<PAGE>
File Nos. 333-12507 and 811-7827
As filed with the Securities and Exchange Commission on April 27, 2000
____________________________________________
U.S. 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. 4 [X]
------
and/or
Registration Statement Under the Investment Company Act of 1940 [ ]
Amendment No. 6 [X]
-----
(Check appropriate box or boxes.)
RetireMAP Variable Account
(Exact Name of Registrant)
United Investors Life Insurance Company
(Name of Depositor)
2001 Third Avenue South
Birmingham, Alabama 35233
(Address of Depositor's Principal Executive Office)
Depositor's Telephone Number: (205) 325-4300
Name and Address of Agent for Service: Copy to:
John H. Livingston, Esquire Frederick R. Bellamy, Esquire
United Investors Life Insurance Company Sutherland Asbill & Brennan LLP
2001 Third Avenue South 1275 Pennsylvania Avenue, N.W.
Birmingham, Alabama 35233 Washington, D.C. 20004-2415
____________________________________________
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on April 28, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) (1) of Rule 485
[ ] on _________ 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 Being Registered: Variable Annuity Contracts
<PAGE>
Prospectus
May 1, 2000
Please read this prospectus carefully before investing, and keep it for
future reference. It contains important information about the RetireMAPSM
variable annuity policy.
To learn more about the policy, you may want to look at the Statement of
Additional Information dated May 1, 2000 (known as the "SAI"). For a free copy
of the SAI, contact us at:
United Investors Life Insurance Co.
Administrative Office
P. O. Box 10287
Birmingham, AL 35202-0287
Telephone: (800) 453-1271
United Investors has filed the SAI with the U.S. Securities and Exchange
Commission (the "SEC") and has incorporated it by reference into this
prospectus. The SAI's table of contents appears on page 33 of this prospectus.
The SEC maintains an Internet website (http://www.sec.gov) that contains the
SAI, material incorporated by reference, and other information.
Variable annuity policies involve certain risks, and you may lose some or
all of your investment.
. We do not guarantee how any of the investment divisions will perform.
. The policy is not a deposit or obligation of any bank, and no bank endorses
or guarantees the policy.
. Neither the U.S. Government nor any federal agency insures your investment in
the policy.
RetireMAPSM
VARIABLE ANNUITY
DEFERRED VARIABLE ANNUITY POLICY
issued by
United Investors Life Insurance Company
through
RetireMAP Variable Account
The policy has 21 funding choices--one fixed account (paying a guaranteed
minimum fixed rate of interest) and 20 variable investment divisions which
invest in the following mutual fund portfolios:
AIM Variable Insurance Funds
. AIM V.I. Growth Fund
. AIM V.I. Value Fund
Dreyfus Variable Investment Fund
. Dreyfus VIF--Appreciation Portfolio
. Dreyfus VIF--Growth and Income Portfolio
. Dreyfus VIF--Quality Bond Portfolio
. Dreyfus VIF--Small Cap Portfolio
Federated Insurance Series
. American Leaders Fund II
. Equity Income Fund II
. Fund for U.S. Government Securities II
. Prime Money Fund II
INVESCO Variable Investment Funds, Inc.
. INVESCO VIF--Dynamics Fund
. INVESCO VIF--Equity Income Fund
. INVESCO VIF--High Yield Fund
MFS(R) Variable Insurance Trustsm
. MFS(R) Emerging Growth Series
. MFS(R) Growth with Income Series
. MFS(R) Research Series
. MFS(R) Utilities Series
Scudder Variable Life Investment Fund
. Global Discovery Portfolio
. International Portfolio
Warburg Pincus Trust
. International Equity Portfolio
Neither the SEC nor any state securities commission has approved or disapproved
these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
U-1153, Ed. 5-00
<PAGE>
Table of Contents
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<TABLE>
<S> <C>
Glossary.................................................................... iv
Summary..................................................................... 1
The Policy................................................................ 1
Annuity Payments.......................................................... 1
Purchasing the Policy..................................................... 1
Funding Choices........................................................... 2
Charges and Deductions.................................................... 2
Taxes..................................................................... 7
Surrender and Partial Withdrawals......................................... 7
Death Benefit............................................................. 7
Other Information......................................................... 7
Inquiries................................................................. 8
United Investors Life Insurance Company..................................... 9
Published Ratings......................................................... 9
RetireMAP Variable Account.................................................. 9
The Portfolios............................................................ 9
Fund Management........................................................... 13
Fixed Account............................................................... 13
The Policy.................................................................. 14
Issuance of a Policy...................................................... 14
Purchase Payments......................................................... 14
Allocation of Purchase Payments........................................... 14
Policy Value.............................................................. 14
Variable Account Value.................................................. 15
Fixed Account Value..................................................... 15
Surrender and Partial Withdrawals......................................... 16
Withdrawals............................................................. 16
Automatic Partial Withdrawals........................................... 16
Surrender............................................................... 16
Restrictions Under the Texas ORP and Section 403(b) Plans............... 16
Restrictions Under Other Qualified Policies............................. 17
Transfers................................................................. 17
Before the Retirement Date.............................................. 17
After the Retirement Date............................................... 17
Transfer Procedures..................................................... 18
Dollar Cost Averaging..................................................... 18
Death Benefit............................................................. 18
Basic Death Benefit..................................................... 18
Optional Death Benefit Rider............................................ 19
Payment Procedures...................................................... 19
Required Distributions.................................................... 20
"Free Look" Period........................................................ 20
Charges and Deductions...................................................... 21
Withdrawal Charge......................................................... 21
Waiver of Withdrawal Charges Rider........................................ 22
Annual Contract Maintenance Charge........................................ 22
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Administration Fee........................................................ 22
Mortality and Expense Risk Charge......................................... 22
Optional Death Benefit Rider Charge....................................... 23
Transaction Charge........................................................ 23
Premium Taxes............................................................. 23
Federal Taxes............................................................. 23
Fund Expenses............................................................. 23
Reduction in Charges for Certain Groups................................... 23
Annuity Payments............................................................ 24
Election of Annuity Payment Method........................................ 24
Retirement Date........................................................... 24
Annuity Payment Methods................................................... 24
Distribution of the Policies................................................ 26
Federal Tax Matters......................................................... 26
Historical Performance Data................................................. 29
Voting Rights............................................................... 30
Legal Proceedings........................................................... 31
Financial Statements........................................................ 31
Condensed Financial Information............................................. 31
Statement of Additional Information......................................... 33
</TABLE>
iii
<PAGE>
Glossary
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<TABLE>
<S> <C>
Annuitant The annuitant is the individual whose life expectancy
determines the size of annuity payments and whose actual
lifetime may determine the duration of annuity payments.
- -----------------------------------------------------------------------------------
Beneficiary The beneficiary is the individual or individuals to whom the
death benefit is paid if the owner dies before the retirement
date.
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Business Day Each day that the New York Stock Exchange and our
administrative office are open. Currently, the Friday after
Thanksgiving and, in most years, December 24 (Christmas Eve
day) and December 31 (New Year's Eve day) are not Business
Days.
- -----------------------------------------------------------------------------------
Joint Annuitant The joint annuitant, if any, is a second individual whose
joint life expectancy with the annuitant determines the size
of annuity payments and whose actual lifetime with the
annuitant may determine the duration of annuity payments.
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Owner's Designated The owner's designated beneficiary (a joint owner, if any, or
Beneficiary the beneficiary named in the policy) is the individual who
becomes owner of the policy upon the death of an owner.
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Policy Year A policy year is a year that starts on the policy's effective
date or on a policy anniversary.
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Retirement Date The retirement date is the date on which annuity payments are
to start.
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Surrender Value The policy value less any withdrawal charges, the annual
contract maintenance charge, the optional death benefit rider
charge (if applicable), and applicable deductions for premium
taxes.
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We, Us, Our We are United Investors Life Insurance Company.
- -----------------------------------------------------------------------------------
You, Your You are the policy owner.
</TABLE>
iv
<PAGE>
Summary
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This is a summary of some of the more important points that you should know
and consider before purchasing the RetireMAP variable annuity policy.
The Policy
The RetireMAP variable annuity policy lets you invest on a tax-deferred
basis for your retirement or other long-term purposes. Tax deferral allows the
entire amount you have invested to remain in the policy where it can continue
to produce an investment return. Therefore, your money could grow faster than
in a comparable taxable investment where current income taxes would be due each
year.
You may divide your RetireMAP policy value among the fixed account and up to
17 of the 20 variable investment divisions which invest in specified portfolios
of underlying mutual funds. We guarantee the principal and a minimum interest
rate you will receive from the fixed account. However, the value of what you
allocate to the variable investment divisions is not guaranteed. Instead, your
investment in the variable investment divisions will go up or down with the
performance of the particular mutual fund portfolios you select. You may lose
money on investments in the variable investment divisions.
Like most annuity policies, different rules apply to the RetireMAP policy
before and after the retirement date you select for your policy. Before the
retirement date, you may invest more money in your policy. After the retirement
date, you will receive one or more annuity payments. The amount of money you
accumulate in your policy before the retirement date has a major effect on the
size of the payments you receive after the retirement date.
This policy is designed for people seeking long-term tax-deferred
accumulation of assets, generally for retirement or other long-term purposes;
and for persons who have maximized their use of other retirement savings
methods, such as 401(k) plans. The tax-deferred feature is most attractive to
people in high Federal and state tax brackets. You should not buy this policy
if you are looking for a short-term investment or if you cannot take the risk
of losing money that you put in.
There are various additional fees and charges associated with variable
annuities. You should consider whether the features and benefits unique to
variable annuities, such as the opportunity for lifetime income payments, a
guaranteed death benefit and the guaranteed level of certain charges are
appropriate for your needs. Variable annuities provide tax-deferral when
purchased outside of qualified plans. However, the tax deferral features of
variable annuities are unnecessary when purchased to fund a qualified plan,
since the plan would already provide tax deferral in most cases.
Annuity Payments
On the retirement date, you may apply your policy value to receive fixed
annuity payments, variable annuity payments or a combination. We guarantee that
fixed annuity payments will remain constant throughout the payment period.
However, the amount of each variable annuity payment will go up or down with
the performance of the particular investment divisions you select.
You may choose among the following ways of receiving your annuity payments:
1. Payments for the lifetime of an individual you select (the annuitant).
2. Payments for the lifetime of the survivor of two individuals you select (the
annuitant and joint annuitant).
3. Payments for the lifetime of an individual (the annuitant), but guaranteed
to continue for at least 10 or 20 years.
Other annuity payment methods are available with our written consent.
Purchasing the Policy
You can purchase a "qualified" policy (one that qualifies for favorable
Federal income tax treatment), or you can purchase a policy on a non-qualified
tax basis. For a non-qualified policy, the
1
<PAGE>
minimum initial investment is $2,000. For a qualified policy, the initial
investment must be at least $1,200, although we will accept installments of at
least $100 per month through a bank draft authorization or a pre-approved group
payment method. You can make more investments of at least $100 each before the
retirement date.
Funding Choices
You may allocate each new investment (and your existing policy value) among
variable investment divisions which invest in the following 20 mutual fund
portfolios:
AIM Variable Insurance Funds
. AIM V.I. Growth Fund
. AIM V.I. Value Fund
Dreyfus Variable Investment Fund
. Dreyfus VIF--Appreciation Portfolio
. Dreyfus VIF--Growth and Income Portfolio
. Dreyfus VIF--Quality Bond Portfolio
. Dreyfus VIF--Small Cap Portfolio
Federated Insurance Series
. American Leaders Fund II
. Equity Income Fund II
. Fund for U.S. Government Securities II
. Prime Money Fund II
INVESCO Variable Investment Funds, Inc.
. INVESCO VIF-Dynamics Fund
. INVESCO VIF-Equity Income Fund
. INVESCO VIF-High Yield Fund
MFS(R) Variable Insurance Trust SM
. MFS(R) Emerging Growth Series
. MFS(R) Growth with Income Series
. MFS(R) Research Series
. MFS(R) Utilities Series
Scudder Variable Life Investment Fund
. Global Discovery Portfolio
. International Portfolio
Warburg Pincus Trust
. International Equity Portfolio
In most states, you may also allocate purchase payments and your policy
value to the fixed account. We guarantee your fixed account allocation will
earn at least 4% interest per year.
Charges and Deductions
We do not deduct any charges from your purchase payments when received,
except for any premium taxes charged in your location.
We make two types of deductions from your policy value for certain
administrative expenses. First, we deduct a flat charge of $35 a year from each
policy that does not hold cumulative purchase payments (less any withdrawals)
of at least $30,000. Second, we deduct a daily charge at an effective annual
rate of 0.15% of the assets of each variable investment division.
If you surrender your policy or make a cash withdrawal, we may deduct a
withdrawal charge. This withdrawal charge is 7% of purchase payments withdrawn
that are less than two years old. It decreases to 3% on purchase payments that
are five years old. There is no withdrawal charge on purchase payments six or
more years old. We also do not deduct a withdrawal charge on the first 10% of
policy value withdrawn each policy year. This 10% portion is the free
withdrawal amount.
For each withdrawal in excess of twelve in any one policy year, we deduct a
transaction charge of no more than $20.
We also deduct a daily charge from the variable investment divisions to
compensate us for certain mortality and expense risks. This charge is at an
effective annual rate of 1.25% of assets. In addition, investment management
fees, operating expenses, and in some cases 12b-1 fees are deducted from each
portfolio of the underlying mutual funds.
There is an annual charge of 0.17% of the average death benefit amount for
the optional death benefit.
The following tables summarize these charges. (We may also deduct premium
tax charges.)
Policy Owner Transaction Expenses:
- ---------------------------------
<TABLE>
<S> <C>
Maximum Transaction Charge (for each withdrawal in excess of 12 per
policy year).......................................................... $20.00
</TABLE>
Withdrawal Charge (% of purchase payment being withdrawn):
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Years less than 1 1 2 3 4 5 6+
- ------------------------------------------------------------------------------------------------------
% 7 7 6 6 4 3 0
</TABLE>
<TABLE>
<S> <C>
Annual Contract Maintenance Charge....................................... $35.00
- ----------------------------------
</TABLE>
Variable Account Annual Expenses:
- --------------------------------
<TABLE>
<S> <C>
Administration Fee........................................................ 0.15%
Mortality and Expense Risk Charge......................................... 1.25%
-----
Total Variable Account Annual Expenses.................................... 1.40%
</TABLE>
Optional Death Benefit Rider Charge
- -----------------------------------
<TABLE>
<S> <C>
(% of average death benefit amount)....................................... 0.17%
</TABLE>
2
<PAGE>
Portfolio Annual Expenses(/1/)
(% of net assets of the portfolio)
<TABLE>
<CAPTION>
Management 12b-1 Other Total Portfolio
Fee(/2/) Fees Expenses(/2/) Expenses(/2/)
(after any (after any (after waiver or
Portfolio waiver) reimbursement) reimbursement)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance
Funds
. AIM V.I. Growth Fund 0.63% None 0.10% 0.73%
. AIM V.I. Value Fund 0.61% None 0.15% 0.76%
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Dreyfus Variable Investment
Fund
. Dreyfus VIF--Appreciation
Portfolio 0.75% None 0.03% 0.78%
. Dreyfus VIF--Growth and
Income Portfolio 0.75% None 0.04% 0.79%
. Dreyfus VIF--Quality Bond
Portfolio 0.65% None 0.09% 0.74%
. Dreyfus VIF--Small Cap
Portfolio 0.75% None 0.03% 0.78%
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Federated Insurance Series
. Federated American
Leaders Fund II 0.75% None 0.13% 0.88%
. Federated Equity Income
Fund II 0.55% None 0.39% 0.94%
. Federated Fund for U.S.
Government Securities II 0.60% None 0.24% 0.84%
. Federated Prime Money
Fund II 0.50% None 0.23% 0.73%
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INVESCO Variable Investment
Funds, Inc.(/3/)
. INVESCO VIF--Dynamics
Fund 0.75% None 0.51% 1.26%
. INVESCO VIF--Equity
Income Fund 0.75% None 0.42% 1.17%
. INVESCO VIF--High Yield
Fund 0.60% None 0.47% 1.07%
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MFS(R) Variable Insurance
Trustsm
. MFS(R) Emerging Growth
Series 0.75% None 0.09% 0.84%
. MFS(R) Growth with Income
Series 0.75% None 0.13% 0.88%
. MFS(R) Research Series 0.75% None 0.11% 0.86%
. MFS(R) Utilities Series 0.75% None 0.16% 0.91%
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Scudder Variable Life
Investment Fund
(Class B Shares)
. Scudder Global Discovery
Portfolio(/4/) 0.98% 0.25% 0.65% 1.88%
. Scudder International
Portfolio 0.85% 0.25% 0.18% 1.28%
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Warburg Pincus Trust
. Warburg Pincus
International Equity
Portfolio 1.00% None 0.32% 1.32%
</TABLE>
(/1/) These expenses are deducted directly from the assets of the underlying
mutual fund portfolios and therefore reduce their net asset value. The expenses
shown are those incurred for the year ended December 31, 1999. Current or
future expenses may be greater or less than those shown. The investment adviser
of each underlying mutual fund supplied the above information, and we have not
independently verified it. See the underlying mutual funds' prospectuses for
more complete information.
3
<PAGE>
(/2/) With respect to certain Portfolios, the Portfolio's investment adviser is
waiving part or all of its Management Fee and reimbursing part or all of the
Other Expenses. Absent the waiver or reimbursement, the 1999 expenses of these
Portfolios would have been as indicated below:
<TABLE>
<CAPTION>
Management
Fee Total Portfolio
(before Other Expenses Annual Expenses
any 12b-1 (before any (before waiver or
Portfolio waiver) Fees reimbursement) reimbursement)
--------- ---------- ----- -------------- -----------------
<S> <C> <C> <C> <C>
Federated Equity Income Fund
II......................... 0.75% None 0.39% 1.14%
INVESCO VIF--Dynamics Fund.. 0.75% None 1.53% 2.28%
INVESCO VIF--Equity Income
Fund....................... 0.75% None 0.44% 1.19%
INVESCO VIF--High Yield
Fund....................... 0.60% None 0.48% 1.08%
</TABLE>
(/3/) The expense information shown for INVESCO Variable Investment Funds, Inc.
has been restated from the financials to reflect a change in the administrative
services fee.
(/4/) Beginning May 1, 2000, the advisor has agreed to waive a portion of its
fees to the extent necessary to limit the expenses of the Global Discovery
Portfolio to 1.50% of average daily net assets. This expense limit will remain
in effect until April 30, 2001.
4
<PAGE>
Examples. The following tables give examples of expenses you might pay, on a
$1,000 investment, assuming 5% annual return on assets.
Example 1 (assuming basic death benefit)
(right arrow)If you surrender your policy at the end of the applicable time
period, you would pay the following expenses:
<TABLE>
<CAPTION>
Investment Division 1 year 3 years 5 years 10 years
------------------- ------- ------- ------- --------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund $ 91.30 $128.38 $148.06 $254.88
AIM V.I. Value Fund $ 91.60 $129.28 $149.57 $257.72
Dreyfus VIF--Appreciation Portfolio $ 91.80 $129.88 $150.58 $259.74
Dreyfus VIF--Growth and Income Portfolio $ 91.90 $130.18 $151.08 $260.79
Dreyfus VIF--Quality Bond Portfolio $ 91.40 $128.68 $148.57 $255.69
Dreyfus VIF--Small Cap Portfolio $ 91.80 $129.88 $150.58 $259.74
Federated American Leaders Fund II $ 92.80 $132.89 $155.60 $269.79
Federated Equity Income Fund II $ 93.40 $134.69 $158.61 $275.78
Federated Fund for U.S. Government
Securities II $ 92.40 $131.69 $153.60 $265.78
Federated Prime Money Fund II $ 91.30 $128.38 $148.06 $254.68
INVESCO VIF--Dynamics Fund $ 96.60 $144.26 $174.50 $307.12
INVESCO VIF--Equity Income Fund $ 95.70 $141.58 $170.05 $298.40
INVESCO VIF--High Yield Fund $ 94.70 $138.59 $165.09 $288.63
MFS(R) Emerging Growth Series $ 92.40 $131.69 $153.60 $265.78
MFS(R) Growth with Income Series $ 92.80 $132.89 $155.60 $269.79
MFS(R) Research Series $ 92.60 $132.29 $154.60 $267.79
MFS(R) Utilities Series $ 93.10 $133.79 $157.11 $272.79
Scudder Global Discovery Portfolio $102.75 $162.49 $204.47 $364.69
Scudder International Portfolio $ 96.80 $144.86 $175.49 $309.05
Warburg Pincus International Equity
Portfolio $ 97.20 $146.05 $177.46 $312.89
</TABLE>
(right arrow)If you annuitize or do not surrender your policy at the end of the
applicable time period, you would pay the following expenses:
<TABLE>
<CAPTION>
Investment Division 1 year 3 years 5 years 10 years
------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund $21.30 $ 68.38 $118.06 $254.68
AIM V.I. Value Fund $21.60 $ 69.28 $119.57 $257.72
Dreyfus VIF--Appreciation Portfolio $21.80 $ 69.88 $120.58 $259.74
Dreyfus VIF--Growth and Income Portfolio $21.90 $ 70.18 $121.08 $260.75
Dreyfus VIF--Quality Bond Portfolio $21.40 $ 68.68 $118.57 $255.69
Dreyfus VIF--Small Cap Portfolio $21.80 $ 69.88 $120.58 $259.74
Federated American Leaders Fund II $22.80 $ 72.89 $125.60 $269.79
Federated Equity Income Fund II $23.40 $ 74.69 $128.61 $275.78
Federated Fund for U.S. Government
Securities II $22.40 $ 71.69 $123.60 $265.78
Federated Prime Money Fund II $21.30 $ 68.38 $118.06 $254.68
INVESCO VIF--Dynamics Fund $26.60 $ 84.26 $144.50 $307.12
INVESCO VIF--Equity Income Fund $25.70 $ 81.58 $140.05 $298.40
INVESCO VIF--High Yield Fund $24.70 $ 78.59 $135.09 $288.63
MFS(R) Emerging Growth Series $22.40 $ 71.69 $123.60 $265.78
MFS(R) Growth with Income Series $22.80 $ 72.89 $125.60 $269.79
MFS(R) Research Series $22.60 $ 72.29 $124.60 $267.79
MFS(R) Utilities Series $23.10 $ 73.79 $127.11 $272.79
Scudder Global Discovery Portfolio $32.75 $102.49 $174.47 $364.69
Scudder International Portfolio $26.80 $ 84.86 $145.49 $309.05
Warburg Pincus International Equity
Portfolio $27.20 $ 86.05 $147.46 $312.89
</TABLE>
5
<PAGE>
Example 2 (assuming optional death benefit)
(right arrow)If you surrender your policy at the end of the applicable time
period, you would pay the following expenses:
<TABLE>
<CAPTION>
Investment Division 1 year 3 years 5 years 10 years
------------------- ------- ------- ------- --------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund $ 91.30 $131.83 $155.16 $271.74
AIM V.I. Value Fund $ 91.60 $132.73 $156.66 $274.75
Dreyfus VIF--Appreciation Portfolio $ 91.80 $133.33 $157.67 $276.75
Dreyfus VIF--Growth and Income Portfolio $ 91.90 $133.64 $158.17 $277.75
Dreyfus VIF--Quality Bond Portfolio $ 91.40 $132.13 $155.66 $272.74
Dreyfus VIF--Small Cap Portfolio $ 91.80 $133.33 $157.67 $276.75
Federated American Leaders Fund II $ 92.80 $136.34 $162.67 $286.72
Federated Equity Income Fund II $ 93.40 $138.14 $165.66 $292.65
Federated Fund for U.S. Government
Securities II $ 92.40 $135.14 $160.67 $282.74
Federated Prime Money Fund II $ 91.30 $131.83 $155.16 $271.74
INVESCO VIF--Dynamics Fund $ 96.60 $147.69 $181.50 $323.71
INVESCO VIF--Equity Income Fund $ 95.70 $145.01 $177.07 $315.07
INVESCO VIF--High Yield Fund $ 94.70 $142.03 $172.12 $305.38
MFS(R) Emerging Growth Series $ 92.40 $135.14 $160.67 $282.74
MFS(R) Growth with Income Series $ 92.80 $136.34 $162.67 $286.72
MFS(R) Research Series $ 92.60 $135.74 $161.67 $284.73
MFS(R) Utilities Series $ 93.10 $137.24 $164.17 $289.69
Scudder Global Discovery Portfolio $102.75 $165.88 $211.35 $380.74
Scudder International Portfolio $ 96.80 $148.29 $182.48 $325.62
Warburg Pincus International Equity
Portfolio $ 97.20 $149.48 $184.45 $329.42
</TABLE>
(right arrow)If you annuitize or do not surrender your policy at the end of the
applicable time period, you would pay the following expenses:
<TABLE>
<CAPTION>
Investment Division 1 year 3 years 5 years 10 years
------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund $21.30 $ 71.83 $125.16 $271.74
AIM V.I. Value Fund $21.60 $ 72.73 $126.66 $274.75
Dreyfus VIF--Appreciation Portfolio $21.80 $ 73.33 $127.67 $276.75
Dreyfus VIF--Growth and Income Portfolio $21.90 $ 73.64 $128.17 $277.75
Dreyfus VIF--Quality Bond Portfolio $21.40 $ 72.13 $125.66 $272.74
Dreyfus VIF--Small Cap Portfolio $21.80 $ 73.33 $127.67 $276.75
Federated American Leaders Fund II $22.80 $ 76.34 $132.67 $286.72
Federated Equity Income Fund II $23.40 $ 78.14 $135.66 $292.65
Federated Fund for U.S. Government
Securities II $22.40 $ 75.14 $130.67 $282.74
Federated Prime Money Fund II $21.30 $ 71.83 $125.16 $271.74
INVESCO VIF--Dynamics Fund $26.60 $ 87.69 $151.50 $323.71
INVESCO VIF--Equity Income Fund $25.70 $ 85.01 $147.07 $315.07
INVESCO VIF--High Yield Fund $24.70 $ 82.03 $142.12 $305.38
MFS(R) Emerging Growth Series $22.40 $ 75.14 $130.67 $282.74
MFS(R) Growth with Income Series $22.80 $ 76.34 $132.67 $286.72
MFS(R) Research Series $22.60 $ 75.74 $131.67 $284.73
MFS(R) Utilities Series $23.10 $ 77.24 $134.17 $289.69
Scudder Global Discovery Portfolio $32.75 $105.88 $181.35 $380.74
Scudder International Portfolio $26.80 $ 88.29 $152.48 $325.62
Warburg Pincus International Equity
Portfolio $27.20 $ 89.48 $154.45 $329.42
</TABLE>
These examples reflect the $35 annual contract maintenance charge as a
deduction of 0.13% of assets in the variable investment divisions. These
examples do not reflect any premium tax charges.
These examples are not intended to represent past or future expenses. Actual
expenses may be greater or less than those shown. The assumed 5% return is
purely hypothetical. Actual returns (investment performance) will vary, and may
be more or less than 5%.
6
<PAGE>
Taxes
You are generally required to pay taxes on amounts earned in a non-qualified
policy only when they are withdrawn. When you take distributions or withdrawals
from your policy, taxable earnings are considered to be paid out first,
followed by your investment in the policy.
You are generally required to pay taxes on all amounts withdrawn from a
qualified policy because purchase payments were made with before-tax dollars.
However, the amount of any distribution attributable to after-tax contributions
is not subject to Federal income tax.
Distributions from the policy are taxed as ordinary income. You may owe a
10% Federal tax penalty for distributions or withdrawals taken before age 59
1/2.
Surrender and Partial Withdrawals
You may surrender the policy before the retirement date for the surrender
value, which is the policy value less any withdrawal charge, the annual
contract maintenance charge, the optional death benefit rider charge, and any
premium tax charge.
You may make a partial withdrawal of cash from your policy value. The
withdrawal must be at least $100, and the policy value remaining after the
withdrawal must be at least $1,000.
You cannot surrender the policy or make a withdrawal after the retirement
date. Withdrawals may be prohibited or restricted under qualified policies.
Death Benefit
The policy provides a death benefit if a policy owner dies before the
retirement date. We will pay the death benefit in a lump sum or as a series of
annuity payments. The policy always provides at least a basic death benefit,
and you may purchase the optional death benefit rider.
Basic Death Benefit: The basic death benefit is the greatest of:
(a) your policy value at the time the death benefit is paid;
(b) the total purchase payments you have invested in the policy (less any
withdrawals you have made and withdrawal charges); or
(c) the highest policy value on the sixth policy anniversary and every second
policy anniversary thereafter prior to the policy owner's 76th birthday (or
the annuitant's 76th birthday if the policy owner is not a natural person),
plus any purchase payments you have invested since then, less any
withdrawals you have made and withdrawal charges you have incurred since
then.
Optional Death Benefit Rider: If you purchase the optional death benefit
rider, we will enhance the death benefit to be the greatest of (a), (b), or (c)
above, or:
(d) the total purchase payments you have invested in the policy (less any
withdrawals you have made and withdrawal charges), increasing daily at the
rate of 5% per year until the first anniversary date following the policy
owner's 76th birthday (or the annuitant's 76th birthday if the policy owner
is not a natural person). This is subject to a maximum of 200% of purchase
payments.
There is an extra charge for this rider. The rider is not available in all
states.
Other Information
Free Look: You may cancel the policy by returning it within 10 days after
you receive it. When we receive the returned policy, we will cancel it and
generally will refund your policy value plus any charges deducted. In some
states, we will refund the full amount of your purchase payments instead. (The
"free look" period may be longer in some states.)
Automatic Partial Withdrawals: You may arrange for automatic partial
withdrawals of the same dollar amount to be made every month, three months, six
months, or twelve months. This dollar amount must be at least $100, but in any
one policy year automatic partial withdrawals cannot exceed 10% of your policy
value. These withdrawals may be taxable, and you may also incur a 10% Federal
tax penalty before age 59 1/2.
7
<PAGE>
Waiver of Withdrawal Charges Rider: If your policy includes the waiver of
withdrawal charges rider, we will waive withdrawal charges under certain
conditions if the policy owner or the owner's spouse becomes confined in a
qualified nursing home, qualified hospital, or qualified hospice care program.
Transfers: Before the retirement date, you may transfer all or part of your
policy value among the 21 funding choices up to twelve times per policy year.
However, you may transfer out of the fixed account only once each policy year
(except dollar cost averaging transfers). Other restrictions apply, especially
to fixed account transfers.
After the retirement date, the annuitant may reallocate his or her annuity
interest among the variable investment divisions or from the variable
investment divisions to the fixed account once each policy year. However, after
the retirement date, transfers from the fixed account to the variable
investment divisions are not permitted.
Dollar Cost Averaging: Before the retirement date, you may have automatic
monthly transfers made from the fixed account or the money market investment
division to as many as 17 of the other variable investment divisions. Certain
minimums and other restrictions apply.
Financial Information: Condensed financial information for the variable
investment divisions begins at page 31 of this prospectus. Our financial
statements, and full financial statements for the variable investment
divisions, are in the Statement of Additional Information.
Inquiries
If you have questions about your policy or need to make changes, contact
your financial representative who sold you the policy, or contact us at:
United Investors Life Insurance Company
Administrative Office
P. O. Box 10287
Birmingham, AL 35202-0287
Telephone: (800) 453-1271
- --------------------------------------------------------------------------------
The policy is not available in all states. This prospectus does not offer to
sell securities in any jurisdiction where they cannot be lawfully sold. You
should rely only on the information contained in this prospectus or that we
have referred you to. We have not authorized anyone to provide you with
information that is different.
NOTE: Because this is a summary, it does not contain all the information
that may be important to you. You should read this entire prospectus and the
underlying mutual funds' prospectuses carefully before investing. For qualified
policies, the requirements of a particular retirement plan, an endorsement to
the policy, or limitations or penalties imposed by the Internal Revenue Code
may impose limits or restrictions on purchase payments, surrenders,
distributions or benefits, or on other provisions of the policy. This
prospectus does not describe these limitations or restrictions. (See "Federal
Tax Matters".)
8
<PAGE>
United Investors Life Insurance Company
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We were incorporated in the State of Missouri on August 17, 1981, as the
successor to a company of the same name established in Missouri on September
27, 1961. We are a stock life insurance company, indirectly owned by Torchmark
Corporation. Our principal business is selling life insurance and annuity
contracts. We are admitted to do business in the District of Columbia and all
states except New York.
Published Ratings
We may publish (in advertisements, sales literature, and reports to policy
owners) the ratings and other information assigned to us by one or more
independent insurance industry analysts or rating organizations such as A. M.
Best Company, Standard & Poor's Corporation, and Weiss Research, Inc. These
ratings reflect the organization's current opinion of an insurance company's
financial strength and operating performance in comparison to the norms for the
insurance industry; they do not reflect the strength, performance, risk, or
safety (or lack thereof) of the variable investment options. The claims-paying
ability rating as measured by Standard & Poor's is an opinion of an operating
insurance company's financial capacity to meet its obligations under its
outstanding insurance and annuity policies.
RetireMAP Variable Account
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The variable investment divisions are "sub-accounts" or divisions of the
RetireMAP Variable Account (the "Variable Account"). We established the
Variable Account as a segregated asset account on September 20, 1996. The
Variable Account will receive and invest the purchase payments allocated to the
variable investment divisions. Our Variable Account is currently divided into
20 investment divisions. Each division invests exclusively in shares of a
single mutual fund portfolio. Income, gains and losses arising from the assets
of each investment division are credited to or charged against that division
without regard to income, gains or losses from any other investment division of
the Variable Account or arising out of any other business we may conduct.
The assets in the Variable Account are our property. However, the assets
allocated to the variable investment divisions under the policy are not
chargeable with liabilities arising out of any other business that we may
conduct.
The Variable Account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940. It meets the definition of a
"separate account" under the Federal securities law. However, the SEC does not
supervise the management or investment practices or policies of the Variable
Account or us.
