ANNUITY INVESTORS VARIABLE ACCOUNT B
485BPOS, 2000-04-28
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     As filed with the Securities and Exchange Commission on April 28, 2000


                                                              File No. 333-51955
                                                              File No. 811-08017

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                          -----------------------------
                                    FORM N-4
           REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( )
                         Pre-effective Amendment No. (_)

                      Post-effective Amendment No. 3 ( X )

                                     and/or
                   REGISTRATION STATEMENT UNDER THE INVESTMENT
                             COMPANY ACT OF 1940 (_)
                         Pre-effective Amendment No. (_)

                      Post-effective Amendment No. 16 ( X )

                        (Check appropriate box or boxes)

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

                     ANNUITY INVESTORS(R) VARIABLE ACCOUNT B
                           (Exact Name of Registrant)

                   ANNUITY INVESTORS LIFE INSURANCE COMPANY(R)
                               (Name of Depositor)
                                  P.O. Box 5423
                           Cincinnati, Ohio 45201-5423
         (Address of Depositor's Principal Executive Offices) (Zip Code)

               Depositor's Telephone Number, including Area Code:
                                 (800) 789-6771

- --------------------------------------------------------------------------------
                             Mark F. Muething, Esq.

             Executive Vice President, Secretary and General Counsel

                    Annuity Investors Life Insurance Company
                                  P.O. Box 5423
                           Cincinnati, Ohio 45201-5423
                     (Name and Address of Agent for Service)

                                    Copy to:

                              John P. Gruber, Esq.
                                 Vice President
                    Annuity Investors Life Insurance Company
                                  P.O. Box 5423
                           Cincinnati, Ohio 45201-5423
- --------------------------------------------------------------------------------

It is proposed that this filing will become effective:


[_]  Immediately upon filing pursuant to Rule 485(b)

[X]  On May 1, 2000 pursuant to Rule 485(b)

[_]  60 days after filing pursuant to Rule 485(a)(1)
[_]  On pursuant to Rule 485(a)(1)
[_]  75 days after filing pursuant to Rule 485(a)(2)
[_]  On pursuant to Rule 485(a)(2)



<PAGE>


                              CROSS REFERENCE SHEET
                             Pursuant to Rule 495(a)


                                   (333-51955)



                    Showing Location in Part A (Prospectus),
   Part B (Statement of Additional Information) and Part C (Other Information)
           of Registration Statement Information Required by Form N-4


                                     PART A

<TABLE>
<CAPTION>
     Item of Form N-4                                             Prospectus Caption
     ----------------                                             ------------------
<S>                                                               <C>
 1.  Cover Page..............................................     Cover Page

 2.  Definitions.............................................     Definitions; Glossary of Financial Terms

 3.  Synopsis................................................     Overview

 4.  Condensed Financial Information

     (a)     Accumulation Unit Values........................     Condensed Financial Information

     (b)     Performance Data................................     Performance Information

     (c)     Financial Statements............................     Financial Statements

 5.  General Description of Registrant, Depositor and
     Portfolio Companies
     (a)     Depositor.......................................     Annuity Investors Life Insurance Company(R)

     (b)     Registrant......................................     The Separate Account

     (c)     Portfolio Companies.............................     The Portfolios

     (d)     Portfolio Prospectuses..........................     The Portfolios

     (e)     Voting Rights...................................     Voting Rights

6.   Deductions and Expenses
     (a)     General.........................................     Charges and Deductions

     (b)     Sales Load %....................................     Not Applicable

     (c)     Special Purchase Plan...........................     Not Applicable

     (d)     Commissions.....................................     AAG Securities, Inc.
</TABLE>



333-51955                                                                     ii


<PAGE>


<TABLE>
<CAPTION>
<S>                                                               <C>
     (e)     Portfolio Expenses..............................     Fee Table

     (f)     Operating Expenses..............................     Fee Table

7.   Contracts
     (a)     Persons with Rights.............................     Persons with Rights Under a Contract; Voting
                                                                  Rights
     (b)(i)  Allocation of Premium  Payments.................     Purchase Payments

       (ii)  Transfers ......................................     Transfers

      (iii)  Exchanges ......................................     Additions, Deletions or Substitutions

     (c)     Changes.........................................     Not Applicable

     (d)     Inquiries.......................................     How Do I Contact the Company

8.   Annuity Period..........................................     Benefit Payment Period

9.   Death Benefit...........................................     Death Benefit

10.  Purchases and Contract Values
     (a)     Purchases.......................................     Purchase Payments; Investment Options--Allocations



     (b)     Valuation.......................................     Account Value; Definitions; Glossary of Financial
                                                                  Terms

     (c)     Daily Calculation...............................     Account Value; Accumulation Units; Definitions;
                                                                  Glossary of Financial Terms


     (d)     Underwriter.....................................     AAG Securities, Inc.

11.  Redemptions
     (a)     By Owner........................................     Surrenders

             By Annuitant....................................     Not Applicable

     (b)     Texas ORP.......................................     Texas Optional Retirement Program

     (c)     Check Delay.....................................     Surrenders

     (d)     Free Look.......................................     Right to Cancel

12.  Taxes...................................................     Federal Tax Matters

13.  Legal Proceedings.......................................     Legal Proceedings

14.  Table of Contents for the Statement of Additional
     Information.............................................     Statement of Additional Information
</TABLE>



333-51955                                                                    iii


<PAGE>


                                     PART B

<TABLE>
<CAPTION>
                                                                  Statement of Additional
     Item of Form N-4                                             Information Caption
     ----------------                                             -------------------
<S>                                                               <C>
15.  Cover Page..............................................     Cover Page

16.  Table of Contents.......................................     Table of Contents

17.  General Information and History.........................     General Information and History

18.  Services
     (a)     Fees and Expenses of Registrant.................     (Prospectus) Fee Table

     (b)     Management Contracts............................     Not Applicable

     (c)     Custodian.......................................     Not Applicable

             Independent Auditors............................     Experts

     (d)     Assets of Registrant............................     Not Applicable

     (e)     Affiliated Person...............................     Not Applicable

     (f)     Principal Underwriter...........................     Not Applicable

19.  Purchase of Securities Being Offered....................     (Prospectus) AAG Securities, Inc.

     Offering Sales Load.....................................     Not Applicable

20.  Underwriters............................................     AAG Securities, Inc.

21.  Calculation of Performance Data
     (a)     Money Market Funded Sub-Accounts................     Money Market Sub-Account Standardized Yield
                                                                  Calculation
     (b)     Other Sub-Accounts..............................     Not Applicable

22.  Annuity Payments........................................     (Prospectus) Fixed Dollar Benefit;
                                                                  Variable Dollar Benefit; (SAI) Benefit
                                                                  Units--Transfer Formulas

23.  Financial Statements....................................     Financial Statements
</TABLE>



333-51955                                                                     iv


<PAGE>


                                     PART C


<TABLE>
<CAPTION>
     Item of Form N-4                                             Part C Caption
     ----------------                                             --------------
<S>                                                               <C>
24.  Financial Statements and Exhibits.......................     Financial Statements and Exhibits

     (a)     Financial Statements............................     Financial Statements

     (b)     Exhibits........................................     Exhibits

25.  Directors and Officers of the Depositor.................     Directors and Officers of Annuity Investors Life
                                                                  Insurance Company(R)

26.  Persons Controlled By or Under Common Control With the       Persons Controlled By Or Under Common
     Registrant..............................................     Control With the Depositor or Registrant

27.  Number of Owners........................................     Number of Owners

28.  Indemnification.........................................     Indemnification

29.  Principal Underwriters..................................     Principal Underwriter

30.  Location of Accounts and
     Records ................................................     Location of Accounts and Records

31.  Management Services.....................................     Management Services

32.  Undertakings............................................     Undertakings

     Signature Page..........................................     Signature Page
</TABLE>



333-51955                                                                      v


<PAGE>


ANNUITY INVESTORS LIFE INSURANCE COMPANY(R)
ANNUITY INVESTORS(R) VARIABLE ACCOUNT B
PROSPECTUS FOR INDIVIDUAL AND GROUP FLEXIBLE PREMIUM DEFERRED ANNUITIES



                                                                     May 1, 2000

This prospectus describes individual and group flexible premium deferred annuity
contracts (the  "Contracts").  Annuity Investors Life Insurance  Company(R) (the
"Company")  is the issuer of the  Contracts.  The  Contracts  are  available for
tax-qualified and non-tax-qualified annuity purchases. All Contracts qualify for
tax-deferred  treatment  during the  Accumulation  Period.  The tax treatment of
annuities is discussed in the Federal Tax Matters section of this prospectus.


The Contracts  offer both variable and fixed  investment  options.  The variable
investment options under the Contracts are Sub-Accounts of Annuity  Investors(R)
Variable Account B (the "Separate  Account").  The Contracts  currently offer 29
Sub-Accounts.  Each Sub-Account is invested in shares of a registered investment
company or a portfolio thereof (each, a "Portfolio").  The Portfolios are listed
below.

         Janus Aspen Series (6 Portfolios)

              -Aggressive Growth Portfolio
              -Worldwide Growth Portfolio
              -Balanced Portfolio
              -Growth Portfolio
              -International Growth Portfolio
              -Capital Appreciation Portfolio

         Dreyfus Variable Investment Fund (4 Portfolios)

              -Appreciation Portfolio
              -Money Market Portfolio
              -Growth and Income Portfolio
              -Small Cap Portfolio

         The Dreyfus Socially Responsible Growth Fund, Inc.
         Dreyfus Stock Index Fund

         Strong Opportunity Fund II, Inc.
         Strong Variable Insurance Funds, Inc. (1 Portfolio)

              -Strong Mid Cap Growth Fund II

         Deutsche Asset Management VIT Funds (3 Portfolios)

              -Deutsche VIT EAFE(R) Equity Index Fund
              -Deutsche VIT Equity 500 Index Fund
              -Deutsche VIT Small Cap Index Fund

         INVESCO Variable Investment Funds, Inc. (3 Portfolios)
              -INVESCO VIF-Equity Income Fund
              -INVESCO VIF-Total Return Fund
              -INVESCO VIF-High Yield Fund

         The Universal Institutional Funds, Inc. (5 Portfolios)
              Morgan Stanley UIF, Inc -Mid Cap Value Portfolio
              Morgan Stanley UIF, Inc -Value Portfolio
              Morgan Stanley UIF, Inc -Fixed Income Portfolio
              Morgan Stanley UIF, Inc -U.S. Real Estate Portfolio
              Morgan Stanley UIF, Inc -Emerging Markets Equity Portfolio

         PBHG Insurance Series Fund, Inc. (3 Portfolios)
              -PBHG Growth II Portfolio
              -PBHG Large Cap Growth Portfolio
              -PBHG Technology & Communications Portfolio

         The Timothy Plan Small-Cap Variable Series



This prospectus  includes  information  you should know before  investing in the
Contracts.  This prospectus is not complete without the current prospectuses for
the Portfolios.  Please keep this prospectus and the Portfolio  prospectuses for
future reference.

A  statement  of  additional  information,  dated  May 1,  2000,  contains  more
information about the Separate Account and the Contracts.  The Company filed the
statement of additional information with the Securities and Exchange Commission.
It is part of this prospectus.  For a free copy, complete and return the form on
the last page of this prospectus, or call the Company at 1-800-789-6771. You may
also  access  the  statement  of  additional  information  (as well as all other
documents filed with the Securities and Exchange  Commission with respect to the
Contracts,  the Separate  Account or the Company) at the Securities and Exchange
Commission's  Web  site:  http://www.sec.gov.  The  table  of  contents  for the
statement  of  additional  information  is  printed  on the  last  page  of this
prospectus.


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

- --------------------------------------------------------------------------------
These  securities  may be sold by a bank or credit union,  but are not financial
institution  products.

     o    The Contracts are Not FDIC or NCUSIF Insured

     o    The  Contracts are  Obligations  of the Company and Not of the Bank or
          Credit Union

     o    The Bank or Credit Union Does Not Guarantee the Company's  Obligations
          Under the Contracts

     o    The Contracts Involve Investment Risk and May Lose Value
- --------------------------------------------------------------------------------


333-51955

                                       1

<PAGE>


                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

                                                                                                 Page
                                                                                                 ----
<S>                                                                                               <C>
DEFINITIONS........................................................................................6
OVERVIEW...........................................................................................5
   What is the Separate Account?...................................................................5
   What Are the Contracts?.........................................................................5
   How Do I Purchase or Cancel a Contract?.........................................................5
   Will Any Penalties or Charges Apply If I Surrender a Contract?..................................5
   What Other Charges and Deductions Apply to the Contract?........................................5
   How Do I Contact the Company?...................................................................5
FEE TABLE..........................................................................................9
   Owner Transaction Expenses......................................................................9
   Separate Account Annual Expenses................................................................9
   Portfolio Annual Expenses (After Expense Reimbursement) for Year Ended 12/31/99(1)..............9
   Examples.......................................................................................11
CONDENSED FINANCIAL INFORMATION...................................................................17
   Financial Statements...........................................................................18
   Performance Information........................................................................19
     Yield Data...................................................................................19
     Total Return Data............................................................................19
     Other Performance Measures...................................................................19
THE PORTFOLIOS....................................................................................20
   Janus Aspen Series.............................................................................20
   Dreyfus Portfolios.............................................................................21
   Strong Portfolios..............................................................................16
   Deutsche Asset Management VIT Funds............................................................23
   INVESCO Variable Investment Funds, Inc.........................................................24
   PBHG Insurance Series Fund, Inc................................................................24
   The Universal Institutional Funds, Inc.........................................................25
   The Timothy Plan Small-Cap Variable Series.....................................................26
   Additions, Deletions, or Substitutions.........................................................27
   Voting Rights..................................................................................27
ANNUITY INVESTORS LIFE INSURANCE COMPANY(R).......................................................28
THE SEPARATE ACCOUNT..............................................................................28
AAG SECURITIES, INC...............................................................................28
CHARGES AND DEDUCTIONS............................................................................29
   Charges and Deductions By the Company..........................................................29
     Contract Maintenance Fee.....................................................................29
     Transfer Fee.................................................................................30
     Administration Charge........................................................................30
     Mortality and Expense Risk Charge............................................................31
     Premium Taxes................................................................................31
     Discretionary Waivers of Charges.............................................................31
   Expenses of the Portfolios.....................................................................31
THE CONTRACTS.....................................................................................32
   Right to Cancel................................................................................32
   Persons With Rights Under a Contract...........................................................32
ACCUMULATION PERIOD...............................................................................33
   Account Statements.............................................................................33

</TABLE>


                                       2

<PAGE>


<TABLE>

<S>                                                                                               <C>
   Account Value..................................................................................33
   Purchase Payments..............................................................................34
   Investment Options--Allocations................................................................34
   Transfers......................................................................................35
   Surrenders.....................................................................................37
   Contract Loans.................................................................................38
   Termination....................................................................................38
BENEFIT PAYMENT PERIOD............................................................................39
   Annuity Benefit................................................................................39
   Death Benefit..................................................................................39
   Settlement Options.............................................................................39
     Form of Settlement Option....................................................................40
     Calculation of Fixed Dollar Benefit Payments.................................................40
     Calculation of Variable Dollar Benefit Payments..............................................41
FEDERAL TAX MATTERS...............................................................................42
   Tax Deferral On Annuities......................................................................42
   Tax-Qualified Plans............................................................................43
     Individual Retirement Annuities..............................................................43
     Roth IRAs....................................................................................43
     Tax-Sheltered Annuities......................................................................43
     Texas Optional Retirement Program............................................................43
     Pension and Profit Sharing Plans.............................................................43
     Governmental Deferred Compensation Plans.....................................................43
   Nonqualified Deferred Compensation Plans.......................................................43
   Summary of Income Tax Rules....................................................................44
GLOSSARY OF FINANCIAL TERMS.......................................................................45
THE REGISTRATION STATEMENT........................................................................46
OTHER INFORMATION.................................................................................46
   Legal Proceedings..............................................................................46
STATEMENT OF ADDITIONAL INFORMATION...............................................................47

</TABLE>


                                       3
<PAGE>


DEFINITIONS
================================================================================

The capitalized  terms defined on this page will have the meanings given to them
when used in this  prospectus.  Other  terms  which may have a specific  meaning
under the Contracts,  but which are not defined on this page,  will be explained
as they are used in this prospectus.

