PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT, 485BPOS, 2000-04-27

PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
485BPOS, 2000-04-27

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<PAGE>

As filed with the Securities and Exchange Commission on April 27, 2000

Registration No. 333-61063
---------
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. 6 [X]

and

REGISTRATION STATEMENT UNDER [_]
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 23 [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
- ------------------------------------

Contracts

--------------------------

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b) of Rule 485.
- ------

X on May 1, 2000 pursuant to paragraph (b) of Rule 485.
- ------

60 days after filing pursuant to paragraph (a)(1) of Rule 485.
- ------

on May 1, 2000 pursuant to paragraph (a)(1) of Rule 485.
- ------

If appropriate, check the following box:

This post-effective amendment designates a new effective date
------
for a previously filed post-effective amendment.

<PAGE>

PFL IMMEDIATE
INCOME BUILDER

Issued Through
PFL RETIREMENT BUILDER
VARIABLE ANNUITY ACCOUNT
By
PFL LIFE INSURANCE COMPANY

Prospectus
May 1, 2000

This prospectus and the mutual fund prospectuses give you important information
about the contracts and the mutual funds. Please read them carefully before you
invest and keep them for future reference.

If you would like more information about the PFL Immediate Income Builder, a
fixed and variable single premium immediate annuity contract, you can obtain a
free copy of the Statement of Additional Information (SAI) dated May 1, 2000.
Please call us at (800) 544-3152 or write us at: PFL Life Insurance Company,
Financial Markets Division, Variable Annuity Department, 4333 Edgewood Road
N.E., P.O. Box 3183, Cedar Rapids, Iowa, 52406-3183. A registration statement,
including the SAI, has been filed with the Securities and Exchange Commission
(SEC) and is incorporated herein by reference. Information about the separate
account can be reviewed and copied at the SEC's Public Reference Room in
Washington, D.C. You may obtain information about the operation of the public
reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a
web site (http://www.sec.gov) that contains the prospectus, the SAI, material
incorporated by reference, and other information. The table of contents of the
SAI is included at the end of this prospectus.

Please note that the contracts and the underlying portfolios:
.are not bank deposits;
.are not federally insured;
.are not endorsed by any bank or government agency;

.are not guaranteed to achieve their goal; and

.are subject to risks, including loss of premium.

The immediate annuity contract has fixed and variable payment options. There
are fourteen portfolios you can select from if you choose to receive variable
payments. You can choose any combination of fixed and variable payments. You
bear the investment risk if you choose variable payments.

MANAGED BY MANAGEMENT & RESEARCH COMPANY:

Variable Insurance Products Fund
(VIP) - Initial Class

Fidelity - VIP Money Market Portfolio

Fidelity - VIP High Income Portfolio

Fidelity - VIP Equity-Income Portfolio

Fidelity - VIP Growth Portfolio

Fidelity - VIP Overseas Portfolio

Variable Insurance Products Fund II
(VIP II) - Initial Class

Fidelity - VIP II Investment Grade Bond Portfolio

Fidelity - VIP II Asset Manager Portfolio

Fidelity - VIP II Asset Manager: Growth Portfolio

Fidelity - VIP II Index 500 Portfolio

Fidelity - VIP II Contrafund(R) Portfolio

Variable Insurance Products Fund III
(VIP III) - Initial Class

Fidelity - VIP III Balanced Portfolio

Fidelity - VIP III Growth & Income Portfolio

Fidelity - VIP III Growth Opportunities Portfolio

Fidelity - VIP III Mid Cap Portfolio

The Securities and Exchange Commission has not approved or disapproved these
securities, or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
<PAGE>

<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
GLOSSARY OF TERMS........................................................... 3

SUMMARY..................................................................... 4

EXPENSE TABLE............................................................... 7

EXAMPLES.................................................................... 9

1.THE ANNUITY CONTRACT...................................................... 11

2.PURCHASE.................................................................. 11
Contract Issue Requirements............................................... 11
Premium Payment........................................................... 11
Allocation of Premium Payment............................................. 11
Variable Annuity Units.................................................... 11

3.ANNUITY PAYMENTS.......................................................... 12
Annuity Payment Dates..................................................... 12
Payments Under the Contract............................................... 12
Stabilized Payments....................................................... 12
Variable or Combination Payments.......................................... 12
Assumed Investment Rate (AIR)............................................. 12
Calculation of Variable Payments.......................................... 13
Payment Options........................................................... 14

4.INVESTMENT CHOICES........................................................ 17
The Separate Account...................................................... 17
Transfers................................................................. 17

5.EXPENSES.................................................................. 18
Separate Account Charge................................................... 18
Expenses of the Funds..................................................... 18
Premium Taxes............................................................. 18
Other Taxes............................................................... 19
Surrender Charge.......................................................... 19
Transfer Fee.............................................................. 19
Payment Guarantee Rider Fee............................................... 19

6.TAXES..................................................................... 19
Annuity Contract in General............................................... 19
Qualified Contracts....................................................... 20
Nonqualified Contracts.................................................... 20
Taxation of Death Benefit Proceeds........................................ 20
Transfers, Assignments or Exchanges of Contracts.......................... 21
Possible Tax Law Changes.................................................. 21
Diversification and Distribution Requirements............................. 21

</TABLE>

<TABLE>
<S> <C>
7.SURRENDERS................................................................ 21
Surrender of Certain Only Payment Option.................................. 21
Surrender of Life With Emergency CashSM Payment Option.................... 21

8.PERFORMANCE............................................................... 21

9.DEATH BENEFIT............................................................. 22

10.PAYMENT GUARANTEE RIDERS................................................. 22
Initial Payment Guarantee................................................. 23
Step-up Payment Guarantee................................................. 23
Rider Fees................................................................ 23
Other Terms and Conditions................................................ 23

11.OTHER INFORMATION........................................................ 23
PFL Life Insurance Company................................................ 23
The Separate Account...................................................... 23
Voting Rights............................................................. 24
Distributor of the Contracts.............................................. 24
Variations in Contract Provisions......................................... 24
IMSA...................................................................... 24
Delay of Payments......................................................... 24
Legal Proceedings......................................................... 24
Financial Statements...................................................... 25

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION................ 25

APPENDIX A
Condensed Financial Information........................................... A-1

APPENDIX B
Historical Performance Data............................................... B-1

APPENDIX C
Additional Fund Information............................................... C-1

APPENDIX D
Illustrations of Annuity Payment Values................................... D-1
</TABLE>

No one is authorized to give any information or to make any representations
that are not in this prospectus and the SAI (or any sales literature approved
by PFL). You should rely only on the information contained in these documents.
The contracts are not available in all states. This prospectus is not an offer
anywhere that would be unlawful.

2
<PAGE>

GLOSSARY OF TERMS

Annuitant and Secondary Annuitant--The person(s) 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 variable or a combination of
fixed and variable.

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.

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. The payment
amount will be determined no more than seven business days before each payment
date. 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.

Stabilized Payment--The variable annuity payment you receive. Stabilized
payments are determined annually at your contract anniversary and are paid in
according to the annuity payment frequency you select. You can choose not to
stabilize your variable annuity payments in which case each payment fluctuates
based on the performance of the selected subaccounts.

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(ies) is entitled to the death proceeds of the contract.
If no person is named, the owner's estate shall be deemed the successor owner.

Supportable Payment--The amount equal to the sum of the variable annuity unit
values times the number of variable annuity units in each of the selected
subaccounts. The variable annuity units will be adjusted to reflect the year-
to-date difference between stabilized and non-stabilized payments.

Valuation Day--Each day the New York Stock Exchange is open for trading.

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. The determination of the variable annuity unit value is
made at the end of each valuation day.

3
<PAGE>

SUMMARY

The sections in this summary correspond to sections in this prospectus, which
discuss the topics in more detail.

1. THE ANNUITY CONTRACT

The Fixed and Variable Single Premium Immediate Annuity Contract offered by PFL
Life Insurance Company (PFL, we, us or our) is a contract between you, as the
owner, and PFL, an insurance company. The contract is intended to provide a
stream of income for life or for a specific period of time you select.

2. PURCHASE

You purchase this contract with a single premium. You cannot make additional
premium payments. The minimum premium is $25,000, although we can accept a
smaller premium with approval from our home office.

You may return your contract for a refund within 20 days after you receive it.
The amount of the refund will generally be the premium we receive plus or minus
the investment performance of the subaccounts to which your premium was
allocated, if any. We will generally pay the refund within 7 days after we
receive written notice of cancellation and the returned contract. The contract
will then be deemed void. In some states you may have more or less than 20
days, or receive a refund of more (or less) than the amount described above.

3. ANNUITY PAYMENTS

Annuity payments may be variable or a combination of fixed and variable. We
guarantee the amount of fixed annuity payments. We do not, however, guarantee
the amount of variable annuity payments. Variable annuity payment amounts are
determined by the investment performance of the subaccounts you select.
However, you can purchase a minimum payment guarantee rider to ensure a minimum
payment amount. See Section 10 for more information.

Annuity payments may be scheduled either monthly, quarterly, semiannually or
annually.

We recommend using electronic funds transfer (EFT) to receive your annuity
payments whenever possible.

4. INVESTMENT CHOICES

You choose between fixed or variable annuity payments, or a combination of
both. If you choose variable annuity payments you must also select one or more
of the following portfolios described in the underlying fund prospectuses:

MANAGED BY FIDELITY MANAGEMENT & RESEARCH COMPANY

Fidelity - VIP Money Market Portfolio - Initial Class

Fidelity - VIP High Income Portfolio - Initial Class

Fidelity - VIP Equity-Income Portfolio-- Initial Class

Fidelity - VIP Growth Portfolio - Initial Class

Fidelity - VIP Overseas Portfolio - Initial Class

Fidelity - VIP II Investment Grade Bond Portfolio - Initial Class

Fidelity - VIP II Asset Manager Portfolio - Initial Class

Fidelity - VIP II Asset Manager: Growth Portfolio - Initial Class

Fidelity - VIP II Index 500 Portfolio - Initial Class

Fidelity - VIP II Contrafund(R) - Portfolio-- Initial Class

Fidelity - VIP III Balanced Portfolio - Initial Class

Fidelity - VIP III Growth & Income Portfolio - Initial Class

Fidelity - VIP III Growth Opportunities Portfolio - Initial Class

Fidelity - VIP III Mid Cap Portfolio - Initial Class

Your variable annuity payments may go up or down with the investment
performance of any of these portfolios. You bear this investment risk.

4
<PAGE>

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).

5. EXPENSES

There is a separate account charge of 1.15% annually of average daily net
assets if you allocate $50,000 or more to variable annuity payments; if you
allocate less than $50,000 to variable annuity payments the separate account
charge is 1.35%. This charge will not increase and does not apply to fixed
annuity payments.

Each portfolio has investment management and other fees charged directly to it.
In 1999, these ranged from 0.27% to 0.97% annually of average daily net assets.

In some states, a charge for applicable premium taxes ranging from 0% to 3.5%
is deducted from the premium when paid.

If you surrender from a Certain Only variable payment option we will deduct a
surrender charge of up to 7% of the premium payment surrendered within the
first nine years. If you surrender from a Life with Emergency CashSM payment
option, we will deduct a surrender charge of up to 4% of the premium payment
surrendered within the first four years. Surrenders are not allowed under any
other payment options.

There is an extra charge if you elect one of the optional payment guarantee
riders.

6. TAXES

You are taxed on the part of your annuity payment considered income. Annuity
payments from nonqualified contracts may be considered partly a return of your
investment in the contract so that part of each payment would not be taxable as
income. Annuity payments from qualified contracts are generally considered as
all taxable income.

7. SURRENDERS

You do not have access to your money and cannot surrender any of your contract
unless you select either the Certain Only or Life with Emergency CashSM payment
option. No other payment option allows surrenders. If you choose a Certain Only
payment option you may surrender the present value of the remaining payments,
less any applicable surrender charge. If you choose the Life with Emergency
CashSM payment option, we will provide you with a Life with Emergency CashSM
benefit schedule that will allow you to estimate how much is available to
surrender (before deducting any applicable surrender charge). The minimum
amount you may surrender is $2,500.

Surrenders may have adverse tax consequences. You should consult with your tax
advisor before requesting a surrender.

8. PERFORMANCE

The amount of your variable annuity payments will vary up or down depending
upon the investment performance of the subaccounts you choose. We provide
historical, or past, performance information for the portfolios (adjusted to
reflect the separate account charge) in Appendix B and in the Statement of
Additional Information. This data does not indicate future performance.

9. DEATH BENEFIT

Some payment options provide a death benefit in the event the annuitant dies
after annuity payments begin or if an owner or annuitant dies before annuity
payments begin.

10. PAYMENT GUARANTEE RIDERS

Two optional riders are available:
. The initial payment guarantee--Your variable annuity payments will never be
less than the initial variable annuity payment.
. The step-up payment guarantee--Your variable annuity payments will never
decrease.

There is an extra charge for these riders.

5
<PAGE>

11. OTHER INFORMATION

This section of the prospectus contains information on:
. PFL Life Insurance Company
. The Separate Account
. Voting Rights
. Distributor of the Contracts
. Variations of Contract Provisions
. IMSA
. Delay of Payments
. Legal Proceedings
. Financial Statements

12. INQUIRIES

If you need more information, please contact our Administrative and Services
Office at:

PFL Life Insurance Company
Variable Annuity Department
4333 Edgewood Road N.E.
P.O. Box 3183
Cedar Rapids, IA 52406-3183
(800) 544-3152

You may check your policy at www.pfllife.com/fmd. Follow the logon procedures.
You will need your pre-assigned Personal Identification Number ("PIN") to
access information about your policy.

6
<PAGE>

EXPENSE TABLE*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Contract Owner Transaction Expenses
- -----------------------------------------
<S> <C>
Sales Load charged to premium...... None
Annual Contract Administration
Charge............................ None
Transfer Fee (for first six
transfers in any contract
year)(/1/)........................ None
Maximum Surrender Charge (as a % of
premium payment surrendered):
. Life with Emergency CashSM
payment option.................. 4%
. Other Life Contingent payment
options......................... N/A
. Certain Only payment option
(variable)...................... 7%
</TABLE>
<TABLE>
<CAPTION>
Separate Account Annual Expenses
(as a percentage of average net assets)
<S> <C>
Separate Account Charge:
- -----------------------
Mortality and Expense Risk
Charge.......................... 1.20%
(This charge is 1.00% if you
allocate $50,000 or more to
variable annuity payments)
Administration Charge............ 0.15%
-----
TOTAL............................ 1.35%
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Portfolio Annual Expenses(/2/)
(as a percentage of average net assets and after expense reimbursements)
- -------------------------------------------------------------------------------
Total
Portfolio
Management Other Annual
Fees Expenses Expenses
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity--VIP Money Market--Initial
Class.................................... 0.18% 0.09% 0.27%
Fidelity--VIP High Income--Initial Class.. 0.58% 0.11% 0.69%
Fidelity--VIP Equity-Income--Initial
Class(/3/)............................... 0.48% 0.09% 0.57%
Fidelity--VIP Growth--Initial Class(/3/).. 0.58% 0.08% 0.66%
Fidelity--VIP Overseas--Initial
Class(/3/)............................... 0.73% 0.18% 0.91%
Fidelity--VIP II Investment Grade Bond--
Initial Class............................ 0.43% 0.11% 0.54%
Fidelity--VIP II Asset Manager--Initial
Class(/3/)............................... 0.53% 0.10% 0.63%
Fidelity--VIP II Asset Manager: Growth--
Initial Class(/3/)....................... 0.58% 0.09% 0.67%
Fidelity--VIP II Index 500--Initial
Class(/4/)............................... 0.24% 0.04% 0.28%
Fidelity--VIP II Contrafund(R)--Initial
Class(/3/)............................... 0.58% 0.13% 0.71%
Fidelity--VIP III Balanced--Initial
Class(/3/)............................... 0.43% 0.14% 0.57%
Fidelity--VIP III Growth & Income--Initial
Class(/3/)............................... 0.48% 0.12% 0.60%
Fidelity--VIP III Growth Opportunities--
Initial Class(/3/)....................... 0.58% 0.11% 0.69%
Fidelity--VIP III Mid Cap--Initial
Class(/4/)............................... 0.57% 0.40% 0.97%
</TABLE>

* The expenses herein are only applicable to premium payments allocated to
variable annuity payments.

7
<PAGE>

(/1/) There is currently no charge for any transfers, although PFL reserves the
right to charge $15 for each transfer in excess of six per year.

(/2/) The fee table information relating to the portfolios is for 1999 and was
provided to PFL by Fidelity Management & Research Company, and PFL has not
independently verified such information. Future expenses may be higher or
lower than these 1999 expenses.

(/3/) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds, or Fidelity Management &
Research Company on behalf of certain funds, have entered into
arrangements with their custodian, whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of each applicable
fund's expenses. The total operating expenses presented in the table are
shown without these reductions. With these reductions, the total operating
expenses presented in the table would have been: 0.56%--VIP Equity Income;
0.65%--VIP Growth; 0.87% VIP Overseas; 0.62%--VIP II Asset Manager;
0.70%--VIP II Asset Manager: Growth; 0.65%--VIP II Contrafund(R); 0.55%--
VIP III Balanced; 0.68%--VIP III Growth Opportunities; and 0.59%--VIP III
Growth & Income.

(/4/) Fidelity Management & Research Company agreed to reimburse a portion of
Index 500 Portfolio's and Mid Cap Portfolio's expenses during the period.
The expenses presented in the table are shown with this reimbursement.
Without this reimbursement, the Portfolios' management fee, other expenses
and total expenses would have been: 0.24%, 0.10%, 0.34%--Index 500 and
0.57%, 2.77% and 3.34%--Mid Cap, respectively.

8
<PAGE>

EXAMPLES

The following examples indicate the expenses you would pay in various
situations, based on actual portfolio expenses for 1999, and the following
assumptions:

. a $1,000 investment (and, therefore, a 1.35% separate account charge);
. a 5.0% annual return on assets;
. monthly payments;
. a 3.5% AIR (the expenses using a 5% AIR will be no greater than with the 3.5%
AIR);
. there are no premium taxes;
. no optional payment guarantee rider is elected;
. there are no transfers;
. the entire premium is allocated to each subaccount; and
. the annuitant is a 65 year old male.

(Any different assumption(s)would result in different expenses.)
<TABLE>
<CAPTION>
30 Year Certain Only Annuity
--------------------------------------------------------------------
The contract is The contract
not surrendered is surrendered
--------------------------------------------------------------------
1 3 5 10 1 3 5 10
Subaccounts Year Years Years Years Year Years Years Years
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity--VIP Money
Market--
Initial Class.......... $15.93 $46.78 $ 79.21 $104.12 $85.93 $106.78 $116.21 $104.12
- ----------------------------------------------------------------------------------------
Fidelity--VIP High
Income--
Initial Class.......... $19.99 $58.45 $ 94.85 $129.10 $89.99 $118.45 $134.85 $129.10
- ----------------------------------------------------------------------------------------
Fidelity--VIP Equity-
Income--
Initial Class.......... $18.83 $55.14 $ 89.57 $122.04 $88.83 $115.14 $129.57 $122.04
- ----------------------------------------------------------------------------------------
Fidelity--VIP Growth--
Initial Class.......... $19.70 $57.62 $ 93.53 $127.34 $89.70 $117.62 $133.53 $127.34
- ----------------------------------------------------------------------------------------
Fidelity--VIP Overseas--
Initial Class.......... $22.10 $64.49 $104.44 $141.86 $92.10 $124.49 $144.44 $141.86
- ----------------------------------------------------------------------------------------
Fidelity--VIP II
Investment Grade Bond--
Initial Class.......... $18.54 $54.30 $ 88.24 $120.27 $88.54 $114.30 $128.24 $120.27
- ----------------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager--
Initial Class.......... $19.41 $56.80 $ 92.21 $125.58 $89.41 $116.80 $132.21 $125.58
- ----------------------------------------------------------------------------------------
Fidelity--VIP II Asset
Manager:
Growth--
Initial Class.......... $19.79 $57.90 $ 93.97 $127.92 $89.79 $117.90 $133.97 $127.92
- ----------------------------------------------------------------------------------------
Fidelity--VIP II Index
500--Initial Class..... $16.03 $47.06 $ 76.66 $104.73 $86.03 $107.06 $116.66 $104.73
- ----------------------------------------------------------------------------------------
Fidelity--VIP II
Contrafund(R)--
Initial Class.......... $20.18 $59.00 $ 95.73 $130.27 $90.18 $119.00 $135.73 $130.27
- ----------------------------------------------------------------------------------------
Fidelity--VIP III
Balanced--
Initial Class.......... $18.83 $55.14 $ 89.57 $122.04 $88.83 $115.14 $129.57 $122.04
- ----------------------------------------------------------------------------------------
Fidelity--VIP III Growth
& Income--
Initial Class.......... $19.12 $55.97 $ 90.89 $123.81 $89.12 $115.97 $130.89 $123.81
- ----------------------------------------------------------------------------------------
Fidelity--VIP III Growth
Opportunities--
Initial Class.......... $19.99 $58.45 $ 94.85 $129.10 $89.99 $118.45 $134.85 $129.10
- ----------------------------------------------------------------------------------------
Fidelity--VIP III Mid
Cap--Initial Class..... $22.67 $66.13 $107.03 $145.30 $92.67 $126.13 $147.03 $145.30
- ----------------------------------------------------------------------------------------
</TABLE>

9
<PAGE>

<TABLE>
<CAPTION>
Single Life Annuity with Emergency Cash SM
------------------------------------------------------------------
The contract is The contract is
not surrendered surrendered
- ---------------------------------------------------------------------------------------
1 3 5 10 1 3 5 10
Subaccounts Year Years Years Years Year Years Years Years
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity--VIP Money
Market--Initial Class.. $15.81 $45.61 $ 72.90 $ 97.63 $45.81 $55.61 $ 72.90 $ 97.63
- ---------------------------------------------------------------------------------------
Fidelity--VIP High
Income--Initial Class.. $19.84 $56.98 $ 90.73 $121.06 $49.84 $66.98 $ 90.73 $121.06
- ---------------------------------------------------------------------------------------
Fidelity--VIP Equity-
Income--Initial Class.. $18.69 $53.76 $ 85.69 $114.47 $48.69 $63.76 $ 85.69 $114.47
- ---------------------------------------------------------------------------------------
Fidelity--VIP Growth--
Initial Class.......... $19.55 $56.18 $ 89.49 $119.44 $49.55 $66.18 $ 89.49 $119.44
- ---------------------------------------------------------------------------------------
Fidelity--VIP Overseas--
Initial Class.......... $21.93 $62.88 $ 99.93 $133.10 $51.93 $72.88 $ 99.93 $133.10
- ---------------------------------------------------------------------------------------
Fidelity--VIP II
Investment Grade Bond--
Initial Class.......... $18.40 $52.95 $ 84.42 $112.80 $48.40 $62.95 $ 84.42 $112.80
- ---------------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager--
Initial Class.......... $19.26 $55.38 $ 88.23 $117.29 $49.26 $65.38 $ 88.23 $117.79
- ---------------------------------------------------------------------------------------
Fidelity--VIP II Asset
Manager:
Growth--Initial Class.. $19.65 $56.45 $ 89.91 $120.00 $49.65 $66.45 $ 89.91 $120.00
- ---------------------------------------------------------------------------------------
Fidelity--VIP II Index
500--Initial Class..... $15.91 $45.88 $ 73.33 $ 98.20 $45.91 $55.88 $ 73.33 $ 98.20
- ---------------------------------------------------------------------------------------
Fidelity--VIP II
Contrafund(R)--
Initial Class.......... $20.03 $57.53 $ 91.59 $122.19 $50.03 $67.53 $ 91.59 $122.19
- ---------------------------------------------------------------------------------------
Fidelity--VIP III
Balanced--Initial
Class.................. $18.69 $53.76 $ 85.69 $114.47 $48.69 $63.76 $ 85.69 $114.47
- ---------------------------------------------------------------------------------------
Fidelity--VIP III Growth
& Income--Initial
Class.................. $18.98 $54.57 $ 86.96 $116.13 $48.98 $64.57 $ 86.96 $116.13
- ---------------------------------------------------------------------------------------
Fidelity--VIP III Growth
Opportunities--
Initial Class.......... $19.84 $56.98 $ 90.73 $121.06 $49.84 $66.98 $ 90.73 $121.06
- ---------------------------------------------------------------------------------------
Fidelity--VIP III Mid
Cap--Initial Class..... $22.51 $64.48 $102.42 $136.33 $52.51 $74.48 $102.42 $136.33
- ---------------------------------------------------------------------------------------
</TABLE>
The above tables will assist you in understanding the costs and expenses of the
contract and the underlying funds that you will bear, directly or indirectly.
The expense table assumes that your entire premium is allocated to the separate
account; therefore, it reflects expenses of the separate account as well as the
underlying portfolios.

The tables do not reflect any deductions for taxes. Any applicable premium
taxes are deducted from the premium when you buy the contract.

The examples are not a representation of past or future expenses. Actual
expenses may be more or less than those shown.

Financial Information. Condensed financial information for the subaccounts is
in Appendix A to this prospectus.

10
<PAGE>

1. THE ANNUITY CONTRACT

This prospectus describes the PFL Immediate Income Builder. This is a single
premium immediate annuity contract offered by PFL Life Insurance Company.

An annuity is a contract between you, the owner, and an insurance company (in
this case PFL), where the insurance company promises to pay you an income in
the form of annuity payments. You choose the frequency of these payments and
the first annuity payment date.

You can use the contract to provide periodic payments over your lifetime or
some other specific period of time you select.

The contract is "fixed and variable" because you can allocate your premium
between fixed and variable annuity payments. The amount of the fixed annuity
payments will not vary and is guaranteed by PFL. The amount of the variable
annuity payments will vary depending on the investment performance of your
investment choices.

The contract is a "single premium" contract because you purchase it with a
single premium. You cannot pay additional premiums.

The contract is an "immediate" contract because the annuity payments generally
begin within 30 days and must begin within one year.

2. PURCHASE

Contract Issue Requirements

PFL will not issue a contract unless:

. PFL receives all information needed to issue the contract; and

. PFL receives your entire single premium payment.

Premium Payment

The minimum premium for a contract is $25,000. Amounts less than $25,000 may be
accepted with approval from our home office. You cannot make additional premium
payments.

We apply your premium to the contract within two business days after receipt
(at our Administrative and Service Office) of both the premium and all
necessary information.

If the information is incomplete, we will request the necessary information. If
the information is not provided within five days, we will return the premium
unless you tell us to keep it until the necessary information is completed.

The date we credit the premium and issue the contract is called the contract
issue date. On the contract issue date, we allocate the premium (net of any
premium tax deduction) as you specify in the order form.

You should make checks for your premium payment payable only to PFL Life
Insurance Company and send it to the Administrative and Service Office. Your
check must be honored in order for us to pay any associated payments and
benefits due under the contract.

Allocation of Premium Payment

We will invest the amount of your premium that you allocate to the
subaccount(s) on the contract issue date. You must allocate percentages that
are whole numbers, not fractions. Your allocations must equal 100%, and you
must allocate at least $25,000 to variable annuity payments.

Variable Annuity Units

The portion of your premium allocated to the subaccounts will be used to
purchase variable annuity units. We will determine the number of variable
annuity units based upon:
.the premium reduced by any premium taxes,
.the annuitant's age and sex (and the age and sex of the secondary annuitant,
if any),
.the payment option you choose,
.the frequency of payments you choose,
.the AIR you choose,
.the first payment date, and
.the variable annuity unit value of the subaccount(s) you initially select.

The number of variable annuity units allocated to each subaccount will change
if you transfer among the subaccounts, transfer from variable to fixed annuity
payments or receive cash through a surrender (if allowed). If you choose a
joint and survivor payment option and benefits are reduced due to the death of
one of the annuitants, the number of variable annuity units will be reduced at
that time. Additionally,

11
<PAGE>

with stabilized payments, your variable annuity units will be adjusted on each
contract anniversary.

3. ANNUITY PAYMENTS

Annuity Payment Dates

We provide annuity payments to the payee on each payment date. You select
either a monthly, quarterly, semiannual or annual payment frequency when you
purchase the contract. Payments will generally be made by electronic funds
transfer. Other disbursement options may be available, if we approve. The first
payment date is typically 30 days after we receive the entire single premium
and must be within one year of the contract issue date. All subsequent payment
dates will generally be on the same day of the month as the first payment date.

Payments Under the Contract

We usually make payments within seven days of the payment date or receipt of
all applicable written notices and/or proofs of death.

We will not pay interest on amounts represented by uncashed annuity payment
checks if the postal or other delivery service is unable to deliver checks to
the payee's address of record. Uncashed variable annuity payments will not
participate in the performance of the portfolios. The payee is responsible for
keeping us informed of their current address of record.

Stabilized Payments

You will receive variable annuity payments that are "stabilized" or held
constant during each contract year, unless you elect at the time of purchase to
receive non-stabilized variable annuity payments where each payment will go up
or down to reflect investment performance. With stabilized payments, your
payment amount will only go up or down to reflect investment performance on an
annual basis. Please note that stabilized payments do not include any amounts
allocated to fixed payments.

During the first contract year each stabilized payment 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 upcoming contract year.

See the Statement of Additional Information for a more detailed discussion of
stabilized payments and changes in the number of variable annuity units
credited to your contract and an illustration showing hypothetical changes in
the number of variable annuity units.

Variable or Combination Payments

You allocate your premium between fixed and variable payments under a payment
option when you buy the contract. You may choose all variable or a combination
of fixed and variable annuity payments.

Any portion of your premium allocated to a fixed payment option will always
remain allocated to fixed annuity payments. However, you may transfer from
variable annuity payments to fixed annuity payments at any time.

If you choose a combination of fixed and variable annuity payments, a portion
of your annuity payments will be fixed and a portion will vary. We will
guarantee the dollar amount of any fixed portion of each annuity payment;
however, the amount of the variable annuity payments will depend upon the
investment experience of the underlying portfolios and is not guaranteed.

Under some joint and survivor payment options, the annuity payments decrease
upon the death of the annuitant or secondary annuitant (as described for
payment options 5, 6, 8, and 9) whether they are fixed or variable.

Assumed Investment Return (AIR)

The assumed investment return you choose is used in the calculation of variable
annuity payments.