The Portfolios
Each investment division of the Variable Account invests exclusively in
shares of a particular mutual fund portfolio. The assets of each portfolio are
separate from the assets of the other portfolios. Thus, each portfolio operates
separately, and the income, gains, or losses of one portfolio have no effect on
the investment performance of any other portfolio.
The investment objectives and policies of each mutual fund portfolio are
summarized below. There is no assurance that any of the portfolios will achieve
their stated objectives. More detailed information, including a description of
risks, is in the prospectuses of the portfolios.
9
<PAGE>
The following 20 mutual fund portfolios are currently offered to policy
owners through the investment divisions of the Variable Account:
<TABLE>
<CAPTION>
Portfolio Investment Objective and Certain Policies
- -----------------------------------------------------------------------------------------------
<S> <C>
AIM V.I. AIM V.I. Growth Fund seeks growth of capital primarily by investing
Growth Fund in seasoned and better capitalized companies considered to have
strong earnings momentum.
- -----------------------------------------------------------------------------------------------
AIM V.I. AIM V.I. Value Fund seeks long-term growth of capital by investing
Value Fund primarily in equity securities judged by the fund's investment
advisor to be undervalued relative to the investment advisor's
appraisal of the current or projected earnings of the companies
issuing the securities, or relative to current market values of
assets owned by the companies issuing the securities or relative to
the equity market generally. Income is a secondary objective.
- -----------------------------------------------------------------------------------------------
Dreyfus VIF-- Dreyfus VIF--Appreciation Portfolio seeks long-term capital growth
Appreciation Portfolio consistent with the preservation of capital; current income is a
secondary goal. This portfolio invests in common stocks focusing on
"blue chip" companies with total market values of more than $5
billion at the time of purchase.
- -----------------------------------------------------------------------------------------------
Dreyfus VIF--Growth and Dreyfus VIF--Growth and Income Portfolio seeks long-term capital
Income Portfolio growth, current income and growth of income consistent with
reasonable investment risk. To pursue this goal, it invests in
stocks, bonds and money market instruments of domestic and foreign
issuers. The portfolio's stock investments may include common
stocks, preferred stocks and convertible securities.
- -----------------------------------------------------------------------------------------------
Dreyfus VIF--Quality Dreyfus VIF--Quality Bond Portfolio seeks to maximize current income
Bond Portfolio as is consistent with the preservation of capital and the
maintenance of liquidity. To pursue this goal, the portfolio invests
at least 80% of net assets in fixed-income securities, including
mortgage-related securities, collateralized mortgage obligations
("CMOs"), and asset-backed securities, that, when purchased, are
rated A or better or are the unrated equivalent as determined by
Dreyfus, and in securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
- -----------------------------------------------------------------------------------------------
Dreyfus VIF--Small Cap Dreyfus VIF--Small Cap Portfolio seeks to maximize capital
Portfolio appreciation. To pursue this goal, the portfolio generally invests
at least 65% of its assets in the common stock of U.S. and foreign
companies. The portfolio focuses on small-cap companies with total
market values of less than $1.5 billion.
- -----------------------------------------------------------------------------------------------
Federated American Federated American Leaders Fund II seeks to achieve long-term growth
Leaders Fund II of capital and to provide income. The Fund pursues its investment
objectives by investing, under normal circumstances, at least 65% of
its total assets in a portfolio of equity securities issued by
certain blue chip companies selected by the adviser. "Blue-chip"
companies generally are top-quality, established growth companies
which, in the opinion of the Fund's adviser meet certain criteria.
- -----------------------------------------------------------------------------------------------
Federated Equity Income Federated Equity Income Fund II seeks to provide above average
Fund II income and capital appreciation. The Fund attempts to achieve its
objectives by investing at least 65% of its assets in income-
producing equity securities, including securities that are
convertible into common stocks. The portion of the Fund's total
assets invested in common stocks, preferred stocks, and convertible
securities will vary according to the Fund's assessment of market
and economic conditions and outlook.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Portfolio Investment Objective and Certain Policies
- -----------------------------------------------------------------------------------------------
<S> <C>
Federated Fund for U.S. Federated Fund for U.S. Government Securities II seeks to provide
Government Securities II current income. The Fund pursues its investment objectives by
investing primarily in a portfolio of U.S. government mortgage-
backed securities. The Fund does, however, utilize U.S. Treasury
and U.S. government agency debentures in order to comply with the
diversification requirements of the variable contract asset
regulations. The Fund may invest up to 35% of its total assets in
certain mortgage securities of non-governmental issuers the payment
of which is indirectly guaranteed by the U.S. government.
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Federated Prime Money Federated Prime Money Fund II seeks to provide current income
Fund II consistent with stability of principal and liquidity. The Fund
pursues its investment objective by investing in a portfolio of
high quality fixed income securities maturing in 397 days or less.
The average maturity of the Fund's portfolio, computed on a dollar-
weighted basis, will be 90 days or less. An investment in this Fund
is neither insured nor guaranteed by the U.S. government.
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INVESCO VIF--Dynamics INVESCO VIF--Dynamics Fund seeks long-term capital growth by
Fund primarily investing in the common stocks of rapidly growing mid-
sized companies, with market capitalizations generally between $2
billion and $15 billion. See "Risk Factors" in the INVESCO VIF--
Dynamics Fund prospectus for the various types of risks that are
involved with the portfolio.
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INVESCO VIF--High Yield INVESCO VIF--High Yield Fund seeks a high level of current income
Fund by investing substantially all of its assets in lower rated debt
securities commonly called "junk bonds," and in preferred stock,
including securities issued by foreign companies. See "Investment
Risks" in the INVESCO VIF--High Yield Fund prospectus for a
description of the risks involved in investing in lower-rated debt
securities. The portfolio pursues its investment objective through
investment in a variety of long-term, intermediate-term and short-
term bonds. Potential capital appreciation is a factor in the
selection of investments, but is secondary to the portfolio's
primary objective.
- -----------------------------------------------------------------------------------------------
INVESCO VIF--Equity INVESCO VIF--Equity Income Fund seeks the best possible high
Income Fund current income. Capital growth potential is a secondary
consideration in the selection of portfolio securities. The Fund
normally invests at least 65% of its assets in dividend-paying
common and preferred stocks. Up to 10% of the Fund's assets may be
invested in equity securities that do not pay regular dividends.
- -----------------------------------------------------------------------------------------------
MFS(R) Emerging Growth MFS(R) Emerging Growth Series will seek long-term growth of
Series capital. The series invests, under normal market conditions, at
least 65% of its total assets in common stocks and related
securities, such as preferred stocks, convertible securities and
depositary receipts for those securities, of emerging growth
companies. These companies are companies that the series' adviser
believes are either early in their life cycle but have the
potential to become major enterprises or are major enterprises
whose rates of earnings growth are expected to accelerate.
- -----------------------------------------------------------------------------------------------
MFS(R) Growth with MFS(R) Growth with Income Series will seek long-term growth of
Income Series capital and future income while providing more current dividend
income than is normally obtainable from a portfolio of only growth
stocks. The series invests, under normal market conditions, at
least 65% of its total assets in common stock and related
securities, such as preferred stocks, convertible securities and
depositary receipts for those securities. While the series may
invest in companies of any size, the series generally focuses on
companies with larger market capitalizations that the series'
adviser believes have sustainable growth prospects and attractive
valuations based on current and expected earnings or cash flow.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Portfolio Investment Objective and Certain Policies
- ------------------------------------------------------------------------------------------------
<S> <C>
MFS(R) Research Series MFS(R) Research Series will seek to provide long-term growth of
capital and future income. The Series invests, under normal market
conditions, at least 80% of its total assets in common stocks and
related securities, such as preferred stocks, convertible securities
and depositary receipts. The series focuses on companies that the
series' adviser believes have favorable prospects for long-term
growth, attractive valuations based on current and expected earnings
or cash flow, dominant or growing market share and superior
management.
- ------------------------------------------------------------------------------------------------
MFS(R) Utilities Series MFS(R) Utilities Series will seek capital growth and current income
(income above that available from a portfolio invested entirely in
equity securities) by investing under normal market conditions, at
least 65% of its total assets in equity and debt securities of both
domestic and foreign companies in the utilities industry.
- ------------------------------------------------------------------------------------------------
Scudder Global Discovery Scudder Global Discovery Portfolio seeks above-average capital
Portfolio appreciation over the long term by investing primarily in the equity
securities of small companies located throughout the world. It
primarily invests in a diversified portfolio of equity securities of
small, rapidly growing companies that the Portfolio's management
believes offer the potential for above-average returns relative to
larger companies, yet are frequently overlooked and thus undervalued
by the market.
- ------------------------------------------------------------------------------------------------
Scudder International Scudder International Portfolio seeks long-term growth of capital
Portfolio primarily through diversified holdings of marketable foreign equity
securities. It invests primarily in common stocks of established
companies, listed on foreign exchanges, which the Portfolio's
management believes have favorable characteristics. The companies in
which the Portfolio invests do business primarily outside the United
States.
- ------------------------------------------------------------------------------------------------
Warburg Pincus Trust Warburg Pincus Trust International Equity Portfolio seeks long-term
International Equity capital appreciation. To pursue this goal, it invests in equity
Portfolio securities of companies located or conducting a majority of their
business outside the U.S.
</TABLE>
Each mutual fund portfolio is designed to provide an investment vehicle for
variable annuity and variable life insurance contracts issued by various
insurance companies. For more information about the risks associated with the
use of the same funding vehicle for both variable annuity and variable life
insurance contracts of various insurance companies, see the prospectuses of the
portfolios which accompany this prospectus.
These mutual fund portfolios are not available for purchase directly by the
general public, and are not the same as other mutual fund portfolios with very
similar or nearly identical names that are sold directly to the public.
However, the investment objectives and policies of certain portfolios available
under the policy are very similar to the investment objectives and policies of
other portfolios that are or may be managed by the same investment adviser or
manager. Nevertheless, the investment performance and results of the portfolios
available under the policy may be lower, or higher, than the investment results
of such other (publicly available) portfolios. There can be no assurance, and
no representation is made, that the investment results of any of the portfolios
available under the policy will be comparable to the investment results of any
other mutual fund portfolio, even if the other portfolio has the same
investment adviser or manager and the same investment objectives and policies,
and a very similar name.
We may receive payments or revenues from some or all of the mutual fund
portfolios or their investment advisers. The amounts we receive may be
different for each fund or portfolio, and may depend on the amount invested in
each portfolio.
12
<PAGE>
Fund Management
AIM Variable Insurance Funds. A I M Advisors, Inc. ("AIM") has acted as an
investment advisor since its organization in 1976. Today, AIM, together with
its subsidiaries, advises or manages over 120 investment portfolios
encompassing a broad range of investment objectives.
Dreyfus Variable Investment Fund. The Dreyfus Corporation ("Dreyfus") is the
investment adviser of Dreyfus Variable Investment Fund and provides investment
advisory services to its portfolios. Fayez Sarofim & Co. is the sub-investment
adviser of the Appreciation Portfolio, for which it provides investment
advisory assistance and day-to-day management.
Federated Insurance Series. Federated Investment Management Company is the
investment adviser of Federated Insurance Series and provides investment
advisory services to its portfolios.
INVESCO Variable Investment Funds, Inc. INVESCO Funds Group, Inc. ("IFG") is
the investment adviser of the INVESCO Variable Investment Funds, Inc. and
provides investment advisory services to its portfolios.
MFS(R) Variable Insurance TrustSM. Massachusetts Financial Services Company
("MFS") is the investment adviser of MFS(R) Variable Insurance Trust and
provides investment advisory services to its portfolios.
Scudder Variable Life Investment Fund. Scudder Kemper Investments, Inc.
("Scudder"), is the investment adviser of Scudder Variable Life Investment Fund
and provides investment advisory services to its portfolios.
Warburg Pincus Trust. Credit Suisse Asset Management LLC ("CSAM"), is the
investment adviser of Warburg Pincus Trust and provides investment advisory
services to their portfolios.
Fixed Account
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The funding choice guaranteeing your principal and a minimum fixed rate of
interest is called the "fixed account." It is not registered under the
Securities Act of 1933, and it is not registered as an investment company under
the Investment Company Act of 1940. Accordingly, neither the fixed account nor
any interests therein are subject to the provisions or restrictions of these
Federal securities laws, and the disclosure regarding the fixed account has not
been reviewed by the staff of the SEC.
The fixed account is a part of our general account, which includes all of
our assets other than those in any separate account. We guarantee that we will
credit interest at a rate of not less than 4% per year to policy value
allocated to the fixed account. We may credit interest at a rate in excess of
4% per year, but any excess interest credited will be determined in our sole
discretion. The policy owner assumes the risk that interest credited to the
fixed account may not exceed 4% per year. The fixed account may not be
available in all states.
As the policy owner, you determine the allocation of policy value to the
fixed account. Before the retirement date, you may transfer all or part of the
policy value in the fixed account to one or more of the variable investment
divisions once per policy year. After the retirement date, transfers out of the
fixed account are not allowed. After the retirement date, values in the
variable investment divisions may be transferred to the fixed account only once
per policy year. (See "Transfers".)
13
<PAGE>
The Policy
- --------------------------------------------------------------------------------
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The policy is a deferred variable annuity. Your rights and benefits as owner
of the policy are described below and in the policy. However, we reserve the
right to modify the policy to comply with any law or regulation, or to give you
the benefit of any law or regulation, where permitted by state law.
Issuance of a Policy
If you wish to purchase a policy, you must complete an application and send
it to our administrative office. We will generally accept your application if
it conforms to our requirements, but we reserve the right to reject any
application or purchase payment. If the application can be accepted in the form
received, the initial purchase payments will be applied within two business
days after the latter of receipt of the application or receipt of the initial
purchase payment. If the initial purchase payment cannot be applied within five
business days after receipt because the application is incomplete, we will
contact you with an explanation for the delay. Your initial purchase payment
will be returned at that time unless you let us keep it and apply it as soon as
the remaining application requirements are met. Both you (the policy owner) and
the annuitant (if different) must be less than 85 years old when you purchase a
policy. The policy will only become effective when we accept your application.
Purchase Payments
The initial purchase payment for non-qualified policies must be at least
$2,000. For qualified policies, the initial purchase payment must be at least
$1,200. Additional purchase payments may be in amounts of $100 or more. As an
exception for qualified policies, if purchase payments will be made by means of
a bank draft authorization or a group payment method approved in advance by us,
we will accept installments of $100 per month for the first year.
Allocation of Purchase Payments
You determine in the application how the initial purchase payment will be
allocated among the variable investment divisions and the fixed account. You
may use any whole percentage to allocate your purchase payments, from 0% to
100%.
Between the date that we receive the initial purchase payment and your
policy's effective date, we will credit interest on the purchase payment equal
to the interest paid by the money market investment division.
If you make an additional purchase payment, we will allocate the purchase
payment among the funding choices according to your instructions. These will be
the allocations you specify in the application, or new instructions you
provide.
Your policy value will vary with the investment performance of the variable
investment divisions you select. You bear the entire risk for amounts allocated
to the variable investment divisions. You should periodically review your
allocations of policy value in light of all relevant factors, including market
conditions and your overall financial planning requirements.
Policy Value
Your policy value prior to the retirement date is equal to:
(a) your variable account value; plus
(b) your fixed account value.
14
<PAGE>
Variable Account Value. Your variable account value is not guaranteed. It
equals the sum of the values of the variable investment divisions under the
policy. The value of each variable investment division is calculated on each
business day. Business days generally are Monday through Friday, except
holidays when the New York Stock Exchange or United Investors' Administrative
Office is closed.
On your policy's effective date, your variable account value is equal to the
portion of the initial purchase payment allocated to the variable investment
divisions (plus any accrued interest from the date we received the initial
purchase payment to the policy's effective date). On any business day
thereafter, the value of each variable investment division under your policy
equals:
(a) the value of the investment division on the previous business day,
increased or decreased by its investment experience and daily charge;
plus
(b) the amount of any purchase payments allocated to the investment
division since the previous business day; plus
(c) the amount of any transfers into the investment division since the
previous business day; minus
(d) the amount of any withdrawals (including any withdrawal charge or
transaction charge) from the investment division since the previous
business day; minus
(e) the amount of any transfers out of the investment division since the
previous business day; minus
(f) the portion of the annual contract maintenance charge (and optional
death benefit rider charge, if applicable) allocated to the investment
division since the previous business day; minus
(g) the portion of any deduction for premium taxes allocated to the
investment division since the previous business day.
Deductions (f) and (g) will be made from each investment division in the
same proportion that the value of the investment division bears to your entire
policy value.
Fixed Account Value. On any business day, your fixed account value is equal
to:
(a) the value of the fixed account on the previous business day; plus
(b) the sum of all purchase payments allocated to the fixed account since
the previous business day; plus
(c) any amounts transferred into the fixed account since the previous
business day; plus
(d) total interest credited since the previous business day; less
(e) any amounts transferred out of the fixed account since the previous
business day; less
(f) the portion of any withdrawals, withdrawal charges, and transaction
charges allocated to the fixed account since the previous business day;
less
(g) the portion of the optional death benefit rider charge (if applicable)
allocated to the fixed account since the previous business day; less
(h) the portion of any deduction for premium taxes allocated to the fixed
account since the previous business day.
15
<PAGE>
Surrender and Partial Withdrawals
Withdrawals. You may make a partial withdrawal from your policy value prior
to the retirement date. You must send a written request to our administrative
office in a form acceptable to us. A partial withdrawal must be for at least
$100, and your remaining policy value must be at least $1,000 after a partial
withdrawal. If your policy value would be less than $1,000, we will treat the
request for a partial withdrawal as a request for complete surrender of your
policy. We will ordinarily pay a withdrawal within seven days of receipt of
your written request (unless the check for your purchase payment has not yet
cleared your bank). We may defer payment of any amounts from the fixed account
for up to six months. If we defer payment for more than 30 days, we will pay
interest on the amount deferred at a rate not less than 4% per year.
You can specify that the partial withdrawal should be made from a particular
funding choice (or choices). If you do not specify this, then the partial
withdrawal will be made from the funding choices in the same proportions that
their values bear to your total policy value.
You may request up to 12 withdrawals per policy year without a transaction
charge. If you request more than these 12 withdrawals, there will be a $20
transaction charge (or 2% of the amount withdrawn, if less) for each additional
withdrawal during that policy year. Also, withdrawal charges of up to 7% may
apply to withdrawal amounts in a policy year that exceed the free withdrawal
amount. (See "Withdrawal Charge" and "Transaction Charge".) Any transaction
charge or withdrawal charge will be deducted from your remaining policy value,
or from the amount paid if your remaining policy value is insufficient. No
withdrawals may be made after the retirement date.
Partial withdrawals may be subject to a 10% Federal tax penalty and to
income tax. (See "Federal Tax Matters".)
Automatic Partial Withdrawals. You may also establish automatic partial
withdrawals by submitting a one-time written request. These automatic partial
withdrawals of a fixed dollar amount may be requested on a monthly, quarterly,
semi-annual or annual basis. The minimum amount you can withdraw is $100. The
maximum amount of automatic partial withdrawals in any one policy year is the
free withdrawal amount. Automatic partial withdrawals are only available before
the retirement date.
Automatic partial withdrawals are subject to all the other policy provisions
and terms. If an additional withdrawal is made from a policy participating in
automatic partial withdrawals, the automatic partial withdrawals will terminate
automatically and may be resumed only on or after the next policy anniversary.
Automatic partial withdrawals may be subject to a 10% Federal tax penalty
and to income tax. (See "Federal Tax Matters".)
Surrender. You may surrender your policy for its policy value--less any
withdrawal charge, the annual contract maintenance charge, the optional death
benefit rider charge (if applicable), and any deductions for premium taxes--by
sending a written request to our administrative office. (The withdrawal charge,
described below, is only applicable if a surrender occurs in the first six
policy years following receipt of a purchase payment.) A surrender will
ordinarily be paid within seven days of receipt of your written request (unless
the check for a purchase payment has not yet cleared your bank). Your policy
will terminate as of the date we receive your written request for surrender.
Surrenders are generally taxable transactions, and may be subject to a 10%
Federal tax penalty. (See "Federal Tax Matters".) The policy may not be
surrendered after the retirement date.
Restrictions Under the Texas ORP and Section 403(b) Plans. The Texas
Educational Code does not permit participants in the Texas Optional Retirement
Program ("ORP") to withdraw or surrender their interest in a variable annuity
contract issued under the ORP except upon:
(a) termination of employment in the Texas public institutions of higher
education;
(b) retirement; or
(c) death.
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<PAGE>
Accordingly, a participant in the ORP (or the participant's estate if the
participant has died) will be required to obtain a certificate of termination
from the employer or a certificate of death before the account can be redeemed.
Similar restrictions apply to variable annuity contracts used as funding
vehicles for Section 403(b) retirement plans. Section 403(b) of the Internal
Revenue Code provides for tax-deferred retirement savings plans for employees
of certain non-profit and educational organizations. As required by Section
403(b), any policy used for a Section 403(b) plan will prohibit distributions
of:
(a) elective contributions made in years beginning after December 31, 1988;
(b) earnings on those contributions; and
(c) earnings on amounts attributable to elective contributions held as of
the end of the last year beginning before January 1, 1989.
However, distributions of such amounts will be allowed upon:
(a) death of the employee;
(b) reaching age 59 1/2;
(c) separation from service;
(d) disability; or
(e) financial hardship (except that income attributable to elective
contributions may not be distributed in the case of hardship).
Restrictions Under Other Qualified Policies. Other restrictions on
surrenders or with respect to the election, commencement, or distributions of
benefits may apply under qualified policies or under the terms of the plans for
which qualified policies are issued.
Transfers
Before the Retirement Date. You may transfer all or a part of your fixed
account value to one or more of the variable investment divisions once per
policy year before the retirement date. However, this restriction does not
apply to automatic monthly transfers of a preselected dollar amount from the
fixed account to a variable investment division. (See "Dollar Cost Averaging".)
The amount transferred from the fixed account to a variable investment division
may not exceed the greater of:
(a) 25% of the prior policy anniversary's fixed account value; or
(b) the amount of the prior policy year's transfer.
You may transfer all or part of your variable account value out of a
variable investment division (to one or more of the other variable investment
divisions or to the fixed account) up to 12 times per policy year. However, if
a transfer has been made out of the fixed account, then no transfer into the
fixed account may be made for six months from the transfer date.
The value remaining in the fixed account or each variable investment
division from which a transfer is requested must be at least $250. If the value
remaining would be less than $250, we will transfer the total value in the
fixed account or variable investment division from which you have requested the
transfer.
After the Retirement Date. Transfers from the fixed account to the variable
investment divisions are not allowed after the retirement date.
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After the retirement date, the annuitant may transfer values among the
variable investment divisions once per policy year and may transfer values from
the variable investment divisions to the fixed account once per policy year.
Transfer Procedures. Transfers may be made by a written request to our
administrative office or by calling us if a written authorization for telephone
transfers is on file. We have the authority to honor any telephone transfer
request believed to be authentic. We employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. For example, you may
be required to use a personal identification number to initiate a telephone
transfer. We will not be liable for the consequences of a fraudulent telephone
transfer request we believe to be authentic. As a result, you bear the risk of
loss arising from such a fraudulent request if you give us authorization for
telephone transfers.
We will make each transfer, without the imposition of any fee or charge, at
the end of the business day during which we receive a valid, complete transfer
request. We may suspend or modify this transfer privilege at any time.
Dollar Cost Averaging
Before the retirement date, you may authorize automatic transfers of a fixed
dollar amount from the fixed account or the money market investment division to
as many as 17 of the other variable investment divisions. Automatic transfers
will be made monthly on the day of the month you select. (If that day of the
month does not fall on a business day, then transfers will be made on the next
following business day.) Transfers will be made at the unit values determined
on the date of each transfer.
The minimum automatic transfer amount is $100. If the transfer is to be made
into more than one variable investment division, a minimum of $25 must be
transferred into each variable investment division selected.
Participation in the automatic transfer program does not guarantee a greater
profit, nor does it protect against loss in declining markets. You should
consider your ability to continue the program through all market conditions.
Automatic dollar cost averaging transfers will not be counted as transfers for
purposes of the 12-transfer limit specified in "Transfers" above.
Death Benefit
The policy pays a death benefit to the beneficiary named in the policy if a
policy owner dies before the retirement date while the policy is in force. (If
no owner of a policy is a natural person, the death benefit is payable if an
annuitant dies before the retirement date.) The policy provides a basic death
benefit, and an optional death benefit rider is available for an extra charge.
Basic Death Benefit. Under the policy without the optional death benefit
rider, the death benefit is the greatest of:
(a) the policy value;
(b) the total purchase payments made, adjusted for any amounts withdrawn
and any withdrawal charges; or
(c) the highest of the policy values on the sixth policy anniversary and
every second policy anniversary thereafter prior to the policy
anniversary following the policy owner's 76th birthday (or the
annuitant's 76th birthday if the policy owner is not a natural person),
plus any purchase payments made since then, adjusted for any amounts
withdrawn and any withdrawal charges since then.
Adjustment for amounts withdrawn and withdrawal charges will reduce the death
benefit under (b) and (c) above in the same proportion that they reduced the
policy value on the date of the withdrawal. The death benefit under (c) above
will not increase on or after the policy anniversary following the policy
owner's 76th birthday (or the annuitant's 76th birthday if the policy owner is
not a natural person).
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<PAGE>
Optional Death Benefit Rider. This rider is optional, and is available for
an additional annual charge of 0.17% of the average death benefit. However,
this rider is not available if the policy owner is over age 70. Also, this
rider is not available in all states. If you have purchased this rider for your
policy, then the death benefit is the greatest of (a), (b), or (c) above, or:
(d) the total purchase payments made, less any withdrawals and withdrawal
charges, accumulated daily at a rate equivalent to 5% per year, from
the date such amount is allocated or withdrawn, to the policy
anniversary following the policy owner's 76th birthday (or the
annuitant's 76th birthday if the policy owner is not a natural person),
subject to a maximum of 200% of purchase payments.
The death benefit under (d) above will not increase on or after the policy
anniversary following the policy owner's 76th birthday (or the annuitant's 76th
birthday if the policy owner is not a natural person).
The optional death benefit rider will terminate on the earliest of:
(a) the date the policy is surrendered, terminated or exchanged;
(b) the retirement date; or
(c) the date your written request to terminate this rider is received at
our administrative office.
Payment Procedures. Upon receiving due proof of death, we will pay the death
benefit proceeds to the beneficiary in a lump sum or under one of the annuity
payment methods. (See "Annuity Payments".) However, we will not compute the
amount of the death benefit until the date it is paid, and we cannot pay the
death benefit until we receive both due proof of death and instructions on how
to pay it (that is, as a lump sum or applied under one of the annuity payment
methods). If an annuitant or an owner dies after the retirement date, the
amount payable, if any, will be as provided in the annuity payment method then
in effect.
If an annuitant dies before the retirement date and if that annuitant is
also the owner or a joint owner of the policy (or any owner is not a natural
person), then special rules (governing distribution of death benefit proceeds
in the event of the death of an owner) shall apply. (See "Required
Distributions" below.) If (i) an annuitant dies before the retirement date,
(ii) that annuitant was not an owner, and (iii) all owners are natural persons,
then the owner may name a new annuitant (subject to our age limitations) and
the death benefit will not be payable. If the owner does not name a new
annuitant, the owner will automatically become the annuitant and the death
benefit will not be payable.
If an owner dies before the retirement date, the entire death benefit
proceeds must be distributed within five years after the date of death. If the
beneficiary chooses to receive any of these proceeds as an annuity,
distributions must commence within one year after the date of death and must be
distributed over the beneficiary's lifetime or over a period not extending
beyond the beneficiary's life expectancy.
If the beneficiary is the deceased owner's spouse, then the spouse may elect
to continue the policy in force (and be treated as the original policy owner)
instead of receiving the death benefit proceeds. If the beneficiary elects to
continue the policy in this manner, then although the beneficiary does not have
a right to receive the death benefit proceeds, we will increase the policy
value so that it equals the amount of the death benefit (if greater).
As far as permitted by law, the death benefit proceeds under the policy will
not be subject to any claim of the beneficiary's creditors.
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Required Distributions
In order to be treated as an annuity contract for Federal income tax
purposes, the Internal Revenue Code requires any non-qualified policy to
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provide that:
(a) if any owner dies before the retirement date, then the entire interest
in the policy will be distributed within five years after the date of
that owner's death; and
(b) if any owner dies on or after the retirement date but before the time
the entire interest in the policy has been distributed, then the
remaining portion of such interest will be distributed at least as
rapidly as under the method of distribution being used as of the date
of that owner's death.
These requirements will be considered satisfied as to any portion of the
owner's interest that is payable as annuity payments, beginning within one year
of that owner's death, that will be made over the life of the owner's
designated beneficiary or over a period not extending beyond his life
expectancy.
If any owner dies before the retirement date, then ownership of the policy
passes to the owner's designated beneficiary, who then has the right to the
death benefit. If the policy has joint owners and one owner dies, then the
surviving joint owner is the designated beneficiary. If there is no joint owner
and the owner dies, then the owner's designated beneficiary is the beneficiary
named in the policy.
If the owner's designated beneficiary is the surviving spouse of the owner,
then the policy may be continued with the surviving spouse as the new owner and
no distributions will be required.
If an annuitant is an owner or joint owner and that annuitant dies before
the retirement date, and if the owner's designated beneficiary does not elect
to receive the death benefit in a lump sum at that time, then we will increase
the policy value so that it equals the death benefit amount, if that is higher
than the policy value. This would occur if the owner's designated beneficiary:
(a) elects to delay receipt of the proceeds for up to five years;
(b) is the deceased owner's spouse and elects to continue the policy; or
(c) elects to receive the proceeds as annuity payments, as described above.
Any such increase in the policy value would be paid by us. We will allocate it
to the variable investment divisions and the fixed account in proportion to the
pre-existing policy value, unless instructed otherwise.
The non-qualified policies contain provisions which are intended to comply
with the requirements of the Internal Revenue Code. However, no regulations
interpreting these requirements have been issued. We intend to review such
provisions and modify them if necessary to assure that they comply with the
applicable requirements when clarified by regulation or otherwise.
Other rules may apply to qualified policies.
"Free Look" Period
If for any reason you are not satisfied with the policy, you may return it
to us within 10 days after you receive it. If you cancel the policy within this
10-day "free look" period, we will generally refund the policy value (plus any
charges for premium taxes deducted before purchase payments were allocated to
funding choices) and the policy will be void from its effective date. (In some
states, we will instead refund the full amount of purchase payment received.)
To cancel the policy, you must mail or deliver it either to our administrative
office or to the registered agent who sold it within 10 days after you receive
it. (See "Allocation of Purchase Payments".) The "free look" period may be
longer than 10 days where required by state law.
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Charges and Deductions
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We do not deduct any charges from a purchase payment (except for any premium
taxes charged in your location). However, certain other charges are deducted to
compensate us for providing the insurance benefits set forth in the policy, for
administering and distributing the policy, for any applicable taxes, and for
assuming certain risks in connection with the policy. These charges are
described below.
Withdrawal Charge
We may deduct a withdrawal charge if you:
(a) make partial withdrawals under the policy; or
(b) surrender the policy.
The withdrawal charge is a percent of the purchase payments deemed to be
included in the withdrawal (in the case of a partial withdrawal) or the total
purchase payments (in the case of a surrender), as specified in the following
table of withdrawal charge rates:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Policy
Anniversaries since 0 1 2 3 4 5 6 or
receipt of Purchase more
Payment:
- ----------------------------------------------------------------------------------------
Withdrawal Charge 7% 7% 6% 6% 4% 3% none
(% of Purchase Payment):
</TABLE>
There is a "free withdrawal amount" that can be withdrawn each policy year
without a withdrawal charge. The free withdrawal amount in a policy year is 10%
of policy value. We calculate the free withdrawal amount at the time you make
the first withdrawal in a policy year. Amounts withdrawn in excess of the free
withdrawal amount may be subject to the withdrawal charge.
The withdrawal charge is determined by multiplying each purchase payment
deemed included in the withdrawal by the applicable withdrawal charge rate
specified in the table above.
For purposes of calculating the withdrawal charge:
(a) the oldest purchase payments will be treated as the first withdrawn,
newer purchase payments next, and appreciation last;
(b) amounts withdrawn up to the free withdrawal amount will not be
considered a withdrawal of purchase payments; and
(c) if the policy is surrendered, the withdrawal charge will apply to all
purchase payments not previously assessed with a withdrawal charge.
As shown above, the withdrawal charge percentage varies, depending on the
"age" of the purchase payments included in the withdrawal--that is, the number
of policy years since the purchase payment was paid. A withdrawal charge of 7%
applies to purchase payments withdrawn that are less than two years old.
Thereafter the withdrawal charge rate decreases to 3% on purchase payments that
are five years old. Amounts representing purchase payments that are at least
six years old may be withdrawn without charge.
We will deduct the withdrawal charge from the remaining policy value, or
from the amount paid if there is not enough value remaining. The withdrawal
charge partially compensates us for sales expenses, including agent sales
commissions, the cost of printing prospectuses and sales literature,
advertising, and other marketing and sales promotional activities.
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The amounts we receive from the withdrawal charge, along with the sales
charge, may not be sufficient to cover distribution expenses. We expect to
recover any deficiency from our general assets (which include amounts derived
from the mortality and expense risk charge, as described below).
Waiver of Withdrawal Charges Rider
We waive the withdrawal charges described above if the owner or the owner's
spouse becomes confined to a nursing home, hospital, or hospice care program,
provided that certain conditions are met. These conditions include:
(a) the waiver of withdrawal charges rider is attached to your policy;
(b) the owner or the owner's spouse is continuously confined to a "Nursing
Home," "Hospital," or "Hospice Care Program" for a combined stay of at
least 30 days within a 35-day period;
(c) the confinement must have totally occurred after the policy's effective
date; and
(d) written notice and satisfactory proof of confinement are received no
later than 60 days after confinement ends.
