------ ------ ------
Net income................................................. $ 25.2 $ 30.6 $ 39.2
====== ====== ======
</TABLE>
The accompanying notes are an
integral part of the financial
statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
STATEMENT OF SHAREHOLDER'S EQUITY
for the years ended December 31, 1999, 1998 and 1997
(Dollars in millions)
Common stock Accumulated other
and additional comprehensive Retained
Total paid-in capital income (loss) earnings
----- --------------- ------------- --------
<S> <C> <C> <C> <C>
Balance, December 31, 1996................................. $396.9 $380.8 $ (4.6) $ 20.7
Comprehensive income, net of tax:
Net income............................................ 39.2 - - 39.2
Change in unrealized appreciation (depreciation) of
securities (net of applicable income tax expense
of $7.2)........................................... 13.3 - 13.3 -
------
Total comprehensive income........................ 52.5 - - -
Dividends on common stock............................... (32.5) - - (32.5)
------ ------ ------ ------
Balance, December 31, 1997................................. 416.9 380.8 8.7 27.4
Comprehensive income, net of tax:
Net income............................................ 30.6 - - 30.6
Change in unrealized appreciation (depreciation) of
securities (net of applicable income tax benefit
of $5.1)........................................... (9.5) - (9.5) -
------
Total comprehensive income........................ 21.1
Dividends on common stock............................... (32.9) - - (32.9)
------ ------ ------ ------
Balance, December 31, 1998................................. 405.1 380.8 (.8) 25.1
Comprehensive loss, net of tax:
Net income.............................................. 25.2 - - 25.2
Change in unrealized depreciation of securities (net
of applicable income tax benefit of $15.7 million).... (27.6) - (27.6) -
------
Total comprehensive loss.......................... (2.4)
Dividends on common stock............................... (27.0) - - (27.0)
------ ------ ------ ------
Balance, December 31, 1999................................. $375.7 $380.8 $(28.4) $ 23.3
====== ====== ====== ======
</TABLE>
The accompanying notes are an
integral part of the financial
statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
for the years ended December 31, 1999, 1998 and 1997
(Dollars in millions)
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................................................ $ 25.2 $ 30.6 $ 39.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization................................................ 13.8 43.0 27.1
Income taxes................................................ 11.4 (1.2) 6.7
Insurance liabilities....................................... 162.6 120.0 95.2
Accrual and amortization of investment income............... (11.4) 1.6 .3
Deferral of cost of policies produced....................... (62.7) (35.3) (31.8)
Net (gains) losses from sale of investments................. 10.0 (18.5) (13.3)
Other....................................................... .7 (38.3) (4.6)
--------- --------- -------
Net cash provided by operating activities................... 149.6 101.9 118.8
--------- --------- -------
Cash flows from investing activities:
Sales of investments.............................................. 904.8 1,185.0 755.2
Maturities and redemptions........................................ 109.0 145.5 150.4
Purchases of investments.......................................... (1,502.0) (1,420.7) (923.5)
--------- --------- -------
Net cash used by investing activities....................... (488.2) (90.2) (17.9)
--------- --------- -------
Cash flows from financing activities:
Deposits to insurance liabilities................................. 654.1 400.4 255.9
Investment borrowings............................................. 69.4 4.7 12.6
Withdrawals from insurance liabilities............................ (324.8) (385.0) (302.2)
Dividends paid on common stock.................................... (27.0) (32.9) (32.5)
--------- --------- -------
Net cash provided (used) by financing activities............ 371.7 (12.8) (66.2)
--------- --------- -------
Net increase (decrease) in cash and cash equivalents........ 33.1 (1.1) 34.7
Cash and cash equivalents, beginning of year......................... 48.4 49.5 14.8
--------- --------- -------
Cash and cash equivalents, end of year............................... $ 81.5 $ 48.4 $ 49.5
========= ========= =======
</TABLE>
The accompanying notes are an
integral part of the financial
statements.
F-6
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Conseco Variable Insurance Company ("we" or the "Company") markets
tax-qualified annuities and certain employee benefit-related insurance products
through professional independent agents. Prior to its name change in October
1998, the Company was named Great American Reserve Insurance Company. Since
August 1995, the Company has been a wholly owned subsidiary of Conseco, Inc.
("Conseco"), a financial services holding company operating throughout the
United States. Conseco's life insurance subsidiaries develop, market and
administer supplemental health insurance, annuity, individual life insurance,
individual and group major medical insurance and other insurance products.
Conseco's finance subsidiaries originate, purchase, sell and service consumer
and commercial finance loans. On March 31, 2000, Conseco announced its plan to
explore the sale of its finance subsidiaries and its hiring of Lehman Brothers
to assist in the planned sale.
The following summary explains the accounting policies we use to arrive at
the more significant numbers in our financial statements. We prepare our
financial statements in accordance with generally accepted accounting principles
("GAAP"). We follow the accounting standards established by the Financial
Accounting Standards Board, the American Institute of Certified Public
Accountants and the Securities and Exchange Commission. We reclassified certain
amounts in our 1998 and 1997 financial statements and notes to conform with the
1999 presentation.
