<PAGE>
As filed with the Securities and Exchange Commission on November 2, 1999
Registration No. 333-61063
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811-7689
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
Immediate Income Builder
FORM N-4
REGISTRATION STATEMENT UNDER THE [ ]
SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ [_]
Post-Effective Amendment No. 3 [X]
and
REGISTRATION STATEMENT UNDER [_]
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 17 [X]
PFL RETIREMENT BUILDER VARIABLE ANNUITY
ACCOUNT
(Exact Name of Registrant)
PFL LIFE INSURANCE COMPANY
(Name of Depositor)
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499-0001
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (319) 297-8468
Frank A. Camp, Esq.
PFL Life Insurance Company
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499-0001
(Name and Address of Agent for Service)
Copy to:
Frederick R. Bellamy, Esq.
Sutherland, Asbill and Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
<PAGE>
Approximate Date of Proposed Public Offering: As soon as practicable after the
- --------------------------------------------
effective date of the Registration statement.
Title of Securities Being Registered: Single Premium Immediate Variable Annuity
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Contracts
--------------------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485.
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on May 1, 1999 pursuant to paragraph (b)(1)(iii) of Rule 485.
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X 60 days after filing pursuant to paragraph (a)(i) of Rule 485.
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on May 1, 1999 pursuant to paragraph (a)(i) of Rule 485.
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If appropriate, check the following box:
This post-effective amendment designates a new effective date
------
for a previously filed post-effective amendment.
<PAGE>
This Post-Effective Amendment No. 3 to Form N-4 incorporates by reference the
Prospectus that was filed with the Securities and Exchange Commission on April
28, 1999 as a part of Post-Effective Amendment No. 2, Form N-4, File No. 333-
61063.
<PAGE>
PFL IMMEDIATE INCOME BUILDER
A Single Premium Variable Annuity
Issued by
PFL LIFE INSURANCE COMPANY
Supplement Dated November 2, 1999
To The
Prospectus Dated May 1, 1999
Optional Annuity Payment Guarantee Riders
-----------------------------------------
Two optional riders, each offering a certain payment guarantee benefit, are
available with the PFL Immediate Income Builder. These are (1) an initial
payment guarantee, and (2) a step-up payment guarantee. The rights and benefits
under these optional riders are summarized below. However, the description of
each payment guarantee contained in this supplement is qualified in its entirety
by reference to each rider, copies of which are available upon request from PFL
Life Insurance Company ("PFL").
All italicized terms used, which are not defined in this supplement, shall have
the same meaning as the same terms used in the accompanying prospectus.
The initial payment guarantee and the step-up payment guarantee may not be
available in all states at the date of this supplement. Please contact PFL at
(800) 525-6205 for additional information regarding their availability in your
state.
_______________
Payment Guarantees
You may elect to purchase the initial payment guarantee or the step-up payment
guarantee only at the time you purchase your contract. The guarantees only
apply to variable annuity payments.
The initial payment guarantee ensures that the amount of each annuity payment
you receive will not be less than the guaranteed minimum payment. By electing
this benefit, you can participate in the gains of the underlying variable
investment options you select while knowing that you are guaranteed a minimum
payment amount, regardless of the performance of the underlying variable
investment options.
The step-up payment guarantee ensures that the amount of each annuity payment
you receive will never decrease. By electing this benefit, you can participate
in the gains of the underlying variable investment options you select while
knowing that your annuity payment is guaranteed to never decrease, regardless of
the performance of the underlying variable investment options.
The initial payment guarantee and the step-up payment guarantee do not establish
or guarantee performance of any specific subaccount.
This Prospectus Supplement must be accompanied
by the Prospectus for the
PFL Immediate Income Builder Variable Annuity dated May 1, 1999
<PAGE>
Initial Payment Guarantee
Guaranteed Minimum Payment. With the initial payment guarantee, your annuity
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payments are guaranteed to never be less than the guaranteed minimum payment.
Currently, the guaranteed minimum payment is 100% of the initial annuity
payment. We may, at our discretion, change the percentage that we offer to
guarantee in the future, but it will never be less than 75% of the initial
annuity payment. Changes in the amount we guarantee would only apply to new
contracts sold after the date of the change. The guaranteed minimum payment
amount is included on page one of the initial payment guarantee rider.
Stabilized Payments. Your annuity payments will also be "stabilized" or held
- -------------------
constant during each contract year. Each annuity payment during the first
contract year will equal the initial variable annuity payment. On each contract
anniversary, a new stabilized payment will be determined and you will be
notified of the new stabilized payment amount for the up coming contract year.
The new stabilized payment will equal the greater of the guaranteed minimum
payment or the payment supportable by the variable annuity units in the selected
subaccounts at the beginning of the contract year. (See "Supportable Payment"
below). Thus, during the course of each contract year, you will receive these
stabilized, or level, annuity payments instead of variable payments that can
fluctuate monthly. However, from year to year, your annuity payments will vary
with the investment performance of the selected subaccounts, but will never be
less than the guaranteed minimum payment.
Step-up Payment Guarantee
Guaranteed Minimum Payment. With the step-up payment guarantee, your annuity
- --------------------------
payments may increase or remain constant but they are guaranteed to never
decrease. On each contract anniversary, your guaranteed minimum payment is
"stepped-up" to equal the new stabilized payment.
Stabilized Payments. Your annuity payments will also be "stabilized" or held
- -------------------
constant during each contract year. Each annuity payment during the first
contract year will equal the initial variable annuity payment. On each contract
anniversary, a new stabilized payment will be determined and you will be
notified of the new stabilized payment amount for the up coming contract year.
The new stabilized payment can increase, but it will not decrease.
The new stabilized payment will equal the greater of {[(a - b) * c] + b} or b
Where: (a) is the payment supportable by the variable annuity units in the
selected subaccounts (see "Supportable Payment" below);
(b) is the current stabilized payment; and
(c) is the immediate payment increase allocation (which determines how
much of the gain in the variable annuity unit values is applied to
the new stabilized payment and how much is used to purchase
additional variable annuity units; see below).
Accordingly, on any contract anniversary:
IF: the supportable payment is greater than the current stabilized payment;
-------
THEN: the stabilized payment will increase.
* * *
IF: the supportable payment is less than or equal to the current stabilized
----
payment;
THEN: the stabilized payment will remain unchanged.
Currently, the immediate payment increase allocation is 50%. This means that
50% of the gain in the value of the variable annuity units on a contract
anniversary will be received immediately in the form of
2
<PAGE>
increased variable annuity payments and the remaining 50% will be used to
purchase additional variable annuity units. We may, at our discretion, change
the immediate payment increase allocation in the future, but it will never be
less than 40%. Changes in the immediate payment increase allocation would only
apply to new contracts sold after the date of the change.
Supportable Payment
The supportable payment is the total of the variable annuity unit values times
the number of variable annuity units credited to each of the selected
subaccounts. Please note that if you elect one of these riders you receive
stabilized payments, not supportable payments.
Increases and Decreases in Number of Variable Annuity Units
Since your payments are stabilized during each contract year, we will increase
or decrease the number of variable annuity units credited to the contract each
annuity payment date (except on contract anniversaries) to ensure that you
receive the full investment performance, both positive and negative, of the
subaccounts you select. Please note that if all variable annuity units have
been used in an attempt to maintain the stabilized payment at the guaranteed
payment level (that is, the number of units has gone down to zero because of
negative investment performance), all future payments will equal the guaranteed
minimum payment. See the Statement of Additional Information for a more
detailed discussion concerning increases and decreases in the number of variable
annuity units credited to your contract and an illustration showing hypothetical
changes in the number of variable annuity units.
Rider Fee
There is a charge for each rider. A rider fee is reflected in the amount of the
annuity payments that you receive if you select either payment guarantee rider.
It is deducted in the same manner as the separate account charge since it is
reflected in the calculation of the annuity unit values. The rider fee is
identified on page one of your rider.
Initial Payment Guarantee. Currently the initial payment guarantee rider fee is
- -------------------------
equal to an annual rate of 1.25% of the daily net asset value in the
subaccounts. We may, at our discretion, change the rider fee in the future, but
it will never be greater than 2.0%. Changes in the rider fee would only apply to
new contracts sold after the date of the change.
Step-up Payment Guarantee. Currently the step-up payment guarantee rider fee is
- -------------------------
equal to an annual rate of 2.50% of the daily net asset value in the
subaccounts. We may, at our discretion, change the rider fee in the future, but
it will never be greater than 3.0%. Changes in the rider fee would only apply to
new contracts sold after the date of the change.
Other Terms and Conditions
You must purchase the initial payment guarantee or step-up payment guarantee
when you purchase your contract. You cannot add either payment guarantee after
you purchase your contract.
The payment guarantees are only available with the 3.5% AIR.
You may currently invest in any subaccount and still elect either payment
guarantee. We may, at our discretion, place new restrictions on the subaccounts
you can select in the future. Changes in the restrictions would only apply to
new contracts sold after the date of the change. Any restrictions will be
identified on the first page of the rider.
3
<PAGE>
Surrender Value
When you have elected either payment guarantee, the amount of the surrender
value, if any, is calculated using the current supportable payment instead of
the stabilized payment. Partial surrenders will reduce the next stabilized
payment, and the guaranteed payment, pro rata. For example, if you surrender
50% of the value of your variable annuity payments, the stabilized payment and
the guaranteed minimum payment, will be reduced by 50%.
Death Benefit
When you have elected either payment guarantee, the amount of the death benefit,
if any, is calculated using the current supportable payment instead of the
stabilized payment.
Transfers
Transfers from variable to fixed annuity payments will reduce the next
stabilized payment, and the guaranteed minimum payment, pro rata. For example,
if you transfer 25% of the value of your variable annuity payments to fixed
annuity payments, the stabilized payment and the guaranteed minimum payment,
will be reduced by 25%. The reduction will be reflected in your next payment.
Transfers from fixed to variable annuity payments are not allowed.
Reduced Payments under Certain Payment Options
If you have selected a Joint and Survivor payment option with reduced payments
to the surviving annuitant, the next stabilized payment, and the guaranteed
minimum payment, will be reduced pro rata at the death of the first annuitant.
For example, if you selected the Joint and 75% Survivor Life Annuity payment
option, upon the death of either annuitant the next stabilized payment, and the
guaranteed minimum payment, will be reduced to 75% of their pre-death values.
Termination
Both the initial payment guarantee and the step-up payment guarantee riders are
irrevocable.
The initial payment guarantee benefit and the step-up payment guarantee benefit
may not be available in all states.
4
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PFL IMMEDIATE INCOME BUILDER
Issued through
PFL RETIREMENT BUILDER VARIABLE
ANNUITY ACCOUNT
Offered by
PFL LIFE INSURANCE COMPANY
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
This Statement of Additional Information expands upon subjects discussed in
the current prospectus for the PFL Immediate Income Annuity Contract offered
by PFL Life Insurance Company. You may obtain a copy of the prospectus dated
May 1, 1999, by calling 1-800-544-3152, or by writing to the Administrative
and Service Office, Financial Markets Division-Variable Annuity Dept., 4333
Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001. The prospectus sets forth
information that a prospective investor should know before investing in a
contract. Terms used in the current prospectus for the contract are
incorporated in this Statement of Additional Information.
