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Previous: COVA VARIABLE LIFE ACCOUNT ONE, 497, 2000-10-06 |
Next: TUCKER ANTHONY SUTRO, POS AM, 2000-10-06 |
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
COVA VARIABLE LIFE ACCOUNT ONE
Supplement dated September 1, 2000
The following supplements certain information contained in your Cova Flexible
Premium Variable Life Insurance Policy prospectus:
1. The following changes are made to the "Executive Officers and Directors"
section in Part II of the prospectus:
o Lorry E. Stensrud, William C. Mair, John W. Barber, Douglas E. Jacobs and
Myron H. Sandberg are deleted.
o The following replaces the information for Mark E. Reynolds:
President and Director of Cova, CFLIC and FCLIC - June, 2000 to
present; Executive Vice President and Director of Cova and CFLIC -
May, 1997 to June, 2000; Chief Financial Officer and Director of FCLIC
- May, 1997 to present; Executive Vice President of CLMC - May, 1997
to present; Executive Vice President and Director of Advisory -
December, 1996 to present; Executive Vice President and Director of
Allocation - December, 1996 to present.
o The following information is added:
James A. Shepherdson III - Chairman of the Board and a Director of
Cova and CFLIC since June, 2000; Co-Chief Executive Officer, MetLife
Security First Group - April, 2000 to present; Co-Chief Executive
Officer, Equitable Distributors, Inc. - April, 1996 to April, 2000;
Chief Operating Officer, McGuinness Companies and Chief Operating
Officer, Endeavor Group - September, 1978 to March, 1996.
Gregory P. Brakovich - Director of Cova and CFLIC since June, 2000;
Co-Chief Executive Officer, MetLife Security First Group - April,
2000 to present; Co-Chief Executive Officer, Equitable Distributors
Inc. - March, 1996 to April, 2000; Consultant/Managing Director,
Bankers Trust Co. - June, 1992 to March, 1996.
o The following supplements the information for Bernard J. Spaulding and
Peter L. Witkewiz, respectively:
Bernard J. Spaulding - Director of Cova, CFLIC and FCLIC since June,
2000.
Peter L. Witkewiz - Director of Cova, CFLIC and FCLIC since June,
2000.
2.The following financial statements are added to the prospectus:
COVA VARIABLE LIFE ACCOUNT ONE
Statement of Assets and Liabilities
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
Assets:
Investments:
Cova Series Trust (Cova):
<S> <C> <C> <C>
Lord Abbett Growth and Income Portfolio 74,315 shares at a net asset value of $22.879850 per share $ 1,700,324
Bond Debenture Portfolio 28,803 shares at a net asset value of $11.818836 per share 340,422
Developing Growth Portfolio 33,278 shares at a net asset value of $12.436639 per share 413,862
Large Cap Research Portfolio 38,602 shares at a net asset value of $12.981956 per share 501,124
Mid-Cap Value Portfolio 27,990 shares at a net asset value of $13.030863 per share 364,733
Quality Bond Portfolio 11,732 shares at a net asset value of $10.407309 per share 122,095
Small Cap Stock Portfolio 17,193 shares at a net asset value of $16.700167 per share 287,124
Large Cap Stock Portfolio 52,843 shares at a net asset value of $18.543961 per share 979,921
Select Equity Portfolio 63,421 shares at a net asset value of $14.816764 per share 939,701
International Equity Portfolio 15,169 shares at a net asset value of $14.530295 per share 220,406
General American Capital Company (GACC):
Money Market Fund 38,007 shares at a net asset value of $20.873908 per share 793,360
Russell Insurance Funds (Russell):
Multi-Style Equity Fund 6 shares at a net asset value of $15.57 per share 98
Aggressive Equity Fund 7 shares at a net asset value of $13.48 per share 99
Non-US Fund 7 shares at a net asset value of $13.11 per share 101
Core Bond Fund 10 shares at a net asset value of $9.85 per share 102
Real Estate Securities Fund 11 shares at a net asset value of $9.73 per share 103
AIM Variable Insurance Funds, Inc. (AIM):
AIM V.I. Value Fund 3,612 shares at a net asset value of $33.41 per share 120,669
AIM V.I. Capital Appreciation Fund 4,413 shares at a net asset value of $38.51 per share 169,940
AIM V.I. International Equity Fund 111 shares at a net asset value of $26.11 per share 2,903
Alliance Variable Products Series
<PAGE>
Fund, Inc. (Alliance):
Premier Growth Portfolio 498 shares at a net asset value of $39.60 per share 19,733
Real Estate Investment Portfolio 975 shares at a net asset value of $9.84 per share 9,595
Liberty Variable Investment Trust (Liberty):
Newport Tiger Fund, Variable Series 1,101 shares at a net asset value of $2.61 per share 2,874
Goldman Sachs Variable Insurance Trust
(Goldman Sachs):
Growth and Income Fund 501 shares at a net asset value of $10.97 per share 5,494
International Equity Fund 7 shares at a net asset value of $14.24 per share 100
Global Income Fund 10 shares at a net asset value of $10.15 per share 101
<PAGE>
Kemper Variable Series (Kemper):
Kemper Small Cap Growth Portfolio 3,808 shares at a net asset value of $2.639950 per share 10,052
Kemper Small Cap Value Portfolio 2,705 shares at a net asset value of $1.058730 per share 2,864
Kemper Government Securities Portfolio 91 shares at a net asset value of $1.120430 per share 102
MFS Variable Insurance Trust (MFS):
MFS Research Series 209 shares at a net asset value of $23.24 per share 4,859
MFS Growth with Income Series 842 shares at a net asset value of $21.15 per share 17,813
MFS Emerging Growth Series 79 shares at a net asset value of $35.05 per share 2,765
MFS High Income Series 270 shares at a net asset value of $10.57 per share 2,851
MFS Global Governments Series 11 shares at a net asset value of $9.68 per share 102
Oppenheimer Variable Account Funds
(Oppenheimer):
Oppenheimer Capital Appreciation Fund 2 shares at a net asset value of $51.14 per share 99
Oppenheimer Main Street Growth &
Income Fund 4 shares at a net asset value of $23.35 per share 99
Oppenheimer High Income Fund 11 shares at a net asset value of $9.57 per share 101
Oppenheimer Bond Fund 1,023 shares at a net asset value of $10.81 per share 11,055
Oppenheimer Strategic Bond Fund 22 shares at a net asset value of $4.65 per share 102
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Statement of Assets and Liabilities
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
Assets, continued:
Investments, continued:
Putnam Variable Trust (Putnam)
<S> <C> <C> <C>
Putnam VT Growth and Income Fund 606 shares at a net asset value of $23.21 per share $ 14,069
Putnam VT New Value Fund 9 shares at a net asset value of $11.36 per share 101
Putnam VT Vista Fund 441 shares at a net asset value of $23.79 per share 10,486
Putnam VT International Growth Fund 5 shares at a net asset value of $19.69 per share 102
Putnam VT International New Opportunities Fund 939 shares at a net asset value of $18.87 per share 17,726
Franklin Templeton Variable Insurance Products
Trust (Templeton)
Templeton Global Income Securities Fund 4,202 shares at a net asset value of $11.07 per share 46,522
<PAGE>
Franklin Small Cap Fund 2,052 shares at a net asset value of $26.52 per share 54,409
Templeton Growth Securities Fund 542 shares at a net asset value of $13.26 per share 7,191
Templeton International Securities Fund 1,824 shares at a net asset value of $19.31 per share 35,215
Templeton Developing Markets Securities Fund 874 shares at a net asset value of $6.39 per share 5,588
<PAGE>
Mutual Shares Securities Fund 8 shares at a net asset value of $12.69 per share 99
Franklin Large Cap Growth Securities Fund 3,475 shares at a net asset value of $22.28 per share 77,433
------------
Total assets $ 7,316,789
============
</TABLE>
<TABLE>
<CAPTION>
Liabilities:
<S> <C>
Cova Lord Abbett Growth and Income $ 2
Cova Bond Debenture 1
Cova Mid-Cap Value 2
GACC Money Market 80
AIM V.I. Value 2
Alliance Premier Growth 1
Alliance Real Estate Investment 1
MFS Research 1
MFS Growth with Income 2
MFS Emerging Growth 1
Oppenheimer Bond 1
Putnam VT Growth and Income 1
Putnam VT Vista 1
Putnam VT International New Opportunities 1
Templeton International Securities 1
-----------------
Total liabilities $ 98
=================
</TABLE>
<TABLE>
Net Assets:
<S> <C>
Cova Lord Abbett Growth and Income $ 1,700,322
Cova Bond Debenture 340,421
Cova Developing Growth 413,862
Cova Large Cap Research 501,124
Cova Mid-Cap Value 364,731
Cova Quality Bond 122,095
Cova Small Cap Stock 287,124
<PAGE>
<PAGE>
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Statement of Assets and Liabilities
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
Net Assets, continued:
<S> <C>
Cova Large Cap Stock $ 979,921
Cova Select Equity 939,701
Cova International Equity 220,406
GACC Money Market 793,280
Russell Multi-Style Equity 98
Russell Aggressive Equity 99
Russell Non-US 101
Russell Core Bond 102
Russell Real Estate Securities 103
AIM V.I. Value 120,667
AIM V.I. Capital Appreciation 169,940
AIM V.I. International Equity 2,903
Alliance Premier Growth 19,732
Alliance Real Estate Investment 9,594
Liberty Newport Tiger Fund, Variable 2,874
Goldman Sachs Growth and Income 5,494
Goldman Sachs International Equity 100
Goldman Sachs Global Income 101
Kemper Small Cap Growth 10,052
Kemper Small Cap Value 2,864
Kemper Government Securities 102
MFS Research 4,858
MFS Growth with Income 17,811
MFS Emerging Growth 2,764
MFS High Income 2,851
MFS Global Governments 102
Oppenheimer Capital Appreciation 99
Oppenheimer Main Street Growth & Income 99
Oppenheimer High Income 101
Oppenheimer Bond 11,054
Oppenheimer Strategic Bond 102
Putnam VT Growth and Income 14,068
Putnam VT New Value 101
Putnam VT Vista 10,485
Putnam VT International Growth 102
Putnam VT International New Opportunities 17,725
Templeton Global Income Securities 46,522
Franklin Small Cap 54,409
Templeton Growth Securities 7,191
<PAGE>
Templeton International Securities 35,214
<PAGE>
Templeton Developing Markets Securities 5,588
Templeton Mutual Shares Securities 99
Franklin Large Cap Growth Securities 77,433
--------------
Net assets $ 7,316,691
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Operations Period ended June 30,
2000 Unaudited
<TABLE>
<CAPTION>
Cova
-------------------------------------------------------------------------------------
Lord Abbett
Growth Large Small
and Bond Developing Cap Mid-Cap Quality Cap
Income Debenture Growth Research Value Bond Stock
----------- ----------- ----------- ----------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 20,203 21,569 - 1,151 1,006 6,181 3
Expenses:
Mortality and expense risk 2 1 - - 2 - -
----------- ----------- ----------- ----------- ----------- -------- ----------
Net investment income (loss) 20,201 21,568 - 1,151 1,004 6,181 3
----------- ----------- ----------- ----------- ----------- -------- ----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 12,309 2,297 791 7,244 1,716 (12) 1,946
Realized gain distributions 28,057 - 20,654 41,359 2,130 - 11,158
----------- ----------- ----------- ----------- ----------- -------- ----------
Net realized gain (loss) 40,366 2,297 21,445 48,603 3,846 (12) 13,104
----------- ----------- ----------- ----------- ----------- -------- ----------
<PAGE>
Change in unrealized appreciation (92,556) (18,936) (60,693) (70,017) 42,226 (2,625) (10,425)
----------- ----------- ----------- ----------- ----------- -------- ----------
Net increase (decrease) in net
assets from operations $ (31,989) 4,929 (39,248) (20,263) 47,076 3,544 2,682
=========== =========== =========== =========== =========== ======== ==========
<PAGE>
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Operations Period ended June 30,
2000 Unaudited
<TABLE>
<CAPTION>
Cova GACC Russell
------------------------------------- ---------- ----------------------------------
Large Multi-
Cap Select International Money Style Aggressive
Stock Equity Equity Market Equity Equity Non-US
--------- ----------- ------------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 5,976 4,626 936 - - - -
Expenses:
Mortality and expense risk - - - 80 - - -
--------- ----------- ------------- ---------- --------- ----------- ----------