IF:
. the performance of the applicable subaccounts after all expenses is equal to
the AIR;
THEN:
. the variable annuity payments will remain constant.

IF:
. the performance of the subaccounts after all expenses exceeds the AIR;

12
<PAGE>

THEN:
. the variable annuity payments will increase.

IF:
. the performance of the subaccounts after all expenses is less than the AIR;
THEN:
. the variable annuity payments will decrease.

You choose either a 3.5% AIR or a 5% AIR.

IF:
. you choose a 5% AIR instead of a 3.5% AIR;
THEN:
. you will receive a higher initial payment; and
. payments will increase less during periods of good investment performance
(i.e., when investment performance exceeds the AIR) and decrease more during
periods of poor investment performance (i.e., when investment performance is
below the AIR).

IF:
. you choose a 3.5% AIR instead of a 5% AIR;
THEN:
. you will receive a lower initial payment; and
. payments will increase more during periods of good investment performance
(i.e., when investment performance exceeds the AIR) and decrease less during
periods of poor investment performance (i.e., when investment performance is
below the AIR).

See Appendix D for an illustration of the difference in the two AIRs.

Calculation of Variable Payments

The stabilized payment is calculated on your contract anniversary. The amount
of the payment is determined by taking the number of variable annuity units in
each subaccount and multiplying them by the variable annuity unit value of each
subaccount. The number of variable annuity units are adjusted to reflect the
year to date difference between stabilized payment and non-stabilized payments.
This calculation is performed for each subaccount and the sum of the
subaccounts will equal the amount of your stabilized variable annuity payment.

Non-stabilized payments are calculated monthly.

The variable annuity unit value in a particular subaccount on any valuation day
is equal to:

. the variable annuity unit value for that subaccount on the immediately
preceding valuation day; multiplied by
. the net investment factor for that subaccount for the valuation period;
multiplied by
. the daily factor for the valuation period.

The daily factor for the valuation period (the period of time beginning at the
close of business each valuation day and ending at the close of business on the
next valuation day) is a discount factor that reflects the AIR. Please refer to
the Statement of Additional Information.

The net investment factor used to calculate the variable annuity unit value for
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:
. the net asset value of a portfolio share held in that subaccount
determined as of the end of the current valuation period, plus
. the per share amount of any dividend or capital gain distributions
made by the portfolio for shares held in that subaccount if the ex-
dividend date occurs during the valuation period; plus or minus
. a per share credit or charge for any taxes reserved for, which we
determine to have resulted from the investment operation of the
subaccount.

(b) is the net asset value of a portfolio 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 and any
applicable rider charge (shown in the contract specifications section of
the contract).

13
<PAGE>

Payment Options

You select the payment option and the number of guaranteed years, if any. You
cannot change the payment option and guarantee period after we issue the
contract. Please note that generally you can only select one payment option. We
currently offer the options described below.

The dollar amount of each variable annuity payment will depend on the
investment performance of the portfolio(s) you select. The dollar amount will
also depend on the payment option you select (it may be different for each of
the various payment options). The number of annuity payments may depend on how
long the annuitant or a secondary annuitant, if any, lives. It is possible that
the sum of annuity payments may be less than the premium (except for option
10--Life Annuity with Premium Refund Payments).

1. Certain Only Annuity. This option provides annuity payments for a guaranteed
period (10-30 years). You choose the guaranteed period. If the annuitant dies
prior to the last guaranteed payment date, we will either:

. continue payments as they become due; or
. pay the present value of the remaining payments in a lump sum to the
beneficiary when we receive due proof of the annuitant's death.

If the lump sum death benefit is chosen and the payments under this option are
variable, the present value of the remaining payments is calculated as of the
date we receive written notice of the annuitant's death, using the AIR you
chose when the contract was issued. If the payments under this option are
fixed, the present value of the remaining guaranteed payments is calculated
using interest rates (determined by PFL) in effect on the date we receive due
proof of death.

No additional payments will be made under this option after all the guaranteed
payments have been made.

If you choose the Certain Only payment option and you have stabilized payments,
then your final stabilized payment will equal the supportable payment at that
time. Under this option, you can make full or partial surrenders from the
contract prior to the last payment date. The amount you surrender must be at
least $2,500. A partial surrender will reduce all future payments. A surrender
charge may apply and there may be tax consequences.

You should consult a tax advisor before requesting a full or partial surrender.

2. Single Life Annuity. This option provides annuity payments for the
annuitant's lifetime, no matter how long that may be. The final payment will be
the payment made immediately prior to the death of the annuitant. No additional
payments will be made after the annuitant dies.

With this option there is the risk that only one (or a few) annuity payment
will be made if the annuitant dies shortly after the payments begin.

No surrenders are permitted under this option.

3. Single Life Annuity with Period Certain. This option provides annuity
payments for a guaranteed period (5 to 30 years) or for the life of the
annuitant, whichever is later. The final annuity payment will be the later of
either the last guaranteed payment or the scheduled annuity payment immediately
prior to the annuitant's death. If the annuitant dies prior to the last
guaranteed payment date, we will make payments to the beneficiary when we
receive due proof of the annuitant's death. No additional payments will be made
if the annuitant dies after all guaranteed payments have been made.

No surrenders are permitted under this option.

4. 100% Joint and Survivor Life Annuity. This option provides annuity payments
for the annuitant and the secondary annuitant's lifetimes. After the death of
either the annuitant or the secondary annuitant, we will continue to provide
the full amount of annuity payments to the survivor. Annuity payments stop when
both the annuitant and the secondary annuitant die.

No surrenders are permitted under this option.

5. Joint and Survivor Life Annuity with Reduced Annuity Payments to the
Secondary Annuitant. This option is similar to option 4 above, except that
annuity payments are higher

14
<PAGE>

while both the annuitant and the secondary annuitant are living, and then are
lower if the annuitant dies before the secondary annuitant. The final annuity
payment will be the one made immediately before the last surviving annuitant's
death. No additional annuity payments will be made after the death of both
annuitants.

If the annuitant dies before the secondary annuitant, the amount of the fixed
annuity payments will be reduced to the percent you select: either 50%, 66.67%
or 75%. For variable annuity payments, the number of variable annuity units
will also be reduced to 50%, 66.67% or 75%.

If the secondary annuitant dies before the annuitant, we will continue to make
annuity payments as they are due, and the amount of the annuity payments will
not go down due to the death.

No surrenders are permitted under this option.

6. Joint and Last Survivor Life Annuity. This option provides annuity payments
for the annuitant's and secondary annuitant's lifetimes. Payments are higher
while both annuitants are living and decrease upon the death of either the
annuitant or the secondary annuitant. The final annuity payment will be the one
made immediately before the death of the last surviving annuitant. No
additional annuity payments will be made after the death of both annuitants.

Upon the first death, the amount of the fixed annuity payments will be reduced
to a percent you select: either 50%, 66.67% or 75%. For variable annuity
payments, the number of variable annuity units will also be reduced to 50%,
66.67% or 75%.

No surrenders are permitted under this option.

7. 100% Joint and Survivor Life Annuity with Period Certain. This option
provides annuity payments for a guaranteed period (5-30 years) or for the
annuitant's and secondary annuitant's lifetimes, whichever is later. The final
annuity payment will be the later of the last guaranteed payment or the annuity
payment made immediately prior to the last surviving annuitant's death. No
additional payments will be made if both annuitants die after all guaranteed
payments have been made.

If both annuitants die prior to the last guaranteed payment date, we will
continue to make guaranteed payments to the beneficiary as they become due for
the remainder of the guaranteed period.

No surrenders are permitted under this option.

8. Joint and Survivor Life Annuity with Period Certain and Reduced Annuity
Payments to the Secondary Annuitant. This option is similar to option 7 above,
except that annuity payments are higher while both the annuitant and the
secondary annuitant are living, and then are lower if the annuitant dies before
the secondary annuitant and after the guaranteed period. The final annuity
payment will be the later of the last guaranteed payment or the annuity payment
made immediately prior to the last surviving annuitant's death. No additional
payments will be made if both annuitants die after all guaranteed annuity
payments have been made.

If the annuitant dies before the secondary annuitant and after the guaranteed
period, the amount of the fixed annuity payments will be reduced to the percent
you select: either 50%, 66.67% or 75%. For variable annuity payments, the
number of variable annuity units will also be reduced to 50%, 66.67% or 75%.

If the secondary annuitant dies before the annuitant, we will continue to make
annuity payments as they are due, and the amount of the annuity payments will
not go down due to the death.

No surrenders are permitted under this option.

9. Joint and Last Survivor Life Annuity with Period Certain. This option
provides annuity payments for a guaranteed period (5-30 years) or for the
annuitant's and secondary annuitant's lifetimes, whichever is later. Payments
are higher while both annuitant(s) are living and decrease after the guarantee
period upon the death of either the annuitant or the secondary annuitant. The
final annuity payment will be the later of the last guaranteed payment or the
annuity payment made immediately prior to the last surviving annuitant's death.
No additional annuity payments will be made after the death of both annuitants.

15
<PAGE>

Upon the first death after the guaranteed period (or the end of the guaranteed
period if the first death occurred prior thereto), the amount of the fixed
annuity payments will be reduced to a percent you select: either 50%, 66.67% or
75%. For variable annuity payments, the number of variable annuity units will
also be reduced to 50%, 66.67% or 75%.

No surrenders are permitted under this option.

10. Life Annuity with Premium Refund Payment. This option provides annuity
payments for the annuitant's lifetime. The final annuity payment will be either
the payment made immediately prior to the annuitant's death or the premium
refund benefit.

We will pay the premium refund benefit to the beneficiary if, at the date of
the annuitant's death, the sum of all the annuity payments made is less than
the premium. The premium refund benefit will be the premium less the sum of the
previously distributed variable and fixed annuity payments.

No surrenders are permitted under this option.

11. Single Life Annuity with Emergency CashSM. This option provides annuity
payments for the annuitant's lifetime. You can only receive variable payments
under this option (not fixed). With the Life with Emergency CashSM feature, you
are able to surrender all or a portion of the Life with Emergency CashSM
benefit. The amount you surrender must be at least $2,500. We will provide you
with a Life with Emergency CashSM benefit schedule as a rider to the contract
that will assist you in estimating the amount you have available to surrender.
A partial surrender will reduce all future payments. A surrender charge may
apply and there may be tax consequences. The Life with Emergency CashSM benefit
will continue through age 100 of the annuitant.

You should consult a tax advisor before requesting a full or partial surrender.

The Life with Emergency CashSM benefit is also a death benefit that is paid
upon the death of the annuitant.

For qualified contracts the death benefit ceases at the date the annuitant
reaches the IRS age limitation (determined at the contract issue date).

12. Joint and Survivor Life Annuity with Emergency CashSM. This option provides
annuity payments to the annuitant and the secondary annuitant while both are
living. You can only receive variable payments under this option (not fixed).
After the death of either the annuitant or the secondary annuitant, we will
continue to provide the full amount of annuity payments to the survivor. With
the Life with Emergency CashSM feature, you are able to surrender all or a
portion of the Life with Emergency CashSM benefit. The amount you surrender
must be at least $2,500. We will provide you with a Life with Emergency CashSM
benefit schedule as a rider to the contract that will assist you in estimating
the amount you have available to surrender. A partial surrender will reduce all
future payments. A surrender charge may apply and there may be tax
consequences. The Life with Emergency CashSM benefit will continue through age
100 of the younger of the annuitant and the secondary annuitant.

You should consult a tax advisor before requesting a full or partial surrender.

The Life with Emergency CashSM benefit is also a death benefit that is paid
upon the death of the last annuitant.

For qualified contracts the death benefit ceases at the date of the IRS joint
age limitation (determined at the contract issue date.)

Other payment options may be made available.

PLEASE NOTE CAREFULLY THAT IF:

. you choose a Single Life Annuity, 100% Joint and Survivor Life Annuity,
Joint and Survivor Life Annuity with Reduced Annuity Payments to the
Secondary Annuitant, or Joint and Last Survivor Annuity; and

. the annuitant(s) dies before the due date of the second annuity payment;

THEN:

. we may make only the one payment.

Please also note that the federal income tax laws may limit your payment
options where the contract is used as a qualified contract.

16
<PAGE>

4. INVESTMENT CHOICES

The Separate Account

The separate account currently consists of fourteen subaccounts.

The Underlying Funds. The subaccounts invest in shares of the underlying funds.
Fidelity Management & Research Company (FMR) provides investment advice and
administrative services for all of the underlying funds offered through this
contract. The following subaccounts are currently offered:

VARIABLE INSURANCE PRODUCTS FUND (VIP):

Fidelity--VIP Money Market Portfolio-- Initial Class

Fidelity--VIP High Income Portfolio-- Initial Class

Fidelity--VIP Equity-Income Portfolio-- Initial Class

Fidelity--VIP Growth Portfolio--Initial Class

Fidelity--VIP Overseas Portfolio-- Initial Class

VARIABLE INSURANCE PRODUCTS FUND II (VIP II):

Fidelity--VIP II Investment Grade Bond Portfolio--Initial Class

Fidelity--VIP II Asset Manager Portfolio-- Initial Class

Fidelity--VIP II Asset Manager: Growth Portfolio--Initial Class

Fidelity--VIP II Index 500 Portfolio-- Initial Class

Fidelity--VIP II Contrafund(R) Portfolio-- Initial Class

VARIABLE INSURANCE PRODUCTS FUND III (VIP III):

Fidelity--VIP III Balanced Portfolio-- Initial Class

Fidelity--VIP III Growth & Income Portfolio-- Initial Class

Fidelity--VIP III Growth Opportunities Portfolio--Initial Class

Fidelity--VIP III Mid Cap Portfolio-- Initial Class

The general public may not purchase shares of these underlying funds. The
investment objectives and policies may be similar to other portfolios and
mutual funds managed by the same investment adviser or manager that are sold
directly to the public. You should not expect that the investment results of
the other portfolios and mutual funds will be comparable to those of the
underlying funds.

Detailed information about the underlying portfolios may be found in their
current prospectuses. This includes a description of each portfolio's
investment objectives, policies, and strategies. These prospectuses are
attached to this prospectus. You should read the prospectuses for each of the
underlying funds carefully before you invest. PFL may receive expense
reimbursements or other revenues from the funds or FMR. The amount of these
reimbursements or revenues, if any, may vary from fund to fund and may be based
on the amount of assets that PFL (or its affiliates) or the separate account
invests in the underlying funds. The investment objectives and policies of
certain portfolios are similar to the investment objectives and policies of
other portfolios that may be managed by the same investment advisor or manager.
The investment results of the portfolios, however, may differ from the results
of such other portfolios. There can be no assurance, and no representation is
made, that the investment results of any of the portfolios will be comparable
to the investment results of any other portfolio, even if the other portfolio
has the same investment advisor or manager.

See Appendix C for Additional Fund Information.

Transfers

Transfers are made using the variable annuity unit values for the end of the
day when we receive your request (that is, at the end of the valuation period
during which we receive your request).

We reserve the right to impose transfer charges.

The percent of the allocation in each subaccount will change over time with its
investment performance. You should periodically review the allocations in light
of market conditions and financial objectives.

17
<PAGE>

The contract you are purchasing was not designed for professional market timing
organizations or other persons that use programmed, large, or frequent
transfers. The use of such transfers may be disruptive to an underlying
portfolio. We reserve the right to reject any transfer request from any person,
if, in our judgment, an underlying portfolio would be unable to invest
effectively in accordance with its investment objectives and policies or would
otherwise be potentially adversely affected or if an underlying portfolio would
reject our purchase order.

Transfers Among Subaccounts. You may transfer amounts among subaccounts by
telephoning us or by providing us with a notice that you have signed or an
electronic notice that gives us the facts that we need.

Transfers From Variable to Fixed Payments. You may transfer all or a part of
the value of variable annuity payments to fixed annuity payments by telephoning
us or providing us with a notice you have signed or an electronic notice that
gives us the facts that we need. If you transfer from variable annuity payments
to fixed annuity payments, the payment option for fixed annuity payments will
be a continuation of the payment option under which the variable annuity
payments were being made, or a continuation of the fixed payment option that
may already exist.

For example, if you received variable annuity payments for two years under a 10
Year Certain and Life Option and elect to transfer to fixed annuity payments,
your payment option would be an 8 Year Certain and Life Option. If your
variable payment option is Life with Emergency CashSM, the fixed payment option
will be Life only, Life with Premium Refund or Life with Period Certain. The
period certain cannot be greater than the annuitant's remaining life expectancy
determined at the contract issue date. (Life with Emergency CashSM is only
available with variable annuity payments.)

Transfers from variable to fixed annuity payments may have tax consequences.
You should consult a tax advisor before making a transfer from variable to
fixed annuity payments.

You may not transfer from fixed to variable annuity payments.

5. EXPENSES

The following are all the charges made under the contract.

Separate Account Charge

A daily charge is deducted from the assets of each subaccount for our
assumption of mortality and expense risks, and our administration expenses. If
the amount you allocate to variable annuity payments is less than $50,000, a
daily mortality and expense risk charge will be deducted at an effective annual
rate of 1.20%; otherwise, the mortality and expense risk charge will be 1.00%.

An administration expense charge will also be deducted daily from the assets of
each subaccount at an effective annual rate of 0.15%. We guarantee that the
mortality and expense risk and administrative charges will never increase.

The mortality risk arises from our obligation to provide annuity income for
your life (and the life of the secondary annuitant, if any) no matter how long
that might be. The expense risk results from our obligation to cover the cost
of issuing and administering the contracts, no matter how long we may incur
such cost or how large that cost may be. The administration expense charge is
for the costs of administering the contracts. We may earn a profit from the
separate account charge (and expect to do so). Any profit can be used for
distribution expenses or for any other purpose.

Expenses of the Funds

The portfolios are charged management fees and incur operating expenses. The
effect of these fees and expenses is reflected in the performance of the
portfolios underlying the subaccounts, and therefore affects the variable
annuity unit value.

Premium Taxes

Some states charge a premium tax based on the amount of your premium. State
premium

18
<PAGE>

taxes currently range from 0% to 3.5%. In addition, some counties, cities or
towns may charge additional premium taxes. If you live in a place that has
premium taxes, any amount needed to provide for the applicable premium taxes is
deducted from your premium. We allocate the remainder of your premium to the
subaccounts and/or to the purchase of fixed annuity payments.

Other Taxes

We reserve the right to charge for certain taxes (other than premium taxes)
that may be incurred due to the contracts or the separate account. Currently,
we do not charge for any other taxes.

Surrender Charge

If you select the Certain Only payment option, you may surrender all or a
portion of your contract. For Certain Only variable annuity payments, the
following schedule shows the surrender charges that apply during the first nine
years:

<TABLE>
<CAPTION>
Number of Years Surrender Charge
Since (as a percentage
Premium Payment Date of premium)
- ------------------------------------------------------------------------------
<S> <C>
0-1 7%
- ------------------------------------------------------------------------------
1-2 7%
- ------------------------------------------------------------------------------
2-3 6%
- ------------------------------------------------------------------------------
3-4 6%
- ------------------------------------------------------------------------------
4-5 5%
- ------------------------------------------------------------------------------
5-6 4%
- ------------------------------------------------------------------------------
6-7 3%
- ------------------------------------------------------------------------------
7-8 2%
- ------------------------------------------------------------------------------
8-9 1%
- ------------------------------------------------------------------------------
9 or more 0%
</TABLE>

For Certain Only fixed annuity payments, there is a 2% surrender charge in the
calculation of the surrender value.

If you select the Life with Emergency CashSM payment option, you may also
surrender all or a portion of your contract. The following schedule shows the
surrender charges that apply during the first four years for the Life with
Emergency CashSM payment option:

For surrender charge purposes, premium is considered to be withdrawn before
earnings.

Transfer Fee

There is currently no charge for transfers. We reserve the right to charge $15
for each transfer over six per contract year (all transfers made simultaneously
will be treated as a single request).

Payment Guarantee Rider Fee

If you elect the initial payment guarantee, there is an annual rider fee of
1.25% of the daily net asset value.

If you elect the step-up payment guarantee, there is an annual rider fee of
2.50% of the daily net asset value.

6. TAXES

NOTE: PFL has prepared the following information on federal income taxes as a
general discussion of the subject. It is not intended as tax advice to any
individual. You should consult your own tax adviser about your own
circumstances. PFL has included an additional discussion regarding taxes in the
Statement of Additional Information.

Annuity Contracts in General

Generally you will not be taxed on your annuity contract until you take the
money out, either as a withdrawal or as an annuity payment. There are different
rules as to how you will be taxed depending on how you take the money out and
the type of contract--qualified or nonqualified.

19
<PAGE>

Qualified Contracts

Qualified contracts are issued in connection with Individual Retirement
Annuities (IRAs); Tax-Sheltered Annuities made available to employees of
certain public school systems and tax-exempt organizations (403(b) plans);
corporate Pension, Profit Sharing and H.R. 10 Plans.

Withdrawals and Annuity Payments. Generally, withdrawals and annuity payments
from qualified contracts are subject to federal income tax, and in most states,
to state income tax. The amount of any distribution attributable to after-tax
contributions is not subject to federal income tax.

The Internal Revenue Code also provides that withdrawals may be subject to a
penalty. The amount of the penalty is equal to 10% of the amount that is
includable in income. Some withdrawals will be exempt from the penalty. They
include any amounts:

. paid on or after the taxpayer reaches age 59 1/2;

. paid after the taxpayer dies;

. paid if the taxpayer becomes totally disabled (as that term is defined in
the Internal Revenue Code); or

. paid in a series of substantially equal payments made at least annually for
the life or life expectancy of the annuitant or joint annuitant.

There may be other reasons or circumstances that allow a withdrawal in your
particular situation to be exempt from the 10% penalty. You should consult your
legal counsel or tax adviser if you are considering purchasing or requesting
withdrawals from a qualified contract.

Nonqualified Contracts

If you purchase the contract as an individual and not under an individual
retirement annuity, 403(b) plan, 457 plan, or pension or profit sharing plan,
your contract is referred to as a nonqualified contract.

Annuity Payments. Generally, the annuity payments from a nonqualified contract
include both a return of premium and interest or investment gain. Accordingly,
only a portion of the annuity payments you receive will be includable in your
gross income and subject to federal income tax and state income tax, where
applicable. However, when the entire premium has been recovered or returned,
the full amount of any additional annuity payments is includable in gross
income.

Currently capital gains tax rates are not applicable to annuities.

If, after the contract issue date, annuity payments stop because an annuitant
died, any premium that has not been recovered is generally allowable as a
deduction for your last taxable year.

Withdrawals. The Internal Revenue Service currently takes the position that a
withdrawal (i.e., a partial surrender) from an immediate annuity contract is
fully taxable, with no change in the tax treatment of subsequent annuity
payments. If you surrender your contract, the amount that is taxable is the
excess of the amount distributed to you over the unrecovered investment in the
contract. You should consult a tax advisor before partially or fully
surrendering your contract.

. paid on or after the taxpayer reaches age 59 1/2;

. paid after an owner dies;

. paid if the taxpayer becomes totally disabled (as that term is defined in
the Internal Revenue Code);

. paid in a series of substantially equal payments made annually (or more
frequently) under a lifetime annuity; or

. which come from premium payments made prior to August 14, 1982.

Taxation of Death Benefit Proceeds

Amounts may be distributed from the contract because of the death of an owner
or the annuitant. Generally, such amounts are includable in the income of the
recipient:

. if distributed in a lump sum, these amounts are taxed in the same manner as
a full surrender; or

20
<PAGE>

. if distributed under an annuity payment option, these amounts are taxed in
the same manner as annuity payments.

For these purposes, the "investment in the contract" is not affected by the
owner's or annuitant's death. That is, the "investment in the contract" remains
generally the total premium payments, less amounts received, which were not
includable in gross income.

Transfers, Assignments or Exchanges of Contracts

A transfer of ownership or assignment of a contract, the designation of an
annuitant, payee or beneficiary who is not also the owner, the selection of
certain annuity commencement dates, or a change of annuitant, may result in
certain income or gift tax consequences to the owner that are beyond the scope
of this discussion. An owner contemplating any such transfer, assignment,
selection, or change should contact a competent tax adviser in respect to the
potential tax effects of such a transaction.

Possible Tax Law Changes

Although the likelihood of legislative changes is uncertain, there is always
the possibility that the tax treatment of the contract could change by
legislation or otherwise. You should consult a tax adviser with respect to
legal developments and their effect on the contract.

Diversification and Distribution Requirements

The Internal Revenue Code provides that the underlying investments for a
variable annuity must satisfy certain diversification requirements in order for
a nonqualified contract to be treated as an annuity contract. The contract must
also meet certain distribution requirements at the death of an owner in order
to be treated as an annuity contract. These diversification and distribution
requirements are discussed in the Statement of Additional Information. PFL may
modify the contract to attempt to maintain favorable tax treatment.

7. SURRENDERS

You may not surrender any portion of a contract unless either the Certain Only
or Life with Emergency CashSM payment option is selected. No other payment
option allows surrenders. The amount you surrender must be at least $2,500. A
partial surrender will reduce all future payments. Surrenders may have adverse
tax consequences. If you do not specify which investment option(s) the
surrender should come out of, then it will be taken out pro rata from your
existing allocations.You should consult with your tax advisor before requesting
a full or partial surrender.

Surrender of Certain Only Payment Option

For Certain Only fixed annuity payments the surrender value is 98% of the
present value of the remaining payments (using PFL's declared interest rates in
effect at the time of the surrender). For Certain Only variable annuity
payments, the surrender value is the present value of future payments less any
applicable surrender charge. For information concerning the calculation of the
present value of future payments, please refer to the Statement of Additional
Information.

Surrender of Life with Emergency CashSM Payment Option

If you select the Life with Emergency CashSM payment option, we will provide
you with a Life with Emergency CashSM benefit schedule that will allow you to
estimate how much is available to surrender (before deducting any applicable
surrender charge).

8. PERFORMANCE

Performance information for the subaccounts may appear in reports and
advertising. The performance information is based on adjusted historical
investment experience of the subaccounts and the underlying funds and does not
indicate or represent future performance.

Total returns of the subaccounts may be advertised. Total returns are based on
the overall dollar or percentage change in value of a hypothetical investment.
Total return quotations reflect changes in portfolio share price, the automatic
reinvestment by the separate account of all distributions and the deduction of
applicable annuity charges.

21
<PAGE>

A cumulative total return reflects performance over a stated period of time. An
average annual total return reflects the hypothetical annually compounded
return that would have produced the same cumulative total return if the
performance had been constant over the entire period. Because average annual
total returns tend to smooth out variations in a subaccount's returns, you
should recognize that they are not the same as actual year-by-year results.

Some subaccounts may also advertise yield. These measures reflect the income
generated by an investment in the subaccount over a specified period of time.
This income is annualized and shown as a percentage. Yields do not take into
account capital gains or losses.

The Fidelity--VIP Money Market Subaccount may advertise its current and
effective yield. Current yield reflects the income generated by an investment
in the subaccount over a seven day period. Effective yield is calculated in a
similar manner except that income earned is assumed to be reinvested. The
Fidelity--VIP II Investment Grade Bond and the Fidelity--VIP High Income
Subaccounts may advertise a 30 day yield which reflects the income generated by
an investment in the subaccount over a 30 day period.

Appendix B contains performance information that you may find useful. It is
divided into various parts, depending upon the type of performance information
shown. Future performance will vary and future results will not be the same as
the results shown.

9. DEATH BENEFIT

If the owner dies before the first annuity payment, the premium we receive
(plus or minus investment performance) will be paid as a death benefit. More
information on how we pay it is in the Statement of Additional Information.

If an owner, who may or may not also be an annuitant, dies on or after the
annuity starting date, we will pay the remaining portion of the annuity
payments due under the contract, if any, in the same manner and frequency (at
least as rapidly) as under the method of distribution used before such owner's
death.
Death Benefits under Payment Options 10, 11, and 12 will be paid in a lump sum.

If the deceased owner's surviving spouse is the sole successor owner, then on
such owner's death such surviving spouse may elect to become the sole owner
under the contract and to continue the contract as his or her own.

If a non-natural person is named as an owner, then the primary annuitant, as
defined in the Code, shall be treated as an owner solely for the purposes of
the distribution at death rules. The entire interest in the contract must be
distributed upon the annuitant's death, if the annuitant dies prior to the
first payment date.

If the deceased owner was also the annuitant, then the annuitant's beneficiary
is entitled to the proceeds described above in this section (unless the
deceased owner's surviving spouse is the sole successor owner). If no person is
named as the beneficiary, the owner's estate shall be deemed the beneficiary.

Note carefully. In instances where the owner's estate is deemed to be the
successor owner or beneficiary, it may be necessary to open a probate estate in
order to exercise ownership rights to, or receive death proceeds from, the
contract. If no probate estate is opened because the owner has precluded the
opening of a probate estate by means of a trust or other instrument, unless we
have received written notice of the trust as a successor owner or beneficiary
prior to the owner's death, that trust may not exercise ownership rights to, or
receive death proceeds from, the contract.

In all events, distributions upon the death of an owner will comply with
section 72(s) of the Code.

10. PAYMENT GUARANTEE RIDERS

You can only elect to purchase a payment guarantee at the time you purchase
your contract. The guarantees only apply to variable annuity payments. There is
an additional charge for these guarantees. If you do not purchase one of the
payment guarantees you will receive non-guaranteed stabilized payments unless
you elect otherwise.

The initial payment guarantee and the step-up payment guarantee do not
establish or guarantee the performance of any subaccount.

22
<PAGE>

Initial Payment Guarantee

With the initial payment guarantee, you receive stabilized payments that are
guaranteed to never be less than the initial payment (i.e., the guaranteed
payment).

Step-up Payment Guarantee

With the step-up payment guarantee, you receive stabilized payments that are
guaranteed to never decrease. On each contract anniversary, we allocate a
portion of any positive investment performance of the subaccounts to the
stabilized payment for the following year, and the remainder is used to
increase the number of variable annuity units. For information concerning the
annual calculation of the step-up payment amount, please refer to the Statement
of Additional Information.

Rider Fees

There is a charge for each of the initial payment guarantee rider and the step-
up payment guarantee rider. This 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 initial payment guarantee rider fee is equal to an annual rate of 1.25% of
the daily net asset value in the subaccounts.