This Statement of Additional Information is not a prospectus and should be
read only in conjunction with the prospectus for the contract and the PFL
Retirement Builder Variable Annuity Account.
Dated: November 2, 1999
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GLOSSARY OF TERMS.......................................................... 3
THE CONTRACT--GENERAL PROVISIONS........................................... 4
Transfers................................................................ 4
Delay of Transfers....................................................... 4
Entire Contract.......................................................... 4
Assignment............................................................... 5
Beneficiary.............................................................. 5
Change of Beneficiary.................................................... 5
Incontestability......................................................... 5
Misstatement of Age or Sex............................................... 5
Modification of Contract................................................. 5
Nonparticipating......................................................... 5
Owner.................................................................... 5
Proof of Death........................................................... 6
Proof of Survival........................................................ 6
Death Before First Payment Date.......................................... 6
Protection of Proceeds................................................... 6
Optional Annuity Payment Guarantee Rider................................. 6
FEDERAL TAX MATTERS........................................................ 8
Tax Status of the Contract............................................... 8
Diversification Requirements............................................. 8
Owner Control............................................................ 8
Required Distributions................................................... 8
Taxation of PFL.......................................................... 9
INVESTMENT EXPERIENCE...................................................... 9
Annuity Unit Value and Annuity Payment Rates............................. 9
STATE REGULATION OF PFL.................................................... 11
ADMINISTRATION............................................................. 11
RECORDS AND REPORTS........................................................ 12
DISTRIBUTION OF THE CONTRACTS.............................................. 12
OTHER PRODUCTS............................................................. 12
CUSTODY OF ASSETS.......................................................... 12
HISTORICAL PERFORMANCE DATA................................................ 12
Money Market Yields...................................................... 12
Other Subaccount Yields.................................................. 13
Total Returns............................................................ 14
Other Performance Data................................................... 14
Adjusted Hypothetical Performance Data................................... 15
LEGAL MATTERS.............................................................. 15
INDEPENDENT AUDITORS....................................................... 15
OTHER INFORMATION.......................................................... 15
FINANCIAL STATEMENTS....................................................... 15
</TABLE>
2
<PAGE>
GLOSSARY OF TERMS
Annuitant and Secondary Annuitant--The person upon whose life the annuity
payments are based. For joint options, annuity payments are based upon the
lives of both the annuitant and secondary annuitant. Either the annuitant or
the secondary annuitant generally must be no older than 80 years of age on the
contract issue date.
Annuity Payments--Payments made by us to the payee pursuant to the payment
option chosen. Annuity payments may be either fixed or variable or a
combination of both.
Assumed Investment Return or AIR--The annual effective rate shown in the
contract specifications section of the contract that is used in the
calculation of each variable annuity payment.
Beneficiary(ies)--The person(s) who may receive death proceeds or guaranteed
payments under this contract when there is no longer a living annuitant (or
last annuitant for joint options).
Contract Issue Date--The date the contract becomes effective. This will be
stated in the contract. Generally, the date the initial premium is allocated
to the separate account.
Net Investment Factor--A unit of measure used to reflect the change in
variable annuity unit values in a subaccount from one valuation period to the
next valuation period.
Owner(s)--"You," "your," and "yours." The person or entity named in the
contract specifications section who may, while any annuitant is living,
exercise all rights granted by the contract. The annuitant must be the owner,
if the contract is a qualified contract. If there is a secondary annuitant, he
or she may also be an owner (except for a qualified contract, where only one
owner is permitted). The secondary annuitant is never required to be an owner.
Payee--The person or entity to whom annuity payments are paid.
Payment Date--The date an annuity payment is paid to the payee. We may require
evidence that any annuitant(s) and/or payee is/are alive on the payment date.
Separate Account--PFL Retirement Builder Variable Annuity Account.
Subaccount--The investment options or divisions of the separate account. Each
subaccount invests in a different portfolio of the funds. We may make
additional subaccounts available in the future.
Successor Owner--The person named by the owner to whom ownership of the
contract passes upon the owner's death. If the owner is also the annuitant,
the annuitant's beneficiary is entitled to the death proceeds of the contract.
If no person is named, the owner's estate shall be deemed the successor owner.
Valuation Day--Each day the New York Stock Exchange is open for trading and
any other day when the Securities and Exchange Commission requires mutual
funds or unit investment trusts to be valued. The determination of the
variable annuity unit value is made at the end of each valuation day.
Variable Annuity Unit--Variable annuity payments are expressed in terms of
variable annuity units, the value of which fluctuates in relation to the
selected subaccounts.
Variable Annuity Payment Calculation Date--The date, no more than seven
business days before each payment date, when the amount of the variable
annuity payment is determined. If the New York Stock Exchange is closed on a
variable annuity payment calculation date, we will determine the amount of
annuity income on the next day it is open.
3
<PAGE>
In order to supplement the description in the prospectus, the following
provides additional information about PFL and the contract which may be of
interest to a prospective purchaser. Words printed in italics in this
Statement of Additional Information are defined in the Glossary of Terms,
found on page 3.
THE CONTRACT--GENERAL PROVISIONS
Transfers
You may transfer amounts within the various subaccounts. You may also transfer
amounts from variable to fixed annuity payments at any time. If you do, then
the payment option for the fixed annuity payments will be a continuation of
the payment option currently applicable to variable annuity payments.
Transfers from fixed to variable annuity payments are not permitted. We may
charge a fee for excessive transfers (we currently do not charge for
transfers) or decline to accept excessive transfers.
Excessive trading activity can disrupt portfolio management strategy and
increase portfolio expenses, which are borne by everyone participating in the
portfolio regardless of their transfer activity.
In some cases, contracts may be sold to individuals who independently utilize
the services of a firm or individual engaged in market timing. Generally,
market timing services obtain authorization from contract owner(s) to make
transfers and exchanges among the subaccounts on the basis of perceived market
trends. Because the large transfers of assets associated with market timing
services may disrupt the management of the portfolios of the underlying funds,
such transactions may hurt contract owners not utilizing the market timing
service. Therefore, we may restrict or eliminate the right to make transfers
among subaccounts if such rights are executed by a market timing firm or
similar third party authorized to initiate transfers or exchange transactions
on behalf of a contract owner(s).
In modifying such rights, we may, among other things, decline to accept:
. transfer or exchange instructions of any agent acting under a power of
attorney on behalf of more than one contract owner, or
. transfer or exchange instructions of individual contract owners who have
executed pre-authorized transfer or exchange forms which are submitted by
market timing firms or other third parties on behalf of more than one
contract owner at the same time.
We will impose such restrictions only if we believe (or Fidelity Management &
Research Company believes) that doing so will prevent harm to other contract
owners.
Delay of Transfers
When you transfer amounts among the subaccounts, we will redeem shares of the
appropriate portfolios at their prices as of the end of the current valuation
period. Generally any subaccount you transfer to is credited at the same time.
However, we may wait to credit the amount to a new subaccount until a
subaccount you transfer from becomes liquid. This will happen only if (1) the
subaccount you transfer to invests in a portfolio that accrues dividends on a
daily basis and requires federal funds before accepting a purchase order, and
(2) the subaccount you transfer from is investing in an equity portfolio in an
illiquid position due to substantial redemptions or transfers that require it
to sell portfolio securities in order to make funds available. The subaccount
you transfer from will be liquid when it receives proceeds from sales of
portfolio securities, the purchase of new contracts, or otherwise. During any
period that we wait to credit a subaccount for this reason, the amount you
transfer will be uninvested. After seven days the transfer will be made even
if the subaccount you transfer from is not liquid.
Entire Contract
The entire contract is made up of the contract, and any riders, endorsements,
or application. No change in or waiver of any provision of the contract is
valid unless the change or waiver is signed by the President or Secretary of
PFL.
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Assignment
The option to assign is only available for non-tax qualified annuities. Only
you may make an assignment of this contract. You must notify us in writing to
assign this contract. No change will apply to any action taken by us before
the written notice was received. We are not responsible for the validity or
the effect of an assignment.
Beneficiary
The beneficiary is named in the contract specifications section of the
contract or in a subsequent endorsement. More than one beneficiary may be
named. The rights of any beneficiary will be subject to all the provisions of
the contract. You may impose other limitations with our consent.
If any primary or contingent beneficiary dies before the annuitant, that
beneficiary's interest in this contract ends with that beneficiary's death.
Only those beneficiaries living at the time of the annuitant's death will be
eligible to receive their share of the death benefits. In the event no
contingent beneficiaries have been named and all primary beneficiaries have
died before the death benefits become payable, the owner(s) will become the
beneficiary(ies) unless elected otherwise. If both primary and contingent
beneficiaries have been named, payment will be made to the named primary
beneficiaries living at the time the death proceeds become payable. If there
is more than one beneficiary and you failed to specify their interest, they
will share equally. Payment will be made to the named contingent
beneficiary(ies) in only if all primary beneficiaries have died before the
death benefits become payable. If any primary beneficiary is alive at the time
the death benefits become payable, but dies before receiving their payment,
their share will be paid to their estate.
Change of Beneficiary
You may change the beneficiary while the annuitant is living, unless an
irrevocable one has been named. Change is made by written notice. The change
takes effect on the date the written notice was signed, and the written notice
must have been postmarked on or before the date of the annuitant's death. No
change will apply to any annuity payment made before the written notice was
received. We may require return of the contract for endorsement before making
a change.
Incontestability
The contract is incontestable from the contract issue date.
Misstatement of Sex or Age
If the age or sex of any annuitant has been misstated, the annuity payments
will be those which the premium paid would have purchased for the correct age
and sex. Any underpayment made by us will be paid with the next annuity
payment. Any overpayment made by us will be deducted from future annuity
payments. Any underpayment or overpayment will include interest at 5% per
year, from the date of the incorrect payment to the date of the adjustment.
Modification of Contract
No change in the contract is valid unless made in writing.
Nonparticipating
Your contract is nonparticipating. This means we do not pay dividends on it.
Your contract will not share in our profits or surplus earnings.
Owner
You, the owner, are named in the contract specifications section. You may,
while any annuitant is living, exercise all rights granted by the contract.
These rights are subject to the rights of any assignee or living irrevocable
beneficiary. "Irrevocable" means that you have given up your right to change
the beneficiary named.
5
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Unless we have been notified of a community or marital property interest in
the contract, we will rely on our good faith belief that no such interest
exists and will assume no responsibility for inquiry.
Proof of Death
Any beneficiary claiming an interest in the contract must provide us in
writing with due proof of death of the payee/annuitant and/or secondary
annuitant (if any). We will not be responsible for annuity payments made
before we receive due proof of death at the Administrative and Service Office.
Proof of Survival
If annuity payments under the contract depend on a person being alive on a
given date, proof of survival may be required by us prior to making annuity
payments.