Investments
Fixed maturities are securities that mature more than one year after
issuance and include bonds, notes receivable and redeemable preferred stock.
Fixed maturities that we may sell prior to maturity are classified as actively
managed and are carried at estimated fair value, with any unrealized gain or
loss, net of tax and related adjustments, recorded as a component of
shareholder's equity. Fixed maturity securities that we intend to sell in the
near term are classified as trading and included in other invested assets. We
include any unrealized gain or loss on trading securities in net investment
gains.
Equity securities include investments in common stocks and non-redeemable
preferred stock. We carry these investments at estimated fair value. We record
any unrealized gain or loss, net of tax and related adjustments, as a component
of shareholder's equity.
Mortgage loans held in our investment portfolio are carried at amortized
unpaid balances, net of provisions for estimated losses.
Policy loans are stated at their current unpaid principal balances.
Other invested assets include trading securities and certain
non-traditional investments. Non-traditional investments include investments in
certain limited partnerships, mineral rights and promissory notes; we account
for them using either the cost method, or for investments in partnerships over
whose operations the Company exercises significant influence, the equity method.
We defer any fees received or costs incurred when we originate investments
(primarily mortgage loans). We amortize fees, costs, discounts and premiums as
yield adjustments over the contractual lives of the investments. We consider
anticipated prepayments on mortgage-backed securities in determining estimated
future yields on such securities.
When we sell a security (other than a trading security), we report the
difference between our sale proceeds and its amortized cost (determined based on
specific identification) as an investment gain or loss.
We regularly evaluate all of our investments based on current economic
conditions, credit loss experience and other investee-specific developments. If
there is a decline in a security's net realizable value that is other than
temporary, we treat it as a realized loss and reduce our cost basis of the
security to its estimated fair value.
F-7
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Cash and Cash Equivalents
Cash and cash equivalents include commercial paper, invested cash and other
investments purchased with maturities of less than three months. We carry them
at amortized cost, which approximates their estimated fair value.
Separate Accounts
Separate accounts are funds on which investment income and gains or losses
accrue directly to certain policyholders. The assets of these accounts are
legally segregated. They are not subject to the claims that may arise out of any
other business of the Company. We report separate account assets at market
value; the underlying investment risks are assumed by the contract holders. We
record the related liabilities at amounts equal to the market value of the
underlying assets. We record the fees earned for administrative and
contractholder services performed for the separate accounts in insurance policy
income.
Cost of Policies Produced
The costs that vary with, and are primarily related to, producing new
insurance business are referred to as cost of policies produced. We amortize
these costs using the interest rate credited to the underlying policy: (i) in
relation to the estimated gross profits for universal life-type and
investment-type products; or (ii) in relation to future anticipated premium
revenue for other products.
When we realize a gain or loss on investments backing our universal life or
investment-type products, we adjust the amortization to reflect the change in
estimated gross profits from the products due to the current realized gain or
loss and the effect of the event on future investment yields. We also adjust the
cost of policies produced for the change in amortization that would have been
recorded if actively managed fixed maturity securities had been sold at their
stated aggregate fair value and the proceeds reinvested at current yields. We
include the impact of this adjustment in accumulated other comprehensive income
(loss) within shareholder's equity.
Each year, we evaluate the recoverability of the unamortized balance of the
cost of policies produced. We consider estimated future gross profits or future
premiums, expected mortality or morbidity, interest earned and credited rates,
persistency and expenses in determining whether the balance is recoverable.
Cost of Policies Purchased
The cost assigned to the right to receive future cash flows from contracts
existing at the date of an acquisition is referred to as the cost of policies
purchased. The balance of this account is amortized, evaluated for recovery, and
adjusted for the impact of unrealized gains (losses) in the same manner as the
cost of policies produced described above.
The discount rate we use to determine the value of the cost of policies
purchased is the rate of return we need to earn in order to invest in the
business being acquired. In determining this required rate of return, we
consider many factors including: (i) the magnitude of the risks associated with
each of the actuarial assumptions used in determining expected future cash
flows; (ii) the cost of our capital required to fund the acquisition; (iii) the
likelihood of changes in projected future cash flows that might occur if there
are changes in insurance regulations and tax laws; (iv) the acquired company's
compatibility with other Company activities that may favorably affect future
cash flows; (v) the complexity of the acquired company; and (vi) recent prices
(i.e., discount rates used in determining valuations) paid by others to acquire
similar blocks of business.
Goodwill
Goodwill is the excess of the amount paid to acquire the Company over the
fair value of its net assets. Our analysis indicates that the anticipated
ongoing cash flows from the earnings of the Company extends significantly beyond
the maximum 40-year period allowed for goodwill amortization. Accordingly, we
amortize goodwill on the straight-line basis generally over a 40-year period. At
December 31, 1999, the total accumulated amortization of goodwill was $16.1
million. We continually
F-8
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
monitor the value of our goodwill based on our estimates of future earnings. We
determine whether goodwill is fully recoverable from projected undiscounted net
cash flows from our earnings over the remaining amortization period. If we were
to determine that changes in such projected cash flows no longer support the
recoverability of goodwill over the remaining amortization period, we would
reduce its carrying value with a corresponding charge to expense or shorten the
amortization period (no such changes have occurred).