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.

Other Terms and Conditions

You must purchase the initial payment guarantee or step-up payment guarantee
when you purchase your contract. You cannot add or delete either payment
guarantee after you purchase your contract.

The payment guarantees are only available with the 3.5% AIR.

Termination. Both the initial payment guarantee rider and the step-up payment
guarantee rider are irrevocable.

The initial payment guarantee benefit and the step-up payment guarantee benefit
may not be available in all states.

11. OTHER INFORMATION

PFL Life Insurance Company

PFL Life Insurance Company was incorporated under the laws of the State of Iowa
on April 19, 1961 as NN Investors Life Insurance Company, Inc. It sells life
and health insurance and annuity contracts. PFL is a wholly-owned indirect
subsidiary of AEGON USA, Inc. All of the stock of AEGON USA, Inc., is
indirectly owned by AEGON N.V. of The Netherlands, the securities of which are
publicly traded. AEGON N.V., a holding company, conducts its business through
subsidiary companies engaged primarily in the insurance business. PFL is
licensed in the District of Columbia, Guam, and in all states except New York.

All obligations arising under the contracts, including the promise to make
annuity payments, are general corporate obligations of PFL.

The Separate Account

PFL established a separate account, called the PFL Retirement Builder Variable
Annuity Account, under the laws of the State of Iowa on March 29, 1996. The
separate account receives and currently invests the premium payments under the
contracts that are allocated to it for investment only in shares of the
Variable Insurance Products Fund, the Variable Insurance Products Fund II, and
the Variable Insurance Products Fund III. Fidelity Management & Research
Company manages these funds.

The separate account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940. However, the SEC does not supervise
the management, the investment practices, or the policies of the separate
account or PFL. The obligations to pay the benefits due under the contract are
PFL's responsibility.

The assets of the separate account are held in PFL's name on behalf of the
separate account and belong to PFL. However, those assets that underlie the
contracts are not chargeable with liabilities arising out of any other business
PFL may conduct.

23
<PAGE>

Information about the separate account can be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. You may obtain information about the
operation of the public reference room by calling the Commission at 1-800-SEC-
0330. In addition, the SEC maintains a web site (http://www.sec.gov) that
contains other information regarding the separate account.

Voting Rights

PFL will vote all shares of the underlying funds in accordance with
instructions we receive from you and other owners that have voting interests in
the portfolios. We will send you and other owners written requests for
instructions on how to vote those shares. When we receive those instructions,
we will vote all of the shares in proportion to those instructions. If,
however, we determine that we are permitted to vote the shares in our own
right, we may do so.

Each person having a voting interest will receive proxy material, reports, and
other materials relating to the appropriate portfolio.

Distributor of the Contracts

AFSG Securities Corporation is the principal underwriter of the contracts. Like
PFL, it is an indirect wholly-owned subsidiary of AEGON USA, Inc. It is located
at 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001. AFSG Securities
Corporation is registered as a broker/dealer under the Securities Exchange Act
of 1934. It is a member of the National Association of Securities Dealers, Inc.
(NASD). It was incorporated in Pennsylvania in 1986.

Commissions of up to 6% of premium payments will be paid to broker/dealers who
sell the contracts under agreements with AFSG Securities Corporation. These
commissions are not deducted from premium payments. In addition, certain
production, persistency and managerial bonuses may be paid. PFL may also pay
compensation to banks and other financial institutions for their services in
connection with the sale and servicing of the contracts.

Variations in Contract Provisions

Certain provisions of the contracts may vary from the descriptions in this
prospectus in order to comply with different state laws. See your contract for
variations since any such state variations will be included in your contract,
riders or endorsements attached to your contract.

IMSA

PFL is a member of the Insurance Marketplace Standards Association (IMSA). IMSA
is an independent, voluntary organization of life insurance companies. It
promotes high ethical standards in the sales and advertising of individual life
insurance and annuity products. Companies must undergo a rigorous self and
independent assessment of their practices to become a member of IMSA. The IMSA
logo in our sales literature shows our ongoing commitment to these standards.

Delay of Payments

PFL may delay any payments from the separate account if:
. the New York Stock Exchange is closed other than for usual weekends or
holidays or trading on the Exchange is otherwise restricted; or
. an emergency exists as defined by the SEC or the SEC requires that trading
be restricted; or
. the SEC permits a delay for the protection of owners.

In addition, transfers of amounts from and within the subaccounts may be
deferred under these circumstances.

Pursuant to the requirements of certain state laws, we reserve the right to
defer fixed annuity payments for up to six months.

If a check has been submitted as the premium, we have the right to defer any
payments until the check has been honored.

24
<PAGE>

Legal Proceedings

There are no legal proceedings to which the separate account is a party or to
which the assets of the account are subject. PFL, like other life insurance
companies, is involved in lawsuits. In some class action and other lawsuits
involving other insurers, substantial damages have been sought and/or material
settlement payments have been made. Although the outcome of any litigation
cannot be predicted with certainty, PFL believes that at the present time there
are no pending or threatened lawsuits that are reasonably likely to have a
material adverse impact on the separate account or PFL.

Financial Statements

The financial statements of PFL and the subaccounts are in the Statement of
Additional Information.

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

Glossary of Terms
The Contract--General Provisions
Federal Tax Matters
Investment Experience
State Regulation of PFL
Administration
Records and Reports
Distribution of the Contracts
Other Products
Custody of Assets
Historical Performance Data
Legal Matters
Independent Auditors
Other Information
Financial Statements

For a free copy of the Statement of Additional Information please call us at
(800) 544-3152 or write us at: PFL Life Insurance Company, Financial Markets
Division, Variable Annuity Department, 4333 Edgewood Road N.E., P.O. Box 3183,
Cedar Rapids, Iowa, 52406-3183.

25
<PAGE>

APPENDIX A

CONDENSED FINANCIAL INFORMATION*

The equivalent accumulation unit values and the number of variable equivalent
accumulation units outstanding for each subaccount from the date of inception
are shown in the following tables.

The mortality and expense risk charge is 1.20% for allocations
of less than $50,000 to variable annuity payments.

(Total Separate Account Annual Expenses: 1.35%)

<TABLE>
<CAPTION>
Equivalent Equivalent Number of
Accumulation Unit Accumulation Unit Equivalent
Value Value Accumulation Units
at Beginning of Year at End of Year at End of Year
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity - VIP Money
Market - Initial Class
1999(/1/).............. $1.000000 $1.023113 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP High
Income - Initial Class
1999(/1/).............. $1.000000 $0.999130 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP Equity-
Income - Initial Class
1999(/1/).............. $1.000000 $0.975731 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP Growth -
Initial Class
1999(/1/)............. $1.000000 $1.269380 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP
Overseas -
Initial Class
1999(/1/).............. $1.000000 $1.381864 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Investment Grade Bond -
Initial Class
1999(/1/).............. $1.000000 $0.993693 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager - Initial Class
1999(/1/).............. $1.000000 $1.083777 38,851.309
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager: Growth - Initial
Class 1999(/1/)........ $1.000000 $1.115920 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP II Index
500 - Initial Class
1999(/1/).............. $1.000000 $1.125983 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Contrafund(R) -
Initial Class
1999(/1/).............. $1.000000 $1.167959 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Balanced - Initial
Class 1999(/1/)........ $1.000000 $1.009724 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth & Income -
Initial Class
1999(/1/).............. $1.000000 $1.048420 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth Opportunities -
Initial Class
1999(/1/)............. $1.000000 $1.013953 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP III Mid
Cap - Initial Class
1999(/1/).............. $1.000000 $1.379578 1,000.000
</TABLE>

(/1/) Period from May 28, 1999 through December 31, 1999.

* For financial reporting purposes, "Equivalent Accumulation Unit Value" and
"Equivalent Accumulation Units" are used. The Equivalent Accumulation Unit
Values and Equivalent Accumulation Units are not used to calculate annuity
payments nor can they be used to establish any other contract value.

A-1
<PAGE>

The mortality and expense risk charge is 1.20% for allocations of less than
$50,000 to variable annuity payments and the Initial Payment Guarantee Rider
Charge is 1.25%.

(Total Separate Account Annual Expenses: 2.60%)

<TABLE>
<CAPTION>
Equivalent Equivalent Number of
Accumulation Unit Accumulation Unit Equivalent
Value Value Accumulation Units
at Beginning of Year at End of Year at End of Year
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity - VIP Money
Market - Initial Class
1999(/1/).............. $1.000000 $1.004754 999.923
- -----------------------------------------------------------------------------------
Fidelity - VIP High
Income - Initial Class
1999(/1/).............. $1.000000 $1.034341 996.410
- -----------------------------------------------------------------------------------
Fidelity - VIP Equity-
Income - Initial Class
1999(/1/).............. $1.000000 $1.007286 997.715
- -----------------------------------------------------------------------------------
Fidelity - VIP Growth -
Initial Class
1999(/1/).............. $1.000000 $1.161263 987.907
- -----------------------------------------------------------------------------------
Fidelity - VIP
Overseas - Initial Class
1999(/1/).............. $1.000000 $1.188729 994.447
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Investment Grade Bond -
Initial Class
1999(/1/).............. $1.000000 $0.991851 997.619
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager - Initial Class
1999(/1/).............. $1.000000 $1.056482 994.982
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager: Growth -
Initial Class
1999(/1/).............. $1.000000 $1.078681 993.629
- -----------------------------------------------------------------------------------
Fidelity - VIP II Index
500 - Initial Class
1999(/1/).............. $1.000000 $1.081814 994.392
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Contrafund(R) -
Initial Class
1999(/1/).............. $1.000000 $1.136264 991.532
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Balanced - Initial Class
1999(/1/).............. $1.000000 $1.027391 994.301
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth & Income -
Initial Class
1999(/1/).............. $1.000000 $1.032944 995.891
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth Opportunities -
Initial Class
1999(/1/).............. $1.000000 $1.028354 994.305
- -----------------------------------------------------------------------------------
Fidelity - VIP III Mid
Cap - Initial Class
1999(/1/).............. $1.000000 $1.222348 992.145
</TABLE>

(/1/) Period from May 28, 1999 through December 31, 1999.

A-2
<PAGE>

The mortality and expense risk charge is 1.20% for allocations of less than
$50,000 to variable annuity payments and the Step-Up Payment Guarantee Rider
Charge is 2.50%

(Total Separate Account Annual Expenses: 3.85%)

<TABLE>
<CAPTION>
Equivalent Equivalent Number of
Accumulation Unit Accumulation Unit Equivalent
Value Value Accumulation Units
at Beginning of Year at End of Year at End of Year
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity - VIP Money
Market -
Initial Class
1999(/1/).............. $1.000000 $1.002831 999.957
- -----------------------------------------------------------------------------------
Fidelity - VIP High
Income -
Initial Class
1999(/1/).............. $1.000000 $1.032356 996.443
- -----------------------------------------------------------------------------------
Fidelity - VIP Equity-
Income -
Initial Class
1999(/1/).............. $1.000000 $1.005343 997.748
- -----------------------------------------------------------------------------------
Fidelity - VIP Growth -
Initial Class
1999(/1/).............. $1.000000 $1.159032 987.939
- -----------------------------------------------------------------------------------
Fidelity - VIP
Overseas -
Initial Class
1999(/1/).............. $1.000000 $1.186455 994.480
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Investment Grade Bond -
Initial Class
1999(/1/).............. $1.000000 $0.989942 997.653
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager - Initial Class
1999(/1/).............. $1.000000 $1.054451 995.015
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager: Growth -
Initial Class
1999(/1/).............. $1.000000 $1.076610 993.661
- -----------------------------------------------------------------------------------
Fidelity - VIP II Index
500 -
Initial Class
1999(/1/).............. $1.000000 $1.079734 994.425
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Contrafund(R) -
Initial Class
1999(/1/).............. $1.000000 $1.134083 991.565
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Balanced -
Initial Class
1999(/1/).............. $1.000000 $1.025415 994.333
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth & Income -
Initial Class
1999(/1/).............. $1.000000 $1.030959 995.924
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth Opportunities -
Initial Class
1999(/1/).............. $1.000000 $1.026377 994.337
- -----------------------------------------------------------------------------------
Fidelity - VIP III Mid
Cap -
Initial Class
1999(/1/).............. $1.000000 $1.220006 992.178
</TABLE>

(/1/Period)from May 28, 1999 through December 31, 1999.

A-3

<PAGE>

The mortality and expense risk charge is 1.00% for allocations
over $50,000 to variable annuity payments.

(Total Separate Account Annual Expenses: 1.15%)

<TABLE>
<CAPTION>
Equivalent Equivalent Number of
Accumulation Unit Accumulation Unit Equivalent
Value Value Accumulation Units
at Beginning of Year at End of Year at End of Year
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity - VIP Money
Market -
Initial Class
1999(/1/).............. $1.000000 $1.024315 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP High
Income -
Initial Class
1999(/1/).............. $1.000000 $1.000301 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP Equity-
Income -
Initial Class
1999(/1/).............. $1.000000 $0.976882 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP Growth -
Initial Class
1999(/1/).............. $1.000000 $1.270862 52,331.620
- -----------------------------------------------------------------------------------
Fidelity - VIP
Overseas -
Initial Class
1999(/1/).............. $1.000000 $1.383479 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Investment Grade Bond -
Initial Class
1999(/1/).............. $1.000000 $0.994859 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager - Initial Class
1999(/1/).............. $1.000000 $1.085052 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager: Growth -
Initial Class
1999(/1/).............. $1.000000 $1.117226 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP II Index
500 -
Initial Class
1999(/1/).............. $1.000000 $1.127296 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Contrafund(R) -
Initial Class
1999(/1/).............. $1.000000 $1.169328 54,855.535
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Balanced -
Initial Class
1999(/1/).............. $1.000000 $1.010912 56,869.953
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth & Income -
Initial Class
1999(/1/).............. $1.000000 $1.049654 55,552.517
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth Opportunities -
Initial Class
1999(/1/).............. $1.000000 $1.015147 1,000.000
- -----------------------------------------------------------------------------------
Fidelity - VIP III Mid
Cap -
Initial Class
1999(/1/).............. $1.000000 $1.381195 1,000.000
</TABLE>

(/1/Period)from May 28, 1999 through December 31, 1999.

A-4

<PAGE>

The mortality and expense risk charge is 1.00% for allocations over $50,000 to
variable annuity payments and the Initial Payment Guarantee Rider Charge is
1.25%.

(Total Separate Account Annual Expenses: 2.40%)

<TABLE>
<CAPTION>
Equivalent Equivalent Number of
Accumulation Unit Accumulation Unit Equivalent
Value Value Accumulation Units
at Beginning of Year at End of Year at End of Year
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity - VIP Money
Market -
Initial Class
1999(/1/).............. $1.000000 $1.005054 999.918
- -----------------------------------------------------------------------------------
Fidelity - VIP High
Income -
Initial Class
1999(/1/).............. $1.000000 $1.034665 996.405
- -----------------------------------------------------------------------------------
Fidelity - VIP Equity
Income -
Initial Class
1999(/1/).............. $1.000000 $1.007599 997.710
- -----------------------------------------------------------------------------------
Fidelity - VIP Growth -
Initial Class
1999(/1/).............. $1.000000 $1.161623 987.901
- -----------------------------------------------------------------------------------
Fidelity - VIP
Overseas -
Initial Class
1999(/1/).............. $1.000000 $1.189096 994.441
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Investment Grade Bond -
Initial Class
1999(/1/).............. $1.000000 $0.992161 997.614
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager -Initial Class
1999(/1/).............. $1.000000 $1.056810 994.976
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager: Growth -
Initial Class
1999(/1/).............. $1.000000 $1.079016 993.624
- -----------------------------------------------------------------------------------
Fidelity - VIP II Index
500 -
Initial Class
1999(/1/).............. $1.000000 $1.082150 994.387
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Contrafund(R) -
Initial Class
1999(/1/).............. $1.000000 $1.136618 991.526
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Balanced -
Initial Class
1999(/1/).............. $1.000000 $1.027713 994.295
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth & Income -
Initial Class
1999(/1/).............. $1.000000 $1.033269 995.885
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth Opportunities -
Initial Class
1999(/1/).............. $1.000000 $1.028673 994.300
- -----------------------------------------------------------------------------------
Fidelity - VIP III Mid
Cap -
Initial Class
1999(/1/).............. $1.000000 $1.222724 992.140
</TABLE>

(/1/Period)from May 28, 1999 through December 31, 1999.

A-5

<PAGE>

The mortality and expense risk charge is 1.00% for allocations over $50,000 to
variable annuity payments and the Step-Up Payment Guarantee Rider Charge is
2.50%.

(Total Separate Account Annual Expenses: 3.65%)

<TABLE>
<CAPTION>
Equivalent Equivalent Number of
Accumulation Unit Accumulation Unit Equivalent
Value Value Accumulation Units
at Beginning of Year at End of Year at End of Year
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity - VIP Money
Market -
Initial Class
1999(/1/).............. $1.000000 $1.003130 999.951
- -----------------------------------------------------------------------------------
Fidelity - VIP High
Income -
Initial Class
1999(/1/).............. $1.000000 $1.032670 996.438
- -----------------------------------------------------------------------------------
Fidelity - VIP Equity-
Income -
Initial Class
1999(/1/).............. $1.000000 $1.005651 997.743
- -----------------------------------------------------------------------------------
Fidelity - VIP Growth -
Initial Class
1999(/1/).............. $1.000000 $1.159391 987.934
- -----------------------------------------------------------------------------------
Fidelity - VIP
Overseas -
Initial Class
1999(/1/).............. $1.000000 $1.186816 994.475
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Investment Grade Bond -
Initial Class
1999(/1/).............. $1.000000 $0.990245 997.647
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager - Initial Class
1999(/1/).............. $1.000000 $1.054772 995.010
- -----------------------------------------------------------------------------------
Fidelity - VIP II Asset
Manager: Growth -
Initial Class
1999(/1/).............. $1.000000 $1.076939 993.657
- -----------------------------------------------------------------------------------
Fidelity - VIP II Index
500 -
Initial Class
1999(/1/).............. $1.000000 $1.080067 994.419
- -----------------------------------------------------------------------------------
Fidelity - VIP II
Contrafund(R) -
Initial Class
1999(/1/).............. $1.000000 $1.134431 991.560
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Balanced -
Initial Class
1999(/1/).............. $1.000000 $1.025731 994.328
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth & Income -
Initial Class
1999(/1/).............. $1.000000 $1.031275 995.919
- -----------------------------------------------------------------------------------
Fidelity - VIP III
Growth Opportunities -
Initial Class
1999(/1/).............. $1.000000 $1.026689 994.332
- -----------------------------------------------------------------------------------
Fidelity - VIP III Mid
Cap -
Initial Class
1999(/1/).............. $1.000000 $1.220375 992.173
</TABLE>

(/1/Period)from May 28, 1999 through December 31, 1999.

A-6

<PAGE>

APPENDIX B

HISTORICAL PERFORMANCE DATA

Standardized Performance Data

PFL may advertise historical yields and total returns for the subaccounts of
the separate account. These figures are based on historical earnings and are
calculated according to guidelines from the SEC. They do not indicate future
performance.

Fidelity--VIP Money Market Subaccount. The yield of the Fidelity--VIP Money
Market Subaccount for a contract refers to the annualized income generated by
an investment under a contract in the subaccount over a specified seven-day
period. The yield is calculated by assuming that the income generated for that
seven-day period is generated each seven-day period over a 52-week period and
is shown as a percentage of the investment. The effective yield is calculated
similarly but, when annualized, the income earned by an investment under a
contract in the subaccount is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of
this assumed reinvestment.

Other Subaccounts. The yield of a subaccount of the separate account (other
than the Fidelity--VIP Money Market Subaccount) for a contract refers to the
annualized income generated by an investment under a contract in the subaccount
over a specified 30-day period. The yield is calculated by assuming that the
income generated by the investment during that 30-day period is generated each
30-day period over a 12-month period and is shown as a percentage of the
investment.

The total return of a subaccount of the separate account refers to return
quotations assuming an investment under a contract has been held in the
subaccount for various periods of time including a 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. The total return quotations for a subaccount will
represent the average annual compounded rates of return that equate an initial
investment of $1,000 in the subaccount to the redemption value of that
investment as of the last day of each of the periods for which total return
quotations are provided.

The yield and total return calculations for a subaccount do not reflect the
effect of any premium taxes that may be applicable to a particular contract,
and they assume you do not elect one of the optional payment guarantee riders.
The yield calculations also do not reflect the effect of any surrender charge
that may be applicable to a particular contract. To the extent that any or all
of a premium tax and/or surrender charge is applicable to a particular
contract, the yield and/or total return of that contract will be reduced. For
additional information regarding yields and total returns calculated using the
standard formats briefly summarized above, please refer to the Statement of
Additional Information.

Based on the method of calculation described in the Statement of Additional
Information, the average annual total returns for periods from inception of the
subaccounts to December 31, 1999 are shown in Table 1 below. Total returns
shown reflect deductions for the mortality and expense risk fee (1.20%) and the
administrative charges (0.15%). Standard total return calculations will reflect
the effect of surrender charges that may be applicable to a particular period.

B-1
<PAGE>

TABLE 1
STANDARD AVERAGE ANNUAL TOTAL RETURNS

30 Year Certain Only Annuity
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Inception of
the
Subaccount (1)
Subaccount to 12/31/99
- --------------------------------------------------------------------------------
<S> <C>
Fidelity--VIP Money Market--Initial Class........................ (4.80%)
Fidelity--VIP High Income--Initial Class......................... (7.24%)
Fidelity--VIP Equity-Income--Initial Class....................... (9.53%)
Fidelity--VIP Growth--Initial Class.............................. 19.67%
Fidelity--VIP Overseas--Initial Class............................ 30.91%
Fidelity--VIP II Investment Grade Bond--Initial Class............ (7.74%)
Fidelity--VIP II Asset Manager--Initial Class.................... 1.22%
Fidelity--VIP II Asset Manager: Growth--Initial Class............ 4.42%
Fidelity--VIP II Index 500--Initial Class........................ 5.41%
Fidelity--VIP II Contrafund(R)--Initial Class.................... 9.55%
Fidelity--VIP III Balanced--Initial Class........................ (6.17%)
Fidelity--VIP III Growth & Income--Initial Class................. (2.30%)
Fidelity--VIP III Growth Opportunities--Initial Class............ (5.73%)
Fidelity--VIP III Mid Cap--Initial Class......................... 30.57%
</TABLE>

(/1/The)inception date for all of the subaccounts is May 28, 1999.

Non-Standardized Performance Data

In addition to the standard data discussed above, similar performance data for
other periods may also be shown.

PFL may also advertise or disclose average annual total return or other
performance data in non-standard formats for a subaccount of the separate
account. The non-standard performance data may assume that no surrender charge
is applicable, and may also make other assumptions such as the amount invested
in a subaccount, differences in time periods to be shown, or the effect of
partial withdrawals.

All non-standard performance data will be advertised only if the standard
performance data is also disclosed. For additional information regarding the
calculation of other performance data, please refer to the Statement of
Additional Information.

The non-standard average annual total return figures shown in Table 2 are based
on the assumption that the contract is not surrendered, and therefore the
surrender charge is not imposed. Also, Table 2 does not reflect the rider
charge for either optional payment guarantee.

B-2
<PAGE>

TABLE 2
NON-STANDARD AVERAGE ANNUAL TOTAL RETURNS
The contract can not be surrendered or is not surrendered
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Inception of
the
Subaccount (1)
Subaccount to 12/31/99
- --------------------------------------------------------------------------------
<S> <C>
Fidelity - VIP Money Market - Initial Class...................... 2.31%
Fidelity - VIP High Income - Initial Class....................... (0.09%)
Fidelity - VIP Equity-Income - Initial Class..................... (2.43%)
Fidelity - VIP Growth - Initial Class............................ 26.94%
Fidelity - VIP Overseas - Initial Class.......................... 38.19%
Fidelity - VIP II Investment Grade Bond - Initial Class.......... (0.63%)
Fidelity - VIP II Asset Manager - Initial Class.................. 8.38%
Fidelity - VIP II Asset Manager: Growth - Initial Class.......... 11.59%
Fidelity - VIP II Index 500 - Initial Class...................... 12.60%
Fidelity - VIP II Contrafund(R) - Initial Class.................. 16.80%
Fidelity - VIP III Balanced - Initial Class...................... 0.97%
Fidelity - VIP III Growth & Income - Initial Class............... 4.84%
Fidelity - VIP III Growth Opportunities - Initial Class.......... 1.40%
Fidelity - VIP III Mid Cap - Initial Class....................... 37.96%
</TABLE>

(/1/The)inception date for all of the subaccounts is May 28, 1999.

Adjusted Historical Performance Data

The following graphs show how your annuity payments can fluctuate based on past
investment performance (net of all charges) of the portfolios through December
31, 1999. The information presented includes periods prior to the inception
date of the subaccounts, and therefore, the graphs illustrate what annuity
payments might have been under a contract had one existed during the years
shown.

The graphs are based on the adjusted historical performance of the portfolios,
which means that the 1.35% separate account charge and the actual net expenses
of each portfolio for the year ended December 31, 1999, are reflected in the
graph for each portfolio. The graphs do not reflect any premium tax charge.

Each graph shows the effect that the portfolio's investment performance would
have had on the value of an annuity unit and, thus, the value of an annuity
payment if a contract with an AIR of 3.5%, providing an initial monthly annuity
payment of $500.00, was purchased on the date the portfolio commenced
operations. Each graph assumes that the entire premium of the hypothetical
contract was allocated to the subaccount being illustrated. Each graph also
assumes monthly variable payments (not stabilized payments) and that neither
optional payment guarantee was elected. Annuity payments increase for a given
month if the performance of the portfolio underlying the subaccounts, net of
all charges, for that month is higher than the AIR, and decreases for a given
month if the performance of the portfolio underlying the subaccounts, net of
all charges, for that month is lower than the AIR. The premium necessary for an
initial monthly annuity payment of $500.00 will vary depending on the age and
sex of the annuitant (and secondary annuitant, if any), the payment option and
the first annuity payment date. For example, suppose that a 65 year old male
who lives in a state that does not charge a premium tax wishes to purchase
$500.00 of an initial monthly variable annuity payment beginning on the
contract issue date with a life only payment option. If there is no secondary
annuitant, no guarantee period and he chooses a 3.5% AIR, the premium needed
would be $85,871.79. If the purchaser were female, the premium necessary would
be $95,427.35. This is because females have a longer life expectancy than
males.

B-3
<PAGE>

The monthly payments depicted in the graphs are not based on actual contracts.
They are based on adjusted historical performance results of the portfolios and
are not projections or indications of future results. PFL does not guarantee
and does not suggest that any subaccount or contract issued by PFL will
generate these or similar average monthly payments for any period of time. The
graphs are for illustration purposes only and do not represent future variable
annuity payments or future investment returns. Variable annuity payments under
a real contract may be more or less than those forming the basis for the
monthly payments shown in these graphs, if the actual returns of the portfolios
selected by you are different from the adjusted historical returns of the
portfolios. It is very likely that a portfolio's investment performance will
fluctuate over time; therefore, you can expect that your variable annuity
payments will fluctuate. The total amount of variable annuity payments
ultimately received will depend upon the payment option selected by you.

B-4
<PAGE>

FIDELITY--VIP MONEY MARKET PORTFOLIO--INITIAL CLASS

[MONEY MARKET PORTFOLIO PERFORMANCE CHART]

Chart Specifications:

. 3.5% AIR
. $500 initial monthly annuity payment

. Fund inception date--April 1, 1982

<TABLE>
<CAPTION>
Monthly Adjusted
Payment Historical Adjusted Historical Average
Amounts at End Annual Total Annual Total Return*
Year of Year Return* (Periods Ended 12/31/1999)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $666 4.46% 1 Year 3.77%
------------------------------------------------------------------------------
1996 $669 3.99% 5 Years 4.08%
------------------------------------------------------------------------------
1997 $673 4.10% 10 Years 3.88%
------------------------------------------------------------------------------
1998 $676 4.05% Since Inception 5.29%
------------------------------------------------------------------------------
1999 $678 3.77%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP Money Market Portfolio,
adjusted to reflect the 1.35% separate account charge.

B-5
<PAGE>

FIDELITY--VIP HIGH INCOME PORTFOLIO--INITIAL CLASS

[FLOW CHART APPEARS HERE]

Chart Specifications:

. 3.5% AIR
.$500 initial monthly annuity payment

.Fund inception date--September 19, 1985

<TABLE>
<CAPTION>
Monthly Adjusted
Payment Historical Adjusted Historical Average
Amounts at End Annual Total Annual Total Return*
Year of Year Return* (Periods Ended 12/31/1999)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $964 19.12% 1 Year 6.72%
-------------------------------------------------------------------------------
1996 $1,048 12.51% 5 Years 9.41%
-------------------------------------------------------------------------------
1997 $1,175 16.11% 10 Years 10.94%
-------------------------------------------------------------------------------
1998 $1,072 (5.62%) Since Inception 9.41%
-------------------------------------------------------------------------------
1999 $1,105 6.72%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP High Income Portfolio,
adjusted to reflect the 1.35% separate account charge.

B-6
<PAGE>

FIDELITY--VIP EQUITY-INCOME PORTFOLIO--INITIAL CLASS

[FLOW CHART APPEARS HERE]

Chart Specifications:

. 3.5% AIR
. $500 initial monthly annuity payment

. Fund inception date--October 9, 1986

<TABLE>
<CAPTION>
Monthly Adjusted
Payment Historical Adjusted Historical Average
Amounts at End Annual Total Annual Total Return*
Year of Year Return* (Periods Ended 12/31/1999)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $1,007 33.32% 1 Year 4.92%
-------------------------------------------------------------------------------
1996 $1,097 12.76% 5 Years 17.04%
-------------------------------------------------------------------------------
1997 $1,340 26.42% 10 Years 12.97%
-------------------------------------------------------------------------------
1998 $1,426 10.14% Since Inception 12.14%
-------------------------------------------------------------------------------
1999 $1,445 4.92%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP Equity-Income Portfolio,
adjusted to reflect the 1.35% separate account charge.