Death Before First Payment Date
If any owner, who is an annuitant, dies before the first payment date, the
amount of the death proceeds is the premium plus or minus the investment
performance of the subaccounts. If any owner, who is not an annuitant, dies
before the first payment date, the successor owner may direct the owner's
interest in the contract to be distributed as follows:
. one cash lump sum to be distributed within five years of the deceased
owner's death; or
. annuitize the value of the annuity payments over the lifetime of the
successor owner with payments to begin within one year of the owner's
death; or
. annuitize the value of the annuity payments over a period that does not
exceed the life expectancy of the successor owner, as defined by the
Internal Revenue Code of 1986, as amended (Code), with payments to begin
within one year of the owner's death.
If the deceased owner was also an annuitant, the annuitant's beneficiary is
entitled to the benefit described above. If no person is named as the
successor owner, the owner's estate shall be deemed the successor owner.
Non-natural successor owners may only choose a lump sum distribution. For
qualified contracts, any option chosen must meet the requirements of the Code.
Protection of Proceeds
Unless you so direct by filing written notice with us, no beneficiary may
assign payments under the contract before the same are due. To the extent
permitted by law, no payments under the contract will be subject to the claims
of creditors of any beneficiary.
Optional Annuity Payment Guarantee Rider
The stabilized payment is determined once each year. However, with stabilized
payments, on each annuity payment date throughout the contract year, we
calculate the value of the variable annuity units (that is, the supportable
payment) and adjust the number of variable annuity units credited to your
contract. If the supportable payment at any payment date, other than a
contract anniversary, is greater than the current stabilized payment, we will
increase the number of variable annuity units to reflect the difference.
Conversely, if the supportable payment is less than the current stabilized
payment, we will reduce the number of variable annuity units. This means that
during the course of a contract year, instead of reflecting positive
investment performance by increasing the dollar amount of an annuity payment,
we credit that investment performance to your contract by increasing the
number of variable annuity units. Similarly, we reflect negative investment
performance by decreasing the number of variable annuity units credited to
your contract instead of decreasing the dollar amount of an annuity payment.
Increases or decreases in the number of variable annuity units will be
allocated on a pro rata basis within the selected subaccounts.
6
<PAGE>
Since we only change the stabilized payment once each year, the increase or
decrease in the number of variable annuity units ensures that you receive the
full investment performance, both positive and negative, of the subaccounts
you select. For example, if your monthly stabilized payment is $500, and
positive investment performance results in a supportable payment of $510 at
the end of the first month, your payment is $500 but we increase the number of
variable annuity units credited to your contract to give you credit for the
$10. In the case of an increase in the number of variable annuity units, your
participation in the future investment performance will be increased since
more variable annuity units are credited to your contract. Conversely, in the
case of a reduction of the number of variable annuity units, your
participation in the future investment performance will be decreased since
fewer variable annuity units are credited to your contract.
PFL bears the risk that it must continue to make the guaranteed minimum or
stabilized payments, even if the supportable payments would be lower because
some variable annuity units have been used to maintain the stabilized
payments. In addition, PFL bears the risk that it will need to continue to
make payments even if all variable annuity units have been used in an attempt
to maintain the stabilized payments at the guaranteed payment level (that is,
the number of units has gone down to zero). If all the variable annuity units
have been used, all future payments will equal the guaranteed minimum payment
and the amount of your future variable annuity payment will not increase or
decrease and will not depend upon the performance of any variable investment
option. To compensate PFL for this and other risks, a rider fee will be
deducted.
The following table demonstrates, on a purely hypothetical basis, the changes
in the number of variable annuity units under either of the optional annuity
payment guarantee riders to reflect investment performance during the course
of a single contract year. The change in the number of variable annuity units
reflects not only the dollar amount of the difference between the supportable
payment and the stabilized payment, but also the age and sex of the annuitant
and the annuity payment option. The changes in the variable annuity unit
values reflect the investment performance of the applicable mutual fund
portfolio as well as the separate account charge and rider fee. The
calculations would be done separately for each applicable subaccount.
<TABLE>
<S> <C>
AIR: 3.50%
Life & 10 Years Certain
Male aged 65
Guaranteed Minimum Payment: $500
</TABLE>
<TABLE>
<CAPTION>
Beginning Unit Monthly Change in Ending
Annuity Annuity Value Stabilized Annuity Annuity
Units Unit Values Total* Payment Units Units
--------- ----------- ------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
At Is-
sue: 1/1/1999 400.0000 1.250000 $500.00 400.0000
1st Pay-
ment 2/1/1999 400.0000 1.254526 $501.81 $500.00 0.0080 400.0080
3/1/1999 400.0080 1.253122 $501.26 $500.00 0.0056 400.0137
4/1/1999 400.0137 1.247324 $498.95 $500.00 (0.0047) 400.0089
5/1/1999 400.0089 1.247818 $499.14 $500.00 (0.0039) 400.0051
6/1/1999 400.0051 1.244178 $497.68 $500.00 (0.0105) 399.9946
7/1/1999 399.9946 1.250422 $500.16 $500.00 0.0007 399.9953
8/1/1999 399.9953 1.245175 $498.06 $500.00 (0.0088) 399.9865
9/1/1999 399.9865 1.251633 $500.64 $500.00 0.0029 399.9894
10/1/1999 399.9894 1.253114 $501.23 $500.00 0.0056 399.9950
11/1/1999 399.9950 1.261542 $504.61 $500.00 0.0208 400.0158
12/1/1999 400.0158 1.265963 $506.41 $500.00 0.0289 400.0447
1/1/2000 400.0447 1.270547 $508.28 $500.00 0.0373 400.0820
</TABLE>
- -------------------------
* This is the supportable payment.
7
<PAGE>
FEDERAL TAX MATTERS
Tax Status of the Contracts
The discussion in the prospectus assumes that the contracts qualify as
"annuity contracts" for federal income tax purposes under the Code.
Diversification Requirements. Section 817(h) of the Code provides that
separate account investments underlying a contract must be "adequately
diversified" in accordance with Treasury Department regulations in order for
the contract to qualify as an annuity contract under Section 72 of the Code.
The separate account, through each underlying fund, intends to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Code, which affect how the assets in the various subaccounts may be
invested. Although PFL does not have direct control over the underlying funds
in which the separate account invests, PFL believes that each fund will meet
the diversification requirements, and therefore, the contract will be treated
as an annuity contract under the Code.
Owner Control. 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
includable in the variable annuity 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 possessed incidents
of ownership in those assets, such as the ability to exercise investment
control over the assets. The Treasury Department has also announced, in
connection with the issuance of regulations concerning investment
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 contract owner), 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 policy-holders may direct
their investments to particular Sub-Accounts without being treated as owners
of the underlying assets."
The ownership rights under the contracts are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets.
For example, the contract owner has the choice of several subaccounts in which
to allocate the premium, and may be able to transfer among subaccounts more
frequently than in such rulings. In addition, the contract provides for more
subaccounts than did the variable contracts that were the subject of such
rulings. These differences could result in a contract owner being treated as
the owner of the assets of the separate account. In addition, PFL 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. PFL therefore
reserves the right to modify the contract as necessary to attempt to prevent
the contract owner from being considered the owner of the separate account's
assets.
Required Distributions. In order to be treated as an annuity contract for
federal income tax purposes, section 72(s) of the Code requires any non-
qualified contract to provide that: (a) if any contract owner dies on or after
the Annuity Starting Date (as defined in the prospectus) but prior to the time
the entire interest in the contract 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 contract owner's
death; and (b) if any contract owner dies prior to the Annuity Starting Date,
the entire interest in the contract will be distributed within five years
after the date of the contract owner's death. These requirements will be
considered satisfied as to any portion of the contract owner's interest that
is payable to or for the benefit of a "designated beneficiary," and that is
distributed over the life of such designated beneficiary or over a period not
extending beyond the life expectancy of that beneficiary, provided that such
distributions begin within one year of that contract owner's death. The
"designated beneficiary" for these purposes is the person who becomes the new
owner of the contract upon a contract owner's death and must be a natural
person. However, if the contract owner's sole designated beneficiary is the
surviving spouse of the contract owner, the contract may be continued with the
surviving spouse as the new contract owner. The Code further provides that if
the contract owner is not an individual, the primary annuitant shall be
treated as
8
<PAGE>
the contract owner for purposes of making distributions that are required to
be made upon the death of the contract owner. (The primary annuitant is the
individual the events in the life of whom are of primary importance in
effecting the timing and amount of the payout under the contract. If there is
a change in the primary annuitant, such change shall be treated as the death
of the contract owner. The contract does not permit a change of the
annuitants, however.
Non-qualified contracts contain provisions that are intended to comply with
the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. PFL will review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code Section 72(s) when clarified by regulation or otherwise.
Qualified contracts are subject to similar provisions.
Taxation of PFL
PFL at present is taxed as a life insurance company under part I of Subchapter
L of the Code. The separate account is treated as part of PFL and,
accordingly, will not be taxed separately as a "regulated investment company"
under Subchapter M of the Code. We do not expect to incur any federal income
tax liability with respect to investment income and net capital gains arising
from the activities of the separate account retained as part of the reserves
under the contract. Based on this expectation, it is anticipated that no
charges will be made against the separate account for federal income taxes.
If, in future years, any federal income taxes are incurred by PFL with respect
to the separate account, we may make a charge to the separate account.
INVESTMENT EXPERIENCE
A "net investment factor" is used to determine the value of variable annuity
units and to determine the amount of annuity payments as follows:
Annuity Unit Value and Annuity Payment Rates
The amount of variable annuity payments will vary with variable annuity unit
values. Variable annuity unit values rise if the net investment performance of
the subaccount exceeds the assumed investment return. Conversely, variable
annuity unit values fall if the net investment performance of the subaccount
is less than the assumed investment return. The value of a variable annuity
unit in each subaccount was established at $1.00 on the date operations began
for that subaccount. The value of a variable annuity unit on any subsequent
business day is equal to (a) multiplied by (b) multiplied by (c), where:
(a) is the variable annuity unit value for that subaccount on the
immediately preceding business day;
(b) is the net investment factor for that subaccount for the valuation
period; and
(c) is the daily factor for the valuation period.
The daily factor for the valuation period is a discount factor that reflects
the assumed investment return. The valuation period is the period from the
close of the immediately preceding business day to the close of the current
business day.
The net investment factor for the contract used to calculate the value of a
variable annuity unit in each subaccount for the valuation period is
determined by dividing (a) by (b) and subtracting (c) from the result, where:
(a) is the net result of:
(1) the net asset value of a fund share held in that subaccount
determined at the end of the current valuation period; plus
(2) the per share amount of any dividend or capital gain distributions
made by the fund for shares held in that subaccount if the ex-dividend
date occurs during the valuation period; plus or minus
(3) a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the investment operations of the
subaccount;
9
<PAGE>
(b) is the net asset value of a fund share held in that subaccount
determined as of the end of the immediately preceding valuation period; and
(c) is an amount representing the separate account charge as shown in the
specifications section of the contract.
The dollar amount of subsequent variable annuity payments will depend upon
changes in applicable variable annuity unit values.