Waiver of withdrawal charges is subject to all of the conditions and
provisions of the rider. (See your policy.) There is no charge for this rider.
Also, it is not available in all states.
Annual Contract Maintenance Charge
We deduct an annual policy fee of $35 from each policy, for administering
the policy. This deduction is made from the variable investment divisions in
the same proportion that their values bear to the policy's variable account
value. These expenses include costs of maintaining records, processing death
benefit claims, surrenders, transfers and policy changes, providing reports to
policy owners, and overhead costs. We guarantee not to increase this charge
during the life of the policy. Before the retirement date, this charge is
deducted on each policy anniversary and upon a full surrender of your policy.
We waive this charge on any policy anniversary when at least $30,000 of
cumulative purchase payments (less any withdrawals) have been made under your
policy. After the retirement date, this charge is not deducted.
Administration Fee
We also deduct a daily charge from the investment divisions of the Variable
Account, at an annual rate of 0.15% of the average daily net assets of each
variable investment division, for administering the Variable Account and the
policy. These expenses include costs of maintaining records, processing death
benefit claims, surrenders, transfers and policy changes, providing reports to
policy owners, and overhead costs. We guarantee not to increase this charge
during the life of the policy. We will continue to deduct this charge after the
retirement date.
Mortality and Expense Risk Charge
We deduct a daily charge from the variable investment divisions at an
effective annual rate of 1.25% of their average daily net assets. This charge
compensates us for assuming certain mortality and expense risks. No mortality
and expense risk charge is deducted from the fixed account. We may realize a
profit from this charge. However, the level of this charge is guaranteed for
the life of the policy and may not be increased. We will continue to deduct
this charge after the retirement date.
The mortality risk we bear arises in part from our obligation to make
monthly annuity payments regardless of how long all annuitants or any
individual may live. These payments are guaranteed in accordance with the
annuity tables and other provisions contained in the policy. This assures you
that neither the longevity of the annuitant, nor an unanticipated improvement
in general life expectancy, will have any adverse effect on the
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<PAGE>
monthly annuity payments the annuitant will receive under the policy. Our
obligation therefore relieves the annuitant from the risk that he or she will
outlive the funds accumulated for retirement. The mortality risk also arises in
part because of the risk that the death benefit may be greater than the policy
value. We also assume the risk that other expense charges may be insufficient
to cover the actual expenses we incur.
Optional Death Benefit Rider Charge
If you purchase the optional death benefit rider, we will deduct an annual
charge from the policy for the additional mortality risk. This charge is 0.17%
of the average death benefit amount and is deducted from the variable
investment divisions in the same proportion that their values bear to the
policy's variable account value. We deduct it in full on each policy
anniversary and pro rata on full surrender of the policy or voluntary
termination of the rider. It is not deducted after the retirement date. The
average death benefit amount is the simple average of the death benefit amount
on the current policy anniversary (or the date of surrender) and the preceding
policy anniversary.
Transaction Charge
You may make up to 12 withdrawals per policy year without a transaction
charge. After the 12th withdrawal in a policy year, a transaction charge will
apply to each additional withdrawal. The transaction charge is $20 or 2% of the
amount withdrawn, whichever is less. We will deduct this charge from the
remaining policy value, or from the amount paid if there is not enough value
remaining. This charge is in addition to any applicable withdrawal charge.
Premium Taxes
We will deduct a charge for any premium taxes we incur. Depending on state
and local law, premium taxes can be incurred when you make a purchase payment,
when policy value is withdrawn or surrendered, or when annuity payments start.
(The state premium tax rates currently range from 0% to 3.50%. Some local
governments charge additional premium taxes.)
Federal Taxes
Currently no charge is made for Federal income taxes that may be
attributable to the Variable Account. We may, however, make such a charge in
the future. Charges for other taxes, if any, attributable to the Variable
Account may also be made. (See "Federal Tax Matters".)
Fund Expenses
The value of the assets of the variable investment divisions will reflect
the investment management fee and other expenses incurred by the corresponding
mutual fund portfolios in which they invest. (See "Summary--Charges and
Deductions".)
Reduction in Charges for Certain Groups
We may reduce or eliminate the administration fee, annual contract
maintenance charge, or withdrawal charges on policies that have been sold to:
(a) our employees and sales representatives, or those of our affiliates or
distributors of the policy;
(b) our customers or distributors of the policies who are transferring
existing policy values to a policy;
(c) individuals or groups when sales of the policy result in savings of
sales or administrative expenses; or
(d) individuals or groups where purchase payments are paid through an
approved group payment method and where the size and type of the group
results in savings of administrative expenses.
We will not reduce or eliminate the administration fee, annual contract
maintenance charge, or withdrawal charges where such reduction or elimination
will unfairly discriminate against any person.
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Annuity Payments
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Election of Annuity Payment Method
As the policy owner, you have the sole right to elect an annuity payment
method in the application. You can also change that election, during your
lifetime and before the retirement date, by written request any time at least
30 days before the retirement date. We may require the exchange of the policy
for a contract covering the method selected.
Retirement Date
The first annuity payment will be made as of the retirement date. You may
select the retirement date in the application for the policy. If no selection
is made at that time, the retirement date will be the later of the annuitant's
age 85 or 10 years after the policy's effective date, or the date required by
state law. You may change the retirement date by giving us written notice at
least 30 days before the old retirement date (and at least 30 days before the
new retirement date).
A retirement date must be the first day of any calendar month. It must also
be at least one year and one month after the policy's effective date.
Annuity Payment Methods
The policy value as of 14 days before the retirement date (less any premium
taxes) may be applied to annuity payments. They can be fixed annuity payments,
variable annuity payments, or a combination of both.
Fixed annuity payments provide guaranteed annuity payments which remain
fixed in amount throughout the payment period. Variable annuity payments vary
with the investment experience of the variable investment divisions. The dollar
amount of variable annuity payments after the first is not fixed.
Annuity payment methods currently available include:
<TABLE>
<S> <C>
Life Annuity with No This method provides monthly annuity payments during the
Guaranteed Period lifetime of the annuitant. No payment will be made after the
death of the annuitant. Only one payment will be made under
this method if the annuitant dies before the second payment is
due; only two payments will be made if the annuitant dies
before the third payment is due; and so forth.
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Joint Life Annuity This method provides monthly annuity payments during the
Continuing to lifetime of the annuitant and a joint annuitant. Payments will
the Survivor continue to the survivor for the survivor's remaining
lifetime. Only one payment or very few payments will be made
under this method if the annuitant and joint annuitant both
die before or shortly after payments begin.
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Life Annuity with 120 or This method provides monthly annuity payments during the
240 Monthly Payments lifetime of the annuitant. A guaranteed period of 120 or 240
Guaranteed months (10 or 20 years) may be chosen. If the annuitant dies
prior to the end of this guaranteed period, monthly annuity
payments will be made to the beneficiary until the end of the
guaranteed period.
</TABLE>
Other annuity payment methods are currently available with our written consent.
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<PAGE>
If you have not selected an annuity payment method on the retirement date,
we will make monthly annuity payments during the lifetime of the annuitant with
120 monthly payments guaranteed. Unless you instruct us otherwise before the
retirement date, we will use your variable account value to make variable
annuity payments ( in accordance with the allocation of your account value
among the investment divisions) and we will use your fixed account value to
make fixed annuity payments.
The amount of each annuity payment under the methods described above will
depend on the sex and age of the annuitant (or annuitants) at the time the
first payment is due. The annuity payments may be more or less than the total
purchase payments, and more or less than the policy value, because:
(a) variable annuity payments vary with the investment experience of the
underlying mutual fund portfolios and you therefore bear the investment
risk under variable annuity payments; and
(b) annuitants may die before the actuarially predicted date of death.
Therefore, the dollar amount of annuity payments cannot be predicted. The
method of computing the annuity payments is described in more detail in the
Statement of Additional Information.
The duration of the annuity payment guarantee will affect the dollar amount
of each payment. For example, payments guaranteed for 20 years will be less
than payments guaranteed for 10 years.
Whether variable annuity payments decrease, increase, or remain level
depends on whether the net investment performance is worse than the "assumed
investment rate," better than that rate, or equal to that rate. The assumed
investment rate is 4.0% per year. The dollar amount of the variable annuity
payments will decrease if the actual net investment experience of the variable
investment division(s) you select is less than the assumed investment rate. The
dollar amount of the variable annuity payments will increase if the actual net
investment experience exceeds the assumed investment rate. The dollar amount of
the variable annuity payments will stay the same if the actual net investment
experience equals the assumed investment rate.
Fixed annuity payment amounts will be based on our fixed annuity payment
rates in effect on the retirement date. These rates are guaranteed not to be
less than payments based on the 1983 Individual Annuity Mortality Table (set
back one year) with interest at 4.0%. The one-year setback results in lower
annuity payments than if no setback is used.
If the net amount to be applied to an annuity payment method is less than
$2,000, we have the right to pay such amount in one sum. Also, if any payment
would be less than $50, we have the right to reduce the frequency of payment to
an interval that will result in payments of at least $50.
After the retirement date, the policy value may not be withdrawn, nor may
the policy be surrendered. The annuitant will be entitled to exercise any
voting rights and to reallocate the value of his or her interest in the
variable investment divisions. (See "Voting Rights" and "Transfers".)
The policies offered by this prospectus contain life annuity tables that
provide for different benefit payments to men and women of the same age,
although they provide for unisex tables where requested and required by law.
Nevertheless, in accordance with the U.S. Supreme Court's decision in Arizona
Governing Committee v. Norris, in certain employment-related situations,
annuity tables that do not vary on the basis of sex must be used. Accordingly,
if the policy will be used in connection with an employment-related retirement
or benefit plan, you should give consideration, in consultation with your legal
counsel, to the impact of Norris on any such plan before making any
contributions under these policies.
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Distribution of the Policies
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MAP Investments Incorporated ("MAP") of 9020 North May Avenue, Suite 290,
Oklahoma City, Oklahoma 73120-4498, is the principal underwriter and the
distributor of the policies. MAP may enter into written sales agreements with
various broker-dealers to aid in the distribution of the policies. A commission
plus bonus compensation may be paid to broker-dealers or agents in connection
with sales of the policies. Bonus compensation will be based on the amount of
purchase payments received and /or assets under management.
Federal Tax Matters
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The following discussion is general and is not intended as tax advice.
We do not intend to address the tax consequences resulting from all
situations in which a person may be entitled to or may receive a distribution
under a policy. Any person concerned about these tax implications should
consult a competent tax advisor before initiating any transaction. This
discussion is based upon our understanding of the present Federal income tax
laws as they are currently interpreted by the Internal Revenue Service. We have
not assessed the likelihood of the continuation of the present Federal income
tax laws or of their current interpretation by the Internal Revenue Service.
Moreover, we have not attempted to consider any applicable state or other tax
laws.
The policy may be purchased on a non-tax-qualified basis ("non-qualified
policy") or as a qualified policy. Qualified policies are designed for use with
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retirement plans entitled to special income tax treatment under the Internal
Revenue Code of 1986, as amended (the "Code").
Possible Changes in Taxation. Although the likelihood of legislative change
is uncertain, there is always the possibility that the tax treatment of the
policy could change by legislation or other means (such as U.S. Treasury
Department regulations, Internal Revenue Service revenue rulings, and judicial
decisions). It is possible that any change could be retroactive (that is,
effective prior to the date of the change). You should consult a tax advisor
regarding such developments and their effect on the policy.
Taxation of Annuities in General. The following discussion assumes that the
policy will qualify as an annuity contract for Federal income tax purposes. The
Statement of Additional Information and the "Required Distributions" section of
this prospectus describe the requirements necessary to qualify.
Section 72 of the Code governs taxation of annuities in general.
An annuity owner who is a natural person generally is not taxed on increases
in the value of a policy until distribution occurs. Distribution could be
either in the form of a lump sum received by withdrawing all or part of the
cash value (i.e., surrender or partial withdrawal) or in the form of annuity
payments under the annuity payment method elected. For this purpose, the
assignment, pledge, or agreement to assign or pledge any portion of the policy
value generally will be treated as a distribution. The taxable portion of a
distribution (in the form of a lump sum payment or annuity payments) is taxed
as ordinary income.
An owner of any deferred annuity contract who is not a natural person
generally must include in income any increase in the excess of the policy value
over the owner's "investment in the contract" during the taxable year. However,
there are some exceptions to this rule, and you may wish to discuss these with
your tax advisor.
The following discussion applies to policies owned by natural persons.
Withdrawals. In the case of a withdrawal under a qualified policy, a ratable
----------------
portion of the amount received is taxable, generally based on the ratio of the
"investment in the contract" to the total policy value.
26
<PAGE>
The "investment in the contract" generally equals the portion, if any, of
purchase payments paid with after-tax dollars (that is, purchase payments that
were not excluded from the individual's gross income). For qualified policies,
the "investment in the contract" can be zero. Special rules may apply to a
withdrawal from a qualified policy.
Generally, in the case of a partial withdrawal under a non-qualified policy
--------------------
before the retirement date, amounts received are first treated as taxable
income to the extent that the policy value immediately before the withdrawal
exceeds the "investment in the contract" at that time. Any additional amount
withdrawn is not taxable.
In the case of a full surrender under a non-qualified policy, the amount
received generally will be taxable to the extent it exceeds the "investment in
the contract".
Annuity Payments. Although the tax consequences may vary depending on the
annuity payment method elected under the policy, generally only the portion of
the annuity payment that represents the amount by which the policy value
exceeds the "investment in the contract" will be taxed.
. For variable annuity payments, in general the taxable portion of each
-------------------------
annuity payment (prior to recovery of the "investment in the contract")
is determined by a formula which establishes a specific non-taxable
dollar amount of each annuity payment. This dollar amount is determined
by dividing the "investment in the contract" by the total number of
expected annuity payments.
. For fixed annuity payments, in general there is no tax on the portion of
----------------------
each annuity payment which reflects the ratio that the "investment in
the contract" bears to the total expected value of annuity payments for
the term of the payments; however, the remainder of each annuity payment
is taxable.
In all cases, after the "investment in the contract" is recovered, the full
amount of any additional annuity payments is taxable.
Penalty Tax. In the case of a distribution from a non-qualified policy,
there may be imposed a Federal penalty tax equal to 10% of the amount treated
as taxable income. In general, however, there is no penalty tax on
distributions:
(a) made on or after the taxpayer attains age 59 1/2;
(b) made as a result of an owner's death or attributable to the taxpayer's
disability; or
(c) received in substantially equal periodic payments as a life annuity.
Other tax penalties may apply to distributions from a qualified policy.
Aggregation of Contracts. All non-qualified deferred annuities entered into
after October 21, 1988 that we (or our affiliates) issued to the same owner
during any calendar year are treated as one annuity contract for purposes of
determining the amount includable in gross income under Section 72(e) of the
Code. In addition, there may be other situations in which the U.S. Treasury
Department may (under its authority to issue regulations or otherwise) conclude
that it would be appropriate to aggregate two or more annuity contracts
purchased by the same owner. Accordingly, you should consult a competent tax
advisor before purchasing more than one annuity contract.
Transfers and Assignments. A transfer or assignment of ownership of a
policy, or designation of an annuitant or other beneficiary who is not also the
owner, may result in certain tax consequences to the policy owner that are not
discussed herein. If you are contemplating any such transfer, assignment or
designation, you should contact a competent tax advisor with respect to the
potential tax effects of such transaction.
27
<PAGE>
Death Benefits. Amounts may be distributed from a policy because of the
death of a policy owner or an annuitant. Generally, such amounts are includable
in the income of the recipient as follows:
(a) if distributed in a lump sum, they are taxed in the same manner as a
full surrender of the policy, as described above; or
(b) if distributed under an annuity payment method, they are taxed in the
same manner as annuity payments, as described above.
Qualified Policies. The tax rules applicable to a qualified policy vary
according to the type of plan and the terms and conditions of the plan. The
following events may cause adverse tax consequences:
(a) contributions in excess of specified limits;
(b) distributions prior to age 59 1/2 (subject to certain exceptions);
(c) distributions that do not conform to specified commencement and minimum
distribution rules; and
(d) other circumstances specified in the Code.
We make no attempt to provide more than general information about the use of
the policy with the various types of retirement plans. The terms and conditions
of the retirement plans may limit the rights otherwise available to you under a
qualified policy. You are responsible for determining that contributions,
distributions and other transactions with respect to the qualified policy
comply with applicable law. If you are purchasing an annuity contract for use
with any qualified retirement plan, you should consult your legal counsel and
tax advisor regarding the suitability of the annuity contract.
Required Distributions. For qualified plans under Sections 401(a), 403(a),
403(b), and 457, the Code requires that distributions generally must begin by
the later of April 1 of the calendar year following the calendar year in which
the policy owner (or plan participant): (a) reaches age 70 1/2; or (b) retires.
Distributions must be made in a specified form and manner. If the participant
is a "5 percent owner" (as defined in the Code), distributions generally must
begin no later than April 1 of the calendar year following the calendar year in
which the policy owner (or plan participant) reaches age 70 1/2. For Individual
Retirement Annuities (IRAs) described in Section 408 of the Code, distributions
generally must begin no later than April 1 of the calendar year following the
calendar year in which the policy owner (or plan participant) reaches age 70
1/2.
Corporate Pension and Profit-Sharing Plans. Section 401(a) of the Code
permits employers to establish retirement plans for employees, and permits
self-employed individuals to establish retirement plans for themselves and
their employees. Adverse tax or other legal consequences to the plan, to the
participant or to both may result if this policy is purchased by a Section
401(a) plan and later assigned or transferred to any individual. The policy
includes a death benefit that in some cases may exceed the greater of purchase
payments or policy value. The death benefit could be characterized as an
incidental benefit, the amount of which is limited in any pension or profit-
sharing plan. Because the death benefit may exceed this limitation, employers
using the policy in connection with such plans should consult their tax
advisor.
Section 403(b) Plans. Under Code Section 403(b), public school systems and
certain tax-exempt organizations may purchase annuity contracts for their
employees. Generally, payments to Section 403(b) annuity contracts will be
excluded from the gross income of the employee, subject to certain limitations.
However, these payments may be subject to FICA (Social Security) taxes. The
policy includes a death benefit that in some cases may exceed the greater of
purchase payments or policy value. The death benefit could be characterized as
an incidental benefit, the amount of which is limited in any tax-sheltered
annuity under Section 403(b). Because the death benefit may exceed this
limitation, employers using the policy in connection with such plans should
consult their tax advisor. Under Section 403(b) annuity contracts, the
following amounts may
28
<PAGE>
only be distributed upon death of the employee, attainment of age 59 1/2,
separation from service, disability, or financial hardship:
(a) elective contributions made in years beginning after December 31, 1988;
(b) earnings on those contributions; and
(c) earnings in such years on amounts held as of the last year beginning
before January 1, 1989.
In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Individual Retirement Annuities. Section 408 of the Code limits the amount
which may be contributed to an IRA each year to the lesser of $2,000 or 100% of
the amount of compensation includible in the policy owner's gross income. These
contributions may be deductible in whole or in part depending on the
individual's income. The limit on the amount contributed to an IRA does not
apply to distributions from certain other types of qualified plans that are
"rolled over" on a tax-deferred basis into an IRA. Amounts in the IRA (other
than non-deductible contributions) are taxed when distributed from the IRA.
Distributions prior to age 59 1/2 (unless certain exceptions apply) are subject
to a 10% penalty tax. The Internal Revenue Service has not addressed in a
ruling of general applicability whether a death benefit provision such as the
provision in the policy meets IRA qualification requirements.
Deferred Compensation Plans. Section 457 of the Code provides for certain
deferred compensation plans available with respect to service for state
governments, local governments, political subdivisions, agencies,
instrumentalities and certain affiliates of such entities, and tax-exempt
organizations. These plans are subject to various restrictions on contributions
and distributions. Under non-governmental plans, all amounts are subject to the
claims of general creditors of the employer and depending on the terms of the
particular plan, the employer may be entitled to draw on deferred amounts for
purposes unrelated to its Section 457 plan obligations.
All Policies. As noted above, the foregoing comments about the Federal tax
consequences under the policy are not exhaustive, and special rules apply to
other tax situations not discussed in this prospectus. Further, the Federal tax
consequences discussed herein reflect our understanding of current law, and the
law may change. Federal estate tax and state and local estate, inheritance and
other tax consequences of ownership or receipt of distributions under a policy
depend on the individual circumstances of each policy owner or recipient of a
distribution. A competent tax advisor should be consulted for further
information.
Historical Performance Data
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
We may advertise yields and total returns for the investment divisions of
the Variable Account. In addition, we may advertise the effective yield of the
money market investment division. These figures are historical and are not
intended to indicate future performance.
The yield of the money market investment division is the annualized income
generated by an amount invested in that option over a specified seven-day
period. We assume that the income generated for that seven-day period is
generated each seven-day period over a 52-week period. We show the result as a
percentage of the amount invested. We calculate the effective yield similarly
but assume that the income earned is reinvested every seven days. The
compounding effect of this assumed reinvestment causes the effective yield to
be slightly higher than the yield.
29
<PAGE>
We calculate the total return of investment divisions for portfolios other
than the money market portfolio for various periods of time, including:
(a) one year;
(b) five years;
(c) ten years; and
(d) the period starting when the investment division commenced operations.
The average annual total return is the annual compounded rate of return at
which an initial investment of $1,000 would have grown to reach the redeemable
value of that investment at the end of each of the various measurement periods.
We may also disclose cumulative total returns and returns for various time
periods. We may disclose performance figures that reflect the withdrawal
charge, and also figures that assume the policy is not surrendered and
therefore do not reflect any withdrawal charge.
We may also disclose performance for periods beginning before the investment
divisions of the Variable Account commenced operations, based upon the actual
performance of the underlying mutual fund portfolios adjusted to reflect the
policy's and the Variable Account's charges and deductions.
The Statement of Additional Information has more information about
performance data calculations.
Voting Rights
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To the extent required by law, we will vote shares of the mutual fund
portfolios held by the Variable Account according to instructions received from
persons having voting interests in those variable investment divisions. If,
however, the 1940 Act or any regulation thereunder should be amended or if the
present interpretation thereof should change, or if we determine that we are
allowed to vote the mutual fund portfolios' shares in our own right, we may
elect to do so. The mutual funds generally do not hold regular annual
shareholder meetings.
The number of votes that you may direct to us to cast will be calculated
separately for each variable investment division. We will determine that number
by applying your percentage interest, if any, in a particular variable
investment division to the total number of votes attributable to that variable
investment division. Before the retirement date, you hold a voting interest in
each variable investment division to which policy value is allocated. After the
retirement date, the person receiving variable annuity payments has the voting
interest. After the retirement date, the votes attributable to a policy
decrease as the value of the variable investment divisions under your policy
decrease with each variable annuity payment. In determining the number of
votes, fractional shares will be recognized.
The number of votes for a portfolio which are available will be determined
as of the record date established by each mutual fund. Voting instructions will
be solicited by written communication prior to such meeting in accordance with
procedures established by the mutual funds.
Portfolio shares attributable to the policies for which no timely
instructions are received will be voted in proportion to the voting
instructions which are received with respect to all RetireMAP policies
participating in the variable investment division. Voting instructions to
abstain on any item to be voted upon will be applied on a pro rata basis to
reduce the votes eligible to be cast.
Each person having a voting interest in a variable investment division will
receive proxy material, reports and other materials relating to the appropriate
portfolio of the mutual funds.
30
<PAGE>
Legal Proceedings
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
There are no legal proceedings to which the Variable Account is a party or
to which the assets of the Variable Account are subject. We are not involved in
any litigation that is of material importance in relation to our total assets
or that relates to the Variable Account.
Financial Statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Our financial statements and those for the Variable Account (as well as the
Auditors' Reports thereon) are in the Statement of Additional Information.
Condensed Financial Information
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The following table gives "per unit" information about the financial history
of each variable investment division since its inception. This information
should be read in conjunction with the Variable Account's financial statements
(including the notes thereto) included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
Accumulation Accumulation
Unit Value At Unit Value Accumulation Units
Beginning of At End of Outstanding
Investment Division Period Period At End of Period Year
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund 1.069 1.425 52,200 1999
- ------------------------------------------------------------------------------
1.000 1.069 346 1998*
- ------------------------------------------------------------------------------
AIM V.I. Value Fund 1.051 1.346 75,407 1999
- ------------------------------------------------------------------------------
1.000 1.051 4,935 1998*
- ------------------------------------------------------------------------------
Dreyfus VIF--
Appreciation Portfolio 1.030 1.138 43,332 1999
- ------------------------------------------------------------------------------
1.000 1.030 4,758 1998*
- ------------------------------------------------------------------------------
Dreyfus VIF--Growth and
Income Portfolio 1.007 1.161 6,113 1999
- ------------------------------------------------------------------------------
1.000 1.007 0 1998*
- ------------------------------------------------------------------------------
Dreyfus VIF--Quality
Bond Portfolio 0.971 0.960 16,214 1999
- ------------------------------------------------------------------------------
1.000 0.971 856 1998*
- ------------------------------------------------------------------------------
Dreyfus VIF--Small Cap
Portfolio 0.909 1.104 14,806 1999
- ------------------------------------------------------------------------------
1.000 0.909 0 1998*
- ------------------------------------------------------------------------------
Federated American
Leaders Fund II 1.004 1.056 7,942 1999
- ------------------------------------------------------------------------------
1.000 1.004 337 1998*
- ------------------------------------------------------------------------------
Federated Equity Income
Fund II 1.027 1.200 47,491 1999
- ------------------------------------------------------------------------------
1.000 1.027 4,677 1998*
- ------------------------------------------------------------------------------
Federated Fund for U.S.
Government
Securities II 1.032 1.012 17,160 1999
- ------------------------------------------------------------------------------
1.000 1.032 1,415 1998*
- ------------------------------------------------------------------------------
Federated Prime Money
Fund II 1.016 1.048 9,740 1999
- ------------------------------------------------------------------------------
1.000 1.016 823 1998*
</TABLE>
* The Variable Account Commenced Operations on July 15, 1998.
31
<PAGE>
<TABLE>
<CAPTION>
Accumulation
Unit Value At Accumulation Accumulation Units
Beginning of Unit Value At Outstanding
Investment Division Period End of Period At End of Period Year
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESCO VIF--Dynamics
Fund 0.964 1.479 0 1999
- --------------------------------------------------------------------------------
1.000 0.964 0 1998*
- --------------------------------------------------------------------------------
INVESCO VIF--Equity
Income Fund 1.016 1.131 0 1999
- --------------------------------------------------------------------------------
1.000 1.016 0 1998*
- --------------------------------------------------------------------------------
INVESCO VIF--High Yield
Fund 0.943 0.946 44,121 1999
- --------------------------------------------------------------------------------
1.000 0.943 0 1998*
- --------------------------------------------------------------------------------
MFS(R) Emerging Growth
Series 1.063 1.852 10,528 1999
- --------------------------------------------------------------------------------
1.000 1.063 0 1998*
- --------------------------------------------------------------------------------
MFS(R) Growth with
Income Series 1.012 1.064 13,017 1999
- --------------------------------------------------------------------------------
1.000 1.012 0 1998*
- --------------------------------------------------------------------------------
MFS(R) Research Series 0.994 1.216 5,834 1999
- --------------------------------------------------------------------------------
1.000 0.994 5,002 1998*
- --------------------------------------------------------------------------------
MFS(R) Utilities Series 1.031 1.330 17,777 1999
- --------------------------------------------------------------------------------
1.000 1.031 0 1998*
- --------------------------------------------------------------------------------
Scudder Global Discovery
Portfolio 0.960 1.568 0 1999
- --------------------------------------------------------------------------------
1.000 0.960 0 1998*
- --------------------------------------------------------------------------------
Scudder International
Portfolio 0.932 1.416 13,533 1999
- --------------------------------------------------------------------------------
1.000 0.932 0 1998*
- --------------------------------------------------------------------------------
Warburg Pincus
International Equity
Portfolio 0.879 1.325 41,004 1999
- --------------------------------------------------------------------------------
1.000 0.879 5,014 1998*
</TABLE>
* The Variable Account Commenced Operations on July 15, 1998.
32
<PAGE>
Statement of Additional Information
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this prospectus. The following is
the table of contents for the Statement of Additional Information:
Table of Contents
<TABLE>
<S> <C>
The Policy.................................................................. 3
Accumulation Units........................................................ 3
Annuity Units............................................................. 3
Net Investment Factor..................................................... 3
Determination of Annuity Payments......................................... 4
Fixed Annuity Payments.................................................. 4
Variable Annuity Payments............................................... 4
The Contract.............................................................. 5
Misstatement of Age or Sex................................................ 5
Annual Report............................................................. 5
Non-Participation......................................................... 6
Delay or Suspension of Payments........................................... 6
Ownership................................................................. 6
Beneficiary............................................................... 6
Change of Owner or Beneficiary............................................ 7
Assignment................................................................ 7
Incontestability.......................................................... 7
Evidence of Survival...................................................... 7
Performance Data Calculations............................................... 7
Money Market Investment Division Yield Calculation........................ 7
Average Annual Total Return Calculations.................................. 8
Actual Performance Data................................................. 8
Adjusted Historical Performance Data.................................... 10
Federal Tax Matters......................................................... 12
Taxation of United Investors.............................................. 12
Tax Status of the Policies................................................ 12
Required Distributions.................................................... 13
Withholding............................................................... 14
Addition, Deletion or Substitution of Investments........................... 14
Distribution of the Policy.................................................. 15
Safekeeping of Variable Account Assets...................................... 15
State Regulation............................................................ 15
Records and Reports......................................................... 16
Legal Matters............................................................... 16
Experts..................................................................... 16
Other Information........................................................... 17
Financial Statements........................................................ 17
</TABLE>
33
<PAGE>
This Prospectus sets forth information about the RetireMAP Variable Annuity
Policy that a prospective investor should know before investing. The Statement
of Additional Information contains more detailed information about the Policy
and the Variable Account. This Statement of Additional Information is available
upon request at no charge. To obtain such information, return this request form
to the address shown below.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
TO: United Investors Life Insurance Company
Administrative Office
P. O. Box 10287
Birmingham, AL 35202-0287
Please send me a Statement of Additional Information for the RetireMAP
Variable Annuity.
Name ________________________________
Address _____________________________
_______________________________
_______________________________
_______________________________
_______________________________
Telephone ( ) -
_________________________
<PAGE>
RetireMAP Variable Account
Statement of Additional Information
-----------------------------------
for the
RetireMAP/SM/
VARIABLE ANNUITY
Offered by
United Investors Life Insurance Company
This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the RetireMAP/SM/ Deferred Variable Annuity Policy (the
"Policy") offered by United Investors Life Insurance Company. You may obtain a
copy of the Prospectus dated May 1, 2000, by writing to United Investors Life
Insurance Company, Administrative Office, P.O. Box 10287, Birmingham, AL, 35202-
0287. Terms used in the current Prospectus for the Policy are incorporated in
this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE POLICY.
Dated: May 1, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Corresponding
Page in
Page Prospectus
---- -------------
<S> <C> <C>
THE POLICY.................................................... 3 14
Accumulation Units......................................... 3
Annuity Units.............................................. 3
Net Investment Factor...................................... 3
Determination of Annuity Payments.......................... 4
Fixed Annuity Payments.................................. 4
Variable Annuity Payments............................... 4
The Contract............................................... 5
Misstatement of Age or Sex................................. 5
Annual Report.............................................. 5
Non-Participation.......................................... 6
Delay or Suspension of Payments............................ 6
Ownership.................................................. 6
Beneficiary................................................ 6
Change of Ownership or Beneficiary......................... 7
Assignment................................................. 7
Incontestability........................................... 7
Evidence of Survival....................................... 7
PERFORMANCE DATA CALCULATIONS................................. 7 29
Money Market Investment Division Yield Calculation......... 7
Average Annual Total Return Calculations................... 8
Actual Performance Data................................. 8
Adjusted Historical Performance Data.................... 10
FEDERAL TAX MATTERS........................................... 12 26
Taxation of United Investors............................... 12
Tax Status of the Policies................................. 12
Required Distributions..................................... 13
Withholding................................................ 14
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS.......... 14
DISTRIBUTION OF THE POLICY................................. 15 26
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS..................... 15
STATE REGULATION........................................... 15
RECORDS AND REPORTS........................................ 16
LEGAL MATTERS.............................................. 16 31
EXPERTS.................................................... 16
OTHER INFORMATION.......................................... 17
FINANCIAL STATEMENTS....................................... 17 31
</TABLE>
-2-
<PAGE>
THE POLICY
-----------
As a supplement to the description in the Prospectus, the following
provides additional information about the Policy.
Accumulation Units
- -------------------
An Accumulation Unit is an accounting unit used prior to the Retirement
Date to calculate the Variable Account Value. The portion of a Net Purchase
Payment that you allocate to an Investment Division of the Variable Account is
credited as Accumulation Units in that Investment Division. Similarly, the
value that you transfer to an Investment Division of the Variable Account is
credited as Accumulation Units in that Investment Division. The number of
Accumulation Units to credit is determined by dividing (1) the dollar amount
allocated to the Investment Division by (2) the Investment Division's
appropriate Accumulation Unit Value for the Valuation Period in which we
received the Purchase Payment or transfer request (in the case of the initial
Purchase Payment, we will credit Accumulation Units for that Purchase Payment
based on the Accumulation Unit value for the Policy Date).
The value of an Accumulation Unit for each Investment Division was
initially arbitrarily set at $1. The value for any later Valuation Period is
found by multiplying the Accumulation Unit Value for an Investment Division for
the last prior Valuation Period by such Investment Division's Net Investment
Factor (described below) for the following Valuation Period. Like the Policy
Value, the value of an Accumulation Unit may increase or decrease from one
Valuation Period to the next.