Recognition of Insurance Policy Income and Related Benefits and Expenses
on Insurance Contracts
Generally, we recognize insurance premiums for traditional life and
accident and health contracts as earned over the premium-paying periods. We
establish reserves for future benefits on a net-level premium method based upon
assumptions as to investment yields, mortality, morbidity, withdrawals and
dividends. We record premiums for universal life-type and investment-type
contracts that do not involve significant mortality or morbidity risk as
deposits to insurance liabilities. Revenues for these contracts consist of
mortality, morbidity, expense and surrender charges. We establish reserves for
the estimated present value of the remaining net costs of all reported and
unreported claims.
Reinsurance
In the normal course of business, we seek to limit our exposure to loss on
any single insured or to certain groups of policies by ceding reinsurance to
other insurance enterprises. We currently retain no more than $.5 million of
mortality risk on any one policy. We diversify the risk of reinsurance loss by
using a number of reinsurers that have strong claims-paying ratings. If any
reinsurer could not meet its obligations, the Company would assume the
liability. The likelihood of a material loss being incurred as the result of the
failure of one of our reinsurers is considered remote. The cost of reinsurance
is recognized over the life of the reinsured policies using assumptions
consistent with those used to account for the underlying policy. The cost of
reinsurance ceded totaled $23.1 million, $21.0 million and $24.2 million in
1999, 1998 and 1997, respectively. A receivable is recorded for the reinsured
portion of insurance policy benefits paid and liabilities for insurance
products. Reinsurance recoveries netted against insurance policy benefits
totaled $20.8 million, $21.8 million and $14.9 million in 1999, 1998 and 1997,
respectively.
Income Taxes
Our income tax expense includes deferred income taxes arising from
temporary differences between the tax and financial reporting bases of assets
and liabilities. In assessing the realization of deferred income tax assets, we
consider whether it is more likely than not that the deferred income tax assets
will be realized. The ultimate realization of deferred income tax assets depends
upon generating future taxable income during the periods in which temporary
differences become deductible. If future income is not generated as expected,
deferred income tax assets may need to be written off (no such write-offs have
occurred).
Investment Borrowings
As part of our investment strategy, we may enter into reverse repurchase
agreements and dollar-roll transactions to increase our investment return or to
improve our liquidity. We account for these transactions as collateral
borrowings, where the amount borrowed is equal to the sales price of the
underlying securities. Reverse repurchase agreements involve a sale of
securities and an agreement to repurchase the same securities at a later date at
an agreed-upon price. Dollar rolls are similar to reverse repurchase agreements
except that, with dollar rolls, the repurchase involves securities that are only
substantially the same as the securities sold. Such borrowings averaged $137.7
million during 1999 and $66.0 million during 1998. These borrowings were
collateralized by investment securities with fair values approximately equal to
the loan value. The weighted average interest rate on short-term collateralized
borrowings was 5.0 percent and 4.4 percent in 1999 and 1998, respectively. The
primary risk associated with short-term collateralized borrowings is that a
counterparty will be unable to perform under the terms of the contract. Our
exposure is limited to the excess of the net replacement cost of the securities
over the value of the short-term investments (such excess was not material at
December 31, 1999). We believe the counterparties to our reverse repurchase and
dollar-roll agreements are financially responsible and that the counterparty
risk is minimal.
F-9
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Use of Estimates
When we prepare financial statements in conformity with GAAP, we are
required to make estimates and assumptions that significantly affect various
reported amounts of assets and liabilities, and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting periods. For example, we use significant estimates
and assumptions in calculating values for the cost of policies produced, the
cost of policies purchased, goodwill, insurance liabilities, liabilities related
to litigation, guaranty fund assessment accruals and deferred income taxes. If
our future experience differs materially from these estimates and assumptions,
our financial statements could be affected.
Fair Values of Financial Instruments
We use the following methods and assumptions to determine the estimated
fair values of financial instruments:
Investment securities. For fixed maturity securities (including redeemable
preferred stocks) and for equity and trading securities, we use quotes from
independent pricing services, where available. For investment securities
for which such quotes are not available, we use values obtained from
broker-dealer market makers or by discounting expected future cash flows
using a current market rate appropriate for the yield, credit quality, and
(for fixed maturity securities) the maturity of the investment being
priced.
Cash and cash equivalents. The carrying amount for these instruments
approximates their estimated fair value.
Mortgage loans and policy loans. We discount future expected cash flows for
loans included in our investment portfolio based on interest rates
currently being offered for similar loans to borrowers with similar credit
ratings. We aggregate loans with similar characteristics in our
calculations.
Other invested assets. We use quoted market prices, where available. When
quotes are not available, we estimate the fair value based on: (i)
discounted future expected cash flows; or (ii) independent transactions
which establish a value for our investment. When we are unable to estimate
a fair value, we assume a market value equal to carrying value.
Insurance liabilities for interest-sensitive products. We discount future
expected cash flows based on interest rates currently being offered for
similar contracts with similar maturities.