Illustrations of Calculations for Annuity Unit Value and Variable Annuity
Payments
Formula and Illustration for Determining Annuity Unit Value in each Subaccount
Variable annuity unit value = V = A x B x C
Where: A=variable annuity unit value for the immediately preceding valuation
period.
B=net investment factor for the valuation period for which the variable
annuity unit value is being calculated.
C=a daily factor to neutralize the assumed investment return built into
the annuity tables used.
C=(1/(1 + AIR)) /\ (1/365) = 0.999905754 (3.5% AIR) or 0.999866337 (5%
AIR)
For example, if the AIR is 5% and: A=$20 on the day prior to the first payment
B=1.01
C=1/(1.055) /\ (1/365) = 0.999866337
Then, the variable annuity unit value is equal to V
=A x B x C
=$20 x 1.01 x .999866337
=20.1973
Formula and Illustration for Determining Amount of First Monthly Variable
Annuity Payment
First monthly variable annuity payment = P = (D x E)/$1,000
Where: D=the contract value as of the contract issue date.
E=the annuity purchase rate per $1,000 based upon the option
selected, the sex and adjusted age of the annuitant according
to the tables contained in the contract.
For example if:
D=$100,000
E=7.00
Then, the first monthly variable annuity payment is equal to P =(D x E)/$1,000
=($100,000 x 7.00)/$1,000
=$700
10
<PAGE>
Formula and Illustration for Determining the Number of Annuity Units
Represented by Each
Monthly Variable Annuity Payment (assuming investment in only one Subaccount)
Number of variable annuity units = U = P/V
Where: P=the dollar amount of the first monthly variable annuity payment.
V=the variable annuity unit value for the valuation date on which
the first monthly payment is due.
For example if:
P=$700
V=20.1973
Then, the variable annuity units is equal to U =P/V
=$700/20.1973
=34.6581 units
Formula and Illustration for Determining a Future Monthly Variable Annuity
Payment
(assuming investment in only one Subaccount)
Monthly variable annuity payment = P = U x V
Where: U=the variable annuity units
V=the variable annuity unit value for the valuation date on which
the future monthly payment is due.
For example if:
U=34.6581
V=20.6970 (the variable annuity unit value increased since issue)
Then, the amount of the monthly variable annuity payment = U x V = 34.6581 x
20.6970 = $717.32
If the variable annuity unit value had actually decreased to V = 19.6970, the
resulting monthly variable annuity payment would = U x V = 34.6581 x 19.6970 =
$682.66
Illustration 4 assumes that no transfers or surrenders are made between
determining the number of variable annuity units and determining the future
monthly variable annuity payment; therefore, the number of variable annuity
units in Illustrations 3 and 4 are the same.
STATE REGULATION OF PFL
We are subject to the laws of Iowa governing insurance companies and to
regulation by the Iowa Division of Insurance. An annual statement in a
prescribed form is filed with the Division of Insurance each year covering our
operation for the preceding year and its financial condition as of the end of
such year. Regulation by the Division of Insurance includes periodic
examination to determine our contract liabilities and reserves so that the
Division may determine the items are correct. Our books and accounts are
subject to review by the Division of Insurance at all times and a full
examination of its operations is conducted periodically by the National
Association of Insurance Commissioners. In addition, we are subject to
regulation under the insurance laws of other jurisdictions in which we may
operate.
ADMINISTRATION
We perform administrative services for the contracts. These services include
issuance of the contracts, maintenance of records concerning the contracts,
and certain valuation services.
11
<PAGE>
RECORDS AND REPORTS
All records and accounts relating to the separate account will be maintained
by us. As presently required by the Investment Company Act of 1940 and
regulations promulgated thereunder, we will mail to all owners at their last
known address of record, at least annually, reports containing such
information as may be required under that Act or by any other applicable law
or regulation. Owners will also receive confirmation of each financial
transaction and any other reports required by law or regulation.
DISTRIBUTION OF THE CONTRACTS
The contracts are offered to the public through brokers licensed under the
federal securities laws and state insurance laws. The offering of the
contracts is continuous and we do not anticipate discontinuing the offering of
the contracts. However, we reserve the right to discontinue the offering of
the contracts.
AFSG Securities Corporation, an affiliate of PFL, is the principal underwriter
of the contracts and may enter into agreements with broker-dealers for the
distribution of the contracts.
OTHER PRODUCTS
We make other variable annuity contracts available that may also be funded
through the separate account. These variable annuity contracts may have
different features, such as different investment options or charges.
CUSTODY OF ASSETS
The assets of each of the subaccounts of the separate account are held by us.
The assets of each of the subaccounts of the separate account are segregated
and held separate and apart from the assets of the other subaccounts and from
our general account assets. We maintain records of all purchases and
redemptions of shares of the underlying funds held by each of the subaccounts.
Additional protection for the assets of the separate account is afforded by
our fidelity bond, presently in the amount of $5,000,000, covering the acts of
our officers and employees.
HISTORICAL PERFORMANCE DATA
Money Market Yields
We may from time to time disclose the current annualized yield of the Money
Market Subaccount for a 7-day period in a manner which does not take into
consideration any realized or unrealized gains or losses on shares of the
portfolio securities. This 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 and income other than
investment income) at the end of the 7-day period in the value of a
hypothetical account having a balance of 1 unit at the beginning of the 7-day
period, dividing such 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 (i) net income from the portfolio attributable to the hypothetical
account; and (ii) charges and deductions imposed under a contract that are
attributable to the hypothetical account. The charges and deductions include
the per unit charges for the hypothetical account for the separate account
charge. Current Yield will be calculated according to the following formula:
Current Yield = ((NCS x ES)/UV) x (365/7)
Where:
NCS
= the net change in the value of the portfolio (exclusive of realized
gains and losses on the sale of securities and unrealized appreciation
and depreciation and income other than investment income) for the 7-day
period attributable to a hypothetical account having a balance of 1
subaccount unit.
12
<PAGE>
ES = per unit expenses of the subaccount for the 7-day period.
UV = the unit value on the first day of the 7-day period.
Because of the charges and deductions imposed under a contract, the yield for
the Money Market Subaccount will be lower than the yield for the Money Market
Portfolio. The yield calculations do not reflect the effect of any premium
taxes or surrender charges that may be applicable to a particular contract.
We may also disclose the effective yield of the Money Market Subaccount for
the same 7-day period, determined on a compounded basis. The effective yield
is calculated by compounding the base period return according to the following
formula:
Effective Yield = (1 + ((NCS-ES)/UV))365/7-1
Where:
NCS= the net change in the value of the account (exclusive of realized gains
and losses on the sale of securities and unrealized appreciation and
depreciation and income other than investment income) for the 7-day
period attributable to a hypothetical account having a balance of 1
subaccount unit.
ES = per unit expenses of the subaccount for the 7-day period.
UV = the unit value on the first day of the 7-day period.
The yield on amounts held in the Money Market Subaccount normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Subaccount actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Portfolio, the types and quality of portfolio securities held by
the Money Market Portfolio and its operating expenses.
Other Subaccount Yields
We may from time to time advertise or disclose the current annualized yield of
one or more of the subaccounts of the separate account (except the Money
Market Subaccount) for 30-day periods. The annualized yield of a subaccount
refers to income generated by the subaccount over a specific 30-day period.
Because the yield is annualized, the yield generated by a subaccount during
the 30-day period is assumed to be generated each 30-day period over a 12-
month period. The yield is computed by: (i) dividing the net investment income
of the subaccount less subaccount expenses for the period, by (ii) the maximum
offering price per unit on the last day of the period times the daily average
number of units outstanding for the period, compounding that yield for a 6-
month period, and (iv) multiplying that result by 2. Expenses attributable to
the subaccount include the separate account charge. The 30-day yield is
calculated according to the following formula:
Yield = 2 x ((((NI-ES)/(U x UV)) + 1)6-1)
Where:
NI = net investment income of the subaccount for the 30-day period
attributable to the subaccount's.
ES = expenses of the subaccount for the 30-day period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last day in the 30-day
period.
Because of the charges imposed by the separate account, the yield for a
subaccount of the separate account will be lower than the yield for its
corresponding portfolio. The yield calculations do not reflect the effect of
any premium taxes or surrender charges that may be applicable to a particular
contract.
13
<PAGE>
The yield on amounts held in the subaccounts of the separate account normally
will fluctuate over time. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. A subaccount's actual yield is affected by the types and quality of
its investments and its operating expenses.
Total Returns
We may from time to time also advertise or disclose total returns for one or
more of the subaccounts of the separate account for various periods of time.
One of the periods of time will include the period measured from the date the
subaccount commenced operations. When a subaccount has been in operation for
1, 5 and 10 years, respectively, the total return for these periods will be
provided. Total returns for other periods of time may from time to time also
be disclosed. Total returns represent the average annual compounded rates of
return that would equate an initial investment of $1,000 to the redemption
value of that investment as of the last day of each of the periods. The ending
date for each period for which total return quotations are provided will be
for the most recent month end practicable, considering the type and media of
the communication and will be stated in the communication.
Total returns will be calculated using subaccount unit values which we
calculate on each business day based on the performance of the subaccount's
underlying portfolio, and the deduction for the separate account charge. Total
return calculations will reflect the effect of surrender charges that may be
applicable to a particular period. The total return will then be calculated
according to the following formula:
P (1 + T)n = ERV
Where:
T = the average annual total return net of subaccount recurring charges.
ERV= the ending redeemable value of the hypothetical account at the end of
the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
Other Performance Data
We may from time to time also disclose average annual total returns in a non-
standard format in conjunction with the standard format described above.
We may from time to time also disclose cumulative total returns in conjunction
with the standard format described above. The cumulative returns will be
calculated using the following formula. The charges reflected in the
cumulative total returns include the actual total annual portfolio expenses of
the applicable fund and the separate account charge of 1.35%.
CTR = (ERV/P) - 1
Where:
CTR= the cumulative total return net of subaccount recurring charges for the
period.
ERV= the ending redeemable value of the hypothetical investment at the end
of the period.
P = a hypothetical initial payment of $1,000.
All non-standard performance data will only be advertised if the standard
performance data for the same period, as well as for the required period, is
also disclosed.
14
<PAGE>
Adjusted Historical Performance Data
From time to time, sales literature or advertisements may quote average annual
total returns for periods prior to the date the separate account commenced
operations. Such performance information for the subaccounts will be
calculated based on the performance of the various portfolios and the
assumption that the subaccounts were in existence for the same periods as
those indicated for the portfolios, with the level of contract charges that
were in effect at the inception of the subaccounts.
LEGAL MATTERS
Legal advice relating to certain matters under the federal securities laws
applicable to the issue and sale of the contracts has been provided to us by
Sutherland, Asbill & Brennan LLP, of Washington D.C.
INDEPENDENT AUDITORS
The statutory-basis financial statements and schedules of PFL as of December
31, 1998 and 1997, and for each of the three years in the period ended
December 31, 1998, included in this Statement of Additional Information have
been audited by Ernst & Young LLP, Independent Auditors, Suite 3400, 801 Grand
Avenue, Des Moines, Iowa 50309.