Annuity Units
- --------------
An Annuity Unit is an accounting unit used after the Retirement Date to
calculate the value of Variable Annuity Payments. The value of an Annuity Unit
in each Investment Division was initially set at $1. The value for any later
Valuation Period is determined by (a) multiplying the Annuity Unit Value for an
Investment Division for the last prior Valuation Period for such Investment
Division's Net Investment Factor for the following Valuation Period, and then
(b) adjusting the result to compensate for the interest rate assumed in the
annuity tables used to determine the amount of the first Variable Annuity
Payment. The value of an Annuity Unit for each Investment Division changes to
reflect the investment performance of the Portfolio underlying that Investment
Division.
Net Investment Factor
- ---------------------
The Net Investment Factor is an index applied to measure the investment
performance of an Investment Division of the Variable Account from one Valuation
Period to the next. The Net Investment Factor may be greater or less than one,
so the value of an Investment Division may increase or
-3-
<PAGE>
decrease.
The Net Investment Factor of an Investment Division for any Valuation
Period is determined by dividing (1) by (2) and subtracting (3) from the result,
where:
(1) is the result of:
(a) the net asset value per share of the Portfolio shares held in the
Investment Division determined at the end of the current Valuation
Period; plus
(b) the per share amount of any dividend or capital gain distributions
on the Portfolio shares held in the Investment Division, if the
"ex-dividend" date occurs during the current Valuation Period;
plus or minus
(c) a charge or credit for any taxes reserved for the current
Valuation Period which we determine to have resulted from the
investment operations of the Investment Division;
(2) is the result of:
(a) the net asset value per share of the Portfolio shares held in the
Investment Division, determined at the end of the previous
Valuation Period; plus or minus
(b) the charge or credit for any taxes reserved for the previous
Valuation Period; and
(3) is a deduction for the 1.25% Mortality and Expense Risk Charge and the
0.15% Administration Fee.
Determination of Annuity Payments
- ---------------------------------
At the Retirement Date, the Policy Value as of 14 days prior to the
Retirement Date, less any applicable premium taxes, may be applied to make Fixed
Annuity Payments, Variable Annuity Payments, or a combination thereof.
Fixed Annuity Payments. Fixed Annuity Payments provide guaranteed
-----------------------
annuity payments which remain fixed in amount throughout the payment period.
Fixed Annuity Payments do not vary with the investment experience of the
Investment Divisions. The payment amount will be based on our Fixed Annuity
Payment rates in effect on the settlement date. These rates are guaranteed not
to be less than payments based on the 1983 Individual Annuity Mortality Table
(set back one year) with interest at 4.0%. The one year setback results in lower
Annuity Payments than if no setback is used. Where requested and required by law
unisex tables will be used.
Variable Annuity Payments. The dollar amount of the first Variable
--------------------------
Annuity Payment is determined by multiplying the net value applied by purchase
rates based on the 1983 Individual Annuity Mortality Table (set back one year)
with interest at 4.0%. The one year setback results in lower Annuity Payments
-4-
<PAGE>
than if no setback is used. Where requested and required by law unisex tables
will be used.
The portion of the first Variable Annuity Payment attributed to each
Investment Division is divided by the Annuity Unit Value for the Investment
Division (as of the same date that the amount of the first Variable Annuity
Payment is determined) to determine the number of Annuity Units upon which later
Variable Annuity Payments will be made. This number of Annuity Units will not
change unless subsequently changed by reallocation. The dollar amount of each
monthly Variable Annuity Payment after the first Annuity Payment will equal the
sum of the number of Annuity Units credited to each Investment Division
multiplied by the Annuity Unit Value for each respective Investment Division for
the Valuation Period as of 14 days prior to the Variable Annuity Payment.
After the Retirement Date, the Annuitant may reallocate the value of the
Annuitant's interest in the Investment Divisions, no more than once each Policy
Year, by sending a Written Request to United Investors. A reallocation will be
effected during the Valuation Period as of 14 days prior to the next Variable
Annuity Payment, by converting Annuity Units for the value transferred from an
Investment Division into Annuity Units in the Investment Division to which the
value is transferred. Reallocations may cause the number of Annuity Units to
change, but will not change the dollar amount of the Variable Annuity Payment as
of the date of reallocation.
United Investors guarantees that the dollar amount of monthly Variable
Annuity Payments after the first payment will not be affected by variations in
expenses or mortality experience.
The Contract
- ------------
The entire contract is made up of the Policy, any riders, and the written
application. All statements made in the application, in the absence of fraud,
are considered representations and not warranties. Only the statements made in
the written application can be used by us to defend a claim or void the Policy.
Changes to the Policy are not valid unless we make them in writing. They
must be signed by one of our executive officers. No agent has authority to
change the Policy or to waive any of its provisions.
Misstatement of Age or Sex
- --------------------------
If the Annuitant's age or sex is misstated, we will adjust each benefit and
any amount to be paid to reflect the correct age and sex.
Annual Report
- -------------
At least once each Policy Year prior to the Retirement Date we will send
you a report on your Policy. It will show the current Policy Value, the
-5-
<PAGE>
current Fixed Account Value, the current value of the Investment Divisions of
the Variable Account, the Purchase Payments paid, all charges and partial
withdrawals since the last report, the current Surrender Value and the current
Death Benefit. We will also include in the report any other information
required by state law or regulation. Further, we will send you the reports
required by the Investment Company Act of 1940. You may request additional
reports during the year but we may charge a fee for any additional reports.
Non-Participation
- -----------------
The Policy is non-participating. This means that no dividends will be paid
on your Policy. It will not share in our profits or surplus earnings.
Delay or Suspension of Payments
- -------------------------------
We will normally pay a surrender or any withdrawal within seven days after
we receive your Written Request at our Administrative Office. However, payment
of any amount from the Investment Divisions of the Variable Account may be
delayed or suspended whenever:
a) the New York Stock Exchange is closed other than customary weekend and
holiday closing, or trading on the New York Exchange is restricted as
determined by the U.S. Securities and Exchange Commission;
b) the U.S. Securities and Exchange Commission by order permits
postponement for the protection of Policyowners; or
c) an emergency exists, as determined by the Commission, as a result of
which disposal of the securities held in the Investment Divisions is
not reasonably practicable or it is not reasonably practicable to
determine the value of the Variable Account's net assets.
Payment of any amounts from the Fixed Account may be deferred for up to six
months from the date of the request to surrender. If payment is deferred for
more than 30 days, we will pay interest on the amount deferred at a rate not
less the Guaranteed Minimum Interest Rate.
Payments under the Policy of any amounts derived from Purchase Payments
paid by check may be delayed until such time as the check has cleared your bank.
Ownership
- ---------
The Policy belongs to you, the Policyowner. Unless you provide otherwise,
you may receive all benefits and exercise all rights of the Policy prior to the
Retirement Date. These rights and the rights of any Beneficiary are subject to
the rights of any assignee. If there is more than one Owner at a given time,
all must exercise the rights of ownership by joint action.
Beneficiary
- -----------
The Beneficiary means the person, persons or entity entitled to Death
-6-
<PAGE>
Benefit proceeds under this Policy upon death of the Owner (or Annuitant if the
Owner is not a natural person) before the Retirement Date. If the Policy has
Joint Owners and one Owner dies, the surviving Joint Owner will be deemed the
Beneficiary. The rights of any Beneficiary who dies before the Owner (or
Annuitant if the Owner is not a natural person) will pass to the surviving
Beneficiary or Beneficiaries unless you provide otherwise. If no Beneficiary is
living at the Owner's (or Annuitant's if the Owner is not a natural person)
death, we will pay the Death Benefit, if any, to the Owner, if living;
otherwise, it will be paid to the deceased's estate.
Change of Ownership or Beneficiary
- ----------------------------------
Unless you provide otherwise in writing to us, you may change the Owner or
the Beneficiary during your lifetime. Any changes must be made by Written
Request filed with us. The change takes effect on the date the request was
signed, but it will not apply to payments made by us before we accept your
Written Request. We may require you to submit the Policy to us before making a
change. A change of ownership may be a taxable event.
Assignment
- ----------
You may assign the Policy, but we will not be responsible for the validity
of any assignment and no assignment will bind us until it is filed in writing at
our Administrative Office. When it is filed, your rights and the rights of any
Beneficiary will be subject to it. An assignment of the Policy may be a taxable
event. Your ability to assign a Qualified Policy may be restricted.
Incontestability
- ----------------
United Investors will not contest the Policy.
Evidence of Survival
- --------------------
Where any payments under the Policy depend on the payee being alive, we may
require proof of survival prior to making the payments.
PERFORMANCE DATA CALCULATIONS
-----------------------------
We may advertise the yield and effective yield of the Money Market
Investment Division. In addition, we may advertise the total returns for other
Investment Divisions of the Variable Account. All performance data calculations
for the Variable Account will be in accordance with uniformly imposed SEC
regulations.
Money Market Investment Division Yield Calculation
- --------------------------------------------------
In accordance with regulations adopted by the SEC, if we disclose the
current annualized yield of the Money Market Investment Division for a seven-day
period, it is required to be in a manner which does not take into consideration
(1) any realized or unrealized gains or losses of the Federated Prime Money Fund
II or on its portfolio securities, or (2) any income other
-7-
<PAGE>
than investment income. The current annualized yield is computed by determining
the net change (exclusive of realized gains and losses on the sale of securities
and unrealized appreciation and depreciation) in the value of a hypothetical
account having a balance of one unit of the Money Market Investment Division at
the beginning of the seven-day period, dividing the net change in account value
by the value of the account at the beginning of the period to determine the base
period return, and annualizing this quotient on a 365-day basis. The net change
in account value reflects the deduction for the Mortality and Expense Risk
Charge and the Administration Fee as well as reflecting income and expenses
accrued during the period. Because of these deductions, the yield for the Money
Market Investment Division will be lower than the yield for the Federated Prime
Money Fund II.
The SEC also permits us to disclose the effective yield of the Money Market
Investment Division for the same seven-day period, determined on a compounded
basis. The effective yield is calculated by compounding the annualized base
period return by adding one to the base period return, raising the sum to a
power equal to 365 divided by 7, and subtracting one from the result according
to the following formula:
Effective Yield = [(Base period return +1)/\365/7]-1
For the seven-day period ending December 31, 1999, the Money Market
Investment Division annualized yield was 3.42%. For the same period, the
effective yield was 3.48%.
The actual yield of the Money Market Investment Division is affected by:
(l) changes in interest rates on money market securities; (2) the average
portfolio maturity of the Federated Prime Money Fund II; (3) the types and
quality of securities held by the Federated Prime Money Fund II; and (4) its
operating expenses. The yield on amounts held in the Money Market Investment
Division normally will fluctuate on a daily basis. Therefore, the disclosed
yields for any given past period is not an indication or representation of
future yields or rates of return.
Average Annual Total Return Calculations
- ----------------------------------------
Actual Performance Data. For each Investment Division of the Variable
------------------------
Account other than the Money Market Investment Division an average annual total
return may be calculated for a given period. It is computed by finding the
average annual compounded rate of return over one, five and ten year periods
(or, where an Investment Division has been in existence for a period less than
one, five or ten years, for such lesser period) that would equate the initial
amount invested to the ending redeemable value, according to the following
formula:
P(1 + T)/\n = ERV
-8-
<PAGE>
Where
P = a hypothetical initial payment of $1,000
T = average annual total return
N = number of years in the period
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the one, five or ten year periods (or fractional portion
thereof) at the end of such period.
All recurring fees that are charged to all Policy Owner accounts are
recognized in the ending redeemable value. The average annual total return
calculation will also reflect the effect of Withdrawal Charges that may be
applicable due to surrender of the Policy at the end of a particular period.
The optional death benefit rider charge is not reflected in this calculation.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
7/15/98* to
Investment Division 1 Year 12/31/99
- ------------------- ------ -----------
AIM V.I. Growth Fund 26.23% 22.97%
AIM V.I. Value Fund 20.96% 18.02%
Dreyfus VIF - Appreciation Portfolio 3.40% 4.48%
Dreyfus VIF - Growth and Income Portfolio 8.13% 5.98%
Dreyfus VIF - Quality Bond Portfolio -8.35% -7.82%
Dreyfus VIF - Small Cap Portfolio 14.31% 2.18%
Federated American Leaders Fund II -1.94% -1.11%
Federated Equity Income Fund II 9.70% 8.56%
Federated Fund for U.S. Government Securities II -9.11% -4.14%
INVESCO VIF - Dynamics Fund 46.27% 26.26%
INVESCO VIF - Equity Income Fund 4.20% 4.01%
INVESCO VIF - High Yield Fund -6.86% -8.79%
MFS Emerging Growth Series 67.13% 48.29%
MFS Growth with Income Series -1.92% -0.52%
MFS Research Series 15.20% 9.63%
MFS Utilities Series 21.86% 16.97%
Scudder Global Discovery Portfolio 56.20% 31.68%
Scudder International Portfolio 44.86% 22.41%
Warburg Pincus International Equity Portfolio 43.55% 16.64%
- -----------------------
* The Variable Account commenced operations on July 15, 1998.
From time to time we may also disclose average annual total returns in a
non-standard format in conjunction with the standard format described above. The
only difference between the two methods is that the non-standard format assumes
a Withdrawal Charge of 0%.
-9-
<PAGE>
NON-STANDARD AVERAGE ANNUAL TOTAL RETURN
7/15/98* to
Investment Division 1 Year 12/31/99
- ------------------- ------ -----------
AIM V.I. Growth Fund 33.23% 27.29%
AIM V.I. Value Fund 27.96% 22.41%
Dreyfus VIF - Appreciation Portfolio 10.40% 9.12%
Dreyfus VIF - Growth and Income Portfolio 15.13% 10.59%
Dreyfus VIF - Quality Bond Portfolio -1.35% -2.91%
Dreyfus VIF - Small Cap Portfolio 21.31% 6.87%
Federated American Leaders Fund II 5.06% 3.65%
Federated Equity Income Fund II 16.70% 13.12%
Federated Fund for U.S. Government Securities II -2.11% 0.69%
INVESCO VIF - Dynamics Fund 53.27% 30.52%
INVESCO VIF - Equity Income Fund 11.20% 8.66%
INVESCO VIF - High Yield Fund 0.14% -3.86%
MFS Emerging Growth Series 74.13% 52.25%
MFS Growth with Income Series 5.08% 4.23%
MFS Research Series 22.20% 14.17%
MFS Utilities Series 28.86% 21.38%
Scudder Global Discovery Portfolio 63.20% 35.86%
Scudder International Portfolio 51.86% 26.73%
Warburg Pincus International Equity Portfolio 50.55% 21.06%
The performance information provided above reflects only the performance of
a hypothetical $1,000 payment which is allocated to the stated Investment
Division during the time period on which the calculations are based. Performance
information provided for any given past period is not an indication or
representation of future yields or rates of return.
Adjusted Historical Performance Data. We may also disclose performance
-------------------------------------
for periods beginning before the investment divisions of the Variable Account
commenced operations, based upon the actual performance of the underlying mutual
fund portfolios adjusted to reflect the policy's and the Variable Account's
charges and deductions.
-10-
<PAGE>
AVERAGE ANNUAL RETURN USING ADJUSTED HISTORICAL DATA FOR PERIOD ENDED 12/31/99
(Including Maximum Withdrawal Charges)
<TABLE>
Since Inception
1 5 10 Portfolio Date of
Investment Division Year Years Years Inception Portfolio
- ------------------- ------ ------ ----- --------- ---------
<S> <C> <C> <C> <C> <C>
AIM V.I. Growth Fund 26.23% 26.40% NA 20.31% 05/05/93
AIM V.I. Value Fund 20.96% 25.02% NA 21.17% 05/05/93
Dreyfus VIF - Appreciation Portfolio 3.40% 23.48% NA 18.30% 04/05/93
Dreyfus VIF - Growth and Income Portfolio 8.13% 22.17% NA 18.81% 05/02/94
Dreyfus VIF - Quality Bond Portfolio -8.35% 4.54% NA 5.99% 08/31/90
Dreyfus VIF - Small Cap Portfolio 14.31% 13.60% NA 33.46% 08/31/90
Federated American Leaders Fund II -1.94% 19.80% NA 16.08% 02/01/94
Federated Equity Income Fund II 9.70% NA NA 16.27% 01/02/97
Federated Fund for US Govt Securities II 9.11% 3.50% NA 3.27% 03/28/94
INVESCO VIF - Dynamics Fund 46.27% NA NA 28.20% 08/25/97
INVESCO VIF - Equity Income Fund 4.20% 19.24% NA 17.86% 08/10/94
INVESCO VIF - High Yield Fund -6.86% 8.90% NA 7.85% 05/27/94
MFS Emerging Growth Series 67.13% NA NA 33.74% 07/24/95
MFS Growth with Income Series -1.92% NA NA 18.72% 10/09/95
MFS Research Series 15.20% NA NA 20.38% 07/26/95
MFS Utilities Series 21.86% NA NA 24.07% 01/03/95
Scudder Global Discovery Portfolio 56.20% NA NA 30.55% 05/02/97
Scudder International Portfolio 44.86% NA NA 22.64% 05/08/97
Warburg Pincus International Equity Ptflo 43.55% NA NA 12.06% 06/30/95
</TABLE>
AVERAGE ANNUAL RETURN USING ADJUSTED HISTORICAL DATA FOR PERIOD ENDED 12/31/99
(Excluding Withdrawal Charges)
<TABLE>
Since Inception
1 5 10 Portfolio Date of
Investment Division Year Years Years Inception Portfolio
- ------------------- ------ ------ ----- ---------- ---------
<S> <C> <C> <C> <C> <C>
AIM V.I. Growth Fund 33.23% 26.64% NA 20.31% 05/05/93
AIM V.I. Value Fund 27.96% 25.27% NA 21.17% 05/05/93
Dreyfus VIF - Appreciation Portfolio 10.40% 23.73% NA 18.30% 04/05/93
Dreyfus VIF - Growth and Income Portfolio 15.13% 22.44% NA 19.04% 05/02/94
Dreyfus VIF - Quality Bond Portfolio -1.35% 5.04% NA 5.99% 08/31/90
Dreyfus VIF - Small Cap Portfolio 21.31% 13.96% NA 33.46% 08/31/90
Federated American Leaders Fund II 5.06% 20.09% NA 16.32% 02/01/94
Federated Equity Income Fund II 16.70% NA NA 17.73% 01/02/97
Federated Fund for US Govt Securities II -2.11% 4.02% NA 3.72% 03/28/94
INVESCO VIF - Dynamics Fund 53.27% NA NA 30.00% 08/25/97
INVESCO VIF - Equity Income Fund 11.20% 19.54% NA 18.12% 08/10/94
INVESCO VIF - High Yield Fund 0.14% 9.33% NA 8.23% 05/27/94
MFS Emerging Growth Series 74.13% NA NA 34.07% 07/24/95
MFS Growth with Income Series 5.08% NA NA 19.25% 10/09/95
MFS Research Series 22.20% NA NA 20.85% 07/26/95
MFS Utilities Series 28.86% NA NA 24.41% 01/03/95
Scudder Global Discovery Portfolio 63.20% NA NA 31.98% 05/02/97
Scudder International Portfolio 51.86% NA NA 24.24% 05/08/97
Warburg Pincus International Equity Ptflo 50.55% NA NA 12.65% 06/30/95
</TABLE>
The Inception Dates shown above are the Inception Dates for the underlying
portfolios. Data presented herein is described as standardized if it takes into
account the maximum withdrawal charge and all other fees and
-11-
<PAGE>
charges. However, the staff of the U.S. Securities and Exchange Commission does
not consider such data to be standard or standardized, in accordance with Form
N-4, if it includes any time period before the Investment Division's inception
(reflecting the underlying Portfolio's historical performance, adjusted for the
Policy and Variable Account fees and expenses). Accordingly, the Prospectus
and/or the Statement of Additional Information refers to any performance data
that includes periods prior to the Investment Division's inception as adjusted
historical data, not standard data, even if it takes into account the maximum
Withdrawal Charge.
FEDERAL TAX MATTERS
--------------------
Taxation of United Investors
- ----------------------------
United Investors is taxed as a life insurance company under Part 1 of
Subchapter L of the Internal Revenue Code of 1986 (the "Code"). Since the
Variable Account is not an entity separate from United Investors and its
operations form a part of United Investors, it will not be taxed separately as a
"regulated investment company" under Subchapter M of the Code. Investment
income and realized net capital gains on the assets of the Variable Account are
reinvested and taken into account in determining the Policy Value. As a result,
such investment income and realized net capital gains are automatically retained
as part of the reserves under the Policy. Under existing Federal income tax
law, United Investors believes that Variable Account investment income and
realized net capital gains should not be taxed to the extent that such income
and gains are retained as part of the reserves under the Policy.
Tax Status of the Policies
- --------------------------
Section 817(h) of the Code provides that the investments of the Variable
Account must be "adequately diversified" in accordance with Treasury regulations
in order for the Policies to qualify as annuity contracts under Section 72 of
the Code. The Variable Account, through each Portfolio of the Funds, intends to
comply with the diversification requirements prescribed by the Treasury in
Treas. Reg. Section 1.817-5, which affect how the Portfolios' assets may be
invested. United Investors does not control any of the Funds or their
Portfolios' investments. However, it has entered into an agreement regarding
participation in each Fund, which requires each participating Portfolio of the
Funds to be operated in compliance with the diversification requirements
prescribed by the Treasury.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for Federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
-12-
<PAGE>
variable contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The
Treasury Department also announced, in connection with the issuance of
regulations concerning diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
Policyowner), rather than the insurance company, to be treated as the owner of
the assets in the account." This announcement also stated that guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts without being treated as
owners of the underlying assets."
The ownership rights under the Policy are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policy owners were not owners of separate account assets. For
example, the Policyowner has additional flexibility in allocating premium
payments and Policy Values. These differences could result in a Policyowner
being treated as the owner of a pro rata portion of the assets of the Variable
Account. In addition, United Investors does not know what standards will be set
forth, if any, in the regulations or rulings which the Treasury Department has
stated it expects to issue. United Investors therefore reserves the right to
modify the Policy as necessary to attempt to prevent a Policyowner from being
considered the owner of a pro rata share of the assets of the Variable Account.
Required Distributions
- ----------------------
In order to be treated as an annuity contract for Federal income tax
purposes, Section 72(s) of the Code requires any nonqualified Policy to provide
that (a) if any Owner dies on or after the annuity starting date but prior to
the time the entire interest in the Policy has been distributed, the remaining
portion of such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of that Owner's death; and (b)
if any Owner dies prior to the annuity starting date, the entire interest in the
Policy will be distributed within five years after the date of that Owner's
death.
These requirements will be considered satisfied as to any portion of the
Owner's interest that is payable as annuity payments which will begin within one
year of that Owner's death and which will be made over the life of the Owner's
designated Beneficiary or over a period not extending beyond his life
expectancy.
If the Owner's designated Beneficiary is the surviving spouse of the
-13-
<PAGE>
Owner, the Policy may be continued with the surviving spouse as the new Owner
and no distributions will be required.
Withholding
- -----------
Distributions from the Policy generally are subject to withholding for the
Owner's Federal income tax liability. The withholding rate varies according to
the type of distribution and the Owner's tax status. The Owner will be provided
the opportunity to elect not to have tax withheld from distributions.
"Eligible rollover distributions" from section 401(a) plans, section 403(a)
annuities, and section 403(b) tax-sheltered annuities are subject to a mandatory
Federal income tax withholding of 20%. An eligible rollover distribution is the
taxable portion of any distribution from such a plan, except certain
distributions such as distribution required by the Code or distributions in a
specified annuity form. The 20% withholding does not apply, however, if the
Owner chooses a "direct rollover" from the plan to another tax-qualified plan or
IRA.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
-------------------------------------------------
United Investors reserves the right, subject to compliance with applicable
law, to make additions to, deletions from, or substitutions for, the shares of
the Funds that are held by the Variable Account (or any Investment Division) or
that the Variable Account (or any Investment Division) may purchase. United
Investors reserves the right to eliminate the shares of any of the Portfolios of
the Funds and to substitute shares of another Portfolio of the Funds or any
other investment vehicle or of another open-end, registered investment company
if laws or regulations are changed, if the shares of any of the Funds or a
Portfolio are no longer available for investment, or if in our judgment further
investment in any Portfolio should become inappropriate in view of the purposes
of the Investment Division. United Investors will not substitute any shares
attributable to a Policyowner's interest in an Investment Division of the
Variable Account without notice and prior approval of the U.S. Securities and
Exchange Commission and the insurance regulator of the state where the Policy
was delivered, where required. Nothing contained herein shall prevent the
Variable Account from purchasing other securities for other series or classes of
policies, or from permitting a conversion between series or classes of policies
on the basis of requests made by Policyowners.
United Investors also reserves the right to establish additional Investment
Divisions of the Variable Account, each of which would invest in a new Portfolio
of one of the Funds, or in shares of another investment company or suitable
investment, with a specified investment objective. New Investment
-14-
<PAGE>
Divisions may be established when, in the sole discretion of United Investors,
marketing needs or investment conditions warrant, and any new Investment
Divisions will be made available to existing Policyowners on a basis to be
determined by United Investors. United Investors may also eliminate one or more
Investment Divisions if, in its sole discretion, marketing, tax, or investment
conditions warrant.
In the event of any such substitution or change, United Investors may, by
appropriate endorsement, make such changes in the Policies as may be necessary
or appropriate to reflect such substitution or change. If deemed by United
Investors to be in the best interests of persons having voting rights under the
Policies, the Variable Account may be operated as a management company under the
Investment Company Act of 1940, it may be deregistered under that Act in the
event such registration is no longer required, or it may be combined with other
United Investors separate accounts.
DISTRIBUTION OF THE POLICY
--------------------------
The Policies will be sold by individuals who, in addition to being licensed
as life insurance agents for United Investors, are also registered
representatives of MAP Investments Incorporated ("MAP"), the principal
underwriter of the Policies, or of broker-dealers or banks who have entered into
written sales agreements with MAP. MAP is registered with the U.S. Securities
and Exchange Commission under the Securities Exchange Act of 1934 as a broker-
dealer and is a member of the National Association of Securities Dealers, Inc.
The total commissions paid by United Investors for the sale of the Policy were
$5,438 during 1998 and $67,376 during 1999. The Policies are offered to the
public through brokers licensed under the Federal securities laws and state
insurance laws that have entered into agreements with MAP. The offering of the
Policies is continuous, and MAP does not anticipate discontinuing the offering
of the Policies. However, MAP reserves the right to discontinue the offering of
the Policies.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
--------------------------------------
United Investors holds the assets of the Variable Account. The assets are
kept physically segregated and held separate and apart from United Investors'
general account. United Investors maintains records of all purchases and
redemptions of Fund shares by each of the Investment Divisions.
STATE REGULATION
----------------
United Investors is subject to regulation by the Missouri Department of
Insurance. An annual statement is filed with the Missouri Department of
Insurance on or before March 1 of each year covering the operations and
-15-
<PAGE>
reporting on the financial condition of United Investors as of December 31 of
the preceding year. Periodically, the Missouri Department of Insurance or other
authorities examine the liabilities and reserves of United Investors and the
Variable Account, and a full examination of United Investors' operations is
conducted periodically by the National Association of Insurance Commissioners.
In addition, United Investors is subject to the insurance laws and
regulations of other states within which it is licensed or may become licensed
to operate. Generally, the insurance department of any other state applies the
laws of the state of domicile in determining permissible investments. A Policy
is governed by the law of the state in which it is delivered. The values and
benefits of each Policy are at least equal to those required by such state.
RECORDS AND REPORTS
-------------------
All records and accounts relating to the Variable Account will be
maintained by United Investors. As presently required by the Investment Company
Act of 1940 and regulations promulgated thereunder, reports containing such
information as may be required under that Act or by any other applicable law or
regulation will be sent to Owners at their last known address of record.
LEGAL MATTERS
-------------
Legal advice regarding certain matters relating to Federal securities laws
applicable to the issuance of the Policy described in the Prospectus has been
provided by Sutherland Asbill & Brennan LLP of Washington, D.C.
EXPERTS
-------
The balance sheet of United Investors Life Insurance Company as of December
31, 1999 and the related statement of operations, comprehensive income,
shareholders' equity and cash flow for the year ended December 31, 1999 and the
balance sheet of RetireMAP Variable Account as of December 31, 1999 and the
related statement of operations and changes in net assets for the year ended
December 31, 1999 included in this statement of additional information have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein and are included in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
The balance sheet of United Investors Life Insurance Company as of December
31, 1998, and the related statements of operations, comprehensive income,
shareholders' equity, and cash flows for each of the years in the two-year
period ended December 31, 1998 and the statement of operations and
-16-
<PAGE>
changes in net assets of RetireMAP Variable Account for the year ended December
31, 1998 have been included herein in reliance upon the report of KPMG LLP
(formerly KPMG Peat Marwick LLP), independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
OTHER INFORMATION
-----------------
A Registration Statement has been filed with the U.S. Securities and
Exchange Commission under the Securities Act of 1933, as amended, with respect
to the Policies discussed in this Statement of Additional Information. Not all
of the information set forth in the Registration Statement, amendments and
exhibits thereto has been included in this Statement of Additional Information.
Statements contained in this Statement of Additional Information concerning the
content of the Policies and other legal instruments are intended to be
summaries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the U.S. Securities and Exchange
Commission.
FINANCIAL STATEMENTS
--------------------
The financial statements of United Investors, which are included in this
Statement of Additional Information, should be considered only as bearing on the
ability of United Investors to meet its obligations under the Policies. They
should not be considered as bearing on the investment performance of the assets
held in the Variable Account.
-17-
<PAGE>
Financial Statements
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
United Investors Life Insurance Company
Birmingham, Alabama
We have audited the accompanying balance sheet of United Investors Life
Insurance Company as of December 31, 1999, and the related statements of
operations, comprehensive income, shareholders' equity, and cash flow for the
year then ended. These financial statements are the responsibility of
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such 1999 financial statements present fairly, in all material
respects, the financial position of United Investors Life Insurance Company as
of December 31, 1999, and the results of its operations and its cash flow for
the year then ended in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
January 28, 2000
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
United Investors Life Insurance Company
Birmingham, Alabama
We have audited the accompanying balance sheet of United Investors Life
Insurance as of December 31, 1998 and the related statements of operations,
comprehensive income, shareholders' equity, and cash flows for each of the
years in the two-year period ended December 31, 1998. These financial
statements are the responsibility of United Investors Life Insurance Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United Investors Life
Insurance Company as of December 31, 1998, and the results of its operations
and cash flows for each of the years in the two-year period ended December 31,
1998, in conformity with generally accepted accounting principles.
KPMG LLP
Birmingham, Alabama
January 29, 1999
F-2
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
BALANCE SHEETS
(Dollar amounts in thousands except per share data)
<TABLE>
<CAPTION>
At December 31,
----------------------
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities-available for sale, at fair value
(cost: 1999--$613,003; 1998--$612,586)................ $ 587,346 $ 643,151
Preferred stock of affiliate (cost: 1999--$188,212:
1998--$188,212)....................................... 188,212 188,212
Equity securities at fair value (cost: 1999--$3,400;
1998--$0)............................................. 2,635 0
Policy loans........................................... 19,665 18,009
Short term investments................................. 11,796 12,680
---------- ----------
Total investments................................... 809,654 862,052
Cash.................................................... 5,842 11,426
Accrued investment income (includes amounts from
affiliates: 1999--$675; 1998--$582).................... 11,550 11,747
Receivables............................................. 3,033 3,113
Due from affiliate (includes funds withheld on
reinsurance: 1999--$275,374; 1998--$229,194)........... 329,365 278,458
Deferred acquisition costs.............................. 227,170 183,033
Value of insurance purchased............................ 26,101 30,600
Goodwill................................................ 28,519 29,465
Property and equipment.................................. 221 96
Other assets............................................ 3,076 1,786
Separate account assets................................. 3,413,675 2,425,262
---------- ----------
Total assets........................................ $4,858,206 $3,837,038
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Future policy benefits (includes reserves assumed from
affiliates: 1999--$287,376; 1998--$241,357)........... $ 824,785 $ 776,461
Unearned and advance premiums.......................... 2,804 2,822
Other policy benefits.................................. 6,790 6,973
---------- ----------
Total policy liabilities............................ 834,379 786,256
Accrued income taxes................................... 50,112 55,498
Other liabilities...................................... 10,247 2,174
Due to affiliates...................................... 602 8,268
Separate account liabilities........................... 3,413,675 2,425,262
---------- ----------
Total liabilities................................... 4,309,015 3,277,458
Shareholders' equity:
Common stock, par value $6 per share authorized, issued
and outstanding: 500,000 shares....................... 3,000 3,000
Additional paid in capital............................. 350,714 350,388
Accumulated other comprehensive income (loss).......... (12,258) 15,654
Retained earnings...................................... 207,735 190,538
---------- ----------
Total shareholders' equity.......................... 549,191 559,580
---------- ----------
Total liabilities and shareholders' equity.......... $4,858,206 $3,837,038
========== ==========
</TABLE>
See accompanying Notes to Financial Statements.
F-3
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Premium income................................... $ 73,718 $ 69,987 $ 68,723
Policy charges and fees.......................... 56,652 45,113 36,582
Net investment income (includes amounts from af-
filiates 1999--$16,532;
1998--$13,082; 1997--$2,863).................... 63,388 61,373 51,514
Realized investment gains (losses)............... (5,023) 9,401 (5,365)
Other income (includes amounts from affiliates:
1999--$17,058;
1998--$13,665; 1997--$11,876)................... 17,058 13,665 11,876
-------- -------- --------
Total revenue.................................. 205,793 199,539 163,330
Benefits and expenses:
Policy benefits:
Individual life................................. 51,595 63,689 57,954
Annuity......................................... 26,686 13,633 15,165
-------- -------- --------
Total policy benefits.......................... 78,281 77,322 73,119
Amortization of deferred acquisition costs....... 33,284 27,874 24,898
Commissions and premium taxes (includes amounts
to affiliates:
1999--$3,679; 1998--$1,013; 1997--$4,928)....... 5,897 5,580 6,251
Other operating expenses (includes amounts to af-
filiates: 1999--$3,176;
1998--$3,252; 1997--$3,217)..................... 7,022 6,579 5,470
-------- -------- --------
Total benefits and expenses.................... 124,484 117,355 109,738
Net operating income before income taxes.......... 81,309 82,184 53,592
Income taxes...................................... 23,112 25,567 18,843
-------- -------- --------
Net income..................................... $ 58,197 $ 56,617 $ 34,749
======== ======== ========
</TABLE>
See accompanying Notes to Financial Statements.