Account Value:  The value of a Contract during the  Accumulation  Period.  It is
equal to the sum of the value of the owner's  interest in the  Sub-Accounts  and
the owner's interest in the fixed account options.

Accumulation  Period:  The period  during which  purchase  payments are invested
according to the investment  options  elected and  accumulated on a tax-deferred
basis. The Accumulation Period ends when a Contract is annuitized or surrendered
in full, or on the Death Benefit Valuation Date.

Accumulation  Unit: A share of a Sub-Account  that an owner purchases during the
Accumulation Period.


Accumulation  Unit  Value:  The  value of an  Accumulation  Unit at the end of a
Valuation  Period.  See  the  Glossary  of  Financial  Terms  on page 37 of this
prospectus for an explanation of how Accumulation Unit Values are calculated.


Benefit Payment Period:  The period during which either annuity benefit or death
benefit payments are paid under a settlement  option. The Benefit Payment Period
begins on the first day of the first payment interval in which a benefit payment
will be paid.

Benefit Unit: A share of a  Sub-Account  that is used to determine the amount of
each variable  dollar benefit  payment after the first  variable  dollar benefit
payment during the Benefit Payment Period.


Benefit  Unit  Value:  The  value of a  Benefit  Unit at the end of a  Valuation
Period. See the Glossary of Financial Terms on page 37 of this prospectus for an
explanation of how Benefit Unit Values are calculated.


Death Benefit  Valuation  Date: The date the death benefit is valued.  It is the
date  that the  Company  receives  both  proof of the  death  of the  owner  and
instructions as to how the death benefit will be paid. If  instructions  are not
received within one year of the date of death, the Death Benefit  Valuation Date
will be one year after the date of death.  The Death Benefit  Valuation Date may
never be later than five years after the date of death.

Net Asset Value: The price computed by or for each Portfolio, no less frequently
than  each  Valuation  Period,  at which  the  Portfolio's  shares  or units are
redeemed in accordance with the rules of the Securities and Exchange Commission.


Net Investment  Factor:  The factor that represents the percentage change in the
Accumulation  Unit Values and Benefit Unit Values from one  Valuation  Period to
the next. See the Glossary of Financial  Terms on page 37 of this prospectus for
an explanation of how the Net Investment Factor is calculated.


Valuation Date: A day on which  Accumulation Unit Values and Benefit Unit Values
can be calculated.  Each day the New York Stock Exchange is open for business is
a Valuation Date.

Valuation Period: The period starting at the close of regular trading on the New
York Stock  Exchange on any Valuation Date and ending at the close of trading on
the next succeeding Valuation Date.


                                       4

<PAGE>


OVERVIEW
================================================================================

What is the Separate Account?

The Separate  Account is a unit investment  trust registered with the Securities
and Exchange  Commission under the Investment  Company Act of 1940. The Separate
Account is divided  into  Sub-Accounts,  each of which is invested in one of the
Portfolios  listed  on page 1 of  this  prospectus.  If you  choose  a  variable
investment  option,  you are investing in the Sub-Accounts,  not directly in the
Portfolios.

What Are the Contracts?

The Contracts are individual and group deferred  annuities,  which are insurance
products.  The  Contracts  are sold with either a standard  or an  enhanced  fee
structure,  as  described  in the Fee  Table on page 6 of this  prospectus.  The
Contracts are available in both tax-qualified and non-tax-qualified  forms, both
of which qualify for tax-deferred investment status. See the Federal Tax Matters
section  beginning on page 34 of this prospectus for more information  about tax
qualifications  and taxation of annuities  in general.  During the  Accumulation
Period, the amounts you contribute can be allocated among any of the 29 variable
investment  options and five fixed  account  options.  The  variable  investment
options are the Sub-Accounts of the Separate Account,  each of which is invested
in a  Portfolio.  The  owner  bears the risk of any  investment  gain or loss on
amounts  allocated to the  Sub-Accounts.  The fixed account options earn a fixed
rate of  interest  declared  by the  Company,  which will be no less than 3% per
year. The Company  guarantees  amounts invested in the fixed account options and
the earnings thereon so long as those amounts remain in the fixed account.

During the Benefit Payment Period,  payments can be allocated  between  variable
dollar benefit and fixed dollar benefit options. If a variable dollar benefit is
selected,  Benefit Units can be allocated to any of the same  Sub-Accounts  that
are available during the Accumulation Period.

How Do I Purchase or Cancel a Contract?

The  requirements to purchase a Contract are explained in The Contracts  section
beginning  on page 24 of this  prospectus.  You may  purchase  a  Contract  only
through a licensed securities  representative.  You may cancel a Contract within
twenty  days  after you  receive  it (the  right to cancel may be longer in some
States).  In many States,  you will bear the risk of investment  gain or loss on
any amounts  allocated to the Sub-Accounts  prior to cancellation.  The right to
cancel may not apply to group Contracts. The right to cancel is described in the
Right to Cancel section on page 24 of this prospectus.


Will Any Penalties or Charges Apply If I Surrender a Contract?

There are no charges  imposed on partial or full  surrenders  of the  Contracts,
except that the annual contract  maintenance fee will be deducted at the time of
a full surrender.  Surrender  procedures are described in the Surrenders section
beginning  on page 29 of this  prospectus.  A penalty  tax may be imposed at the
time of a  surrender  depending  on  your  age and  other  circumstances  of the
surrender.  Tax  consequences  of a surrender  are  described in the Federal Tax
Matters  section on page 34 of this  prospectus.  The right to surrender  may be
restricted under certain tax-qualified plans.

What Other Charges and Deductions Apply to the Contract?

The Company  will charge the fees and charges  listed  below  unless the Company
waives the fee or charge as  discussed  in the  Charges and  Deductions  section
beginning on page 21 of this prospectus:

o    a transfer fee for certain transfers between investment options;

o    an  annual  contract  maintenance  fee,  which  is  assessed  only  against
     investments  in the  Sub-Accounts;  o a mortality  and expense risk charge,
     which is an expense of the Separate  Account and charged against all assets
     in the Sub-Accounts (this charge may never be waived);

o    an administration  charge,  which is an expense of the Separate Account and
     charged against all assets in the Sub-Accounts; and

o    premium taxes in some States (where taxes apply, they may never be waived).

In addition to charges and deductions under the Contracts,  the Portfolios incur
expenses that are passed  through to owners.  Portfolio  expenses for the fiscal
year ending  December  31, 1999 are  included in the Fee Table on page 6 of this
prospectus  and are described in the  prospectuses  and statements of additional
information for the Portfolios.


How Do I Contact the Company?

Any questions or inquiries  should be directed to the  Company's  Administrative
Office,  P.O. Box 5423,  Cincinnati,  Ohio  45201-5423,  (800) 789-6771.  Please
include the Contract number and the owner's name.


                                       5

<PAGE>


FEE TABLE
================================================================================

Owner Transaction Expenses

Sales load imposed on purchase payments or on surrenders                    None
Transfer Fee (applies to transfers in excess of 12 in any contract year)     $25
Annual Contract Maintenance Fee (not assessed against fixed account options) $40

Separate Account Annual Expenses

(As  a  percentage  of  the  average  value  of  the  owner's  interest  in  the
Sub-Accounts)

<TABLE>
<CAPTION>
                                                                                                                Enhanced Contracts
                                                        Standard Contracts         Enhanced Contracts          with Administration
                                                                                                                  Charge Waived
<S>                                                            <C>                 <C>           <C>           <C>            <C>
Mortality and Expense Risk Charge                              1.25%               0.95%         0.75%         0.95%          0.75%
Administration Charge                                          0.15%               0.15%         0.15%         0.00%          0.00%
                                                               -----               -----         -----         -----          -----
Total Separate Account Annual Expenses                         1.40%               1.10%         0.90%         0.95%          0.75%
</TABLE>



Portfolio  Annual  Expenses  (After  Expense   Reimbursement)   for  Year  Ended
12/31/99(1)

(As a percentage of Portfolio average net assets)

<TABLE>
<CAPTION>
  Sub-Account                                                                     Management       Other          Total
                                                                                     Fees         Expenses       Expenses
 -----------------------------------------------------------------------------  -------------   ------------    ----------

  <S>                                                                              <C>              <C>             <C>
  Janus A.S.-Aggressive Growth Portfolio(2)                                        0.65             0.02            0.67
  Janus A.S.-Worldwide Growth Portfolio(2)                                         0.65             0.05            0.70
  Janus A.S.-Balanced Portfolio(2)                                                 0.65             0.02            0.67
  Janus A.S.-Growth Portfolio(2)                                                   0.65             0.02            0.67
  Janus A.S.-International Growth Portfolio(2)                                     0.65             0.11            0.76
  Janus A.S.-Capital Appreciation Portfolio(2)                                     0.65             0.04            0.69
  Dreyfus V.I.F.-Appreciation Portfolio                                            0.75             0.03            0.78
  Dreyfus V.I.F.-Money Market Portfolio                                            0.50             0.08            0.58
  Dreyfus V.I.F.-Growth and Income Portfolio                                       0.75             0.04            0.79
  Dreyfus V.I.F.-Small Cap Portfolio                                               0.75             0.03            0.78
  The Dreyfus Socially Responsible Growth Fund, Inc.                               0.75             0.04            0.79
  Dreyfus Stock Index Fund                                                         0.25             0.01            0.26
  Strong Opportunity Fund II, Inc.                                                 1.00             0.14            1.14
  Strong Variable Insurance Funds, Inc.-Strong Mid Cap Growth Fund II              1.00             0.15            1.15
  Deutsche VIT EAFE(R)Equity Index Fund                                            0.26             0.39            0.65
  Deutsche VIT Equity 500 Index Fund                                               0.14             0.16            0.30
  Deutsche VIT Small Cap Index Fund                                                0.13             0.32            0.45
  INVESCO VIF-Equity Income Fund                                                   0.75             0.44            1.19
  INVESCO VIF-Total Return Fund                                                    0.75             0.55            1.30
  INVESCO VIF-High Yield Fund                                                      0.60             0.48            1.08
  Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio                                 0.43             0.62            1.05
  Morgan Stanley UIF, Inc.-Value Portfolio                                         0.18             0.67            0.85
  Morgan Stanley UIF, Inc.-Fixed Income Portfolio                                  0.14             0.56            0.70
  Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio                              0.00             1.10            1.10
  Morgan Stanley UIF, Inc.-Emerging Markets Equity Portfolio                       0.42             1.37            1.79
  PBHG Insurance Series Fund, Inc.-PBHG Growth II Portfolio                        0.85             0.35            1.20
  PBHG Insurance Series Fund, Inc.-PBHG Large Cap Growth Portfolio                 0.68             0.42            1.10
  PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm. Portfolio                    0.85             0.24            1.09
  The Timothy Plan Small-Cap Variable Series                                       1.00             0.18            1.18

</TABLE>


                                       6

<PAGE>



The purpose of the Fee Table is to assist the owner in understanding the various
costs and expenses that an owner will bear directly or indirectly. The Fee Table
reflects  expenses of the  Separate  Account as well as of the  Portfolios.  The
Separate Account expenses are discussed more fully in the Charges and Deductions
section  beginning on page 21 of this  prospectus.  The  Portfolio  expenses are
discussed  more  fully in the  Portfolio  prospectuses.  Premium  taxes may also
apply.


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

(1)  Data for each  Portfolio  are for its fiscal year ended  December 31, 1999.
     Actual expenses in future years may be higher or lower. Portfolios may have
     agreements  with their  advisors to cap or waive fees,  and/or to reduce or
     waive  expenses  or to  reimburse  expenses.  The  specific  terms  of such
     waivers,  reductions,  reimbursements  or fee changes are  discussed in the
     Portfolio  prospectuses.  Fee and expenses  shown below are actual fees and
     expenses  before  any  applicable  fee  waivers  or  reductions  or expense
     reimbursements.


(2)  Expenses  are based upon  expenses  for the fiscal year ended  December 31,
     1999,  restated to reflect a reduction in the  management fee for the Janus
     Aspen Portfolios.