OTHER INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
contracts 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 the prospectus or this Statement of
Additional Information. Statements contained in the prospectus and this
Statement of Additional Information concerning the content of the contracts
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 Securities and Exchange Commission.
FINANCIAL STATEMENTS
The values of the interest of owners in the separate account will be affected
solely by the investment results of the selected subaccount(s). The statutory-
basis financial statements of PFL, which are included in this Statement of
Additional Information, should be considered only as bearing on PFL's ability
to meet its obligations under the contracts. They should not be considered as
bearing on the investment performance of the assets held in the separate
account.
15
<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) (a) Resolution of the Board of Directors of PFL Life Insurance
Company authorizing establishment of the Separate Account.
/1/
(2) Not Applicable.
(3) (a) Principal Underwriting Agreement by and between PFL Life
Insurance Company, on its own behalf and on behalf of the
Separate Account, and AFSG Securities Corporation./4/
(b) Form of Broker/Dealer Supervision and Sales Agreement by
and between AFSG Securities Corporation and the
Broker/Dealer./9/
(4) (a) Form of Contract for the PFL Immediate Income Annuity./7/
(5) (a) Form of Application for the PFL Immediate Income Annuity.
/7/
(6) (a) Articles of Incorporation of PFL Life Insurance Company./1/
(b) ByLaws of PFL Life Insurance Company./1/
(7) Not Applicable.
(8) (a) Participation Agreement by and between Variable Insurance
Product Funds and Variable Insurance Products Fund II,
Fidelity Distributors Corporation, and PFL Life Insurance
Company, and Addendums thereto./2/
(b) Participation Agreement between Variable Insurance Products
Fund III, Fidelity Distributors Corporation, and PFL Life
Insurance Company./3/
(c) Amended Schedule A to Participation Agreement by and
between Variable Insurance Product Funds and Variable
Insurance Products Fund II, Fidelity Distributors
Corporation, and PFL Life Insurance Company./8/
<PAGE>
(d) Amended Schedule A to Participation Agreement between
Variable Insurance Products Fund III, Fidelity Distributors
Corporation, and PFL Life Insurance Company./8/
(9) Opinion and Consent of Counsel./6/
(10) (a) Consent of Independent Auditors./9/
(10) (b) Opinion and Consent of Actuary./7/
(11) Not applicable.
(12) Not applicable.
(13) Performance Data Calculations./8/
(14) Powers of Attorney. (P.S. Baird, C.D. Vermie,
W.L. Busler, L.N. Norman, D.C. Kolsrud, R.J. Kontz,
B.K. Clancy) Note 9.
/1/ Incorporated herein by reference to the Initial filing of Registrants
Form N-4 Registration Statement (File No. 333-7509) on July 3, 1996.
/2/ Incorporated herein by reference to the Registrants filing of Pre-
Effective Amendment No. 1 to Form N-4 Registration Statement (File No.
333-7509) on December 6, 1996.
/3/ Incorporated herein by reference to the Registrant's filing of Post-
Effective Amendment No. 1 to Form N-4 Registration Statement (File No.
333-7509) on April 29, 1997.
/4/ Incorporated herein by reference to the Registrant's filing of Post-
Effective Amendment No. 4 to Form N-4 Registration Statement (File No.
333-7509) on April 30, 1998.
/5/ Incorporated herein by reference to the Registrant's filing of Post-
Effective Amendment No. 5 to Form N-4 Registration Statement (File No.
333-7509) on July 16, 1998.
/6/ Filed with the initial Form N-4 Registration Statement (File No. 333-
61063) on August 10, 1998.
/7/ Filed with Pre-Effective Amendment No. 1 to Form N-4 Registration
Statement (File No. 333-61063) on December 11, 1998.
/8/ Filed with Post-Effective Amendment No. 2 to Form N-4 Registration
Statement (File No. 333-61063) on April 28, 1999.
/9/ Filed herewith.
<PAGE>
Item 25. Directors and Officers of the Depositor (PFL Life Insurance Company)
<TABLE>
<CAPTION>
Name and Business Address Principal Positions and Offices with
- ------------------------- ------------------------------------
Depositor
---------
<S> <C>
William L. Busler Director, Chairman of the Board and
4333 Edgewood Road, N.E. President
Cedar Rapids, Iowa 52499-0001
Patrick S. Baird Director, Senior Vice President and Chief
4333 Edgewood Road, N.E. Operating Officer
Cedar Rapids, Iowa 52499-0001
Craig D. Vermie Director, Vice President, Secretary and
4333 Edgewood Road, N.E. General Counsel
Cedar Rapids, Iowa 52499-0001
Douglas C. Kolsrud Director, Senior Vice President, Chief
4333 Edgewood Road, N.E. Investment Officer and Corporate Actuary
Cedar Rapids, Iowa 52499-0001
Larry N. Norman Director and Executive Vice President
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
Robert J. Kontz Vice President and Corporate Controller
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
Brenda K. Clancy Vice President, Treasurer and Chief Financial
4333 Edgewood Road, N.E. Officer
Cedar Rapids, Iowa 52499-0001
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- ------------- ----------------- --------
<S> <C> <C> <C>
AEGON N.V. Netherlands 53.63% of Vereniging Holding company
Corporation AEGON Netherlands
Membership Association
Groninger Financieringen B.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON Netherland N.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
AEGON Nevak Holding B.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON International N.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
Voting Trust Delaware Voting Trust
Trustees:
K.J. Storm
Donald J. Shepard
H.B. Van Wijk
Dennis Hersch
AEGON U.S. Holding Delaware 100% of Voting Trust Holding company
Corporation
Short Hills Management New Jersey 100% of AEGON U.S. Holding company
Company Holding Corporation
CORPA Reinsurance New York 100% of AEGON U.S. Holding company
Company Holding Corporation
AEGON Management Indiana 100% of AEGON U.S. Holding company
Company Holding Corporation
RCC North America Inc. Delaware 100% of AEGON U.S. Holding company
Holding Corporation
AEGON USA, Inc. Iowa 100% AEGON U.S. Holding company
Holding Corporation
AUSA Holding Company Maryland 100% AEGON USA, Inc. Holding company
Monumental General Insurance Maryland 100% AUSA Holding Co. Holding company
Group, Inc.
Trip Mate Insurance Kansas 100% Monumental General Sale/admin. of travel
Agency, Inc. Insurance Group, Inc. insurance
Monumental General Maryland 100% Monumental General Provides management
Administrators, Inc. Insurance Group, Inc. srvcs. to unaffiliated
third party
administrator
Executive Management and Maryland 100% Monumental General Provides actuarial
Consultant Services, Inc. Administrators, Inc. consulting services
Monumental General Mass Maryland 100% Monumental General Marketing arm for
Marketing, Inc. Insurance Group, Inc. sale of mass marketed
insurance coverages
Diversified Investment Delaware 100% AUSA Holding Co. Registered investment
advisor
Advisors, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Diversified Investors Delaware 100% Diversified Broker-Dealer
Securities Corp. Investment Advisors, Inc.
AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer
Supplemental Ins. Tennessee 100% AUSA Holding Co. Insurance
Division, Inc.
Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance
CRC Creditor Resources Canada 100% Creditor Insurance agency
Canadian Dealer Network Inc. Resources, Inc.
AEGON USA Investment Iowa 100% AUSA Holding Co. Investment advisor
Management, Inc.
AEGON USA Realty Iowa 100% AUSA Holding Co. Provides real estate
Advisors, Inc. administrative and real
estate investment services
Quantra Corporation Delaware 100% AEGON USA Realty Real estate and financial
Advisors, Inc. software production and
sales
Quantra Software Delaware 100% Quantra Corporation Manufacture and sell
Corporation mortgage loan and security
management software
Landauer Realty Advisors, Inc. Iowa 100% AEGON USA Realty Real estate counseling
Advisors, Inc.
Landauer Associates, Inc. Delaware 100% AEGON USA Realty Real estate counseling
Advisors, Inc.
Realty Information Iowa 100% AEGON USA Realty Information Systems for
Systems, Inc. Advisors, Inc. real estate investment
management
AEGON USA Realty Iowa 100% AEGON USA Real estate management
Management, Inc Realty Advisors, Inc.
USP Real Estate Investment Iowa 21.89% First AUSA Real estate investment
Life Ins. Co. trust
Trust 13.11% PFL Life Ins. Co.
4.86% Bankers United
Life Assurance Co.
RCC Properties Limited Iowa AEGON USA Realty Limited Partnership
Partnership Advisors Inc. is General
Partner and 5% owner.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
AUSA Financial Markets, Inc. Iowa 100% AUSA Holding Co. Marketing
Endeavor Investment Advisors California 49.9% AUSA Financial General Partnership
Markets, Inc.
Universal Benefits Corporation Iowa 100% AUSA Holding Co. Third party administrator
Investors Warranty of Iowa 100% AUSA Holding Co. Provider of automobile
America, Inc. extended maintenance
contracts
Massachusetts Fidelity Trust Co. Iowa 100% AUSA Holding Co. Trust company
Money Services, Inc. Delaware 100% AUSA Holding Co. Provides financial
counseling for employees
and agents of affiliated
companies
Zahorik Company, Inc. California 100% AUSA Holding Co. Broker-Dealer
ZCI, Inc. Alabama 100% Zahorik Company,Inc. Insurance agency
AEGON Asset Management Delaware 100% AUSA Holding Co. Registered investment
advisor
Services, Inc.
Intersecurities, Inc. Delaware 100% AUSA Holding Co. Broker-Dealer
Associated Mariner Financial Michigan 100% Intersecurities,Inc. Holding co./management
Group, Inc. services
Mariner Financial Services, Inc. Michigan 100% Associated Mariner Broker/Dealer
Financial Group, Inc.
Mariner Planning Corporation Michigan 100% Mariner Financial Financial planning
Services, Inc.
Associated Mariner Agency, Inc. Michigan 100% Associated Mariner Insurance agency
Financial Group, Inc.
Associated Mariner Agency Hawaii 100% Associated Mariner Insurance agency
of Hawaii, Inc. Agency, Inc.
Associated Mariner Ins. Agency Massachusetts 100% Associated Mariner Insurance agency
of Massachusetts, Inc. Agency, Inc.
Associated Mariner Agency Ohio 100% Associated Mariner Insurance agency
Ohio, Inc. Agency, Inc.
Associated Mariner Agency Texas 100% Associated Mariner Insurance agency
Texas, Inc. Agency, Inc.
Associated Mariner Agency New Mexico 100% Associated Mariner Insurance agency
New Mexico, Inc. Agency, Inc.
Mariner Mortgage Corp. Michigan 100% Associated Mariner Mortgage origination
Financial Group, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Idex Investor Services, Inc. Florida 100% AUSA Holding Co. Shareholder services
Idex Management, Inc. Delaware 50% AUSA Holding Co. Investment advisor
50% Janus Capital Corp.