F-4
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF COMPREHENSIVE INCOME
(Dollar amounts in thousands)
<TABLE>
<S> <C> <C> <C>
<CAPTION>
Year Ended December 31,
-------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Net income.......................................... $58,197 $56,617 $34,749
Other comprehensive income:
Unrealized investment gains (losses):
Unrealized investment gains (losses) on
securities:
Unrealized holding gains (losses) arising during
period......................................... (61,690) 7,021 13,362
Reclassification adjustment for (gains) losses
on securities included in net income ........... 5,023 (1) 5,235
Reclassification adjustment for amortization of
(discount) and premium.......................... 446 502 744
------- ------- -------
(56,221) 7,522 19,341
Unrealized gains (losses) on other investments... (763) (6,330) 1,798
Unrealized gains (losses) on deferred acquisition
costs.......................................... 14,042 276 (5,387)
------- ------- -------
Total unrealized gains (losses) ................. (42,942) 1,468 15,752
Applicable tax................................... 15,030 (514) (5,512)
------- ------- -------
Other comprehensive income (loss)................... (27,912) 954 10,240
Comprehensive income............................. $30,285 $57,571 $44,989
======= ======= =======
</TABLE>
See accompanying Notes to Financial Statements.
F-5
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common Paid-in Comprehensive Retained Shareholders'
Stock Capital Income (Loss) Earnings Equity
------ ---------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Year Ended at December
31, 1997
Balance at January 1,
1997................... $3,000 $137,950 $ 4,460 $166,652 $312,062
Comprehensive income.... 10,240 34,749 44,989
Dividends............... (26,000) (26,000)
Exercise of stock op-
tions.................. 519 519
------ -------- -------- -------- --------
Balance at December 31,
1997.................. 3,000 138,469 14,700 175,401 331,570
Year Ended at December
31, 1998
Comprehensive income.... 954 56,617 57,571
Dividends............... (33,500) (33,500)
Impact from reorganiza-
tion of Waddell &
Reed................... 211,851 (7,980) 203,871
Exercise of stock op-
tions.................. 68 68
------ -------- -------- -------- --------
Balance at December 31,
1998.................. $3,000 $350,388 $ 15,654 $190,538 $559,580
Year Ended at December
31, 1999
Comprehensive income.... (27,912) 58,197 30,285
Dividends............... (41,000) (41,000)
Exercise of stock op-
tions.................. 326 326
------ -------- -------- -------- --------
Balance at December 31,
1999.................. $3,000 $350,714 $(12,258) $207,735 $549,191
====== ======== ======== ======== ========
</TABLE>
See accompanying Notes to Financial Statements.
F-6
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net income.................................... $ 58,197 $ 56,617 $ 34,749
Adjustment to reconcile net income to cash
provided from operations:
Increase in future policy benefits.......... 14,953 13,871 17,878
Increase (decrease) in other policy liabili-
ties....................................... (202) (1,892) 749
Deferral of policy acquisition costs........ (58,880) (42,857) (33,485)
Value of business acquired.................. 0 0 (10,000)
Amortization of deferred acquisition costs.. 33,284 27,874 24,898
Change in accrued income taxes.............. 9,644 1,079 10,212
Depreciation................................ 41 39 42
Realized (gains) losses on sale of invest-
ments and properties....................... 5,023 (9,401) 5,365
Other accruals and adjustments.............. 4,553 (3,240) 1,817
-------- -------- --------
Cash provided from operations................. 66,613 42,090 52,225
-------- -------- --------
Cash used for investment activities:
Investments sold or matured:
Fixed maturities available for sale-sold..... 152,270 46,039 113,035
Fixed maturities available for sale-matured,
called and repaid........................... 50,760 76,583 66,469
Other long-term investments.................. 0 25,596 2,199
-------- -------- --------
Total investments sold or matured.......... 203,030 148,218 181,703
Acquisition of investments:
Fixed maturities available for sale.......... (208,912) (123,111) (176,905)
Equity securities............................ (3,400) 0 0
Net increase in policy loans................. (1,656) (2,192) (1,485)
Other long-term investments.................. 0 (36) (1,517)
-------- -------- --------
Total acquisition of investments........... (213,968) (125,339) (179,907)
Net (increase) decrease in short-term
investments.................................. 876 747 (11,589)
Funds loaned to affiliates.................... (126,120) (13,026) (24,080)
Funds repaid from affiliates.................. 117,800 2,400 24,080
Funds borrowed from affiliates................ 81,400 14,800 0
Funds repaid to affiliates ................... (81,400) (14,800) 0
Disposition of properties and equipment....... 0 5 0
Additions of properties and equipment......... (166) (37) (27)
-------- -------- --------
Cash provided from (used for) investment
activities................................... (18,548) 12,968 (9,820)
-------- -------- --------
Cash used for financing activities:
Cash dividends paid to shareholders......... (41,000) (33,500) (27,000)
Net receipts from deposit product opera-
tions...................................... (12,649) (15,420) (12,521)
-------- -------- --------
Cash used for financing activities............ (53,649) (48,920) (39,521)
Increase (decrease) in cash................... (5,584) 6,138 2,884
Cash at beginning of year..................... 11,426 5,288 2,404
-------- -------- --------
Cash at end of year........................... $ 5,842 $ 11,426 $ 5,288
======== ======== ========
</TABLE>
See accompanying Notes to Financial Statements.
F-7
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Dollar amounts in thousands)
Note 1--Summary of Significant Accounting Policies
Organization: United Investors Life Insurance Company ("UILIC" or "United
Investors") was a wholly owned subsidiary of Waddell & Reed Financial, Inc.
("WDR") (formerly known as United Investors Management Company), a subsidiary
of Torchmark Corporation. On March 3, 1998, to facilitate the initial public
offering ("IPO") by Torchmark Corporation ("TMK") of 36% of the common stock of
WDR, several transactions were completed to reorganize the assets held by WDR.
The following transactions directly affected UILIC:
(i) WDR contributed 188,212 shares of TMK 6 1/2% Cumulative Preferred Stock,
Series A to UILIC.
(ii) WDR dividended the common stock of its subsidiary UILIC pro rata to
Liberty National Life Insurance Company ("LNL"), an 81.18% owner, and
TMK, an 18.82% owner. LNL is a wholly owned subsidiary of TMK.
(iii) Upon reorganization, UILIC recorded additional goodwill in the amount of
$23,639. This goodwill represented UILIC's portion of United Investors
Management Company's goodwill which was allocated between Waddell & Reed
and UILIC upon dividend of UILIC to TMK and LNL.
(iv) TMK transferred to UILIC a deferred commission credit of $7,980, net of
applicable tax of $4,297. This credit is being amortized over
approximately 10 years.
Description of Business: The Company is a life insurer licensed in 49
states. The Company offers a full range of life, annuity and variable products
through its agents and is subject to competition from other insurers throughout
the United States. The Company is subject to regulation by the insurance
department of states in which it is licensed, and undergoes periodic
examinations by those departments.
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date
of the financial statements and revenues and expenses for the reporting period.
Actual results could differ significantly from those estimates.
The estimates susceptible to significant change are those used in
determining deferred acquisition costs the liability for policy reserves,
losses and claims. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
Basis of Presentation: The accompanying financial statements include the
accounts of United Investors, an indirectly wholly-owned subsidiary of TMK, is
owned by Liberty National Life Insurance Company (81.18%) and Torchmark
Corporation (18.82%). The financial statements have been prepared on the basis
of generally accepted accounting principles ("GAAP").
Investments: United Investors classifies all of its fixed maturity
investments, which include bonds and redeemable preferred stocks, as available
for sale. Investments classified as available for sale are carried at fair
value with unrealized gains and losses, net of deferred taxes, reflected as a
component of accumulated other comprehensive income (loss) in shareholders'
equity. Investments in equity securities, which include common and
nonredeemable preferred stocks, are reported at fair value with unrealized
gains and losses, net of deferred taxes, reflected as a component of
accumulated other comprehenive income (loss) in shareholders' equity. Policy
loans are carried at unpaid principal balances. Short-term investments include
investments in certificates of deposit and other interest-bearing time deposits
with original maturities within three months. Other long-term investments
consist of investments in mutual funds which are carried at fair value. If an
investment becomes permanently impaired, such impairment is treated as a
realized loss and the investment is adjusted to net realizable value.
F-8
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 1--Summary of Significant Accounting Policies (continued)
Gains and losses realized on the disposition of investments are recognized
as revenues and are determined on a specific identification basis.
Realized investment gains and losses and investment income attributable to
separate accounts are credited to the separate accounts and have no effect on
United Investors' net income. Investment income attributable to policyholders
is included in United Investors' net investment income. Net investment income
for the years ended December 31, 1999, 1998 and 1997 included approximately
$35,900, $37,000, and $37,800, respectively, which was allocable to
policyholder reserves or accounts. Realized investment gains and losses are not
allocable to policyholders.
Determination of Fair Values of Financial Instruments: Fair value for cash,
short-term investments, receivables and payables approximates carrying value.
Fair values for investment securities are based on quoted market prices, where
available. Otherwise, fair values are based on quoted market prices of
comparable instruments. Fair value of future benefits for universal life and
current interest products and annuity products are based on the fund value.
Cash: Cash consists of balances on hand and on deposit in banks and
financial institutions.
Recognition of Revenue and Related Expenses: Premiums for insurance
contracts which are not defined as universal life-type according to the
Financial Accounting Standards Board's Statement of Accounting Standards (SFAS)
97 are recognized as revenue over the premium-paying period of the policy.
Premiums for limited-payment life insurance contracts as defined by SFAS 97 are
recognized over the contract period. Premiums for universal life-type and
annuity contracts are added to the policy account value, and revenues from such
products are recognized as charges to the policy account value for mortality,
administration, and surrenders (retrospective deposit method). The related
benefits and expenses are matched with revenues by means of the provision for
future policy benefits and the amortization of deferred acquisition costs in a
manner which recognizes profits as they are earned over the same period.
Future Policy Benefits: The liability for future policy benefits for
universal life-type products according to SFAS 97 is represented by policy
account value. Annuity contracts are accounted for as deposit contracts. The
liability for future policy benefits for other products is provided on the net
level premium method based on estimated investment yields, mortality,
persistency and other assumptions which were appropriate at the time the
policies were issued. Assumptions used are based on United Investors'
experience as adjusted to provide for possible adverse deviation. These
estimates are periodically reviewed and compared with actual experience. If it
is determined that future expected experience differs significantly from that
assumed, the estimates are revised.
Deferred Acquisition Costs and Value of Insurance Purchased: The costs of
acquiring new insurance business are deferred. Such costs consist of sales
commissions, underwriting expenses, and certain other selling expenses. The
costs of acquiring new business through the purchase of other companies and
blocks of insurance business are also deferred.
Deferred acquisition costs and the value of insurance purchased, for
policies other than universal life-type policies, according to SFAS 97, are
amortized with interest over an estimate of the premium-paying period of the
policies in a manner which charges each year's operations in proportion to the
receipt of premium income. For limited-payment contracts, acquisition costs are
amortized over the contract period. For universal life-type policies,
acquisition costs are amortized with interest in proportion to estimated gross
profits. The assumptions used as to interest, withdrawals and mortality are
consistent with those used in computing the liability for future policy
benefits and expenses. If it is determined that future experience differs
significantly from that
F-9
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 1--Summary of Significant Accounting Policies (continued)
previously assumed, the estimates are revised. Deferred acquisition costs are
adjusted to reflect the amounts associated with unrealized investment gains and
losses pertaining to universal life-type products.
Income Taxes: Income taxes are accounted for under the asset and liability
method in accordance with SFAS 109. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement book
values and tax bases of assets and liabilities. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Interest Expense: Interest expense includes interest on borrowed funds not
used in the production of investment income. Interest expense relating to the
production of investment income is deducted from investment income.
Property and Equipment: Property and equipment is reported at cost less
allowances for depreciation. Depreciation is provided on the straight-line
method over the estimated useful lives of these assets which range from three
to ten years.
Goodwill: Goodwill represents the excess cost over the fair value of the net
assets acquired when United Investors was purchased by Torchmark Corporation
(Torchmark) in 1981 and is being amortized on a straight-line basis over forty
years. In 1998 United Investors recorded additional goodwill of $23,639 upon
the reorganization of the company as outlined in Note 1--"Organization." This
additional goodwill is being amortized on a straight-line basis over thirty-
five years.
Reclassification: Certain amounts in the financial statements presented have
been reclassified from amounts previously reported in order to be comparable
between years. These reclassifications have no effect on previously reported
shareholders' equity or net income during the periods involved.
Comprehensive Income: United Investors adopted SFAS 130, "Reporting
Comprehensive Income," effective January 1, 1998. This standard defines
comprehensive income as the change in equity of a business enterprise during a
period from transactions from all nonowner sources. It requires the company to
display comprehensive income for the period, consisting of net income and other
comprehensive income. In compliance with SFAS 130, Statements of Comprehensive
Income is included as an integral part of the financial statements.
Earnings on Derivatives: Accounting for Derivative Instruments and Hedging
Activities (FASB Statement No. 133), as amended by FASB Statement No. 137, is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000, with earlier application of all of the provisions of this statement
encouraged. Early adoption of selective provisions is prohibited. Prior periods
may not be restated for comparability. This statement establishes standards for
the accounting and reporting of derivative instruments. It requires that all
derivatives be recognized as assets or liabilities on the balance sheet and be
measured at fair value. Changes in the values of derivatives for the reporting
period are reflected as adjustments to earnings through realized gains and
losses. If certain conditions are met, a derivative may be designated as a
hedge against exposure to market risks of other instruments or commitments,
cash flow risks, or foreign currency risks. If a derivative is classified as a
hedge, the adjustment to earnings is offset by a corresponding change in the
value of the item hedged. Hedging relationships may be designated anew upon
adoption of this statement. Management believes that Statement 133 will have an
immaterial impact on UILIC's financial statements.
F-10
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 2--Statutory Accounting
United Investors is required to file statutory financial statements with
state insurance regulatory authorities. Accounting principles used to prepare
these statutory financial statements differ from GAAP. Net income and
shareholders' equity on a statutory basis for United Investors were as follows:
<TABLE>
<CAPTION>
Net Income Shareholders' Equity
Year Ended December 31, At December 31,
---------------------------------------- ---------------------------------
1999 1998 1997 1999 1998
-------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C>
$49,235 $47,294 $34,537 $171,458 $169,757
</TABLE>
The excess of shareholders' equity on a GAAP basis over that determined on a
statutory basis is not available for distribution to shareholders without
regulatory approval.
A reconciliation of United Investors' statutory net income to GAAP net
income is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Statutory net income........................... $ 49,235 $ 47,294 $ 34,537
Deferral of acquisition costs.................. 58,880 42,857 33,485
Amortization of acquisition costs.............. (33,284) (27,874) (24,898)
Differences in policy liabilities.............. (3,887) 1,417 (2,113)
Deferred income taxes.......................... (6,996) (6,422) (6,053)
Other.......................................... (5,751) (655) (209)
-------- -------- --------
GAAP net income................................ $ 58,197 $ 56,617 $ 34,749
======== ======== ========
</TABLE>
A reconciliation of United Investors' statutory shareholders' equity to GAAP
shareholders' equity is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1999 1998
----------- -----------
<S> <C> <C>
Statutory shareholders' equity................... $ 171,458 $ 169,757
Differences in policy liabilities................ 5,987 9,208
Deferred acquisition cost and value of insurance
purchased....................................... 253,271 213,633
Deferred income taxes............................ (51,541) (59,575)
Asset valuation reserve.......................... 5,806 4,781
Nonadmitted assets............................... 5,168 3,348
Fair value adjustment on fixed maturities
available for sale.............................. (25,656) 30,565
Fair value adjustment on preferred stock of
affiliate....................................... 188,212 188,212
Goodwill......................................... 28,519 29,465
Due and deferred premiums........................ (30,471) (30,317)
Other............................................ (1,562) 503
----------- -----------
GAAP shareholders' equity........................ $ 549,191 $559,580
=========== ===========
</TABLE>
The NAIC requires that a risk based capital formula be applied to all life
and health insurers. The risk based capital formula is a threshold formula
rather than a target capital formula. It is designed only to identify companies
that require regulatory attention and is not to be used to rate or rank
companies that are adequately capitalized. United Investors is adequately
capitalized under the risk based capital formula.
F-11
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 3--Investment Operations
Investment income is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Fixed maturities.................................. $ 45,728 $45,889 $46,000
Policy loans...................................... 1,327 1,186 1,107
Other long-term investments....................... 135 84 1,614
Short-term investments............................ 468 743 436
Other income...................................... 0 954 0
Interest and dividends from affiliates............ 16,532 13,082 2,863
-------- ------- -------
64,190 61,938 52,020
Less investment expense........................... (802) (565) (506)
-------- ------- -------
Net investment income............................. $ 63,388 $61,373 $51,514
======== ======= =======
Analysis of gains (losses) from investments:
Realized investments gains (losses)
Fixed maturities................................ $ (5,023) $ 1 $(5,235)
Mutual funds.................................... 0 9,400 (130)
-------- ------- -------
$ (5,023) $ 9,401 $(5,365)
======== ======= =======
Analysis of change in unrealized gains (losses):
Net change in unrealized investments gains
(losses) on fixed maturities available for sale
before tax....................................... (56,221) 7,522 19,341
Net change in unrealized gains (losses) on equity
securities....................................... (765) 0 0
Net change in unrealized investments gains
(losses) on short-term investments before tax.... 2 (2) 0
Other (includes loss of $5,946 related to sale of
mutual fund shares in 1998)...................... 0 (6,328) 1,798
Adjustment for deferred acquisition cost.......... 14,042 276 (5,387)
Applicable tax.................................... 15,030 (514) (5,512)
-------- ------- -------
Net change in unrealized gains (losses) on short-
term investments and fixed maturities available
for sale......................................... $(27,912) $ 954 $10,240
======== ======= =======
</TABLE>
F-12
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 3--Investment Operations (continued)
A summary of fixed maturities available for sale by cost or amortized cost,
gross unrealized gains and losses and fair value at December 31, 1999 and 1998
is as follows:
<TABLE>
<CAPTION>
Cost or Gross Gross Amount per
Amortized Unrealized Unrealized Fair the Balance
1999: Cost Gains Losses Value Sheet
- ----- --------- ---------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
Fixed maturities avail-
able for sale:
Bonds:
U.S. Government direct
obligations and
agencies............... $ 7,240 $ 30 $ (174) $ 7,096 $ 7,096
GNMA's.................. 64,952 1,675 (536) 66,091 66,091
MBS, GNMA Collateral.... 3,177 7 0 3,184 3,184
Other mortgage-backed
securities............. 23,658 0 (457) 23,201 23,201
States, municipalities
and political
subdivisions........... 18,416 0 (267) 18,149 18,149
Foreign governments..... 3,012 66 0 3,078 3,078
Public utilities........ 54,010 102 (2,150) 51,962 51,962
Industrial and
miscellaneous.......... 438,538 439 (24,392) 414,585 414,585
-------- ------- -------- -------- --------
Total fixed maturities.. $613,003 $ 2,319 $(27,976) $587,346 $587,346
======== ======= ======== ======== ========
Equity Securities:
Common Stock............ $ 3,400 $ -- $ (765) $ 2,635 $ 2,635
======== ======= ======== ======== ========
<CAPTION>
1998:
- -----
<S> <C> <C> <C> <C> <C>
Fixed maturities avail-
able for sale:
Bonds:
U.S. Government direct
obligations and
agencies............... $ 21,441 $ 1,959 $ 0 $ 23,400 $ 23,400
GNMA's.................. 89,674 4,022 (18) 93,678 93,678
Mortgage-backed
securities, GNMA
collateral............. 7,488 71 (1) 7,558 7,558
Other mortgage-backed
securities............. 20,961 1,368 0 22,329 22,329
States, municipalities
and political
subdivisions........... 28,610 1,236 0 29,846 29,846
Public utilities........ 31,454 2,287 0 33,741 33,741
Industrial and
miscellaneous.......... 412,958 21,971 (2,330) 432,599 432,599
-------- ------- -------- -------- --------
Total fixed maturities.. $612,586 $32,914 $ (2,349) $643,151 $643,151
======== ======= ======== ======== ========
</TABLE>
F-13
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 3--Investment Operations (continued)
A schedule of fixed maturities by contractual maturity at December 31, 1999
is shown below on an amortized cost basis and on a fair value basis. Actual
maturities could differ from contractual maturities due to call or prepayment
provisions.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
--------- --------
<S> <C> <C>
Fixed maturities available for sale:
Due in one year or less................................. $ 11,335 $ 11,423
Due from one to five years.............................. 57,297 57,250
Due from five to ten years.............................. 234,712 225,812
Due after ten years..................................... 199,693 185,507
-------- --------
503,037 479,992
Mortgage- and asset-backed securities.................... 109,966 107,354
-------- --------
$613,003 $587,346
======== ========
</TABLE>
Proceeds from sales of fixed maturities available for sale were $157,270 in
1999, $46,039 in 1998, and $113,035 in 1997. Gross gains realized on these
sales were $337 in 1999, $928 in 1998, and $112 in 1997. Gross losses on these
sales were $5,653 in 1999, $927 in 1998, and $5,716 in 1997.
Note 4--Deferred Acquisition Cost and Value of Insurance Purchased
An analysis of deferred acquisition costs and the value of insurance
purchased is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------- --------------------- ---------------------
Deferred Value of Deferred Value of Deferred Value of
Acquisition Insurance Acquisition Insurance Acquisition Insurance
Cost Purchased Cost Purchased Cost Purchased
----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of
year................... $183,033 $30,600 $176,897 $33,754 $169,986 $16,160
Additions:
Deferred during peri-
od:
Commissions........... 49,812 0 36,328 0 27,664 0
Other expenses........ 9,068 0 6,529 0 5,821 0
-------- ------- -------- ------- -------- -------
Total deferred....... 58,880 0 42,857 0 33,485 0
Value of insurance
purchased............ 0 0 0 0 0 21,305
Adjustment attributable
to unrealized invest-
ment losses (1)....... 14,042 0 276 0 0 0
-------- ------- -------- ------- -------- -------
Total additions...... 72,922 0 43,133 0 33,485 21,305
Deductions:
Amortized during peri-
od................... (28,785) (4,499) (24,720) (3,154) (21,019) (3,711)
Adjustment
attributable to
unrealized investment
gains (1)............ 0 0 0 0 (5,387) 0
Adjustment attribut-
able to realized
investment gains
(1).................. 0 0 0 0 (168) 0
Adjustment to deferred
commissions due to
reorganization....... 0 0 (12,277) 0 0 0
-------- ------- -------- ------- -------- -------
Total deductions..... (28,785) (4,499) (36,997) (3,154) (26,574) (3,711)
-------- ------- -------- ------- -------- -------
Balance at end of year.. $227,170 $26,101 $183,033 $30,600 $176,897 $33,754
======== ======= ======== ======= ======== =======
</TABLE>
- --------
(1) Represents amounts pertaining to investments relating to universal life-
type products.
F-14
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
The amount of interest accrued on the unamortized balance of value of
insurance purchased was approximately $578, $755, and $938 for the years ended
December 31, 1999, 1998 and 1997, respectively. The average interest accrual
rates used were 6.00%, 6.15% and 6.29%, respectively. The estimated amount of
the unamortized value of business purchased balance at December 31, 1999 to be
amortized during each of the next five years is: 2000, $3,159; 2001, $2,636;
2002, $2,244; 2003, $1,950; and 2004, $1,729.
In the event of lapses or early withdrawals in excess of those assumed,
deferred acquisition costs and the value of insurance purchased may not be
recoverable.
Note 5--Property and Equipment
A summary of property and equipment used in the business is as follows:
<TABLE>
<CAPTION>
At December 31, At December 31,
1999 1998
------------------- -------------------
Accumulated Accumulated
Cost Depreciation Cost Depreciation
------ ------------ ------ ------------
<S> <C> <C> <C> <C>
Data processing equipment.............. $ 366 $ 209 $ 227 $ 178
Transportation equipment............... 72 42 72 36
Furniture and office equipment ........ 955 921 928 917
------ ------ ------ ------
Total................................ $1,393 $1,172 $1,227 $1,131
====== ====== ====== ======
</TABLE>
Depreciation expense on property and equipment used in the business was $41,
$39 and $42 in each of the years 1999, 1998, and 1997, respectively.
Note 6--Future Policy Benefit Reserves
A summary of the assumptions used in determining the liability for future
policy benefits at December 31, 1999 is as follows:
Individual Life Insurance
Interest Assumptions:
<TABLE>
<CAPTION>
Percent of
Years of Issue Interest Rates Liability
-------------- -------------------------- ----------
<S> <C> <C>
1962-1999 3.00% level to 6.00% level 15%
1986-1992 7.00% graded to 6.00% 23%
1962-1985 8.50% graded to 6.00% 3%
1981-1985 8.50% graded to 7.00% 3%
1984-1999 Interest Sensitive 56%
----
100%
====
</TABLE>
Mortality assumptions:
The mortality tables used are various statutory mortality tables and
modifications of:
1965-70 Select and Ultimate Table
1975-80 Select and Ultimate Table
Withdrawal assumptions:
Withdrawal assumptions are based on United Investors' experience.
F-15
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 7--Income Taxes
United Investors is included in the life-nonlife consolidated federal income
tax return filed by Torchmark. Under the tax allocation agreement with
Torchmark, a company with taxable income pays tax equal to the amount it would
pay if it filed a separate tax return. A company with a loss is paid a tax
benefit currently to the extent that affiliated companies with taxable income
utilize that loss.
Total income taxes were allocated as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Operating income............................... $ 23,112 $25,567 $18,843
Shareholders' equity:
Unrealized gains (losses)..................... (15,030) 514 5,512
Tax basis compensation expense in excess of
amounts recognized for financial reporting
purposes from the exercise of stock options.. (326) (68) (519)
Tax benefit received on deferred commission
credit due to reorganization................. 0 (4,297) 0
Other......................................... 132 300 1
-------- ------- -------
$ 7,888 $22,016 $23,837
======== ======= =======
</TABLE>
Income tax expense before the adjustments to shareholders' equity is
summarized below:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Current income tax expense......................... $16,116 $19,145 $12,790
Deferred income tax expense........................ 6,996 6,422 6,053
------- ------- -------
$23,112 $25,567 $18,843
======= ======= =======
</TABLE>
In 1999, 1998, and 1997, deferred income tax expense was incurred because of
the difference between net operating income before income taxes as reported on
the statements of operations and taxable income as reported on United
Investor's income tax returns. As explained in Note 1, this difference caused
the financial statement book values of some assets and liabilities to be
different from their respective tax bases.
The effective income tax rate differed from the expected 35% rate in 1999,
1998 and 1997 as shown below:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1999 % 1998 % 1997 %
------- --- ------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Expected income taxes............... $28,458 35% $28,764 35% $18,757 35%
Increase (reduction) in income taxes
resulting from:
Tax-exempt investment income....... (5,682) (7) (3,532) (4) (18) 0
Purchase accounting differences.... 331 0 331 0 99 0
Other.............................. 5 0 4 0 5 0
------- --- ------- --- ------- ---
Income taxes........................ $23,112 28% $25,567 31% $18,843 35%
======= === ======= === ======= ===
</TABLE>
F-16
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 7--Income Taxes (continued)
The tax effects of temporary differences that gave rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1999 1998
----------- -----------
<S> <C> <C>
Deferred tax assets:
Unrealized investment losses....................... $ 6,601 $ 0
Present value of future policy surrender charges... 28,534 20,153
Other liabilities, principally due to the current
nondeductibilty for tax purposes of certain
accrued expenses.................................. 183 132
----------- -----------
Total gross deferred tax assets.................... 35,318 20,285
Deferred tax liabilities:
Future policy benefits and unearned and advance
premiums.......................................... 8,599 2,022
Deferred acquisition costs......................... 73,791 61,881
Unrealized investment gains........................ 0 8,428
Other.............................................. 4,469 7,529
----------- -----------
Total gross deferred tax liabilities............... 86,859 79,860
----------- -----------
Net deferred tax liability.......................... $ 51,541 $ 59,575
=========== ===========
</TABLE>
In United Investors' opinion, all deferred tax assets will be recoverable.
United Investors has not recognized a deferred tax liability of
approximately $2,200 that arose prior to 1984 on temporary differences related
to its policyholders' surplus account. A current tax expense will be recognized
in the future if and when this tax becomes payable.
Note 8--Postretirement Benefits
Pension Plans: United Investors has retirement benefit plans and savings
plans which cover substantially all employees. There is also a nonqualified
excess benefit plan which covers certain employees. The plans cover primarily
employees of United Investors, Liberty National and Torchmark. The total cost
of these retirement plans charged to UILIC's operations was as follows:
<TABLE>
<CAPTION>
Defined
Defined Benefit
Year Ended Contribution Pension
December 31, Plans Plans
------------ ------------ -------
<S> <C> <C>
1999.................................................. $71 $121
1998.................................................. 42 114
1997.................................................. 44 118
</TABLE>
United Investors accrues expense for the defined contribution plans based on
a percentage of the employees contributions. The plans are funded by the
employee contributions and a United Investors contribution equal to the amount
of accrued expense.
F-17
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 8--Postretirement Benefits (continued)
Cost for the defined benefit pension plans has been calculated on the
projected unit credit actuarial cost method. Contributions are made to the
pension plans subject to minimums required by regulation and maximums allowed
for tax purposes. Accrued pension expense in excess of amounts contributed has
been recorded as a liability in UILIC's financial statements and was $177
thousand and $55 thousand at December 31, 1999 and 1998, respectively. The
total unfunded plan liability recorded at December 31, 1999 was $1,271. The
plans covering the majority of employees are organized as trust funds whose
assets consist primarily of investments in marketable long-term fixed
maturities and equity securities which are valued at market.
The excess benefit pension plan provides the benefits that an employee would
have otherwise received from a defined benefit pension plan in the absence of
the Internal Revenue Codes limitation on benefits payable under a qualified
plan. Although this plan is unfunded, pension cost is determined in a similar
manner as for the funded plans. UILIC's liability for the excess benefit plan
was $19 thousand and $19 thousand as of December 31, 1999 and 1998,
respectively.
Net periodic pension cost for the defined benefit plans by expense component
was as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Service cost--benefits earned during period..... $ 725 $ 679 $ 638
Interest cost on projected benefit obligation... 1,420 1,657 1,575
Return on assets................................ (3,035) (3,118) (2,335)
Net amortization and deferral................... 1,701 1,942 1,351
------- ------- -------
Total net periodic cost........................ 811 1,160 1,229
Periodic cost allocated to other participating
employers..................................... 689 1,046 1,111
------- ------- -------
UILIC's net periodic cost....................... $ 122 $ 114 $ 118
======= ======= =======
</TABLE>
F-18
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 8--Postretirement Benefits (continued)
United Investors adopted FASB Statement No. 132, Employers Disclosures about
Pensions and Other Postretirement Benefits, effective for year-end 1998 with
comparative periods restated. In accordance with this Standard, the following
table presents a reconciliation from the beginning to the end of the year of
the benefit obligation and plan assets. This table also presents a
reconciliation of the plans funded status with the.amounts recognized on United
Investors' and Liberty National's balance sheet.
<TABLE>
<CAPTION>
Pension
Benefits For
the year ended
December 31,
----------------
1999 1998
------- -------
<S> <C> <C>
Changes in benefit obligation:
Obligation at the beginning of year...................... $23,230 $21,841
Service cost............................................. 725 679
Interest cost............................................ 1,761 1,657
Actuarial gain (loss).................................... (412) 1,061
Benefits paid............................................ (2,020) (2,008)
------- -------
Obligation at the end of year............................ 23,284 23,230
Changes in plan assets:
Fair value at the beginning of year...................... 18,140 16,054
Return on assets......................................... 3,035 3,118
Contributions............................................ 550 976
Benefits paid............................................ (2,020) (2,008)
------- -------
Fair value at the end of year............................ 19,705 18,140
------- -------
Funded status at year end............................ (3,579) (5,090)
Unrecognized amounts at year end:
Unrecognized actuarial loss (gain)....................... (2,935) (775)
Unrecognized prior service cost.......................... 951 1,044
Unrecognized transition obligation....................... 0 0
------- -------
Net amount recognized at year end...................... $(5,563) $(4,821)
======= =======
Amounts recognized consist of:
Prepaid benefit cost..................................... $(1,271) $ (459)
Accrued benefit liability................................ (4,651) (4,707)
Intangible asset......................................... 359 345
------- -------
Net amount recognized at year end....................... (5,563) (4,821)
Net amount recognized allocated to other participating
employers.............................................. (5,367) (4,747)
------- -------
UILIC's net amount recognized at year end................ $ (196) $ (74)
======= =======
</TABLE>
The weighted average assumed discount rates used in determining the
actuarial benefit obligations were 7.5% in 1999 and 7.0% in 1998. The rate of
assumed compensation increase was 4.5% in 1999 and 4.0% in 1998 while the
expected long-term rate of return on plan assets was 9.25% in 1999 and 9.25% in
1998.