Investment borrowings. Due to the short-term nature of these borrowings
(terms generally less than 30 days), estimated fair values are assumed to
approximate the carrying amount reported in the balance sheet.
Here are the estimated fair values of our financial instruments:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
Financial assets:
Actively managed fixed maturities............................ $1,398.7 $1,398.7 $1,524.1 $1,524.1
Equity securities ........................................... 49.8 49.8 45.7 45.7
Mortgage loans............................................... 108.0 102.8 110.2 119.0
Policy loans................................................. 75.5 75.5 79.6 79.6
Other invested assets........................................ 50.8 50.8 120.3 120.3
Cash and cash equivalents.................................... 81.5 81.5 48.4 48.4
Financial liabilities:
Insurance liabilities for interest-sensitive products (1).... 1,289.2 1,289.2 1,365.2 1,365.2
Investment borrowings........................................ 135.1 135.1 65.7 65.7
F-10
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
<FN>
(1) The estimated fair value of the liabilities for interest-sensitive
products was approximately equal to its carrying value at December 31,
1999 and 1998. This was because interest rates credited on the vast
majority of account balances approximate current rates paid on similar
products and because these rates are not generally guaranteed beyond
one year. We are not required to disclose fair values for insurance
liabilities, other than those for interest-sensitive products .
However, we take into consideration the estimated fair values of all
insurance liabilities in our overall management of interest rate risk.
We attempt to minimize exposure to changing interest rates by matching
investment maturities with amounts due under insurance contracts.
</FN>
</TABLE>
Recently Issued Accounting Standards
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), as amended by
Statement of Financial Accounting Standards No. 137, "Deferral of the Effective
Date of FASB Statement No. 133" requires all derivative instruments to be
recorded on the balance sheet at estimated fair value. Changes in the fair value
of derivative instruments are to be recorded each period either in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, on the type of hedge
transaction. SFAS 133 is required to be implemented in year 2001. We are
currently evaluating the impact of SFAS 133; at present, we do not believe it
will have a material effect on our consolidated financial position or results of
operations. Because of ongoing changes to implementation guidance, we do not
plan on adopting the new standard until the first quarter of 2001.
We implemented the Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1") on
January 1, 1999. SOP 98-1 defines internal use software and when the costs
associated with internal use software should be capitalized. The implementation
of SOP 98-1 did not have a material effect on our consolidated financial
position or results of operations.
2. INVESTMENTS:
At December 31, 1999, the amortized cost and estimated fair value of
actively managed fixed maturities and equity securities were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---- ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
Investment grade:
Corporate securities................................................ $ 840.6 $2.2 $59.3 $ 783.5
United States Treasury securities and obligations of
United States government corporations and agencies................ 15.5 .1 .7 14.9
States and political subdivisions................................... 11.7 - 1.1 10.6
Debt securities issued by foreign governments....................... 12.2 - 1.6 10.6
Mortgage-backed securities ......................................... 482.3 .2 22.7 459.8
Below-investment grade (primarily corporate securities)................ 129.5 2.4 12.6 119.3
-------- ---- ----- --------
Total actively managed fixed maturities........................... $1,491.8 $4.9 $98.0 $1,398.7
======== ==== ===== ========
Equity securities...................................................... $47.8 $3.9 $1.9 $49.8
===== ==== ==== =====
</TABLE>
F-11
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
At December 31, 1998, the amortized cost and estimated fair value of
actively managed fixed maturities and equity securities were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---- ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
Investment grade:
Corporate securities................................................ $ 860.4 $20.7 $15.0 $ 866.1
United States Treasury securities and obligations of
United States government corporations and agencies................ 26.9 .8 .2 27.5
States and political subdivisions................................... 17.3 .3 - 17.6
Debt securities issued by foreign governments....................... 11.7 - .8 10.9
Mortgage-backed securities ......................................... 487.4 8.0 1.2 494.2
Below-investment grade (primarily corporate securities)................ 116.8 1.2 10.2 107.8
-------- ----- ----- --------
Total actively managed fixed maturities........................... $1,520.5 $31.0 $27.4 $1,524.1
======== ===== ===== ========
Equity securities...................................................... $ 46.0 $ .8 $ 1.1 $ 45.7
======== ===== ===== ========
</TABLE>
Accumulated other comprehensive loss included in shareholder's equity as of
December 31, 1999 and 1998, is summarized as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
(Dollars in millions)
<S> <C> <C>
Unrealized gains (losses) on investments............................................................. $(90.8) .9
Adjustments to cost of policies purchased and cost of policies produced.............................. 46.3 (2.1)
Deferred income tax benefit.......................................................................... 16.1 .4
------ -----
Accumulated other comprehensive loss.......................................................... $(28.4) $ (.8)
====== =====
</TABLE>
The following table sets forth the amortized cost and estimated fair value
of actively managed fixed maturities at December 31, 1999, by contractual
maturity. 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. Most of the mortgage-backed securities shown below
provide for periodic payments throughout their lives.