B-7
<PAGE>

FIDELITY--VIP GROWTH PORTFOLIO--INITIAL CLASS

[FLOW CHART APPEARS HERE]

Chart Specifications:

. 3.5% AIR
. $500 initial monthly annuity payment

. Fund inception date--October 9, 1986

<TABLE>
<CAPTION>
Monthly Adjusted
Payment Historical Adjusted Historical Average
Amounts at End Annual Total Annual Total Return*
Year of Year Return* (Periods Ended 12/31/1999)
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $1,137 33.59% 1 Year 35.61%
----------------------------------------------------------------------------------
1996 $1,243 13.18% 5 Years 28.03%
----------------------------------------------------------------------------------
1997 $1,463 21.85% 10 Years 18.35%
----------------------------------------------------------------------------------
1998 $1,946 37.66% Since Inception 17.06%
----------------------------------------------------------------------------------
1999 $2,550 35.61%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity - VIP Growth Portfolio,
adjusted to reflect the 1.35% separate account charge.

B-8
<PAGE>

FIDELITY--VIP OVERSEAS PORTFOLIO--INITIAL CLASS

[FLOW CHART APPEARS HERE]

Chart Specifications:

. 3.5% AIR
. $500 initial monthly annuity payment

. Fund inception date--January 28, 1987

<TABLE>
<CAPTION>
Monthly Adjusted Adjusted Historical
Payment Historical Average Annual Total
Amounts at End Annual Total Return* (Periods Ended
Year of Year Return* 12/31/1999)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $ 613 8.28% 1 Year 40.66%
---------------------------------------------------------------------------------------
1996 $ 661 11.64% 5 Years 15.81%
---------------------------------------------------------------------------------------
1997 $ 703 10.07% 10 Years 9.94%
---------------------------------------------------------------------------------------
1998 $ 756 11.30% Since Inception 9.42%
---------------------------------------------------------------------------------------
1999 $1,027 40.66%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP Overseas Portfolio,
adjusted to reflect the 1.35% separate account charge.

B-9
<PAGE>

FIDELITY--VIP II INVESTMENT GRADE BOND PORTFOLIO--INITIAL CLASS

[INVESTMENT GRADE BOND PORTFOLIO PERFORMANCE CHART]

Chart Specifications:

.3.5% AIR
.$500 initial monthly annuity payment

.Fund inception date--December 5, 1988

<TABLE>
<CAPTION>
Monthly Adjusted
Payment Historical Adjusted Historical Average
Amounts at End Annual Total Annual Total Return* (Periods
Year of Year Return* Ended 12/31/1999)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $653 15.77% 1 Year (2.37%)
-----------------------------------------------------------------------------
1996 $642 1.80% 5 Years 5.86%
-----------------------------------------------------------------------------
1997 $667 7.61% 10 Years 5.76%
-----------------------------------------------------------------------------
1998 $693 7.40% Since Inception 6.03%
-----------------------------------------------------------------------------
1999 $653 (2.37%)
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP II Investment Grade Bond
Portfolio, adjusted to reflect the 1.35% separate account charge.

B-10
<PAGE>

FIDELITY--VIP II ASSET MANAGER PORTFOLIO--INITIAL CLASS

[ASSET MANAGER PORTFOLIO PERFORMANCE CHART]

Chart Specifications:

. 3.5% AIR
. $500 initial monthly annuity payment

. Fund inception date--September 6, 1989

<TABLE>
<CAPTION>
Monthly Adjusted
Payment Historical Adjusted Historical Average
Amounts at End Annual Total Annual Total Return*
Year of Year Return* (Periods Ended 12/31/1999)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $ 725 15.41% 1 Year 9.61%
-------------------------------------------------------------------------------
1996 $ 792 13.08% 5 Years 14.09%
-------------------------------------------------------------------------------
1997 $ 911 19.06% 10 Years 11.64%
-------------------------------------------------------------------------------
1998 $ 999 13.52% Since Inception 11.30%
-------------------------------------------------------------------------------
1999 $1,058 9.61%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP II Asset Manager
Portfolio, adjusted to reflect the 1.35% separate account charge.

B-11
<PAGE>

FIDELITY--VIP II ASSET MANAGER: GROWTH PORTFOLIO--INITIAL CLASS

[ASSET MANAGER GROWTH PORTFOLIO PERFORMANCE CHART]

Chart Specifications:

. 3.5% AIR
. $500 initial monthly annuity payment

. Fund inception date--January 3, 1995

<TABLE>
<CAPTION>
Monthly Adjusted
Payment Historical Adjusted Historical Average
Amounts at End Annual Total Annual Total Return*
Year of Year Return* (Periods Ended 12/31/1999)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $587 N/A 1 Year 13.72%
-------------------------------------------------------------------------------
1996 $671 18.45% 5 Years N/A
-------------------------------------------------------------------------------
1997 $801 23.42% 10 Years N/A
-------------------------------------------------------------------------------
1998 $897 16.01% Since Inception 18.57%
-------------------------------------------------------------------------------
1999 $986 13.72%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP II Asset Manager: Growth
Portfolio, adjusted to reflect the 1.35% separate account charge.

B-12
<PAGE>

FIDELITY--VIP II INDEX 500 PORTFOLIO--INITIAL CLASS

[INDEX 500 PORTFOLIO PERFORMANCE CHART]

Chart Specifications:

. 3.5% AIR
. $500 initial monthly annuity payment

. Fund inception date--August 27, 1992

<TABLE>
<CAPTION>
Monthly Adjusted
Payment Historical Adjusted Historical Average
Amounts at End Annual Total Annual Total Return*
Year of Year Return* (Periods Ended 12/31/1999)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $ 689 35.40% 1 Year 18.91%
-------------------------------------------------------------------------------
1996 $ 806 21.09% 5 Years 26.47%
-------------------------------------------------------------------------------
1997 $1,021 31.09% 10 Years N/A
-------------------------------------------------------------------------------
1998 $1,249 26.62% Since Inception 19.47%
-------------------------------------------------------------------------------
1999 $1,435 18.91%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP II Index 500 Portfolio,
adjusted to reflect the 1.35% separate account charge.

B-13
<PAGE>

FIDELITY--VIP II CONTRAFUND(R) PORTFOLIO--INITIAL CLASS

[CONTRAFUND PORTFOLIO PERFORMANCE CHART]

Chart Specifications:

. 3.5% AIR
.$500 initial monthly annuity payment

.Fund inception date--January 3, 1995

<TABLE>
<CAPTION>
Adjusted Historical
Monthly Adjusted Average Annual
Payment Historical Total Return*
Amounts at End Annual Total (Periods Ended 12/31/1999)
Year of Year Return*
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $ 666 N/A 1 Year 22.06%
---------------------------------------------------------------------------------------
1996 $ 770 19.61% 5 Years N/A
---------------------------------------------------------------------------------------
1997 $ 912 22.51% 10 Years N/A
---------------------------------------------------------------------------------------
1998 $1,130 28.27% Since Inception 26.05%
---------------------------------------------------------------------------------------
1999 $1,338 22.60%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP II Contrafund(R)
Portfolio, adjusted to reflect the 1.35% separate account charge.

B-14
<PAGE>

FIDELITY--VIP III BALANCED PORTFOLIO--INITIAL CLASS

[BALANCED PORTFOLIO PERFORMANCE CHART]

Chart Specifications:

. 3.5% AIR

. $500 initial monthly annuity payment

. Fund inception date--January 3, 1995

<TABLE>
<CAPTION>
Monthly Adjusted
Payment Historical Adjusted Historical Average
Amounts at End Annual Total Annual Total Return*
Year of Year Return* (Periods Ended 12/31/1999)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $543 N/A 1 Year 3.15%
------------------------------------------------------------------------------
1996 $569 8.51% 5 Years N/A
------------------------------------------------------------------------------
1997 $663 20.57% 10 Years N/A
------------------------------------------------------------------------------
1998 $744 16.08% Since Inception 12.00%
------------------------------------------------------------------------------
1999 $742 3.15%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP III Balanced Portfolio,
adjusted to reflect the 1.35% separate account charge.

B-15
<PAGE>

FIDELITY--VIP III GROWTH & INCOME PORTFOLIO--INITIAL CLASS

[GROWTH & INCOME PORTFOLIO PERFORMANCE CHART]

Chart Specifications:

. 3.5% AIR
. $500 initial monthly annuity payment

. Fund inception date--December 31, 1996

<TABLE>
<CAPTION>
Monthly Adjusted Adjusted Historical
Payment Historical Average Annual Total
Amounts at End Annual Total Return* (Periods Ended
Year of Year Return* 12/31/1999)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 N/A N/A 1 Year 7.71%
---------------------------------------------------------------------------------------
1996 $500 N/A 5 Years N/A
---------------------------------------------------------------------------------------
1997 $614 27.10% 10 Years N/A
---------------------------------------------------------------------------------------
1998 $759 27.88% Since Inception 20.52%
---------------------------------------------------------------------------------------
1999 $790 7.71%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP III Growth & Income
Portfolio, adjusted to reflect the 1.35% separate account charge.

B-16
<PAGE>

FIDELITY--VIP III GROWTH OPPORTUNITIES PORTFOLIO--INITIAL CLASS

[GROWTH OPPORTUNITIES PORTFOLIO PERFORMANCE CHART]

Chart Specifications:

.3.5% AIR
.$500 initial monthly annuity payment

.Fund inception date--January 3, 1995

<TABLE>
<CAPTION>
Monthly Adjusted
Payment Historical Adjusted Historical Average
Amounts at End Annual Total Annual Total Return*
Year of Year Return* (Periods Ended 12/31/1999)
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $ 632 N/A 1 Year 2.88%
-----------------------------------------------------------------------------------
1996 $ 713 16.70% 5 Years N/A
-----------------------------------------------------------------------------------
1997 $ 883 28.24% 10 Years N/A
-----------------------------------------------------------------------------------
1998 $1,049 22.97% Since Inception 19.91%
-----------------------------------------------------------------------------------
1999 $1,043 2.88%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP III Growth Opportunities
Portfolio, adjusted to reflect the 1.35% separate account charge.

B-17
<PAGE>

FIDELITY--VIP III MID CAP PORTFOLIO--INITIAL CLASS

[MIDCAP PORTFOLIO PERFORMANCE CHART]

Chart Specifications:

.3.5% AIR
.$500 initial monthly annuity payment

.Fund inception date--December 28, 1998

<TABLE>
<CAPTION>
Monthly Adjusted Adjusted Historical
Payment Historical Average Annual Total
Amounts at End Annual Total Return* (Periods Ended
Year of Year Return* 12/31/1999)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 N/A N/A 1 Year 46.06%
---------------------------------------------------------------------------------------
1996 N/A N/A 5 Years N/A
---------------------------------------------------------------------------------------
1997 N/A N/A 10 Years N/A
---------------------------------------------------------------------------------------
1998 $515 N/A Since Inception 51.09%
---------------------------------------------------------------------------------------
1999 $732 47.06%
</TABLE>

* Historical returns for periods prior to the subaccount inception date (May
28, 1999) are total returns for the Fidelity--VIP III Mid Cap Portfolio,
adjusted to reflect the 1.35% separate account charge.

B-18
<PAGE>

APPENDIX C

ADDITIONAL FUND INFORMATION

Fidelity Management & Research Company (FMR) is the investment advisor for the
underlying funds. FMR is a registered investment advisor under the Investment
Advisors Act of 1940. FMR is the original Fidelity company and was founded in
1946. It provides numerous mutual funds and other clients with investment
research and portfolio management services. It maintains a large staff of
experienced investment personnel and a full complement of related support
facilities. FMR charges the portfolios an investment management fee. These fees
are part of the portfolios' operating expenses. See the attached prospectuses
for the underlying funds for discussions of the Underlying funds' expenses.

There is no assurance that any of the portfolios will achieve its investment
objective.

PFL may receive expense reimbursements or other revenues from the funds or FMR.
The amount of these reimbursements or revenues, if any, may be based on the
amount of assets that PFL (or its affiliates) or the separate account invests
in the underlying funds.

The underlying funds' prospectuses should be read carefully before any decision
is made concerning the allocation of the premium to a particular subaccount.

An investment in the separate account, or in any portfolio, including the
Fidelity--VIP Money Market Portfolio, is not insured or guaranteed by the U.S.
government or any government agency.

The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment advisor or manager. The investment results of the
portfolios, however, may differ from the results of such other portfolios.
There can be no assurance, and no representation is made, that the investment
results of any of the portfolios will be comparable to the investment results
of any other portfolio, even if the other portfolio has the same investment
advisor or manager.

Addition, Deletion, or Substitution of Investments. We cannot and do not
- --------------------------------------------------
guarantee that any of the subaccounts will always be available to receive
premium allocations or transfers. We retain the right, subject to any
applicable law, to make certain changes in the separate account and its
investments. We reserve the right to eliminate the shares of any portfolio held
by a subaccount and to substitute shares of another portfolio of the funds or
of another registered open-end management investment company for the shares of
any portfolio, if the shares of the portfolio are no longer available for
investment or, if in our judgment, investment in any portfolio would be
inappropriate in view of the purposes of the separate account. To the extent
required by the 1940 Act, substitutions of shares attributable to an owner's
interest in a subaccount will not be made without prior notice to the owner and
the prior approval of the SEC. Nothing contained herein shall prevent the
separate account from purchasing other securities for other series or classes
of variable annuity contracts or from effecting an exchange between series or
classes of variable annuity contracts on the basis of requests made by owners.

New subaccounts may be established when, in our sole discretion, marketing,
tax, investment or other conditions warrant. Any new subaccounts may be made
available to existing owners on a basis to be determined by us. Each additional
subaccount will purchase shares in a mutual fund portfolio or other investment
vehicle. We may also eliminate one or more subaccounts if, in our sole
discretion, marketing, tax, investment or other conditions warrant such change.
In the event any subaccount is eliminated, we will notify owners and request a
reallocation of the amounts invested in the eliminated subaccount. If no such
reallocation is provided by the owner, we will reinvest the amounts invested in

C-1
<PAGE>

the eliminated subaccount in the subaccount that invests in the Money Market
Portfolio (or in a similar portfolio of money market instruments) or in another
subaccount, if appropriate.

In the event of any such substitution or change, we may, by appropriate
endorsement, make such changes in the contracts as may be necessary or
appropriate to reflect such substitution or change. Furthermore, if deemed to
be in the best interests of persons having voting rights under the contracts,
the separate account may be:

. operated as a management company under the 1940 Act or any other form
permitted by law,

. deregistered under the 1940 Act in the event such registration is no longer
required, or

. combined with one or more other separate accounts.

To the extent permitted by applicable law, we also may:

. transfer the assets of the separate account associated with the contracts to
another account or accounts,

. restrict or eliminate any voting rights of owners or other persons who have
voting rights as to the separate account,

. create new separate accounts,

. add new subaccounts to or remove existing subaccounts from the separate
account or combine subaccounts, or

. add new underlying funds, or substitute a new fund for an existing fund.

Resolving Material Conflicts. The underlying funds are available to separate
- ----------------------------
accounts offering variable annuity and variable life products of other
participating insurance companies and qualified retirement plans, as well as to
the separate account and other separate accounts we establish. Although we do
not anticipate any disadvantages to this, there is a possibility that a
material conflict may arise between the interest of the separate account and
one or more of the other separate accounts participating in an underlying fund.
A conflict may occur due to a change in law affecting the operations of
variable life insurance and variable annuity separate accounts, differences in
the voting instructions we receive and instructions received by other
companies, or some other reason. In the event of a conflict, it is possible
that the separate account might be required to withdraw its investment in the
underlying funds. In the event of any conflict, we will take any steps
necessary to protect owners, annuitants, secondary annuitants and
beneficiaries.

C-2
<PAGE>

APPENDIX D

ILLUSTRATIONS OF ANNUITY PAYMENT VALUES

The following graphs have been prepared to show how different variables affect
your variable annuity payments over time. The graphs incorporate hypothetical
rates of return and PFL does not guarantee that you will earn these returns for
any one year or any sustained period of time. The graphs are for illustrative
purposes only and do not represent past or future investment returns.

Your variable annuity payment may be more or less than the income shown if the
actual returns of the subaccounts are different than those illustrated. Since
it is very likely that your investment returns will fluctuate over time, you
can expect that the amount of your annuity payment will also fluctuate. The
total amount of annuity payments ultimately received will, in addition to the
investment performance of the subaccounts, also depend on how long you live and
whether you choose an optional payment guarantee rider. The graph assumes no
optional payment guarantee rider was selected.

Another factor which determines the amount of your variable annuity payment is
the assumed investment return (AIR). Annuity payments will increase from one
variable annuity payment calculation date to the next if the performance of the
portfolio underlying the subaccounts, net of all charges, is greater than the
AIR and will decrease if the performance of the portfolio underlying the
subaccounts, net of all charges, is less than the AIR.

The "Hypothetical Illustration" graph below illustrates differences in monthly
variable annuity payments assuming different investment returns. The graph
assumes a single premium of $46,627.09; the entire premium was allocated to
variable annuity payments; the AIR is 3.5%; the payment option is Single Life
Annuity; a 81 year old male, and separate account charges of 1.35% and average
portfolio expenses of 0.63%. This results in the receipt of an initial annuity
payment in the amount of $500. The graph illustrates gross returns of 0.00%,
6.00%, and 10.00% (net returns after expenses are (1.98)%, 4.02%, and 8.02%,
respectively).

D-1
<PAGE>

[GRAPH]

[PLOT POINTS TO COME]

Monthly Payments Assuming Different Gross Portfolio Returns
<TABLE>
--------------------------------------------------------------------------------------------
<CAPTION>
Gross Portfolio Returns*
--------------------------------------------------------
Monthly Payment at the
End of Contract Year 0.0% 6.0% 10.0%
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assumed First Monthly Payment $500 $500 $500
1 $474 $503 $522
2 $448 $505 $545
3 $425 $508 $568
4 $402 $510 $593
5 $381 $513 $619
6 $361 $515 $646
7 $342 $518 $674
8 $324 $520 $704
9 $306 $523 $735
10 $290 $526 $767
11 $275 $528 $800
12 $260 $531 $835
13 $247 $534 $872
14 $233 $536 $910
15 $221 $539 $949
16 $209 $542 $991
17 $198 $544 $1,034
18 $188 $547 $1,079
19 $178 $550 $1,126
20 $168 $553 $1,176
</TABLE>

* The corresponding net returns are (1.98)%, 4.02%, and 8.02%.

D-2
<PAGE>

The "Monthly Payment Amounts with Different AIRs" graph below illustrates the
differences in variable annuity payments between selecting the 3.5% and 5% AIR.
The graph assumes a single premium of $46,627.09; the entire premium was
allocated to variable annuity payments; the payment option is a single Life
Annuity; 79 year old male; separate account charges of 1.35%; average portfolio
expenses of 0.63%; variable payments (not stabilized payments); no optional
payment guarantee rider; and an annual return of the portfolios, after all
expenses of 6%. Monthly variable annuity payments are shown with the 3.5% AIR
and the 5% AIR.

Immediate Income Builder

[GRAPH]

D-3
<PAGE>

Hypothetical Illustration

Monthly Payments Assuming Different AIRs
(Net Portfolio Return = 6%, Gross Portfolio Return = 7.98%)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIR
--------------------------------------------------
Monthly Payment at the End of Year 3.5% 5%
------------------------------------------------------------------------------------------
<S> <C> <C>
Assumed First Monthly Payment $500 $545
1 $512 $550
2 $524 $555
3 $537 $560
4 $550 $566
5 $563 $571
6 $577 $576
7 $591 $582
8 $605 $587
9 $620 $593
10 $635 $599
11 $650 $604
12 $666 $610
13 $682 $616
14 $698 $622
15 $715 $628
16 $733 $634
17 $750 $640
18 $768 $646
19 $787 $652
20 $806 $658
</TABLE>

The annuity payment amounts shown reflect the deduction of all fees and
expenses. Actual fees and expenses under the contract may be higher or
lower, will vary from year to year, and will depend on how you allocate
among the portfolios. The separate account charge is assumed to be at an
annual rate of 1.35% of the average daily net assets.

Upon request, we will furnish a customized illustration based on your
individual circumstances and choice of annuity options.

D-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 Builder Annuity Contract
offered by PFL Life Insurance Company. You may obtain a copy of the prospectus
dated May 1, 2000, 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 for the underlying
portfolios.

Dated: May 1, 2000

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................................................................... 6
Proof of Death.......................................................... 6
Proof of Survival....................................................... 6
Death Before First Payment Date......................................... 6
Protection of Proceeds.................................................. 6
1035 Exchanges.......................................................... 6
Present Value of Future Payments........................................ 7
Stabilized Payments..................................................... 7
Optional Payment Guarantee Riders....................................... 8
Adjustments to Guaranteed Payment Under Optional Payment Guarantee
Riders................................................................. 8
Calculation of New Stabilized Payment Under Step-up Payment Guarantee... 9
FEDERAL TAX MATTERS....................................................... 9
Tax Status of the Contracts............................................. 9
Taxation of PFL......................................................... 10
ANNUITY UNIT VALUE AND VARIABLE ANNUITY PAYMENTS.......................... 10
Annuity Unit Value and Annuity Payment Rates............................ 10
STATE REGULATION OF PFL................................................... 13
ADMINISTRATION............................................................ 13
RECORDS AND REPORTS....................................................... 13
DISTRIBUTION OF THE CONTRACTS............................................. 13
OTHER PRODUCTS............................................................ 13
CUSTODY OF ASSETS......................................................... 13
HISTORICAL PERFORMANCE DATA............................................... 14
Money Market Yields..................................................... 14
Other Subaccount Yields................................................. 14
Total Returns........................................................... 15
Other Performance Data.................................................. 15
Adjusted Hypothetical Performance Data.................................. 16
LEGAL MATTERS............................................................. 16
INDEPENDENT AUDITORS...................................................... 16
OTHER INFORMATION......................................................... 16
FINANCIAL STATEMENTS...................................................... 17
</TABLE>

2
<PAGE>

GLOSSARY OF TERMS

Annuitant and Secondary Annuitant - The person(s) 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 variable or a combination of
fixed and variable.

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.

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. The payment
amount will be determined no more than seven business days before each payment
date. 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.

Stabilized Payment - The variable annuity payment you receive. Stabilized
payments are determined annually at your contract anniversary and are paid in
according to the annuity payment frequency you select. You can choose not to
stabilize your variable annuity payments in which case each payment fluctuates
based on the performance of the selected subaccounts.

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(ies) is entitled to the death proceeds of the contract.
If no person is named, the owner's estate shall be deemed the successor owner.

Supportable Payment - The amount equal to the sum of the variable annuity unit
values times the number of variable annuity units in each of the selected
subaccounts. The variable annuity units will be adjusted to reflect the year-
to-date difference between stabilized and non-stabilized payments.

Valuation Day - Each day the New York Stock Exchange is open for trading.

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. The determination of the variable annuity unit value is
made at the end of each valuation day.

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.

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.

4
<PAGE>

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)
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.

5
<PAGE>

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.

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.

1035 Exchanges

If your purchase is a section 1035 exchange, you may exchange two or more
annuities for this one. In these instances, we will start your contract on the
date we receive the first premium installment. Each premium installment will be
invested in the investment options you select when it is received. When we
receive the final premium installment, we will purchase annuity units with the
entire premium (the final premium installment plus the current value of the
previous premium installments).

If you exchange one or more deferred annuities for this one, please contact a
tax adviser.

6
<PAGE>

Present Value of Future Variable Payments

The present value of future variable payments is calculated by taking (a) the
supportable payment on the business day we receive the surrender request, times
(b) the number of payments remaining, discounted using a rate equal to the AIR.

Stabilized Payments

The stabilized payments remain constant throughout each year and are adjusted
on your contract anniversary. Had you not selected stabilized payments, each
payment throughout the year would fluctuate based on the performance of your
selected subaccounts. To reflect the difference in these payments we adjust
(both increase and decrease as appropriate) the number of annuity units. The
units are adjusted when we calculate the supportable payment. Supportable
payments are used in the calculation of surrender values, death benefits and
transfers. On your contract anniversary we set the new stabilized payment equal
to the current supportable payment. 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 account.

The following table demonstrates, on a purely hypothetical basis, the changes
in the number of variable annuity units. The changes in the variable annuity
unit values reflect the investment performance of the applicable subaccounts as
well as the separate account charge.

Hypothetical Changes in Annuity Units with Stabilized Payments*
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AIR 3.50%
- -------------------------------------------------------------------------------------------
Life & 10 Years Certain
- -------------------------------------------------------------------------------------------
Male aged 65
- -------------------------------------------------------------------------------------------
First Variable Payment $500
- -------------------------------------------------------------------------------------------
<CAPTION>
Monthly Adjustments Cumulative
Beginning Annuity Payment Monthly in Adjusted
Annuity Unit Without Stabilized Annuity Annuity
Units Values Stabilization Payment Units Units
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
At Issue: January 1 400.0000 1.250000 $500.00 -- -- 400.0000
- -------------------------------------------------------------------------------------------
February 1 400.0000 1.254526 $501.81 $500.00 0.0084 400.0084
- -------------------------------------------------------------------------------------------
March 1 400.0000 1.253122 $501.25 $500.00 0.0058 400.0142
- -------------------------------------------------------------------------------------------
April 1 400.0000 1.247324 $498.93 $500.00 (0.0050) 400.0092
- -------------------------------------------------------------------------------------------
May 1 400.0000 1.247818 $499.13 $500.00 (0.0040) 400.0051
- -------------------------------------------------------------------------------------------
June 1 400.0000 1.244178 $497.67 $500.00 (0.0109) 399.9943
- -------------------------------------------------------------------------------------------
July 1 400.0000 1.250422 $500.17 $500.00 0.0008 399.9951
- -------------------------------------------------------------------------------------------
August 1 400.0000 1.245175 $498.07 $500.00 (0.0090) 399.9861
- -------------------------------------------------------------------------------------------
September 1 400.0000 1.251633 $500.65 $500.00 0.0030 399.9891
- -------------------------------------------------------------------------------------------
October 1 400.0000 1.253114 $501.25 $500.00 0.0058 399.9949
- -------------------------------------------------------------------------------------------
November 1 400.0000 1.261542 $504.62 $500.00 0.0212 400.0161
- -------------------------------------------------------------------------------------------
December 1 400.0000 1.265963 $506.39 $500.00 0.0293 400.0454
- -------------------------------------------------------------------------------------------
January 1 400.0000 1.270547 $508.22 $500.00 0.0387 400.0841
- -------------------------------------------------------------------------------------------
February 1 400.0841 1.275148 $510.17 $508.33 0.0086 400.0927
</TABLE>

* Expenses included in the calculations are 1.35% Separate Account Charge and
0.63% portfolio expenses, and the calculations assume that no optional
payment guarantee has been selected.

7
<PAGE>

Surrender Value. When you have elected stabilized payments, 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 will be reduced by 50%.

Death Benefit. When you have elected stabilized payments, 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 pro rata. For example, if you transfer 25% of the value
of your variable annuity payments to fixed annuity payments, the stabilized
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.

Effect Of Payment Options With Reduced Payments To The Survivor On Stabilized
Payments. If you have selected a Joint and Survivor payment option with reduced
payments to the surviving annuitant, the next stabilized 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 will be reduced to 75% of their
pre-death values.

Certain Only Payment Option. Please note that if you have chosen a Certain Only
payment option, your final payment will be the supportable payment (or the
guaranteed payment if you selected one of the payment guarantees and the
supportable payment is less than the guaranteed payment). This is done to
ensure you receive the full investment performance, both positive and negative,
of the subaccounts you selected.

Optional Payment Guarantee Riders

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.

Adjustments to Guaranteed Payment Under Optional Payment Guarantee Riders

Partial Surrenders. Partial surrenders will reduce the guaranteed payment pro
rata. For example, if you surrender 50% of the value of your variable annuity
payments, the guaranteed payment will be reduced by 50%.

Transfers. Transfers from variable to fixed annuity payments will reduce the
guaranteed payment pro rata. For example, if you transfer 25% of the value of
your variable annuity payments to fixed annuity payments, the guaranteed
payment will be reduced by 25%. 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 guaranteed 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 guaranteed payment will
be reduced to 75% of its pre-death value.

8
<PAGE>

Calculation of New Stabilized Payment Under Step-up Payment Guarantee

If you elect the Step-up Payment Guarantee, then on each contract anniversary,
a new stabilized step-up payment will be determined and you will be notified of
the new payment amount for the upcoming 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 current supportable payment;

(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.

The immediate payment increase allocation is 80%. This means that 80% of the
gain in the value of the variable annuity units on a contract anniversary will
be received immediately in the form of increased variable annuity payments and
the remaining 80% will be used to purchase additional variable annuity units.

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 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.

9
<PAGE>

PFL 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 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.

ANNUITY UNIT VALUES AND VARIABLE ANNUITY PAYMENTS

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;

10
<PAGE>

(b) is the net investment factor for that subaccount for the valuation
period; and

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;

(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

The dollar amount of subsequent variable annuity payments will depend upon
changes in applicable variable annuity unit values.

Illustrations of Calculation for Annuity Unit Value and Nonstabilized Variable
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

11
<PAGE>

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

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.

12
<PAGE>

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.

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. Prior to April 30, 1998, AEGON USA Securities,
Inc. (also an affiliate of PFL) was the principal underwriter. During 1999, the
amount paid to AFSG Securities Corporation, AEGON USA Securities, Inc. and/or
the broker-dealers for their services related to the Immediate Income Builder
policies was $3,520.00. No fees had been paid to any broker/dealers for their
services prior to 1999.

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.

13
<PAGE>

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.
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. For the seven days
ended December 31, 1999, the yield of the Money Market Subaccount was 5.13%,
and the effective yield was 5.00%.

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

14
<PAGE>

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.

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.

15
<PAGE>

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.

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, 1999 and 1998, and for each of the three years in the period ended December
31, 1999, and the financial statements of certain subaccounts of the PFL
Retirement Builder Variable Annuity Account which are available for investment
by PFL Immediate Income Builder contract owners, as of December 31, 1999 and
for the period May 28, 1999 (commencement of operations) through December 31,
1999, 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.

16
<PAGE>

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). Financial
Statements of certain subaccounts of PFL Retirement Builder Variable Annuity
Account which are available for investment by PFL Immediate Income Builder
contract owners are contained herein. 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.