Postretirement Benefit Plans Other Than Pensions: United Investors provides
postretirement life insurance benefits for most retired employees, and also
provides additional postretirement life insurance benefits for certain key
employees. The majority of the life insurance benefits are accrued over the
working lives of active employees.
F-19
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 8--Postretirement Benefits (continued)
For retired employees over age sixty-five, United Investors does not provide
postretirement benefits other than pensions. United Investors does provide a
portion of the cost for health insurance benefits for employees who retired
before February 1, 1993 and before age sixty-five, covering them until they
reach age sixty-five. Eligibility for this benefit was generally achieved at
age fifty-five with at least fifteen years of service. This subsidy is minimal
to retired employees who did not retire before February 1,1993. This plan is
unfunded.
The components of net periodic postretirement benefit cost other than
pensions is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Service cost ................................... $ 89 $ 112 $ 86
Interest on accumulated postretirement. benefit
obligation..................................... 277 377 357
Return on assets................................ 0 0 0
Net amortization and deferral................... (402) (251) (374)
------- ------- -------
Total net periodic postretirement cost......... (36) 238 69
Periodic cost allocated to other participating
employers..................................... (35) 233 68
------- ------- -------
UILIC's net periodic postretirement cost........ $ (1) $ 5 $ 1
======= ======= =======
</TABLE>
The following table presents a reconciliation of the benefit obligation and
plan assets from the beginning to the end of the year, also reconciling the
funded status to the accrued benefit liability.
<TABLE>
<CAPTION>
Benefits Other than Pension
For the year ended
December 31,
----------------------------
1999 1998
------------- -------------
<S> <C> <C>
Changes in benefit obligation:
Obligation at the beginning of year.......... $ 5,262 $ 4,775
Service cost................................. 89 112
Interest cost................................ 277 377
Actuarial gain (loss)........................ (1,255) 559
Benefits paid................................ (490) (561)
------------- -------------
Obligation at the end of year................ 3,883 5,262
Changes in plan assets:
Fair value at the beginning of year.......... 0 0
Return on assets............................. 0 0
Contributions................................ 490 561
Benefits paid................................ (490) (561)
------------- -------------
Fair value at the end of year................ 0 0
------------- -------------
Funded status at year end.................. (3,883) (5,262)
Unrecognized amounts at year end:
Unrecognized actuarial loss (gain)........... (1,612) (553)
Unrecognized prior service cost.............. (151) (357)
------------- -------------
Net amount recognized at year end as accrued
benefit liability.......................... (5,646) (6,172)
Net amount recognized allocated to other
participating employers.................... (5,555) (6,070)
------------- -------------
UILIC's net amount recognized at year end as
accrued benefit liability................... $ (91) $ (102)
============= =============
</TABLE>
F-20
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 8--Postretirement Benefits (continued)
For measurement purposes, an 8.0% annual rate of increase in per capita cost
of covered healthcare benefits was assumed for 1999. These rates grade to
ranges of 8.0% to 4.5% by the year 2004. The health care cost trend rate
assumption has a significant effect on the amounts reported, as illustrated in
the following table which presents the effect of a one-percentage-point
increase and decrease on the service and interest cost components and the
benefit obligation:
Effect on:
<TABLE>
<CAPTION>
Change in Trend
Rate
-----------------
1% 1%
Increase Decrease
-------- --------
<S> <C> <C>
Service and interest cost components....................... $ 27 $ (24)
Benefit obligation......................................... 241 (225)
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.50% in 1999 and 7.00% in 1998.
Note 9--Related Party Transactions
United Investors was charged for space, equipment and services provided by
an affiliate amounting to $1,835 in 1999, $1,840 in 1998, and $1,852 in 1997.
Torchmark performed certain administrative services for United Investors for
which it was charged $408 in 1999, $612 in 1998, and $468 in 1997.
In 1997, United Investors loaned Torchmark, Liberty National and United
American Insurance Company (United American), an affiliate, $8,060, $10,520 and
$5,500 respectively, at an interest rate of 5.5% all of which were repaid prior
to December 31, 1997. Interest income related to these loans totaling $25 is
included in the accompanying financial statements. United Investors in 1998
loaned Liberty National and United American $1,400 and $1,000 respectively at
an interest rate of 5.5% all of which were repaid as of December 31, 1998.
Interest income related to these loans totaling $4 is included in the
accompanying financial statements. During 1999, United Investors borrowed in a
series of notes $57,000, $2,200, $20,700 and $800 from Globe Life and Accident
Insurance Company (Globe), an affiliate, Liberty National, Torchmark and United
American, respectively. All these notes had a 5.5% interest rate and were
repaid prior to December 31, 1999 and the interest expense related to these
notes of $204 is included in the accompanying financial statements. United
Investors during 1999 loaned in a series of notes $6,100 and $111,800 to
Liberty National and Torchmark, respectively. These notes had a 5.5% interest
rate and were repaid prior to December 31, 1999. In addition, Torchmark repaid
in 1999 a $35,000 note originated in 1994 having an interest rate of 8.110% and
borrowed an additional $35,000 at an interest rate of 7.05%. During 1999,
United Investors received income of $4,300 from these notes which are included
in the accompanying financial statements.
Effective January 1, 1997 United Investors assumed a block of annuity
products totaling $200,321 from United American on 100% funds withheld basis.
In connection with this transaction, United Investors paid a ceding fee
totaling $21,305, $10,000 of which was paid in cash, and recorded a due from
affiliates totaling $189,016 at the end of 1997. The funds withheld totaled
$275,355 and $229,194 at December, 1999 and 1998, respectively. Interest income
totaled $17,058, $13,665 and $11,876 in 1999, 1998 and 1997, respectively, and
is included in other income. The reserve for annuity balances assumed in
connection with this business totaled $287,376 and $241,357 as of December 31,
1999 and 1998, respectively. United Investors reimbursed United American for
administrative expenses in the amount of $933, $800, and $897 in 1999, 1998 and
1997, respectively.
F-21
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
United Investors serves as sponsor to four separate accounts. During 1997,
United Investors was also a investor in two of the separate accounts. These
investments were sold during 1998 for $18.4 million and United Investors is no
longer a depositor to any of its separate accounts.
On March 3, 1998, Waddell & Reed Financial, Inc. contributed 188,212 shares
of TMK 6 1/2% Cumulative Preferred Stock, Series A to UILIC due to the
reorganization discussed in Note 1--Summary of Significant Accounting Policies.
Dividend income, on these shares, in the amount of $12,234 in 1999 and $10,093
in 1998 is included in the accompanying financial statements.
Note 10--Commitments and Contingencies
Reinsurance: United Investors reinsures that portion of insurance risk which
is in excess of its retention limit. The maximum net retention limit for
ordinary life insurance is $500 per life. Life insurance ceded represented 2%
of total life insurance in force at December 31, 1999 and 3% of premium income
for 1999. United Investors would be liable for the reinsured risks ceded to
other companies to the extent that such reinsuring companies are unable to meet
their obligation. Except as disclosed in Note 9, United Investors does not
assume insurance risks of other companies.
Restrictions on the Transfer of Funds: Regulatory restrictions exist on the
transfer of funds from insurance companies. These restrictions generally limit
the payment of dividends to the statutory net gain from operations of the prior
year in the absence of special approval. Additionally, insurance companies are
not permitted to distribute the excess of shareholders' equity as determined on
a GAAP basis over that determined on a statutory basis. Restricted net assets
at December 31, 1999 in compliance with all regulations were $380,733.
Litigation: United Investors is engaged in routine litigation arising from
the normal course of business. In management's opinion, this litigation will
not materially affect United Investors' financial position or results of
operations.
Concentration of Credit Risk: United Investors maintains a highly
diversified investment portfolio with limited concentration in any given
region, industry, or economic characteristic. The portfolio consists of
securities of the U.S. government or U.S. government-backed securities (10%);
nongovernment-guaranteed mortgage-backed securities (3%); securities of state
and municipal governments (2%); investment-grade corporate bonds (49%);
preferred stock in affiliates (23%); noninvestment-grade securities (9%); and
policy loans (2%), which are secured by the underlying insurance policy values.
The balance of the portfolio is invested in short-term investments and
equities.
Investments in municipal governments and corporations are made throughout
the U.S. with no concentration in any given state. Corporate debt and equity
investments are made in a wide range of industries. At December 31, 1999, 1% or
more of the portfolio was invested in the following industries; Electric, gas,
and sanitary services (7%); depository institutions (5%); chemicals and allied
products (4%); nondepository credit institutions (4%); food and kindred
products (3%); industrial and commercial machinery, and computer equipment
(3%); printing, publishing, and allied lines (3%); transportation equipment
(3%); metal fabricators (3%); general merchandise stores (2%); communications
(2%); insurance carriers (2%); railroad transportation (2%); petroleum refining
and related industries (2%); motor freight transportation and warehousing (2%);
and investment holding companies (2%). At year-end 1999, 9% of the carrying
value of fixed maturities was rated below investment grade (BB or lower as
rated by Standard & Poor's or the equivalent NAIC designation). Par value of
these investments was $76.0 million, amortized cost was $75.7 million, and
market value was $71.6 million. While these investments could be subject to
additional credit risk, such risk should generally be reflected in market
value.
F-22
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 10--Commitments and Contingencies (continued)
Collateral Requirements: United Investors requires collateral for
investments in instruments where collateral is available and typically required
because of the nature of the investment. Since the majority of United
Investors' investments are in government, government-secured, or corporate
securities, the requirement for collateral is rare.
Note 11--Supplemental Disclosures for Cash Flow Statement
The following table summarizes United Investors' noncash transactions, which
are not reflected on the statement of cash flow as required by GAAP:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Due from affiliates........................... $274,744 $229,194 $189,016
Value of business purchased................... 0 0 11,305
Future policy benefits........................ 287,376 241,357 200,321
Impact from reorganization of
Waddell & Reed .............................. 0 203,871 0
The following table summarizes certain amounts paid during the period:
<CAPTION>
Year Ended December 31,
--------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Taxes paid.................................... $ 13,142 $26,054 $8,631
</TABLE>
Note 12--Business Segments
United Investors' segments are based on the insurance product lines it
markets and administers, life insurance and annuities. These major product
lines are set out as segments because of the common characteristics of products
within these categories, comparability of margins, and the similarity in
regulatory environment and management techniques. There is also an investment
segment which manages the investment portfolio, debt, and cash flow for the
insurance segments and the corporate function.
Life insurance products include traditional and interest-sensitive whole
life insurance as well as term life insurance. Annuities include both fixed-
benefit and variable contracts. Variable contracts allow policyholders to
choose from a variety of mutual funds in which to direct their deposits.
United Investors markets its insurance products through a number of
distribution channels, each of which sells the products of one or more of
United Investors' insurance segments. The tables below present segment premium
revenue by each of United Investors' marketing groups.
<TABLE>
<CAPTION>
For the Year 1999
------------------------------------------
Life Annuity Total
------------- ------------ -------------
% of % of % of
Distribution Channel Amount Total Amount Total Amount Total
- -------------------- ------- ----- ------ ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Independent Producers............... $ 6,526 8.9% $ -- $ 6,526 8.9%
Waddell & Reed...................... 60,996 83.2% 60,996 82.7%
Liberty National.................... 5,399 7.4% 5,399 7.3%
United American..................... 48 0.1% 473 100.0% 521 0.7%
Globe Direct Response............... 276 0.4% 276 0.4%
------- ----- ----- ----- ------- -----
$73,245 100.0% $ 473 100.0% $73,718 100.0%
======= ===== ===== ===== ======= =====
</TABLE>
F-23
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 12--Business Segments (continued)
<TABLE>
<CAPTION>
For the Year 1998
------------------------------------------
Life Annuity Total
------------- ------------ -------------
% of % of % of
Distribution Channel Amount Total Amount Total Amount Total
- -------------------- ------- ----- ------ ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Independent Producers............... $ 8,004 11.5% $-- $ 8,004 11.4%
Waddell & Reed...................... 61,511 88.4% 61,511 87.9%
United American .................... 415 100.0% 415 0.6%
Globe Direct Response............... 57 0.1% 57 0.1%
------- ----- ---- ----- ------- -----
$69,572 100.0% $415 100.0% $69,987 100.0%
======= ===== ==== ===== ======= =====
<CAPTION>
For the Year 1997
------------------------------------------
Life Annuity Total
------------- ------------ -------------
% of % of % of
Distribution Channel Amount Total Amount Total Amount Total
- -------------------- ------- ----- ------ ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Independent Producers............... $ 7,264 10.6% $-- $ 7,264 10.6%
Waddell & Reed...................... 61,149 89.4% 61,149 89.0%
United American .................... 310 100.0% 310 0.4%
------- ----- ---- ----- ------- -----
$68,413 100.0% $310 100.0% $68,723 100.0%
======= ===== ==== ===== ======= =====
</TABLE>
Because of the nature of the insurance industry, United Investors has no
individual or group which would be considered a major customer. Substantially
all of United Investors' business is conducted in the United States, primarily
in the Southeastern and Southwestern regions.
The measure of profitability for insurance segments is underwriting income
before other income and administrative expenses, in accordance with the manner
the segments are managed. It essentially represents gross profit margin on
insurance products before insurance administrative expenses and consists of
premium, less net policy obligations, acquisition expenses, and commissions. It
differs from GAAP pretax operating income before other income and
administrative expense for two primary reasons. First, there is a reduction to
policy obligations for interest credited by contract to policyholders because
this interest is earned and credited by the investment segment. Second,
interest is also added to acquisition expense which represents the implied
interest cost of deferred acquisition costs, which is funded by and is
attributed to the investment segment.
F-24
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 12--Business Segments (continued)
The measure of profitability for the investment segment is excess investment
income, which represents the income earned on the investment portfolio in
excess of net policy requirements. The investment segment is measured on a tax-
equivalent basis, equating the return on tax-exempt investments to the pretax
return on taxable investments. Other than the above-mentioned interest
allocations, there are no other intersegment revenues or expenses. All other
unallocated revenues and expenses on a pretax basis, including insurance
administrative expense, are included in the "Other" segment category. The table
below sets forth a reconciliation of United Investors' revenues and operations
by segment to its major income statement line items.
<TABLE>
<CAPTION>
For the Year 1999
------------------------------------------------------------
Life Annuity Investment Other Adjustments Total
-------- -------- ---------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Premium................ $ 73,245 $ 473 $ -- $ -- $ -- $ 73,718
Policy charges and
fees.................. 16,251 40,401 56,652
Net investment income.. 63,388 63,388
Other income........... 17,058 17,058
-------- -------- -------- ------- ----- --------
Total Revenues........ 89,496 57,932 63,388 210,816
Benefits and Expenses
Policy benefits........ 51,595 26,686 78,281
Required reserve
interest.............. (19,262) (16,625) 35,887 0
Amortization of
acquisition costs..... 18,377 14,907 33,284
Commissions and premium
taxes................. 5,207 690 5,897
Required interest on
acquisition costs..... 8,179 5,646 (13,825) 0
-------- -------- -------- ------- ----- --------
Total Benefits and
Expenses............. 64,096 31,304 22,062 117,462
-------- -------- -------- ------- ----- --------
Underwriting income
before other income
and administrative
expense............... 25,400 26,628 41,326 93,354
Administrative
expense............... 6,076 6,076
Goodwill amortization.. 946 946
Deferred acquisition
cost adjustment....... 0
-------- -------- -------- ------- ----- --------
Pretax operating
income................ $ 25,400 $ 26,628 $ 41,326 $(7,022) $ -- 86,332
======== ======== ======== ======= =====
Realized investment losses and deferred acquisition cost adjustment..... (5,023)
--------
Pretax income.......................................................... $ 81,309
========
</TABLE>
F-25
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 12--Business Segments (continued)
<TABLE>
<CAPTION>
For the Year 1998
------------------------------------------------------------
Life Annuity Investment Other Adjustments Total
-------- -------- ---------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Premium................ $ 69,572 $ 415 $ -- $ -- $ -- $ 69,987
Policy charges and
fees.................. 12,048 33,065 45,113
Net investment income.. 61,373 61,373
Other income........... 13,665 13,665
-------- -------- -------- ------- ----- --------
Total Revenues........ 81,620 47,145 61,373 190,138
Benefits and Expenses
Policy benefits........ 51,430 25,892 77,322
Required reserve
interest.............. (18,832) (18,162) 36,994 0
Amortization of
acquisition costs..... 16,306 11,568 27,874
Commissions and premium
taxes................. 5,182 398 5,580
Required interest on
acquisition costs..... 7,958 4,814 (12,772) 0
-------- -------- -------- ------- ----- --------
Total Benefits and
Expenses............. 62,044 24,510 24,222 110,776
-------- -------- -------- ------- ----- --------
Underwriting income
before other income
and administrative
expense............... 19,576 22,635 37,151 79,362
Administrative
expense............... 5,633 5,633
Goodwill amortization.. 946 946
Deferred acquisition
cost adjustment.......
-------- -------- -------- ------- ----- --------
Pretax operating
income................ $ 19,576 $ 22,635 $ 37,151 $(6,579) $ -- 72,783
======== ======== ======== ======= =====
Realized investment gains and deferred acquisition cost adjustment...... 9,401
--------
Pretax income.......................................................... $ 82,184
========
</TABLE>
F-26
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 12--Business Segments (continued)
<TABLE>
<CAPTION>
For the Year 1997
----------------------------------------------------------
Life Annuity Investment Other Adjustments Total
------- ------- ---------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Premium................ $68,413 $ 310 $ -- $ -- $ -- $ 68,723
Policy charges and
fees.................. 9,573 27,009 36,582
Net investment income.. 51,514 51,514
Other income........... 11,876 11,876
------- ------- ------- ------- ----- --------
Total Revenues........ 77,986 39,195 51,514 168,695
Benefits and Expenses
Policy benefits........ 47,930 25,189 73,119
Required reserve
interest.............. (18,067) (19,735) 37,802 0
Amortization of
acquisition costs..... 14,671 10,227 24,898
Commissions and premium
taxes................. 5,647 604 6,251
Required interest on
acquisition costs..... 8,044 4,287 (12,331) 0
------- ------- ------- ------- ----- --------
Total Benefits and
Expenses............. 58,225 20,572 25,471 104,268
------- ------- ------- ------- ----- --------
Underwriting income
before other income
and administrative
expense............... 19,761 18,623 26,043 64,427
Administrative
expense............... 5,186 5,186
Goodwill amortization.. 284 284
Deferred acquisition
cost adjustment....... 168 168
------- ------- ------- ------- ----- --------
Pretax operating
income................ $19,761 $18,623 $26,043 $(5,470) $(168) 58,789
======= ======= ======= ======= =====
Realized investment losses and deferred acquisition cost adjustment... (5,197)
--------
Pretax income........................................................ $ 53,592
========
</TABLE>
F-27
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Note 12--Business Segments (continued)
Assets for each segment are reported based on a specific identification
basis. The insurance segments' assets contain deferred acquisition costs, value
of insurance purchased, and separate account assets. The investment segment
includes the investment portfolio, cash, and accrued investment income.
Goodwill is assigned to corporate operations. All other assets, representing
less than 2% of total assets, are included in the other category. The table
below reconciles segment assets to total assets as reported in the financial
statements.
<TABLE>
<CAPTION>
At December 31, 1999
--------------------------------------------------------------
Life Annuity Investment Other Adjustments Total
-------- ---------- ---------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cash and invested
assets................. $ -- $ -- $815,496 $ -- $ -- $ 815,496
Accrued investment
income................. 11,550 11,550
Deferred acquisition
costs.................. 122,037 105,133 227,170
Goodwill................ 28,519 28,519
Separate account
assets................. 3,413,675 3,413,675
Other Assets............ 361,796 361,796
-------- ---------- -------- -------- ----- ----------
Total Assets............ $122,037 $3,518,808 $827,046 $390,315 $ -- $4,858,206
======== ========== ======== ======== ===== ==========
<CAPTION>
At December 31, 1998
--------------------------------------------------------------
Life Annuity Investment Other Adjustments Total
-------- ---------- ---------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cash and invested
assets................. $ -- $ -- $873,478 $ -- $ -- $ 873,478
Accrued investment
income................. 11,747 11,747
Deferred acquisition
costs.................. 113,057 100,576 213,633
Goodwill................ 29,465 29,465
Separate account
assets................. 2,425,262 2,425,262
Other Assets............ 283,453 283,453
-------- ---------- -------- -------- ----- ----------
Total Assets............ $113,057 $2,525,838 $885,225 $312,918 $ -- $3,837,038
======== ========== ======== ======== ===== ==========
</TABLE>
F-28
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
United Investors Life Insurance Company
And the Contract Owners of the
United Investors RetireMAP Variable Account
Birmingham, Alabama
We have audited the accompanying balance sheet of each of the sub-accounts
("portfolios" for the purpose of this report) that include the Growth, Value,
Capital Appreciation, Growth and Income, Quality Bond, Small Cap, American
Leaders II, Equity Income II, Prime Money II, U.S. Government Securities II,
VIF High Yield, Emerging Growth, Growth with Income, Research, Utilities,
International and International Equity portfolios that comprise United
Investors RetireMAP Variable Account as of December 31, 1999, and the related
statements of operations and changes in net assets for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of investments owned at December 31, 1999. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such 1999 financial statements present fairly, in all material
respects, the financial position of each of the respective portfolios of United
Investors RetireMAP Variable Account as of December 31, 1999, and the results
of their operations and changes in net assets for the year then ended in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
April 20, 2000
F-29
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
United Investors Life Insurance Company
And the Contract Owners of the
United Investors RetireMAP Variable Account
Birmingham, Alabama
We have audited the accompanying statement of operations and changes in net
assets for the year ended December 31, 1998 of RetireMAP Variable Account. This
financial statement is the responsibility of United Investors Life Insurance
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the results of its operations and changes in its net
assets for the year ended December 31, 1998 of RetireMAP Variable Account in
conformity with generally accepted accounting principles.
KPMG LLP
Birmingham, Alabama
April 9, 1999
F-30
<PAGE>
UNITED INVESTORS RETIREMAP VARIABLE ACCOUNT
BALANCE SHEET
As of December 31, 1999
<TABLE>
<CAPTION>
Dreyfus Dreyfus Dreyfus Federated Federated Federated
AIM V.I. AIM V.I. Capital Growth and Quality Dreyfus American Equity Income Prime
Growth Value Appreciation Income Bond Small Cap Leaders II II Money II
------------- ---------- ------------- ----------- --------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments in
Mutual Funds
(Note B)........ $ 74,979 $ 102,227 $ 49,702 $ 7,101 $ 15,677 $ 16,498 $ 8,429 $ 57,563 $ 10,318
--------- ---------- --------- --------- --------- --------- --------- --------- ---------
Total assets.... 74,979 100,227 49,702 7,101 15,677 16,498 8,429 57,563 10,318
--------- ---------- --------- --------- --------- --------- --------- --------- ---------
Liabilities:
Mortality and
expense risk
charge
payable to
Sponsor
(Note D)........ 460 616 359 6 131 136 44 535 113
--------- ---------- --------- --------- --------- --------- --------- --------- ---------
Total liabili-
ties........... 460 616 359 6 131 136 44 535 113
--------- ---------- --------- --------- --------- --------- --------- --------- ---------
Net assets (Note
C)............. $ 74,519 $ 101,611 $ 49,343 $ 7,095 $ 15,546 16,362 $ 8,385 $ 57,028 $ 10,205
========= ========== ========= ========= ========= ========= ========= ========= =========
Equity:
Equity of
contract
owners......... $ 74,519 $ 101,611 $ 49,343 $ 7,095 $ 15,546 $ 16,362 $ 8,385 $ 57,028 $ 10,205
--------- ---------- --------- --------- --------- --------- --------- --------- ---------
Total equity.... $ 74,519 $ 101,611 $ 49,343 $ 7,095 $ 15,546 $ 16,362 $ 8,385 $ 57,028 $ 10,205
========= ========== ========= ========= ========= ========= ========= ========= =========
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Accumulation
units
outstanding.... 52,200 75,407 43,332 6,113 16,214 14,806 7,942 47,491 9,740
========= ========== ========= ========= ========= ========= ========= ========= =========
Net asset value
per unit....... $1.427567 $1.3547501 $1.347501 $1.160641 $0.958801 $1.105093 $1.055779 $1.200817 $1.047741
========= ========== ========= ========= ========= ========= ========= ========= =========
Cost of invested
assets......... $ 64,993 $ 91,782 $ 47,818 $ 7,011 $ 16,003 $ 14,182 $ 8,353 $ 53,415 $ 10,318
========= ========== ========= ========= ========= ========= ========= ========= =========
<CAPTION>
Federated Invesco MFS Growth MFS MFS Warburg
U.S. Gov't VIF MFS Emerging with Income Research Utilities Scudder International
Securities II High Yield Growth Series Series Series Series International Equity Total
------------- ---------- ------------- ----------- --------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments in
Mutual Funds
(Note B)........ $ 17,510 $ 45,200 $ 19,522 $ 13,905 $ 7,216 $ 23,765 $ 19,326 $ 54,765 $ 543,703
--------- ---------- --------- --------- --------- --------- --------- --------- ---------
Total assets.... 17,510 45,200 19,522 13,905 7,216 23,765 19,326 54,765 543,703
--------- ---------- --------- --------- --------- --------- --------- --------- ---------
Liabilities:
Mortality and
expense risk
charge
payable to
Sponsor
(Note D)........ 144 384 18 48 100 108 126 351 3,679
--------- ---------- --------- --------- --------- --------- --------- --------- ---------
Total liabili-
ties........... 144 384 18 48 100 108 126 351 3,679
--------- ---------- --------- --------- --------- --------- --------- --------- ---------
Net assets (Note
C)............. $ 17,366 $ 44,816 $ 19,504 $ 13,857 $ 7,116 $ 23,657 $ 19,200 $ 54,414 $ 540,024
========= ========== ========= ========= ========= ========= ========= ========= =========
Equity:
Equity of
contract
owners......... $ 17,366 $ 44,816 $ 19,504 $ 13,857 $ 7,116 $ 23,657 $ 19,200 $ 54,414 $ 540,024
--------- ---------- --------- --------- --------- --------- --------- --------- ---------
Total equity.... $ 17,366 $ 44,816 $ 19,504 $ 13,857 $ 7,116 $ 23,657 $ 19,200 $ 54,414 $ 540,024
========= ========== ========= ========= ========= ========= ========= ========= =========
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Accumulation
units
outstanding.... 17,160 44,121 10,528 13,017 5,834 17,777 13,351 41,004
========= ========== ========= ========= ========= ========= ========= =========
Net asset value
per unit....... $1.012005 $ 1.015752 $1.852584 $1.064531 $1.219746 $1.330764 $1.418964 $1.327041
========= ========== ========= ========= ========= ========= ========= =========
Cost of invested
assets......... $ 17,544 $ 46,979 $ 15,810 $ 13,185 $ 5,069 $ 20,324 $ 15,140 $ 39,212 $ 487,138
========= ========== ========= ========= ========= ========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
F-31
<PAGE>
UNITED INVESTORS RETIREMAP VARIABLE ACCOUNT
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
Dreyfus
Dreyfus Growth Dreyfus Dreyfus Federated Federated Federated
AIM V.I. AIM V.I. Capital and Quality Small Cap American Equity Income Prime
Growth Value Appreciation Income Bond Leaders II II Money II
------------- -------- ------------ ------- -------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend Income
(Note B, D)........ $ 2,585 $ 1,536 $ 433 $ 218 $ 454 $ 0 $ 0 $ 823 $ 363
Expenses paid to
Sponsor:
Mortality and
expense risk
charge............ 460 601 343 6 130 136 44 519 112
Contract
maintenance
charges:
Annual contract
maintenance...... 0 7 7 0 0 0 0 7 0
------- -------- ------- ------- ------- ------- ------- ------- --------
Total........... 460 608 350 6 130 136 44 526 112
Net investment
income............. 2,125 928 83 212 324 (136) (44) 297 251
Unrealized
investment gains
(losses)
distributed to
accounts........... 69 904 558 0 (53) 179 54 1,587 0
Unrealized
investment gains
(losses)........... 9,991 9,643 1,131 90 (332) 2,316 72 3,494 0
------- -------- ------- ------- ------- ------- ------- ------- --------
Net gain (loss) on
investments........ 10,060 10,547 1,689 90 (385) 2,495 126 5,081 0
------- -------- ------- ------- ------- ------- ------- ------- --------
Net increase
(decrease) in net
assets from
operations......... 12,185 11,475 1,772 302 (61) 2,359 82 5,378 251
Premium deposit &
net transfers*..... 66,041 89,191 44,486 6,793 14,998 15,896 7,965 48,728 9,118
Transfer to sponsor
for benefits and
terminations....... (4,077) (4,246) (1,845) 0 (222) (1,893) 0 (1,883) 0
------- -------- ------- ------- ------- ------- ------- ------- --------
Total increase...... 74,149 96,420 44,413 7,095 14,715 16,362 8,047 52,223 9,369
Net amounts at
beginning of
period............. $ 370 $ 5,191 $ 4,930 $ 0 $ 831 $ 0 $ 338 $ 4,805 $ 836
------- -------- ------- ------- ------- ------- ------- ------- --------
Net amounts at end
of period (Note
C)................. $74,519 $101,611 $49,343 $ 7,095 $15,546 $16,362 $ 8,385 $57,028 $ 10,205
======= ======== ======= ======= ======= ======= ======= ======= ========
<CAPTION>
MFS
Growth
Federated Invesco MFS Emerging with MFS MFS Warburg
U.S. Gov't VIF High Growth Income Research Utilities Scudder International
Securities II Yield Series Series Series Series International Equity Total
------------- -------- ------------ ------- -------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend Income
(Note B, D)........ $ 1 $ 3,058 $ 0 $ 14 $ 75 $ 0 $ 999 $ 476 $ 11,035
Expenses paid to
Sponsor:
Mortality and
expense risk
charge............ 143 384 18 48 85 108 126 336 3,599
Contract
maintenance
charges:
Annual contract
maintenance...... 0 0 0 0 7 0 0 7 35
------- -------- ------- ------- ------- ------- ------- ------- --------
Total........... 143 384 18 48 92 108 126 343 3,634
Net investment
income............. (142) (384) (18) (34) (17) (108) 873 133 7,401
Unrealized
investment gains
(losses)
distributed to
accounts........... 16 78 0 2 1 (79) 377 651 4,344
Unrealized
investment gains
(losses)........... (34) (1,779) 3,712 720 1,323 3,441 4,186 15,281 53,255
------- -------- ------- ------- ------- ------- ------- ------- --------
Net gain (loss) on
investments........ (18) (1,742) 3,712 722 1,324 3,362 4,563 15,932 57,599
------- -------- ------- ------- ------- ------- ------- ------- --------
Net increase
(decrease) in net
assets from
operations......... (160) (2,126) 3,694 688 1,307 3,254 5,406 16,065 65,000
Premium deposit &
net transfers*..... 16,056 48,762 15,810 13,267 833 20,403 16,000 35,757 470,114
Transfer to sponsor
for benefits and
terminations....... 0 (4,919) 0 (98) 0 0 (2,236) (1,841) (23,260)
------- -------- ------- ------- ------- ------- ------- ------- --------
Total increase...... 15,906 44,816 19,504 13,857 2,140 23,657 19,200 49,981 511,854
Net amounts at
beginning of
period............. $ 1,460 $ 0 $ 0 $ 0 $ 4,976 $ 0 $ 0 $ 4,433 $ 28,170
------- -------- ------- ------- ------- ------- ------- ------- --------
Net amounts at end
of period (Note
C)................. $17,366 $ 44,816 $19,504 $13,857 $ 7,116 $23,657 $19,200 $54,414 $540,024
======= ======== ======= ======= ======= ======= ======= ======= ========
</TABLE>
- -----
*Includes transfer activity from (to) other portfolios.
See Notes to Financial Statements.
F-32
<PAGE>
UNITED INVESTORS RETIREMAP VARIABLE ACCOUNT
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Federated
AIM AIM Dreyfus Dreyfus American Federated Federated Federated MFS Warburg
V.I. V.I. Capital Quality Leaders Equity Prime U.S. Gov't Research International
Growth Value Appreciation Bond II Income II Money II Securities II Series Equity Total
------ ------ ------------ ------- --------- --------- --------- ------------- -------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend Income
(Note B, D)........ $ 23 $ 238 $ 27 $ 4 $ 0 $ 0 $ 4 $ 0 $ 0 $ 21 $ 317
Expenses paid to
Sponsor:
Mortality and
expense risk
charge............ 0 16 16 1 0 16 1 2 15 14 81
Contract
maintenance
charges:
Annual contract
maintenance...... 0 0 0 0 0 0 0 0 0 0 0
Withdrawal
charges.......... 0 0 0 0 0 0 0 0 0 0 0
Others............ 0 0 0 0 0 0 0 0 0 0 0
---- ------ ------ ---- ---- ------ ---- ------ ------ ------ -------
Total........... 0 16 16 1 0 16 1 2 15 14 81
Net investment
income (loss)...... 23 222 11 3 0 (16) 3 (2) (15) 7 236
Unrealized
investment gains
(losses)
distributed to
accounts........... 0 0 0 0 0 0 0 0 0 0 0
Unrealized
investment gains
(losses)........... 14 802 752 (5) 5 654 0 4 824 259 3,309
---- ------ ------ ---- ---- ------ ---- ------ ------ ------ -------
Net gain (loss) on
investments........ 14 802 752 (5) 5 654 0 4 824 259 3,309
---- ------ ------ ---- ---- ------ ---- ------ ------ ------ -------
Net increase
(decrease) in net
assets from
operations......... 37 1,024 763 (2) 5 638 3 2 809 266 3,545
Premium deposit &
net transfers*..... 333 4,167 4,167 833 333 4,167 833 1,458 4,167 4,167 24,625
Transfer to sponsor
for benefits and
terminations....... 0 0 0 0 0 0 0 0 0 0 0
---- ------ ------ ---- ---- ------ ---- ------ ------ ------ -------
Total increase...... 370 5,191 4,930 831 338 4,805 836 1,460 4,976 4,433 28,170
Net amounts at
beginning of
period............. $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---- ------ ------ ---- ---- ------ ---- ------ ------ ------ -------
Net amounts at end
of period (Note
C)................. $370 $5,191 $4,930 $831 $338 $4,805 $836 $1,460 $4,976 $4,433 28,170
==== ====== ====== ==== ==== ====== ==== ====== ====== ====== =======
</TABLE>
- -----
*Includes transfer activity from (to) other portfolios.