<TABLE>
<CAPTION>
  Sub-Account                                                                     Management       Other          Total
                                                                                     Fees         Expenses       Expenses
 -----------------------------------------------------------------------------  -------------   ------------    ----------

  <S>                                                                              <C>              <C>             <C>
  Janus A.S.-Worldwide Growth Portfolio(2)                                         0.65             0.05             0.70
  Janus A.S.-Balanced Portfolio(2)                                                 0.65             0.02             0.67
  Janus A.S.-Growth Portfolio(2)                                                   0.65             0.02             0.67
  Janus A.S.-International Growth Portfolio(2)                                     0.65             0.11             0.76
  Janus A.S.-Capital Appreciation Portfolio(2)                                     0.65             0.04             0.69
  Dreyfus V.I.F.-Appreciation Portfolio                                            0.75             0.03             0.78
  Dreyfus V.I.F.-Money Market Portfolio                                            0.50             0.08             0.58
  Dreyfus V.I.F.-Growth and Income Portfolio                                       0.75             0.04             0.79
  Dreyfus V.I.F.-Small Cap Portfolio                                               0.75             0.03             0.78
  The Dreyfus Socially Responsible Growth Fund, Inc.                               0.75             0.04             0.79
  Dreyfus Stock Index Fund                                                         0.25             0.01             0.26
  Strong Opportunity Fund II, Inc.                                                 1.00             0.14             1.14
  Strong Variable Insurance Funds, Inc.-Strong Mid Cap Growth Fund II              1.00             0.17             1.17
  Deutsche VIT EAFE(R)Equity Index Fund                                            0.45             0.69             1.15
  Deutsche VIT Equity 500 Index Fund                                               0.20             0.23             0.43
  Deutsche VIT Small Cap Index Fund                                                0.35             0.83             1.18
  INVESCO VIF-Equity Income Fund                                                   0.75             0.42             1.17
  INVESCO VIF-Total Return Fund                                                    0.75             0.42             1.17
  INVESCO VIF-High Yield Fund                                                      0.60             0.47             1.07
  Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio                                 0.75             0.62             1.37
  Morgan Stanley UIF, Inc.-Value Portfolio                                         0.55             0.67             1.22
  Morgan Stanley UIF, Inc.-Fixed Income Portfolio                                  0.40             0.56             0.96
  Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio                              0.80             1.10             1.90
  Morgan Stanley UIF, Inc.-Emerging Markets Equity Portfolio                       1.25             1.37             2.62
  PBHG Insurance Series Fund, Inc.-PBHG Growth II Portfolio                        0.85             0.35             1.20
  PBHG Insurance Series Fund, Inc.-PBHG Large Cap Growth Portfolio                 0.75             0.42             1.17
  PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm. Portfolio                    0.85             0.24             1.09
  The Timothy Plan Small-Cap Variable Series                                       1.00             1.60             2.60

</TABLE>


                                       7

<PAGE>


Examples

Standard Contracts

If the owner  surrenders his or her Contract at the end of the  applicable  time
period,  or if the owner does not  surrender  his or her  Contract,  or if it is
annuitized, the expenses shown would be charged on a $1,000 investment.

<TABLE>
<CAPTION>
                                                                                           Example (1.40% Total Separate
                                                                                                   Account Expenses)
- ---------------------------------------------------------------------------------------------------------------------------------
Sub-Account                                                                        1 Year      3 Years      5 Years    10 Years
- ---------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                   <C>        <C>          <C>        <C>
Janus A.S.-Aggressive Growth Portfolio                                                $21         $69         $125       $304
Janus A.S.-Worldwide Growth Portfolio                                                 $22         $70         $127       $307
Janus A.S.-Balanced Portfolio                                                         $21         $69         $125       $304
Janus A.S.-Growth Portfolio                                                           $21         $69         $125       $304
Janus A.S.-International Growth Portfolio                                             $22         $72         $130       $315
Janus A.S.-Capital Appreciation Portfolio                                             $22         $70         $126       $306
Dreyfus V.I.F.-Appreciation Portfolio                                                 $23         $73         $131       $318
Dreyfus V.I.F.-Money Market Portfolio                                                 $21         $67         $120       $292
Dreyfus V.I.F.-Growth and Income Portfolio                                            $23         $73         $132       $319
Dreyfus V.I.F.-Small Cap Portfolio                                                    $23         $73         $131       $318
The Dreyfus Socially Responsible Growth Fund, Inc.                                    $23         $73         $132       $319
Dreyfus Stock Index Fund                                                              $17         $56         $101       $248
Strong Opportunity Fund II, Inc.                                                      $26         $85         $152       $364
Strong Variable Insurance Funds, Inc.-Strong Mid Cap Growth Fund II                   $26         $85         $152       $365
Deutsche VIT EAFE(R)Equity Index Fund                                                 $21         $69         $124       $301
Deutsche VIT Equity 500 Index Fund                                                    $18         $57         $104       $254
Deutsche VIT Small Cap Index Fund                                                     $19         $62         $112       $274
INVESCO VIF-Equity Income Fund                                                        $27         $86         $154       $370
INVESCO VIF-Total Return Fund                                                         $28         $90         $160       $384
INVESCO VIF-High Yield Fund                                                           $26         $83         $148       $356
Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio                                      $25         $82         $147       $353
Morgan Stanley UIF, Inc.-Value Portfolio                                              $23         $75         $135       $327
Morgan Stanley UIF, Inc.-Fixed Income Portfolio                                       $22         $70         $127       $307
Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio                                   $26         $83         $149       $359
Morgan Stanley UIF, Inc.-Emerging Markets Equity Portfolio                            $33        $105         $187       $442
PBHG Insurance Series Fund, Inc.-PBHG Growth II Portfolio                             $27         $86         $155       $371
PBHG Insurance Series Fund, Inc.-PBHG Large Cap Growth Portfolio                      $26         $83         $149       $359
PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm. Portfolio                         $26         $83         $149       $358
The Timothy Plan Small-Cap Variable Series                                            $27         $86         $154       $369

</TABLE>


                                       8

<PAGE>


Enhanced Contracts

If the owner  surrenders his or her Contract at the end of the  applicable  time
period,  or if the owner does not  surrender  his or her  Contract,  or if it is
annuitized, the expenses shown would be charged on a $1,000 investment.

<TABLE>
<CAPTION>
                                                                                 Example (1.10% Total Separate Account
                                                                                              Expenses)
- ---------------------------------------------------------------------------------------------------------------------------
Sub-Account                                                                1 Year      3 Years     5 Years      10 Years
- ---------------------------------------------------------------------------------------------------------------------------

<S>                                                                          <C>          <C>        <C>           <C>
Janus A.S.-Aggressive Growth Portfolio                                       $18          $60        $108          $264
Janus A.S.-Worldwide Growth Portfolio                                        $19          $61        $110          $268
Janus A.S.-Balanced Portfolio                                                $18          $60        $108          $264
Janus A.S.-Growth Portfolio                                                  $18          $60        $108          $264
Janus A.S.-International Growth Portfolio                                    $19          $63        $113          $276
Janus A.S.- Capital Appreciation Portfolio                                   $19          $60        $109          $266
Dreyfus V.I.F.-Appreciation Portfolio                                        $20          $63        $114          $278
Dreyfus V.I.F.-Money Market Portfolio                                        $17          $57        $103          $251
Dreyfus V.I.F.-Growth and Income Portfolio                                   $20          $64        $115          $280
Dreyfus V.I.F.-Small Cap Portfolio                                           $20          $63        $114          $278
The Dreyfus Socially Responsible Growth Fund, Inc.                           $20          $64        $115          $280
Dreyfus Stock Index Fund                                                     $14          $46         $84          $207
Strong Opportunity Fund II, Inc.                                             $23          $75        $135          $326
Strong Variable Insurance Funds, Inc.-Strong Mid Cap Growth Fund II          $23          $75        $135          $327
Deutsche VIT EAFE(R)Equity Index Fund                                        $18          $59        $107          $261
Deutsche VIT Equity 500 Index Fund                                           $15          $48         $86          $212
Deutsche VIT Small Cap Index Fund                                            $16          $53         $95          $233
INVESCO VIF-Equity Income Fund                                               $24          $77        $138          $332
INVESCO VIF-Total Return Fund                                                $25          $80        $144          $346
INVESCO VIF-High Yield Fund                                                  $23          $73        $131          $318
Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio                             $22          $72        $130          $314
Morgan Stanley UIF, Inc.-Value Portfolio                                     $20          $66        $118          $288
Morgan Stanley UIF, Inc.-Fixed Income Portfolio                              $19          $61        $110          $268
Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio                          $23          $74        $133          $321
Morgan Stanley UIF, Inc.-Emerging Markets Equity Portfolio                   $30          $96        $171          $407
PBHG Insurance Series Fund, Inc.-PBHG Growth II Portfolio                    $24          $77        $138          $334
PBHG Insurance Series Fund, Inc.-PBHG Large Cap Growth Portfolio             $23          $74        $133          $321
PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm. Portfolio                $23          $73        $132          $319
The Timothy Plan Small-Cap Variable Series                                   $24          $76        $137          $331


<CAPTION>
                                                                               Example (0.90% Total Separate
                                                                                         Account Expenses)
- ------------------------------------------------------------------------  ------------------------------------------------
Sub-Account                                                                 1 Year     3 Years      5 Years     10 Years
- ------------------------------------------------------------------------  ----------- ----------- ------------ -----------

<S>                                                                           <C>         <C>         <C>         <C>
Janus A.S.-Aggressive Growth Portfolio                                        $16         $53          $96        $236
Janus A.S.-Worldwide Growth Portfolio                                         $17         $54          $98        $241
Janus A.S.-Balanced Portfolio                                                 $16         $53          $96        $236
Janus A.S.-Growth Portfolio                                                   $16         $53          $96        $236
Janus A.S.-International Growth Portfolio                                     $17         $56         $102        $249
Janus A.S.- Capital Appreciation Portfolio                                    $17         $54          $97        $239
Dreyfus V.I.F.-Appreciation Portfolio                                         $17         $57         $103        $251
Dreyfus V.I.F.-Money Market Portfolio                                         $15         $50          $91        $224
Dreyfus V.I.F.-Growth and Income Portfolio                                    $18         $57         $103        $253
Dreyfus V.I.F.-Small Cap Portfolio                                            $17         $57         $103        $251
The Dreyfus Socially Responsible Growth Fund, Inc.                            $18         $57         $103        $253
Dreyfus Stock Index Fund                                                      $12         $40          $72        $178
Strong Opportunity Fund II, Inc.                                              $21         $69         $123        $300
Strong Variable Insurance Funds, Inc.-Strong Mid Cap Growth Fund II           $21         $69         $124        $301
Deutsche VIT EAFE(R)Equity Index Fund                                         $16         $53          $95        $234
Deutsche VIT Equity 500 Index Fund                                            $13         $41          $74        $184
Deutsche VIT Small Cap Index Fund                                             $14         $46          $83        $206
INVESCO VIF-Equity Income Fund                                                $22         $70         $126        $306
INVESCO VIF-Total Return Fund                                                 $23         $74         $132        $321
INVESCO VIF-High Yield Fund                                                   $21         $67         $120        $292
Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio                              $20         $66         $118        $288
Morgan Stanley UIF, Inc.-Value Portfolio                                      $18         $59         $107        $261
Morgan Stanley UIF, Inc.-Fixed Income Portfolio                               $17         $54          $98        $241
Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio                           $21         $67         $121        $294
Morgan Stanley UIF, Inc.-Emerging Markets Equity Portfolio                    $28         $89         $160        $382
PBHG Insurance Series Fund, Inc.-PBHG Growth II Portfolio                     $22         $70         $127        $308
PBHG Insurance Series Fund, Inc.-PBHG Large Cap Growth Portfolio              $21         $67         $121        $294
PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm. Portfolio                 $21         $67         $121        $293
The Timothy Plan Small-Cap Variable Series                                    $22         $70         $126        $305

</TABLE>


                                       9

<PAGE>


<TABLE>
<CAPTION>
Enhanced Contracts with Administration Charge Waived                                  Example (0.95% Total Separate Account Annual
                                                                                                       Expenses)
If the owner  surrenders his or her Contract at the end of the  applicable  time
period,  or if the owner does not  surrender  his or her  Contract,  or if it is
annuitized, the expenses shown would be charged on a $1,000 investment.
- ------------------------------------------------------------------------------------------------------------------------------------
Sub-Account                                                                           1 Year      3 Years     5 Years     10 Years
- ------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                     <C>          <C>        <C>          <C>
Janus A.S.-Aggressive Growth Portfolio                                                  $17          $55         $99         $243
Janus A.S.-Worldwide Growth Portfolio                                                   $17          $56        $101         $247
Janus A.S.-Balanced Portfolio                                                           $17          $55         $99         $243
Janus A.S.-Growth Portfolio                                                             $17          $55         $99         $243
Janus A.S.-International Growth Portfolio                                               $18          $58        $104         $256
Janus A.S.-Capital Appreciation Portfolio                                               $17          $55        $100         $246
Dreyfus V.I.F.-Appreciation Portfolio                                                   $18          $58        $106         $258
Dreyfus V.I.F.-Money Market Portfolio                                                   $16          $52         $94         $231
Dreyfus V.I.F.-Growth and Income Portfolio                                              $18          $59        $106         $260
Dreyfus V.I.F.-Small Cap Portfolio                                                      $18          $58        $106         $258
The Dreyfus Socially Responsible Growth Fund, Inc.                                      $18          $59        $106         $260
Dreyfus Stock Index Fund                                                                $13          $41         $75         $186
Strong Opportunity Fund II, Inc.                                                        $22          $70        $126         $306
Strong Variable Insurance Funds, Inc.-Strong Mid Cap Growth Fund II                     $22          $70        $127         $308
Deutsche VIT EAFE(R)Equity Index Fund                                                   $17          $54         $98         $240
Deutsche VIT Equity 500 Index Fund                                                      $13          $43         $77         $191
Deutsche VIT Small Cap Index Fund                                                       $15          $48         $86         $213
INVESCO VIF-Equity Income Fund                                                          $22          $72        $129         $313
INVESCO VIF-Total Return Fund                                                           $23          $75        $135         $327
INVESCO VIF-High Yield Fund                                                             $21          $68        $123         $298
Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio                                        $21          $67        $121         $294
Morgan Stanley UIF, Inc.-Value Portfolio                                                $19          $61        $110         $268
Morgan Stanley UIF, Inc.-Fixed Income Portfolio                                         $17          $56        $101         $247
Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio                                     $21          $69        $124         $301
Morgan Stanley UIF, Inc.-Emerging Markets Equity Portfolio                              $28          $91        $163         $388
PBHG Insurance Series Fund, Inc.-PBHG Growth II Portfolio                               $22          $72        $130         $314
PBHG Insurance Series Fund, Inc.-PBHG Large Cap Growth Portfolio                        $21          $69        $124         $301
PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm. Portfolio                           $21          $69        $123         $300
The Timothy Plan Small-Cap Variable Series                                              $22          $71        $129         $312