17
<PAGE>

Financial Statements--Statutory Basis

PFL Life Insurance Company

Years ended December 31, 1999, 1998 and 1997
with Report of Independent Auditors
<PAGE>

PFL Life Insurance Company

Financial Statements--Statutory Basis

Years ended December 31, 1999, 1998 and 1997

Contents

<TABLE>
<S> <C>
Report of Independent Auditors.............................................. 1
Audited Financial Statements
Balance Sheets--Statutory Basis........................................... 3
Statements of Operations--Statutory Basis................................. 5
Statements of Changes in Capital and Surplus--Statutory Basis............. 6
Statements of Cash Flows--Statutory Basis................................. 7
Notes to Financial Statements--Statutory Basis............................ 9
Statutory-Basis Financial Statement Schedules
Summary of Investments--Other Than Investments in Related Parties......... 28
Supplementary Insurance Information....................................... 29
Reinsurance............................................................... 31
</TABLE>
<PAGE>

[LETTERHEAD OF ERNST & YOUNG LLP APPEARS HERE]

Report of Independent Auditors

The Board of Directors
PFL Life Insurance Company

We have audited the accompanying statutory-basis balance sheets of PFL Life
Insurance Company, an indirect wholly-owned subsidiary of AEGON N.V., as of
December 31, 1999 and 1998, and the related statutory-basis statements of
operations, changes in capital and surplus, and cash flows for each of the
three years in the period ended December 31, 1999. Our audits also included
the accompanying statutory-basis financial statement schedules required by
Article 7 of Regulation S-X. These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Insurance Division, Department of Commerce, of the State of
Iowa, which practices differ from accounting principles generally accepted in
the United States. The variances between such practices and accounting
principles generally accepted in the United States also are described in Note
1. The effects on the financial statements of these variances are not
reasonably determinable but are presumed to be material.

In our opinion, because of the effect of the matter described in the preceding
paragraph, the financial statements referred to above do not present fairly,
in conformity with accounting principles generally accepted in the United
States, the financial position of PFL Life Insurance Company at December 31,
1999 and 1998, or the results of its operations or its cash flows for each of
the three years in the period ended December 31, 1999.

1
<PAGE>

However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of PFL Life Insurance
Company at December 31, 1999 and 1998, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting practices prescribed or permitted by the
Insurance Division, Department of Commerce, of the State of Iowa. Also, in our
opinion, the related financial statement schedules, when considered in
relation to the basic statutory-basis financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Des Moines, Iowa
February 18, 2000

2
<PAGE>

PFL Life Insurance Company

Balance Sheets--Statutory Basis
(Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
December 31
1999 1998
----------- ----------
<S> <C> <C>
Admitted Assets
Cash and invested assets:
Cash and short-term investments........................ $ 53,695 $ 83,289
Bonds.................................................. 4,892,156 4,822,442
Stocks:
Preferred............................................ 17,074 14,754
Common (cost: 1999--$61,813; 1998--$34,731).......... 71,658 49,448
Affiliated entities (cost: 1999--$10,318; 1998--
$8,060)............................................. 6,764 5,613
Mortgage loans on real estate.......................... 1,339,202 1,012,433
Real estate, at cost less accumulated depreciation
($10,891 in 1999; $9,500 in 1998):
Home office properties............................... 7,829 8,056
Properties acquired in satisfaction of debt.......... 16,336 11,778
Investment properties................................ 33,707 44,325
Policy loans........................................... 59,871 60,058
Other invested assets.................................. 123,722 76,482
----------- ----------
Total cash and invested assets..................... 6,622,014 6,188,678
Premiums deferred and uncollected....................... 14,656 15,318
Accrued investment income............................... 65,364 65,308
Receivable from affiliate............................... -- 643
Federal income taxes recoverable........................ 1,335 639
Transfers from separate accounts due or accrued......... 92,309 70,866
Other assets............................................ 30,119 29,511
Separate account assets................................. 4,905,374 3,348,611
----------- ----------
Total admitted assets................................... $11,731,171 $9,719,574
=========== ==========
</TABLE>

3
<PAGE>

PFL Life Insurance Company

Balance Sheets--Statutory Basis
(Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
December 31
1999 1998
----------- ----------
<S> <C> <C>
Liabilities and Capital and Surplus
Liabilities:
Aggregate reserves for policies and contracts:
Life................................................. $ 1,552,781 $1,357,175
Annuity.............................................. 4,036,751 3,925,293
Accident and health.................................. 254,571 205,736
Policy and contract claim reserves:
Life................................................. 8,681 9,101
Accident and health.................................. 37,466 48,906
Other policyholders' funds............................. 172,774 162,266
Remittances and items not allocated.................... 33,020 19,690
Asset valuation reserve................................ 103,193 91,588
Interest maintenance reserve........................... 36,120 50,575
Short-term notes payable to affiliates................. 144,500 9,421
Other liabilities...................................... 70,717 76,766
Payable for securities................................. 15,136 57,645
Payable to affiliates.................................. 11,517 --
Separate account liabilities........................... 4,899,289 3,342,884
----------- ----------
Total liabilities....................................... 11,376,516 9,357,046
Commitments and contingencies (Note 10)
Capital and surplus:
Common stock, $10 par value, 500,000 shares autho-
rized, 266,000 issued and outstanding................. 2,660 2,660
Paid-in surplus........................................ 154,282 154,282
Unassigned surplus..................................... 197,713 205,586
----------- ----------
Total capital and surplus............................... 354,655 362,528
----------- ----------
Total liabilities and capital and surplus............... $11,731,171 $9,719,574
=========== ==========
</TABLE>

See accompanying notes.

4
<PAGE>

PFL Life Insurance Company

Statements of Operations--Statutory Basis
(Dollars in thousands)

<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Premiums and other considerations, net of
reinsurance:
Life.................................... $ 227,510 $ 516,111 $ 202,435
Annuity................................. 1,413,049 667,920 657,695
Accident and health..................... 160,570 178,593 207,982
Net investment income..................... 437,549 446,984 446,424
Amortization of interest maintenance re-
serve.................................... 7,588 8,656 3,645
Commissions and expense allowances on
reinsurance ceded........................ 24,741 32,781 49,859
Separate account fee income............... 49,826 37,137 --
---------- ---------- ----------
2,320,833 1,888,182 1,568,040
Benefits and expenses:
Benefits paid or provided for:
Life and accident and health benefits... 115,621 135,184 146,583
Surrender benefits...................... 1,046,611 732,796 658,071
Other benefits.......................... 169,479 152,209 126,495
Increase (decrease) in aggregate
reserves for policies and contracts:
Life.................................... 195,606 473,158 149,575
Annuity................................. 111,427 (278,665) (203,139)
Accident and health..................... 48,835 36,407 30,059
Other................................... 10,480 17,550 16,998
---------- ---------- ----------
1,698,059 1,268,639 924,642
Insurance expenses:
Commissions............................... 167,146 136,569 157,300
General insurance expenses................ 54,191 48,018 57,571
Taxes, licenses and fees.................. 12,382 19,166 8,715
Net transfers to separate accounts........ 309,307 302,839 297,480
Other expenses............................ 229 1,016 119
---------- ---------- ----------
543,255 507,608 521,185
---------- ---------- ----------
2,241,314 1,776,247 1,445,827
---------- ---------- ----------
Gain from operations before federal income
tax expense and net realized capital gains
on investments............................. 79,519 111,935 122,213
Federal income tax expense.................. 25,316 49,835 43,381
---------- ---------- ----------
Gain from operations before net realized
capital gains on investments............... 54,203 62,100 78,832
Net realized capital gains on investments
(net of related federal income taxes and
amounts transferred to interest maintenance
reserve)................................... 6,365 3,398 7,159
---------- ---------- ----------
Net income.................................. $ 60,568 $ 65,498 $ 85,991
========== ========== ==========
</TABLE>

See accompanying notes.

5
<PAGE>

PFL Life Insurance Company

Statements of Changes in Capital and Surplus--Statutory Basis
(Dollars in thousands)

<TABLE>
<CAPTION>
Total
Capital
Common Paid-in Unassigned and
Stock Surplus Surplus Surplus
------ -------- ---------- --------
<S> <C> <C> <C> <C>
Balance at January 1, 1997 $2,660 $154,129 $261,558 $418,347
Capital contribution.................... -- 153 -- 153
Net income.............................. -- -- 85,991 85,991
Change in net unrealized capital gains.. -- -- 3,592 3,592
Change in non-admitted assets........... -- -- (481) (481)
Change in asset valuation reserve....... -- -- (14,974) (14,974)
Dividend to stockholder................. -- -- (62,000) (62,000)
Surplus effect of sale of a division.... -- -- (161) (161)
Surplus effect of ceding commissions
associated with the sale of a
division............................... -- -- 5 5
Amendment of reinsurance agreement...... -- -- 389 389
Surplus effect of reinsurance
agreement.............................. -- -- 402 402
Change in liability for reinsurance in
unauthorized companies................. -- -- (1,901) (1,901)
------ -------- -------- --------
Balance at December 31, 1997 2,660 154,282 272,420 429,362
Net income.............................. -- -- 65,498 65,498
Change in net unrealized capital gains.. -- -- 4,504 4,504
Change in non-admitted assets........... -- -- (260) (260)
Change in asset valuation reserve....... -- -- (21,763) (21,763)
Dividend to stockholder................. -- -- (120,000) (120,000)
Increase in liability for reinsurance in
unauthorized companies................. -- -- 2,036 2,036
Tax benefit on stock options exercised.. -- -- 2,476 2,476
Change in surplus in separate accounts.. -- -- 675 675
------ -------- -------- --------
Balance at December 31, 1998 2,660 154,282 205,586 362,528
Net income.............................. -- -- 60,568 60,568
Change in net unrealized capital gains.. -- -- (20,217) (20,217)
Change in non-admitted assets........... -- -- (980) (980)
Change in asset valuation reserve....... -- -- (11,605) (11,605)
Dividend to stockholder................. -- -- (40,000) (40,000)
Tax benefit on stock options exercised.. -- -- 1,305 1,305
Change in surplus in separate accounts.. -- -- 245 245
Settlement of prior period tax returns
and other tax-related adjustments...... -- -- 2,811 2,811
------ -------- -------- --------
Balance at December 31, 1999.............. $2,660 $154,282 $197,713 $354,655
====== ======== ======== ========
</TABLE>

See accompanying notes.

6
<PAGE>

PFL Life Insurance Company

Statements of Cash Flows--Statutory Basis
(Dollars in thousands)

<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Operating activities
Premiums and other considerations, net
of reinsurance......................... $ 1,830,365 $ 1,396,428 $ 1,119,936
Net investment income................... 441,737 469,246 452,091
Life and accident and health claims..... (124,178) (138,249) (154,383)
Surrender benefits and other fund
withdrawals............................ (1,046,611) (732,796) (658,071)
Other benefits to policyholders......... (169,476) (152,167) (126,462)
Commissions, other expenses and other
taxes.................................. (238,192) (197,135) (225,042)
Net transfers to separate accounts...... (280,923) (276,375) (319,146)
Federal income taxes.................... (24,709) (72,176) (47,909)
Cash paid in conjunction with an
amendment of a reinsurance agreement... -- -- (4,826)
Cash received in connection with a
reinsurance agreement.................. -- -- 1,477
Other, net.............................. (23,047) (93,095) 89,693
----------- ----------- -----------
Net cash provided by operating
activities............................. 364,966 203,681 127,358
Investing activities
Proceeds from investments sold, matured
or repaid:
Bonds and preferred stocks............ 3,283,038 3,347,174 3,284,095
Common stocks......................... 60,293 34,564 34,004
Mortgage loans on real estate......... 158,739 192,210 138,162
Real estate........................... 13,367 5,624 6,897
Policy loans.......................... 186 -- --
Cash received from ceding commissions
associated with the sale of a
division............................. -- -- 8
Other................................. 6,133 7,210 57,683
----------- ----------- -----------
3,521,756 3,586,782 3,520,849
Cost of investments acquired:
Bonds and preferred stocks............ (3,398,158) (3,251,822) (3,411,442)
Common stocks......................... (76,200) (36,379) (37,339)
Mortgage loans on real estate......... (480,750) (257,039) (159,577)
Real estate........................... (7,568) (11,458) (2,013)
Policy loans.......................... -- (2,922) (2,922)
Cash paid in association with the sale
of a division........................ -- -- (591)
Other................................. (48,719) (44,514) (15,674)
----------- ----------- -----------
(4,011,395) (3,604,134) (3,629,558)
----------- ----------- -----------
Net cash used in investing activities... (489,639) (17,352) (108,709)
</TABLE>

7
<PAGE>

PFL Life Insurance Company

Statements of Cash Flows--Statutory Basis
(Dollars in thousands)

<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Financing activities
Issuance (repayment) of short-term intercompany
notes payable................................... $135,079 $ (6,979) $16,400
Capital contribution............................. -- -- 153
Dividends to stockholder......................... (40,000) (120,000) (62,000)
-------- -------- -------
Net cash provided by (used in) financing
activities...................................... 95,079 (126,979) (45,447)
-------- -------- -------
Increase (decrease) in cash and short-term
investments..................................... (29,594) 59,350 (26,798)
Cash and short-term investments at beginning of
year............................................ 83,289 23,939 50,737
-------- -------- -------
Cash and short-term investments at end of year... $ 53,695 $ 83,289 $23,939
======== ======== =======
</TABLE>

See accompanying notes.

8
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis

(Dollars in thousands)
December 31, 1999

1. Organization and Summary of Significant Accounting Policies

Organization

PFL Life Insurance Company ("the Company") is a stock life insurance company
and is a wholly-owned subsidiary of First AUSA Life Insurance Company ("First
AUSA"), which, in turn, is a wholly-owned subsidiary of AEGON USA, Inc.
("AEGON"). AEGON is an indirect wholly-owned subsidiary of AEGON N.V., a
holding company organized under the laws of The Netherlands.

Nature of Business

The Company sells individual non-participating whole life, endowment and term
contracts, as well as a broad line of single fixed and flexible premium
annuity products. In addition, the Company offers group life, universal life,
and individual and specialty health coverages. The Company is licensed in 49
states and the District of Columbia and Guam. Sales of the Company's products
are primarily through the Company's agents and financial institutions.

Basis of Presentation

The preparation of financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

Significant estimates and assumptions are utilized in the calculation of
aggregate policy reserves, policy and contract claim reserves, guaranty fund
assessment accruals and valuation allowances on investments. It is reasonably
possible that actual experience could differ from the estimates and
assumptions utilized which could have a material impact on the financial
statements.

The accompanying financial statements have been prepared on the basis of
accounting practices prescribed or permitted by the Insurance Division,
Department of Commerce, of the State of Iowa ("Insurance Department"), which
practices differ in some respects from generally accepted accounting
principles. The more significant of these differences are as follows: (a)
bonds are generally reported at amortized cost rather than segregating the
portfolio into held-to-maturity (reported at amortized cost), available-for-
sale (reported at fair value), and trading (reported at fair value)
classifications; (b) acquisition costs of acquiring new business are charged
to current operations as incurred rather than deferred and amortized over the
life of the policies; (c) policy reserves on traditional life products

9
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

1. Organization and Summary of Significant Accounting Policies (continued)

are based on statutory mortality rates and interest which may differ from
reserves based on reasonable assumptions of expected mortality, interest, and
withdrawals which include a provision for possible unfavorable deviation from
such assumptions; (d) policy reserves on certain investment products use
discounting methodologies based on statutory interest rates rather than full
account values; (e) reinsurance amounts are netted against the corresponding
asset or liability rather than shown as gross amounts on the balance sheet;
(f) deferred income taxes are not provided for the difference between the
financial statement and income tax bases of assets and liabilities; (g) net
realized gains or losses attributed to changes in the level of interest rates
in the market are deferred and amortized over the remaining life of the bond
or mortgage loan, rather than recognized as gains or losses in the statement
of operations when the sale is completed; (h) potential declines in the
estimated realizable value of investments are provided for through the
establishment of a formula-determined statutory investment reserve (reported
as a liability), changes to which are charged directly to surplus, rather than
through recognition in the statement of operations for declines in value, when
such declines are judged to be other than temporary; (i) certain assets
designated as "non-admitted assets" have been charged to surplus rather than
being reported as assets; (j) revenues for universal life and investment
products consist of premiums received rather than policy charges for the cost
of insurance, policy administration charges, amortization of policy initiation
fees and surrender charges assessed; (k) pension expense is recorded as
amounts are paid; (l) stock options settled in cash are recorded as expense of
the Company's indirect parent rather than charged to current operations; (m)
adjustments to federal income taxes of prior years are charged or credited
directly to unassigned surplus, rather than reported as a component of expense
in the statement of operations; (n) gains or losses on dispositions of
business are charged or credited directly to unassigned surplus rather than
being reported in the statement of operations; and (o) a liability is
established for "unauthorized reinsurers" and changes in this liability are
charged or credited directly to unassigned surplus. The effects of these
variances have not been determined by the Company but are presumed to be
material.

In 1998, the National Association of Insurance Commissioners ("NAIC") adopted
codified statutory accounting principles ("Codification") effective January 1,
2001. Codification will likely change, to some extent, prescribed statutory
accounting practices and may result in changes to the accounting practices
that the Company uses to prepare its statutory-basis financial statements.
Codification will require adoption by the various states before it becomes the
prescribed statutory basis of accounting for insurance companies domesticated
within those states. Accordingly, before Codification becomes effective for
the Company, the State of Iowa must adopt Codification as the prescribed basis
of accounting on which domestic insurers must report their statutory-basis
results to the Insurance Department. At this time, it is anticipated that the
State of Iowa will adopt Codification. However, based on current guidance,
management believes that the impact of Codification will not be material to
the Company's statutory-basis financial statements.

10
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

1. Organization and Summary of Significant Accounting Policies (continued)

Cash and Short-Term Investments

For purposes of the statements of cash flows, the Company considers all highly
liquid investments with remaining maturity of one year or less when purchased
to be short-term investments.

Investments

Investments in bonds (except those to which the Securities Valuation Office of
the NAIC has ascribed a value), mortgage loans on real estate and short-term
investments are reported at cost adjusted for amortization of premiums and
accrual of discounts. Amortization is computed using methods which result in a
level yield over the expected life of the investment. The Company reviews its
prepayment assumptions on mortgage and other asset-backed securities at
regular intervals and adjusts amortization rates retrospectively when such
assumptions are changed due to experience and/or expected future patterns.
Investments in preferred stocks in good standing are reported at cost.
Investments in preferred stocks not in good standing are reported at the lower
of cost or market. Common stocks of unaffiliated and affiliated companies,
which includes shares of mutual funds and real estate investment trusts, are
carried at market value. Real estate is reported at cost less allowances for
depreciation. Depreciation is computed principally by the straight-line
method. Policy loans are reported at unpaid principal. Other invested assets
consist principally of investments in various joint ventures and are recorded
at equity in underlying net assets. Other "admitted assets" are valued,
principally at cost, as required or permitted by Iowa Insurance Laws.

Net realized capital gains and losses are determined on the basis of specific
identification and are recorded net of related federal income taxes. The Asset
Valuation Reserve ("AVR") is established by the Company to provide for
potential losses in the event of default by issuers of certain invested
assets. These amounts are determined using a formula prescribed by the NAIC
and are reported as a liability. The formula for the AVR provides for a
corresponding adjustment for realized gains and losses. Under a formula
prescribed by the NAIC, the Company defers, in the Interest Maintenance
Reserve ("IMR"), the portion of realized gains and losses on sales of fixed
income investments, principally bonds and mortgage loans, attributable to
changes in the general level of interest rates and amortizes those deferrals
over the remaining period to maturity of the security.

Interest income is recognized on an accrual basis. The Company does not accrue
income on bonds in default, mortgage loans on real estate in default and/or
foreclosure or which are delinquent more than twelve months, or on real estate
where rent is in arrears for more than three months. Further, income is not
accrued when collection is uncertain. During 1999, 1998 and 1997, the Company
excluded investment income due and accrued of $530, $102 and $177,
respectively, with respect to such practices.

11
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

1. Organization and Summary of Significant Accounting Policies (continued)

The Company uses interest rate swaps and caps as part of its overall interest
rate risk management strategy for certain life insurance and annuity products.
The Company entered into several interest rate swap contracts to modify the
interest rate characteristics of the underlying liabilities. The net interest
effect of such swap transactions is reported as an adjustment of interest
income from the hedged items as incurred.

The Company has entered into an interest rate cap agreement to hedge the
exposure of changing interest rates. The cash flows from the interest rate cap
will help offset losses that might occur from changes in interest rates. The
cost of such agreement is included in interest expense ratably during the life
of the agreement. Income received as a result of the cap agreement will be
recognized in investment income as earned. Unamortized cost of the agreement
is included in other invested assets.

Aggregate Policy Reserves

Life, annuity and accident and health benefit reserves are developed by
actuarial methods and are determined based on published tables based on
statutorily specified interest rates and valuation methods that will provide,
in the aggregate, reserves that are greater than or equal to the minimum
required by law.

The aggregate policy reserves for life insurance policies are based
principally upon the 1941, 1958 and 1980 Commissioners' Standard Ordinary
Mortality and American Experience Mortality Tables. The reserves are
calculated using interest rates ranging from 2.00 to 6.00 percent and are
computed principally on the Net Level Premium Valuation and the Commissioners'
Reserve Valuation Methods. Reserves for universal life policies are based on
account balances adjusted for the Commissioners' Reserve Valuation Method.

Deferred annuity reserves are calculated according to the Commissioners'
Annuity Reserve Valuation Method including excess interest reserves to cover
situations where the future interest guarantees plus the decrease in surrender
charges are in excess of the maximum valuation rates of interest. Reserves for
immediate annuities and supplementary contracts with life contingencies are
equal to the present value of future payments assuming interest rates ranging
from 2.50 to 11.25 percent and mortality rates, where appropriate, from a
variety of tables.

Accident and health policy reserves are equal to the greater of the gross
unearned premiums or any required midterminal reserves plus net unearned
premiums and the present value of amounts not yet due on both reported and
unreported claims.

12
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

1. Organization and Summary of Significant Accounting Policies (continued)

Policy and Contract Claim Reserves

Claim reserves represent the estimated accrued liability for claims reported
to the Company and claims incurred but not yet reported through the statement
date. These reserves are estimated using either individual case-basis
valuations or statistical analysis techniques. These estimates are subject to
the effects of trends in claim severity and frequency. The estimates are
continually reviewed and adjusted as necessary as experience develops or new
information becomes available.

Separate Accounts

Assets held in trust for purchases of variable annuity contracts and the
Company's corresponding obligation to the contract owners are shown separately
in the balance sheets. The assets in the separate accounts are valued at
market. Income and gains and losses with respect to the assets in the separate
accounts accrue to the benefit of the contract owners and, accordingly, the
operations of the separate accounts are not included in the accompanying
financial statements. The separate accounts do not have any minimum guarantees
and the investment risks associated with market value changes are borne
entirely by the contract owners. The Company received variable contract
premiums of $486,282, $345,319 and $281,095 in 1999, 1998 and 1997,
respectively. All variable account contracts are subject to discretionary
withdrawal by the contract owner at the market value of the underlying assets
less the current surrender charge.

Stock Option Plan

AEGON N.V. sponsors a stock option plan for eligible employees of the Company.
Under this plan, certain employees have indicated a preference to immediately
sell shares received as a result of their exercise of the stock options; in
these situations, AEGON N.V. has settled such options in cash rather than
issuing stock to these employees. These cash settlements are paid by the
Company, and AEGON N.V. subsequently reimburses the Company for such payments.
Under statutory accounting principles, the Company does not record any expense
related to this plan, as the expense is recognized by AEGON N.V. However, the
Company is allowed to record a deduction in the consolidated tax return filed
by the Company and certain affiliates. The tax benefit of this deduction has
been credited directly to surplus.

Reclassifications

Certain reclassifications have been made to the 1998 and 1997 financial
statements to conform to the 1999 presentation.

13
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

2. Fair Values of Financial Instruments

Statement of Financial Accounting Standard ("SFAS") No. 107, Disclosures about
Fair Value of Financial Instruments, requires disclosure of fair value
information about financial instruments, whether or not recognized in the
statutory-basis balance sheet, for which it is practicable to estimate that
value. SFAS No. 119, Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments, requires additional disclosure about
derivatives. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In that
regard, the derived fair value estimates cannot be substantiated by
comparisons to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument. SFAS No. 107 and No. 119 exclude
certain financial instruments and all nonfinancial instruments from their
disclosure requirements and allow companies to forego the disclosures when
those estimates can only be made at excessive cost. Accordingly, the aggregate
fair value amounts presented do not represent the underlying value of the
Company.

The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:

Cash and short-term investments: The carrying amounts reported in the
balance sheet for these instruments approximate their fair values.

Investment securities: Fair values for fixed maturity securities (including
redeemable preferred stocks) are based on quoted market prices, where
available. For fixed maturity securities not actively traded, fair values
are estimated using values obtained from independent pricing services or,
in the case of private placements, are estimated by discounting expected
future cash flows using a current market rate applicable to the yield,
credit quality, and maturity of the investments. The fair values for equity
securities, including affiliated mutual funds and real estate investment
trusts, are based on quoted market prices.

Mortgage loans and policy loans: The fair values for mortgage loans are
estimated utilizing discounted cash flow analyses, using interest rates
reflective of current market conditions and the risk characteristics of the
loans. The fair value of policy loans is assumed to equal their carrying
amount.

Investment contracts: Fair values for the Company's liabilities under
investment-type insurance contracts are estimated using discounted cash
flow calculations, based on interest rates currently being offered for
similar contracts with maturities consistent with those remaining for the
contracts being valued.

14
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

2. Fair Values of Financial Instruments (continued)

Interest rate cap and interest rate swaps: Estimated fair value of the
interest rate cap is based upon the latest quoted market price. Estimated
fair value of interest rate swaps are based upon the pricing differential
for similar swap agreements.

Short-term notes payable to affiliates: The fair values for short-term
notes payable to affiliates are assumed to equal their carrying amount.

Fair values for the Company's insurance contracts other than investment
contracts are not required to be disclosed. However, the fair values of
liabilities under all insurance contracts are taken into consideration in the
Company's overall management of interest rate risk, which minimizes exposure
to changing interest rates through the matching of investment maturities with
amounts due under insurance contracts.

The following sets forth a comparison of the fair values and carrying amounts
of the Company's financial instruments subject to the provisions of SFAS No.
107 and No. 119:

<TABLE>
<CAPTION>
December 31
1999 1998
--------------------- ---------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Admitted assets
Cash and short-term investments... $ 53,695 $ 53,695 $ 83,289 $ 83,289
Bonds............................. 4,892,156 4,757,325 4,822,442 4,900,516
Preferred stocks.................. 17,074 15,437 14,754 14,738
Common stocks..................... 71,658 71,658 49,448 49,448
Affiliated common stock........... 6,764 6,764 5,613 5,613
Mortgage loans on real estate..... 1,339,202 1,299,160 1,012,433 1,089,315
Policy loans...................... 59,871 59,871 60,058 60,058
Interest rate cap................. 4,959 1,784 4,445 725
Interest rate swaps............... 8,134 10,609 1,916 6,667
Separate account assets........... 4,905,374 4,905,374 3,348,611 3,348,611
Liabilities
Investment contract liabilities... 4,207,369 4,059,842 4,084,683 4,017,509
Separate account liabilities...... 4,377,676 4,212,615 3,271,005 3,213,251
Short-term notes payable to
affiliates....................... 144,500 144,500 9,421 9,421
</TABLE>

15
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

3. Investments

The carrying amounts and estimated fair values of investments in debt
securities were as follows:

<TABLE>
<CAPTION>
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Amount Gains Losses Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1999
Bonds:
United States Government and
agencies........................ $ 141,390 $ 142 $ 4,520 $ 137,012
State, municipal and other
government...................... 137,745 5,168 1,627 141,286
Public utilities................. 219,791 1,148 6,777 214,162
Industrial and miscellaneous..... 2,078,145 20,042 84,919 2,013,268
Mortgage and other asset-backed
securities...................... 2,315,085 24,214 87,702 2,251,597
---------- -------- -------- ----------
4,892,156 50,714 185,545 4,757,325
Preferred stocks................... 17,074 2 1,639 15,437
---------- -------- -------- ----------
$4,909,230 $ 50,716 $187,184 $4,772,762
========== ======== ======== ==========
December 31, 1998
Bonds:
United States Government and
agencies........................ $ 150,085 $ 2,841 $ 321 $ 152,605
State, municipal and other
government...................... 62,948 918 1,651 62,215
Public utilities................. 139,732 5,053 2,555 142,230
Industrial and miscellaneous..... 2,068,086 78,141 34,493 2,111,734
Mortgage and other asset-backed
securities...................... 2,401,591 45,185 15,044 2,431,732
---------- -------- -------- ----------
4,822,442 132,138 54,064 4,900,516
Preferred stocks................... 14,754 75 91 14,738
---------- -------- -------- ----------
$4,837,196 $132,213 $ 54,155 $4,915,254
========== ======== ======== ==========
</TABLE>

The carrying amounts and estimated fair values of bonds at December 31, 1999,
by contractual maturity, are shown below. Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
Carrying Estimated
Amount Fair Value
---------- ----------
<S> <C> <C>
Due in one year or less............................... $ 194,654 $ 192,453
Due after one year through five years................. 1,151,170 1,121,353
Due after five years through ten years................ 908,926 873,402
Due after ten years................................... 322,321 318,520
---------- ----------
2,577,071 2,505,728
Mortgage and other asset-backed securities............ 2,315,085 2,251,597
---------- ----------
$4,892,156 $4,757,325
========== ==========
</TABLE>

16
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

3. Investments (continued)

A detail of net investment income is presented below:

<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Interest on bonds and preferred stock............... $347,639 $374,478 $373,496
Dividends on equity investments..................... 734 1,357 1,460
Interest on mortgage loans.......................... 92,325 77,960 80,266
Rental income on real estate........................ 7,322 6,553 7,501
Interest on policy loans............................ 4,141 4,080 3,400
Other investment income............................. 7,978 2,576 613
-------- -------- --------
Gross investment income............................. 460,139 467,004 466,736
Less investment expenses............................ 22,590 20,020 20,312
-------- -------- --------
Net investment income............................... $437,549 $446,984 $446,424
======== ======== ========
</TABLE>

Proceeds from sales and maturities of debt securities and related gross
realized gains and losses were as follows:

<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Proceeds.................................... $3,283,038 $3,347,174 $3,284,095
========== ========== ==========
Gross realized gains........................ $ 21,171 $ 48,760 $ 30,094
Gross realized losses....................... (32,259) (8,072) (17,265)
---------- ---------- ----------
Net realized gains (losses)................. $ (11,088) $ 40,688 $ 12,829
========== ========== ==========
</TABLE>

At December 31, 1999, investments with an aggregate carrying value of
$6,346,831 were on deposit with regulatory authorities or were restrictively
held in bank custodial accounts for the benefit of such regulatory authorities
as required by statute.