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
---- -----
(Dollars in millions)
<S> <C> <C>
Due in one year or less........................................................................ $ 8.2 $ 8.2
Due after one year through five years.......................................................... 90.8 89.5
Due after five years through ten years......................................................... 279.9 259.6
Due after ten years............................................................................ 628.2 579.4
-------- --------
Subtotal.................................................................................. 1,007.1 936.7
Mortgage-backed securities (a)................................................................. 484.7 462.0
-------- --------
Total actively managed fixed maturities ............................................... $1,491.8 $1,398.7
======== ========
<FN>
--------------------
(a) Includes below-investment grade mortgage-backed securities with an amortized
cost and estimated fair value of $2.4 million and $2.2 million,
respectively.
</FN>
</TABLE>
F-12
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Net investment income consisted of the following:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Actively managed fixed maturity securities........................................... $114.8 $118.4 $133.6
Equity securities.................................................................... 12.2 3.2 1.7
Mortgage loans....................................................................... 9.9 12.1 16.4
Policy loans......................................................................... 4.8 5.1 5.4
Other invested assets................................................................ 3.5 13.3 7.7
Cash and cash equivalents............................................................ 2.1 2.9 3.4
Separate accounts.................................................................... 151.8 44.1 55.7
------ ------ ------
Gross investment income.......................................................... 299.1 199.1 223.9
Investment expenses.................................................................. 1.5 1.1 1.3
------ ------ ------
Net investment income......................................................... $297.6 $198.0 $222.6
====== ====== ======
</TABLE>
The Company had no significant fixed maturity investments or mortgage loans
that were not accruing investment income in 1999, 1998 and 1997.
Investment gains (losses), net of investment expenses, were included in
revenue as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Fixed maturities:
Gross gains........................................................................ $ 8.6 $ 34.0 $20.6
Gross losses....................................................................... (14.5) (12.4) (5.1)
Other than temporary decline in fair value......................................... (1.3) - (.3)
------ ------ -----
Net investment gains (losses) from fixed maturities before expenses........... (7.2) 21.6 15.2
Other.................................................................................. .7 .1 2.2
------ ------ -----
Net investment gains (losses) before expenses................................. (6.5) 21.7 17.4
Investment expenses.................................................................... 3.5 3.2 4.1
------ ------ -----
Net investment gains (losses)................................................. $(10.0) $ 18.5 $13.3
====== ====== =====
</TABLE>
At December 31, 1999, the mortgage loan balance was primarily comprised of
commercial loans. Approximately 16 percent, 11 percent, 10 percent, 8 percent, 8
percent and 8 percent of the mortgage loan balance were on properties located in
Michigan, Texas, Florida, California, Georgia and Tennessee, respectively. No
other state comprised greater than 7 percent of the mortgage loan balance.
Noncurrent mortgage loans were insignificant at December 31, 1999. At December
31, 1999, our allowance for loss on mortgage loans was $.3 million.
Life insurance companies are required to maintain certain investments on
deposit with state regulatory authorities. Such assets had an aggregate carrying
value of $11.5 million at December 31, 1999.
The Company had no investments in any single entity in excess of 10 percent
of shareholder's equity at December 31, 1999, other than investments issued or
guaranteed by the United States government or a United States government agency.
F-13
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
3. INSURANCE LIABILITIES:
These liabilities consisted of the following:
<TABLE>
<CAPTION>
Interest
Withdrawal Mortality rate
assumption assumption assumption 1999 1998
---------- ---------- ---------- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C>
Future policy benefits:
Interest-sensitive products:
Investment contracts............................ N/A N/A (c) $ 976.7 $1,036.0
Universal life-type contracts................... N/A N/A N/A 312.5 329.2
---------- --------
Total interest-sensitive products............. 1,289.2 1,365.2
--------- --------
Traditional products:
Traditional life insurance contracts............ Company (a) 7.6% 137.0 139.9
experience
Limited-payment contracts....................... Company (b) 7.5% 105.8 106.3
experience, ---------- --------
if applicable
Total traditional products.................... 242.8 246.2
---------- --------
Claims payable and other policyholder funds ........ N/A N/A N/A 64.1 62.6
Liabilities related to separate accounts............ N/A N/A N/A 1,457.0 696.4
--------- --------
Total........................................... $3,053.1 $2,370.4
======== ========
<FN>
-------------
(a) Principally, modifications of the 1975 - 80 Basic, Select and Ultimate
Tables.
(b) Principally, the 1984 United States Population Table and the NAIC 1983
Individual Annuitant Mortality Table.
(c) At December 31, 1999 and 1998, approximately 97 percent and 95 percent,
respectively, of this liability represented account balances where
future benefits are not guaranteed. The weighted average interest rate
on the remainder of the liabilities representing the present value of
guaranteed future benefits was approximately 6 percent at December 31,
1999.