<CAPTION>
Enhanced Contracts with Administration Charge Waived                                Example (0.75% Total Separate Account Annual
                                                                                                     Expenses)
If the owner  surrenders his or her Contract at the end of the  applicable  time
period,  or if the owner does not  surrender  his or her  Contract,  or if it is
annuitized, the expenses shown would be charged on a $1,000 investment.
- -----------------------------------------------------------------------------------------------------------------------------------
Sub-Account                                                                         1 Year      3 Years      5 Years     10 Years
- -----------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                    <C>         <C>         <C>         <C>
Janus A.S.-Aggressive Growth Portfolio                                                 $15         $48          $87        $215
Janus A.S.-Worldwide Growth Portfolio                                                  $15         $49          $89        $220
Janus A.S.-Balanced Portfolio                                                          $15         $48          $87        $215
Janus A.S.-Growth Portfolio                                                            $15         $48          $87        $215
Janus A.S.-International Growth Portfolio                                              $16         $51          $93        $228
Janus A.S.-Capital Appreciation Portfolio                                              $15         $49          $89        $218
Dreyfus V.I.F.-Appreciation Portfolio                                                  $16         $52          $94        $231
Dreyfus V.I.F.-Money Market Portfolio                                                  $14         $45          $82        $203
Dreyfus V.I.F.-Growth and Income Portfolio                                             $16         $52          $94        $232
Dreyfus V.I.F.-Small Cap Portfolio                                                     $16         $52          $94        $231
The Dreyfus Socially Responsible Growth Fund, Inc.                                     $16         $52          $94        $232
Dreyfus Stock Index Fund                                                               $11         $35          $63        $157
Strong Opportunity Fund II, Inc.                                                       $20         $64         $115        $280
Strong Variable Insurance Funds, Inc.-Strong Mid Cap Growth Fund II                    $20         $64         $115        $281
Deutsche VIT EAFE(R)Equity Index Fund                                                  $15         $48          $86        $213
Deutsche VIT Equity 500 Index Fund                                                     $11         $36          $65        $162
Deutsche VIT Small Cap Index Fund                                                      $13         $41          $74        $184
INVESCO VIF-Equity Income Fund                                                         $20         $65         $118        $286
INVESCO VIF-Total Return Fund                                                          $21         $69         $124        $301
INVESCO VIF-High Yield Fund                                                            $19         $62         $111        $272
Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio                                       $19         $61         $110        $268
Morgan Stanley UIF, Inc.-Value Portfolio                                               $17         $54          $98        $241
Morgan Stanley UIF, Inc.-Fixed Income Portfolio                                        $15         $49          $89        $220
Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio                                    $19         $62         $113        $274
Morgan Stanley UIF, Inc.-Emerging Markets Equity Portfolio                             $26         $84         $151        $364
PBHG Insurance Series Fund, Inc.-PBHG Growth II Portfolio                              $20         $66         $118        $288
PBHG Insurance Series Fund, Inc.-PBHG Large Cap Growth Portfolio                       $19         $62         $113        $274
PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm. Portfolio                          $19         $62         $112        $273
The Timothy Plan Small-Cap Variable Series                                             $20         $65         $117        $285
</TABLE>

The examples are not  indicative  of past or future  expenses or annual rates of
return of any Portfolio.  Actual expenses and annual rates of return may be more
or less than those assumed in the examples. The examples assume the reinvestment
of all dividends and  distributions,  no transfers among Sub-Accounts or between
the fixed account options and the  Sub-Accounts  and a 5% annual rate of return.
The contract  maintenance  fee is reflected in the examples as a charge of $0.05
per year based on the ratio of actual  contract  maintenance  fees collected for
the year ended 12/31/99 to total net assets as of 12/31/99.  The examples do not
include charges for premium taxes.



                                       10

<PAGE>


CONDENSED FINANCIAL INFORMATION
================================================================================

<TABLE>
<CAPTION>
                                                                                    Standard Contracts
                 Sub-Account                                           12/31/97         12/31/98           12/31/99
- -------------------------------------------------------------------------------------------------------------------------

<S>              <C>                                                   <C>             <C>                <C>
Janus            Aggressive Growth Portfolio
Aspen                     Accumulation Unit Value                      10.723950        14.199318           31.565210
Series                    Accumulation Units Outstanding               2,830.076       53,896.345         329,807.902
                 --------------------------------------------------------------------------------------------------------
                 Worldwide Growth Portfolio
                          Accumulation Unit Value                       9.935860        12.632936           20.488548
                          Accumulation Units Outstanding              56,665.753      402,131.168       1,026,072.851
                 --------------------------------------------------------------------------------------------------------
                 Balanced Portfolio
                          Accumulation Unit Value                      10.604609        14.043929           17.556100
                          Accumulation Units Outstanding              30,519.754      373.285.807       1,571,579.505
                 --------------------------------------------------------------------------------------------------------
                 Growth Portfolio
                          Accumulation Unit Value                      10.239960        13.699715           19.453513
                          Accumulation Units Outstanding              32,737.591      172,190.630         643,514.256
                 --------------------------------------------------------------------------------------------------------
                 International Growth Portfolio
                          Accumulation Unit Value                       9.735841        11.256365           20.234788
                          Accumulation Units Outstanding              12,541.039       45,382.775         142,343.325
                 --------------------------------------------------------------------------------------------------------
                 Capital Appreciation Portfolio
                          Accumulation Unit Value                            N/A              N/A           13.234548
                          Accumulation Units Outstanding                     N/A              N/A         471,936.628
- -------------------------------------------------------------------------------------------------------------------------
Dreyfus          Appreciation Portfolio
Variable                  Accumulation Unit Value                      10.103905        12.975443           14.262203
Investment                Accumulation Units Outstanding              18,347.666      170,523.015         517,772.082
Fund             --------------------------------------------------------------------------------------------------------
                 Money Market Portfolio
                          Accumulation Unit Value                       1.016499         1.050876            1.083700
                          Accumulation Units Outstanding                   0.000      658,981.650       2,638,837.162
                 --------------------------------------------------------------------------------------------------------
                 Growth and Income Portfolio
                          Accumulation Unit Value                      10.196538        11.243790           12.961023
                          Accumulation Units Outstanding              32,231.762      159,409.837         331,756.261
                 --------------------------------------------------------------------------------------------------------
                 Small Cap Portfolio
                          Accumulation Unit Value                      10.362314         9.867472           11.984035
                          Accumulation Units Outstanding              41,359.506      171,968.905         275,503.637
- -------------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth Fund, Inc.
                          Accumulation Unit Value                      10.320883        13.169143           16.894039
                          Accumulation Units Outstanding              26,332.500      140,614.024         408,482.196
- -------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund
                          Accumulation Unit Value                      10.479569        13.250646           15.760394
                          Accumulation Units Outstanding              69,510.645      779,485.606       2,129,772.165
- -------------------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II, Inc.
                          Accumulation Unit Value                      10.727356        12.012034           15.981484
                          Accumulation Units Outstanding               6,416.208       72,644.387         138,453.066
- -------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.-Strong Mid Cap Growth Fund II
                          Accumulation Unit Value                      10.707133        13.587521           25.444156
                          Accumulation Units Outstanding               2,147.556       33,197.715         120,559.085
- -------------------------------------------------------------------------------------------------------------------------
Deutsche         Deutsche VIT EAFE(R) Equity Index Fund
Asset                     Accumulation Unit Value                            N/A              N/A           11.958486
Management                Accumulation Units Outstanding                     N/A              N/A           6,821.832
VIT Funds        --------------------------------------------------------------------------------------------------------
                 Deutsche VIT Equity 500 Index Fund
                          Accumulation Unit Value                            N/A              N/A           10.815237
                          Accumulation Units Outstanding                     N/A              N/A          73,596.514
                 --------------------------------------------------------------------------------------------------------
                 Deutsche VIT Small Cap Index Fund
                          Accumulation Unit Value                            N/A              N/A           11.606269
                          Accumulation Units Outstanding                     N/A              N/A          15,259.149
- -------------------------------------------------------------------------------------------------------------------------
INVESCO          INVESCO VIF-Equity Income Fund
Variable                  Accumulation Unit Value                      10.659157        12.120155           13.726769
Investment                Accumulation Units Outstanding              33,269.953      200,541.938         553,696.171
Funds, Inc.      --------------------------------------------------------------------------------------------------------
                 INVESCO VIF-Total Return Fund
                          Accumulation Unit Value                      10.503108        11.348675           10.811807
                          Accumulation Units Outstanding              14,641.934      154,762.526         258,825.173
                 --------------------------------------------------------------------------------------------------------
                 INVESCO VIF-High Yield Fund
                          Accumulation Unit Value                      10.687084        10.689459           11.510803
                          Accumulation Units Outstanding              10,260.821       70,047.913         221,636.210

</TABLE>


                                       11
<PAGE>


CONDENSED FINANCIAL INFORMATION

================================================================================

<TABLE>
<CAPTION>
                                                                              Standard Contracts
                 Sub-Account                                      12/31/97         12/31/98          12/31/99
- ------------------------------------------------------------------------------------------------------------------

<S>             <C>                                              <C>             <C>               <C>
Morgan          Mid Cap Value Portfolio
Stanley                  Accumulation Unit Value                  11.113227        12.705082         15.049488
UIF Funds,               Accumulation Units Outstanding          16,674.966      111,076.120       183,388.647
Inc.            --------------------------------------------------------------------------------------------------
                Value Portfolio
                         Accumulation Unit Value                  10.204064         9.848411          9.536137
                         Accumulation Units Outstanding           9,944.401       34,212.111        78,330.649
                --------------------------------------------------------------------------------------------------
                Fixed Income Portfolio
                         Accumulation Unit Value                  10.412276        11.079965         10.749115
                         Accumulation Units Outstanding               4.653       46,348.096       279,193.758
                --------------------------------------------------------------------------------------------------
                U.S. Real Estate Portfolio
                         Accumulation Unit Value                  11.101269         9.758808          9.482378
                         Accumulation Units Outstanding           7,200.060       43,786.457        86,941.426
                --------------------------------------------------------------------------------------------------
                Emerging Markets Equity Portfolio
                         Accumulation Unit Value                   7.911559         5.915866         11.416896
                         Accumulation Units Outstanding           9,042.956       30,255.642        56,080.554
- ------------------------------------------------------------------------------------------------------------------
PBHG            PBHG Growth II Portfolio
Insurance                Accumulation Unit Value                   9.511124        10.147606         19.835104
Series                   Accumulation Units Outstanding           6,195.935       24,618.770        67,359.578
Fund, Inc.      --------------------------------------------------------------------------------------------------
                PBHG Large Cap Growth Portfolio
                         Accumulation Unit Value                  10.150555        13.076352         21.307087
                         Accumulation Units Outstanding          11,415.131       31,474.961       158,614.893
                --------------------------------------------------------------------------------------------------
                PBHG Technology & Communications Portfolio
                         Accumulation Unit Value                   9.057045        11.808346         38,941384
                         Accumulation Units Outstanding          20,974.008       65,820.143       433,441.908
- ------------------------------------------------------------------------------------------------------------------
The Timothy Plan Small-Cap Variable Series
                         Accumulation Unit Value                        N/A        10.283942         12.097693
                         Accumulation Units Outstanding                 N/A       29,293.327        94,238.615
</TABLE>

The  above  table  gives  year-end   Accumulation   Unit  information  for  each
Sub-Account  from the end of the year of inception  to December  31, 1999.  This
information  should be read in conjunction with the Separate  Account  financial
statements,  including the notes to those statements. The beginning Accumulation
Unit Value for each  Sub-Account  other than the Dreyfus Money Market  Portfolio
Sub-Account was 10.000000 as of July 15, 1997 (the Separate Account commencement
date),  or as of May 1, 1998 (the  effective  date of the  Sub-Account)  for the
Timothy Plan Small-Cap Variable Series, or as of May 1, 1999 (the effective date
of the  Sub-Account) for the Janus Aspen Series Capital  Appreciation  Portfolio
and the three Deutsche Asset Management  Funds. The beginning  Accumulation Unit
Value for the Dreyfus Money Market Portfolio Sub-Account was 1.000000 as of July
15, 1997.  The  Contracts  were not  available  for sale until July 22, 1998. No
Enhanced Contracts or Enhanced Contracts with Administration  Charge waived were
issued as of December 31, 1999.


Financial Statements

The financial statements and reports of independent auditors for the Company and
for  the  Separate   Account  are  included  in  the   statement  of  additional
information.


                                       12

<PAGE>


Performance Information

From time to time, the Company may advertise yields and/or total returns for the
Sub-Accounts.  These  figures are based on  historical  information  and are not
intended to indicate future  performance.  Performance  data and a more detailed
description of the methods used to determine yield and total return are included
in the statement of additional information.

Yield Data

The "yield" of the money  market  Sub-Account  refers to the  annualized  income
generated  by an  investment  in that  Sub-Account  over a  specified  seven-day
period. The "effective yield" of the money market Sub-Account is the same as the
"yield"  except  that it  assumes  reinvestment  of the  income  earned  in that
Sub-Account.  The effective yield will be slightly higher than the yield because
of the  compounding  effect of this assumed  reinvestment.  The Company does not
advertise yields for any Sub-Account other than the money market Sub-Account.

Total Return Data


The Company may advertise two types of total return data:  "average annual total
return" and "cumulative  total return." Average annual total return is presented
in both standardized and  non-standardized  form.  "Standardized"  total returns
data  reflects the  deduction of all charges that apply to all Contracts of that
type,  except for premium taxes.  "Non-standardized"  total return data does not
reflect the deduction of contract maintenance fees. Cumulative total return data
is currently presented only in non-standardized form.


Total  return data that does not  reflect  all  charges  will be higher than the
total return realized by an investor who incurs the charges.

"Average annual total return" is either  hypothetical or actual return data that
reflects performance of a Sub-Account for a one-year period or for an average of
consecutive   one-year   periods.   If  average  annual  total  return  data  is
hypothetical,  it reflects  performance for a period of time before the Separate
Account commenced operations.  When a Sub-Account has been in operation for one,
five and ten years,  average  annual total  return will be  presented  for these
periods, although other periods may be presented as well.

"Cumulative  total  return" is either  hypothetical  or actual  return data that
reflects  the  performance  of a  Sub-Account  from the  beginning of the period
presented to the end of the period presented. If cumulative total return data is
hypothetical,  it reflects  performance for a period of time before the Separate
Account commenced operations.