Net investment income (loss) 5,976 4,626 936 (80) - - -
--------- ----------- ------------- ---------- --------- ----------- ----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 5,585 2,924 642 27,966 - - -
Realized gain distributions 74,427 62,025 13,625 - - - -
--------- ----------- ------------- ---------- --------- ----------- ----------
Net realized gain (loss) 80,012 64,949 14,267 27,966 - - -
--------- ----------- ------------- ---------- --------- ----------- ----------
Change in unrealized appreciation (101,693) (76,041) (21,836) (2,223) (2) (1) 1
--------- ----------- ------------- ---------- --------- ----------- ----------
<PAGE>
Net increase (decrease) in net
assets from operations $ (15,705) (6,466) (6,633) 25,663 (2) (1) 1
========= =========== ============= ========== ========= =========== ==========
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Operations Period ended June 30,
2000 Unaudited
<PAGE>
<TABLE>
<CAPTION>
Russell AIM Alliance
---------------------- -------------------------------------- -----------------------
Real V.I. V.I. Real
Core Estate V.I. Capital International Premier Estate
Bond Securities Value Appreciation Equity Growth Investment
--------- ----------- --------- ------------ ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ - - - - - - -
Expenses:
Mortality and expense risk - - 2 - - 1 1
--------- ----------- --------- ------------ ------------- ---------- -----------
Net investment income (loss) - - (2) - - (1) (1)
--------- ----------- --------- ------------ ------------- ---------- -----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares - - 899 11 - (1) -
Realized gain distributions - - - - - 35 4
--------- ----------- --------- ------------ ------------- ---------- -----------
Net realized gain (loss) - - 899 11 - 34 4
--------- ----------- --------- ------------ ------------- ---------- -----------
Change in unrealized appreciation 2 3 (3,263) 7,557 (46) (113) (65)
--------- ----------- --------- ------------ ------------- ---------- -----------
Net increase (decrease) in net
assets from operations $ 2 3 (2,366) 7,568 (46) (80) (62)
========= =========== ========= ============ ============= ========== ===========
<PAGE>
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Operations Period ended June 30,
2000 Unaudited
<TABLE>
<CAPTION>
Liberty Goldman Sachs Kemper
----------- ------------------------------------ -------------------------------------
Newport
Tiger Growth Small Small
Fund and International Global Cap Cap Government
Variable Income Equity Income Growth Value Securities
----------- --------- -------------- --------- ----------- ---------- ------------
<PAGE>
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ - - - - - - -
Expenses:
Mortality and expense risk - - - - - - -
----------- --------- -------------- --------- ----------- ---------- ------------
Net investment income (loss) - - - - - - -
----------- --------- -------------- --------- ----------- ---------- ------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares - - - - - - -
Realized gain distributions - - - - - - -
----------- --------- -------------- --------- ----------- ---------- ------------
Net realized gain (loss) - - - - - - -
----------- --------- -------------- --------- ----------- ---------- ------------
Change in unrealized appreciation 25 (104) - 1 396 15 2
----------- --------- -------------- --------- ----------- ---------- ------------
Net increase (decrease) in net
assets from operations $ 25 (104) - 1 396 15 2
=========== ========= ============== ========= =========== ========== ============
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
<PAGE>
Statement of Operations
Period ended June 30, 2000
Unaudited
<TABLE>
<CAPTION>
MFS Oppenheimer
------------------------------------------------------------- --------------------------
Main Street
Growth Growth
and Emerging High Global Capital and
Research Income Growth Income Governments Appreciation Income
----------- --------- ----------- -------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ - - - - - - -
Expenses:
Mortality and expense risk 1 2 1 - - - -
----------- --------- ----------- -------- -------------- ------------- -----------
Net investment income (loss) (1) (2) (1) - - - -
----------- --------- ----------- -------- -------------- ------------- -----------
<PAGE>
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares (1) - - - - - -
Realized gain distributions - - - - - - -
----------- --------- ----------- -------- -------------- ------------- -----------
Net realized gain (loss) (1) - - - - - -
----------- --------- ----------- -------- -------------- ------------- -----------
Change in unrealized appreciation 77 (38) (84) 2 2 (1) (1)
----------- --------- ----------- -------- -------------- ------------- -----------
Net increase (decrease) in net
assets from operations $ 75 (40) (85) 2 2 (1) (1)
=========== ========= =========== ======== ============== ============= ===========
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Operations Period ended June 30,
2000 Unaudited
<PAGE>
<TABLE>
<CAPTION>
Oppenheimer Putnam
---------------------------------- ---------------------------------------------------
VT
Growth VT VT
High Strategic and New VT International
Income Bond Bond Income Value Vista Growth
---------- --------- ----------- ----------- ----------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ - - - - - - -
Expenses:
Mortality and expense risk - 1 - 1 - 1 -
---------- --------- ----------- ----------- ----------- -------- ---------------
Net investment income (loss) - (1) - (1) - (1) -
---------- --------- ----------- ----------- ----------- -------- ---------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares - - - - - 1 -
Realized gain distributions - - - - - - -
---------- --------- ----------- ----------- ----------- -------- ---------------
Net realized gain (loss) - - - - - 1 -
---------- --------- ----------- ----------- ----------- -------- ---------------
Change in unrealized appreciation 1 63 2 (246) 1 256 2
<PAGE>
---------- --------- ----------- ----------- ----------- -------- ---------------
Net increase (decrease) in net
assets from operations $ 1 62 2 (247) 1 256 2
========== ========= =========== =========== =========== ======== ===============
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Operations Period ended June 30,
2000 Unaudited
<TABLE>
<PAGE>
<CAPTION>
Putnam Templeton
------------- ---------------------------------------------------------------------------
VT
International Global Franklin Developing Mutual
New Income Small Growth International Markets Shares
Opportunities Securities Cap Securities Securities Securities Securities
------------- ----------- --------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ - 2,607 87 32 59 - -
Expenses:
Mortality and expense risk 1 - - - 1 - -
------------- ----------- --------- ----------- ------------- ----------- -----------
Net investment income (loss) (1) 2,607 87 32 58 - -
------------- ----------- --------- ----------- ------------- ----------- -----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares - (17) 3 (4) (1) - -
Realized gain distributions - - 62 623 383 - -
------------- ----------- --------- ----------- ------------- ----------- -----------
Net realized gain (loss) - (17) 65 619 382 - -
------------- ----------- --------- ----------- ------------- ----------- -----------
Change in unrealized appreciation (74) (1,768) 2,772 (430) 339 42 (1)
------------- ----------- --------- ----------- ------------- ----------- -----------
Net increase (decrease) in net
assets from operations $ (75) 822 2,924 221 779 42 (1)
============= =========== ========= =========== ============= =========== ===========
</TABLE>
<PAGE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Operations Period ended June 30,
2000 Unaudited
<TABLE>
<CAPTION>
<PAGE>
Templeton
-------------------
Franklin
Large Cap
Growth
Securities Total
------------------- -------------------
<S> <C> <C>
Investment income:
Dividends $ 272 64,708
Expenses:
Mortality and expense risk - 98
------------------- -------------------
Net investment income (loss) 272 64,610
------------------- -------------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares (9) 64,289
Realized gain distributions 3,836 258,378
------------------- -------------------
Net realized gain (loss) 3,827 322,667
------------------- -------------------
Change in unrealized appreciation 832 (408,663)
------------------- -------------------
Net increase (decrease) in net
assets from operations $ 4,931 (21,386)
=================== ===================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Changes in Net Assets Period ended
June 30, 2000 Unaudited
<PAGE>
<TABLE>
<CAPTION>
Cova
---------------------------------------------------------------------------------------
<PAGE>
Lord Abbett
Growth Large Small
and Bond Developing Cap Mid-Cap Quality Cap
Income Debenture Growth Research Value Bond Stock
------------ ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ 20,201 21,568 - 1,151 1,004 6,181 3
Net realized gain (loss) 40,366 2,297 21,445 48,603 3,846 (12) 13,104
Change in unrealized appreciation (92,556) (18,936) (60,693) (70,017) 42,226 (2,625) (10,425)
------------ ----------- ----------- ---------- ----------- ---------- ----------
Net increase (decrease) from
operations (31,989) 4,929 (39,248) (20,263) 47,076 3,544 2,682
------------ ----------- ----------- ---------- ----------- ---------- ----------
Contract transactions:
Cova payments 100 100 100 100 100 100 100
Cova redemptions - - - - - - -
Payments received from contract
owners - - - - - - -
Transfers between sub-accounts, net 91,593 (36,029) 111,355 181,326 79,532 33,740 76,833
Transfers for contract benefits,
terminations and insurance charges (36,922) (39,873) (4,087) (61,066) (3,573) (1,115) (4,940)
------------ ----------- ----------- ---------- ----------- ---------- ----------
Net increase (decrease) in net
assets from contract
transactions 54,771 (75,802) 107,368 120,360 76,059 32,725 71,993
------------ ----------- ----------- ---------- ----------- ---------- ----------
Net increase (decrease) in net
assets 22,782 (70,873) 68,120 100,097 123,135 36,269 74,675
Net assets at beginning of period 1,677,540 411,294 345,742 401,027 241,596 85,826 212,449
------------ ----------- ----------- ---------- ----------- ---------- ----------
Net assets at end of period $ 1,700,322 340,421 413,862 501,124 364,731 122,095 287,124
============ =========== =========== ========== =========== ========== ==========
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Changes in Net Assets Period ended
June 30, 2000 Unaudited
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Cova GACC Russell
------------------------------------ ----------- ------------------------------------
Large Multi-
Cap Select International Money Style Aggressive
Stock Equity Equity Market Equity Equity Non-US
---------- ---------- ------------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ 5,976 4,626 936 (80) - - -
Net realized gain (loss) 80,012 64,949 14,267 27,966 - - -
Change in unrealized appreciation (101,693) (76,041) (21,836) (2,223) (2) (1) 1
---------- ---------- ------------- ----------- ----------- ---------- -----------
Net increase (decrease) from
operations (15,705) (6,466) (6,633) 25,663 (2) (1) 1
---------- ---------- ------------- ----------- ----------- ---------- -----------
Contract transactions:
Cova payments 100 100 100 100 100 100 100
Cova redemptions - - - - - - -
Payments received from contract
owners - - - 1,874,765 - - -
Transfers between sub-accounts, net 195,849 126,684 84,044 (1,567,747) - - -
Transfers for contract benefits,
terminations and insurance charges (64,285) (50,471) (4,549) (30,208) - - -
---------- ---------- ------------- ----------- ----------- ---------- -----------
Net increase (decrease) in net
assets from contract
transactions 131,664 76,313 79,595 276,910 100 100 100