17
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

3. Investments (continued)

Realized investment gains (losses) and changes in unrealized gains (losses)
for investments are summarized below:

<TABLE>
<CAPTION>
Realized
----------------------------
Year ended December 31
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Debt securities......... $(11,088) $ 40,688 $ 12,829
Equity securities....... 11,433 (879) 6,972
Mortgage loans on real
estate................. 4,661 12,637 2,252
Real estate............. 900 3,176 4,252
Short-term investments.. (1,407) 1,533 (19)
Other invested assets... 534 (2,523) 1,632
-------- -------- --------
5,033 54,632 27,918
Tax effect.............. (5,535) (22,290) (10,572)
Transfer from (to)
interest maintenance
reserve................ 6,867 (28,944) (10,187)
-------- -------- --------
Net realized gains...... $ 6,365 $ 3,398 $ 7,159
======== ======== ========
<CAPTION>
Change in Unrealized
----------------------------
Year ended December 31
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Bonds................... $(12,711) $ (836) $ 2,498
Preferred stocks........ (2,753) -- --
Common stocks........... (3,980) 3,751 1,097
Mortgage loans.......... (147) (150) --
Other invested assets... (626) 1,739 (3)
-------- -------- --------
Change in unrealized.... $(20,217) $ 4,504 $ 3,592
======== ======== ========

Gross unrealized gains and gross unrealized losses on equity securities are as
follows:

<CAPTION>
December 31
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Unrealized gains........ $ 11,369 $ 15,980 $ 10,356
Unrealized losses....... (5,078) (3,710) (3,836)
-------- -------- --------
Net unrealized gains.... $ 6,291 $ 12,270 $ 6,520
======== ======== ========
</TABLE>

18
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

3. Investments (continued)

During 1999, the Company issued mortgage loans with interest rates ranging
from 6.42% to 8.67%. The maximum percentage of any one mortgage loan to the
value of the underlying real estate at origination was 84%. Mortgage loans
with a carrying value of $248 were non-income producing for the previous
twelve months. Accrued interest of $95 related to these mortgage loans was
excluded from investment income. The Company requires all mortgaged properties
to carry fire insurance equal to the value of the underlying property.

At December 31, 1999 and 1998, the Company held a mortgage loan loss reserve
in the asset valuation reserve of $15,173 and $16,104, respectively. The
mortgage loan portfolio is diversified by geographic region and specific
collateral property type as follows:

Geographic Distribution

<TABLE>
<CAPTION>
December 31
1999 1998
----- -----
<S> <C> <C>
South Atlantic.......... 27% 32%
Pacific................. 18 15
E. North Central........ 17 16
Middle Atlantic......... 15 10
Mountain................ 9 10
W. South Central........ 6 6
W. North Central........ 4 5
E. South Central........ 3 3
New England............. 1 3
</TABLE>
<TABLE>
<CAPTION>

Property Type Distribution

December 31
1999 1998
----- -----
<S> <C> <C>
Office.................. 39% 30%
Retail.................. 28 35
Industrial.............. 18 21
Apartment............... 11 12
Other................... 4 2
</TABLE>

At December 31, 1999, the Company had no investments (excluding U. S.
Government guaranteed or insured issues) which individually represented more
than ten percent of capital and surplus and the asset valuation reserve,
collectively.

19
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

3. Investments (continued)

The Company utilizes a variety of off-balance sheet financial instruments as
part of its efforts to hedge and manage fluctuations in the market value of
its investment portfolio attributable to changes in general interest rate
levels and to manage duration mismatch of assets and liabilities. These
instruments include interest rate swaps and caps. All involve elements of
credit and market risks in excess of the amounts recognized in the
accompanying financial statements at a given point in time. The contract or
notional amounts of those instruments reflect the extent of involvement in the
various types of financial instruments.

The Company's exposure to credit risk is the risk of loss from a counterparty
failing to perform according to the terms of the contract. That exposure
includes settlement risk (i.e., the risk that the counterparty defaults after
the Company has delivered funds or securities under terms of the contract)
that would result in an accounting loss and replacement cost risk (i.e., the
cost to replace the contract at current market rates should the counterparty
default prior to settlement date). Credit loss exposure resulting from
nonperformance by a counterparty for commitments to extend credit is
represented by the contractual amounts of the instruments.

At December 31, 1999 and 1998, the Company's outstanding financial instruments
with on and off-balance sheet risks, shown in notional amounts, are summarized
as follows:

<TABLE>
<CAPTION>
Notional Amount
1999 1998
-------- --------
<S> <C> <C>
Derivative securities:
Interest rate swaps:
Receive fixed--pay floating............................... $115,000 $100,000
Receive floating--pay fixed............................... 64,017 --
Receive floating (uncapped)--pay floating (capped)........ 41,617 53,011
Receive floating (LIBOR--pay floating (S&P)............... 60,000 60,000
Interest rate cap agreements................................ 500,000 500,000
</TABLE>

4. Reinsurance

The Company reinsures portions of risk on certain insurance policies which
exceed its established limits, thereby providing a greater diversification of
risk and minimizing exposure on larger risks. The Company remains contingently
liable with respect to any insurance ceded, and this would become an actual
liability in the event that the assuming insurance company became unable to
meet its obligation under the reinsurance treaty.

20
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

4. Reinsurance (continued)

Reinsurance assumption and cession treaties are transacted primarily with
affiliates. Premiums earned reflect the following reinsurance assumed and
ceded amounts:

<TABLE>
<CAPTION>
Year ended December 31
----------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Direct premiums.......................... $1,942,716 $1,533,822 $1,312,446
Reinsurance assumed...................... 2,723 2,366 2,038
Reinsurance ceded........................ (144,310) (173,564) (246,372)
---------- ---------- ----------
Net premiums earned...................... $1,801,129 $1,362,624 $1,068,112
========== ========== ==========
</TABLE>

The Company received reinsurance recoveries in the amount of $139,138,
$173,297 and $183,638 during 1999, 1998 and 1997, respectively. At December
31, 1999 and 1998, estimated amounts recoverable from reinsurers that have
been deducted from policy and contract claim reserves totaled $35,511 and
$47,956, respectively. The aggregate reserves for policies and contracts were
reduced for reserve credits for reinsurance ceded at December 31, 1999 and
1998 of $1,870,190 and $2,163,905, respectively.

At December 31, 1999, amounts recoverable from unauthorized reinsurers of
$39,996 (1998--$55,379) and reserve credits for reinsurance ceded of $48,297
(1998--$49,835) were associated with a single reinsurer and its affiliates.
The Company holds collateral under these reinsurance agreements in the form of
trust agreements totaling $85,431 at December 31, 1999, that can be drawn on
for amounts that remain unpaid for more than 120 days.

5. Income Taxes

For federal income tax purposes, the Company joins in a consolidated tax
return filing with certain affiliated companies. Under the terms of a tax-
sharing agreement between the Company and its affiliates, the Company computes
federal income tax expense as if it were filing a separate income tax return,
except that tax credits and net operating loss carryforwards are determined on
the basis of the consolidated group. Additionally, the alternative minimum tax
is computed for the consolidated group and the resulting tax, if any, is
allocated back to the separate companies on the basis of the separate
companies' alternative minimum taxable income.

21
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

5. Income Taxes (continued)

Federal income tax expense differs from the amount computed by applying the
statutory federal income tax rate to gain from operations before federal
income tax expense and net realized capital gains (losses) on investments for
the following reasons:

<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Computed tax at federal statutory rate (35%)..... $27,832 $39,177 $42,775
IMR amortization................................. (2,656) (3,030) (1,276)
Tax reserve adjustment........................... 1,390 607 2,004
Excess tax depreciation.......................... (219) (223) (392)
Deferred acquisition costs-- tax basis........... 5,979 11,827 4,308
Prior year under (over) accrual ................. (3,492) 1,750 (1,016)
Dividend received deduction...................... (1,666) (1,053) (941)
Charitable contributions......................... -- -- (848)
Other items--net................................. (1,852) 780 (1,233)
------- ------- -------
Federal income tax expense....................... $25,316 $49,835 $43,381
======= ======= =======
</TABLE>

Federal income tax expense differs from the amount computed by applying the
statutory federal income tax rate to realized gains (losses) due to the
differences in book and tax asset bases at the time certain investments are
sold.

Prior to 1984, as provided for under the Life Insurance Company Tax Act of
1959, a portion of statutory income was not subject to current taxation but
was accumulated for income tax purposes in a memorandum account referred to as
the policyholders' surplus account. No federal income taxes have been provided
for in the financial statements on income deferred in the policyholders'
surplus account ($20,387 at December 31, 1999). To the extent dividends are
paid from the amount accumulated in the policyholders' surplus account, net
earnings would be reduced by the amount of tax required to be paid. Should the
entire amount in the policyholders' surplus account become taxable, the tax
thereon computed at current rates would amount to approximately $7,135.

In 1999, the Company reached a final settlement with the Internal Revenue
Service for 1990 and 1991, resulting in a tax refund of $904 and interest
received of $548. These amounts were credited directly to unassigned surplus.
The Company also corrected an error in 1999 which related to the 1997 tax-
sharing agreement between the Company and various affiliates. This resulted in
a credit to unassigned surplus of $1,359.

The Company's federal income tax returns have been examined and closing
agreements have been executed with the Internal Revenue Service through 1992.
An examination is underway for years 1993 through 1997.

22
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

6. Policy and Contract Attributes

A portion of the Company's policy reserves and other policyholders' funds
(including separate account liabilities) relate to liabilities established on
a variety of the Company's annuity and deposit fund products. There may be
certain restrictions placed upon the amount of funds that can be withdrawn
without penalty. The amount of reserves on these products, by withdrawal
characteristics, are summarized as follows:

<TABLE>
<CAPTION>
December 31
1999 1998
------------------- ------------------
Percent Percent
of of
Amount Total Amount Total
----------- ------- ---------- -------
<S> <C> <C> <C> <C>
Subject to discretionary withdrawal with
market value adjustment................ $ 114,544 1% $ 82,048 1%
Subject to discretionary withdrawal at
book value less surrender charge....... 828,490 8 515,778 5
Subject to discretionary withdrawal at
market value........................... 4,313,445 41 3,211,896 34
Subject to discretionary withdrawal at
book value (minimal or no charges or
adjustments)........................... 5,021,762 48 5,519,265 58
Not subject to discretionary withdrawal
provision.............................. 248,444 2 228,030 2
----------- --- ---------- ---
10,526,685 100% 9,557,017 100%
Less reinsurance ceded.................. 1,863,810 2,124,769
----------- ----------
Total policy reserves on annuities and
deposit fund liabilities............... $ 8,662,875 $7,432,248
=========== ==========
</TABLE>

A reconciliation of the amounts transferred to and from the separate accounts
is presented below:

<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Transfers as reported in the summary of
operations of the separate accounts statement:..
Transfers to separate accounts................. $486,282 $345,319 $281,095
Transfers from separate accounts............... (175,822) (42,671) (9,819)
-------- -------- --------
Net transfers to separate accounts............... 310,460 302,648 271,276
Reconciling adjustments--change in miscellaneous
income.......................................... (1,153) 191 26,204
-------- -------- --------
Transfers as reported in the summary of
operations of the life, accident and health
annual statement................................ $309,307 $302,839 $297,480
======== ======== ========
</TABLE>

23
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

6. Policy and Contract Attributes (continued)

Reserves on the Company's traditional life products are computed using mean
reserving methodologies. These methodologies result in the establishment of
assets for the amount of the net valuation premiums that are anticipated to be
received between the policy's paid-through date to the policy's next
anniversary date. At December 31, 1999 and 1998, these assets (which are
reported as premiums deferred and uncollected) and the amounts of the related
gross premiums and loadings, are as follows:

<TABLE>
<CAPTION>
Gross Loading Net
------- ------- -------
<S> <C> <C> <C>
December 31, 1999
Life and annuity:
Ordinary direct first year business................ $ 2,823 $2,085 $ 738
Ordinary direct renewal business................... 20,950 6,289 14,661
Group life direct business......................... 638 243 395
Reinsurance ceded.................................. (1,269) (16) (1,253)
------- ------ -------
23,142 8,601 14,541
Accident and health:
Direct............................................. 138 -- 138
Reinsurance ceded.................................. (23) -- (23)
------- ------ -------
Total accident and health............................ 115 -- 115
------- ------ -------
$23,257 $8,601 $14,656
======= ====== =======
December 31, 1998
Life and annuity:
Ordinary direct first year business................ $ 3,346 $2,500 $ 846
Ordinary direct renewal business................... 21,435 6,365 15,070
Group life direct business......................... 1,171 536 635
Reinsurance ceded.................................. (1,367) (44) (1,323)
------- ------ -------
24,585 9,357 15,228
Accident and health:
Direct............................................. 108 -- 108
Reinsurance ceded.................................. (18) -- (18)
------- ------ -------
Total accident and health............................ 90 -- 90
------- ------ -------
$24,675 $9,357 $15,318
======= ====== =======
</TABLE>

At December 31, 1999 and 1998, the Company had insurance in force aggregating
$41,720 and $44,233, respectively, in which the gross premiums are less than
the net premiums required by the standard valuation standards established by
the Insurance Division, Department of Commerce, of the State of Iowa. The
Company established policy reserves of $871 and $998 to cover these
deficiencies at December 31, 1999 and 1998, respectively.

24
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

7. Dividend Restrictions

The Company is subject to limitations, imposed by the State of Iowa, on the
payment of dividends to its parent company. Generally, dividends during any
twelve-month period may not be paid, without prior regulatory approval, in
excess of the greater of (a) 10 percent of statutory capital and surplus as of
the preceding December 31, or (b) statutory gain from operations before net
realized capital gains (losses) on investments for the preceding year. Subject
to the availability of unassigned surplus at the time of such dividend, the
maximum payment which may be made in 2000, without the prior approval of
insurance regulatory authorities, is $54,203.

The Company paid dividends to its parent of $40,000, $120,000 and $62,000 in
1999, 1998 and 1997, respectively.

8. Retirement and Compensation Plans

The Company's employees participate in a qualified benefit pension plan
sponsored by AEGON. The Company has no legal obligation for the plan. The
Company recognizes pension expense equal to its allocation from AEGON. The
pension expense is allocated among the participating companies based on the
SFAS No. 87 expense as a percent of salaries. The benefits are based on years
of service and the employee's compensation during the highest five consecutive
years of employment. Pension expense aggregated $408, $380 and $422 for the
years ended December 31, 1999, 1998 and 1997, respectively. The plan is
subject to the reporting and disclosure requirements of the Employee
Retirement and Income Security Act of 1974.

The Company's employees also participate in a contributory defined
contribution plan sponsored by AEGON which is qualified under Section 401(k)
of the Internal Revenue Service Code. Employees of the Company who customarily
work at least 1,000 hours during each calendar year and meet the other
eligibility requirements, are participants of the plan. Participants may elect
to contribute up to fifteen percent of their salary to the plan. The Company
will match an amount up to three percent of the participant's salary.
Participants may direct all of their contributions and plan balances to be
invested in a variety of investment options. The plan is subject to the
reporting and disclosure requirements of the Employee Retirement and Income
Security Act of 1974. Expense related to this plan was $267, $233 and $226 for
the years ended December 31, 1999, 1998 and 1997, respectively.

25
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

8. Retirement and Compensation Plans (continued)

AEGON sponsors supplemental retirement plans to provide the Company's senior
management with benefits in excess of normal pension benefits. The plans are
noncontributory, and benefits are based on years of service and the employee's
compensation level. The plans are unfunded and nonqualified under the Internal
Revenue Service Code. In addition, AEGON has established incentive deferred
compensation plans for certain key employees of the Company. AEGON also
sponsors an employee stock option plan for individuals employed at least three
years and a stock purchase plan for its producers, with the participating
affiliated companies establishing their own eligibility criteria, producer
contribution limits and company matching formula. These plans have been
accrued or funded as deemed appropriate by management of AEGON and the
Company.

In addition to pension benefits, the Company participates in plans sponsored
by AEGON that provide postretirement medical, dental and life insurance
benefits to employees meeting certain eligibility requirements. Portions of
the medical and dental plans are contributory. The expenses of the
postretirement plans are charged to affiliates in accordance with an
intercompany cost sharing arrangement. The Company expensed $28, $62 and $62
for the years ended December 31, 1999, 1998 and 1997, respectively.

9. Related Party Transactions

The Company shares certain offices, employees and general expenses with
affiliated companies.

The Company receives data processing, investment advisory and management,
marketing and administration services from certain affiliates. During 1999,
1998 and 1997, the Company paid $19,983, $18,706 and $18,705, respectively,
for these services, which approximates their costs to the affiliates.

Payables to affiliates bear interest at the thirty-day commercial paper rate
of 5.7% at December 31, 1999. During 1999, 1998 and 1997, the Company paid net
interest of $1,994, $1,491 and $1,188, respectively, to affiliates.

During 1997, the Company received a capital contribution of $153 in cash from
its parent.

At December 31, 1999 and 1998, the Company has short-term notes payable to an
affiliate of $144,500 and $9,421, respectively. Interest on these notes
accrues at rates ranging from 4.85% to 5.90% at December 31, 1999 and 5.13% to
5.52% at December 31, 1998.

26
<PAGE>

PFL Life Insurance Company

Notes to Financial Statements--Statutory Basis--(continued)

(Dollars in thousands)

9. Related Party Transactions (continued)

During 1998, the Company issued life insurance policies to certain affiliated
companies, covering the lives of certain employees of those affiliates.
Premiums of $174,000 related to these policies were recognized during the
year, and aggregate reserves for policies and contracts are $190,299 and
$181,720 at December 31, 1999 and 1998, respectively.

10. Commitments and Contingencies

The Company has issued Trust (synthetic) GIC contracts to plan sponsors
totaling $374,124 at December 31, 1999, pursuant to terms under which the plan
sponsor retains ownership of the assets related to these contracts. The
Company guarantees benefit responsiveness in the event that plan benefit
requests and other contractual commitments exceed plan cash flows. The plan
sponsor agrees to reimburse the Company for such benefit payments with
interest, either at a fixed or floating rate, from future plan and asset cash
flows. In return for this guarantee, the Company receives a premium which
varies based on such elements as benefit responsive exposure and contract
size. The Company underwrites the plans for the possibility of having to make
benefit payments and also must agree to the investment guidelines to ensure
appropriate credit quality and cash flow matching. The assets relating to such
contracts are not recognized in the Company's statutory-basis financial
statements.

The Company is a party to legal proceedings incidental to its business.
Although such litigation sometimes includes substantial demands for
compensatory and punitive damages, in addition to contract liability, it is
management's opinion, after consultation with counsel and a review of
available facts, that damages arising from such demands will not be material
to the Company's financial position.

The Company is subject to insurance guaranty laws in the states in which it
writes business. These laws provide for assessments against insurance
companies for the benefit of policyholders and claimants in the event of
insolvency of other insurance companies. Assessments are charged to operations
when received by the Company except where right of offset against other taxes
paid is allowed by law; amounts available for future offsets are recorded as
an asset on the Company's balance sheet. Potential future obligations for
unknown insolvencies are not determinable by the Company. The future
obligation has been based on the most recent information available from the
National Organization of Life and Health Insurance Guaranty Associations. The
Company has established a reserve of $19,662 and $17,901 and an offsetting
premium tax benefit of $7,429 and $7,631 at December 31, 1999 and 1998,
respectively, for its estimated share of future guaranty fund assessments
related to several major insurer insolvencies. The guaranty fund expense
(benefit) was $1,994, $1,985 and $(975) for the years ended December 31, 1999,
1998 and 1997, respectively.

27
<PAGE>

PFL Life Insurance Company

Summary of Investments--Other than
Investments in Related Parties

(Dollars in thousands)
December 31, 1999

SCHEDULE I

<TABLE>
<CAPTION>
Amount at Which
Market Shown in the
Type of Investment Cost(1) Value Balance Sheet
------------------ ---------- --------- ---------------
<S> <C> <C> <C>
Fixed maturities
Bonds:
United States Government and government
agencies and authorities............... $ 195,119 $ 189,752 $ 195,119
States, municipalities and political
subdivisions........................... 545,562 535,945 545,562
Foreign governments..................... 134,584 138,767 134,584
Public utilities........................ 219,791 214,162 219,791
All other corporate bonds............... 3,797,100 3,678,699 3,797,100
Redeemable preferred stock................ 17,074 15,437 17,074
---------- --------- ----------
Total fixed maturities.................... 4,909,230 4,772,762 4,909,230
Equity securities
Common stocks:
Banks, trust and insurance.............. 2,676 2,809 2,809
Industrial, miscellaneous and all
other.................................. 59,137 68,849 68,849
---------- --------- ----------
Total equity securities................... 61,813 71,658 71,658
Mortgage loans on real estate............. 1,339,202 1,339,202
Real estate............................... 41,536 41,536
Real estate acquired in satisfaction of
debt..................................... 16,336 16,336
Policy loans.............................. 59,871 59,871
Other long-term investments............... 123,722 123,722
Cash and short-term investments........... 53,695 53,695
---------- ----------
Total investments......................... $6,605,405 $6,615,250
========== ==========
</TABLE>
(1) Original cost of equity securities and, as to fixed maturities, original
cost reduced by repayments and adjusted for amortization of premiums or
accrual of discounts.

28
<PAGE>

PFL Life Insurance Company

Supplementary Insurance Information
(Dollars in thousands)

SCHEDULE III

<TABLE>
<CAPTION>
Future
Policy Policy
Benefits and
and Unearned Contract
Expenses Premiums Liabilities
---------- -------- -----------
<S> <C> <C> <C>
Year ended December 31, 1999
Individual life................................. $1,550,188 $ -- $ 8,607
Individual health............................... 133,214 10,311 10,452
Group life and health........................... 105,035 8,604 27,088
Annuity......................................... 4,036,751 -- --
---------- ------- -------
$5,825,188 $18,915 $46,147
========== ======= =======
Year ended December 31, 1998
Individual life................................. $1,355,283 $ -- $ 8,976
Individual health............................... 94,294 9,631 12,123
Group life and health........................... 93,405 10,298 36,908
Annuity......................................... 3,925,293 -- --
---------- ------- -------
$5,468,275 $19,929 $58,007
========== ======= =======
Year ended December 31, 1997
Individual life................................. $ 882,003 $ -- $ 8,550
Individual health............................... 62,033 9,207 12,821
Group life and health........................... 88,211 11,892 44,977
Annuity......................................... 4,204,125 -- --
---------- ------- -------
$5,236,372 $21,099 $66,348
========== ======= =======
</TABLE>

29
<PAGE>

PFL Life Insurance Company

Supplementary Insurance Information
(Dollars in thousands)

SCHEDULE III

<TABLE>
<CAPTION>
Benefits,
Claims
Net Losses and Other
Premium Investment Settlement Operating Premiums
Revenue Income* Expenses Expenses* Written
---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1999
Individual life........... $ 226,456 $104,029 $ 274,730 $141,030 $ --
Individual health......... 77,985 10,036 58,649 35,329 77,716
Group life and health..... 83,639 10,422 61,143 38,075 81,918
Annuity................... 1,413,049 313,062 1,303,537 278,995 --
---------- -------- ---------- --------
$1,801,129 $437,549 $1,698,059 $493,429
========== ======== ========== ========
Year ended December 31,
1998
Individual life........... $ 514,194 $ 85,258 $ 545,720 $ 87,455 $ --
Individual health......... 68,963 8,004 48,144 30,442 68,745
Group life and health..... 111,547 11,426 82,690 54,352 108,769
Annuity................... 667,920 342,296 592,085 298,222 --
---------- -------- ---------- --------
$1,362,624 $446,984 $1,268,639 $470,471
========== ======== ========== ========
Year ended December 31,
1997
Individual life........... $ 200,175 $ 75,914 $ 211,921 $ 36,185 $ --
Individual health......... 63,548 5,934 37,706 29,216 63,383
Group life and health..... 146,694 11,888 103,581 91,568 143,580
Annuity................... 657,695 352,688 571,434 364,216 --
---------- -------- ---------- --------
$1,068,112 $446,424 $ 924,642 $521,185
========== ======== ========== ========
</TABLE>
- -------------------------
* Allocations of net investment income and other operating expenses are based
on a number of assumptions and estimates, and the results would change if
different methods were applied.

30
<PAGE>

PFL Life Insurance Company

Reinsurance
(Dollars in thousands)

SCHEDULE IV

<TABLE>
<CAPTION>
Assumed Percentage
Ceded to From of Amount
Gross Other Other Net Assumed
Amount Companies Companies Amount to Net
---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1999
Life insurance in
force.................. $6,538,901 $(500,192) $415,910 $6,454,619 6.4%
========== ========= ======== ========== ===
Premiums:
Individual life....... $ 227,363 $ 3,967 $ 2,723 $ 226,119 1.2%
Individual health..... 83,489 5,504 -- 77,985 --
Group life and
health............... 205,752 122,113 -- 83,639 --
Annuity............... 1,426,112 12,726 -- 1,413,386 --
---------- --------- -------- ---------- ---
$1,942,716 $ 144,310 $ 2,723 $1,801,129 0.2%
========== ========= ======== ========== ===
Year ended December 31,
1998
Life insurance in
force.................. $6,384,095 $ 438,590 $ 39,116 $5,984,621 .6%
========== ========= ======== ========== ===
Premiums:
Individual life....... $ 515,164 $ 3,692 $ 2,366 $ 513,838 .5%
Individual health..... 76,438 7,475 -- 68,963 --
Group life and
health............... 255,848 144,301 -- 111,547 --
Annuity............... 686,372 18,096 -- 668,276 --
---------- --------- -------- ---------- ---
$1,533,822 $ 173,564 $ 2,366 $1,362,624 .2%
========== ========= ======== ========== ===
Year ended December 31,
1997
Life insurance in
force.................. $5,025,027 $ 420,519 $ 35,486 $4,639,994 .8%
========== ========= ======== ========== ===
Premiums:
Individual life....... $ 201,691 $ 3,554 $ 2,038 $ 200,175 1.0%
Individual health..... 73,593 10,045 -- 63,548 --
Group life and
health............... 339,269 192,575 -- 146,694 --
Annuity............... 697,893 40,198 -- 657,695 --
---------- --------- -------- ---------- ---
$1,312,446 $ 246,372 $ 2,038 $1,068,112 .2%
========== ========= ======== ========== ===
</TABLE>

31
<PAGE>

Financial Statements

PFL Retirement Builder Variable
Annuity Account - PFL
Immediate Income Builder

For the period May 28, 1999
(commencement of operations)
through December 31, 1999
with Report of Independent Auditors
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Financial Statements

For the period May 28, 1999 (commencement
of operations) through December 31, 1999

Contents
<TABLE>
<S> <C>
Report of Independent Auditors............................................ 1

Financial Statements

Balance Sheets............................................................ 2
Statements of Operations.................................................. 6
Statements of Changes in Contract Owners' Equity.......................... 10
Notes to Financial Statements............................................. 13
</TABLE>
<PAGE>

Report of Independent Auditors

The Board of Directors and Contract Owners
of the PFL Immediate Income Builder,
PFL Life Insurance Company

We have audited the accompanying balance sheets of certain subaccounts of PFL
Retirement Builder Variable Annuity Account (comprised of the VIP Money Market,
VIP High Income, VIP Equity-Income, VIP Growth, VIP Overseas, VIP II Investment
Grade Bond, VIP II Asset Manager, VIP II Asset Manager: Growth, VIP II
Contrafund, VIP II Index 500, VIP III Growth Opportunities, VIP III Growth and
Income, VIP III Balanced and VIP III Mid Cap subaccounts), which are available
for investment by contract owners of the PFL Immediate Income Builder, as of
December 31, 1999, and the related statements of operations for the period then
ended as indicated thereon and changes in contract owners' equity for the period
indicated thereon. These financial statements are the responsibility of the
Separate Account's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of mutual fund shares owned as of December 31,
1999, by correspondence with the mutual funds' transfer agent. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts of PFL Retirement Builder Variable Annuity Account which are
available for investment by contract owners of the PFL Immediate Income Builder
at December 31, 1999, and the results of their operations for the period then
ended as indicated thereon and changes in their contract owners' equity for the
period indicated thereon in conformity with accounting principles generally
accepted in the United States.

/s/ Ernst & Young LLP

Des Moines, Iowa
January 28, 2000

1
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Balance Sheets

December 31, 1999

<TABLE>
<CAPTION>
VIP Money
Market Subaccount
-----------------
<S> <C>
Assets
Cash $ -
Investments in mutual funds, at current market value:
Variable Insurance Products Fund:
VIP Money Market Portfolio 6,063
VIP High Income Portfolio -
VIP Equity-Income Portfolio -
VIP Growth Portfolio -
VIP Overseas Portfolio -
Variable Insurance Products Fund II:
VIP II Investment Grade Bond Portfolio -
VIP II Asset Manager Portfolio -
VIP II Asset Manager: Growth Portfolio -
VIP II Contrafund Portfolio -
VIP II Index 500 Portfolio -
Variable Insurance Products Fund III:
VIP III Growth Opportunities Portfolio -
VIP III Growth & Income Portfolio -
VIP III Balanced Portfolio -
VIP III Mid Cap Portfolio -
-------
Total investments in mutual funds 6,063
-------
Total assets $6,063
=======

Liabilities and contract owners' equity
Liabilities:
Contract terminations payable $ -
-------
Total liabilities

Contract owners' equity:
Annuity reserves 6,063
-------
Total liabilities and contract owners' equity $6,063
=======
</TABLE>

See accompanying notes.