Other Performance Measures

The Company may include in reports and  promotional  literature  rankings of the
Sub-Accounts,  the  Separate  Account  or the  Contracts,  as  published  by any
service,  company,  or person who ranks  separate  accounts or other  investment
products on overall  performance or other  criteria.  Examples of companies that
publish   such   rankings  are  Lipper   Analytical   Services,   Inc.,   VARDS,
IBC/Donoghue's Money Fund Report,  Financial Planning Magazine,  Money Magazine,
Bank Rate Monitor,  Standard & Poor's Indices,  Dow Jones Industrial Average and
Morningstar.

The Company may also:

o    compare the  performance of a Sub-Account  with  applicable  indices and/or
     industry averages;

o    present  performance  information that reflects the effects of tax-deferred
     compounding on Sub-Account investment returns;

o    compare  investment  return on a tax-deferred  basis with currently taxable
     investment return;

o    illustrate investment returns by graphs, charts, or otherwise.


                                       13

<PAGE>


THE PORTFOLIOS

================================================================================


The Separate Account is currently divided into 29 Sub-Accounts. Each Sub-Account
is invested in a Portfolio. Each Portfolio has its own investment objectives and
policies. The current Portfolio  prospectuses,  which accompany this prospectus,
contain additional information concerning the investment objectives and policies
of each Portfolio,  the investment advisory services and administrative services
of each Portfolio and the charges of each Portfolio.  There is no assurance that
the  Portfolios  will  achieve  their  stated  objectives.  You should  read the
Portfolio  prospectuses  carefully  before  making any decision  concerning  the
allocation of purchase payments to, or transfers among, the Sub-Accounts.


All dividends and capital gains  distributed by the Portfolios are reinvested in
the Separate  Account and  reflected  in  Accumulation  Unit  Values.  Portfolio
dividends and net capital gains are not distributed to owners.

The Securities and Exchange  Commission does not supervise the management or the
investment  practices  and/or policies of any of the Portfolios.  The Portfolios
are  available  only through  insurance  company  separate  accounts and certain
qualified retirement plans. Though a Portfolio may have a name and/or investment
objectives  which are  similar to those of a  publicly  available  mutual  fund,
and/or may be managed by the same  investment  advisor  that  manages a publicly
available mutual fund, the performance of the Portfolio is entirely  independent
of the performance of any publicly  available  mutual fund.  Neither the Company
nor the Portfolios  make any  representations  or assurances that the investment
performance  of any  Portfolio  will be the same or  similar  to the  investment
performance of any publicly available mutual fund.


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

Janus Aspen Series
- --------------------------------------------------------------------------------


Advisor:                                 Aggressive Growth Portfolio

Janus Capital Corporation                A non-diversified  portfolio that seeks
                                         long-term    growth   of   capital   by
                                         investing  primarily  in common  stocks
                                         selected  for their  growth  potential,
                                         and  normally  invests  at least 50% of
                                         its  equity   assets  in   medium-sized
                                         companies.

Advisor:                                 Worldwide Growth Portfolio

Janus Capital Corporation                A  diversified   portfolio  that  seeks
                                         long-term growth of capital in a manner
                                         consistent  with  the  preservation  of
                                         capital  by   investing   primarily  in
                                         common  stocks of companies of any size
                                         throughout  the  world.   International
                                         investing  may present  special  risks,
                                         including  currency   fluctuations  and
                                         social and political developments.

Advisor:                                 Balanced Portfolio

Janus Capital Corporation                A  diversified   portfolio  that  seeks
                                         long-term  capital  growth,  consistent
                                         with   preservation   of  capital   and
                                         balanced   by   current   income.   The
                                         Portfolio  normally  invests  40-60% of
                                         its  assets  in   securities   selected
                                         primarily  for their  growth  potential
                                         and 40-60% of its assets in  securities
                                         selected  primarily  for  their  income
                                         potential.  The Portfolio will normally
                                         invest  at least  25% of its  assets in
                                         fixed-income securities.

Advisor:                                 Growth Portfolio

Janus Capital Corporation                A  diversified   portfolio  that  seeks
                                         long-term growth of capital in a manner
                                         consistent  with  the  preservation  of
                                         capital  by   investing   primarily  in
                                         common stocks selected for their growth
                                         potential.  Although the  Portfolio can
                                         invest in  companies  of any  size,  it
                                         generally   invests  in  larger,   more
                                         established companies.

Advisor:                                 International Growth Portfolio

Janus Capital Corporation                A  diversified   portfolio  that  seeks
                                         long-term    growth   of   capital   by
                                         investing  at  least  65% of its  total
                                         assets in securities from at least five
                                         different   countries,   excluding  the
                                         United States.  International investing
                                         may present  special  risks,  including
                                         currency  fluctuations  and  social and
                                         political developments.



                                       14

<PAGE>


Advisor:                                 Capital Appreciation Portfolio

Janus Capital Corporation                A non-diversified  portfolio that seeks
                                         long-term    growth   of   capital   by
                                         investing  primarily  in common  stocks
                                         selected  for their  growth  potential.
                                         The  Portfolio  may invest in companies
                                         of    any    size,     from     larger,
                                         well-established  companies to smaller,
                                         emerging growth companies.

- --------------------------------------------------------------------------------
Dreyfus Portfolios
- --------------------------------------------------------------------------------

Advisor:                                 Dreyfus   Variable   Investment   Fund-
                                         Appreciation Portfolio

The Dreyfus Corporation                  The  Appreciation  Portfolio  seeks  to
                                         provide    long-term   capital   growth
                                         consistent  with  the  preservation  of
Sub-Advisor:                             capital.  Current income is a secondary
Fayez Sarofim & Co.                      goal.  It seeks to achieve its goals by
                                         investing in common stocks, focusing on
                                         "blue chip" companies with total market
                                         values of more than $5  billion  at the
                                         time purchase.

Advisor:                                 Dreyfus Variable Investment  Fund-Money
                                         Market Portfolio

The Dreyfus Corporation                  The  Money  Market  Portfolio  seeks to
                                         provide  as  high a  level  of  current
                                         income  as  is   consistent   with  the
                                         preservation   of   capital   and   the
                                         maintenance    of    liquidity.    This
                                         Portfolio   invests  in  a  diversified
                                         portfolio  of high  quality  short-term
                                         debt  securities.  An investment in the
                                         Money   Market   Portfolio  is  neither
                                         insured nor  guaranteed  by the Federal
                                         Deposit  Insurance  Corporation  or any
                                         other government  agency.  Although the
                                         Portfolio  seeks to preserve  the value
                                         of your  investment at $1.00 per share,
                                         it  is   possible   to  lose  money  by
                                         investing in the Portfolio.

Advisor:                                 Dreyfus Variable Investment Fund-Growth
                                         and Income Portfolio

The Dreyfus Corporation                  The Growth and Income  Portfolio  seeks
                                         long-term   capital   growth,   current
                                         income and growth of income, consistent
                                         with reasonable  investment  risk. This
                                         Portfolio invests in stocks,  bonds and
                                         money  market  instruments  of domestic
                                         and foreign issuers.

Advisor:                                 Dreyfus Variable Investment  Fund-Small
                                         Cap Portfolio

The Dreyfus Corporation                  The  Small  Cap   Portfolio   seeks  to
                                         maximize  capital  appreciation.   This
                                         Portfolio  generally  invests  at least
                                         65% of its  assets in common  stocks of
                                         U.S.   and  foreign   companies.   This
                                         Portfolio    focuses    on    small-cap
                                         companies  with total market  values of
                                         less than $1.5 billion

Advisor:                                 The Dreyfus Socially Responsible Growth
                                         Fund, Inc.

The Dreyfus Corporation                  The Dreyfus Socially Responsible Growth
                                         Fund,  Inc.  seeks to  provide  capital
Sub-Advisor:                             growth   with   current   income  as  a
                                         secondary  goal. To pursue these goals,
NCM Capital Management Group, Inc.       the Fund  invests  primarily  in common
                                         stock of companies that, in the opinion
                                         of   the   Fund's   management,    meet
                                         traditional  investment standards,  and
                                         conduct their business in a manner that
                                         contributes  to the  enhancement of the
                                         quality of life in America

Advisor:                                 Dreyfus Stock Index Fund

The Dreyfus Corporation                  The  Dreyfus  Stock Index Fund seeks to
                                         match the total  return of the Standard
Index Manager:                           &  Poor's  500  Composite  Stock  Price
                                         Index.  To pursue  this goal,  the Fund
Mellon Equity Associates (an             generally  invests in all 500 stocks in
affiliate of Dreyfus)                    the S&P  500(R)in  proportion  to their
                                         weighting in the index. The Fund is not
                                         sponsored,  endorsed,  sold or promoted
                                         by  Standard & Poor's,  and  Standard &
                                         Poor's    makes    no    representation
                                         regarding the advisability of investing
                                         in the Fund.



                                       15

<PAGE>


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

Strong Portfolios
- --------------------------------------------------------------------------------

Advisor:                                 Strong Opportunity Fund II, Inc.

Strong Capital Management, Inc.          The investment  objective of the Strong
                                         Opportunity  Fund II is to seek capital
                                         growth.    It   currently    emphasizes
                                         medium-sized companies that the advisor
                                         believes   are   under-researched   and
                                         attractively valued.

Advisor:                                 Strong   Variable    Insurance   Funds,
                                         Inc.-Strong Mid Cap Growth Fund II

Strong Capital Management, Inc.          The investment  objective of the Strong
                                         Mid  Cap  Growth  Fund  II is  to  seek
                                         capital growth. It invests primarily in
                                         equity  securities that the Portfolio's
                                         advisor  believes  have   above-average
                                         growth  prospects.  This  Portfolio was
                                         formerly  called the Strong Growth Fund
                                         II.


- --------------------------------------------------------------------------------
Deutsche Asset Management VIT Funds
- --------------------------------------------------------------------------------


Advisor:                                 Deutsche VIT EAFE(R) Equity Index Fund

Bankers Trust Company                    The  EAFE(R)Equity  Index Fund seeks to
                                         replicate   as  closely   as   possible
                                         (before   deduction  of  expenses)  the
                                         total return of Morgan Stanley  Capital
                                         International   (MSCI)  (the   "EAFE(R)
                                         Index"), a widely accepted benchmark of
                                         stock performance of major companies in
                                         Europe,  Australia,  and the Far  East.
                                         The  Fund  will  invest   primarily  in
                                         international  companies  that  compose
                                         the  EAFE(R) Index,  using  statistical
                                         methods to replicate  the EAFE(R) Index
                                         in  approximately  the same weightings.
                                         Securities  purchased  by the Fund will
                                         generally,  but  not  necessarily,   be
                                         traded   on   a   foreign    securities
                                         exchange.

Advisor:                                 Deutsche VIT Equity 500 Index Fund

Bankers Trust Company                    The  Equity  500  Index  Fund  seeks to
                                         replicate   as  closely   as   possible
                                         (before   deduction  of  expenses)  the
                                         total  return of the  Standard & Poor's
                                         500  Composite  Stock  Price Index (the
                                         "S&P 500(R)"),  which emphasizes stocks
                                         of large U.S. Companies.  The Portfolio
                                         will  invest  primarily  in the  common
                                         stock of those  companies  included  in
                                         the S&P 500,  selected  on the basis of
                                         computer  generated  statistical  data,
                                         that are deemed  representative  of the
                                         industry  diversification of the entire
                                         S&P 500.

Advisor:                                 Deutsche VIT Small Cap Index Fund

Bankers Trust  Company                   The  Small  Cap  Index  Fund  seeks  to
                                         replicate   as  closely   as   possible
                                         (before   deduction  of  expenses)  the
                                         total  return of the Russell 2000 Small
                                         Stock Index (the "Russell 2000(R)"), an
                                         index      consisting      of     2,000
                                         small-capitalization common stocks. The
                                         Fund will invest primarily in companies
                                         included  in the Russell  2000,  on the
                                         basis  of  statistical  data,  that are
                                         deemed  representative  of the industry
                                         diversification  of the entire  Russell
                                         2000.



                                       16

<PAGE>


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

INVESCO Variable Investment Funds, Inc.
- --------------------------------------------------------------------------------

Advisor:                                 INVESCO VIF -Equity Income Fund

INVESCO Funds Group, Inc.                The   primary   goal  of  the   INVESCO
                                         VIF-Equity  Income Fund is to seek high
                                         current income.  The Portfolio normally
                                         invests  at least 65% of its  assets in
                                         dividend  paying  common and  preferred
                                         stocks.  This  Portfolio  was  formerly
                                         called the Industrial Income Portfolio.

Advisor:                                 INVESCO VIF -Total Return Fund

INVESCO Funds Group, Inc.                The investment objective of the INVESCO
                                         VIF-Total Return Fund is to seek a high
                                         total  return  on  investment   through
                                         capital    appreciation   and   current
                                         income.  The INVESCO  VIF-Total  Return
                                         Fund seeks to accomplish  its objective
                                         by investing in a combination of equity
                                         securities (consisting of common stocks
                                         and,  to a  lesser  degree,  securities
                                         convertible   into  common  stock)  and
                                         fixed income securities.

Advisor:                                 INVESCO VIF -High Yield Fund

INVESCO Funds Group, Inc.                The investment objective of the INVESCO
                                         VIF-High  Yield  Fund is to seek a high
                                         level of  current  income by  investing
                                         substantially  all  of  its  assets  in
                                         lower   rated   debt   securities   and
                                         preferred stocks,  including securities
                                         issued  by   foreign   companies.   The
                                         Portfolio    pursues   its   investment
                                         objective   through   investment  in  a
                                         variety          of          long-term,
                                         intermediate-term,    and    short-term
                                         bonds.  Potential capital  appreciation
                                         is  a  factor  in  the   selection   of
                                         investments,  but is  secondary  to the
                                         Portfolio's   primary  objective.   For
                                         further   discussion   of   the   risks
                                         associated  with  investment  in  lower
                                         rated  bonds,  please see the  attached
                                         INVESCO Variable Investment Funds, Inc.
                                         prospectus.

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

PBHG Insurance Series Fund, Inc.
- --------------------------------------------------------------------------------

Advisor:                                 PBHG Growth II Portfolio

Pilgrim Baxter & Associates,             The  investment  objective  of the PBHG
Ltd.                                     Insurance Series Growth II Portfolio is
                                         to  seek  capital   appreciation.   The
                                         Portfolio  invests  primarily in common
                                         stocks and  convertible  securities  of
                                         small and medium sized growth companies
                                         (market    capitalization   or   annual
                                         revenues  between  $500 million and $10
                                         billion)   that,   in   the   Advisor's
                                         opinion, have strong business momentum,
                                         earnings   growth  and   potential  for
                                         significant capital appreciation.