See Notes to Financial Statements.
F-33
<PAGE>
UNITED INVESTORS RETIREMAP VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
Note A--Summary of Significant Accounting Policies
Organization--The United Investors RetireMAP Variable Account ("the
RetireMAP Variable Account") was established on September 20, 1996 as a
segregated account of United Investors Life Insurance Company ("the Sponsor")
and has been registered as a unit investment trust under the Investment Company
Act of 1940. The RetireMAP Variable Account is currently divided into 20
investment divisions. Each investment division invests exclusively in shares of
a single mutual fund portfolio. As of December 31, 1999, the following
investment portfolios were available:
AIM Variable Insurance Funds, MFS Variable Insurance Trust
Inc. Emerging Growth Series
AIM V.I. Growth Fund Growth with Income Series
AIM V.I. Value Fund Research Series
Dreyfus Variable Investments Fund Utilities Series
Capital Appreciation Portfolio Scudder Variable Life Investment
Growth and Income Portfolio Fund
Quality Bond Portfolio Global Discovery Portfolio
Small Cap Portfolio International Portfolio
Federated Insurance Series Warburg Pincus Trust
American Leaders Fund II International Equity Portfolio
Equity Income Fund II
Fund for U.S. Government Securities
II
Prime Money Fund II
INVESCO Variable Investment
Funds, Inc.
INVESCO VIF Dynamics Portfolio
INVESCO VIF High Yield Portfolio
INVESCO VIF Industrial Income
Fund
The assets of each portfolio are held separate from the assets of the other
portfolios and the investment performance of one portfolio has no effect on any
other portfolio.
Basis of Presentation--The financial statements of the RetireMAP Variable
Account have been prepared on an accrual basis in accordance with generally
accepted accounting principles.
Federal Taxes--Currently no charge is made to the RetireMAP Variable Account
for federal income taxes because no federal income tax is imposed on the
Sponsor for the Life Variable Account investment income under current tax law.
Note B--Investments
Stocks and convertible bonds of each portfolio are valued at the latest sale
price on the last business day of the fiscal period as reported by the
principal securities exchange on which the issue is traded or, if no sale is
reported for a stock, the average of the latest bid and asked prices. Bonds,
other than convertible bonds, are valued using a matrix pricing system provided
by a major dealer in bonds. Convertible bonds are valued using this pricing
system only on days when there is no sale reported. Stocks which are traded
over-the-counter are priced using NASDAQ (National Association of Securities
Dealers Automated Quotations) which provides information on bid and asked
prices quoted by major dealers in such stocks. Short-term debt securities are
valued at amortized cost, which approximates market.
Security transactions are accounted for by Portfolio on the trade date (date
the order to buy or sell is executed). Securities gains and losses are
calculated on the specific identification method. Dividend income is recorded
on the ex-dividend date. Interest income is recorded on the accrual basis.
F-34
<PAGE>
UNITED INVESTORS RETIREMAP VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS--(Continued)
Investments in shares of the separate investment portfolios are stated at
market value which is the net asset value per share as determined by the
respective portfolios (see Note C--Net Assets). Dividends received by the
portfolios are reinvested daily in additional shares of the portfolios and are
recorded as dividend income on the record date.
The following is a summary of reinvested dividends by portfolio:
<TABLE>
<CAPTION>
1999
----
Investment Portfolio Shares Reinvested Dividend Income
-------------------- ----------------- ---------------
<S> <C> <C>
AIM V.I. Growth.............................. 87 $2,585
AIM V.I. Value............................... 49 1,536
Dreyfus Capital Appreciation................. 11 433
Dreyfus Growth & Income...................... 9 218
Dreyfus Quality Bond......................... 48 454
Federated Equity Income...................... 58 823
Federated Prime Money Market................. 363 363
Federated U.S. Gov't Securities II........... 0 1
Invesco VIF High Yield....................... 269 3,058
MFS Growth with Income....................... 1 14
MFS Research Series.......................... 4 75
Scudder International Fund................... 70 999
Warburg International Equity................. 32 476
<CAPTION>
1998
----
Investment Portfolio Shares Reinvested Dividend Income
-------------------- ----------------- ---------------
<S> <C> <C>
AIM V.I. Growth Fund......................... 1 $ 23
AIM V.I. Value Fund.......................... 10 238
Dreyfus Capital Appreciation Portfolio....... 1 27
Dreyfus Quality Bond Portfolio............... 0 4
Federated Prime Money Fund II................ 4 4
Warburg International Equity Portfolio....... 2 21
</TABLE>
F-35
<PAGE>
UNITED INVESTORS RETIREMAP VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS--(Continued)
Note C--Net Assets
The following table illustrates by component parts (since inception of each
portfolio) the net asset value for each portfolio.
<TABLE>
<CAPTION>
Dreyfus Dreyfus Dreyfus Federated Federated Federated
AIM V.I. AIM V.I. Capital Growth and Quality Dreyfus American Equity Income Prime
1999 Growth Value Appreciation Income Bond Small Cap Leaders II II Money II
- ---- ------------- -------- ------------ ---------- -------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cost to:
Contract
owners.......... $66,374 $ 93,358 $48,653 $ 6,793 $15,831 $15,896 $ 8,298 $52,895 $ 9,951
Sponsor......... 0 0 0 0 0 0 0 0 0
Adjustment for
market
appreciation
(depreciation)... 12,682 13,123 2,901 308 68 2,495 131 6,558 367
Deductions:
Mortality &
expense risk
charge.......... (460) (617) (359) (6) (131) (136) (44) (535) (113)
Contract
maintenance
charges:
Annual
maintenance
charge.......... 0 (7) (7) 0 0 0 0 (7) 0
Benefits &
terminations..... (4,077) (4,246) (1,845) 0 (222) (1,893) 0 (1,883) 0
------- -------- ------- ------- ------- ------- ------- ------- --------
Net assets....... $74,519 $101,611 $49,343 $ 7,095 $15,546 $16,362 $ 8,385 $57,028 $ 10,205
======= ======== ======= ======= ======= ======= ======= ======= ========
<CAPTION>
Invesco MFS Growth
Federated V.I.F. MFS Emerging with MFS MFS Warburg
U.S. Gov't High Growth Income Research Utilities Scudder International
Securities II Yield Series Series Series Series International Equity Total
------------- -------- ------------ ---------- -------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cost to:
Contract
owners.......... $17,524 $ 48,762 $15,810 $13,267 $ 5,000 $20,403 $16,000 $39,924 $494,739
Sponsor......... 0 0 0 0 0 0 0 0 0
Adjustment for
market
appreciation
(depreciation)... (13) (1,357) 3,712 736 2,223 3,362 5,562 16,688 72,260
Deductions:
Mortality &
expense risk
charge.......... (145) (384) (18) (48) (100) (108) (126) (350) (3,680)
Contract
maintenance
charges:
Annual
maintenance
charge.......... 0 0 0 0 (7) 0 0 (7) (35)
Benefits &
terminations..... 0 (4,919) 0 (98) 0 0 (2,236) (1,841) (23,260)
------- -------- ------- ------- ------- ------- ------- ------- --------
Net assets....... $17,366 $ 44,816 $19,504 $13,857 $ 7,116 $23,657 $19,200 $54,414 $540,024
======= ======== ======= ======= ======= ======= ======= ======= ========
</TABLE>
F-36
<PAGE>
UNITED INVESTORS RETIREMAP VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS--(Continued)
Note C--Net Assets (continued)
The following table illustrates by component parts the net asset value for
each portfolio.
<TABLE>
<CAPTION>
Federated
AIM AIM Dreyfus Dreyfus Federated Federated Federated U.S. Gov't MFS Warburg
V.I. V.I. Capital Quality American Equity Prime Securities Research International
1998 Growth Value Appreciation Bond Leaders II Income II Money II II Series Equity Total
- ---- ------ ------ ------------ ------- ---------- --------- --------- ---------- -------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cost to:
Contract
owners.......... $333 $4,167 $4,167 $833 $333 $4,167 $833 $1,458 $4,167 $4,167 $24,625
Sponsor......... 0 0 0 0 0 0 0 0 0 0 0
Adjusted for
market
appreciation
(depreciation)... 37 1,040 779 (1) 5 654 4 4 824 280 3,626
Deduction:
Mortality &
expense risk
charge.......... 0 (16) (16) (1) 0 (16) (1) (2) (15) (14) (81)
---- ------ ------ ---- ---- ------ ---- ------ ------ ------ -------
Net assets....... $370 $5,191 $4,930 $831 $338 $4,805 $836 $1,460 $4,976 $4,433 $28,170
==== ====== ====== ==== ==== ====== ==== ====== ====== ====== =======
</TABLE>
F-37
<PAGE>
UNITED INVESTORS RETIREMAP VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS--(Continued)
Note D--Charges and Deductions
Fund Management and Fees
AIM Advisors, Inc., Dreyfus Corporation, Federated Advisors, Inc., INVESCO
Funds Group, Inc., Massachusetts Financial Services Company, Scudder Kemper
Investments, Inc., and Warburg Pincus Asset Management, Inc. are managers of
their respective funds and provide investment advisory services to their
respective fund portfolios. Each portfolio will pay the manager a fee for
managing its investment. However, for certain portfolios, the manager waived
part or all of its management fee during 1999. This management fee by manager
as a percentage of the fund's annual average net assets, after amounts waived,
is as follows:
<TABLE>
<CAPTION>
Annual
Management Fee
--------------
<S> <C>
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth Fund......................................... .64%
AIM V.I. Value Fund.......................................... .61%
Dreyfus Variable Investment Fund
Capital Appreciation Portfolio............................... .75%
Growth and Income Portfolio.................................. .75%
Quality Bond Portfolio....................................... .65%
Small Cap Portfolio.......................................... .75%
Federated Insurance Series
American Leaders Fund II..................................... .74%
Equity Income Fund II........................................ .32%
Fund for U.S. Government Securities II....................... .52%
Prime Money Fund II.......................................... .49%
INVESCO Variable Investment Fund, Inc.
INVESCO VIF--Dynamics Portfolio.............................. .60%
INVESCO VIF--High Yield Portfolio............................ .60%
INVESCO VIF--Equity Income Fund.............................. .75%
MFS Variable Insurance Trust
Emerging Growth Series....................................... .75%
Growth with Income Series.................................... .75%
Research Series.............................................. .75%
Utilities Series............................................. .75%
Scudder Variable Life Investment Fund
Global Discovery Portfolio................................... .91%
International Portfolio...................................... .87%
Warburg Pincus Trust
International Equity Portfolio............................... 1.00%
</TABLE>
F-38
<PAGE>
UNITED INVESTORS RETIREMAP VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS--(Continued)
Mortality and Expense Risk Charges
A daily charge is deducted at an effective annual rate of 1.25% of the
average daily net assets of each investment portfolio to compensate the Sponsor
for certain mortality and expense risks assumed. The mortality risk arises from
the Sponsor's obligation to make annuity payments (determined in accordance
with annuity tables) regardless of how long all annuitants may live. The
Sponsor also assumes the risk that other expense charges may be insufficient to
cover actual expenses incurred in connection with policy obligations.
Premium Deposit Charges
The Sponsor does not impose an immediate charge against the initial premium
deposits (except for premium taxes incurred).
Contract Maintenance Charges and Administration Fee
The Sponsor deducts a charge of $35 on each policy anniversary to compensate
it for administrative expenses. This charge is "cost-based" and the Sponsor
does not expect a profit from the charge.
In addition to the annual contract charge, the Sponsor deducts an
administrative fee at an effective annual rate of 0.15% of the average daily
net assets of each portfolio to compensate the Sponsor for expenses in
administering the RetireMAP Variable Account and the policy.
Premium Taxes
The Sponsor deducts a charge for premium taxes incurred in accordance with
state and local law at the time the premium deposit is accepted, when the
policy value is withdrawn or surrendered, or when annuity payments begin.
Withdrawal Charges
For surrenders occurring during the first six policy years following the
receipt of a premium deposit, a withdrawal charge is made, measured as a
percent of the total premium deposits as specified in the following table. The
withdrawal charge percentage varies depending on the "age" of the premium
deposits included in the withdrawal; in other words, the policy year in which
the premium deposit was made. Partial withdrawals may also be subject to a
charge measured as a percent of the premium deposits included in the
withdrawal.
<TABLE>
<CAPTION>
No. of Policy Years
Since Receipt 6 or
of Premium Deposit 0 1 2 3 4 5 More
- ------------------- --- --- --- --- --- --- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Withdrawal Charge %................................ 7% 7% 6% 6% 4% 3% none
</TABLE>
Withdrawal charges are included in transfers to sponsors for benefits and
terminations.
F-39
<PAGE>
PART C
- ------
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
--------------------
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
--------
(1) Resolution of the Board of Directors of United Investors authorizing
establishment of the Variable Account.\2\
(2) Custody agreements: Not applicable.
(3) (A) Principal Underwriting Agreement.\5\
(B) Form of Broker-Dealer Sales Agreement.\5\
(C) Master Distribution Agreement.\5\
(4) (A) Form of Annuity Policy.\2\
(B) Optional Death Benefit Rider.\5\
(C) Waiver of Withdrawal Charges Rider.\2\
(D) Death Benefit Endorsement.\5\
(5) Form of Application.\2\
(6) (A) Certificate of Incorporation of United Investors.\1\
(B) By-Laws of United Investors.\1\
(7) Reinsurance contracts: Not applicable.
(8) (A) Participation Agreement for:
(i) AIM Variable Insurance Funds,Inc.\5\
(ii) Federated Insurance Series.\4\
(iii) Scudder Variable Life Investment Fund.\4\
(iv) Dreyfus Variable Investment Fund.\4\
(v) MFS Variable Insurance Trust.\4\
(a) Amendment to Participation Agreement for MFS
Variable Insurance Trust.\6\
(vi) Warburg Pincus Trust.\4\
(vii) INVESCO Variable Investment Funds, Inc.\5\
(a) Amendment to Participation Agreement for INVESCO
Variable Investment Funds, Inc.\6\
(B) Form of Administration Agreement.\3\
(9) Opinion and consent of John H. Livingston, Esquire.\6\
(10) (A) Consent of Sutherland Asbill & Brennan LLP\6\
(B) Consents of Independent Accountants.\6\
(11) Certain additional financial statements: Not applicable.
(12) Agreements/understandings for providing initial capital: Not
applicable.
(13) Performance Data Calculations.\5\
(14) Financial Data Schedules: Not applicable.
(15) Power of Attorney.\3\
_________________________________
\1\ Incorporated herein by reference to the Exhibit filed electronically with
Post-Effective Amendment No. 12 to the Registration Statement on Form S-6
(File No. 33-11465) filed on April 30, 1998 (previously filed on January
22, 1987 as an Exhibit to the Form S-6 Registration Statement, File No. 33-
11465).
\2\ Incorporated herein by reference to the initial Registration Statement on
Form N-4 (File No. 333-12507) filed on September 23, 1996.
C-1
<PAGE>
\3\ Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-4 (File No. 333-12507) filed on March 7,
1997.
\4\ Incorporated herein by reference to Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-4 (File No. 333-12507) filed on July 2,
1997.
\5\ Incorporated herein by reference to Post-Effective Amendment No. 1 to
the Registration Statement on Form N-4 (File No. 333-12507) filed on
June 29, 1998.
\6\ Filed herewith.
Item 25. Directors and Officers of the Depositor
---------------------------------------
Name and Principal Position and Offices
Business Address* with Depositor
----------------- --------------
C. B. Hudson** Director
Anthony L. McWhorter Chairman of the Board of
Directors, President and
Chief Executive Officer
W. Thomas Aycock Director, Vice President and
Chief Actuary
Tony G. Brill** Director and Executive Vice
President - Administration
Mark S. McAndrew** Senior Vice President - Marketing
Larry M. Hutchison** Director
Michael J. Klyce Vice President and Treasurer
John H. Livingston Director, Secretary and Counsel
James L. Mayton, Jr. Vice President and Controller
Carol A. McCoy Director and Assistant
Secretary
Ross W. Stagner Director and Vice President
Terry W. Davis Director and Vice President -
Administration
____________________
* Unless otherwise noted, the principal business address of each person listed
is United Investors Life Insurance Company, P. O. Box 10207, Birmingham,
Alabama 35202-0207.
** Principal business address: Torchmark Corporation, 3700 South Stonebridge,
McKinney, Texas 75070.
Item 26. Persons Controlled by or Under Common Control With the Depositor or
-------------------------------------------------------------------
Registrant.
- -----------
C-2
<PAGE>
The Depositor, United Investors Life Insurance Company, Inc. ("United
Investors"), is indirectly owned by Torchmark Corporation. The following table
shows the persons controlled by or under common control with United Investors,
their Parent Company, and the State or Jurisdiction of Incorporation. All
companies are 100% owned by their Parent Company, unless otherwise indicated,
which is indirectly owned by Torchmark Corporation. The Registrant is a
segregated asset account of United Investors.
Parent State/Jurisdiction
Company Co. Code of Incorporation
- ------- -------- ------------------
AILIC Receivables Corporation E Delaware
American Income Life Insurance Co. A Indiana
American Life and Accident Insurance Co. A Texas
Brown-Service Funeral Homes Co., Inc. B Alabama
(Services burial insurance policies)
First United American Life Insurance Co. D New York
Globe Insurance Agency, Inc. (AL) C Alabama
Globe Insurance Agency, Inc. (AR) A Arkansas
Globe Life And Accident Insurance Co. C Delaware
Globe Marketing Services Inc. A Oklahoma
Liberty National Auto Club, Inc. B Alabama
Liberty National GroupCare, Inc. B Alabama
Liberty National Life Insurance Co. C Alabama
National Income Life Insurance Co. E New York
Torch Royalty Company B Delaware
Torchmark Corporation Delaware
(Holding company)
United American Insurance Co. C Delaware
United Investors Life Insurance Co. B** Missouri
Waddell & Reed Asset Management Co. C Missouri
**Parent company owns 81%; remaining 19% owned by Torchmark Corporation.
Parent Company Codes
- ----------------------------------------
C-3
<PAGE>
A Globe Life And Accident Insurance Co.
B Liberty National Life Insurance Co.
C Torchmark Corporation
D United American Insurance Co.
E American Income Life Insurance Company
Item 27. Number of Policy Owners
-----------------------
As of December 31, 1999, there were 30 owners of the policies.
Item 28. Indemnification
---------------
Article XII of United Investors' By-Laws provides as follows:
"Each Director or officer, or former Director or officer, of this
Corporation, and his legal representatives, shall be indemnified by the
Corporation against liabilities, expenses, counsel fees and costs,
reasonably incurred by him or his estate in connection with, or arising out
of, any action, suit, proceeding or claim in which he is made a party by
reason of his being, or having been, such Director or officer; and any
person who, at the request of this Corporation, serves as Director or
officer of another corporation in which this Corporation owns corporate
stock, and his legal representatives, shall in like manner be indemnified
by this Corporation; provided that, in either case suit or proceeding to
have been liable for misconduct in the performance of his duties as such
Director or officer.
The indemnification herein provided for shall apply also in respect of any
amount paid in compromise of any such action, suit, proceeding or claim
asserted against such Director or officer (including expenses, counsel
fees, and costs reasonably incurred in connection therewith), provided that
the Board of Directors shall have first approved such proposed compromise
settlement and determined that the officer or Director involved is not
guilty of misconduct, but in taking such action any Director involved shall
not be qualified to vote thereof, and if for this reason a quorum of the
Board cannot be obtained to vote on such matters, it shall be determined by
a committee of three (3) persons appointed by the shareholders at a duly
called special meeting or at a regular meeting. In determining whether or
not a Director or officer is guilty of misconduct in relation to any such
matter, the Board of Directors or committee appointed by the shareholders,
as the case shall be, may rely conclusively upon an opinion of independent
legal counsel selected by such Board or committee. The rights to
indemnification herein provided shall not be exclusive of any other rights
to which such Director or officer may be lawfully entitled."
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Directors, officers and controlling provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
C-4
<PAGE>
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a Director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 29. Principal Underwriters
----------------------
(a) MAP Investments Incorporated ("MAP") is the principal underwriter of the
Policies as defined in the Investment Company Act of 1940. It is not the
principal underwriter, depositor, sponsor, or investment adviser for any other
investment company.
(b) The following table provides certain information with respect to each
director, officer, or partner of MAP.
Name and Principal Positions and Offices
Business Address* With Underwriter
- ----------------- ----------------
D. Mark Davenport Director, President, Treasurer
Terry L. Johnson Vice President, Secretary
*The principal business address for the officers and Directors listed is 9020 N.
May Avenue, Suite 290, Oklahoma City, OK 73120.
Commissions Received by Each Principal Underwriter
from the Registrant During the One Year Period Ending December 31, 1999
-----------------------------------------------------------------------
Net
Underwriting
Name of Principal Discounts and Compensation Brokerage
Underwriter Commissions on Redemption Commissions Compensation
- ------------------- ------------- ------------- ----------- ------------
MAP Investments $67,376.16 -0- -0- -0-
Incorporated
Item 30. Location of Accounts and Records
--------------------------------
All accounts and records required to be maintained by Section 31(a) of the
1940 Act and the rules under it are maintained by United Investors at its home
office.
Item 31. Management Services
-------------------
All management contracts are discussed in Part A or Part B.
C-5
<PAGE>
Item 32. Undertakings
------------
(a) Registrant undertakes that it will file a Post-Effective Amendment to this
Registration Statement as frequently as necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
(c) Registrant undertakes to deliver any Statement of Additional Information and
any financial statements required to be made available under this Form promptly
upon written or oral request to United Investors at the address or phone number
listed in the Prospectus.
(d) United Investors represents that the fees and charges deducted under the
Policy, in the aggregate, are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by United Investors.
STATEMENT PURSUANT TO RULE 6c-7
-------------------------------
United Investors and the Variable Account rely on 17 C.F.R. Section
270.6c-7 and represent that the provisions of that Rule have been or will be
complied with. Accordingly, United Investors and the Variable Account are
exempt from the provisions of Sections 22(e), 27(c)(1) and 27(d) of the
Investment Company Act of 1940 with respect to any variable annuity contract
participating in such account to the extent necessary to permit compliance with
the Texas Optional Retirement Program.
SECTION 403(b) REPRESENTATIONS
------------------------------
United Investors represents that it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88)
regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of
1940, in connection with redeemability restrictions on Section 403(b) policies,
and that paragraphs numbered (1) through (4) of that letter will be complied
with.
C-6
<PAGE>
SIGNATURES
----------
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant, RetireMap Variable Account, certifies that it meets the
requirements of Securities Act Rule 485(b) for effectiveness of this
Registration Statement and has duly caused this Amendment to the Registration
Statement to be signed on its behalf in the City of Birmingham and the State of
Alabama on the 17th day of April, 2000.
RETIREMAP VARIABLE ACCOUNT
(REGISTRANT)
UNITED INVESTORS LIFE INSURANCE COMPANY
(DEPOSITOR)
By: /s/ Anthony L. McWhorter
--------------------------------------
Anthony L. McWhorter, President
As required by the Securities Act of 1933, this Amendment to the
Registration Statement for the RetireMAP Variable Account has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Director -------
- -----------------------------
C. B. Hudson
/s/ Anthony L. McWhorter Chairman of the Board 4-17-00
- ----------------------------- of Directors, President and
Anthony L. McWhorter Chief Executive Officer
/s/ W. Thomas Aycock Director, Vice President and 4-17-00
- ----------------------------- Chief Actuary
W. Thomas Aycock
/s/ Tony G. Brill Director and Executive Vice 4-17-00
- ----------------------------- President - Administration
Tony G. Brill
Senior Vice President - Marketing -------
- -----------------------------
Mark S. McAndrew
- ----------------------------- Director -------
Larry M. Hutchison
/s/ Michael J. Klyce Vice President and Treasurer 4-17-00
- -----------------------------
Michael J. Klyce
/s/ James L. Mayton, Jr. Vice President and Controller 4-17-00
- -----------------------------
James L. Mayton, Jr.
/s/ John H. Livingston Director, Secretary and Counsel 4-17-00
- -----------------------------
John H. Livingston
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Carol A. McCoy Director and Assistant Secretary 4-17-00
- -----------------------------
Carol A. McCoy
/s/ Ross W. Stagner Director and Vice President 4-17-00
- -----------------------------
Ross W. Stagner
/s/ Terry W. Davis Director and Vice President - 4-17-00
- ----------------------------- Administration
Terry W. Davis
<PAGE>
Exhibit Index
99.8(A)(v)(a) Amendment to Participation Agreement for MFS Variable
Insurance Trust
99.8(A)(vii)(a) Amendment to Participation Agreement for INVESCO
Variable Investments Funds, Inc.
99.9 Opinion and consent of John H. Livingston, Esquire
99.10(A) Consent of Sutherland Asbill & Brennan LLP
99.10(B) Consents of Independent Accountants
<PAGE>
EXHIBIT 99.8.A.v.a
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
UNITED INVESTORS LIFE INSURANCE COMPANY
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT, made and entered into this
14th day of April 2000, by and among MFS VARIABLE INSURANCE TRUST, a
- ---- -----
Massachusetts business trust (the "Trust"), UNITED INVESTORS LIFE INSURANCE
COMPANY, a Missouri corporation (the "Company") on its own behalf and on behalf
of each of the segregated asset accounts of the Company set forth in Schedule A
hereto, as may be amended from time to time (the "Accounts"), and MASSACHUSETTS
FINANCIAL SERVICES COMPANY, a Delaware corporation ("MFS").
WHEREAS, the parties hereto entered into the Participation Agreement on March
1, 1997, which is hereby amended and restated;
WHEREAS, the Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and its
shares are registered or will be registered under the Securities Act of 1933, as
amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into several
series of shares, each representing the interests in a particular managed pool
of securities and other assets;
WHEREAS, the series of shares of the Trust offered by the Trust to the
Company and the Accounts are set forth on Schedule A attached hereto (each, a
"Portfolio," and, collectively, the "Portfolios");
WHEREAS, MFS is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and any applicable state securities law, and
is the Trust's investment adviser;
WHEREAS, the Company will issue certain variable annuity and/or variable life
insurance contracts (individually, the "Policy" or, collectively, the
"Policies") which, if required by applicable law, will be registered under the
1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolution of the Board of Directors of the Company, to
set aside and invest assets attributable to the aforesaid variable annuity
and/or variable life insurance contracts that are allocated to the Accounts (the
Policies and the Accounts covered by this Agreement, and each corresponding
Portfolio covered by this Agreement in which the Accounts invest, is specified
in Schedule A attached hereto as may be modified from time to time);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, MFS Fund Distributors, Inc. (the "Underwriter") is registered as a
broker-dealer with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended
<PAGE>
(hereinafter the "1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, MAP Investments, Inc., United Securities Alliance, Inc. and First
Union Securities, Inc., the underwriters for the individual variable annuity
and the variable life policies, are registered as broker-dealers with the SEC
under the 1934 Act and are members in good standing of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to fund the Policies, and the Trust intends to sell such Shares to
the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, MFS,
and the Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
--------------------
1.1. The Trust agrees to sell to the Company those Shares which the
Accounts order (based on orders placed by Policy holders on that Business
Day, as defined below) and which are available for purchase by such
Accounts, executing such orders on a daily basis at the net asset value
next computed after receipt by the Trust or its designee of the order for
the Shares. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders from Policy owners and
receipt by such designee shall constitute receipt by the Trust; provided
--------
that the Trust receives notice of such orders by 9:30 a.m. New York time on
the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange, Inc. (the "NYSE") is open for trading
and on which the Trust calculates its net asset value pursuant to the rules
of the SEC.
1.2. The Trust agrees to make the Shares available indefinitely for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the SEC and the Trust shall calculate such net asset
value on each day which the NYSE is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Trust (the "Board") may refuse to
sell any Shares to the Company and the Accounts, or suspend or terminate
the offering of the Shares if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of
the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interest of
the Shareholders of such Portfolio.
1.3. The Trust and MFS agree that the Shares will be sold only to
insurance companies which have entered into participation agreements with
the Trust and MFS (the "Participating Insurance Companies") and their
separate accounts, qualified pension and retirement plans and MFS or its
affiliates as provided for under Section 817(h)(4) of the Internal Revenue
Code of 1986, as amended (the "Code") and the regulations thereunder. The
Trust and MFS will not sell Trust shares to any insurance company or
separate account unless and agreement containing provisions substantially
the same as Articles III and VII of this Agreement is in effect to govern
such sales. The Company will not resell the Shares except to the Trust or
its agents.
1.4. The Trust agrees to redeem for cash, on the Company's request, any
full or fractional Shares held by the Accounts (based on orders placed by
Policy holders on that Business Day), executing such requests on a daily
basis at the net asset value next computed after receipt by the Trust or
its designee of the request for redemption. For purposes of this Section
1.4, the Company shall be the designee of the Trust for receipt of requests
for redemption from Policy owners and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of
such request for redemption by 9:30 a.m. New York time on the next
following Business Day.
1.5. Each purchase, redemption and exchange order placed by the Company
shall be placed separately for each Portfolio and shall not be netted with
respect to any Portfolio. However, with respect to payment of
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the purchase price by the Company and of redemption proceeds by the Trust,
the Company and the Trust shall net purchase and redemption orders with
respect to each Portfolio and shall transmit one net payment for all of the
Portfolios in accordance with Section 1.6.
1.6. In the event of net purchases, the Company shall pay for the Shares
by 2:00 p.m. New York time on the next Business Day after an order to
purchase the Shares is made in accordance with the provisions of Section
1.1. hereof. In the event of net redemptions, the Trust shall pay the
redemption proceeds by 2:00 p.m. New York time on the next Business Day
after an order to redeem the shares is made in accordance with the
provisions of Section 1.4. hereof. All such payments shall be in federal
funds transmitted by wire.
1.7. Issuance and transfer of the Shares will be by book entry only.
Stock certificates will not be issued to the Company or the Accounts. The
Shares ordered from the Trust will be recorded in an appropriate title for
the Accounts or the appropriate subaccounts of the Accounts.
1.8. The Trust shall furnish same day notice (by wire or telephone
followed by written confirmation) to the Company of any dividends or
capital gain distributions payable on the Shares. The Company hereby
elects to receive all such dividends and distributions as are payable on a
Portfolio's Shares in additional Shares of that Portfolio. The Trust shall
notify the Company of the number of Shares so issued as payment of such
dividends and distributions.
1.9. The Trust or its custodian shall make the net asset value per share
for each Portfolio available to the Company on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available
by 6:30 p.m. New York time. In the event that the Trust is unable to meet
the 6:30 p.m. time stated herein, it shall provide additional time for the
Company to place orders for the purchase and redemption of Shares. Such
additional time shall be equal to the additional time which the Trust takes
to make the net asset value available to the Company. If the Trust
provides materially incorrect share net asset value information, the Trust
shall make an adjustment to the number of shares purchased or redeemed for
the Accounts to reflect the correct net asset value per share. Any
material error in the calculation or reporting of net asset value per
share, dividend or capital gains information shall be reported promptly
upon discovery to the Company.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
-------------------------------------------------
2.1. The Company represents and warrants that the Policies are or will be
registered under the 1933 Act or are exempt from or not subject to
registration thereunder, and that the Policies will be issued, sold, and
distributed in compliance in all material respects with all applicable
state and federal laws, including without limitation the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the 1940
Act. The Company further represents and warrants that it is an insurance
company duly organized and in good standing under applicable law and that
it has legally and validly established the Account as a segregated asset
account under applicable law and has registered or, prior to any issuance
or sale of the Policies, will register the Accounts as unit investment
trusts in accordance with the provisions of the 1940 Act (unless exempt
therefrom) to serve as segregated investment accounts for the Policies, and
that it will maintain such registration for so long as any Policies are
outstanding except for proper reliance on an exemption from registration
under the 1940 Act. The Company shall amend the registration statements
under the 1933 Act for the Policies and the registration statements under
the 1940 Act for the Accounts from time to time as required in order to
effect the continuous offering of the Policies or as may otherwise be
required by applicable law. The Company shall register and qualify the
Policies for sales accordance with the securities laws of the various
states only if and to the extent deemed necessary by the Company.
2.2. The Company represents and warrants that the Policies are currently
and at the time of issuance will be treated as life insurance, endowment or
annuity contract under applicable provisions of the Code, provided that the
applicable portfolios of the Trust are at all times in compliance with
Section 817(h) of the Code and qualify as regulated investment companies
under Subchapter M of the Code, that it will maintain
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<PAGE>
such treatment and that it will notify the Trust or MFS immediately upon
having a reasonable basis for believing that the policies have ceased to be
so treated or that they might not be so treated in the future.
2.3. The Company represents and warrants that MAP Investments, Inc.,
United Securities Alliance, Inc. and First Union Securities, Inc., the
underwriters for the individual variable annuity and the variable life
policies, is each a member in good standing of the NASD and is a registered
broker-dealer with the SEC. The Company represents and warrants that the
Company, MAP Investments, Inc., United Securities Alliance, Inc. and First
Union Securities, Inc. will sell and distribute such policies in accordance
in all material respects with all applicable state and federal securities
laws, including without limitation the 1933 Act, the 1934 Act, and the 1940
Act.