</FN>
</TABLE>
4. INCOME TAXES:
Income tax liabilities were comprised of the following:
<TABLE>
<CAPTION>
1999 1998
---- ----
(Dollars in millions)
<S> <C> <C>
Deferred income tax liabilities (assets):
Investments (primarily actively managed fixed maturities).................................. $ 3.6 $ 5.4
Cost of policies purchased and cost of policies produced................................... 75.3 56.7
Insurance liabilities...................................................................... (39.2) (28.2)
Unrealized depreciation.................................................................... (16.1) (.4)
Other...................................................................................... 10.2 (2.2)
------ ------
Deferred income tax liabilities....................................................... 33.8 31.3
Current income tax liabilities (assets)........................................................ (.4) 6.2
------ ------
Income tax liabilities................................................................ $ 33.4 $ 37.5
====== ======
</TABLE>
F-14
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Income tax expense was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Current tax provision..................................................................... $ 4.3 $20.8 $16.3
Deferred tax provision (benefit).......................................................... 9.3 (4.2) 5.8
----- ----- -----
Income tax expense............................................................... $13.6 $16.6 $22.1
===== ===== =====
</TABLE>
A reconciliation of the income tax provisions based on the U.S. statutory
corporate tax rate to the provisions reflected in the statement of operations is
as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Tax on income before income taxes at statutory rate....................................... 35.0% 35.0% 35.0%
State taxes............................................................................... 1.5 1.0 .7
Other..................................................................................... (1.4) (.8) .3
---- ---- ----
Income tax expense............................................................... 35.1% 35.2% 36.0%
==== ==== ====
</TABLE>
5. OTHER DISCLOSURES:
Litigation
The Company is involved on an ongoing basis in lawsuits related to its
operations. Although the ultimate outcome of certain of such matters cannot be
predicted, such lawsuits currently pending against the Company are not expected,
individually or in the aggregate, to have a material adverse effect on the
Company's financial condition, cash flows or results of operations.
Guaranty Fund Assessments
The balance sheet at December 31, 1999, includes: (i) accruals of $1.6
million, representing our estimate of all known assessments that will be levied
against the Company by various state guaranty associations based on premiums
written through December 31, 1999; and (ii) receivables of $1.1 million that we
estimate will be recovered through a reduction in future premium taxes as a
result of such assessments. These estimates are subject to change when the
associations determine more precisely the losses that have occurred and how such
losses will be allocated among the insurance companies. We recognized expense
for such assessments of $1.1 million in 1999, $1.1 million in 1998 and $1.2
million in 1997.
Related Party Transactions
The Company operates without direct employees through management and
service agreements with subsidiaries of Conseco. Fees for such services
(including data processing, executive management and investment management
services) are based on Conseco's direct and directly allocable costs plus a 10
percent margin. Total fees incurred by the Company under such agreements were
$43.4 million in 1999, $37.8 million in 1998 and $36.7 million in 1997.
During 1998 and 1997, the Company purchased $13.0 million and $11.2 million
par value, respectively, of senior subordinated notes issued by subsidiaries of
Conseco. The total carrying value of such notes purchased during 1998, 1997 and
prior years was $45.5 million at December 31, 1998. Such notes are classified as
"other invested assets" in the accompanying balance sheet. In 1999, all such
notes were repurchased from the Company by Conseco or its subsidiaries.
F-15
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
6. OTHER OPERATING STATEMENT DATA:
Insurance policy income consisted of the following:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Traditional products:
Direct premiums collected......................................................... $700.4 $445.8 $309.6
Reinsurance assumed............................................................... 18.7 15.6 14.9
Reinsurance ceded................................................................. (23.1) (21.0) (24.2)
------ ------ ------
Premiums collected, net of reinsurance...................................... 696.0 440.4 300.3
Less premiums on universal life and products
without mortality and morbidity risk which are
recorded as additions to insurance liabilities ................................ 654.1 400.4 255.9
------ ------ ------
Premiums on traditional products with mortality or morbidity risk,
recorded as insurance policy income...................................... 41.9 40.0 44.4
Fees and surrender charges on interest-sensitive products............................. 30.2 33.6 31.3
------ ------ ------
Insurance policy income..................................................... $ 72.1 $ 73.6 $ 75.7
====== ====== ======
</TABLE>
The five states with the largest shares of 1999 collected premiums were
California (14 percent), Texas (14 percent), Florida (13 percent), Michigan (8.8
percent) and Indiana (5.2 percent). No other state accounted for more than 4
percent of total collected premiums.
Changes in the cost of policies purchased were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Balance, beginning of year............................................................ $ 98.0 $106.4 $143.0
Amortization...................................................................... (4.1) (21.1) (15.4)
Amounts related to fair value adjustment of actively managed fixed maturities 37.7 11.8 (21.2)
Other ............................................................................ - .9 -
------ ------ ------
Balance, end of year.................................................................. $131.6 $ 98.0 $106.4
====== ====== ======
</TABLE>
Based on current conditions and assumptions as to future events on all
policies in force, the Company expects to amortize approximately 9 percent of
the December 31, 1999, balance of cost of policies purchased in 2000, 10 percent
in 2001, 9 percent in 2002, 7 percent in 2003 and 6 percent in 2004. The
discount rates used to determine the amortization of the cost of policies
purchased ranged from 3.6 percent to 8.0 percent and averaged 5.8 percent.