Advisor:                                 PBHG Large Cap Growth Portfolio

Pilgrim Baxter & Associates, Ltd.        The  investment  objective  of the PBHG
                                         Insurance   Series   Large  Cap  Growth
                                         Portfolio is to seek  long-term  growth
                                         of  capital.   The  Portfolio   invests
                                         primarily  in  common  stocks  of large
                                         capitalization     companies    (market
                                         capitalization in excess of $1 billion)
                                         that,  in the Advisor's  opinion,  have
                                         strong  business  momentum,  growth  in
                                         earnings  and   potential  for  capital
                                         appreciation.

Advisor:                                 PBHG   Technology   &    Communications
                                         Portfolio

Pilgrim Baxter & Associates, Ltd.        The  investment  objective  of the PBHG
                                         Insurance    Series     Technology    &
                                         Communications  Portfolio  is  to  seek
                                         long-term  growth of  capital.  Current
                                         income is incidental to the Portfolio's
                                         objective.     The     Portfolio,     a
                                         non-diversified fund, invests primarily
                                         in  common  stocks of  companies  doing
                                         business   in   the    Technology   and
                                         Communications  sectors of the  market.
                                         The  Portfolio is  concentrated,  which
                                         means it will invest 25% or more of its
                                         total  assets  in  one or  more  of the
                                         industries within these sectors.



                                       17

<PAGE>



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

The Universal Institutional Funds, Inc.
- --------------------------------------------------------------------------------

Advisor:                                 Mid Cap Value Portfolio

Miller Anderson & Sherrerd,              LLP (an The investment objective of the
indirect wholly owned                    Mid  Cap  Value  Portfolio  is to  seek
subsidiary of Morgan Stanley             above-average   total   return  over  a
Dean Witter & Co.)                       market  cycle of three to five years by
                                         investing primarily in common stocks of
                                         companies with  capitalizations  in the
                                         range of companies  included in the S&P
                                         MidCap   400  Index   (currently   $500
                                         million to $6 billion).  The  Portfolio
                                         purchases  stocks that typically do not
                                         pay  dividends.  The  Advisor  analyzes
                                         securities to identify  stocks that are
                                         undervalued,  and measures the relative
                                         attractiveness   of   the   Portfolio's
                                         current  holdings   against   potential
                                         purchases.

Advisor:                                 Value Portfolio

Miller Anderson & Sherrerd,              The  investment  objective of the Value
LLP (an indirect wholly owned            Portfolio  is  to  seek   above-average
subsidiary of Morgan Stanley             total  return  over a  market  cycle of
Dean Witter & Co.)                       three  to  five   years  by   investing
                                         primarily in common stocks of companies
                                         with  equity  capitalizations   greater
                                         than  $2.5   billion.   The   Portfolio
                                         focuses on stocks that are  undervalued
                                         in comparison  with the stock market as
                                         a  whole,  as  measured  by the S&P 500
                                         Index.   The   Portfolio  may  purchase
                                         stocks that do not pay  dividends,  and
                                         it may invest,  to a limited extent, in
                                         foreign equity securities.

Advisor:                                 Fixed Income Portfolio

Miller Anderson & Sherrerd,              The  investment  objective of the Fixed
LLP (an indirect wholly owned            Income    Portfolio    is    to    seek
subsidiary of Morgan Stanley             above-average   total   return  over  a
Dean Witter & Co.)                       market  cycle of three to five years by
                                         investing  primarily  in a  diversified
                                         mix  of  dollar-denominated  investment
                                         grade    fixed    income    securities,
                                         particularly U.S. Government, corporate
                                         and mortgage securities.  The Portfolio
                                         ordinarily  will  maintain  an  average
                                         weighted  maturity  in  excess  of five
                                         years.   The   Portfolio   may   invest
                                         opportunistically     in    non-dollar-
                                         denominated    securities   and   below
                                         investment grade securities.


Advisor:                                 U.S. Real Estate Portfolio

Morgan Stanley Asset Management (a       The  investment  objective  of the U.S.
wholly owned subsidiary of Morgan        Real  Estate   Portfolio   is  to  seek
Stanley Dean Witter & Co.)               above-average    current   income   and
                                         long-term   capital   appreciation   by
                                         investing     primarily    in    equity
                                         securities   of   U.S.   and   non-U.S.
                                         companies  engaged  in  the  U.S.  real
                                         estate industry,  including Real Estate
                                         Investment Trusts (REITs).

Advisor:                                 Emerging Markets Equity Portfolio

Morgan Stanley Asset Management. (a      The   investment   objective   of   the
wholly owned subsidiary of Morgan        Emerging  Markets  Equity  Portfolio is
Stanley Dean Witter & Co.)               long-term   capital   appreciation   by
                                         investing     primarily    in    equity
                                         securities   of  issuers  in   emerging
                                         market  countries.  The Portfolio seeks
                                         to  maximize  returns by  investing  in
                                         growth-oriented  equity  securities  in
                                         emerging   markets.   The   Portfolio's
                                         investment  approach  combines top-down
                                         country allocation with bottom-up stock
                                         selection.     Investment     selection
                                         criteria       include       attractive
                                         growth-characteristics,      reasonable
                                         valuations and management with a strong
                                         shareholder value orientation.



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

The Timothy Plan Small-Cap Variable Series
- --------------------------------------------------------------------------------

Advisor:                                 The  Timothy  Plan  Small-Cap  Variable
                                         Series

Timothy Partners, Ltd.                   The primary investment objective of The
                                         Timothy Plan Small-Cap  Variable Series
                                         is to seek  long-term  capital  growth,
                                         with a secondary  objective  of current
                                         income.  The  Portfolio  shall  seek to
                                         achieve its objectives while abiding by
                                         ethical   standards   established   for
                                         investments  by  the   Portfolio.   The
                                         securities in which the Portfolio shall
                                         be precluded from investing,  by virtue
                                         of the Portfolio's  ethical  standards,
                                         are referred to as excluded securities.


                                       18

<PAGE>


Additions, Deletions, or Substitutions

The Company may add or delete  Sub-Accounts  at any time, or may  substitute one
Portfolio for another,  at any time.  The Company does not guarantee that any of
the  Sub-Accounts  or  any  of the  Portfolios  will  always  be  available  for
allocation of purchase  payments or transfers.  In the event of any substitution
or change, the Company may make such changes in the Contract as may be necessary
or appropriate to reflect such substitution or change.

Additions,  deletions or  substitutions of Sub-Accounts or Portfolios may be due
to an  investment  decision  by the  Company,  or due to an event not within the
Company's  control,  such as  liquidation  of a Portfolio  or an  irreconcilable
conflict of interest between the Separate Account and another  insurance company
which offers a Portfolio. The Portfolio prospectuses describe the possibility of
material conflict of interest in greater detail.

If the Company  eliminates a Sub-Account  or  substitutes  the shares of another
investment  company  for the shares of any  Portfolio,  the  Company  will first
obtain approval of the Securities and Exchange Commission to the extent required
by the  Investment  Company  Act of 1940,  as  amended  ("1940  Act"),  or other
applicable  law.  The Company  will also notify  owners  before it  eliminates a
Sub-Account or substitutes a Portfolio.

New Sub-Accounts may be established when, in the sole discretion of the Company,
marketing,  tax, investment or other conditions so warrant. Any new Sub-Accounts
will be made  available to existing  owners on a basis to be  determined  by the
Company.

If deemed to be in the best  interests of persons having voting rights under the
Contracts,  the Separate  Account may be operated as a management  company under
the 1940 Act or any other form permitted by law, may be de-registered  under the
1940  Act in the  event  such  registration  is no  longer  required,  or may be
combined with one or more separate accounts.

Voting Rights

To the extent required by law, all Portfolio shares held in the Separate Account
will be voted by the Company at regular and special shareholder  meetings of the
respective  Portfolios in  accordance  with  instructions  received from persons
having  voting   interests  in  the   corresponding   Sub-Account.   During  the
Accumulation  Period,  the  Company  will vote  Portfolio  shares  according  to
instructions  of owners,  unless the Company is  permitted to vote shares in its
own right.

The number of votes  that an owner may vote will be  calculated  separately  for
each  Sub-Account.  The  number  will be  determined  by  applying  the  owner's
percentage interest, if any, in a particular  Sub-Account to the total number of
votes attributable to that Sub-Account.

The owner's percentage interest and the total number of votes will be determined
as of the record date established by that Portfolio for voting purposes.  Voting
instructions  will be  solicited by written  communication  in  accordance  with
procedures established by the respective Portfolios.


The Company  will vote or abstain  from  voting  shares for which it receives no
timely  instructions  and shares it holds as to which owners have no  beneficial
interest  (including  shares  held  by  the  Company  as  reserves  for  benefit
payments*).  The  Company  will  vote or  abstain  from  voting  such  shares in
proportion to the voting  instructions  it receives from owners of all Contracts
participating in the Sub-Account.


Each person or entity  having a voting  interest in a  Sub-Account  will receive
proxy  material,   reports  and  other  material  relating  to  the  appropriate
Portfolio.  The  Portfolios  are not  required to hold  annual or other  regular
meetings of shareholders.

*Neither the owner nor payee has any interest in the Separate Account during the
Benefit Payment Period.  Benefit Units are merely a measure of the amount of the
payment the Company is obligated to pay on each payment date.


                                       19

<PAGE>


ANNUITY INVESTORS LIFE
INSURANCE COMPANY(R)

================================================================================

Annuity  Investors Life  Insurance  Company(R)  (the  "Company") is a stock life
insurance  company.  It was incorporated  under the laws of the State of Ohio in
1981.  The  Company is  principally  engaged in the sale of  variable  and fixed
annuity  policies.  The home  office of the Company is located at 250 East Fifth
Street, Cincinnati, Ohio 45202.

The  Company is a wholly  owned  subsidiary  of Great  American  Life  Insurance
Company(R)which is a wholly owned subsidiary of American Annuity Group(R), Inc.,
("AAG") a publicly traded insurance holding company (NYSE:  AAG). AAG is in turn
indirectly  controlled  by American  Financial  Group,  Inc., a publicly  traded
holding company (NYSE: AFG).

The Company may from time to time publish in  advertisements,  sales  literature
and reports to owners the ratings and other information assigned to it by one or
more  independent  rating  organizations  such as A.M. Best Company,  Standard &
Poor's,  and Duff &  Phelps.  The  purpose  of the  ratings  is to  reflect  the
financial strength and/or claims-paying  ability of the Company.  Each year A.M.
Best Company reviews the financial status of thousands of insurers,  culminating
in the assignment of Best's  Ratings.  These ratings reflect A.M. Best Company's
opinion of the relative  financial  strength  and  operating  performance  of an
insurance  company  in  comparison  to the  norms of the  life/health  insurance
industry.  Ratings of the Company do not reflect the  investment  performance of
the Separate  Account or the degree of risk associated with an investment in the
Separate Account.

THE SEPARATE ACCOUNT

================================================================================

Annuity  Investors(R)  Variable  Account B was  established by the Company as an
insurance  company  separate  account  under  the  laws of the  State of Ohio on
December 19, 1996,  pursuant to resolution of the Company's  Board of Directors.
The Separate  Account is registered with the Securities and Exchange  Commission
under the 1940 Act as a unit  investment  trust.  However,  the  Securities  and
Exchange  Commission  does  not  supervise  the  management  or  the  investment
practices or policies of the Separate Account.

The assets of the Separate  Account are owned by the Company,  but they are held
separately from the other assets of the Company. Under Ohio law, the assets of a
separate  account  are not  chargeable  with  liabilities  incurred in any other
business  operation of the  Company.  Income,  gains and losses  incurred on the
assets in the  Separate  Account,  whether  realized or not,  are credited to or
charged against the Separate Account,  without regard to other income,  gains or
losses of the Company.  Therefore,  the  investment  performance of the Separate
Account is entirely  independent of the investment  performance of the Company's
general account assets or any other separate account  maintained by the Company.
The assets of the  Separate  Account will be held for the  exclusive  benefit of
owners of, and the persons entitled to payment under,  the Contracts  offered by
this prospectus and all other contracts that invest in the Separate Account.

AAG SECURITIES, INC.

================================================================================

AAG Securities,  Inc.  ("AAGS"),  an affiliate of the Company,  is the principal
underwriter and  distributor of the Contracts.  AAG Securities is a wholly owned
subsidiary  of  AAG.  AAGS  is  registered  with  the  Securities  and  Exchange
Commission as a  broker-dealer  and is a member of the National  Association  of
Securities Dealers, Inc. ("NASD"). Its principal offices are located at 250 East
Fifth  Street,  Cincinnati,  Ohio  45202.  The  Company  pays AAGS for acting as
underwriter according to the terms of a distribution agreement.

AAGS sells Contracts through its registered  representatives.  In addition, AAGS
may  enter  into  sales   agreements  with  other   broker-dealers   to  solicit
applications  for the Contracts  through its registered  representatives.  These
broker-dealers  are registered  with the Securities and Exchange  Commission and
are members of the NASD. All registered  representatives  who sell the Contracts
are  appointed  by the  Company as  insurance  agents and are  authorized  under
applicable state insurance regulations to sell variable annuities.


The Company or AAGS may pay  commissions to registered  representatives  of AAGS
and other  broker-dealers  of up to 8.5% of  purchase  payments  made  under the
Contracts.  These  commissions  are reduced by one-half for Contracts  issued to
owners  over age 80.  When  permitted  by state  law and in  exchange  for lower
initial  commissions,  AAGS  and/or the  Company  may pay trail  commissions  to
registered   representatives  of  AAGS  and  to  other   broker-dealers.   Trail
commissions  are not expected to exceed 1% of the Account Value of a Contract on
an annual basis.  To the extent  permitted under current law, the Company and/or
AAGS may pay  production,  persistency  and managerial  bonuses as well as other
promotional   incentives,   in  cash  or  other   compensation,   to  registered
representatives of AAGS and/or other broker-dealers.