2
<PAGE>

<TABLE>
<CAPTION>
VIP II
VIP High Income VIP Equity-Income VIP Growth VIP Overseas Investment Grade
Subaccount Subaccount Subaccount Subaccount Bond Subaccount
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ - $ - $ - $ - $ 1

- - - - -
6,119 - - - -
- 5,969 - - -
- - 72,365 - -
- - - 7,491 -

- - - - 5,943
- - - - -
- - - - -
- - - - -
- - - - -

- - - - -
- - - - -
- - - - -
- - - - -
- --------------------------------------------------------------------------------
6,119 5,969 72,365 7,491 5,943
- --------------------------------------------------------------------------------
$6,119 $5,969 $72,365 $7,491 $5,944
================================================================================

$ - $ - $ 5 $ 2 $ -
- --------------------------------------------------------------------------------
- - 5 2 -

6,119 5,969 72,360 7,489 5,944
- --------------------------------------------------------------------------------
$6,119 $5,969 $72,365 $7,491 $5,944
================================================================================
</TABLE>

3
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Balance Sheets (continued)

VIP II Asset VIP II Asset
Manager Manager: Growth
Subaccount Subaccount
---------------------------------------
<S> <C> <C>
Assets
Cash $ 27 $ -
Investments in mutual funds, at current market value:
Variable Insurance Products Fund:
VIP Money Market Portfolio - -
VIP High Income Portfolio - -
VIP Equity-Income Portfolio - -
VIP Growth Portfolio - -
VIP Overseas Portfolio - -
Variable Insurance Products Fund II:
VIP II Investment Grade Bond Portfolio - -
VIP II Asset Manager Portfolio 47,366 -
VIP II Asset Manager: Growth Portfolio - 6,517
VIP II Contrafund Portfolio - -
VIP II Index 500 Portfolio - -
Variable Insurance Products Fund III:
VIP III Growth Opportunities Portfolio - -
VIP III Growth & Income Portfolio - -
VIP III Balanced Portfolio - -
VIP III Mid Cap Portfolio - -
---------------------------------------
Total investments in mutual funds 47,366 6,517
---------------------------------------
Total assets $47,393 $6,517
=======================================

Liabilities and contract owners' equity
Liabilities:
Contract terminations payable $ - $ -
---------------------------------------
Total liabilities - -

Contract owners' equity:
Annuity reserves 47,393 6,517
---------------------------------------
Total liabilities and contract owners' equity $47,393 $6,517
=======================================
</TABLE>

See accompanying notes.

4
<PAGE>

VIP II VIP II VIP III Growth VIP III VIP III
Contrafund Index 500 Opportunities VIP III Growth & Balanced Mid Cap
Subaccount Subaccount Subaccount Income Subaccount Subaccount Subaccount
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ - $ - $ - $ - $ 1 $ -

- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -

- - - - - -
- - - - - -
- - - - - -
69,819 - - - - -
- 6,553 - - - -

- - 6,116 - - -
- - - 63,472 - -
- - - - 62,584 -
- - - - - 7,609
- ---------------------------------------------------------------------------------------------------------------
69,819 6,553 6,116 63,472 62,584 7,609
- ---------------------------------------------------------------------------------------------------------------
$69,819 $6,553 $6,116 $63,472 $62,585 $7,609
===============================================================================================================

$ 3 $ - $ - $ 1 $ - $ 1
- ---------------------------------------------------------------------------------------------------------------
3 - - 1 - 1

69,816 6,553 6,116 63,471 62,585 7,608
- ---------------------------------------------------------------------------------------------------------------
$69,819 $6,553 $6,116 $63,472 $62,585 $7,609
===============================================================================================================
</TABLE>

5
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Statements of Operations

For the period May 28, 1999 (commencement
of operations) through December 31, 1999

<TABLE>
<CAPTION>
VIP Money
Market Subaccount
--------------------
<S> <C>
Net investment income (loss)
Income:
Dividends $ 39
Expenses:
Administrative, mortality and expense risk charge 21
--------------------
Net investment income (loss) 18

Net realized and unrealized capital gain (loss) from investments
Net realized capital gain (loss) from sales of investments:
Proceeds from sales 20
Cost of investments sold 20
--------------------
Net realized capital gain (loss) from sales of investments -

Net change in unrealized appreciation of investments:
Beginning of period -
End of period -
Net change in unrealized appreciation of investments -
--------------------
Net realized and unrealized capital gain (loss) from investments -
Increase (decrease) from operations $ 18
====================
</TABLE>

See accompanying notes.

6
<PAGE>

<TABLE>
<CAPTION>
VIP II
VIP High VIP Equity- Investment
Income Income VIP Growth VIP Overseas Grade Bond
Subaccount Subaccount Subaccount Subaccount Subaccount
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ - $ - $ - $ - $ -
21 20 147 22 20
- --------------------------------------------------------------------------------------------------
(21) (20) (147) (22) (20)

21 21 54,848 22 20
21 21 55,310 20 20
- --------------------------------------------------------------------------------------------------
- - (462) 2 -

- - - - -
144 78 13,100 987 (39)
- --------------------------------------------------------------------------------------------------
144 78 13,100 987 (39)
- --------------------------------------------------------------------------------------------------
144 78 12,638 989 (39)
- --------------------------------------------------------------------------------------------------
$ 123 $ 58 $12,491 $967 $ (59)
==================================================================================================
</TABLE>

7
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Statements of Operations (continued)

VIP II Asset VIP II Asset
Manager Manager: Growth
Subaccount Subaccount
-------------------------------------
<S> <C> <C>
Net investment income (loss)
Income:
Dividends $ - $ -
Expenses:
Administrative, mortality and expense risk charge 102 21
-------------------------------------
Net investment income (loss) (102) (21)

Net realized and unrealized capital gain (loss) from investments
Net realized capital gain (loss) from sales of investments:
Proceeds from sales 546 21
Cost of investments sold 541 20
-------------------------------------
Net realized capital gain (loss) from sales of investments 5 1

Net change in unrealized appreciation of investments:
Beginning of period - -
End of period 1,648 397
-------------------------------------
Net change in unrealized appreciation of investments 1,648 397
-------------------------------------
Net realized and unrealized capital gain (loss) from investments 1,653 398
-------------------------------------
Increase (decrease) from operations $ 1,551 $ 377
=====================================
</TABLE>

See accompanying notes.

8
<PAGE>

VIP II VIP II VIP III Growth VIP III
Contrafund Index 500 Opportunities VIP III Growth & VIP III Balanced Mid Cap
Subaccount Subaccount Subaccount Income Subaccount Subaccount Subaccount
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ - $ - $ - $ - $ - $ 54

144 21 21 138 153 22
- --------------------------------------------------------------------------------------------------------------------
(144) (21) (21) (138) (153) 32

54,914 21 21 54,756 541,360 22
55,220 20 21 55,237 544,552 20
- --------------------------------------------------------------------------------------------------------------------
(306) 1 - (481) (3,192) 2

- - - - - -
10,700 420 169 4,097 3,104 1,118
- --------------------------------------------------------------------------------------------------------------------
10,700 420 169 4,097 3,104 1,118
- --------------------------------------------------------------------------------------------------------------------
10,394 421 169 3,616 (88) 1,120
- --------------------------------------------------------------------------------------------------------------------
$10,250 $400 $148 $ 3,478 $ (241) $ 1,152
====================================================================================================================
</TABLE>

9
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Statements of Changes in Contract Owners' Equity

For the period May 28, 1999 (commencement
of operations) through December 31, 1999

<TABLE>
<CAPTION>
VIP
VIP Money Market VIP High Income Equity-Income
Subaccount Subaccount` Subaccount
------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income (loss) $ 18 $ (21) $ (20)
Net realized capital gain (loss) - - -
Net change in unrealized appreciation of investments - 144 78
------------------------------------------------------
Increase (decrease) from operations 18 123 58

Contract transactions:
Net contract purchase payments 6,002 6,001 5,999
Transfer payments from (to) other subaccounts or
general account 43 (5) (88)
Contract terminations, withdrawals, and other
deductions - - -
------------------------------------------------------
Increase from contract transactions 6,045 5,996 5,911
------------------------------------------------------
Net increase in contract owners' equity 6,063 6,119 5,969

Contract owners' equity at beginning of period - - -
------------------------------------------------------
Contract owners' equity at end of period $6,063 $6,119 $5,969
======================================================
</TABLE>

See accompanying notes.

10
<PAGE>

<TABLE>
<CAPTION>
VIP II
Investment VIP II VIP II Asset VIP II
VIP Growth VIP Overseas Grade Bond Asset Manager Manager: Growth Contrafund VIP II Index
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount 500 Subaccount
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ (147) $ (22) $ (20) $ (102) $ (21) $ (144) $ (21)
(462) 2 - 5 1 (306) 1
13,100 987 (39) 1,648 397 10,700 420
- --------------------------------------------------------------------------------------------------------------------------
12,491 967 (59) 1,551 377 10,250 400

60,577 5,999 6,000 46,001 5,999 60,580 6,000

273 523 3 284 141 (66) 153

(981) - - (443) - (948) -
- --------------------------------------------------------------------------------------------------------------------------
59,869 6,522 6,003 45,842 6,140 59,566 6,153
- --------------------------------------------------------------------------------------------------------------------------
72,360 7,489 5,944 47,393 6,517 69,816 6,553

- - - - - - -
- --------------------------------------------------------------------------------------------------------------------------
$72,360 $7,489 $5,944 $47,393 $6,517 $69,816 $6,553
==========================================================================================================================
</TABLE>

11
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Statements of Changes in Contract Owners' Equity (continued)

<TABLE>
<CAPTION>
VIP III Growth VIP III Growth VIP III
Opportunities & Income Balanced VIP III Mid
Subaccount Subaccount Subaccount Cap Subaccount
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (21) $ (138) $ (153) $ 32
Net realized capital gain (loss) - (481) (3,192) 2
Net change in unrealized appreciation of
investments 169 4,097 3,104 1,118
------------------------------------------------------------------------
Increase (decrease) from operations 148 3,478 (241) 1,152

Contract transactions:
Net contract purchase payments 6,002 60,580 60,581 6,001
Transfer payments from (to) other
subaccounts or general account (34) 303 3,121 455
Contract terminations, withdrawals, and
other deductions - (890) (876) -
------------------------------------------------------------------------
Increase from contract transactions 5,968 59,993 62,826 6,456
------------------------------------------------------------------------
Net increase in contract owners' equity 6,116 63,471 62,585 7,608

Contract owners' equity at beginning of
period - - - -
------------------------------------------------------------------------
Contract owners' equity at end of period $6,116 $63,471 $62,585 $7,608
========================================================================
</TABLE>

See accompanying notes.

12
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Notes to Financial Statements

December 31, 1999

1. Organization and Summary of Significant Accounting Policies

Organization

The PFL Retirement Builder Variable Annuity Account ("Mutual Fund Account") is a
segregated investment account of PFL Life Insurance Company ("PFL Life"), an
indirect wholly-owned subsidiary of AEGON N.V., a holding company organized
under the laws of The Netherlands.

The Mutual Fund Account is registered with the Securities and Exchange
Commission as a Unit Investment Trust pursuant to provisions of the Investment
Company Act of 1940. The Mutual Fund Account consists of sixty-one investment
subaccounts, five of which are invested in specified portfolios of the Variable
Insurance Products Fund, five of which are invested in specified portfolios of
the Variable Insurance Products Fund II, and four of which are invested in
specified portfolios of the Variable Insurance Products Fund III (each a "Series
Fund" and collectively "the Series Funds"). Activity in these fourteen
subaccounts is available to contract owners of the PFL Immediate Income Builder.
Activity in the remaining forty-seven subaccounts (not included herein) are
available to contract owners of Retirement Income Builder Variable Annuity,
Retirement Income Builder II Variable Annuity, The One Income Annuity and the
Portfolio Select, also offered by PFL Life.

Investments

Net purchase payments received by the Mutual Fund Account are invested in the
portfolios of the Series Funds, as selected by the contract owner. Investments
are stated at the closing net asset values per share as of December 31, 1999.

Realized capital gains and losses from sale of shares in the Series Funds are
determined on the first-in, first-out basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date. Unrealized gains or losses
from investments in the Series Funds are credited or charged to contract owners'
equity.

Dividend Income

Dividends received from the Series Funds investments are reinvested to purchase
additional mutual fund shares.

13
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Notes to Financial Statements (continued)

2. Investments

A summary of the mutual fund investments at December 31, 1999 follows:

<TABLE>
<CAPTION>
Number of Net Asset Value Market
Shares Held Per Share Value Cost
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Variable Insurance Products Fund:
VIP Money Market Portfolio 6,062.700 $ 1.00 $ 6,063 $ 6,063
VIP High Income Portfolio 541.000 11.31 6,119 5,975
VIP Equity-Income Portfolio 232.182 25.71 5,969 5,891
VIP Growth Portfolio 1,317.411 54.93 72,365 59,265
VIP Overseas Portfolio 273.003 27.44 7,491 6,504
Variable Insurance Products Fund II:
VIP II Investment Grade Bond Portfolio 488.765 12.16 5,943 5,982
VIP II Asset Manager Portfolio 2,537.008 18.67 47,366 45,718
VIP II Asset Manager: Growth Portfolio 354.586 18.38 6,517 6,120
VIP II Contrafund Portfolio 2,395.176 29.15 69,819 59,119
VIP II Index 500 Portfolio 39.143 167.41 6,553 6,133
Variable Insurance Products Fund III:
VIP III Growth Opportunities Portfolio 264.187 23.15 6,116 5,947
VIP III Growth & Income Portfolio 3,668.876 17.30 63,472 59,375
VIP III Balanced Portfolio 3,911.474 16.00 62,584 59,480
VIP III Mid Cap Portfolio 498.945 15.25 7,609 6,491
</TABLE>

The aggregate cost of purchases and proceeds from sales of investments for the
period ended December 31, 1999 were as follows:

<TABLE>
<CAPTION>
Purchases Sales
---------------------------------
<S> <C> <C>
Variable Insurance Products Fund:
VIP Money Market Portfolio $ 6,083 $ 20
VIP High Income Portfolio 5,996 21
VIP Equity-Income Portfolio 5,912 21
VIP Growth Portfolio 114,575 54,848
VIP Overseas Portfolio 6,524 22
Variable Insurance Products Fund II:
VIP II Investment Grade Bond Portfolio 6,002 20
VIP II Asset Manager Portfolio 46,259 546
VIP II Asset Manager: Growth Portfolio 6,140 21
VIP II Contrafund Portfolio 114,339 54,914
VIP II Index 500 Portfolio 6,153 21
Variable Insurance Products Fund III:
VIP III Growth Opportunities Portfolio 5,968 21
VIP III Growth & Income Portfolio 114,612 54,756
VIP III Balanced Portfolio 604,032 541,360
VIP III Mid Cap Portfolio 6,511 22
</TABLE>

14
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Notes to Financial Statements (continued)

3. Contract Owners' Equity

Contract owners' equity includes amounts which represent the current market
value of PFL Life's capital contribution to the Subaccounts. A summary of these
amounts follows:

<TABLE>
<CAPTION>
Market
Subaccount Value
- ----------- -----------
<S> <C>
VIP Money Market $6,063
VIP High Income 6,119
VIP Equity-Income 5,969
VIP Growth 7,125
VIP Overseas 7,489
VIP II Investment Grade Bond 5,944
VIP II Asset Manager 6,370
VIP II Asset Manager: Growth 6,517
VIP II Contrafund 6,840
VIP II Index 500 6,553
VIP III Growth Opportunities 6,116
VIP III Growth & Income 6,210
VIP III Balanced Portfolio 6,104
VIP III Mid Cap Portfolio 7,608
</TABLE>

For financial statement reporting purposes, PFL Life uses "Equivalent
Accumulation Unit Value" and "Equivalent Accumulation Units", which are
designated amounts reflecting the value of reserves by each category of
mortality and expense. A summary of annuity reserves at December 31, 1999
follows:

<TABLE>
<CAPTION>
No Guarantee Contracts with
Balances Greater than $50,000
---------------------------------------------------------------
Equivalent Equivalent Total
Accumulation Units Accumulation Unit Contract
Subaccount Owned Value Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VIP Money Market 1,000.000 $1.024315 $ 1,024
VIP High Income 1,000.000 1.000301 1,000
VIP Equity-Income 1,000.000 0.976882 977
VIP Growth 52,331.620 1.270862 66,506
VIP Overseas 1,000.000 1.383479 1,383
VIP II Investment Grade Bond 1,000.000 0.994859 995
VIP II Asset Manager 1,000.000 1.085052 1,085
VIP II Asset Manager: Growth 1,000.000 1.117226 1,117
VIP II Contrafund 54,855.535 1.169328 64,144
VIP Index 500 1,000.000 1.127296 1,127
VIP III Growth Opportunities 1,000.000 1.015147 1,015
VIP III Growth & Income 55,552.517 1.049654 58,311
VIP III Balanced 56,869.953 1.010912 57,491
VIP III Mid Cap 1,000.000 1.381195 1,381
</TABLE>

15
<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Notes to Financial Statements (continued)

3. Contract Owners' Equity (continued)

<TABLE>
<CAPTION>
No Guarantee Contracts with
Balances Less than $50,000
---------------------------------------------------------------
Equivalent Equivalent Total
Subaccount Accumulation Units Accumulation Unit Contract
Owned Value Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VIP Money Market 1,000.000 $1.023113 $ 1,023
VIP High Income 1,000.000 0.999130 999
VIP Equity-Income 1,000.000 0.975731 976
VIP Growth 1,000.000 1.269380 1,269
VIP Overseas 1,000.000 1.381864 1,382
VIP II Investment Grade Bond 1,000.000 0.993693 994
VIP II Asset Manager 38,851.309 1.083777 42,106
VIP II Asset Manager: Growth 1,000.000 1.115920 1,116
VIP II Contrafund 1,000.000 1.167959 1,168
VIP Index 500 1,000.000 1.125983 1,126
VIP III Growth Opportunities 1,000.000 1.013953 1,014
VIP III Growth & Income 1,000.000 1.048420 1,048
VIP III Balanced 1,000.000 1.009724 1,010
VIP III Mid Cap 1,000.000 1.379578 1,380

<CAPTION>
Initial Payment Guarantee Contracts
with Balances Greater than $50,000
---------------------------------------------------------------
Equivalent Equivalent Total
Subaccount Accumulation Units Accumulation Unit Contract
Owned Value Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VIP Money Market 999.918 $1.005054 $1,005
VIP High Income 996.405 1.034665 1,031
VIP Equity-Income 997.710 1.007599 1,005
VIP Growth 987.901 1.161623 1,148
VIP Overseas 994.441 1.189096 1,182
VIP II Investment Grade Bond 997.614 0.992161 990
VIP II Asset Manager 994.976 1.056810 1,052
VIP II Asset Manager: Growth 993.624 1.079016 1,072
VIP II Contrafund 991.526 1.136618 1,127
VIP Index 500 994.387 1.082150 1,076
VIP III Growth Opportunities 994.300 1.028673 1,023
VIP III Growth & Income 995.885 1.033269 1,029
VIP III Balanced 994.295 1.027713 1,022
VIP III Mid Cap 992.140 1.222724 1,213
</TABLE>

<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Notes to Financial Statements (continued)

3. Contract Owners' Equity (continued)

<TABLE>
<CAPTION>
Initial Payment Guarantee Contracts
with Balances Less than $50,000
---------------------------------------------------------------
Equivalent Equivalent Total
Subaccount Accumulation Units Accumulation Unit Contract
Owned Value Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VIP Money Market 999.923 $1.004754 $1,005
VIP High Income 996.410 1.034341 1,031
VIP Equity-Income 997.715 1.007286 1,005
VIP Growth 987.907 1.161263 1,147
VIP Overseas 994.447 1.188729 1,182
VIP II Investment Grade Bond 997.619 0.991851 989
VIP II Asset Manager 994.982 1.056482 1,051
VIP II Asset Manager: Growth 993.629 1.078681 1,072
VIP II Contrafund 991.532 1.136264 1,127
VIP Index 500 994.392 1.081814 1,076
VIP III Growth Opportunities 994.305 1.028354 1,022
VIP III Growth & Income 995.891 1.032944 1,029
VIP III Balanced 994.301 1.027391 1,022
VIP III Mid Cap 992.145 1.222348 1,213

<CAPTION>
Step-up Payment Guarantee Contracts
with Balances Greater than $50,000
---------------------------------------------------------------
Equivalent Equivalent Total
Subaccount Accumulation Units Accumulation Unit Contract
Owned Value Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VIP Money Market 999.951 $1.003130 $1,003
VIP High Income 996.438 1.032670 1,029
VIP Equity-Income 997.743 1.005651 1,003
VIP Growth 987.934 1.159391 1,145
VIP Overseas 994.475 1.186816 1,180
VIP II Investment Grade Bond 997.647 0.990245 988
VIP II Asset Manager 995.010 1.054772 1,050
VIP II Asset Manager: Growth 993.657 1.076939 1,070
VIP II Contrafund 991.560 1.134431 1,125
VIP Index 500 994.419 1.080067 1,074
VIP III Growth Opportunities 994.332 1.026689 1,021
VIP III Growth & Income 995.919 1.031275 1,027
VIP III Balanced 994.328 1.025731 1,020
VIP III Mid Cap 992.173 1.220375 1,211
</TABLE>

<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Notes to Financial Statements (continued)

3. Contract Owners' Equity (continued)

<TABLE>
<CAPTION>
Step-up Payment Guarantee Contracts
with Balances Less than $50,000
---------------------------------------------------------------
Equivalent Equivalent Total
Subaccount Accumulation Units Accumulation Unit Contract
Owned Value Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VIP Money Market 999.957 $1.002831 $1,003
VIP High Income 996.443 1.032356 1,029
VIP Equity-Income 997.748 1.005343 1,003
VIP Growth 987.939 1.159032 1,145
VIP Overseas 994.480 1.186455 1,180
VIP II Investment Grade Bond 997.653 0.989942 988
VIP II Asset Manager 995.015 1.054451 1,049
VIP II Asset Manager: Growth 993.661 1.076610 1,070
VIP II Contrafund 991.565 1.134083 1,125
VIP Index 500 994.425 1.079734 1,074
VIP III Growth Opportunities 994.337 1.026377 1,021
VIP III Growth & Income 995.924 1.030959 1,027
VIP III Balanced 994.333 1.025415 1,020
VIP III Mid Cap 992.178 1.220006 1,210

A summary of equivalent accumulation unit activity follows:

<CAPTION>
VIP Money VIP High VIP Equity- VIP
Market Income Income VIP Growth Overseas
Subaccount Subaccount Subaccount Subaccount Subaccount
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Units purchased 6,006 5,992 5,997 58,092 5,984
Units redeemed and transferred (6) (6) (6) (809) (6)
--------------------------------------------------------------------------------------------
Units outstanding at December 31,
1999 6,000 5,986 5,991 57,283 5,978
============================================================================================

<CAPTION>
VIP II VIP II Asset
Investment VIP II Asset Manager: VIP II VIP II
Grade Bond Manager Growth Contrafund Index 500
Subaccount Subaccount Subaccount Subaccount Subaccount
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Units purchased 5,997 44,257 5,981 60,671 5,984
Units redeemed and transferred (6) (426) (6) (849) (6)
--------------------------------------------------------------------------------------------
Units outstanding at December 31,
1999 5,991 43,831 5,975 59,822 5,978
============================================================================================
</TABLE>

<PAGE>

PFL Retirement Builder Variable Annuity Account -
PFL Immediate Income Builder

Notes to Financial Statements (continued)

3. Contract Owners' Equity (continued)

<TABLE>
<CAPTION>
VIP III Growth VIP III Growth VIP III VIP III
Opportunities & Income Balanced Mid Cap
Subaccount Subaccount Subaccount Subaccount
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units purchased 5,983 61,396 62,727 5,975
Units redeemed and transferred (6) (860) (880) (6)
------------------------------------------------------------------------
Units outstanding at December 31,
1999 5,977 60,536 61,847 5,969
========================================================================
</TABLE>

4. Administrative, Mortality and Expense Risk Charge

PFL Life deducts a daily charge for assuming certain mortality and expense
risks. For policies with value of less than $50,000, this charge is equal to an
effective annual rate of 1.20% of the value of the contract owner's individual
account. For policies with value of $50,000 or more, the corresponding charge is
equal to an effective annual rate of 1.00% of the value of the contract owner's
individual account. PFL Life also deducts a daily charge equal to an annual rate
of .15% of the contract owner's account for administrative expenses.

PFL Life also deducts a charge for those contract owners electing either of the
available payment guarantee options. A daily charge equal to an annual rate of
1.25% is deducted from the contract owners' account for the initial payment
guarantee. This charge is equal to 2.50% for the step-up payment guarantee.

5. Taxes

Operations of the Mutual Fund Account form a part of PFL Life, which is taxed as
a life insurance company under Subchapter L of the Internal Revenue Code of
1986, as amended (the "Code"). The operations of the Mutual Fund Account are
accounted for separately from other operations of PFL Life for purposes of
federal income taxation. The Mutual Fund Account is not separately taxable as a
regulated investment company under Subchapter M of the Code and is not otherwise
taxable as an entity separate from PFL Life. Under existing federal income tax
laws, the income of the Mutual Fund Account, to the extent applied to increase
reserves under the variable annuity contracts, is not taxable to PFL Life.

<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./10/

(10) (b) Opinion and Consent of Actuary./10/

(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 with Post-Effective Amendment No. 3 to Form N-4 Registration
Statement (File No. 333-61063) on November 2, 1999.

/10/ Filed herewith.

<PAGE>

Item 25. Directors and Officers of the Depositor (PFL Life Insurance Company)

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

Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- ------------- ----------------- --------
<S> <C> <C> <C>
AEGON N.V. Netherlands 53.63% of Vereniging Holding company
AEGON Netherlands
Membership Association

Groninger Financieringen B.V. Netherlands 100% of AEGON N.V. Holding company

AEGON Netherland N.V. Netherlands 100% of AEGON N.V. Holding company

AEGON Nevak Holding B.V. Netherlands 100% of AEGON N.V. Holding company

AEGON International N.V. Netherlands 100% of AEGON N.V. Holding company

Voting Trust Trustees: Delaware Voting Trust
K.J. Storm
Donald J. Sherpard H.B.
Van Wijk Dennis Hersch

AEGON U.S. Holding Corporation Delaware 100% Voting Trust Holding company

Short Hills Management Company New Jersey 100% AEGON U.S. Holding company
Holding Corporation

CORPA Reinsurance Company New York 100% AEGON U.S. Holding company
Holding Corporation

AEGON Management Company Indiana 100% AEGON U.S. Holding company
Holding Corporation

RCC North America Inc. Delaware 100% AEGON U.S. Holding company
Holding Corporation

AEGON USA, Inc. Iowa 100% AEGON U.S. Holding company
Holding Corporation

Transamerica Holding Company Delaware 100% AEGON USA, Inc. Holding company
Holding Corporation

AEGON Funding Corp. Delaware 100% Transamerica Issue debt securities-net
Holding Corporation proceeds used to make
loans to affiliates

First AUSA Life Insurance Maryland 100% AEGON USA, Inc. Insurance Holding company
Company

AUSA Life Insurance New York 82.33% First AUSA Life Insurance
Company, Inc. Insurance Company
17.67% Veterans Life
Insurance Company

Life Investors Insurance Iowa 100% First AUSA Life Ins. Co. Insurance
Company of America
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
Life Investors Alliance, LLC Delaware 100% LIICA Purchase, own, and hold the
equity interest of other entities

Great American Insurance Iowa 100% LIICA Marketing
Agency, Inc.

Bankers United Life Iowa 100% Life Investors Ins. Insurance
Assurance Company Company of America

PFL Life Insurance Company Iowa 100% First AUSA Life Ins. Co. Insurance

AEGON Financial Services Minnesota 100% PFL Life Insurance Co. Marketing
Group, Inc.

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 Stock Insurance
First AUSA Life Ins. Co.

Iowa Fidelity Life Insurance Co. Arizona 100% of Common Voting Stock Insurance
First AUSA Life Ins. Co.

Western Reserve Life Assurance Ohio 100% First AUSA Life Ins. Co. Insurance
Co. of Ohio

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 advisor
Management, Inc. Assurance Co. of Ohio

ISI Insurance Agency, Inc. California 100% Western Reserve Life Insurance agency
And Subsidiaries Assurance Co. of Ohio

ISI Insurance Agency Alabama 100% ISI Insurance Agency, Insurance Agency
of Alabama, Inc. Inc.

ISI Insurance Agency Ohio 100% ISI Insurance Agency, Inc.Insurance agency
of Ohio, Inc.

ISI Insurance Agency Massachusetts 100% ISI Insurance Agency, Inc.Insurance Agency
of Massachusetts, Inc.

ISI Insurance Agency Texas 100% ISI Insurance Agency, Inc.Insurance agency
of Texas, Inc.
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
ISI Insurance Agency Hawaii 100% ISI Insurance Agency, Insurance agency
of Hawaii, Inc. Inc.

ISI Insurance Agency New Mexico 100% ISI Insurance Agency, Insurance agency
New Mexico, Inc. Inc.

AEGON Equity Group, Inc. Florida 100% Western Reserve Life Insurance Agency
Assurance Co. of Ohio

Monumental General Casualty Co. Maryland 100% First AUSA Life Ins. Co. Insurance

United Financial Services, Inc. Maryland 100% First AUSA Life Ins. Co. General agency

Bankers Financial Life Ins. Co. Arizona 100% First AUSA Life Ins. Co. Insurance

The Whitestone Corporation Maryland 100% First AUSA Life Ins. Co. Insurance agency

Cadet Holding Corp. Iowa 100% First AUSA Life Holding company
Insurance Company

Monumental General Life Puerto Rico 51% First AUSA Life Insurance
Insurance Company of Insurance Company
Puerto Rico 49% Baldrich & Associates
of Puerto Rico

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 Agency, Inc. Kansas 100% Monumental General Sale/admin. of travel
Insurance Group, Inc. insurance

Monumental General Maryland 100% Monumental General Provides management srvcs.
Administrators, Inc. Insurance Group, Inc. to unaffiliated third party
administrator

Executive Management and Maryland 100% Monumental General Provides actuarial consulting
Consultant Services, Inc. Administrators, Inc. services

Monumental General Mass Maryland 100% Monumental General Marketing arm for sale of
Marketing, Inc. Insurance Group, Inc. mass marketed insurance
coverages

AUSA Financial Markets, Inc. Iowa 100% AUSA Holding Co. Marketing

Transamerica Capital, Inc. California 100% AUSA Holding Co. Broker/Dealer

Endeavor Management Company California 100% AUSA Holding Co. Investment Management

Universal Benefits Corporation Iowa 100% AUSA Holding Co. Third party administrator
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
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

ADB Corporation Delaware 100% Money Services, Inc. Special purpose limited
Liability company

ORBA Insurance Services, Inc. California 10.56% Money Services, Inc. Insurance agency

Zahorik Company, Inc. California 100% AUSA Holding Co. Broker-Dealer

ZCI, Inc. Alabama 100% Zahorik Company, Inc. Insurance agency

Zahorik Texas, Inc. Texas 100% Zahorik Company, Inc. Insurance agency

Long, Miller & Associates, L.L.C. California 33-1/3% AUSA Holding Co. 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

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.