---------- ---------- ------------- ----------- ----------- ---------- -----------
Net increase (decrease) in net
assets 115,959 69,847 72,962 302,573 98 99 101
Net assets at beginning of period 863,962 869,854 147,444 490,707 - - -
---------- ---------- ------------- ----------- ----------- ---------- -----------
Net assets at end of period $ 979,921 939,701 220,406 793,280 98 99 101
========== ========== ============= =========== =========== ========== ===========
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Changes in Net Assets Period ended
June 30, 2000 Unaudited
<TABLE>
<PAGE>
<PAGE>
<CAPTION>
Russell AIM Alliance
---------------------- ------------------------------------- ------------------------
Real V.I. V.I. Real
Core Estate V.I. Capital International Premier Estate
Bond Securities Value Appreciation Equity Growth Investment
--------- ------------ --------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ - - (2) - - (1) (1)
Net realized gain (loss) - - 899 11 - 34 4
Change in unrealized appreciation 2 3 (3,263) 7,557 (46) (113) (65)
--------- ------------ --------- ------------- ------------ ----------- -----------
Net increase (decrease) from
operations 2 3 (2,366) 7,568 (46) (80) (62)
--------- ------------ --------- ------------- ------------ ----------- -----------
Contract transactions:
Cova payments 100 100 100 100 200 100 100
Cova redemptions - - - - - - -
Payments received from contract
owners - - - - - - -
Transfers between sub-accounts, net - - 111,317 160,550 2,749 19,712 9,556
Transfers for contract benefits,
terminations and insurance charges - - (14,306) (724) - - -
--------- ------------ --------- ------------- ------------ ----------- -----------
Net increase (decrease) in net
assets from contract
transactions 100 100 97,111 159,926 2,949 19,812 9,656
--------- ------------ --------- ------------- ------------ ----------- -----------
Net increase (decrease) in net
assets 102 103 94,745 167,494 2,903 19,732 9,594
Net assets at beginning of period - - 25,922 2,446 - - -
--------- ------------ --------- ------------- ------------ ----------- -----------
Net assets at end of period $ 102 103 120,667 169,940 2,903 19,732 9,594
========= ============ ========= ============= ============ =========== ===========
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Changes in Net Assets Period ended
June 30, 2000 Unaudited
<PAGE>
<TABLE>
<CAPTION>
<PAGE>
Liberty Goldman Sachs Kemper
----------- ------------------------------------- -------------------------------------
Newport
Tiger Growth Small Small
Fund and International Global Cap Cap Government
Variable Income Equity Income Growth Value Securities
----------- ----------- ------------- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ - - - - - - -
Net realized gain (loss) - - - - - - -
Change in unrealized appreciation 25 (104) - 1 396 15 2
----------- ----------- ------------- --------- ----------- ---------- ------------
Net increase (decrease) from
operations 25 (104) - 1 396 15 2
----------- ----------- ------------- --------- ----------- ---------- ------------
Contract transactions:
Cova payments 100 100 100 100 100 100 100
Cova redemptions - - - - - - -
Payments received from contract
owners - - - - - - -
Transfers between sub-accounts, net 2,749 5,498 - - 9,556 2,749 -
Transfers for contract benefits,
terminations and insurance charges - - - - - - -
----------- ----------- ------------- --------- ----------- ---------- ------------
Net increase (decrease) in net
assets from contract
transactions 2,849 5,598 100 100 9,656 2,849 100
----------- ----------- ------------- --------- ----------- ---------- ------------
Net increase (decrease) in net
assets 2,874 5,494 100 101 10,052 2,864 102
Net assets at beginning of period - - - - - - -
----------- ----------- ------------- --------- ----------- ---------- ------------
Net assets at end of period $ 2,874 5,494 100 101 10,052 2,864 102
=========== =========== ============= ========= =========== ========== ============
<PAGE>
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Changes in Net Assets Period ended
June 30, 2000 Unaudited
<TABLE>
<PAGE>
<CAPTION>
MFS Oppenheimer
------------------------------------------------------------- ---------------------------
Main Street
Growth Growth
and Emerging High Global Capital and
Research Income Growth Income Governments Appreciation Income
--------- ----------- ----------- --------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (1) (2) (1) - - - -
Net realized gain (loss) (1) - - - - - -
Change in unrealized appreciation 77 (38) (84) 2 2 (1) (1)
--------- ----------- ----------- --------- ------------- -------------- -----------
Net increase (decrease) from
operations 75 (40) (85) 2 2 (1) (1)
--------- ----------- ----------- --------- ------------- -------------- -----------
Contract transactions:
Cova payments 100 100 100 100 100 100 100
Cova redemptions - - - - - - -
Payments received from contract
owners - - - - - - -
Transfers between sub-accounts, net 4,683 17,751 2,749 2,749 - - -
Transfers for contract benefits,
terminations and insurance charges - - - - - - -
--------- ----------- ----------- --------- ------------- -------------- -----------
Net increase (decrease) in net
assets from contract
transactions 4,783 17,851 2,849 2,849 100 100 100
--------- ----------- ----------- --------- ------------- -------------- -----------
Net increase (decrease) in net
assets 4,858 17,811 2,764 2,851 102 99 99
<PAGE>
Net assets at beginning of period - - - - - - -
--------- ----------- ----------- --------- ------------- -------------- -----------
Net assets at end of period $ 4,858 17,811 2,764 2,851 102 99 99
========= =========== =========== ========= ============= ============== ===========
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Changes in Net Assets Period ended
June 30, 2000 Unaudited
<PAGE>
<TABLE>
<CAPTION>
Oppenheimer Putnam
--------------------------------- ----------------------------------------------------
VT
Growth VT VT
High Strategic and New VT International
Income Bond Bond Income Value Vista Growth
----------- --------- --------- ----------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ - (1) - (1) - (1) -
Net realized gain (loss) - - - - - 1 -
Change in unrealized appreciation 1 63 2 (246) 1 256 2
----------- --------- --------- ----------- ---------- ----------- --------------
Net increase (decrease) from
operations 1 62 2 (247) 1 256 2
----------- --------- --------- ----------- ---------- ----------- --------------
Contract transactions:
Cova payments 100 100 100 100 100 100 100
Cova redemptions - - - - - - -
Payments received from contract
owners - - - - - - -
Transfers between sub-accounts, net - 10,892 - 14,215 - 10,129 -
Transfers for contract benefits,
terminations and insurance charges - - - - - - -
----------- --------- --------- ----------- ---------- ----------- --------------
Net increase (decrease) in net
<PAGE>
assets from contract
transactions 100 10,992 100 14,315 100 10,229 100
----------- --------- --------- ----------- ---------- ----------- --------------
Net increase (decrease) in net
assets 101 11,054 102 14,068 101 10,485 102
Net assets at beginning of period - - - - - - -
----------- --------- --------- ----------- ---------- ----------- --------------
Net assets at end of period $ 101 11,054 102 14,068 101 10,485 102
=========== ========= ========= =========== ========== =========== ==============
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Changes in Net Assets Period ended
June 30, 2000 Unaudited
<TABLE>
<PAGE>
<CAPTION>
Putnam Templeton
-------------- -------------------------------------------------------------------------
VT
International Global Franklin Developing Mutual
New Income Small Growth International Markets Shares
Opportunities Securities Cap Securities Securities Securities Securities
-------------- ---------- --------- ----------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (1) 2,607 87 32 58 - -
Net realized gain (loss) - (17) 65 619 382 - -
Change in unrealized appreciation (74) (1,768) 2,772 (430) 339 42 (1)
-------------- ---------- --------- ----------- ------------- ----------- ---------
Net increase (decrease) from
operations (75) 822 2,924 221 779 42 (1)
-------------- ---------- --------- ----------- ------------- ----------- ---------
Contract transactions:
Cova payments 100 - 100 - 100 100 100
Cova redemptions - - - - - - -
Payments received from contract
owners -
<PAGE>
Transfers between sub-accounts, net 17,700 46,049 51,367 4,761 32,151 5,446 -
Transfers for contract benefits,
terminations and insurance charges - (449) (123) (45) (76) - -
-------------- ---------- --------- ----------- ------------- ----------- ---------
Net increase (decrease) in net
assets from contract
transactions 17,800 45,600 51,344 4,716 32,175 5,546 100
-------------- ---------- --------- ----------- ------------- ----------- ---------
Net increase (decrease) in net
assets 17,725 46,422 54,268 4,937 32,954 5,588 99
Net assets at beginning of period - 100 141 2,254 2,260 - -
-------------- ---------- --------- ----------- ------------- ----------- ---------
Net assets at end of period $ 17,725 46,522 54,409 7,191 35,214 5,588 99
============== ========== ========= =========== ============= =========== =========
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statement of Changes in Net Assets Period ended
June 30, 2000 Unaudited
<TABLE>
<PAGE>
<CAPTION>
Templeton
-----------------
Franklin
Large Cap
Growth
Securities Total
----------------- -------------------
<S> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ 272 64,610
Net realized gain (loss) 3,827 322,667
Change in unrealized appreciation 832 (408,663)
----------------- -------------------
Net increase (decrease) from
operations 4,931 (21,386)
----------------- -------------------
<PAGE>
Contract transactions:
Cova payments - 4,800
Cova redemptions - -
Payments received from contract
owners 1,874,765
Transfers between sub-accounts, net 73,084 (4,658)
Transfers for contract benefits,
terminations and insurance charges (705) (317,517)
----------------- -------------------
Net increase (decrease) in net
assets from contract
transactions 72,379 1,557,390
----------------- -------------------
Net increase (decrease) in net
assets 77,310 1,536,004
Net assets at beginning of period 123 5,780,687
----------------- -------------------
Net assets at end of period $ 77,433 7,316,691
================= ===================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Statements of Operations
Year ended December 31,1999
<PAGE>
<TABLE>
<CAPTION>
Cova
-------------------------------------------------------------------------------------
Lord Abbett
Growth Large Small
and Bond Developing Cap Mid-Cap Quality Cap
Income Debenture Growth Research Value Bond Stock
----------- ----------- ----------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
<PAGE>
Dividends $ - 6,579 - 511 275 925 419
----------- ----------- ----------- ----------- ---------- --------- ----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of portfolio
shares 1,170 44 2,822 1,594 1,843 (1,159) 1,137
Realized gain distributions - 2,132 - - - 463 -
----------- ----------- ----------- ----------- ---------- --------- ----------
Net realized gain (loss) 1,170 2,176 2,822 1,594 1,843 (696) 1,137
----------- ----------- ----------- ----------- ---------- --------- ----------
Change in unrealized appreciation 140,732 2,316 66,149 61,046 7,745 (2,378) 63,287
----------- ----------- ----------- ----------- ---------- --------- ----------
Net increase (decrease) in net
assets from operations $ 141,902 11,071 68,971 63,151 9,863 (2,149) 64,843
=========== =========== =========== =========== ========== ========= ==========
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Statements of Operations
Year ended December 31,1999
<TABLE>
<CAPTION>
Cova GACC AIM
--------------------------------------- ----------- -------------------------
Large V.I.