                                       20

<PAGE>


CHARGES AND DEDUCTIONS

================================================================================

Charges and Deductions By the Company


There are two types of charges and deductions by the Company.  There are charges
assessed  to the  Contract,  which are  reflected  in the  Account  Value of the
Contract,  but not in Accumulation  Unit Values (or Benefit Unit Values).  These
charges are the annual contract  maintenance fee, premium taxes where applicable
and transfer fees. There are also charges assessed against the Separate Account.
These  charges are reflected in the  Accumulation  Unit Values (and Benefit Unit
Values) of the  Sub-Accounts.  These  charges are the mortality and expense risk
charge and the administration charge.


The  Company  will never  charge  more to a Contract  than the fees and  charges
described  below,  even if its actual expenses exceed the total fees and charges
collected.  If the fees and charges  collected by the Company  exceed the actual
expenses  it incurs,  the excess  will be profit to the  Company and will not be
returned to owners.


Notwithstanding the above, the Company reserves the right to increase the amount
of the  transfer  fee in the  future,  and/or to charge  fees for the  automatic
transfer  programs  described in the Transfers  section  beginning on page 27 of
this prospectus,  and/or for the systematic  withdrawal program described in the
Surrenders  section  on  page  29  of  this  prospectus,  if  in  the  Company's
discretion,  it  determines  such  charges are  necessary to offset the costs of
administering transfers or systematic withdrawals.


Contract Maintenance Fee

Purpose of Charge                    Offset  expenses  incurred  in issuing  the
                                     Contracts and in maintaining  the Contracts
                                     and the Separate Account.

Amount of Charge                     $40.00 per year.

When Assessed                        During the  Accumulation  Period the charge
                                     is  deducted  on  each  anniversary  of the
                                     effective date of the Contract, and at time
                                     of  full  surrender.   During  the  Benefit
                                     Payment  Period a portion  of the charge is
                                     deducted from each variable  dollar benefit
                                     payment.

Assessed Against What                Amounts   invested  in  the   Sub-Accounts.
                                     During the Accumulation  Period, the charge
                                     is deducted pro rata from the  Sub-Accounts
                                     in which the  Contract  has an  interest on
                                     the date of the charge.  During the Benefit
                                     Payment  Period,  a pro rata portion of the
                                     annual charge is deducted from each benefit
                                     payment  from  the  variable  account.  The
                                     charge is not  assessed  against  the fixed
                                     account options.

Waivers                              o    During   Accumulation  Period  if  the
                                          Account  Value is at least  $40,000 on
                                          the  date  of the  charge  (individual
                                          Contracts only).

                                     o    During  Benefit  Payment Period if the
                                          amount  applied to a  variable  dollar
                                          benefit    is   at    least    $40,000
                                          (individual Contracts only).

                                     o    In the Company's  discretion where the
                                          Company   incurs   reduced  sales  and
                                          servicing expenses.

                                     o    During  Benefit  Payment  Period where
                                          required to satisfy state law.


                                       21

<PAGE>


Transfer Fee

Purpose of Charge                    Offset costs incurred in administering  the
                                     Contracts.

Amount of Charge                     $25 for each  transfer  in  excess of 12 in
                                     any contract year. The Company reserves the
                                     right to change the  amount of this  charge
                                     at any time.

When Assessed                        During Accumulation Period.

Assessed Against What                Deducted from amount transferred.

Waivers                              Currently,  the transfer fee does not apply
                                     to  transfers  associated  with the  dollar
                                     cost   averaging,    interest   sweep   and
                                     portfolio rebalancing  programs.  Transfers
                                     associated with these programs do not count
                                     toward the 12 free transfers permitted in a
                                     contract  year.  The Company  reserves  the
                                     right to eliminate this waiver at any time.


Administration Charge

Purpose of Charge                    Offset expenses  incurred in  administering
                                     the Contracts and the Separate Account.

Amount of Charge                     Daily  charge  equal  to  0.000411%  of the
                                     daily Net Asset Value for each Sub-Account,
                                     which  corresponds  to an annual  effective
                                     rate of 0.15%.

When Assessed                        During the  Accumulation  Period and during
                                     the  Benefit  Payment  Period if a variable
                                     dollar benefit is elected.

Assessed Against What                Amounts invested in the  Sub-Accounts.  Not
                                     assessed against the fixed account options.

Waivers                              May be waived or reduced  in the  Company's
                                     discretion where the Company incurs reduced
                                     sales and servicing expenses.


                                       22

<PAGE>


Mortality and Expense Risk Charge

Purpose of Charge                    Compensation for bearing certain  mortality
                                     and  expense   risks  under  the  Contract.
                                     Mortality  risks  arise from the  Company's
                                     obligation to pay benefit  payments  during
                                     the Benefit  Payment  Period and to pay the
                                     death benefit.  The expense risk assumed by
                                     the Company is the risk that the  Company's
                                     actual   expenses  in   administering   the
                                     Contracts  and the  Separate  Account  will
                                     exceed the  amount  recovered  through  the
                                     contract  maintenance  fees,  transfer fees
                                     and administration charges.

Amountof Charge                      Daily  charge  equal  to  0.003403%  of the
                                     daily Net Asset Value for each Sub-Account,
                                     which  corresponds  to an effective  annual
                                     rate of 1.25%.  The Company  estimates that
                                     the mortality risk component of this charge
                                     is 0.75% and the expense risk  component is
                                     0.50%.  Contracts with the 1.25%  mortality
                                     and expense  risk charge are referred to as
                                     "Standard Contracts."

When Assessed                        During the Accumulation  Period, and during
                                     the  Benefit  Payment  Period if a variable
                                     dollar benefit is elected.


Assessed Against What                Amounts invested in the  Sub-Accounts.  Not
                                     assessed against the fixed account options.

Waivers                              When the Company  expects to incur  reduced
                                     sales and servicing expenses,  it may issue
                                     a  Contract  with a reduced  mortality  and
                                     expense risk charge.  These  Contracts  are
                                     referred to as  "Enhanced  Contracts."  The
                                     mortality  and expense risk charge under an
                                     Enhanced  Contract  is a  daily  charge  of
                                     either:  (1)  0.002590%  of the  daily  Net
                                     Asset  Value  for each  Sub-Account,  which
                                     corresponds to an effective  annual rate of
                                     0.95%;  or (2)  0.002047%  of the daily Net
                                     Asset  Value  for each  Sub-Account,  which
                                     corresponds to an effective  annual rate of
                                     0.75%.  The  Company   estimates  that  for
                                     Enhanced  Contracts,   the  mortality  risk
                                     component of either charge is 0.75% and the
                                     expense  risk  component is 0.20% or 0.00%,
                                     respectively.

Premium Taxes

Certain state and local governments  impose premium taxes. These taxes currently
range up to 5.0%  depending upon the  jurisdiction.  The Company will deduct any
applicable  premium taxes from the Account  Value either upon death,  surrender,
annuitization,  or at the time purchase  payments are made,  but no earlier than
when the Company has a tax liability under state law.

Discretionary Waivers of Charges

The Company will look at the  following  factors to determine if it will waive a
charge, in part or in full, due to reduced sales and servicing expenses: (1) the
size and type of the group to which sales are to be made;  (2) the total  amount
of purchase payments to be received;  and (3) any prior or existing relationship
with the Company.  The Company would expect to incur reduced sales and servicing
expenses in connection with Contracts  offered to employees of the Company,  its
subsidiaries and/or affiliates.  There may be other circumstances,  of which the
Company  is not  presently  aware,  which  could  result  in  reduced  sales and
servicing  expenses.  In no event  will the  Company  waive a charge  where such
waiver would be unfairly discriminatory to any person.

Expenses of the Portfolios

In  addition to charges  and  deductions  by the  Company,  there are  Portfolio
management  fees  and  administration   expenses  which  are  described  in  the
prospectus  and  statement of additional  information  for each  Portfolio.  The
actual  Portfolio  fees and expenses for the prior calendar year are included in
the Fee Table on page 6 of this prospectus.  Portfolio  expenses,  like Separate
Account  expenses,  are reflected in  Accumulation  Unit Values (or Benefit Unit
Values).


                                       23

<PAGE>


THE CONTRACTS

================================================================================

Each  Contract  is an  agreement  between  the  Company  and the owner.  Values,
benefits and charges are calculated separately for each Contract. In the case of
a group Contract,  the agreement is between the group owner and the Company.  An
individual  participant  under a group  Contract will receive a  certificate  of
participation,  which is  evidence  of the  participant's  interest in the group
Contract. A certificate of participation is not a Contract. Values, benefits and
charges are calculated  separately for each certificate issued under a Contract.
The  description  of  Contract  provisions  in this  prospectus  applies  to the
interests of certificate owners, except where otherwise noted.

Because the Company is subject to the insurance laws and  regulations of all the
jurisdictions  where it is  licensed  to operate,  the  availability  of certain
Contract  rights and  provisions  in a given  State may  depend on that  State's
approval  of the  Contracts.  Where  required  by state law or  regulation,  the
Contracts will be modified accordingly.

Right to Cancel

The  owner of an  individual  Contract  may  cancel it  before  midnight  of the
twentieth day following  the date the owner  receives the Contract.  For a valid
cancellation,  the Contract must be returned to the Company,  and written notice
of  cancellation  must be given to the  Company,  or to the  agent  who sold the
Contract,  by that deadline. If mailed, the return of the Contract or the notice
is  effective  on the date it is  postmarked,  with the proper  address and with
postage paid.  If the owner cancels the Contract,  the Contract will be void and
the Company  will refund the purchase  payment(s)  paid for it plus or minus any
investment  gains or losses  under the  Contract as of the end of the  Valuation
Period  during  which the  returned  Contract is received by the  Company.  When
required by state or federal law, the Company will return the purchase  payments
without any investment  gain or loss,  during all or part of the right to cancel
period.  When  required by state law,  the right to cancel  period may be longer
than 20 days. When required by state law, the right to cancel may apply to group
Contracts.

Persons With Rights Under a Contract

Owner:  The owner is the person with  authority  to exercise  rights and receive
benefits under the Contract (e.g.,  make allocations  among investment  options,
elect settlement option,  designate annuitant,  beneficiary and payee). An owner
must ordinarily be a natural person,  or a trust or other legal entity holding a
contract for the benefit of a natural  person.  In the case of a group Contract,
the participant will have the rights of an owner unless  restricted by the terms
of  an  employer  plan.  Ownership  of  a  non-tax-qualified   Contract  may  be
transferred,  but  transfer may have  adverse tax  consequences.  Ownership of a
tax-qualified Contract may not be transferred.

Joint Owners: There may be joint owners of a non-tax-qualified  Contract.  Joint
owners may each exercise  transfer rights and make purchase payment  allocations
independently.  All other rights must be exercised by joint action.  A surviving
joint owner who is not the spouse of a deceased owner may not become a successor
owner,  but will be deemed to be the  beneficiary  of the  death  benefit  which
becomes  payable  on the  death of the  first  owner to die,  regardless  of any
beneficiary  designation.

Successor Owner: The surviving spouse of a deceased owner may become a successor
owner if the  surviving  spouse  was either  the joint  owner or sole  surviving
beneficiary  under the  Contract.  In order  for a spouse to become a  successor
owner,  the owner  must make an  election  prior to the  owner's  death,  or the
surviving spouse must make an election within one year of the owner's death.

Annuitant: The annuitant is the person whose life is the measuring life for life
contingent  annuity  benefit  payments.  The annuitant is the same person as the
owner under a tax-qualified Contract. The owner may designate an annuitant under
a non-tax-qualified Contract.

Beneficiary:  The person  entitled to receive the death  benefit.  The owner may
designate the beneficiary, except that a surviving joint owner will be deemed to
be  the  beneficiary  regardless  of  any  designation.  If  no  beneficiary  is
designated,  and there is no surviving  joint owner,  the owner's estate will be
the beneficiary.  The beneficiary will be the measuring life for life contingent
death benefit payments.


Payee:  Under a  tax-qualified  Contract,  the  owner-annuitant  is the payee of
annuity benefits.  Under a non-tax-qualified  Contract,  the owner may designate
the payee of  annuity  benefits.  Irrevocable  naming of a payee  other than the
owner can have adverse tax  consequences.  The  beneficiary  is the payee of the
death benefit.


Assignee: Under a tax-qualified Contract, assignment is not permitted. The owner
of a  non-tax-qualified  Contract may assign most of his/her  rights or benefits
under a  Contract.  Assignment  of  rights  or  benefits  may have  adverse  tax
consequences.


                                       24

<PAGE>


ACCUMULATION PERIOD

================================================================================


Each Contract allows for an Accumulation  Period during which purchase  payments
are invested  according  to the owner's  instructions.  During the  Accumulation
Period,  the owner can control the allocation of investments  through  telephone
transfers or through the following  investment  programs offered by the Company:
dollar cost averaging,  portfolio rebalancing and interest sweep. These programs
and  telephone  transfer  procedures  are  described  in the  Transfers  section
beginning on page 27 of this prospectus.  The owner can access the Account Value
during the Accumulation Period through  surrenders,  systematic  withdrawal,  or
contract loans if available.  These withdrawal features are described more fully
in the  Surrenders  and  Contract  Loans  sections  on  pages  29 and 30 of this
prospectus.


Account Statements

During the  Accumulation  Period,  the Company  will  provide at least once each
contract  year  a  report  of  the  Contract's  Account  Value,  and  any  other
information  required by law. The Company  will confirm  receipt of any purchase
payments  made after the initial  purchase  payment in quarterly  statements  of
account activity.

Account Value

The value of a Contract  during the  Accumulation  Period is  referred to as the
"Account  Value." The Account Value at any given time is the sum of: (1) amounts
invested  in the fixed  investment  options  plus the fixed  rate(s) of interest
earned  on those  amounts  as of that  time;  and (2) the  value of the  owner's
interest in the  Sub-Accounts as of that time. The value of the owner's interest
in  the  Sub-Accounts  at any  time  is  equal  to the  sum  of  the  number  of
Accumulation Units for each Sub-Account attributable to that Contract multiplied
by the Accumulation Unit Value for the applicable  Sub-Account at the end of the
preceding Valuation Period. The Account Value at any time is net of any charges,
deductions,  surrenders, and/or outstanding loans incurred prior to or as of the
end of that Valuation Period.

Accumulation Units

Amounts   allocated  or  transferred   to  a  Sub-Account   are  converted  into
Accumulation  Units. The number of Accumulation  Units credited is determined by
dividing the dollar amount directed to the Sub-Account by the Accumulation  Unit
Value for that  Sub-Account  as of the end of the Valuation  Period in which the
amount  allocated is received by the Company,  or as of the end of the Valuation
Period in which the transfer is made.