Changes in the cost of policies produced were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Balance, beginning of year............................................................ $ 82.5 $ 55.9 $38.2
Additions......................................................................... 62.7 35.3 31.8
Amortization...................................................................... (8.3) (11.0) (10.2)
Amounts related to fair value adjustment of actively managed fixed maturities 10.7 2.3 (3.9)
------ ------ -----
Balance, end of year.................................................................. $147.6 $ 82.5 $55.9
====== ====== =====
</TABLE>
F-16
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
7. STATEMENT OF CASH FLOWS:
Income taxes paid during 1999, 1998, and 1997, were $2.1 million, $17.1
million and $14.8 million, respectively.
8. STATUTORY INFORMATION:
Statutory accounting practices prescribed or permitted by regulatory
authorities for insurance companies differ from GAAP. The Company reported the
following amounts to regulatory agencies:
<TABLE>
<CAPTION>
1999 1998
---- ----
(Dollars in millions)
<S> <C> <C>
Statutory capital and surplus.................................................. $112.6 $134.0
Asset valuation reserve........................................................ 41.4 30.9
Interest maintenance reserve................................................... 66.7 73.1
------- ------
Total...................................................................... $220.7 $238.0
====== ======
</TABLE>
Our statutory net income was $14.6 million, $32.7 million and $32.7 million
in 1999, 1998 and 1997, respectively. Statutory net income differs from net
income presented in our financial statements prepared in accordance with GAAP,
primarily because for GAAP reporting we are required to defer and amortize costs
that vary with and are primarily related to the production of new business as
described in note 1.
State insurance laws generally restrict the ability of insurance companies
to pay dividends or make other distributions. We may pay dividends to our parent
in 2000 of $12.8 million without permission from state regulatory authorities.
In 1998, the National Association of Insurance Commissioners adopted
codified statutory accounting principles, which are expected to constitute the
only source of prescribed statutory accounting practices and are effective in
2001. The changes to statutory accounting practices resulting from the
codification are not expected to have a material effect on the statutory capital
and surplus or statutory operating earnings data shown above.
F-17
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
The financial statements of Conseco Variable Annuity Account G (the
"Separate Account") and Conseco Variable Insurance Company (the "Company")
are included in Part B hereof.
B. EXHIBITS
1. Resolution of Board of Directors of the Company
authorizing the establishment of the Variable Account.*
2. Not Applicable.
3. Form of Principal Underwriters Agreement.*
4. (i) Individual Fixed and Variable Deferred Annuity
Contract.*
(ii) Allocated Fixed and Variable Group Annuity
Contract.*
(iii) Allocated Fixed and Variable Group Annuity
Certificate.*
(iv) Endorsement Amending MVA Provision+
5. Application Form.*
6. (i) Copy of Articles of Incorporation of the Company.*
(ii) Copy of Articles of Amendment to the Articles of
Incorporation of the Company ++
(iii) Copy of Amended and Restated By-Laws of the Company.++
7. Not Applicable.
8. (i) Form of Fund Participation Agreement between INVESCO
Variable Investment Funds, Inc., INVESCO Funds Group,
Inc. and the Company.*
(ii) Form of Fund Participation Agreement between The Alger
American Fund, Fred Alger and Company, Incorporated
<PAGE>
and the Company.*
(iii) Form of Fund Participation Agreement between Van
Eck Worldwide Insurance Trust, Van Eck Associates
Corporation and the Company.*
(iv) Form of Fund Participation Agreement between Insurance
Management Series, Federated Securities Corp. and the
Company.*
(v) Form of Fund Participation Agreement between Lord
Abbett Series Fund, Inc. and the Company.**
(vi) Form of Fund Participation Agreement by and between American
Century Investment Services, Inc. and Great American Reserve
Insurance Company.***
(vii) Form of Fund Participation Agreement by and among Great American
Reserve Insurance Company, Berger Institutional Products Trust and
BBOI Worldwide LLC.***
(viii) Form of Fund Participation Agreement between Rydex Variable Trust
and the Company.++
(ix) Form of Fund Participation Agreement between Pioneer Variable Contracts
Trust and the Company.
9. Opinion and Consent of Counsel.
10. Consent of Independent Accountants.
11. Not Applicable.
12. Not Applicable.
13. Calculation of Performance Information.
14. Not Applicable.
15. Company Organizational Chart.++
27. Not Applicable.
* Incorporated by reference to Registrant's Form N-4 as electronically
filed on January 23, 1996.
** Incorporated by reference to Registrant's Pre-Effective Amendment No. 1
to Form N-4 as electronically filed on January 29, 1997.
*** Incorporated by reference to Great American Reserve Variable
Annuity Account F, Pre-Effective Amendment No.1 to Form N-4, File
Nos. 333-40309/811-08483, filed electronically on February 3, 1998
and Incorporated by reference to Registrant's Post-Effective Amendment
No. 4 to Form N-4 (File Nos. 333-00373 and 811-07501) filed
electronically on March 2, 2000.
+Incorporated by reference to Registrant's Post-Effective Amendment
No. 4 to Form N-4 (File Nos. 333-00373 and 811-07501) filed
electronically on March 2, 2000.