Cap Select International Money V.I. Capital
Stock Equity Equity Market Value Appreciation
---------- ----------- -------------- ----------- --------- --------------
Investment income:
<PAGE>
<S> <C> <C> <C> <C> <C> <C>
Dividends $ 995 2,102 560 - 69 2
---------- ----------- -------------- ----------- --------- --------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of portfolio
shares 6,402 2,488 1,365 24,709 30 1
<PAGE>
Realized gain distributions 21,723 71,329 1,496 - 361 50
---------- ----------- -------------- ----------- --------- --------------
Net realized gain (loss) 28,125 73,817 2,861 24,709 391 51
---------- ----------- -------------- ----------- --------- --------------
Change in unrealized appreciation 61,314 (18,465) 28,256 7,581 2,049 300
---------- ----------- -------------- ----------- --------- --------------
Net increase (decrease) in net
assets from operations $ 90,434 57,454 31,677 32,290 2,509 353
========== =========== ============== =========== ========= ==============
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Statements of Operations
Year ended December 31,1999
<TABLE>
<CAPTION>
Templeton Lord Abbett
------------------------------------------------------------- -----------
Franklin
Global Franklin Large Cap Growth
Income Small Growth International Growth and
Securities Cap Securities Securities Securities Income Total
---------- -------- ----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ - - - - - - 12,437
---------- -------- ----------- ------------- ------------ ----------- -----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of portfolio
shares - - - - - 56,187 98,633
Realized gain distributions - - - - - - 97,554
---------- -------- ----------- ------------- ------------ ----------- -----------
Net realized gain (loss) - - - - - 56,187 196,187
---------- -------- ----------- ------------- ------------ ----------- -----------
Change in unrealized appreciation - 41 160 167 23 (25,472) 394,851
---------- -------- ----------- ------------- ------------ ----------- -----------
<PAGE>
Net increase (decrease) in net
<PAGE>
assets from operations $ - 41 160 167 23 30,715 603,475
========== ======== =========== ============= ============ =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statements of Changes in Net Assets Year ended
December 31, 1999
<TABLE>
<CAPTION>
Cova
--------------------------------------------------------------------------------------
Lord Abbett
Growth Large Small
and Bond Developing Cap Mid-Cap Quality Cap
Income Debenture Growth Research Value Bond Stock
----------- ----------- ------------ ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Investment income $ - 6,579 - 511 275 925 419
Net realized gain (loss) 1,170 2,176 2,822 1,594 1,843 (696) 1,137
Change in unrealized appreciation 140,732 2,316 66,149 61,046 7,745 (2,378) 63,287
----------- ----------- ------------ ----------- ----------- --------- ---------
Net increase (decrease) from
operations 141,902 11,071 68,971 63,151 9,863 (2,149) 64,843
----------- ----------- ------------ ----------- ----------- --------- ---------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners - - - - - - -
Transfers between sub-accounts
(including fixed account), net 1,568,828 241,298 147,286 215,618 75,796 (43,467) 29,705
Transfers for contract benefits,
terminations and insurance charges (33,190) (7,265) (5,783) (7,043) (5,457) (2,464) (3,603)
----------- ----------- ------------ ----------- ----------- --------- ---------
Net increase (decrease) in net
assets from contract
transactions 1,535,638 234,033 141,503 208,575 70,339 (45,931) 26,102
----------- ----------- ------------ ----------- ----------- --------- ---------
Net increase (decrease) in net
assets 1,677,540 245,104 210,474 271,726 80,202 (48,080) 90,945
<PAGE>
<PAGE>
Net assets at beginning of period - 166,190 135,268 129,301 161,394 133,906 121,504
----------- ----------- ------------ ----------- ----------- --------- ---------
Net assets at end of period $ 1,677,540 411,294 345,742 401,027 241,596 85,826 212,449
=========== =========== ============ =========== =========== ========= =========
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statements of Changes in Net Assets Year ended
December 31, 1999
<TABLE>
<CAPTION>
Cova GACC AIM
--------------------------------------- ----------- --------------------------
Large V.I.
Cap Select International Money V.I. Capital
Stock Equity Equity Market Value Appreciation
---------- ---------- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Investment income $ 995 2,102 560 - 69 2
Net realized gain (loss) 28,125 73,817 2,861 24,709 391 51
Change in unrealized appreciation 61,314 (18,465) 28,256 7,581 2,049 300
---------- ---------- --------------- ----------- ----------- -------------
Net increase (decrease) from
operations 90,434 57,454 31,677 32,290 2,509 353
---------- ---------- --------------- ----------- ----------- -------------
Contract transactions:
Cova payments - - - 100 100 100
Cova redemptions - - - - - -
Payments received from contract
owners - - - 2,511,219 - -
Transfers between sub-accounts
(including fixed account), net 531,808 353,369 28,688 (2,485,129) 23,529 2,001
Transfers for contract benefits,
terminations and insurance charges (15,573) (18,696) (3,197) (18,975) (216) (8)
---------- ---------- --------------- ----------- ----------- -------------
Net increase (decrease) in net
assets from contract
transactions 516,235 334,673 25,491 7,215 23,413 2,093
---------- ---------- --------------- ----------- ----------- -------------
<PAGE>
Net increase (decrease) in net
assets 606,669 392,127 57,168 39,505 25,922 2,446
<PAGE>
Net assets at beginning of period 257,293 477,727 90,276 451,202 - -
---------- ---------- --------------- ----------- ----------- -------------
Net assets at end of period $ 863,962 869,854 147,444 490,707 25,922 2,446
========== ========== =============== =========== =========== =============
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE Statements of Changes in Net Assets Year ended
December 31, 1999
<TABLE>
<CAPTION>
Templeton Lord Abbett
----------------------------------------------------------------- -----------
Franklin
Global Franklin Large Cap Growth
Income Small Growth International Growth and
Securities Cap Securities Securities Securities Income Total
----------- --------- ----------- ------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Investment income $ - - - - - - 12,437
Net realized gain (loss) - - - - - 56,187 196,187
Change in unrealized appreciation - 41 160 167 23 (25,472) 394,851
----------- --------- ----------- ------------- ------------- ----------- ------------
Net increase (decrease) from
operations - 41 160 167 23 30,715 603,475
----------- --------- ----------- ------------- ------------- ----------- ------------
Contract transactions:
Cova payments 100 100 100 100 100 - 800
Cova redemptions - - - - - - -
Payments received from contract
owners - - - - - - 2,511,219
Transfers between sub-accounts
(including fixed account), net - - 2,001 2,001 - (693,373) (41)
Transfers for contract benefits,
terminations and insurance charges - - (7) (8) - (253) (121,738)
<PAGE>
----------- --------- ----------- ------------- ------------- ----------- ------------
Net increase (decrease) in net
assets from contract
transactions 100 100 2,094 2,093 100 (693,626) 2,390,240
----------- --------- ----------- ------------- ------------- ----------- ------------
Net increase (decrease) in net
assets 100 141 2,254 2,260 123 (662,911) 2,993,715
<PAGE>
Net assets at beginning of period - - - - - 662,911 2,786,972
----------- --------- ----------- ------------- ------------- ----------- ------------
Net assets at end of period $ 100 141 2,254 2,260 123 - 5,780,687
=========== ========= =========== ============= ============= =========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
(1) ORGANIZATION
Cova Variable Life Account One (the Separate Account), a unit investment
trust registered under the Investment Company Act of 1940 as amended, was
established by Cova Financial Life Services Insurance Company (CFSLIC) and
exists in accordance with the regulations of the Missouri Department of
Insurance. The Separate Account is a funding vehicle for variable life
insurance policies issued by CFSLIC.
The Separate Account is divided into sub-accounts with the assets of each
sub-account invested in corresponding portfolios of the following
investment companies. Each investment company is a diversified, open-end,
management investment company registered under the Investment Company Act
of 1940 as amended. The sub-accounts available for investment may vary
between variable life insurance policies offered for sale by CFSLIC.
<TABLE>
<S> <C>
Cova Series Trust (Trust) 10 portfolios
General American Capital Company (GACC) 1 portfolio
<PAGE>
Russell Insurance Funds (Russell) 5 portfolios
AIM Variable Insurance Funds, Inc. (AIM) 3 portfolios
Alliance Variable Products Series Fund, Inc. (Alliance) 2 portfolios
Liberty Variable Investment Trust (Liberty) 1 portfolio
Goldman Sachs Variable Insurance Trust (Goldman Sachs) 3 portfolios
Kemper Variable Series (Kemper) 3 portfolios
MFS Variable Insurance Trust (MFS) 5 portfolios
Oppenheimer Variable Account Funds (Oppenheimer) 5 portfolios
Putnam Variable Trust (Putnam) 5 portfolios
Franklin Templeton Variable Insurance Products
Trust (Templeton) 7 portfolios
</TABLE>
(2) SIGNIFICANT ACCOUNTING POLICIES
<PAGE>
(A) INVESTMENT VALUATION
Investments made in the portfolios of the investment companies are
valued at the reported net asset value of such portfolios, which value
their investment securities at fair value. The average cost method is
used to compute the realized gains and losses on the sale of portfolio
shares owned by the sub-accounts. Income from dividends and gains from
realized capital gain distributions are recorded on the
ex-distribution date.
(B) REINVESTMENT OF DISTRIBUTIONS
With the exception of the GACC Money Market Fund, dividends and gains
from realized gain distributions are reinvested in additional shares
of the portfolio.
GACC follows the Federal income tax practice known as consent
dividending, whereby substantially all of its net investment income
and realized capital gains are deemed to pass through to the Separate
Account. As a result, GACC does not distribute dividends and realized
capital gains. During December of each year, the accumulated net
investment income and realized capital gains of the GACC Money Market
Fund are allocated to the Separate Account by increasing the cost
basis and recognizing a gain in the Separate Account.
(C) FEDERAL INCOME TAXES
The operations of the Separate Account are included in the federal
income tax return of CFSLIC which is taxed as a Life Insurance Company
under the provisions of the Internal Revenue Code (IRC). Under current
IRC provisions, CFSLIC believes it will be treated as the owner of the
Separate Account assets for federal income tax purposes and does not
expect to incur federal income taxes on the earnings of the Separate
Account to the extent the earnings are credited to the variable life
<PAGE>
insurance policies. Based on this, no charge has been made to the
Separate Account for federal income taxes. A charge may be made in
future years for federal income taxes that would be attributable to
the variable life insurance policies.
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
(3) SEPARATE ACCOUNT EXPENSES
For flexible premium variable universal life policies, CFSLIC deducts a
daily charge from the net assets of the Separate Account sub-accounts for
the assumption of mortality and expense risks. The daily charge is
equivalent on an annual basis to 0.55% for the first 10 policy years,
0.45% for policy years 11-20 and 0.35% thereafter.
<PAGE>
(4) CONTRACT CHARGES AND FEES
There are contract charges and fees associated with the variable life
insurance policies CFSLIC deducts from the policy account value that
reduce the return on investment. CFSLIC sells single premium variable life
(SPVL) and flexible premium variable universal life (FPVL) policies and
the contract charges and fees vary.
The insurance charges for SPVL policies include mortality and expense
risk, administrative, tax expense and cost of insurance. These charges are
deducted from the policy account value on a monthly basis. Withdrawals
during the first 10 years may be subject to a contingent deferred sales
charge. In addition, CFSLIC deducts a deferred premium tax charge on
premium surrendered during the first 10 years. CFSLIC charges a $30 annual
contract maintenance fee on policies with values less than $50,000.
Subject to certain restrictions, policy owners may transfer accumulated
value between the available Separate Account sub-accounts. CFSLIC deducts
a transfer fee on each transfer in excess of twelve transfers during a
policy year. Transfers made in a dollar cost averaging program are not
subject to the transfer fee. The insurance charges and fees are explained
in the product prospectus.
The insurance charges for FPVL policies include tax expense, selection and
expense, monthly policy charge, cost of insurance and the charges for
additional benefit riders. These charges are deducted from the policy
account value on a monthly basis. CFSLIC deducts a sales charge from each
<PAGE>
premium payment. In addition, CFSLIC will deduct a contingent deferred
sales charge during the first 10 years if certain conditions occur.
Subject to certain restrictions, policy owners may transfer or withdraw
accumulated value between the available Separate Account sub-accounts and
the General Account. CFSLIC deducts a fee on each transfer or withdrawal
in excess of twelve transfers and withdrawals during a policy year. The
insurance charges and fees are explained in the product prospectus.