2.4. The Trust and MFS represent and warrant that the Shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized
for issuance and sold in compliance with the laws of The Commonwealth of
Massachusetts and all applicable federal and state securities laws and that
the Trust is and shall remain registered under the 1940 Act. The Trust
shall amend the registration statement for its Shares under the 1933 Act
and the 1940 Act from time to time as required in order to effect the
continuous offering of its Shares. The Trust shall register and qualify
the Shares for sale in accordance with the laws of the various states only
if and to the extent deemed necessary by the Trust.
2.5. MFS represents and warrants that the Underwriter is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
The Trust and MFS represent that the Trust and the Underwriter will sell
and distribute the Shares in accordance in all material respects with all
applicable state and federal securities laws, including without limitation
the 1933 Act, the 1934 Act, and the 1940 Act.
2.6. The Trust represents that it is lawfully organized and validly
existing under the laws of The Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act and any
applicable regulations thereunder. The Trust represents and warrants that
any of its trustees, officers, employees, investment advisers, and other
individuals/entities who deal with the money and/or securities of the Trust
are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage (including larceny and embezzlement) for the
benefit of the Trust in an amount not less than that required by Rule 17g-1
under the 1940 Act issued by a reputable bonding company.
2.7. MFS represents and warrants that it is and shall remain duly
registered under all applicable federal securities laws and that it shall
perform its obligations for the Trust in compliance in all material
respects with any applicable federal securities laws and with the
securities laws of The Commonwealth of Massachusetts. MFS represents and
warrants that it is not subject to state securities laws other than the
securities laws of The Commonwealth of Massachusetts and that it is exempt
from registration as an investment adviser under the securities laws of The
Commonwealth of Massachusetts.
2.8. No less frequently than annually, the Company shall submit to the
Board such reports, material or data as the Board may reasonably request so
that it may carry out fully the obligations imposed upon it by the
conditions contained in the exemptive application pursuant to which the SEC
has granted exemptive relief to permit mixed and shared funding (the "Mixed
and Shared Funding Exemptive Order").
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
---------------------------------------
3.1. At least annually, the Trust or its designee shall provide the
Company, free of charge, with as many copies of the current prospectus
(describing only the Portfolios listed in Schedule A hereto) for the Shares
as the Company may reasonably request for distribution to existing Policy
owners whose Policies are funded by such Shares. The Trust or its designee
shall provide the Company, at the Company's expense, with as many copies of
the current prospectus for the Shares as the Company may reasonably request
for distribution to prospective purchasers of Policies. If requested by
the Company in lieu thereof, the Trust or its designee shall provide such
documentation (including a "camera ready" copy of the new prospectus as set
in type or,
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<PAGE>
at the request of the Company, as a diskette in the form sent to the
financial printer) and other assistance as is reasonably necessary in order
for the parties hereto once each year (or more frequently if the prospectus
for the Shares is supplemented or amended) to have the prospectus for the
Policies and the prospectus for the Shares printed together in one
document; the expenses of such printing to be apportioned between (a) the
Company and (b) the Trust or its designee in proportion to the number of
pages of the Policy and Shares' prospectuses, taking account of other
relevant factors affecting the expense of printing, such as covers,
columns, graphs and charts; the Trust or its designee to bear the cost of
printing the Shares' prospectus portion of such document for distribution
to owners of existing Policies funded by the Shares and the Company to bear
the expenses of printing the portion of such document relating to the
Accounts; provided, however, that the Company shall bear all printing
---------
expenses of such combined documents where used for distribution to
prospective purchasers or to owners of existing Policies not funded by the
Shares. The Company may print the prospectus for the Shares in combination
with other fund prospectuses in accordance with the expense allocation
provisions set forth in the immediately preceding sentence (provided that
the applicable fund will bear expenses with respect to its prospectus). In
the event that the Company requests that the Trust or its designee provides
the Trust's prospectus in a "camera ready" or diskette format, the Trust
shall be responsible for providing the prospectus in the format in which it
or MFS is accustomed to formatting prospectuses and shall bear the expense
of providing the prospectus in such format (e.g., typesetting expenses),
-----
and the Company shall bear the expense of adjusting or changing the format
to conform with any of its prospectuses.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Trust or its
designee. The Trust or its designee, at its expense, shall print and
provide such statement of additional information to the Company (or a
master of such statement suitable for duplication by the Company) for
distribution to any owner of a Policy funded by the Shares. The Trust or
its designee, at the Company's expense, shall print and provide such
statement to the Company (or a master of such statement suitable for
duplication by the Company) for distribution to a prospective purchaser who
requests such statement or to an owner of a Policy not funded by the
Shares.
3.3. The Trust or its designee shall provide the Company free of charge
copies, if and to the extent applicable to the Shares, of the Trust's proxy
materials, reports to Shareholders and other communications to Shareholders
in such quantity as the Company shall reasonably require for distribution
to Policy owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3 above,
or of Article V below, the Company shall pay the expense of printing or
providing documents to the extent such cost is considered a distribution
expense. Distribution expenses would include by way of illustration, but
are not limited to, the printing of the Shares' prospectus or prospectuses
for distribution to prospective purchasers or to owners of existing
Policies not funded by such Shares.
3.5. The Trust hereby notifies the Company that it may be appropriate to
include in the prospectus pursuant to which a Policy is offered disclosure
regarding the potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions received from
Policy owners; and
(c) vote the Shares for which no instructions have been received in
the same proportion as the Shares of such Portfolio for which
instructions have been received from Policy owners;
so long as and to the extent that the SEC continues to interpret the 1940
Act to require pass through voting privileges for variable contract owners.
The Company will in no way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Policy owners. The Company reserves the right to vote shares held in any
segregated asset account in its own right, to the extent
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<PAGE>
permitted by law. Participating Insurance Companies shall be responsible
for assuring that each of their separate accounts holding Shares calculates
voting privileges in the manner required by the Mixed and Shared Funding
Exemptive Order. The Trust and MFS will notify the Company of any changes
of interpretations or amendments to the Mixed and Shared Funding Exemptive
Order.
ARTICLE IV. SALES MATERIAL AND INFORMATION
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee, each piece of sales literature or other promotional
material in which the Trust, MFS, any other investment adviser to the
Trust, or any affiliate of MFS are named, at least three (3) Business Days
prior to its use. No such material shall be used if the Trust, MFS, or
their respective designees reasonably objects to such use within three (3)
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statement on behalf of the Trust, MFS, any other
investment adviser to the Trust, or any affiliate of MFS or concerning the
Trust or any other such entity in connection with the sale of the Policies
other than the information or representations contained in the registration
statement, prospectus or statement of additional information for the
Shares, as such registration statement, prospectus and statement of
additional information may be amended or supplemented from time to time, or
in reports or proxy statements for the Trust, except with the permission of
the Trust, MFS or their respective designees. The Trust, MFS or their
respective designees each agrees to respond to any request for approval on
a prompt and timely basis. The Company shall adopt and implement
procedures reasonably designed to ensure that information concerning the
Trust, MFS or any of their affiliates which is intended for use only by
brokers or agents selling the Policies (i.e., information that is not
----
intended for distribution to Policy holders or prospective Policy holders)
is so used, and neither the Trust, MFS nor any of their affiliates shall be
liable for any losses, damages or expenses relating to the improper use of
such broker only materials.
4.3. The Trust or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company and/or the Accounts is
named, at least three (3) Business Days prior to its use. No such material
shall be used if the company or its designee reasonably objects to such use
within three (3) Business Days after receipt of such material.
4.4. The Trust and MFS shall not give, and agree that the Underwriter
shall not give, any information or make any representations on behalf of
the Company or concerning the Company, the Accounts, or the Policies in
connection with the sale of the Policies other than the information or
representations contained in a registration statement, prospectus, or
statement of additional information for the Policies, as such registration
statement, prospectus and statement of additional information may be
amended or supplemented from time to time, or in reports for the Accounts,
except with the permission of the Company. The Company or its designee
agrees to respond to any request for approval on a prompt and timely basis.
The parties hereto agree that this Section 4.4. is neither intended to
designate nor otherwise imply that MFS is an underwriter or distributor of
the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company or
the Trust, as appropriate) will each provide to the other at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, proxy statements, sales literature and
other promotional materials, applications for exemptions, requests for no-
action letters, and all amendments to any of the above, that relate to the
Policies, or to the Trust or its Shares, prior to or contemporaneously with
the filing of such document with the SEC or other regulatory authorities.
The Company and the Trust shall also each promptly inform the other or the
results of any examination by the SEC (or other regulatory authorities)
that relates to the Policies, the Trust or its Shares, and the party that
was the subject of the examination shall provide the other party with a
copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination.
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4.6. The Trust and MFS will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Portfolio, and of
any material change in the Trust's registration statement, particularly any
change resulting in change to the registration statement or prospectus or
statement of additional information for any Account. The Trust and MFS
will cooperate with the Company so as to enable the Company to solicit
proxies from Policy owners or to make changes to its prospectus, statement
of additional information or registration statement, in an orderly manner.
The Trust and MFS will make reasonable efforts to attempt to have changes
affecting Policy prospectuses become effective simultaneously with the
annual updates for such prospectuses.
4.7. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures, or
other public media), and sales literature (such as brochures, circulars,
reprints or excerpts or any other advertisement, sales literature, or
published articles), distributed or made generally available to customers
or the public, educational or training materials or communications
distributed or made generally available to some or all agents or employees.
ARTICLE V. FEES AND EXPENSES
-----------------
5.1. The Trust shall pay no fee or other compensation to the Company under
this Agreement, and the Company shall pay no fee or other compensation to
the Trust, except that if the Trust or any Portfolio adopts and implements
a plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution
and Shareholder servicing expenses, then, subject to obtaining any required
exemptive orders or regulatory approvals, the Trust may make payments to
the Company or to the underwriter for the Policies if and in amounts agreed
to by the Trust in writing. Each party, however, shall, in accordance with
the allocation of expenses specified in Articles III and V hereof,
reimburse other parties for expense initially paid by one party but
allocated to another party. In addition, nothing herein shall prevent the
parties hereto from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust and/or
to the Accounts.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal
and state laws, including preparation and filing of the Trust's
registration statement, and payment of filing fees and registration fees;
preparation and filing of the Trust's proxy materials and reports to
Shareholders; setting in type and printing its prospectus and statement of
additional information (to the extent provided by and as determined in
accordance with Article III above); setting in type and printing the proxy
materials and reports to Shareholders (to the extent provided by and as
determined in accordance with Article III above); the preparation of all
statements and notices required of the Trust by any federal or state law
with respect to its Shares; all taxes on the issuance or transfer of the
Shares; and the costs of distributing the Trust's prospectuses and proxy
materials to owners of Policies funded by the Shares and any expenses
permitted to be paid or assumed by the Trust pursuant to a plan, if any,
under Rule 12b-1 under the 1940 Act. The Trust shall not bear any expenses
of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares'
prospectus or prospectuses in connection with new sales of the Policies and
of distributing the Trust's Shareholder reports and proxy materials to
Policy owners. The Company shall bear all expenses associated with the
registration, qualification, and filing of the Policies under applicable
federal securities and state insurance laws; the cost of preparing,
printing and distributing the Policy prospectus and statement of additional
information; and the cost of preparing, printing and distributing annual
individual account statements for Policy owners as required by state
insurance laws.
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ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
---------------------------------------
6.1 The Trust and MFS represent and warrant that each Portfolio of the
Trust will meet the diversification requirements of Section 817(h) (1) of
the Code and Treas. Reg. 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts,
as they may be amended from time to time (and any revenue rulings, revenue
procedures, notices, and other published announcements of the Internal
Revenue Service interpreting these sections), as if those requirements
applied directly to each such Portfolio. In the event that any Portfolio
is not so diversified at the end of any applicable quarter, the Trust and
MFS will make every effort to (a) adequately diversify the Portfolio so as
to achieve compliance within the grace period afforded by Treas. Reg.
1.817.5 and (b) notify the Company.
6.2. The Trust and MFS represent that each Portfolio of the Trust will
elect to be qualified as a Regulated Investment Company under Subchapter M
of the Code and will maintain such qualification (under Subchapter M or any
successor or similar provision) and that the Trust or its designee will
notify the Company promptly upon having a reasonable basis for believing
that any Portfolio of the Trust has ceased to so qualify or that any
Portfolio might not so qualify in the future.
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
----------------------------
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for the
existence of any material irreconcilable conflict between the interests of
the variable annuity contract owners and the variable life insurance policy
owners of the Company and/or affiliated companies ("contract owners")
investing in the Trust. The Board shall have the sole authority to
determine if a material irreconcilable conflict exists, and such
determination shall be binding on the Company only if approved in the form
of a resolution by a majority of the Board, or a majority of the
disinterested trustees of the Board. The Board will give prompt notice of
any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the
Board in carrying out its responsibilities under the conditions set forth
in the Trust's exemptive application pursuant to which the SEC has granted
the Mixed and Shared Funding Exemptive Order by providing the Board, as it
may reasonably request, with all information necessary for the Board to
consider any issues raised and agrees that it will be responsible for
promptly reporting any potential or existing conflicts of which it is aware
to the Board including, but not limited to, an obligation by the Company to
inform the Board whenever contract owner voting instructions are disregard.
The Company also agrees that, if a material irreconcilable conflict arises,
it will at is own cost remedy such conflict up to an including (a)
withdrawing the assets allocable to some or all of the Accounts from the
Trust or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Trust, or submitting to a vote of all affected contract owners whether to
withdraw assets from the Trust or any Portfolio and reinvesting such assets
in a different investment medium and, as appropriate, segregating the
assets attributable to any appropriate group of contract owners that votes
in favor of such segregation, or offering to any of the affected contract
owners the option of segregating the assets attributable to their contracts
or policies, and (b) establishing a new registered management investment
company and segregating the assets underlying the Policies, unless a
majority of Policy owners materially adversely affected by the conflict
have voted to decline the offer to establish a new registered management
investment company.
7.3. A majority of the disinterested trustees of the Board shall determine
whether any proposed action by the Company adequately remedies any material
irreconcilable conflict. In the event that the Board determines that any
proposed action does not adequately remedy any material irreconcilable
conflict, the Company will withdraw from investment in the Trust each of
the Accounts designated by the disinterested trustees and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination; provided, however, that such
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withdrawal and termination shall be limited to the extent required to
remedy any such material irreconcilable conflict as determined by a
majority of the disinterested trustees of the Board.
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7.4. If and to the extent that rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or
shares funding (as defined in the Mixed and Shared Funding Exemptive Order)
on terms and conditions materially different from those contained in the
Mixed Shared Funding Exemptive Order, then (a) the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rule 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.5, 3.6, 7.1, 7.2, 7.3 and 7.4 of this Agreement shall continue in effect
only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
---------------
8.1. Indemnification by the Company
------------------------------
The Company agrees to indemnify and hold harmless the Trust, MFS, any
affiliates of MFS, and each of their respective directors/trustees,
officers and each person, if any, who controls the Trust or MFS within the
meaning of Section 15 of the 1933 Act, and any agents or employees of the
foregoing (each an "Indemnified Party," or collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or expenses (including reasonable counsel
fees) to which an Indemnified Party may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Shares or the
Policies and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or statement of additional
information for the Policies or contained in the Policies or
sales literature or other promotional material for the Policies
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the commission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading provided that this agreement to indemnify shall not
--------
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reasonable
reliance upon and in conformity with information furnished to the
Company or its designee by or on behalf of the Trust or MFS for
use in the registration statement, prospectus or statement of
additional information for the Policies or in the Policies or
sales literature or other promotional material (or any amendment
or supplement) or otherwise for use in connection with the sale
of the Policies or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material of
the Trust not supplied by the Company or this designee, or
persons under its control and on which the Company has reasonably
relied) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Policies
or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the registration statement,
prospectus, statement of additional information, or sales
literature or other promotional literature of the Trust, or any
amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Trust by or on behalf
of the Company; or
-9-
<PAGE>
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company; or
(e) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.2. Indemnification by the Trust
----------------------------
The Trust agrees to indemnify and hold harmless the Company and each
of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act, and any agents or
employees of the foregoing (each an "Indemnified Party," or collectively,
the "Indemnified Parties" for purposes of this Section 8.2.) against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Trust) or expenses (including
reasonable counsel fees) to which any Indemnified Party may become subject
under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Shares or the
Policies and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not
misleading, provided that this agreement to indemnify shall not
--------
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reasonable
reliance upon and in conformity with information furnished to the
Trust, MFS, the Underwriter or their respective designees by or
on behalf of the Company for use in the registration statement,
prospectus or statement of additional information for the Trust
or in sales literature or other promotional material for the
Trust (or any amendment or supplement) or otherwise for use in
connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations
(other than statement or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material for
the Policies not supplied by the Trust, MFS the Underwriter or
any of their respective designees or persons under their
respective control and on which any such entity has reasonably
relied) or wrongful conduct of the Trust or persons under its
control, with respect to the sale or distribution of the Policies
or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the registration statement,
prospectus, statement of additional information, or sales
literature or other promotional literature of the Accounts or
relating to the Policies, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Trust, MFS or the
Underwriter; or
-10-
<PAGE>
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements or a failure to qualify as a regulated investment
company each as specified in Article VI of this Agreement) or
arise out of or result from any other material breach of this
Agreement by the Trust; or
(e) arise out of or result from the materially incorrect or untimely
calculation or reporting of the daily net asset value per share
or dividend or capital gain distribution rate; or
(f) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of the
Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.3. In no event shall the Trust be liable under the indemnification
provisions contained in this Agreement to any individual or entity,
including without limitation, the Company, or any Participating Insurance
Company or any Policy holder, with respect to any losses, claims, damages,
liabilities or expenses that arise out of or result from (i) a breach of
any representation, warranty, and/or covenant made by the Company hereunder
or by any Participating Insurance Company under an agreement containing
substantially similar representations, warranties and covenants; (ii) the
failure by the Company or any Participating Insurance Company to maintain
its segregated asset account (which invests in any Portfolio) as a legally
and validly established segregated asset account under applicable state law
and as a duly registered unit investment trust under the provisions of the
1940 Act (unless exempt therefrom); or (iii) the failure by the Company or
any Participating Insurance Company to maintain its variable annuity and/or
variable life insurance contracts (with respect to which any Portfolio
serves as an underlying funding vehicle) as life insurance, endowment or
annuity contracts under applicable provisions of the Code.
8.4. Neither the Company nor the Trust shall be liable under the
indemnification provisions contained in this Agreement with respect to any
losses, claims, damages, liabilities or expenses to which an Indemnified
Party would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, willful misconduct, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement.
8.5. Promptly after receipt by an Indemnified Party under this Section
8.5. of commencement of action, such Indemnified Party will, if a claim in
respect thereof is to be made against the indemnifying party under this
section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any Indemnified Party otherwise than under
this section. In case any such action is brought against any Indemnified
Party, and it notified the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, assume the defense thereof, with counsel
satisfactory to such Indemnified Party. After notice from the indemnifying
party of its intention to assume the defense of an action, the Indemnified
Party shall bear the expenses of any additional counsel obtained by it, and
the indemnifying party shall not be liable to such Indemnified Party under
this section for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation.
8.6. Each of the parties agrees promptly to notify the other parties of
the commencement of any litigation or proceeding against it or any of its
respective officers, directors, trustees, employees or 1933 Act control
persons in connection with the Agreement, the issuance or sale of the
Policies, the operation of the Accounts, or the sale or acquisition of
Shares.
8.7. A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article VIII.
These indemnity provisions shall survive termination of this Agreement and
are in addition to any liability which the parties to this Agreement may
otherwise have.
-11-
<PAGE>
ARTICLE IX. APPLICABLE LAW
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS
----------------------------
The Trust, MFS, and the Company agree that each such party shall promptly
notify the other parties to this Agreement, in writing, of the institution of
any formal proceedings brought against such party or its designees by the NASD,
the SEC, or any insurance department or any other regulatory body regarding such
party's duties under this Agreement or related to the sale of the Policies, the
operation of the Accounts, or the purchase of the Shares.
ARTICLE XI. TERMINATION
------------
11.1. This Agreement shall terminate with respect to the Accounts, or one,
some, or all Portfolios:
(a) at the option of any party upon 180 days advance written notice
to the other parties; or
(b) at the option of the Company to the extent that the Shares of
Portfolios are not reasonably available to meet the requirements
of the Policies or are not "appropriate funding vehicles" for the
Policies, as reasonably determined by the Company. Without
limiting the generality of the foregoing, the Shares of a
Portfolio would not be "appropriate funding vehicles" if, for
example, such Shares did not meet the diversification or other
requirements referred to in Article VI hereof; or if the Company
would be permitted to disregard Policy owner voting instructions
pursuant to Rule 6e-2 or 6e-3(T) under the 1940 Act. Prompt
notice of the election to terminate for such cause and an
explanation of such cause shall be furnished to the Trust by the
Company; or
(c) at the option of the Trust or MFS by written notice to the
Company upon institution of formal proceedings against the
Company by the NASD, the SEC, or any insurance department or any
other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Policies, the operation
of the Accounts, or the purchase of the Shares; or
(d) at the option of the Company by written notice to the Trust and
MFS upon institution of formal proceedings against the Trust by
the NASD, the SEC, or any state securities or insurance
department or any other regulatory body regarding the Trust's or
MFS' duties under this Agreement or related to the sale of the
shares; or
(e) at the option of the Company, the Trust or MFS upon receipt of
any necessary regulatory approvals and/or the vote of the Policy
owners having an interest in the Accounts (or any subaccounts) to
substitute the shares of another investment company for the
corresponding Portfolio Shares in accordance with the terms of
the Policies for which those Portfolio Shares had been selected
to serve as the underlying investment media. The Company will
give thirty (30) day's prior written notice to the Trust of the
Date of any proposed vote or other action taken to replace the
Shares; or
-12-
<PAGE>
(f) termination by either the Trust or MFS by written notice to the
Company, if either one or both of the Trust or MFS respectively,
shall determine, in their sole judgment exercised in good faith,
that the Company has suffered a material adverse change in its
business, operations, financial condition, or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(g) termination by the Company by written notice to the Trust and
MFS, if the Company shall determine, in its sole judgment
exercised in good faith, that the Trust or MFS has suffered a
material adverse change in this business, operations, financial
condition or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(h) at the option of any party to this Agreement by written notice to
the other parties, upon another party's material breach of any
provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the written
consent of the parties hereto.
11.2. The notice shall specify the Portfolio or Portfolios, Policies and,
if applicable, the Accounts as to which the Agreement is to be terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1(a) may be exercised for
cause or for no cause.
11.4. Except as necessary to implement Policy owner initiated
transactions, or as required by state insurance laws or regulations, the
Company shall not redeem the Shares attributable to the Policies (as
opposed to the Shares attributable to the Company's assets held in the
Accounts), and the Company shall not prevent Policy owners from allocating
payments to a Portfolio that was otherwise available under the Policies,
until thirty (30) days after the Company shall have notified the Trust of
its intention to do so.
11.5. Notwithstanding any termination of this Agreement, the Trust and MFS
shall, at the option of the Company, continue to make available additional
shares of the Portfolios pursuant to the terms and conditions of this
Agreement, for all Policies in effect on the effective date of termination
of this Agreement (the "Existing Policies"), except as otherwise provided
under Article VII of this Agreement. Specifically, without limitation, the
owners of the Existing Policies shall be permitted to transfer or
reallocate investment under the Policies, redeem investments in any
Portfolio and/or invest in the Trust upon the making of additional purchase
payments under the Existing Policies.
11.6. If this Agreement terminates, the parties agree that Article VIII,
and to the extent that all or a portion of assets of the Accounts continue
to be invested in the Trust, Articles I, II, III, VI and VII, will remain
in effect after termination.
ARTICLE XII. NOTICES
-------
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
-13-
<PAGE>
If to the Trust:
MFS Variable Insurance Trust
500 Boylston Street
Boston, Massachusetts 02116
Attn: Stephen E. Cavan, Secretary
If to the Company:
United Investors Life Insurance Company
2001 Third Avenue South
Birmingham, Alabama 35233
Attention: John H. Livingston, Secretary & Counsel
Fax: (205) 325-2720
Copy to:
First Union Securities, Inc.
One First Union Center
301 South College Street
Charlotte, NC 28288-0630
Attention: David A. Hebner, Senior Vice President &
Assistant General Counsel
Fax: (704) 374-3105
United Securities Alliance, Inc.
8 Inverness Drive, Suite 100
Englewood, CO 80112
Attention: Edward Wise, President
Fax: (303) 792-0985
If to MFS:
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
Attn: Stephen E. Cavan, General Counsel
ARTICLE XIII. MISCELLANEOUS
-------------
13.1. Subject to the requirement of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Policies and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement or as otherwise required by applicable law
or regulation, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written
consent of the affected party until such time as it may come into the
public domain.
13.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the
same instrument.
-14-
<PAGE>
13.4. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in
connection with inquiries by appropriate governmental authorities
(including without limitation the SEC, the NASD, and state insurance
regulators) relating to this Agreement or the transactions contemplated
hereby.
13.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
13.8. A copy of the Trust's Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. The Company
acknowledges that the obligations of or arising out of this instrument are
not binding upon any of the Trust's trustees, officers, employees, agents
or shareholders individually, but are binding solely upon the assets and
property of the Trust in accordance with its proportionate interest
hereunder. The Company further acknowledges that the assets and
liabilities of each Portfolio are separate and distinct and that the
obligations of or arising out of this instrument are binding solely upon
the assets or property of the Portfolio on whose behalf the Trust has
executed this instrument. The Company also agrees that the obligations of
each Portfolio hereunder shall be several and not joint, in accordance with
its proportionate interest hereunder, and the Company agrees not to proceed
against any Portfolio for the obligations of another Portfolio.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified above.
UNITED INVESTORS LIFE INSURANCE COMPANY
By its authorized officer,
By: Anthony L. McWhorter
--------------------
Title: President
---------
MFS VARIABLE INSURANCE TRUST, on behalf of the
Portfolios
By its authorized officer and not individually,
By:
-----------------------
James R. Bordewick, Jr.
Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By:
-----------------
Jeffrey L. Shames
Chairman and Chief Executive Officer
-15-
<PAGE>
As of ________, 2000
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
--------------------------------------
<TABLE>
<CAPTION>
=====================================================================================================================
Name of Separate
Account and Date Policies Funded Portfolios
Established by Board of Directors by Separate Account Applicable to Policies
======================================================================================================================
<S> <C> <C>
RetireMAP Variable Annuity Variable Annuity - V96 MFS Emerging Growth Series
September 20, 1996 MFS Growth With Income Series
MFS Research Series
MFS Utilities Series
MFS Emerging Growth Series
Titanium Universal Life Variable Life - TL99 MFS Growth With Income Series
Variable Account MFS Research Series
Sept. 15, 1999 MFS Total Return Series
-------------- Variable Annuity - TA99
Titanium Annuity
Variable Account
Sept. 15, 1999
--------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
-16-
<PAGE>
EXHIBIT 99.8.A.vii.a
AMENDMENT TO PARTICIPATION AGREEMENT
This Amendment to Participation Agreement, made and entered into this _____
day of ___________, 2000 by and among United Investors Life Insurance Company
("Insurance Company"), on its own behalf and on behalf of each segregated asset
account of the Insurance Company set forth on Schedule A hereto, INVESCO
Distributors, Inc. ("Distributors"), INVESCO Funds Group, Inc., ("INVESCO"), and
INVESCO Variable Investment Funds, Inc. ("Company").
WHEREAS the Insurance Company, Distributors, INVESCO, and the Company have
entered into a Participation Agreement, dated July 8, 1998 ("Participation
Agreement"), and
WHEREAS Insurance Company, Distributors, INVESCO, and the Company desire
that each segregated asset account of the Insurance Company set forth in
Schedule A hereto be enabled to invest in portfolios of the Company, and
WHEREAS Insurance Company, Distributors, INVESCO, and the Company desire to
have the portfolios of the Company offered in additional insurance contracts
underwritten and distributed by Insurance Company as set forth in Schedule B
hereto;
NOW, THEREFORE Insurance Company, INVESCO, and the Company agree as
follows:
1. Schedule A of the Participation Agreement, which designates the
Insurance Company Accounts which invest in portfolios of the Insurance
Company, and Schedule B of the Participation Agreement, which designates
the contracts offered by Insurance Company, are superseded and replaced
by Schedules A and B attached hereto.
2. Article 1 of the Participation Agreement shall be amended by inserting
the following section after Section 1.9:
1.10 Payments for the purchase of shares of any Fund by the Insurance
Company under this Agreement may be "netted" against amounts due
to the Company for redemptions of shares of any other Fund for the
purposes of determining the amount that the Insurance Company must
wire to Company.
3. The Participation Agreement shall further be amended by the addition of
Schedule C-1, which shall designate persons authorized to give
instructions to the Company and Invesco regarding transactions involving
the Titanium Universal Life Variable Account and the Titanium Annuity
Variable Account. Those persons listed in the original schedule C to the
Participation Agreement shall only have authority to give instructions
regarding transactions involving the RetireMap Variable Account.
All of the other provisions contained in the participation agreement shall
remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Participation Agreement to be executed in its name and on behalf of its duly
authorized representatives.
United Investors Life Insurance Company
By:
-------------------------------------
Title:
----------------------------------
Date:
-----------------------------------
INVESCO Funds Group, Inc./INVESCO Distributors, Inc.
By:
-------------------------------------
Ronald L. Grooms
Senior Vice President and Treasurer
Date:
--------------------------------
INVESCO Variable Investment Funds, Inc.
By:
-------------------------------------
Ronald L. Grooms
Treasurer and Chief Financial and Accounting Officer
Date:
-----------------------------------
<PAGE>
SCHEDULE A
ACCOUNTS
Date of Resolution of Insurance
Company's Board Which
Name of Account Established the Account
RetireMap Variable Account September 20, 1996
Titanium Universal Life Variable Account September 15, 1999
Titanium Annuity Variable Account September 15, 1999
<PAGE>
SCHEDULE B
CONTRACTS
1. Contract Form V96
2. Contract Form TL99
3. Contract Form TA99
<PAGE>
SCHEDULE C-1
PERSONS AUTHORIZED TO GIVE INSTRUCTIONS TO THE COMPANY AND INVESCO
REGARDING TITANIUM VUL AND TITANIUM VA
NAME ADDRESS AND PHONE NUMBER
(1)
-------------------------------- --------------------------------------
Print or Type Name
Phone:
-------------------------------- -------------------------------
Signature
(2)
-------------------------------- --------------------------------------
Print or Type Name
Phone:
-------------------------------- -------------------------------
Signature
(3)
-------------------------------- --------------------------------------
Print or Type Name
Phone:
-------------------------------- -------------------------------
Signature
(4)
-------------------------------- --------------------------------------
Print or Type Name
Phone:
-------------------------------- -------------------------------
Signature
<PAGE>
EXHIBIT 99.9
April 14, 2000
United Investors Life Insurance Company
2001 Third Avenue South
Birmingham, Alabama 35233
Gentlemen:
With reference to the Registration Statement on Form N-4 as amended, filed by
United Investors Life Insurance Company and RetireMAP Variable Account with the
Securities and Exchange Commission covering flexible premium deferred variable
annuity policies, I have examined such documents and such law as I considered
necessary and appropriate, and on the basis of such examination, it is my
opinion that:
1. United Investors Life Insurance Company is duly organized and validly
existing under the laws of the State of Missouri and has been duly
authorized to issue individual flexible premium deferred variable annuity
policies by the Division of Insurance of the State of Missouri.
2. RetireMAP Variable Account is a duly authorized and existing separate
account established pursuant to the provisions of Section 376.309, of the
Revised Statutes of Missouri.
3. The flexible premium deferred variable annuity policies, when issued as
contemplated by said Form N-4 Registration Statement, will constitute
legal, validly issued and binding obligations of United Investors Life
Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to said N-4
Registration Statement.
Very truly yours,
/s/ John H. Livingston
------------------------
John H. Livingston, Esq.
Secretary and Counsel
JHL:dk
<PAGE>
EXHIBIT 99.10.A
April 14, 2000
United Investors Life Insurance Company
2001 Third Avenue South
Birmingham, AL 35233
Re: United Investors RetireMAP Variable Account
Form N-4 File No. 333-12507
Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Statement of Additional Information filed as part of Post-
Effective Amendment No. 4 to the Registration Statement on Form N-4 filed by
United Investors Life Insurance Company for certain variable annuity policies
(File No. 333-12507). In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Very truly yours,
SUTHERLAND ASBILL & BRENNAN LLP
By: /s/ Frederick R. Bellamy
------------------------
Frederick R. Bellamy
FRB:dk
<PAGE>
EXHIBIT 99.10.B
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of
United Investors Life Insurance Company
and the Contract Owners of
RetireMAP Variable Account
We consent to the use in this Post-Effective Amendment No. 4 to Registration
Statement No. 333-12507 of RetireMAP Variable Account of United Investors Life
Insurance Company on Form N-4 of our report dated January 28, 2000 relating to
the financial statements of United Investors Life Insurance Company, and our
report dated April 20, 2000 relating to the financial statements of RetireMAP
Variable Account contained in the Statement of Additional Information, which is
a part of such Registration Statement, and to the reference to us under the
heading "Experts" in such Statement of Additional Information.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
April 21, 2000
<PAGE>
EXHIBIT 99.10.B
Accountants' Consent
The Board of Directors of
United Investors Life Insurance Company
and the Contract Owners of
RetireMAP Variable Account
We consent to the use of our report dated January 29, 1999, relating to the
balance sheet of United Investors Life Insurance Company as of December 31,
1998, and the related statements of operations, comprehensive income,
shareholders' equity, and cash flows for each of the years in the two-year
period ended December 31, 1998, and also to the use of our report dated April 9,
1999, relating to the statement of operations and changes in net assets for the
year ended December 31, 1998 of RetireMAP Variable Account as contained in Post-
Effective Amendment No. 4 to Form N-4 for RetireMAP Variable Account. We also
consent to the reference to our firm under the heading "Experts" in the
Statement of Additional Information.
/s/ KPMG LLP
Birmingham, Alabama
April 21, 2000