IDEX Series Fund Massachusetts Various Mutual fund
First AUSA Life Insurance Maryland 100% AEGON USA, Inc. Insurance holding
company
Company
AUSA Life Insurance New York 100% First AUSA Life Insurance
Company, Inc. Insurance Company
Life Investors Insurance Iowa 100% First AUSA Life Insurance
Company of America Ins. Co.
Life Investors Delaware 100% LIICA Purchases, own, and hold
Alliance, LLC the equity interest of other entities
Bankers United Life Iowa 100% Life Investors Ins. Insurance
Assurance Company Company of America
Life Investors Agency Iowa 100% Life Investors Ins. Marketing
Group, Inc. Company of America
PFL Life Insurance Company Iowa 100% First AUSA Life Insurance
Ins. Co.
AEGON Financial Services Minnesota 100% PFL Life Insurance Marketing
Group, Inc. Co.
AEGON Assignment Corporation Kentucky 100% AEGON Financial Administrator of structured
of Kentucky Services Group, Inc. settlements
AEGON Assignment Corporation Illinois 100% AEGON Financial Administrator of structured
Services Group, Inc. settlements
Southwest Equity Life Ins. Co. Arizona 100% of Common Voting Insurance
Stock
First AUSA Life Ins. Co.
Iowa Fidelity Life Insurance Co. Arizona 100% of Common Voting Insurance
Stock
First AUSA Life Ins. Co.
Western Reserve Life Assurance Ohio 100% First AUSA Life Insurance
Co. of Ohio Ins. Co.
WRL Series Fund, Inc. Maryland Various Mutual fund
WRL Investment Services, Inc. Florida 100% Western Reserve Life Provides administration for
Assurance Co. of Ohio affiliated mutual fund
WRL Investment Florida 100% Western Reserve Life Registered investment
Management, Inc. Assurance Co. of Ohio
Aegon Equity Florida 100% Western Reserve Life Insurance Agency
Group, Inc. Assurance Co. of Ohio
ISI Insurance Agency, Inc. California 100% Western Reserve Life Insurance agency
Assurance Co. of Ohio
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ISI Insurance Agency Ohio 100% ISI Insurance Insurance agency
of Ohio, Inc. Agency Inc.
ISI Insurance Agency Texas 100% ISI Insurance Insurance agency
of Texas, Inc. Agency Inc.
ISI Insurance Agency Massachusetts 100% ISI Insurance Insurance Agency
of Massachusetts, Inc. Agency Inc.
Monumental Life Insurance Maryland 100% First AUSA Life Insurance
Co. Ins. Co.
AEGON Special Markets Maryland 100% Monumental Life Marketing
Group, Inc. Ins. Co.
Monumental General Maryland 100% First AUSA Life Insurance
Casualty Co. Ins. Co.
United Financial Services, Maryland 100% First AUSA Life General agency
Inc. Ins. Co.
Bankers Financial Life Arizona 100% First AUSA Life Insurance
Ins. Co. Ins. Co.
The Whitestone Corporation Maryland 100% First AUSA Life Insurance agency
Ins. Co.
Cadet Holding Corp. Iowa 100% First AUSA Life Holding company
Ins. Co.
Commonwealth General Delaware 100% AEGON USA, Inc. Holding company
Corporation ("CGC")
PB Series Trust Massachusetts N/A Mutual fund
Monumental Agency Group, Kentucky 100% CGC Provider of srvcs. to ins.
Inc. cos.
Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples Security
Life Insurance Company
Durco Agency, Inc. Virginia 100% Benefit Plans, General agent
Inc.
Commonwealth General Kentucky 100% CGC Administrator of structured
Assignment Corporation settlements
AFSG Securities Pennsylvania 100% CGC Broker-Dealer
Corporation
PB Investment Advisors, Delaware 100% CGC Registered investment
Inc. advisor
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Diversified Financial Delaware 100% CGC Provider of investment,
Products Inc. marketing and admin.
services to ins. cos.
AEGON USA Real Estate Delaware 100% Diversified Real estate and mortgage
Services, Inc. Financial holding company
Products Inc.
Capital Real Estate Delaware 100% CGC Furniture and equipment
Development Corporation lessor
Capital General Development Delaware 100% CGC Holding company
Corporation
Ammest Realty Corporation Texas 100% Peoples Security Special purpose
Life Insurance Company subsidiary
JMH Operating Company, Inc. Mississippi 100% Peoples Security Real estate holdings
Life Insurance Company
Independence Automobile Florida 100% Capital Security Automobile Club
Association, Inc. Life Insurance Company
Independence Automobile Georgia 100% Capital Security Automobile Club
Club, Inc. Life Insurance Company
Capital 200 Block Delaware 100% CGC Real estate holdings
Corporation
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Capital Broadway Kentucky 100% CGC Real estate holdings
Corporation
Southlife, Inc. Tennessee 100% CGC Investment subsidiary
Ampac Insurance Agency, Pennsylvania 100% CGC Provider of management
Inc. (EIN 23-1720755) support services
National Home Life Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Corporation Agency, Inc.
Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Corporation Agency, Inc.
Frazer Association Illinois 100% Ampac Insurance TPA license-holder
Consultants, Inc. Agency, Inc.
Valley Forge Associates, Pennsylvania 100% Ampac Insurance Furniture & equipment
Inc. Agency, Inc. lessor
Veterans Benefits Plans, Pennsylvania 100% Ampac Insurance Administrator of group
Inc. Agency, Inc. insurance programs
Veterans Insurance Delaware 100% Ampac Insurance Special-purpose subsidiary
Services, Inc. Agency, Inc.
Financial Planning Dist. Columbia 100% Ampac Insurance Special-purpose subsidiary
Services, Inc. Agency, Inc.
Academy Insurance Group, Delaware 100% CGC Holding company
Inc.
Academy Life Insurance Co. Missouri 100% Academy Insurance Insurance company
Group, Inc.
Pension Life Insurance New Jersey 100% Academy Insurance Insurance company
Company of America Group, Inc.
Academy Services, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Ammest Development Corp. Kansas 100% Academy Insurance Special-purpose subsidiary
Inc. Group, Inc.
Ammest Insurance Agency, California 100% Academy Insurance General agent
Inc. Group, Inc.
Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose subsidiary
Insurance Agency, Inc. Group, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Ammest Realty, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Ampac, Inc. Texas 100% Academy Insurance Managing general agent
Group, Inc.
Ampac Insurance Agency, Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Inc. (EIN 23-2364438) Group, Inc.
Data/Mark Services, Inc. Delaware 100% Academy Insurance Provider of mgmt. services
Group, Inc.
Force Financial Group, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Force Financial Services, Massachusetts 100% Force Fin. Group, Special-purpose subsidiary
Inc. Inc.
Military Associates, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
NCOA Motor Club, Inc. Georgia 100% Academy Insurance Automobile club
Group, Inc.
NCOAA Management Company Texas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Unicom Administrative Pennsylvania 100% Academy Insurance Provider of admin. services
Services, Inc. Group, Inc.
Unicom Administrative Germany 100% Unicom Provider of admin. services
Services, GmbH Administrative Services,
Inc.
Capital Liberty, L.P. Delaware 79.2% Commonwealth Life Holding Company
Insurance Company
19.8% Peoples Security
Life Insurance Company
1% CGC
Commonwealth General LLC Turks & 100% CGC Special-purpose subsidiary
Caicos Islands
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Peoples Benefit Life Missouri 3.7% CGC Insurance company
Insurance Company 20% Capital Liberty, L.P.
76.3% Monumental
Life Insurance Co.
Veterans Life Insurance Co. Illinois 100% Peoples Benefit Insurance company
Life Insurance Company
Peoples Benefit Services, Pennsylvania 100% Veterans Life Ins. Special-purpose subsidiary
Inc. Co.
</TABLE>
Item 27. Number of Contract Owners
As of December 31, 1998, there were no Contract owners.
Item 28. Indemnification
The Iowa Code (Sections 490.850 et. seq.) provides for permissive
--------
indemnification in certain situations, mandatory indemnification in other
situations, and prohibits indemnification in certain situations. The Code also
specifies producers for determining when indemnification payments can be made.
Insofar as indemnification for liabilities arising under the Securities Act of
933 may be permitted to directors, officers and controlling persons of the
Depositor pursuant to the foregoing provisions, or otherwise, the Depositor has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Depositor of expenses incurred
or paid by a director, officer or controlling person in connection with the
securities being registered), the Depositor 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
AFSG Securities Corporation
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
<PAGE>
The directors and officers of AFSG Securities Corporation are as follows:
<TABLE>
<CAPTION>
<S> <C>
Larry N. Norman Sarah J. Stange
Director and President Director and Vice President
Frank A. Camp Bob Warner
Director and Secretary Assistant Compliance Officer
Lisa Wachendorf Linda Gilmer
Vice President and Chief Compliance Officer Treasurer/Controller
Debra C. Cubero Priscilla Hechler
Vice President Assistant Secretary and Assistant Vice President
Emily Bates Thomas Pierpan
Assistant Treasurer Assistant Secretary and Assistant Vice President
Clifton Flenniken Darin D. Smith
Assistant Treasurer Assistant Secretary and Assistant Vice President
</TABLE>
The principal business address of each person listed is AFSG Securities
Corporation, 4333 Edgewood Road, N.E., Cedar Rapids, IA 52499-0001.
Commissions and Other Compensation Received by Principal Underwriter.
- --------------------------------------------------------------------
AFSG Securities Corporation, the broker/dealer, received $0 from the Registrant
from May 1, 1998 through December 31, 1998, for its services in distributing the
Policies. AEGON USA Securities, Inc., its predecessor, received $0 from the
Registrant from January 1, 1998 through April 30, 1998, for its services in
distributing the Policies. No other commission or compensation was received by
the principal underwriter, directly or indirectly, from the Registrant during
the fiscal year.
AFSG Securities Corporation serves as the principal underwriter for the PFL
Endeavor VA Separate Account, the PFL Retirement Builder Variable Annuity
Account, the PFL Life Variable Annuity Account A, the PFL Wright Variable
Annuity Account and the AUSA Endeavor Variable Annuity Account. These accounts
are separate accounts of PFL Life Insurance Company or AUSA Life Insurance
Company, Inc. AFSG Securities Corporation also serves as principal underwriter
for Separate Account I, Separate Account II, Separate Account IV and Separate
Account V of Peoples Benefit Life Insurance Company, and for Separate Account B
and Separate Account C of AUSA Life Insurance Company, Inc.
<PAGE>
Item 30. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by
PFL Life Insurance Company at 4333 Edgewood Road, N.E., Cedar Rapids, Iowa
52499-0001.
Item 31. Management Services.
All management Contracts are discussed in Part A or Part B.
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 Premiums under the Contract may be
accepted.
(b) Registrant undertakes that it will include either (i) a postcard or
similar written communication affixed to or included in the Prospectus
that the applicant can remove to send for a Statement of Additional
Information or (ii) a space in the Policy application that an applicant
can check to request 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 PFL at the address or phone
number listed in the Prospectus.