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(5) COST BASIS OF INVESTMENTS
The cost basis of each sub-account's investment follows:
<S> <C> <C> <C>
Cova Lord Abbett Growth and Income $ 1,652,148 Kemper Small Cap Growth $ 9,656
Cova Bond Debenture 351,862 Kemper Small Cap Value 2,849
Cova Developing Growth 386,509 Kemper Government Securities 100
<PAGE>
Cova Large Cap Research 498,284 MFS Research 4,782
Cova Mid-Cap Value 302,175 MFS Growth with Income 17,851
Cova Quality Bond 126,843 MFS Emerging Growth 2,849
Cova Small Cap Stock 215,688 MFS High Income 2,849
Cova Large Cap Stock 975,605 MFS Global Governments 100
Cova Select Equity 968,851 Oppenheimer Capital Appreciation 100
Cova International Equity 212,207 Oppenheimer Main Street Growth & Income 100
GACC Money Market 783,762 Oppenheimer High Income 100
Russell Multi-Style Equity 100 Oppenheimer Bond 10,992
Russell Aggressive Equity 100 Oppenheimer Strategic Bond 100
Russell Non-US 100 Putnam VT Growth and Income 14,315
Russell Core Bond 100 Putnam VT New Value 100
Russell Real Estate Securities 100 Putnam VT Vista 10,230
AIM V.I. Value 121,883 Putnam VT International Growth 100
AIM V.I. Capital Appreciation 162,083 Putnam VT International New Opportunities 17,800
AIM V.I. International Equity 2,949 Templeton Global Income Securities 48,290
Alliance Premier Growth 19,846 Franklin Small Cap 51,596
Alliance Real Estate Investment 9,660 Templeton Growth Securities 7,461
Liberty Newport Tiger Fund, Variable 2,849 Templeton International Securities 34,709
<PAGE>
Goldman Sachs Growth and Income 5,598 Templeton Developing Markets Securities 5,546
Goldman Sachs International Equity 100 Templeton Mutual Shares Securities 100
Goldman Sachs Global Income 100 Franklin Large Cap Growth Securities 76,578
------------
$ 7,118,755
============
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE
Sub-account
Commenced Accumulation Unit Value
----------------------------------------
Operations 6/30/00 12/31/99 12/31/98
------------ ------------ ------------ ------------
Single premium variable life policies (SPVL):
<S> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 01/08/99 12.178101 12.448204 -
Cova Bond Debenture 04/13/98 10.765079 10.614338 10.262336
Cova Developing Growth 04/16/98 11.513903 13.050371 9.855135
Cova Large Cap Research 05/04/98 13.113251 13.771430 10.972618
Cova Mid-Cap Value 03/23/98 11.915384 10.119059 9.576906
Cova Quality Bond 04/13/98 10.935405 10.551764 10.717509
<PAGE>
Cova Small Cap Stock 04/13/98 12.954078 12.850204 8.891377
Cova Large Cap Stock 04/13/98 13.975272 14.283064 12.135469
Cova Select Equity 03/23/98 12.473352 12.600289 11.480648
Cova International Equity 03/23/98 13.021727 13.571289 10.560451
GACC Money Market 02/26/98 11.351072 11.013039 10.468518
AIM V.I. Value 05/03/99 11.742562 11.774189 -
AIM V.I. Capital Appreciation 07/19/99 15.072152 13.925402 -
AIM V.I. International Equity 05/01/00 9.699112 - -
Templeton Global Income Securities 07/19/99 10.078554 9.970060 -
Franklin Small Cap 07/19/99 14.756923 14.136079 -
Templeton Growth Securities 07/19/99 11.398217 11.011283 -
Templeton International Securities 07/19/99 10.889422 10.827249 -
Franklin Large Cap Growth Securities 07/19/99 13.758449 12.333825 -
<PAGE>
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE
Sub-account Accumulation Unit
Commenced Net Assets (in thousands)
----------------------------------------
Operations 6/30/00 12/31/99 12/31/98
------------ ------------ ------------ ------------
Single premium variable life policies (SPVL):
<S> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 01/08/99 1,700 1,678 -
Cova Bond Debenture 04/13/98 340 411 166
Cova Developing Growth 04/16/98 405 346 135
Cova Large Cap Research 05/04/98 498 401 129
Cova Mid-Cap Value 03/23/98 351 242 161
Cova Quality Bond 04/13/98 112 86 134
Cova Small Cap Stock 04/13/98 287 212 122
Cova Large Cap Stock 04/13/98 980 864 257
Cova Select Equity 03/23/98 940 870 478
Cova International Equity 03/23/98 220 147 90
GACC Money Market 02/26/98 748 491 451
AIM V.I. Value 05/03/99 115 26 -
AIM V.I. Capital Appreciation 07/19/99 167 2 -
AIM V.I. International Equity 05/01/00 - - -
Templeton Global Income Securities 07/19/99 47 - -
Franklin Small Cap 07/19/99 54 - -
<PAGE>
Templeton Growth Securities 07/19/99 7 2 -
Templeton International Securities 07/19/99 21 2 -
Franklin Large Cap Growth Securities 07/19/99 77 - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
<PAGE>
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE
Sub-account Accumulation Unit
Commenced Total Return
----------------------------------------
Operations 6/30/00 12/31/99 12/31/98
------------ ------------ ------------ ------------
Single premium variable life policies (SPVL):
<S> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 01/08/99 -2.17% 11.41% -
Cova Bond Debenture 04/13/98 1.42% 3.43% 0.78%
Cova Developing Growth 04/16/98 -11.77% 32.42% -5.41%
Cova Large Cap Research 05/04/98 -4.78% 25.51% 4.31%
Cova Mid-Cap Value 03/23/98 17.75% 5.66% -6.17%
Cova Quality Bond 04/13/98 3.64% -1.55% 6.22%
Cova Small Cap Stock 04/13/98 0.81% 44.52% -14.87%
Cova Large Cap Stock 04/13/98 -2.15% 17.70% 13.96%
Cova Select Equity 03/23/98 -1.01% 9.75% 9.65%
Cova International Equity 03/23/98 -4.05% 28.51% 1.80%
GACC Money Market 02/26/98 3.07% 5.20% 4.69%
AIM V.I. Value 05/03/99 -0.27% 17.74% -
AIM V.I. Capital Appreciation 07/19/99 8.23% 28.36% -
AIM V.I. International Equity 05/01/00 -3.01% - -
Templeton Global Income Securities 07/19/99 1.09% -0.30% -
Franklin Small Cap 07/19/99 4.39% 41.36% -
Templeton Growth Securities 07/19/99 3.51% 10.11% -
Templeton International Securities 07/19/99 0.57% 8.27% -
Franklin Large Cap Growth Securities 07/19/99 11.55% 23.34% -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<PAGE>
<TABLE>
<PAGE>
<CAPTION>
(6) UNIT FAIR VALUE, CONTINUED
Sub-account
Commenced Accumulation Unit Value
----------------------------------------
Operations 6/30/00 12/31/99 12/31/98
------------ ------------ ------------ ------------
Flexible premium variable universal life policies (FPVL):
<S> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 05/01/00 9.723262 - -
Cova Bond Debenture 05/01/00 10.060863 - -
Cova Developing Growth 05/01/00 9.585406 - -
Cova Large Cap Research 05/01/00 9.746632 - -
Cova Mid-Cap Value 05/01/00 10.306919 - -
Cova Quality Bond 05/01/00 10.174491 - -
Cova Small Cap Stock 05/01/00 10.401447 - -
Cova Large Cap Stock 05/01/00 9.817957 - -
Cova Select Equity 05/01/00 9.862256 - -
Cova International Equity 05/01/00 9.992277 - -
GACC Money Market 11/29/99 10.327135 10.047103 -
Russell Multi-Style Equity 05/01/00 9.839318 - -
Russell Aggressive Equity 05/01/00 9.924708 - -
Russell Non-US 05/01/00 10.044600 - -
Russell Core Bond 05/01/00 10.187476 - -
Russell Real Estate Securities 05/01/00 10.276129 - -
AIM V.I. Value 05/01/00 9.424010 - -
AIM V.I. Capital Appreciation 05/01/00 10.194834 - -
AIM V.I. International Equity 05/01/00 9.690339 - -
Alliance Premier Growth 05/01/00 9.805973 - -
Alliance Real Estate Investment 05/01/00 10.380389 - -
Liberty Newport Tiger Fund, Variable 05/01/00 10.430572 - -
Goldman Sachs Growth and Income 05/01/00 9.963734 - -
Goldman Sachs International Equity 05/01/00 9.990964 - -
Goldman Sachs Global Income 05/01/00 10.110501 - -
Kemper Small Cap Growth 05/01/00 10.313208 - -
Kemper Small Cap Value 05/01/00 9.863794 - -
Kemper Government Securities 05/01/00 10.200453 - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<PAGE>
<PAGE>
<CAPTION>
(6) UNIT FAIR VALUE, CONTINUED
Sub-account Accumulation Unit
Commenced Net Assets (in thousands)
----------------------------------------
Operations 6/30/00 12/31/99 12/31/98
------------ ------------ ------------ ------------
Flexible premium variable universal life policies (FPVL):
<S> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 05/01/00 - - -
Cova Bond Debenture 05/01/00 1 - -
Cova Developing Growth 05/01/00 9 - -
Cova Large Cap Research 05/01/00 3 - -
Cova Mid-Cap Value 05/01/00 14 - -
Cova Quality Bond 05/01/00 10 - -
Cova Small Cap Stock 05/01/00 - - -
Cova Large Cap Stock 05/01/00 - - -
Cova Select Equity 05/01/00 - - -
Cova International Equity 05/01/00 - - -
GACC Money Market 11/29/99 45 - -
Russell Multi-Style Equity 05/01/00 - - -
Russell Aggressive Equity 05/01/00 - - -
Russell Non-US 05/01/00 - - -
Russell Core Bond 05/01/00 - - -
Russell Real Estate Securities 05/01/00 - - -
AIM V.I. Value 05/01/00 5 - -
AIM V.I. Capital Appreciation 05/01/00 3 - -
AIM V.I. International Equity 05/01/00 3 - -
Alliance Premier Growth 05/01/00 20 - -
Alliance Real Estate Investment 05/01/00 10 - -
Liberty Newport Tiger Fund, Variable 05/01/00 3 - -
Goldman Sachs Growth and Income 05/01/00 5 - -
Goldman Sachs International Equity 05/01/00 - - -
Goldman Sachs Global Income 05/01/00 - - -
Kemper Small Cap Growth 05/01/00 10 - -
Kemper Small Cap Value 05/01/00 3 - -
Kemper Government Securities 05/01/00 - - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
<PAGE>
(6) UNIT FAIR VALUE, CONTINUED
<PAGE>
Sub-account Accumulation Unit
Commenced Total Return
----------------------------------------
Operations 6/30/00 12/31/99 12/31/98
------------ ------------ ------------ ------------
Flexible premium variable universal life policies (FPVL):
<S> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 05/01/00 -2.77% - -
Cova Bond Debenture 05/01/00 0.61% - -
Cova Developing Growth 05/01/00 -4.15% - -
Cova Large Cap Research 05/01/00 -2.53% - -
Cova Mid-Cap Value 05/01/00 3.07% - -
Cova Quality Bond 05/01/00 1.74% - -
Cova Small Cap Stock 05/01/00 4.01% - -
Cova Large Cap Stock 05/01/00 -1.82% - -
Cova Select Equity 05/01/00 -1.38% - -
Cova International Equity 05/01/00 -0.08% - -
GACC Money Market 11/29/99 2.79% 0.47% -
Russell Multi-Style Equity 05/01/00 -1.61% - -
Russell Aggressive Equity 05/01/00 -0.75% - -
Russell Non-US 05/01/00 0.45% - -
Russell Core Bond 05/01/00 1.87% - -
Russell Real Estate Securities 05/01/00 2.76% - -
AIM V.I. Value 05/01/00 -5.76% - -
AIM V.I. Capital Appreciation 05/01/00 1.95% - -
AIM V.I. International Equity 05/01/00 -3.10% - -
Alliance Premier Growth 05/01/00 -1.94% - -
Alliance Real Estate Investment 05/01/00 3.80% - -
Liberty Newport Tiger Fund, Variable 05/01/00 4.31% - -
Goldman Sachs Growth and Income 05/01/00 -0.36% - -
Goldman Sachs International Equity 05/01/00 -0.09% - -
Goldman Sachs Global Income 05/01/00 1.11% - -
Kemper Small Cap Growth 05/01/00 3.13% - -
Kemper Small Cap Value 05/01/00 -1.36% - -
Kemper Government Securities 05/01/00 2.00% - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<PAGE>
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE, CONTINUED
Sub-account
Commenced Accumulation Unit Value
<PAGE>
----------------------------------------
Operations 6/30/00 12/31/99 12/31/98
------------ ------------ ------------ ------------
Flexible premium variable universal life policies (FPVL), continued:
<S> <C> <C> <C> <C>
MFS Research 05/01/00 10.042841 - -
MFS Growth with Income 05/01/00 10.009910 - -
MFS Emerging Growth 05/01/00 9.809074 - -
MFS High Income 05/01/00 10.000426 - -
MFS Global Governments 05/01/00 10.223319 - -
Oppenheimer Capital Appreciation 05/01/00 9.938508 - -
Oppenheimer Main Street Growth & Income 05/01/00 9.935662 - -
Oppenheimer High Income 05/01/00 10.085815 - -
Oppenheimer Bond 05/01/00 10.179298 - -
Oppenheimer Strategic Bond 05/01/00 10.143666 - -
Putnam VT Growth and Income 05/01/00 9.784413 - -
Putnam VT New Value 05/01/00 10.088674 - -
Putnam VT Vista 05/01/00 10.161851 - -