Idex Investor Services, Inc. Florida 100% AUSA Holding Co. Shareholder services

Idex Management, Inc. Delaware 100% AUSA Holding Co. Investment advisor

IDEX Mutual Funds Massachusetts Various Mutual fund

Diversified Investment Delaware 100% AUSA Holding Co. Registered investment advisor
Advisors, Inc.

Diversified Investors Securities Delaware 100% Diversified Investment Broker-Dealer
Corp. Advisors, Inc.
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
George Beram & Company, Inc. Massachusetts 100% Diversified Investment Employee benefit and
Advisors, Inc. actuarial consulting

AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer (De-registered)

Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance

CRC Creditor Resources Canada 100% Creditor Resources,Inc. Insurance agency
Canadian Dealer Network Inc.

Weiner Agency, Inc. Maryland 100% Creditor Resources, Inc. Insurance agency

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

AEGON USA Real Estate Delaware 100% AEGON USA Realty Real estate and mortgage
Services, Inc. Advisors, Inc. holding company

QSC Holding, Inc. Delaware 100% AEGON USA Realty Real estate and financial
Advisors, Inc. software production and sales

LRA, Inc. Iowa 100% AEGON USA Realty Real estate counseling
Advisors, Inc.

Landauer Associates, Inc. Delaware 100% AEGON USA Realty Real estate counseling
Advisors, Inc.

Landauer Realty Associates, Inc. Texas 100% Landauer Associates, Inc. Real estate counseling

Realty Information Systems, Inc. Iowa 100% AEGONUSA Realty Information Systems for
Advisors, Inc. real estate investment
management

USP Real Estate Investment Trust Iowa 12.89% First AUSA Life Ins. Co.Real estate investment trust
13.11% PFL Life Ins. Co.
4.86% Bankers United Life
Assurance Co.

RCC Properties Limited Iowa AEGON USA Realty Advisors, Limited Partnership
Partnership Inc. is General Partner and 5%
owner.

Commonwealth General Delaware 100% AEGON USA, Inc. Holding company
Corporation ("CGC")

AFSG Securities Corporation Pennsylvania 100% CGC Broker-Dealer

Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples Security Life
Insurance Company
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
Durco Agency, Inc. Virginia 100% Benefit Plans, Inc. General agent

Capital 200 Block Corporation Delaware 100% CGC Real estate holdings

Capital Real Estate Delaware 100% CGC Furniture and equipment
Development Corporation lessor

Commonwealth General. Kentucky 100% CGC Administrator of structured
Assignment Corporation settlements

Diversified Financial Delaware 100% CGC Provider of investment,
Products Inc. marketing and admin. services
to ins. cos.

Monumental Agency Group, Inc. Kentucky 100% CGC Provider of srvcs. to ins. cos.

PB Investment Advisors, Inc. Delaware 100% CGC Registered investment advisor (de-registered)

Southlife, Inc. Tennessee 100% CGC Investment subsidiary

Commonwealth General LLC Turks & 100% CGC Special-purpose subsidiary
Caicos Islands

Ampac Insurance Agency, Inc. Pennsylvania 100% CGC Provider of management
(EIN 23-1720755) support services

Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Corporation Agency, Inc.

Financial Planning Services, Inc. Dist. Columbia 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.

Frazer Association Illinois 100% Ampac Insurance TPA license-holder
Consultants, Inc. Agency, Inc.

National Home Life Corporation Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.

Valley Forge Associates, Inc. Pennsylvania 100% Ampac Insurance Furniture & equipment lessor
Agency, Inc.

Veterans Benefits Plans, Inc. Pennsylvania 100% Ampac Insurance Administrator of group
Agency, Inc. insurance programs

Veterans Insurance Services, Inc. Delaware 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
Academy Insurance Group, Inc. Delaware 100% CGC Holding company

Academy Life Insurance Co. Missouri 100% Academy Insurance Insurance company
Group, Inc.

Pension Life Insurance New Jersey 100% Academy Life Insurance company
Company of America Insurance Company

FED Financial, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

Ammest Development Corp. Inc. Kansas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

Ammest Insurance Agency, Inc. California 100% Academy Insurance General agent
Group, Inc.

Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose subsidiary
Insurance Agency, Inc. Group, Inc.

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, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
(EIN 23-2364438) Group, Inc.

Force Financial Group, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

Force Financial Services, Inc. Massachusetts 100% Force Fin. Group, Inc. Special-purpose subsidiary

Military Associates, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

NCOAA Management Company Texas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

NCOA Motor Club, Inc. Georgia 100% Academy Insurance Automobile club
Group, Inc.

Unicom Administrative Pennsylvania 100% Academy Insurance Provider of admin. services
Services, Inc. Group, Inc.

Unicom Administrative Germany 100% Unicom Administrative Provider of admin. services
Services, GmbH Services, Inc.

Capital General Development Delaware 100% CGC Holding company
Corporation

Monumental Life Maryland 73.23% Capital General Insurance company
Insurance Company Development Company
26.77% First AUSA Life
Insurance Company

AEGON Special Markets Maryland 100% Monumental Life Marketing company
Group, Inc. Insurance Company

Peoples Benefit Life Missouri 3.7% CGC Insurance company
Insurance Company 20.0% Capital Liberty, L.P.
76.3% Monumental Life
Insurance company

Veterans Life Insurance Co. Illinois 100% Peoples Benefit Insurance company
Life Insurance Company

Peoples Benefit Services, Inc. Pennsylvania 100% Veterans Life Ins. Co. Special-purpose subsidiary

Coverna Direct Insurance Maryland 100% Peoples Benefit Insurance agency
Insurance Services, Inc. Life Insurance Company

Ammest Realty Corporation Texas 100% Monumental Life Special purpose subsidiary
Insurance Company

JMH Operating Company, Inc. Mississippi 100% Monumental Life Real estate holdings
Insurance Company

Capital Liberty, L.P. Delaware 99.0% Monumental Life Holdings Company
Insurance Company
1.0% CGC

Transamerica Corporation Delaware 100% AEGON NV Major interest in insurance
and finance

Transamerica Pacific Insurance Hawaii 100% Transamerica Corp. Life insurance
Company, Ltd.

TREIC Enterprises, Inc. Delaware 100% Transamerica Corp. Investments

ARC Reinsurance Corporation Hawaii 100% Transamerica Corp. Property & Casualty Ins.

Transamerica Management, Inc. Delaware 100% ARC Reinsurance Corp. Asset management

Inter-America Corporation California 100% Transamerica Corp. Insurance Broker

Pyramid Insurance Company, Ltd. Hawaii 100% Transamerica Corp. Property & Casualty Ins.

Pacific Cable Ltd. Bmda. 100% Pyramid Ins. Co., Ltd. Sold 25% of TC Cable, Inc.
stock in 1998

Transamerica Business Tech Corp. Delaware 100% Transamerica Corp. Telecommunications and
data processing

Transamerica CBO I, Inc. Delaware 100% Transamerica Corp. Owns and manages a pool of
high-yield bonds

Transamerica Corporation (Oregon) Oregon 100% Transamerica Corp. Name holding only-Inactive

Transamerica Finance Corp. Delaware 100% Transamerica Corp. Commercial & Consumer
Lending & equip. leasing

TA Leasing Holding Co., Inc. Delaware 100% Transamerica Fin. Corp. Holding company

Trans. Ocean Ltd. Delaware 100% TA Leasing Hldg Co. Inc. Holding company

Trans Ocean Container Corp. Delaware 100% Trans Ocean Ltd. Intermodal leasing
("TOCC")

SpaceWise Inc. Delaware 100% TOCC Intermodal leasing

Trans Ocean Container Delaware 100% TOCC Intermodal leasing
Finance Corp.

Trans Ocean Leasing Germany 100% TOCC Intermodal leasing
Deutschland GmbH

Trans Ocean Leasing PTY Ltd. Austria 100% TOCC Intermodal leasing

Trans Ocean Management S.A. Switzerland 100% TOCC Intermodal leasing

Trans Ocean Regional California 100% TOCC Holding company
Corporate Holdings

Trans Ocean Tank Services Corp. Delaware 100% TOCC Intermodal leasing

Transamerica Leasing Inc. Delaware 100% TA Leasing Holding Co. Leases & Services intermodal
equipment

Transamerica Leasing Holdings Delaware 100% Transamerica Leasing Inc. Holding Company
Inc. ("TLHT")

Greybox Logistics Services Inc. Delaware 100% TLHI Intermodal Leasing
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
Greybox L.L.C. Delaware 100% TLHI Intermodal freight container
interchange facilitation
service

Transamerica Trailer France 100% Greybox L.L.C. Leasing
Leasing S.N.C.

Greybox Services Limited U.K. 100% TLHI Intermodal Leasing

Intermodal Equipment, Inc. Delaware 100% TLHI Intermodal leasing

Transamerica Leasing N.V. Belg. 100% Intermodal Equipment Inc. Leasing

Transamerica Leasing SRL Italy 100% Intermodal Equipment Inc. Leasing

Transamerica Distribution Delaware 100% TLHI Provided door-to-door
Services, Inc. services for the domestic
transportation of temperature-
sensitive products

Transamerica Leasing Belg. 100% TLHI Leasing
Coordination Center

Transamerica Leasing do Braz. 100% TLHI Container Leasing
Brasil Ltda.

Transamerica Leasing GmbH Germany 100% TLHI Leasing

Transamerica Leasing Limited U.K. 100% TLHI Leasing

ICS Terminals (UK) Limited U.K. 100% Transamerica. Leasing
Leasing Limited

Transamerica Leasing Pty. Ltd. Australia 100% TLHI Leasing

Transamerica Leasing (Canada) Inc. Canada 100% TLHI Leasing

Transamerica Leasing (HK) Ltd. H.K. 100% TLHI Leasing

Transamerica Leasing S. Africa 100% TLHI Intermodal leasing
(Proprietary) Limited

Transamerica Tank Container Australia 100% TLHI The Australian (domestic)
Leasing Pty. Limited leasing of tank containers

Transamerica Trailer Holdings I Inc. Delaware 100% TLHI Holding company

Transamerica Trailer Holdings II, Inc. Delaware 100% TLHI Holding company
</TABLE>

<PAGE>

<TABLE>

<S> <C> <C> <C>
Transamerica Trailer Holdings III, Inc.Delaware 100% TLHI Holding company

Transamerica Trailer Leasing AB Swed. 100% TLHI Leasing

Transamerica Trailer Leasing AG Swetzerland 100% TLHI Leasing

Transamerica Trailer Leasing A/S Denmark 100% TLHI Leasing

Transamerica Trailer Leasing GmbH Germany 100% TLHI Leasing

Transamerica Trailer Leasing Belgium 100% TLHI Leasing
(Belgium) N.V.

Transamerica Trailer Leasing Netherlands 100% TLHI Leasing
(Netherlands) B.V.

Transamerica Trailer Spain S.A. Spain 100% TLHI Leasing

Transamerica Transport Inc. New Jersey 100% TLHI Dormant

Transamerica Commercial Delaware 100% Transamerica Fin. Corp. Holding company for
Finance Corporation, I ("TCFCI") Commercial/consumer
finance subsidiaries

Transamerica Equipment Financial Delaware 100% TCFCI
Services Corporation

BWAC Credit Corporation Delaware 100% TCFCI

BWAC International Corporation Delaware 100% TCFCI

BWAC Twelve, Inc. Delaware 100% TCFCI Holding company for
premium finance subsidiaries

TIFCO Lending Corporation Illinois 100% BWAC Twelve, Inc. General financing & other
services in the US &
elsewhere

Transamerica Insurance Finance Maryland 100% BWAC Twelve, Inc. Provides insurance premium
Corporation ("TIFC") financing in the US with the
exception of CA and HI

Transamerica Insurance Finance Maryland 100% TIFC Provides Insurance premium
Company (Europe) financing in California

Transamerica Insurance Finance California 100% TIFC Disability ins. & holding co.
Corporation, California for various insurance
subsidiaries of Transamerica
Corporation
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
Transamerica Insurance Finance ON 100% TIFC Provides ins. premium
Corporation, Canada financing in Canada

Transamerica Business Credit Delaware 100% TCFCI Provides asset based lending
Corporation ("TBCC") leasing & equip. financing

Transamerica Mezzanine Delaware 100% TBCC Holds investments in several
Financing, Inc. joint ventures/partnerships

Transamerica Business Advisory Delaware 100% TBCC
Grp.

Bay Capital Corporation Delaware 100% TBCC Special purpose company for
the purchase of real estate tax
liens

Coast Funding Corporation Delaware 100% TBCC Special purpose company for
the purchase of real estate tax
liens

Transamerica Small Business Delaware 100% TBCC
Capital, Inc. ("TSBC")

Emergent Business Capital Delaware 100% TSBC
Holdings, Inc.

Gulf Capital Corporation Delaware 100% TBCC Special purpose company for
the purchase of real estate tax
liens

Direct Capital Equity Investment, Delaware 100% TBCC Small business loans
Inc.

TA Air East, Corp Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air I, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air II, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air III, Corp. Delaware 100% TBCC special purpose corp. which
hold an ownership interest
or leases aircraft
</TABLE>

<PAGE>

<TABLE>

<S> <C> <C> <C>
TA Air IV, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air V, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air VI, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air VII, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air VIII, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air IX, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air X, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air XI, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air XII, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air XIII, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air XIV, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft

TA Air XV, Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest
or leases aircraft
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
TA Marine I Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest or
leases barges or ships

TA Marine II Corp. Delaware 100% TBCC Special purpose corp. which
hold an ownership interest or
leases barges or ships

TBC I, Inc. Delaware 100% TBCC Special purpose corp.

TBC II, Inc. Delaware 100% TBCC Special purpose corp.

TBC III, Inc. Delaware 100% TBCC Special purpose corp.

TBC IV, Inc. Delaware 100% TBCC Special purpose corp.

TBC V, Inc. Delaware 100% TBCC Special purpose corp.

TBC VI, Inc. Delaware 100% TBCC Special purpose corp.

TBC Tax I, Inc. Delaware 100% TBCC Special purpose co. for the
purchase of real estate tax lien

TBC Tax II, Inc. Delaware 100% TBCC Special purpose co. for the
purchase of real estate tax lien

TBC Tax III, Inc. Delaware 100% TBCC Special purpose co. for the
purchase of real estate tax lien

TBC Tax IV, Inc. Delaware 100% TBCC Special purpose co. for the
purchase of real estate tax lien

TBC Tax V, Inc. Delaware 100% TBCC Special purpose co. for the
purchase or real estate tax lien

TBC Tax VI, Inc. Delaware 100% TBCC Special purpose co. for the
purchase or real estate tax lien

TBC Tax VII, Inc. Delaware 100% TBCC Special purpose co. for the
purchase or real estate tax lien

TBC Tax VIII, Inc. Delaware 100% TBCC Special purpose co. for the
purchase of real estate tax lien

TBC Tax IX, Inc. Delaware 100% TBCC Special purpose co. for the
purchase of real estate tax lien
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
The Plain Company Delaware 100% TBCC Special purpose corp. which
hold an ownership interest or
leases aircraft.

Transamerica Distribution Delaware 100% TCFCI Holding corp. for inventory,
Finance Corporation ("TDFC") comm. Leasing, retail finance
comm. Recovery service and
accounts

Transamerica Accounts Holding Delaware 100% TDFC
Corp.

Transamerica Commercial Delaware 100% TDFC Wholesale floor plan for
Finance Corporation ("TCFC") appliances, electronics, computers, office
equip. and marine equipment.

Transamerica Acquisition Canada 100% TCFC Holding company
Corporation, Canada

Transamerica Distribution Finance Delaware 100% TCFC
Corporation - Overseas, Inc.
("TDFCO")

TDF Mauritius Limited Mauritius 100% TDFCO Mauritius holding company
of our Indian Joint Venture

Inventory Funding Trust Delaware 100% TCFC

Inventory Funding Company, LLC Delaware 100% Inventory Funding Trust

TCF Asset Management Corporation Colorado 100% TCFC A depository for foreclosed
real and personal property

Transamerica Joint Ventures, Inc. Delaware 100% TCFC To enter into general partner-
ships for the ownership of
comm. & finance business

Transamerica Inventory Delaware 100% TDFC Holding co. for inventory
Finance Corporation ("TIFC") finance subsidiaries

Transamerica GmbH, Inc. Delaware 100% TIFC Commercial lending in
Germany

Transamerica Fincieringsmaatschappij
B.V. Netherlands 100% Trans. GmbH, Inc. Commercial lending in
Europe
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
BWAC Seventeen, Inc. Delaware 100% TIFC Holding co. for principal
Canadian operation, Trans-
America Comm. Finance
Corp, Canada

Transamerica Commercial ON 100% BWAC Seventeen, Inc. Shell corp.- Dormant
Finance Canada, Limited

Transamerica Commercial Canada 100% BWAC Seventeen, Inc. Commercial finance
Finance Corporation, Canada

BWAC Twenty-One, Inc. Delaware 100% TIFC Holding co. for United
Kingdom operation, Trans-
America Comm. Finance
Limited

Transamerica Commercial U.K. 100% BWAC Twenty-One Inc. Commercial lending in the
Finance Limited ("TCFL") United Kingdom.

Whirlpool Financial Corporation 100% TCFL Inactive commercial finance
Polska Spzoo Company in Poland

Transamerica Commercial U.K. 100% BWAC Twenty-One Inc. Holding Company
Holdings Limited

Transamerica Commercial Finance U.K. 100% Trans. Commercial
Limited Holdings Limited

Transamerica Commercial Finance France 100% BWAC Twenty-One Inc. Carries out factoring trans-
France S.A. actions in France & abroad

Transamerica GmbH Inc. Delaware 100% BWAC Twenty-One Inc. Holding co. for Transamerica
Financieringsmaatschappij
B.V.

Transamerica Retail Financial Delaware 100% TIFC Provides retail financing
Services Corporation ("TRFSC")

Transamerica Bank, NA Delaware 100% TRFSC Bank (Credit Cards)

Transamerica Consumer Finance Delaware 100% TRFSC Consumer finance holding
Holding Company ("TCFHC") company

Transamerica Mortgage Company Delaware 100% TCFHC Consumer mortgages

Transamerica Consumer Mortgage Delaware 100% TCFHC Securitization company
Receivables Company

Metropolitan Mortgage Company Florida 100% TCFHC Consumer mortgages
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
Easy Yes Mortgage, Inc. Florida 100% Metropolitan Mtg. Co. No active business/Name
holding only

Easy Yes Mortgage, Inc. Georgia 100% Metropolitan Mtg. Co. No active business/Name
holding only

First Florida Appraisal Services, Georgia 100% Metropolitan Mtg. Co. Appraisal and inspection
Inc. services

First Georgia Appraisal Services, Georgia 100% First FL App. Srvc, Inc. Appraisal services
Inc.

Freedom Tax Services, Inc. Florida 100% Metropolitan Mtg. Co. Property tax information
services

J.J. & W. Advertising, Inc. Florida 100% Metropolitan Mtg. Co. Advertising and marketing
services

J.J. & W. Realty Corporation Florida 100% Metropolitan Mtg. Co. To hold problem REO
properties

Liberty Mortgage Company of Florida 100% Metropolitan Mtg. Co. No active business/Name
Ft. Myers, Inc. holding only

Metropolis Mortgage Company Florida 100% Metropolitan Mtg. Co. No active business/Name
holding only

Perfect Mortgage Company Florida 100% Metropolitan Mtg. Co. No active business/Name
holding only

Transamerica Vendor Financial Delaware 100% TDFC Provides commercial lease
Srvc.

Transamerica Distribution Finance 100% TCFCI
Corporation de Mexico ("TDFCM")

TDF de Mexico Mexico 100% TDFCM

Transamerica Corporate Services 100% TDFCM
De Mexico

Transamerica Home Loan California 100% TFC Consumer mortgages

Transamerica Lending Company Delaware 100% TFC Consumer lending

Transamerica Financial Products, California 100% Transamerica Corp. Service investments
Inc.

Transamerica Insurance Corporation California 100% Transamerica Corp. Provides insurance premium
of California ("TICC") financing in California
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
Arbor Life Insurance Company Arizona 100% TICC Life insurance, disability
insurance

Plaza Insurance Sales Inc. California 100% TICC Casualty insurance placement

Transamerica Advisors, Inc. California 100% TICC Retail sale of investment
advisory services

Transamerica Annuity Services New Mexico 100% TICC Performs services required for
Corp. structured settlements

Transamerica Financial Resources, Delaware 100% TICC Retail sale of securities
Inc. products

Financial Resources Insurance Texas 100% Transamerica Fin. Res. Retail sale of securities
Agency of Texas products

TBK Insurance Agency of Ohio, Inc. Ohio 100% Transamerica Fin. Res. Variable insurance contract
sales in state of Ohio

Transamerica Financial Resources Alabama 100% Transamerica Fin. Res. Insurance agent & broker
Agency of Alabama, Inc.

Transamerica Financial Resources Massachusetts 100% Transamerica Fin. Res. Insurance agent & broker
Ins. Agency of Massachusetts,
Inc.

Transamerica International Delaware 100% TICC Holding & administering
Insurance Services, Inc. foreign operations
("TIIS")

Home Loans and Finance Ltd. U.K. 100% TIIS Inactive

Transamerica Occidental Life California 100% TICC Licensed in all forms of life
Insurance Company ("TOLIC") insurance, accident and
sickness insurance

NEF Investment Company California 100% TOLIC Real estate development

Transamerica Life Insurance and N. Carolina 100%TOLIC Writes life and pension ins.
Annuity Company ("TLIAC") originally incorporated in CA
April 14, 1966

Transamerica Assurance Company Missouri 100% TLIAC Life and disability insurance

Gemini Investments, Inc. Delaware 100% TLIAC Investment subsidiary

Transamerica Life Insurance Canada 100% TOLIC Sells individual life insurance
Company of Canada & investment products in all
provinces and territories of
Canada
</TABLE>
<PAGE>

<TABLE>

<S> <C> <C> <C>
Transamerica Life Insurance New York 100% TOLIC Licensed in NY to market life
Company of New York insurance, annuities and
health
insurance

Transamerica South Park Delaware 100% TOLIC Provide market analysis of
Resources, Inc. certain undeveloped land
holdings held by TOLIC

Transamerica Variable Insurance Maryland 100% TOLIC Mutual Fund
Fund, Inc.

USA Administration Services, Inc. Kansas 100% TOLIC Third party administrator

Transamerica Products. Inc. California 100% TICC Parent co. of various
subsidiary corp. which are
formed to be co-general
partners of proprietary limited

Transamerica Securities Sales Maryland 100% Transamerica Prod. Inc. Retail sale of the variable life
Corp. ins. and variable annuity
products of the Transamerica
life companies

Transamerica Service Company Delaware 100% Transamerica Prod. Inc. Passive loss tax service for
Lloyd's U.S. names

Transamerica Intellitech, Inc. Delaware 100% TICC Real estate information and
technology services

Transamerica International Delaware 100% TICC Investments
Holdings, Inc.

Transamerica Investment Services, Delaware 100% TICC Investment adviser
Inc.
Transamerica Income Shares, Inc. Maryland 100% Trans. Invest. Srvc. Inc. Transamerica investment
services

Transamerica LP Holdings Corp. Delaware 100% TICC Limited partnership
Investment (initial limited
partner of Transamerica
Delaware, L.P.)

Transamerica Real Estate Tax N/A 100% TICC Real estate tax reporting and
Service (A Division of processing services
Transamerica Corp)

Transamerica Realty Services, Inc. Delaware 100% TICC Responsible for real estate
investments for Transamerica
</TABLE>

<PAGE>

<S> <C> <C> <C>
Bankers Mortgage Company of CA California 100% Transamerica Realty Srv. Holds bank account and owns
certain residual investments in
certain French real estate
projects which are managed
special purpose company for
the purchase of real estate tax
liens.

Pyramid Investment Corporation Delaware 100% Transamerica Realty Srv. Owns office buildings in San
Francisco and other properties

The Gilwell Company California 100% Transamerica Realty Srv. Ground lessee of 517
Washington Street,
San Francisco

Transamerica Affordable Housing, California 100% Transamerica Realty Srv. Owns general partnership
Inc. interests in low-income
housing tax credit
partnerships

Transamerica Minerals Company California 100% Transamerica Realty Srv. Owner and lessor of oil and
gas properties

Transamerica Oakmont Corporation California 100% Transamerica Realty Srv. General partner in
Transamerica/Oakmont
Retirement Associates

Transamerica Senior Properties, Delaware 100% TICC Owns congregate care and
Inc. assisted living retirement
Properties

Transamerica Senior Living, Inc. Delaware 100% Trans. Sr. Prop. Inc. Manages congregate care and
assisted living retirement
properties.
</TABLE>
<PAGE>

Item 27. Number of Contract Owners

As of December 31, 1999, there were 8 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 Ann Spaes
Director and President Director and Vice President

Frank A. Camp Bob Warner
Secretary Assistant Compliance Officer

Lisa Wachendorf Linda Gilmer
Director, Vice President and Treasurer/Controller
Chief Compliance Officer
Priscilla Hechler
Thomas R. Moriarty Assistant Secretary and Assistant Vice President
Vice President
Thomas Pierpan
Emily Bates Assistant Secretary and Assistant Vice President
Assistant Treasurer
Darin D. Smith
Clifton Flenniken Assistant Secretary and Assistant Vice President
Assistant Treasurer
</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 $3,520.00 and $0 from
the Registrant for the year ending December 31, 1999 and from May 1, 1998
through December 31, 1998 respectively, 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 Variable Annuity Account, the PFL Endeavor Platinum Variable Annuity
Account, the PFL Retirement Builder Variable Annuity Account, the PFL Life
Variable Annuity Account A, the PFL Life Variable Annuity Account C, the PFL
Life Variable Annuity Account D, 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 hereby certifies that this Amendment to the Registration
Statement meets the requirements for effectiveness pursuant to paragraph (b) of
Rule 485 and has caused this Registration Statement to be signed on its behalf,
in the City of Cedar Rapids and State of Iowa, on this 26th day of April, 2000.

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 April 26, 2000
- --------------------------------
Patrick S. Baird

/s/ Craig D. Vermie Director April 26, 2000
- --------------------------------
Craig D. Vermie

/s/ William L. Busler Director April 26, 2000
- --------------------------------
William L. Busler (Principal Executive Officer)

/s/ Larry N. Norman Director April 26, 2000
- --------------------------------
Larry N. Norman

/s/ Douglas C. Kolsrud Director April 26, 2000
- --------------------------------
Douglas C. Kolsrud

/s/ Robert J. Kontz Vice President and April 26, 2000
- --------------------------------
Robert J. Kontz Corporate Controller

/s/ Brenda K. Clancy Treasurer April 26, 2000
- --------------------------------
Brenda K. Clancy
</TABLE>
<PAGE>

Registration No.
333-61063

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

---------------

EXHIBITS

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.*
- ----------- ---------------------- ---------

(10)(a) Consent of Independent Auditors

(10)(b) Opinion and Consent of Actuary

- ---------------------
* Page numbers included only in manually executed original.

<PAGE>

EXHIBIT (10)(a)

CONSENT OF 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 reports (1)
dated January 28, 2000 with respect to the financial statements of certain
subaccounts of PFL Retirement Builder Variable Annuity Account, which are
available for investment by contract owners of PFL Immediate Income Builder, and
(2) dated February 18, 2000 with respect to the statutory-basis financial
statements and schedules of PFL Life Insurance Company, included in Post-
Effective Amendment No. 6 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
April 24, 2000

<PAGE>

EXHIBIT (10)(b)
---------------

OPINION AND CONSENT OF ACTUARY
<PAGE>

[PFL Life Insurance Company Letterhead]
April 10, 2000

PFL Life Insurance Company
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499-0001

Re: PFL Retirement Builder Variable Annuity Account Registration on Form N-4
SEC File No. 333-61063

Dear Sir/Madam:

With regard to the above registration statement, I have examined such documents
and made such inquiries as I have deemed necessary and appropriate, and on the
basis of such examination, have the following opinions:

Fees and charges deducted under the PFL Immediate Income Annuity policies are
those deemed necessary to appropriately reflect:

(1) the expenses incurred in the acquisition and distribution of the Policies,

(2) the expenses associated with the development and servicing of the policies,

(3) the assumption of certain risks arising from the operation and management
of the Policies and that provides for a reasonable margin of profit.

Fees and charges assessed include:

(i) Separate Account Charge

(ii) Taxes (including Premium and other Taxes if applicable)

The magnitude of each of the individual charges listed above in (i) through (ii)
is established in the pricing of the PFL Immediate Income Annuity, to achieve a
reasonable Return on Investment (ROI), which is within the range of industry
practice with respect to comparable variable immediate annuity products.
<PAGE>

PFL Life Insurance Company
Page 2
April 10, 2000

Except by coincidence, it is not expected that actual charges assessed in a
given year would exactly offset actual expenses incurred. Acquisition expenses
(as well as major product and/or systems development expenses) are incurred "up
front" and recovered, with a reasonable profit margin, through future years'
charges. In addition, the company cannot increase certain charges under the
Policies in the pricing process.

Therefore, in my opinion, the fees and charges deducted under the Policies, in
the aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the company.

I hereby consent to the use of this opinion, which is included as an Exhibit to
the Registration Statement.

/s/ Roger Freeman
- -----------------------------------
Roger Freeman, MAAA
Vice President
PFL Life Insurance Company