(d) PFL Life Insurance Company hereby represents that the fees and charges
deducted under the contracts, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by PFL Life Insurance Company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on its
behalf, in the City of Cedar Rapids and State of Iowa, on this 28th of October,
1999.
PFL RETIREMENT BUILDER
VARIABLE ANNUITY ACCOUNT
PFL LIFE INSURANCE COMPANY
Depositor
/s/ William L. Busler
------------------------------
William L. Busler
President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the duties indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Patrick S. Baird Director October 28, 1999
- -------------------------
Patrick S. Baird
/s/ Craig D. Vermie Director October 28, 1999
- -------------------------
Craig D. Vermie
/s/ William L. Busler Director October 28, 1999
- ------------------------- (Principal Executive Officer)
William L. Busler
/s/ Larry N. Norman Director October 28, 1999
- -------------------------
Larry N. Norman
/s/ Douglas C. Kolsrud Director October 28, 1999
- -------------------------
Douglas C. Kolsrud
/s/ Robert J. Kontz Vice President and October 28, 1999
- ------------------------- Corporate Controller
Robert J. Kontz
/s/ Brenda K. Clancy Treasurer October 28, 1999
- -------------------------
Brenda K. Clancy
</TABLE>
<PAGE>
Registration No.
333-61063
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
EXHIBITS
TO
FORM N-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FOR
PFL IMMEDIATE INCOME BUILDER
_______________
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description of Exhibit Page No.*
- ---------- ---------------------- -------
(3)(b) Form of Broker/Dealer Supervision and Sales Agreement
by and between AFSG Securities Corporation and the
Broker/Dealer.
(10)(a) Consent of Independent Auditors
(14) Powers of Attorney
_______________________________
* Page numbers included only in manually executed original.
<PAGE>
EXHIBIT (3)(b)
--------------
FORM OF
BROKER/DEALER SUPERVISION AND SALES AGREEMENT
<PAGE>
SELECTED BROKER AGREEMENT
AGREEMENT dated__________________________,19____, by and between AFSG
Securities Corporation ("Distributor"), a Pennsylvania corporation, PFL Life
Insurance Company ("Company") and _______________________("Broker"), a
______________ corporation. This Agreement supersedes and replaces any prior
Selected Broker Agreement regarding the subject matter between the parties
hereto.
WITNESSETH:
In consideration of the mutual promises contained herein, the parties
hereto agree as follows:
A. Definitions
-----------
(1) Contracts--Variable life insurance contracts and/or variable annuity
contracts described in Schedule A attached hereto and issued by PFL
Life Insurance Company and for which Distributor has been appointed
the principal underwriter pursuant to Distribution Agreements, copies
of which have been furnished to Broker.
(2) Accounts--Separate accounts established and maintained by Company
pursuant to the laws of Iowa, as applicable, to fund the benefits
under the Contracts.
(3) The Funds--, open-end management investment companies registered under
the 1940 Act, shares of which are sold to the Accounts in connection
with the sale of the Contracts, as described in the Prospectus for the
Contracts.
(4) Registration Statement--The registration statements and amendments
thereto relating to the Contracts, the Accounts, and the Funds,
including financial statements and all exhibits.
(5) Prospectus--The prospectuses included within the Registration
Statements.
(6) 1933 Act--The Securities Act of 1933, as amended.
(7) 1934 Act--The Securities Exchange Act of 1934, as amended.
(8) 1940 Act--The Investment Company Act of 1940, as amended.
(9) SEC--The Securities and Exchange Commission.
(10) NASD--The National Association of Securities Dealers, Inc.
B. Agreements of Distributor
-------------------------
(1) Pursuant to the authority delegated to it by Company, Distributor
hereby authorizes Broker during the term of this Agreement to solicit
applications for Contracts from eligible persons provided that there
is an effective Registration Statement relating to such Contracts and
provided further that Broker has been notified by Distributor that the
Contracts are qualified for sale under all applicable securities and
insurance laws of the state or jurisdiction in which the application
will be solicited. In connection with the solicitation of applications
for Contracts, Broker is hereby authorized to offer riders that are
available with the Contracts in accordance with instructions furnished
by Distributor or Company.
(2) Distributor, during the term of this Agreement, will notify Broker of
the issuance by the SEC of any stop order with respect to the
Registration Statement or any amendments thereto or the initiation of
any proceedings for that purpose or for any other purpose relating to
the registration and/or offering of the Contracts and of any other
action or circumstance that may prevent the lawful sale of the
Contracts in any state or jurisdiction.
(3) During the term of this Agreement, Distributor shall advise Broker of
any amendment to the Registration Statement or any amendment or
supplement to any Prospectus.
C. Agreements of Broker
--------------------
(1) It is understood and agreed that Broker is a registered broker/dealer
under the 1934 Act and a member of the NASD and that the agents or
representatives of Broker who will be soliciting applications for the
Contracts also will be duly registered representative of Broker.
(2) Commencing at such time as Distributor and Broker shall agree upon,
Broker agrees to use commercially reasonable efforts to find
purchasers for the Contracts acceptable to Company. In meeting its
obligation to use its commercially reasonable efforts to solicit
applications for Contracts, Broker shall, during the term of this
Agreement, engage in the following activities:
(a) Regularly utilize only training, sales and promotional materials
relating to the Contracts which have been approved by Company.
(b) Establish and implement reasonable procedures for periodic
inspection and supervision of sales practices of its agents or
representatives and submit periodic reports to Distributor as may be
requested on the results of such inspections and the compliance with
such procedures.
(c) Broker shall take reasonable steps to ensure that the various
representatives appointed by it shall not make recommendations to an
applicant to purchase a Contract in the absence of reasonable grounds
to believe that
<PAGE>
the purchase of the Contract is suitable for such applicant. While not
limited to the following, a determination of suitability shall be
based on information furnished to a representative after reasonable
inquiry of such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and, if
applicable, the likelihood that the applicant will make the premium
payments contemplated by the Contract.
(d) Broker shall adopt, abide by, and enforce the principles set
forth in the Principles and Code of Ethical market Conduct of the
Insurance Marketplace Standards Association as adopted by the Company
and provided to You with this Agreement.
(3) All payments for Contracts collected by agents or representatives of
Broker shall be held at all times in a fiduciary capacity and shall be
remitted promptly in full together with such applications, forms and
other required documentation to an office of the Company designated by
Distributor. Checks or money orders in payment of initial premiums
shall be drawn to the order of "PFL Life Insurance Company." Broker
acknowledges that the Company retains the ultimate right to control
the sale of the Contracts and that the Distributor or Company shall
have the unconditional right to reject, in whole or part, any
application for the Contract. In the event Company or Distributor
rejects an application, Company immediately will return all payments
directly to the purchaser and Broker will be notified of such action.
In the event that any purchaser of a Contract elects to return such
Contract pursuant to the free look right, the purchaser will receive a
refund of either premium payments or the value of the invested portion
of such premiums as set forth in the Contract and according to
applicable state law. The Broker will be notified of any such action.
(4) Broker shall act as an independent contractor, and nothing herein
contained shall constitute Broker, its agents or representatives, or
any employees thereof as employees of Company or Distributor in
connection with solicitation of applications for Contracts. Broker,
its agents or representatives, and its employees shall not hold
themselves out to be employees of Company or Distributor in this
connection or in any dealings with the public.
(5) Broker agrees that any material, including material it develops,
approves or uses for sales, training, explanatory or other purposes in
connection with the solicitation of applications for Contracts
hereunder (other than generic advertising materials which do not make
specific reference to the Company or the Contracts) will only be used
after receiving the written consent of Distributor to such material
and, where appropriate, the endorsement of Company to be obtained by
Distributor.
(6) Solicitation and other activities by Broker shall be undertaken only
in accordance with applicable Company procedures, ethical principles
and manuals, and applicable laws and regulations. No agent or
representative of Broker shall solicit applications for the contracts
until duly licensed and appointed by Company (such appointment not to
be unreasonably withheld by the Company) as a life insurance and
variable contract broker or agent of Company in the appropriate states
or other jurisdictions. Broker shall ensure that such agents or
representatives fulfill any training requirements necessary to be
licensed and that such agents or representatives are properly
supervised and controlled pursuant to the rules and regulations of the
SEC and the NASD. Broker shall certify agents' and representatives'
qualifications to the satisfaction of Distributor, including
certifying a General Letter of Recommendation set forth in Exhibit A
hereto. Broker understands and acknowledges that neither it nor its
agents or representatives is authorized by Distributor or Company to
give any information or make any representation in connection with
this Agreement or the offering of the Contracts other than those
contained in the Prospectus or other solicitation material authorized
in writing by Distributor or Company.
(7) Broker shall not have authority on behalf of Distributor or Company
to: make, alter or discharge any Contract or other form; waive any
forfeiture, extend the time of paying any premium; receive any monies
or premiums due, or to become due, to Company, except as set forth in
Section C(3) of this Agreement. Broker shall not expend, nor contract
for the expenditure of the funds of Distributor, nor shall Broker
possess or exercise any authority on behalf of Broker by this
Agreement.
(8) Broker shall have the responsibility for maintaining the records of
its representatives licensed, registered and otherwise qualified to
sell the Contracts. Broker shall maintain such other records as are
required of it by applicable laws and regulations. The books, accounts
and records of the Company, the Account, Distributor and Broker
relating to the sale of the Contracts shall be maintained so as to
clearly and accurately disclose the nature and details of the
transactions. All records maintained by the Broker in connection with
this Agreement shall be the property of the Company and shall be
returned to the Company upon termination of this Agreement, free from
any claims or retention of rights by the Broker. Nothing in this
Section C(8) shall be interpreted to prevent the Broker from retaining
copies of any such records which the Broker, in its discretion, deems
necessary or desirable to keep. The Broker shall keep confidential any
information obtained pursuant to this Agreement and shall disclose
such information only if the Company has authorized such disclosure or
if such disclosure is expressly required by applicable federal or
state regulatory authorities.
<PAGE>
D. Compensation
------------
(1) Pursuant to the Distribution Agreement between Distributor and
Company, Distributor shall cause Company to arrange for the payment of
commissions to Broker as compensation for the sale of each contract
sold by an agent or representative of Broker. Such amounts shall be
paid to Broker or its subsidiary insurance agency, whichever is
authorized to receive insurance commissions under applicable insurance
laws, in accordance with the schedules attached hereto, the General
Agent Agreement, and the commission schedules attached thereto. All
terms and conditions of the General Agent Agreement not otherwise
conflicting with the terms herein, shall be incorporated by reference
herein. Company shall identify to Broker with each such payment the
name of the agent or representative of Broker who solicited each
Contract covered by the payment.
(2) Neither Broker nor any of its agents or representatives shall have any
right to withhold or deduct any part of any premium it shall receive
for purposes of payment of commission or otherwise. Neither Broker nor
any of its agents or representatives shall have an interest in any
compensation paid by Company to Distributor, now or hereafter, in
connection with the sale of any Contracts hereunder.