Putnam VT International Growth 05/01/00 10.187588 - -
Putnam VT International New Opportunities 05/01/00 9.160794 - -
Franklin Small Cap 05/01/00 10.489358 - -
Templeton International Securities 05/01/00 10.594502 - -
Templeton Developing Markets Securities 05/01/00 9.852198 - -
Templeton Mutual Shares Securities 05/01/00 9.866570 - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE, CONTINUED
Sub-account Accumulation Unit
Commenced Net Assets (in thousands)
<PAGE>
----------------------------------------
Operations 6/30/00 12/31/99 12/31/98
------------ ------------ ------------ ------------
Flexible premium variable universal life policies (FPVL), continued:
<S> <C> <C> <C> <C>
MFS Research 05/01/00 5 - -
MFS Growth with Income 05/01/00 18 - -
MFS Emerging Growth 05/01/00 3 - -
MFS High Income 05/01/00 3 - -
<PAGE>
MFS Global Governments 05/01/00 - - -
Oppenheimer Capital Appreciation 05/01/00 - - -
Oppenheimer Main Street Growth & Income 05/01/00 - - -
Oppenheimer High Income 05/01/00 - - -
Oppenheimer Bond 05/01/00 11 - -
Oppenheimer Strategic Bond 05/01/00 - - -
Putnam VT Growth and Income 05/01/00 14 - -
Putnam VT New Value 05/01/00 - - -
Putnam VT Vista 05/01/00 10 - -
Putnam VT International Growth 05/01/00 - - -
Putnam VT International New Opportunities 05/01/00 18 - -
Franklin Small Cap 05/01/00 - - -
Templeton International Securities 05/01/00 14 - -
Templeton Developing Markets Securities 05/01/00 6 - -
Templeton Mutual Shares Securities 05/01/00 - - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE, CONTINUED
Sub-account Accumulation Unit
Commenced Total Return
----------------------------------------
Operations 6/30/00 12/31/99 12/31/98
------------ ------------ ------------ ------------
Flexible premium variable universal life policies (FPVL), continued:
<S> <C> <C> <C> <C>
<PAGE>
MFS Research 05/01/00 0.43% - -
MFS Growth with Income 05/01/00 0.10% - -
MFS Emerging Growth 05/01/00 -1.91% - -
MFS High Income 05/01/00 0.00% - -
MFS Global Governments 05/01/00 2.23% - -
Oppenheimer Capital Appreciation 05/01/00 -0.61% - -
Oppenheimer Main Street Growth & Income 05/01/00 -0.64% - -
Oppenheimer High Income 05/01/00 0.86% - -
Oppenheimer Bond 05/01/00 1.79% - -
Oppenheimer Strategic Bond 05/01/00 1.44% - -
Putnam VT Growth and Income 05/01/00 -2.16% - -
Putnam VT New Value 05/01/00 0.89% - -
Putnam VT Vista 05/01/00 1.62% - -
Putnam VT International Growth 05/01/00 1.88% - -
Putnam VT International New Opportunities 05/01/00 -8.39% - -
<PAGE>
Franklin Small Cap 05/01/00 4.89% - -
Templeton International Securities 05/01/00 5.95% - -
Templeton Developing Markets Securities 05/01/00 -1.48% - -
Templeton Mutual Shares Securities 05/01/00 -1.33% - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION The realized
gain (loss) on the sale of fund shares and the change in unrealized
appreciation for each sub-account during the period ending June 30, 2000
and the year ending December 31, 1999 follows:
Realized Gain (Loss)
--------------------------------------------------------------------
Aggregate Aggregate Cost
Year or Proceeds from Sales of Fund Shares Realized
Period of Fund Shares Redeemed Gain (Loss)
----------- ----------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 2000 $ 141,459 $ 129,150 $ 12,309
<PAGE>
1999 98,255 97,086 1,169
Cova Bond Debenture 2000 108,557 106,260 2,297
1999 4,688 4,644 44
Cova Developing Growth 2000 3,384 2,593 791
1999 15,912 13,090 2,822
Cova Large Cap Research 2000 59,273 52,029 7,244
1999 12,192 10,598 1,594
Cova Mid-Cap Value 2000 10,006 8,290 1,716
1999 17,534 15,691 1,843
Cova Quality Bond 2000 1,097 1,109 (12)
1999 97,215 98,374 (1,159)
Cova Small Cap Stock 2000 7,299 5,353 1,946
1999 6,684 5,547 1,137
Cova Large Cap Stock 2000 63,741 58,156 5,585
<PAGE>
1999 49,866 43,464 6,402
Cova Select Equity 2000 78,277 75,353 2,924
1999 79,613 77,125 2,488
Cova International Equity 2000 6,139 5,497 642
1999 19,787 18,422 1,365
GACC Money Market 2000 2,189,836 2,161,870 27,966
1999 2,543,802 2,519,093 24,709
Russell Multi-Style Equity 2000 - - -
1999 - - -
Russell Aggressive Equity 2000 - - -
1999 - - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<PAGE>
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS), CONTINUED:
Realized Gain (Loss)
--------------------------------------------------------------------
Aggregate Aggregate Cost
Year or Proceeds from Sales of Fund Shares Realized
Period of Fund Shares Redeemed Gain (Loss)
----------- ----------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Russell Non-U.S. 2000 $ - $ - $ -
1999 - - -
Russell Core Bond 2000 - - -
1999 - - -
Russell Real Estate Securities 2000 - - -
1999 - - -
AIM V.I. Value 2000 14,127 13,228 899
1999 218 188 30
AIM V.I. Capital Appreciation 2000 508 497 11
1999 8 7 1
<PAGE>
AIM V.I. International Equity 2000 - - -
1999 - - -
Alliance Premier Growth 2000 59 60 (1)
1999 - - -
Alliance Real Estate Investment 2000 13 13 -
1999 - - -
Liberty Newport Tiger Fund, Variable 2000 - - -
1999 - - -
Goldman Sachs Growth and Income 2000 - - -
1999 - - -
Goldman Sachs International 2000 - - -
1999 - - -
Goldman Sachs Global Income 2000 - - -
<PAGE>
1999 - - -
Kemper Small Cap Growth 2000 13 13 -
1999 - - -
Kemper Small Cap Value 2000 - - -
1999 - - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS), CONTINUED:
Realized Gain (Loss)
--------------------------------------------------------------------
Aggregate Aggregate Cost
Year or Proceeds from Sales of Fund Shares Realized
Period of Fund Shares Redeemed Gain (Loss)
---------- ----------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Kemper Government Securities 2000 $ - $ - $ -
1999 - - -
MFS Research 2000 206 207 (1)
<PAGE>
1999 - - -
MFS Growth and Income 2000 23 23 -
1999 - - -
MFS Emerging Growth 2000 - - -
1999 - - -
MFS High Income 2000 - - -
1999 - - -
MFS Global Governments 2000 - - -
1999 - - -
<PAGE>
Oppenheimer Main Street Growth & Income 2000 - - -
1999 - - -
Oppenheimer Capital Appreciation 2000 - - -
1999 - - -
Oppenheimer High Income 2000 - - -
1999 - - -
Oppenheimer Bond 2000 21 21 -
1999 - - -
Oppenheimer Strategic Bond 2000 - - -
1999 - - -
Putnam VT Growth and Income 2000 59 59 -
1999 - - -
Putnam VT New Value 2000 - - -
1999 - - -
Putnam VT Vista 2000 53 52 1
1999 - - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS), CONTINUED:
Realized Gain (Loss)
<PAGE>
------------------------------------------------------------------
Aggregate Aggregate Cost
Year or Proceeds from Sales of Fund Shares Realized
Period of Fund Shares Redeemed Gain (Loss)
----------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
<PAGE>
Putnam VT International Growth 2000 $ - $ - $ -
1999 - - -
Putnam VT International New Opportunities 2000 33 33 -
1999 - - -
Templeton Global Income Securities 2000 449 466 (17)
1999 - - -
Franklin Small Cap 2000 121 118 3
1999 - - -
Templeton Growth Securities 2000 45 49 (4)
1999 8 8 -
Templeton International Securities 2000 88 89 (1)
1999 8 8 -
Templeton Developing Markets Securities 2000 10 10 -
1999 - - -
Templeton Mutual Shares Securities 2000 - - -
1999 - - -
Franklin Large Cap Growth Securities 2000 705 714 (9)
1999 - - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(7) CHANGE IN UNREALIZED APPRECIATION:
Unrealized Appreciation (Depreciation)
-------------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
<PAGE>
----------- ------------------ ----------------------- -----------------
<PAGE>
<S> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 2000 $ 48,176 $ 140,732 $ (92,556)
1999 140,732 - 140,732
Cova Bond Debenture 2000 (11,440) 7,496 (18,936)
1999 7,496 5,180 2,316
Cova Developing Growth 2000 27,353 88,046 (60,693)
1999 88,046 21,897 66,149
Cova Large Cap Research 2000 2,840 72,857 (70,017)
1999 72,857 11,811 61,046
Cova Mid-Cap Value 2000 62,558 20,332 42,226
1999 20,332 12,587 7,745
Cova Quality Bond 2000 (4,748) (2,123) (2,625)
1999 (2,123) 255 (2,378)
Cova Small Cap Stock 2000 71,436 81,861 (10,425)
1999 81,861 18,574 63,287
Cova Large Cap Stock 2000 4,316 106,009 (101,693)
1999 106,009 44,695 61,314
Cova Select Equity 2000 (29,150) 46,891 (76,041)
1999 46,891 65,356 (18,465)
Cova International Equity 2000 8,199 30,035 (21,836)
1999 30,035 1,779 28,256
GACC Money Market 2000 9,598 11,821 (2,223)
1999 11,821 4,240 7,581
Russell Multi-Style Equity 2000 (2) - (2)
1999 - - -
Russell Aggressive Equity 2000 (1) - (1)
1999 - - -
Russell Non-U.S. 2000 1 - 1
1999 - - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
<PAGE>
<PAGE>
Unaudited
<TABLE>
<CAPTION>
(7) CHANGE IN UNREALIZED APPRECIATION, CONTINUED:
Unrealized Appreciation (Depreciation)
--------------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
---------- ------------------ ----------------------- ----------------
<S> <C> <C> <C> <C>
Russell Core Bond 2000 $ 2 $ - $ 2
1999 - - -
Russell Real Estate Securities 2000 3 - 3
1999 - - -
AIM V.I. Value 2000 (1,214) 2,049 (3,263)
1999 2,049 - 2,049
AIM V.I. Capital Appreciation 2000 7,857 300 7,557
1999 300 - 300
AIM V.I. International Equity 2000 (46) - (46)
1999 - - -
Alliance Premier Growth 2000 (113) - (113)
1999 - - -
Alliance Real Estate Investment 2000 (65) - (65)
1999 - - -
Liberty Newport Tiger Fund, Variable 2000 25 - 25
1999 - - -
Goldman Sachs Growth and Income 2000 (104) - (104)
1999 - - -
Goldman Sachs International Equity 2000 - - -
1999 - - -
Goldman Sachs Global Income 2000 1 - 1
1999 - - -
Kemper Small Cap Growth 2000 396 - 396
<PAGE>
1999 - - -
<PAGE>
Kemper Small Cap Value 2000 15 - 15
1999 - - -
Kemper Government Securities 2000 2 - 2
1999 - - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(7) CHANGE IN UNREALIZED APPRECIATION, CONTINUED:
Unrealized Appreciation (Depreciation)
--------------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
---------- ----------------- ----------------------- ----------------
<S> <C> <C> <C> <C>
MFS Research 2000 $ 77 $ - $ 77
1999 - - -
MFS Growth with Income 2000 (38) - (38)
1999 - - -
MFS Emerging Growth 2000 (84) - (84)
1999 - - -
MFS High Income 2000 2 - 2
1999 - - -
MFS Global Governments 2000 2 - 2
1999 - - -
Oppenheimer Main Street Growth and Income 2000 (1) - (1)
1999 - - -
<PAGE>
Oppenheimer Capital Appreciation 2000 (1) - (1)
1999 - - -
Oppenheimer High Income 2000 1 - 1
1999 - - -
Oppenheimer Bond 2000 63 - 63
<PAGE>
1999 - - -
Oppenheimer Strategic Bond 2000 2 - 2
1999 - - -
Putnam VT Growth and Income 2000 (246) - (246)
1999 - - -
Putnam VT New Value 2000 1 - 1
1999 - - -
Putnam VT Vista 2000 256 - 256
1999 - - -
Putnam VT International Growth 2000 2 - 2
1999 - - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(7) CHANGE IN UNREALIZED APPRECIATION, CONTINUED:
Unrealized Appreciation (Depreciation)
-------------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
----------- ---------------- ----------------------- ---------------
<S> <C> <C> <C> <C>
Putnam VT International New Opportunities 2000 $ (74) $ - $ (74)
<PAGE>
1999 - - -
Templeton Global Income Securities 2000 (1,768) - (1,768)
1999 - - -
Franklin Small Cap 2000 2,813 41 2,772
1999 41 - 41
Templeton Growth Securities 2000 (270) 160 (430)
1999 160 - 160
Templeton International Securities 2000 506 167 339
1999 167 - 167
<PAGE>
Templeton Developing Markets Securities 2000 42 - 42
1999 - - -
Templeton Mutual Shares Securities 2000 (1) - (1)
1999 - - -
Franklin Large Cap Growth Securities 2000 855 23 832
1999 23 - 23
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<TABLE>
<CAPTION>
(8) UNITS OUTSTANDING
6/30/00 12/31/99 12/31/98
----------------- ------------------ -----------------
Accumulation Units:
Single premium variable life policies (SPVL):
<S> <C> <C> <C>
Cova Lord Abbett Growth and Income 139,613 134,762 -
Cova Bond Debenture 31,557 38,749 16,194
Cova Developing Growth 35,202 26,493 13,726
Cova Large Cap Research 38,004 29,120 11,784
Cova Mid-Cap Value 29,474 23,875 16,852
<PAGE>
Cova Quality Bond 10,281 8,134 12,494
Cova Small Cap Stock 22,157 16,533 13,665
Cova Large Cap Stock 70,111 60,489 21,202
Cova Select Equity 75,329 69,034 41,611
Cova International Equity 16,918 10,864 8,549
GACC Money Market 65,920 44,548 43,101
AIM V.I. Value 9,814 2,202 -
AIM V.I. Capital Appreciation 11,092 176 -
AIM V.I. International Equity 10 - -
Templeton Global Income Securities 4,616 10 -
Franklin Small Cap 3,680 10 -
Templeton Growth Securities 631 205 -
Templeton International Securities 1,959 209 -
Franklin Large Cap Growth Securities 5,628 10 -
Accumulation Units:
Flexible premium variable universal life (FPVL):
Cova Lord Abbett Growth and Income 10 - -
<PAGE>
Cova Bond Debenture 70 - -
Cova Developing Growth 892 - -
Cova Large Cap Research 284 - -
Cova Mid-Cap Value 1,313 - -
Cova Quality Bond 950 - -
Cova Small Cap Stock 10 - -
Cova Large Cap Stock 10 - -
Cova Select Equity 10 - -
Cova International Equity 10 - -
GACC Money Market 4,359 10 -
Russell Multi-Style Equity 10 - -
Russell Aggressive Equity 10 - -
Russell Non-US 10 - -
Russell Core Bond 10 - -
Russell Real Estate Securities 10 - -
AIM V.I. Value 575 - -
AIM V.I. Capital Appreciation 271 - -
AIM V.I. International Equity 290 - -
</TABLE>
<PAGE>
COVA VARIABLE LIFE ACCOUNT ONE
Notes to Financial Statements
June 30, 2000
Unaudited
<PAGE>
<TABLE>
<CAPTION>
(8) UNITS OUTSTANDING, CONTINUED:
6/30/00 12/31/99 12/31/98
----------------- ------------------ -----------------
Accumulation Units:
Flexible premium variable universal life (FPVL):
<S> <C> <C> <C>
Alliance Premier Growth 2,012 - -
Alliance Real Estate Investment 924 - -
Liberty Newport Tiger Fund, Variable 276 - -
Goldman Sachs Growth and Income 551 - -
Goldman Sachs International Equity 10 - -
Goldman Sachs Global Income 10 - -
Kemper Small Cap Growth 975 - -
Kemper Small Cap Value 291 - -
Kemper Government Securities 10 - -
MFS Research 484 - -
MFS Growth with Income 1,779 - -
MFS Emerging Growth 282 - -
MFS High Income 285 - -
<PAGE>
MFS Global Governments 10 - -
Oppenheimer Capital Appreciation 10 - -
Oppenheimer Main Street Growth & Income 10 - -
Oppenheimer High Income 10 - -
Oppenheimer Bond 1,086 - -
Oppenheimer Strategic Bond 10 - -
Putnam VT Growth and Income 1,438 - -
Putnam VT New Value 10 - -
Putnam VT Vista 1,032 - -
Putnam VT International Growth 10 - -
Putnam VT International New Opportunities 1,935 - -
Franklin Small Cap 10 - -
Templeton International Securities 1,311 - -
Templeton Developing Markets Securities 567 - -
Templeton Mutual Shares Securities 10 - -
</TABLE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
JUNE 30,
2000 DECEMBER 31,
Assets (UNAUDITED) 1999
---------------- --------------------
(IN THOUSANDS)
Investments:
<S> <C> <C>
Debt securities available-for-sale, at fair value (cost of
$1,533,343 in 2000 and $1,575,536 in 1999) $ 1,533,046 1,481,997
Preferred stock - affiliate, at fair value -- 6,892
Common stock, at fair value 12 12
Mortgage loans, net of allowance for potential loan loss
of $1,090 in 2000 and 1999 366,137 376,147
Policy loans 27,011 27,778
Other invested assets 14,529 4,625
---------------- --------------------
Total investments 1,940,735 1,897,451
Cash and cash equivalents - interest-bearing 107,442 86,038
Cash - noninterest-bearing 6,913 5,893
Receivable from sale of securities 3,588 1,452
<PAGE>
Accrued investment income 26,002 24,992
Deferred policy acquisition costs 16,138 214,120
Present value of future profits -- 55,406
Value of business acquired 301,843 --
Goodwill 44,589 16,157
Deferred tax asset, net 4,078 21,964
Receivable from OakRe 66,326 336,376
Federal and state income taxes recoverable 1,193 1,190
Due from affiliates 972 --
Other assets 203 741
Separate account assets 2,683,805 2,537,962
---------------- --------------------
Total assets $ 5,203,827 5,199,742
================ ====================
<PAGE>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Balance Sheets, Continued
<TABLE>
<CAPTION>
JUNE 30,
2000 DECEMBER 31,
Liabilities and Shareholder's Equity (UNAUDITED) 1999
---------------- --------------------
(IN THOUSANDS)
Liabilities:
<S> <C> <C>
Policyholder deposits $ 2,035,977 2,270,795
Future policy benefits 58,652 58,432
Payable on return of collateral on loaned securities 48,841 37,862
Payable on purchase of securities 3,940 516
Due to affiliates -- 4,220
Accounts payable and other liabilities 21,223 22,905
Future purchase price payable to OakRe 489 2,898
Guaranty fund assessments 9,900 9,900
Separate account liabilities 2,683,783 2,537,652
---------------- --------------------
<PAGE>
Total liabilities 4,862,805 4,945,180
---------------- --------------------
Shareholder's equity:
Common stock, $2 par value. Authorized
5,000,000 shares; issued and outstanding
2,899,466 shares in 2000 and 1999 5,799 5,799
Additional paid-in capital 334,913 260,491
Retained earnings 366 12,906
<PAGE>
Accumulated other comprehensive
loss - net of tax (56) (24,634)
---------------- --------------------
Total shareholder's equity 341,022 254,562
---------------- --------------------
Total liabilities and shareholder's equity $ 5,203,827 5,199,742
================ ====================
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------
(IN THOUSANDS)
Revenues:
<S> <C> <C> <C> <C>
Premiums $ 3,182 9,755 $ 2,267 6,467
Net investment income 83,004 66,028 41,243 32,125
Net realized gains (losses)on sales of investments 377 (4,794) 338 (2,569)
<PAGE>
Separate account fees 18,516 14,326 9,495 7,637
Other income 2,683 2,797 1,400 1,336
------------- ------------- ------------- -------------
Total revenues 107,762 88,112 54,743 44,996
<PAGE>
------------- ------------- ------------- -------------
Benefits and expenses:
Interest on policyholder deposits 56,116 49,696 28,791 24,504
Current and future policy benefits 5,839 11,918 3,455 8,112
Operating and other expenses 14,902 10,023 8,552 5,646
Amortization of purchased
intangible assets 29,591 3,267 16,687 1,639
Amortization of deferred policy
acquisition costs 28 10,223 (12) 5,362
------------- ------------- ------------- -------------
Total benefits and expenses 106,476 85,127 57,473 45,263
------------- ------------- ------------- -------------
Income (loss) before income taxes 1,286 2,985 (2,730) (267)
------------- ------------- ------------- -------------
Income tax expense (benefit):
Current 5 (206) 1 (4,421)
Deferred 915 755 (525) 4,075
------------- ------------- ------------- -------------
Total income tax expense (benefit) 920 549 (524) (346)
------------- ------------- ------------- -------------
Net income (loss) $ 366 2,436 $ (2,206) 79
============= ============= ============= =============
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Shareholder's Equity
<TABLE>
<CAPTION>
JUNE 30,
2000 DECEMBER 31,
(UNAUDITED) 1999
---------------- --------------------
(IN THOUSANDS)
<S> <C> <C>
Common stock, balance at beginning
and end of period $ 5,799 5,799
---------------- --------------------
Additional paid-in capital:
Balance at beginning of period 260,491 220,491
Adjustment to reflect purchase acquisition 49,422 --
Capital contribution 25,000 40,000
---------------- --------------------
Balance at end of period 334,913 260,491
---------------- --------------------
Retained earnings:
Balance at beginning of period 12,906 26,410
Adjustment to reflect purchase acquisition (12,906) --
Net income (loss) 366 (13,504)
---------------- --------------------
Balance at end of period 366 12,906
---------------- --------------------
Accumulated other comprehensive loss:
Balance at beginning of period (24,634) (614)
Adjustment to reflect purchase acquisition 24,634 --
Change in unrealized depreciation of debt and equity securities (295) (91,987)
Deferred federal income tax impact 31 12,934
Change in deferred policy acquisition costs attributable
to unrealized depreciation -- 39,975
Change in value of business acquired
attributable to unrealized depreciation 208 15,058
---------------- --------------------
Balance at end of period (56) (24,634)
---------------- --------------------
Total shareholder's equity $ 341,022 254,562
================ ====================
Total comprehensive income (loss):
Net income (loss) $ 366 (13,504)
Other comprehensive income (loss) (change in net unrealized
depreciation of debt and equity securities) (56) (24,020)
---------------- --------------------
<PAGE>
<PAGE>
Total comprehensive income (loss) $ 310 (37,524)
================ ====================
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
2000 1999
------------ ------------
(IN THOUSANDS)
Reconciliations of net income to net cash provided by operating activities:
<S> <C> <C>
Net income $ 366 2,436
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase in future policy benefits 1,943 4,094
(Decrease) increase in payables and accrued liabilities (2,540) 5,163
Increase in accrued investment income (1,010) (2,449)
Amortization of intangible assets and
deferred policy acquisition costs 29,619 13,490
Amortization and accretion of securities
premiums and discounts (9,897) (97)
Decrease in recapture commissions payable to OakRe (2,409) (1,453)
Interest credited to intangible assets and deferred
policy acquisition costs (10,791) (6,128)
Net realized (gain) loss on sale of investments (377) 4,794
Interest accumulated on policyholder deposits 56,116 49,696
Increase(decrease) in current and
deferred federal income taxes 912 (4,910)
Commissions and expenses deferred (20,754) (23,880)
<PAGE>
Other (2,679) 10,493
------------ ------------
Net cash provided by operating activities 38,499 51,249
------------ ------------
<PAGE>
Cash flows from investing activities:
Cash used in the purchase of investment securities (149,949) (373,923)
Proceeds from investment securities sold and matured 121,209 218,492
------------ ------------
Net cash used in investing activities $ (28,740) (155,431)
------------ ------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Cash Flows (Unaudited), Continued
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
2000 1999
------------ ------------
(IN THOUSANDS)
Cash flows from financing activities:
<S> <C> <C>
Policyholder deposits $ 385,612 484,855
Transfers from OakRe 282,352 206,951
Transfer to separate accounts (224,037) (288,377)
Return of policyholder deposits (463,870) (378,266)
Proceeds from security collateral on securities lending 10,979 15,874
Transfers from (to) RGA (3,371) 35,991
Capital contributions received 25,000 10,000
------------ ------------
<PAGE>
Net cash provided by financing activities 12,665 87,028
------------ ------------
Increase (decrease) in cash and
cash equivalents 22,424 (17,154)
Cash and cash equivalents at beginning of period 91,931 99,778
------------ ------------
Cash and cash equivalents at end of period $ 114,355 82,624
============ ============
<PAGE>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Interim Financial Statements - (Unaudited)
June 30, 2000 and 1999
(1) BASIS OF PRESENTATION
The interim consolidated financial statements for Cova Financial Services
Life Insurance Company (the Company) have been prepared on the basis of
generally accepted accounting principles (GAAP) and, in the opinion of
management, reflect all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of results for such periods.