++Incorporated by reference to Registrant's Post-Effective Amendment
No. 5 (File No. 333-00373) filed electronically on April 28, 2000.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Executive Officers and Directors of the Company which
are engaged directly or indirectly in activities relating to the Registrant or
the Contracts offered by the Registrant:
Name and Principal Position and Offices
Business Address* with Depositor
------------------- ---------------------------------------
Ngaire E. Cuneo Director
John M. Howard Director
David K. Herzog Director, Executive Vice President, General Counsel
and Secretary
Thomas J. Kilian Director and President
James S. Adams Director, Senior Vice President, Chief Accounting
Officer and Treasurer
*The Principal business address for all officers and directors listed above is
11825 N. Pennsylvania Street, Carmel, Indiana 46032.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT
The Company organizational chart was filed as Exhibit 15 in Post-Effective
Amendment No. 5 and is incorporated herein by reference.
ITEM 27. NUMBER OF CONTRACT OWNERS
<PAGE>
As of September 30, 2000 there were 125 Qualified Contract Owners and 80
Non-Qualified Contract Owners.
ITEM 28. INDEMNIFICATION
The Bylaws (Article VI) of the Company provide, in part, that:
The Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative, or investigative,
by reason of the fact that he is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (collectively, "Agent") against expenses
(including attorneys' fees), judgments, fines, penalties, court costs and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement (whether with or
without court approval), conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Agent did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. If several claims, issues or matters are involved, an
Agent may be entitled to indemnification as to some matters even though he is
not entitled as to other matters. Any director or officer of the Corporation
serving in any capacity of another corporation, of which a majority of the
shares entitled to vote in the election of its directors is held, directly or
indirectly, by the Corporation, shall be deemed to be doing so at the request of
the Corporation.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 29. PRINCIPAL UNDERWRITERS
<PAGE>
(a) Conseco Equity Sales, Inc. is the principal underwriter for the following
investment companies (other than Registrant):
Conseco Variable Annuity Account C Conseco Variable Annuity Account E Conseco
Variable Annuity Account F Conseco Variable Annuity Account H Conseco Fund Group
Rydex Advisor Variable Annuity Account BMA Variable Life Account A
(b) Conseco Equity Sales, Inc. ("CES") is the principal underwriter for the
Contracts and Certificates. The following persons are the officers and
directors of CES. The principal business address for each officer and
director of CES is 11815 N. Pennsylvania Street, Carmel, Indiana 46032.
Name and Principal Positions and Offices
Business Address with Underwriter
------------------------ ---------------------------------------
L. Gregory Gloeckner President and Director
William P. Kovacs Vice President, General Counsel,
Secretary and Director
James S. Adams Senior Vice President, Chief Accounting
Officer, Treasurer and Director
William T. Devanney, Jr. Senior Vice President, Corporate
Taxes
Donald B. Johnston Vice President, Director Mutual Fund
Sales & Marketing
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Conseco Variable Life Insurance Company,11815 N. Pennsylvania Street, Carmel, IN
46032, maintains physical possession of the accounts, books or documents of the
Separate Account required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
<PAGE>
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under this
Form promptly upon written or oral request.
d. Conseco Variable Insurance Company (the "Company") hereby represents
that the fees and charges deducted under the Contracts and Certificates
described in the Prospectus, in the aggregate, are reasonable in relation to the
services rendered, the expenses to be incurred and the risks assumed by the
Company.
REPRESENTATIONS
The Company hereby represents that it is relying upon a No-Action Letter issued
to the American Council of Life Insurance dated November 28, 1988 (Commission
ref. IP-6-88) and that the following provisions have been complied with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Registration Statement and has caused this
Registration Statement to be signed on its behalf, in the City of Carmel, and
State of Indiana on this 26th day of December, 2000.
CONSECO VARIABLE ANNUITY
ACCOUNT G
Registrant
By: CONSECO VARIABLE INSURANCE COMPANY
By: /S/ THOMAS J. KILIAN
--------------------------------------------
By: CONSECO VARIABLE INSURANCE COMPANY
Depositor
By: /S/ THOMAS J. KILIAN
--------------------------------------------
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
------------------------ -------------------------- ---------------
Director
--------------------------------- --------------
Ngaire E. Cuneo
/S/ THOMAS J. KILIAN Director and President December 26, 2000
-------------------------------- (principal executive officer) -----------------
Thomas J. Kilian
/S/ JAMES S. ADAMS Senior Vice President, December 26, 2000
--------------------------------- Chief Accounting Officer and Treasurer -----------------
James S. Adams and Director (principal financial
officer and principal accounting officer)
/S/ DAVID K. HERZOG December 26, 2000
--------------------------------- Director --------------
David K. Herzog
/S/ JOHN M. HOWARD December 26, 2000
------------------------------ Director ------------------
John M. Howard
</TABLE>
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 6
TO
FORM N-4
FOR
CONSECO VARIABLE ANNUITY ACCOUNT G
CONSECO VARIABLE INSURANCE COMPANY
INDEX TO EXHIBITS
EXHIBIT PAGE
EX-99.B8(ix) Form of Fund Participation Agreement between Pioneer
Variable Contracts Trust and the Company
EX-99.B9 Opinion of Consent of Counsel
EX-99.B10 Consent of Independent Accountants
EX-99.B13 Calculation of Performance Information