E. Complaints and Investigations
-----------------------------
(1) Broker and Distributor jointly agree to cooperate fully in any
insurance or securities regulatory investigation or proceeding or
judicial proceeding arising in connection with the Contracts marketed
under this Agreement. Broker, upon receipt, will notify Distributor of
any customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding in connection with the Contracts.
Broker and Distributor further agree to cooperate fully in any
securities regulatory investigation or proceeding or judicial
proceeding with respect to Broker, Distributor, their affiliates and
their agents or representatives to the extent that such investigation
or proceeding is in connection with Contracts marketed under this
Agreement. Broker shall furnish applicable federal and state
regulatory authorities with any information or reports in connection
with its services under this Agreement which such authorities may
request in order to ascertain whether the Company's operations are
being conducted in a manner consistent with any applicable law or
regulation. Each party shall bear its own costs and expenses of
complying with any regulatory requests, subject to any right of
indemnification that may be available pursuant to Section G of this
Agreement.
F. Term of Agreement
-----------------
(1) This Agreement shall continue in force for one year from its effective
date and thereafter shall automatically be renewed every year for a
further one year period; provided that either party may unilaterally
terminate this Agreement upon thirty (30) days' written notice to the
other party of its intention to do so.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except (a) the agreements contained in Section
E hereof; (b) the indemnity set forth in Section G hereof; and (c) the
obligations to settle accounts hereunder, including commission
payments on premiums subsequently received for Contracts in effect at
the time of termination or issued pursuant to applications received by
Broker prior to termination.
(3) Distributor and Company reserve the right, without notice to Broker,
to suspend, withdraw or modify the offering of the Contracts or to
change the conditions of their offering.
G. Indemnity
---------
(1) Broker shall be held to the exercise of reasonable care in carrying
out the provisions of this Agreement.
(2) Distributor agrees to indemnify and hold harmless Broker and each
officer or director of Broker against any losses, claims, damages or
liability, joint or several, to which Broker or such officer or
director become subject, under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact, required to be stated
therein or necessary to make the statements therein not misleading,
contained in any Registration Statement or any post-effective
amendment thereto or in the Prospectus or any amendment or supplement
to the Prospectus, or any sales literature provided by the Company or
by the Distributor.
(3) Broker agrees to indemnify and hold harmless Company and Distributor
and each of their current and former directors and officers and each
person, if any, who controls or has controlled Company or Distributor
within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages or liabilities to which Company or Distributor
and any such director or officer or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:
(a) Any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning the
Contracts by Brokers, its agents, employees or representatives; or
(b) Claims by agents or representatives or employees of Broker for
commissions, service fees, development allowances or other
compensation or remuneration of any type;
(c) The failure of Broker, its officers, employees, or agents to
comply with the provisions of this Agreement; and Broker will
reimburse Company and Distributor and any director or officer or
controlling person of either for any legal or other expenses
reasonably incurred by Company, Distributor, or such director, officer
of controlling
<PAGE>
person in connection with investigating or defending any such loss,
claims, damage, liability or action. This indemnity agreement will be
in addition to any liability which Broker may otherwise have.
H. Assignability
-------------
This Agreement shall not be assigned by either party without the
written consent of the other.
I. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa.
J. Notices
-------
All communications under the Agreement shall be in writing and shall
be deemed delivered when mailed by certified mail, postage prepaid.
Alternatively, communications shall be deemed delivered by timely
transmission of the writing, delivery charges prepaid, to a third
party company or governmental entity providing delivery services in
the ordinary course of business, which guarantees delivery to the
other party on the next business day. Notices shall be sent to the
following addresses unless and until the addressee notifies the other
party of a change in address according to the terms of this Section:
<TABLE>
<S> <C>
(1) if to Broker, to: (2) if to the Distributor or Company, send
to the Company, to:
__________________________ PFL Life Insurance Company
__________________________(street address) Financial Markets Division
__________________________ 4333 Edgewood Road NE
__________________________(city, state, zip) Cedar Rapids, Iowa 52499
__________________________(telephone no.)
__________________________(fax no.) (319) 297-8208 (telephone no.)
Attention:________________ (319) 297-8132 (fax no.)
</TABLE>
In Witness Whereof, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
__________________________________
(Broker Name)
By:_______________________________
Title:____________________________
AFSG SECURITIES CORPORATION
(Distributor)
By:_______________________________
Title:____________________________
PFL LIFE INSURANCE COMPANY
(Company)
By:_______________________________
Title:____________________________
<PAGE>
EXHIBIT A
General Letter of Recommendation
BROKER-DEALER hereby certifies to the Company that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of the Company
submitted by BROKER-DEALER. BROKER-DEALER will, upon request, forward proof of
compliance with same to the Company in a timely manner.
1. We have made a thorough and diligent inquiry and investigation
relative to each applicant's identity, residence and business
reputation and declare that each applicant is personally known to us,
has been examined by us, is known to be of good moral character, has a
good business reputation, is reliable, is financially responsible and
is worthy of a license. Each individual is trustworthy, competent and
qualified to act as an agent for the Company to hold himself out in
good faith to the general public.
2. We have on file a U-4 form which was completed (and has been amended,
as required) by each applicant. We have fulfilled all the necessary
investigative requirements for the registration of each applicant as a
registered representative through our NASD member firm, including but
not limited to: (i) checking for and investigating criminal arrest and
conviction records available to Broker-Dealer on the CRD system; and
(ii) communicating with each employer of the applicant for 3 years
prior to the applicant's registration with our firm. Each applicant is
presently registered as an NASD registered representative.
The above information in our files indicates no fact or condition
which would disqualify the applicant from receiving a license and all
the findings of all investigative information is favorable.
At the time of application, in those states required by the Company,
we shall provide the Company with a copy of the entire U-4 form, or
designated pages, thereof, completed by each applicant, including any
amendments or updates thereto, and we certify those items are true
copies of the original.
3. We certify that all educational requirements have been met for the
specified state each applicant is requesting a license in, and that
all such persons have fulfilled the appropriate examination, education
and training requirements.
4. If the applicant is required to submit his picture, his signature, and
securities registration in the state in which he is applying for a
license, we certify that those items forwarded to the Company are
those of the applicant and the securities registration is a true copy
of the original.
5. We hereby warrant that the applicant is not applying for a license
with the Company in order to place insurance chiefly and solely on his
life or property, or lives or property of his relatives, or property
or liability of his associates.
6. We will not permit any applicant to transact insurance in a state as
an agent until duly licensed and appointed therefor with the
appropriate State Insurance Department. No applicants have been given
a contract or furnished supplies, nor have any applicants been
permitted to write, solicit business, or act as an agent in any
capacity, and they will not be so permitted until the certificate of
authority or license applied for is received.
<PAGE>
EXHIBIT (10)(a)
---------------
CONSENT OF INDEPENDENT AUDITORS
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
in the Statement of Additional Information and to the use of our report dated
February 19, 1999 with respect to the statutory-basis financial statements and
schedules of PFL Life Insurance Company, included in the Post-Effective
Amendment No. 3 to the Registration Statement (Form N-4 No. 333-61063) and
related Prospectus of PFL Immediate Income Builder.
/s/ Ernst & Young LLP
Des Moines, Iowa
November 1, 1999
<PAGE>
EXHIBIT (14)
------------
POWERS OF ATTORNEY
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
Know all men by these presents that Patrick S. Baird, whose signature appears
below, constitutes and appoints Craig D. Vermie and Brenda K. Clancy, and each
of them, his attorneys-in-fact, each with the power of substitution, for him in
any and all capacities, to sign any registration statements and amendments
thereto for the PFL Retirement Builder Variable Annuity Account, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute, may do or cause to be done by
virtue hereof.
/s/ Patrick S. Baird
---------------------------
Patrick S. Baird
Senior Vice President
PFL Life Insurance Company
October 11, 1999
- -------------------------
Date
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
Know all men by these presents that Craig D. Vermie, whose signature appears
below, constitutes and appoints Craig D. Vermie and Brenda K. Clancy, and each
of them, his attorneys-in-fact, each with the power of substitution, for him in
any and all capacities, to sign any registration statements and amendments
thereto for the PFL Retirement Builder Variable Annuity Account, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute, may do or cause to be done by
virtue hereof.
/s/ Craig D. Vermie
------------------------------
Craig D. Vermie
Vice President
PFL Life Insurance Company
October 11, 1999
- ----------------------
Date
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
Know all men by these presents that William L. Busler, whose signature appears
below, constitutes and appoints Craig D. Vermie and Brenda K. Clancy, and each
of them, his attorneys-in-fact, each with the power of substitution, for him in
any and all capacities, to sign any registration statements and amendments
thereto for the PFL Retirement Builder Variable Annuity Account, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute, may do or cause to be done by
virtue hereof.
/s/ William L. Busler
------------------------------
William L. Busler
President
PFL Life Insurance Company
October 11, 1999
- ----------------------
Date
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
Know all men by these presents that Larry N. Norman, whose signature appears
below, constitutes and appoints Craig D. Vermie and Brenda K. Clancy, and each
of them, his attorneys-in-fact, each with the power of substitution, for him in
any and all capacities, to sign any registration statements and amendments
thereto for the PFL Retirement Builder Variable Annuity Account, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute, may do or cause to be done by
virtue hereof.
/s/ Larry N. Norman
-----------------------------
Larry N. Norman
Executive Vice President
PFL Life Insurance Company
October 11, 1999
- ----------------------
Date
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
Know all men by these presents that Douglas C. Kolsrud, whose signature appears
below, constitutes and appoints Craig D. Vermie and Brenda K. Clancy, and each
of them, his attorneys-in-fact, each with the power of substitution, for him in
any and all capacities, to sign any registration statements and amendments
thereto for the PFL Retirement Builder Variable Annuity Account, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute, may do or cause to be done by
virtue hereof.
/s/ Douglas C. Kolsrud
------------------------------
Douglas C. Kolsrud
Senior Vice President
PFL Life Insurance Company
October 11, 1999
- ----------------------
Date
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
Know all men by these presents that Robert J. Kontz, whose signature appears
below, constitutes and appoints Craig D. Vermie and Brenda K. Clancy, and each
of them, his attorneys-in-fact, each with the power of substitution, for him in
any and all capacities, to sign any registration statements and amendments
thereto for the PFL Retirement Builder Variable Annuity Account, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute, may do or cause to be done by
virtue hereof.
/s/ Robert J. Kontz
-----------------------------
Robert J. Kontz
Vice President
PFL Life Insurance Company
October 11, 1999
- ----------------
Date
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
Know all men by these presents that Brenda K. Clancy, whose signature appears
below, constitutes and appoints Craig D. Vermie and Brenda K. Clancy, and each
of them, her attorneys-in-fact, each with the power of substitution, for her in
any and all capacities, to sign any registration statements and amendments
thereto for the PFL Retirement Builder Variable Annuity Account, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or her substitute, may do or cause to be done by
virtue hereof.
/s/ Brenda K. Clancy
-----------------------------
Brenda K. Clancy
Vice President
PFL Life Insurance Company
October 11, 1999
- ----------------
Date