The results of operations and cash flows for any interim period are not
necessarily indicative of results for the full year. These financial
statements should be read in conjunction with the financial statements as
of December 31, 1999 and December 31, 1998, and for each of the years in
the three-year period ended December 31, 1999 and related notes thereto,
presented elsewhere herein. Interim financial data presented herein are
unaudited.
(2) MERGER
The Company is a wholly owned subsidiary of Cova Corporation, which is a
wholly owned subsidiary of General American Life Insurance Company
<PAGE>
(GALIC), a Missouri domiciled life insurance company. GALIC is a wholly
owned subsidiary of GenAmerica Corporation, which in turn is wholly owned
by the ultimate parent, General American Mutual Holding Company (GAMHC).
The Company owns 100% of the outstanding shares of two subsidiaries,
First Cova Life Insurance Company (a New York domiciled insurance
company) (FCLIC) and Cova Financial Life Insurance Company (a California
domiciled insurance company) (CFLIC).
On January 6, 2000, GenAmerica Corporation and all of its holdings were
acquired by Metropolitan Life Insurance Company (MetLife), a New York
domiciled life insurance company, for $1.2 billion in cash. For the
purposes of financial reporting, the Company has accounted for the merger
as if it took place on January 1, 2000.
(3) CHANGE IN ACCOUNTING
Upon the merger, the Company restated its financial statements in
<PAGE>
accordance with "push down purchase accounting". The net purchase price
of approximately $316 million was allocated to the Company and its
subsidiaries based on the fair values of the acquired assets and
liabilities, including the estimated value of business acquired. These
allocated values were dependent upon policies in force and market
conditions at the time of closing. These allocations are summarized
below:
<PAGE>
<TABLE>
JANUARY 1, 2000
---------------------
(IN THOUSANDS)
<S> <C>
Total investments $ 1,902,771
Cash and cash equivalents 91,931
Value of business acquired 314,646
Goodwill 45,732
Receivable from OakRe 336,376
Deferred tax benefits 4,962
Other assets 28,373
Separate account assets 2,537,962
-------------
<PAGE>
Total assets acquired 5,262,753
-------------
Policyholder deposits 2,274,318
Future policy benefits 56,709
Payable for return of collateral on loan securities 37,862
Other liabilities 40,500
Separate account liabilities 2,537,652
-------------
Total liabilities assumed 4,947,041
-------------
Adjusted purchase price $ 315,712
=============
</TABLE>
In addition to revaluing all material tangible assets and liabilities to
their respective estimated market values at the merger date, the Company
also recorded in its financial statements the excess of cost over fair
value of net assets acquired (goodwill) as well as the value of business
acquired to be derived from the purchased and reinsured business. These
<PAGE>
amounts were determined in accordance with the purchase method of
accounting. This new basis of accounting resulted in an increase in
shareholder's equity of approximately $61 million on January 1, 2000
reflecting the application of push down purchase accounting. The
Company's consolidated financial statements subsequent to January 1, 2000
reflect this new basis of accounting.
<PAGE>
(4) INVESTMENTS
The Company's investments in debt and equity securities are considered
available-for-sale and carried at estimated fair value, with the
aggregate unrealized appreciation or depreciation being recorded as a
separate component of shareholder's equity. The amortized cost, estimated
fair value, and carrying value of investments at June 30, 2000 are as
follows:
<PAGE>
<TABLE>
<CAPTION>
JUNE 30, 2000
-----------------------------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR CARRYING
COST GAINS LOSSES VALUE VALUE
-------------- -------------- --------------- --------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Debt securities:
U.S. Government
treasuries $ 25,174 463 (7) 25,630 25,630
Corporate securities 1,055,038 13,645 (14,895) 1,053,788 1,053,788
Mortgage-backed securities 222,333 1,438 (799) 222,972 222,972
Asset-backed securities 230,797 3,686 (3,827) 230,656 230,656
-------------- -------------- --------------- --------------- --------------
Total debt securities 1,533,342 19,232 (19,528) 1,533,046 1,533,046
Equity securities 12 - - 12 12
Mortgage loans (net) 366,139 1,037 - 367,176 366,139
Other invested assets 14,529 - - 14,529 14,529
Policy loans 27,012 - - 27,012 27,012
-------------- -------------- --------------- --------------- --------------
<PAGE>
Total investments $ 1,941,034 20,269 (19,528) 1,941,775 1,940,738
============== ============== =============== =============== ==============
Company's beneficial interest
in separate accounts $ 22 - - 22 22
============== ============== =============== =============== ==============
</TABLE>
As of June 30, 2000, the Company had six impaired debt securities with
estimated fair value of $9,200,000, of which one debt security, with
estimated fair value of $4,400,000, became nonincome producing in 2000.
The Company's valuation allowance for potential losses on mortgage loans
is $1,090,000 at June 30, 2000.
<PAGE>
<PAGE>
The amortized cost and estimated fair value of debt securities at June
30, 2000, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties. Maturities of mortgage-backed securities will be
substantially shorter than their contractual maturity because they
require monthly principal installments and mortgagees may prepay
principal.
<TABLE>
<CAPTION>
JUNE 30, 2000
------------------------------
ESTIMATED
AMORTIZED FAIR
COST VALUE
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Less than one year $ 60,999 61,104
Due after one year through five years 556,884 556,290
Due after five years through ten years 385,586 385,310
Due after ten years 76,743 76,714
Mortgage-backed securities 453,130 453,628
-------------- --------------
Total $ 1,533,342 1,533,046
============== ==============
</TABLE>
At June 30, 2000, approximately 90.9% of the Company's debt securities
<PAGE>
are investment grade or are nonrated but considered to be of investment
grade. Of the 9.1% noninvestment grade debt securities, 7.3% are rated
as BB, 1.1% are rated as B, and .7 % are rated C and treated as
impaired.
<PAGE>
<TABLE>
<CAPTION>
<PAGE>
The components of investment income, realized capital gains (losses),
and unrealized appreciation (depreciation) are as follows:
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
------------ ----------- ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Income on debt securities $ 65,832 50,849 32,741 25,274
Income on mortgage loans 15,357 13,666 7,644 6,095
Income on short-term investments 1,574 1,013 831 548
Interest on policy loans 1,076 1,043 526 530
Income on equity securities 136 281 - 137
Miscellaneous interest 249 283 117 114
------------ ------------ ------------ -------------
Total investment income 84,224 67,135 41,859 32,698
Investment expenses (1,220) (1,107) (616) (573)
------------ ------------ ------------ -------------
Net investment income $ 83,004 66,028 41,243 32,125
============ ============ ============ =============
Net realized capital gains(losses) - debt securities $ 377 (4,794) 338 (2,569)
============ ============ ============ =============
</TABLE>
<TABLE>
JUNE 30, 2000 DECEMBER 31,
UNAUDITED 1999
-----------------------------------
(IN THOUSANDS)
Unrealized appreciation (depreciation) are as follows:
<S> <C> <C>
Debt securities $ (295) (93,540)
Preferred stock - affiliate - (2,108)
Common stock - (25)
<PAGE>
Effects on deferred acquisition costs amortization - 43,190
Effects on PVFP amortization - 14,585
Effects on VOBA amortization 208 -
----------------- ---------------
Unrealized depreciation before income tax (87) (37,898)
Unrealized income tax benefit 31 13,264
<PAGE>
----------------- ---------------
Unrealized depreciation on investments $ (56) (24,634)
================= ===============
</TABLE>
(5) SECURITIES GREATER THAN 10% OF SHAREHOLDER'S EQUITY
The Company does not have any individual security that exceeds 10% of
shareholder's equity at June 30, 2000.
<PAGE>
(6) STATUTORY SURPLUS
As of June 30, 2000, the Company's statutory capital and surplus was
$104,199,976. The Company's statutory net losses for the periods ended
June 30, 2000 and 1999 were $14,122,054 and $9,554,724, respectively.
(7) RELATED-PARTY TRANSACTIONS
On October 31, 1999, the Company's affiliate Cova Life Management Company
(CLMC) purchased the remaining 51% interest in Cova Life Administrative
Service Company (CLASC) from another affiliate, Navisys Incorporated, for
$1,184,414.
The Company has entered into management, operations, and servicing
agreements with its affiliated companies. The affiliated companies are
CLMC, which provides management services and the employees necessary to
conduct the activities of the Company; Conning Asset Management, which
provides investment advice; and CLASC, which provides underwriting,
policy issuance, claims, and other policy administration functions.
Additionally, a portion of overhead and other corporate expenses is
allocated by the Company's ultimate parent, GALIC. Expenses and fees paid
to affiliated companies as of June 30, 2000 and 1999 were $15,887,385 and
$10,768,818, respectively.
(8) REINSURANCE
Effective July 25, 1999, the company entered into a modified coinsurance
agreement with MetLife. Under the agreement, the Company ceded life
insurance and annuity business that was issued or renewed from July 25,
<PAGE>
1999 through December 31, 1999 to MetLife. Net earnings to MetLife from
<PAGE>
that business are experience refunded to the Company. The agreement does
not meet the conditions for reinsurance accounting under GAAP. In
substance, the agreement represents a permanent guarantee by MetLife of
new and renewed business during this period. There was no impact on the
Company's financial statements resulting from the reinsurance transaction
with MetLife. On January 6, 2000, the Company discontinued ceding new
business under the modified coinsurance agreement with MetLife.
(9) SUBSEQUENT EVENT
On July 1, 2000, the Company recaptured all of the existing single
premium deferred annuity policies ceded to OakRe Life Insurance Company
(OakRe). On that same date, the Company terminated the June 1, 1995
reinsurance agreement with OakRe.
(10) OTHER
Certain 1999 amounts have been reclassified to conform to the 2000
presentation.
CL-4395 (9/00) 21-RVUL-SL-1
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