Accumulation Units will be canceled as of the end of the Valuation Period during
which one of the following events giving rise to cancellation occurs:

     o    transfer from a Sub-Account

     o    full or partial surrender from the Sub-Accounts

     o    payment of a death benefit

     o    application of the amounts in the Sub-Accounts to a settlement option

     o    deduction of the contract maintenance fee

     o    deduction of any transfer fee

Successor Owner Endorsement

If the  Contract  is  modified  by the  successor  owner  endorsement,  and  the
surviving  spouse of a deceased owner becomes a successor owner of the Contract,
the Account Value will be stepped-up to equal the death benefit which  otherwise
would have been payable,  as of what would have been the Death Benefit Valuation
Date.

For purposes of  determining  what would have been the Death  Benefit  Valuation
Date, the election to become  successor  owner will be deemed to be instructions
as to the form of death benefit.  The election to become successor owner must be
made within one year of the date of the owner's death.

The successor owner endorsement may not be available in all States.


                                       25

<PAGE>


Purchase Payments

Purchase  payments may be made at any time during the Accumulation  Period.  The
current restrictions on purchase payment amounts are as follows:

<TABLE>
<CAPTION>
=================================================================================================
                                                       Tax-Qualified          Non-Tax-Qualified
- -------------------------------------------------------------------------------------------------

<S>                                                    <C>                    <C>
Minimum initial purchase payment                       $20,000                $20,000
- -------------------------------------------------------------------------------------------------
Minimum additional payments                            $50                    $100
- -------------------------------------------------------------------------------------------------
Maximum single purchase payment                        $500,000 or Company    $500,000 or Company
                                                       approval               approval
=================================================================================================

</TABLE>

The Company  reserves  the right to increase or decrease  the minimum  allowable
single purchase payment or the minimum allowable additional purchase payment, at
its discretion and at any time, where permitted by law.

Each  purchase  payment  will be  applied  by the  Company  to the credit of the
owner's  account.  If the  application  form is in good order,  the Company will
apply the  initial  purchase  payment  to an  account  for the owner  within two
business days of receipt of the purchase payment. If the application form is not
in good order,  the Company  will  attempt to get the  application  form in good
order within five business days. If the application form is not in good order at
the end of this period,  the Company will inform the applicant of the reason for
the delay and that the purchase payment will be returned  immediately  unless he
or she  specifically  consents to the Company keeping the purchase payment until
the  application  form is in good order.  Once the  application  form is in good
order,  the purchase  payment will be applied to the owner's  account within two
business days.

Each additional  purchase  payment is credited to a Contract as of the Valuation
Date on which the Company receives the purchase payment. If the purchase payment
is allocated to a Sub-Account, it will be applied at the Accumulation Unit Value
calculated  at the end of the  Valuation  Period in which  that  Valuation  Date
occurs.

Investment Options--Allocations


Purchase  payments can be allocated in whole percentages to any of the available
Sub-Accounts  or fixed  account  options.  The  fixed  account  options  are not
available under group Contracts. See the Portfolios section beginning on page 14
of this  prospectus  for a listing and  description  of the currently  available
Sub-Accounts. The currently available fixed account options are as follows:


     Fixed Accumulation Account Option
     One Year Guaranteed Interest Rate Option
     Three Year Guaranteed Interest Rate Option
     Five Year Guaranteed Interest Rate Option
     Seven Year Guaranteed Interest Rate Option

The current restrictions on allocations are as follows:

<TABLE>
<CAPTION>
===============================================================================================================
                                                                     Tax-Qualified and Non-Tax-Qualified
- ---------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>
Minimum allocation to any Sub-Account                                $10
- ---------------------------------------------------------------------------------------------------------------
Minimum allocation to fixed accumulation account                     $10
                                                                     Not available under group Contracts.
- ---------------------------------------------------------------------------------------------------------------

Minimum allocation to fixed account guarantee option                 $2,000
                                                                     Not available under group Contracts. No
                                                                     amounts may be allocated to a guarantee
                                                                     period   option,   which  would  extend
                                                                     beyond the owner's  85th  birthday or 5
                                                                     years after the  effective  date of the
                                                                     Contract, if later.

- ---------------------------------------------------------------------------------------------------------------
Allocation during right to cancel period                             No current  restrictions,  however, the
                                                                     Company  reserves  the right to require
                                                                     that  purchase  payment(s) be allocated
                                                                     to the money market  Sub-Account  or to
                                                                     the fixed  accumulation  account option
                                                                     during the right to cancel period.
===============================================================================================================
</TABLE>


                                       26

<PAGE>


Interests in the fixed account options are not securities and are not registered
with the  Securities  and Exchange  Commission.  Amounts  allocated to the fixed
account  options will receive a stated rate of interest of at least 3% per year.
Amounts  allocated to the fixed  account  options and  interest  credited to the
fixed  account  options  are  guaranteed  by  the  Company.   Interests  in  the
Sub-Accounts  are  securities   registered  with  the  Securities  and  Exchange
Commission.  The owner  bears  the risk of  investment  gain or loss on  amounts
allocated to the Sub-Accounts.

Principal Guarantee Program

An owner of an  individual  Contract  may elect to have the  Company  allocate a
portion of a purchase payment to the seven-year  guaranteed interest rate option
such that, at the end of the seven-year guarantee period, that account will grow
to an  amount  equal to the  total  purchase  payment  (so long as there  are no
surrenders or loans from the  Contract).  The Company  determines the portion of
the purchase  payment that must be allocated to the seven-year  guarantee option
such that, based on the interest rate then in effect,  that account will grow to
equal the full amount of the purchase  payment after seven years.  The remainder
of the purchase payment will be allocated according to the owner's instructions.
The minimum  purchase payment  eligible for the principal  guarantee  program is
$5,000.

Renewal of Fixed Account Guarantee Options


At the end of a  guarantee  period,  and for 30 days  preceding  the end of such
guarantee period,  the owner may elect to allocate the amount maturing to any of
the available investment options under the Contract.  If the owner does not make
a reallocation  election, the amount maturing will be allocated to the guarantee
period option with the same number of years as the period expiring,  or the next
shortest  period as may be required to comply with the restriction on allocation
to guarantee period options as described in the Investment  Options--Allocations
section on page 26 of this prospectus.  If a guarantee period is unavailable due
to this  restriction,  the  amount  maturing  will  be  allocated  to the  fixed
accumulation account option.


Transfers

During  the   Accumulation   Period,   an  owner  may  transfer   amounts  among
Sub-Accounts,  between fixed account options (where  available),  and/or between
Sub-Accounts and fixed account options (where available).

The current restrictions on transfers are as follows:

<TABLE>
<CAPTION>
===============================================================================================================
                                                                     Tax-Qualified and Non-Tax-Qualified
- ---------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>
Minimum transfer from any Sub-Account                                $500 or balance of Sub-Account, if less
- ---------------------------------------------------------------------------------------------------------------
Minimum transfer from fixed account option                           $500  or  balance   of  fixed   account
                                                                     option, if less
- ---------------------------------------------------------------------------------------------------------------

Minimum transfer to fixed account guarantee option                   $2,000
                                                                     Not available under group Contracts. No
                                                                     amounts   may  be   transferred   to  a
                                                                     guarantee  period  option,  which would
                                                                     extend beyond the owner's 85th birthday
                                                                     or 5 years after the effective  date of
                                                                     the Contract, if later.

- ---------------------------------------------------------------------------------------------------------------
Maximum  transfer from fixed account option other than fixed         During any  contract  year,  20% of the
account  guarantee  option  which is maturing                        fixed account  option's value as of the
                                                                     most recent contract anniversary.
- ------------------------------------------------------------------------------------------------------------
Transfers from fixed account options                                 o    May not be  made  prior  to  first
                                                                          contract anniversary.

                                                                     o    Amounts   transferred  from  fixed
                                                                          account  options  to  Sub-Accounts
                                                                          may  not be  transferred  back  to
                                                                          fixed account options for a period
                                                                          of 6  months  from the date of the
                                                                          original transfer.
===============================================================================================================
</TABLE>

A transfer is effective on the Valuation Date during which the Company  receives
the request for transfer,  and will be processed at the Accumulation  Unit Value
for the end of the Valuation Period in which that Valuation Date occurs.


                                       27

<PAGE>


Automatic Transfer Programs

During the  Accumulation  Period,  the  Company  offers the  automatic  transfer
services  described below. To enroll in one of these programs,  you will need to
complete  the  appropriate  authorization  form,  which you can obtain  from the
Company by calling 1-800-789-6771.

Currently,  the transfer fee does not apply to dollar cost averaging,  portfolio
rebalancing,  or interest sweep  transfers,  and transfers  under these programs
will not count toward the twelve transfers  permitted under the Contract without
a transfer fee charge.  However,  the Company reserves the right to impose a fee
in  such  amount  as  the  Company  may  then  determine  to be  reasonable  for
participation in automatic transfer programs.

<TABLE>
<CAPTION>
Service                             Description                      Minimum Account                 Limitations/Notes
                                                                     Requirements
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                              <C>                             <C>
Dollar Cost Averaging               Automatic transfers from the     Source of funds must be at      Dollar cost averaging transfers
There are risks involved in         money market Sub-Account to any  least $10,000.                  may not be made to any of the
switching between investments       other Sub-Account(s), or from                                    fixed account options.  The
available under the Contract.       the fixed accumulation account   Minimum transfer per month is   dollar cost averaging transfers
Dollar cost averaging requires      option (where available) to any  $500.  When balance of source   will take place on the last
regular investment changes          Sub-Account(s), on a monthly or  of funds falls below $500,      Valuation Date of each calendar
regardless of fluctuating price     quarterly basis.                 entire balance will be          month or quarter as requested
levels and does not guarantee                                        allocated according to dollar   by the owner.
profits or prevent losses in a                                       cost averaging instructions.
declining market.  You should
consider your financial ability
to continue dollar cost averaging
transfers through periods of
changing price levels.
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio Rebalancing               Automatically transfer amounts   Minimum Account Value of        Transfers will take place on
                                    between the Sub-Accounts and     $10,000.                        the last Valuation Date of each
                                    the fixed accumulation account                                   calendar quarter.  Portfolio
                                    option (where available) to                                      rebalancing will not be
                                    maintain the percentage                                          available if the dollar cost
                                    allocations selected by the                                      averaging program or an
                                    owner.                                                           interest sweep from the fixed
                                                                                                     accumulation account option is
                                                                                                     being utilized.
- ----------------------------------------------------------------------------------------------------------------------------------
Interest Sweep                      Automatic transfers of the       Balance of each fixed account   Interest sweep transfers will
Not available under group           income from any fixed account    option selected must be at      take place on the last
Contracts.                          option(s) to any Sub-Account(s). least $5,000.  Maximum          Valuation Date of each calendar
                                                                     transfer from each fixed        quarter.
                                                                     account option selected is 20%
                                                                     of such fixed account option's
                                                                     value per year.  Amounts
                                                                     transferred under the interest
                                                                     sweep program will reduce the
                                                                     20% maximum transfer amount
                                                                     otherwise allowed.
</TABLE>

                                       28

<PAGE>


Telephone Transfers

An  owner  may  place a  request  for all or part  of the  Account  Value  to be
transferred by telephone.  All transfers must be in accordance with the terms of
the Contract.  Transfer  instructions  are currently  accepted on each Valuation
Date  between  9:30 a.m.  and 4:00 p.m.  Eastern  Time at  1-800-789-6771.  Once
instructions  have  been  accepted,  they  may not be  rescinded;  however,  new
telephone instructions may be given the following day.

The Company will not be liable for complying  with telephone  instructions  that
the Company reasonably  believes to be genuine, or for any loss, damage, cost or
expense in acting on such telephone  instructions.  The owner or person with the
right to control  payments  will bear the risk of such loss.  The  Company  will
employ  reasonable  procedures  to determine  that  telephone  instructions  are
genuine.  If the  Company  does not employ such  procedures,  the Company may be
liable  for  losses  due  to  unauthorized  or  fraudulent  instructions.  These
procedures may include, among others, tape recording telephone instructions.

Termination of Transfer Programs

The owner may terminate any of the automatic  transfer programs at any time, but
must give the Company at least 30 days notice to change any  automatic  transfer
instructions that are already in place. Termination and change instructions will
be accepted by telephone at 1-800-789-6771.  The Company may terminate,  suspend
or modify any aspect of the transfer  programs  described  above  without  prior
notice to owners, as permitted by applicable law. The Company may also impose an
annual fee or increase  the current  annual fee, as  applicable,  for any of the
foregoing  services in such  amount(s)  as the Company may then  determine to be
reasonable for participation in the service.

Surrenders

An  owner  may  surrender  a  Contract  either  in full or in  part  during  the
Accumulation Period. The restrictions and charges on surrenders are as follows:

<TABLE>
<CAPTION>
==================================================================================================================================
                                                                       Tax-Qualified                    Non-Tax-Qualified
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                                <C>
Minimum amount of partial surrender                                                                     $500
- ----------------------------------------------------------------------------------------------------------------------------------
Minimum remaining Account Value after partial surrender                                                 $500
- ----------------------------------------------------------------------------------------------------------------------------------
Amount  available for surrender (valued as of end of                 Account Value  subject to tax      Account Value subject to
Valuation Period in which request for surrender is                   law or employer plan               employer plan restrictions
received by the Company)                                             restrictions on withdrawals        on withdrawals
- ----------------------------------------------------------------------------------------------------------------------------------
Tax penalty for early withdrawal                                     Up to 10% of Account Value before age 59 1/2
- ----------------------------------------------------------------------------------------------------------------------------------
Contract maintenance fee on full surrender                           $40
==================================================================================================================================
</TABLE>

A full surrender will terminate the Contract.  Partial  surrenders are withdrawn
proportionally  from all  Sub-Accounts  and fixed  account  options in which the
Contract  is invested on the date the Company  receives  the  surrender  request
unless  the owner  requests  that the  surrender  be  withdrawn  from a specific
investment  option.  A surrender is effective on the Valuation Date during which
the Company  receives  the request for  surrender,  and will be processed at the
Accumulation  Unit  Value  for the end of the  Valuation  Period  in which  that
Valuation  Date occurs.  Payment of a  surrendered  amount may be delayed if the
amount  surrendered was paid to the Company by a check that has not yet cleared.
Surrenders from a fixed account option may be delayed for up to six months after
receipt of a  surrender  request as  allowed by state law.  Surrenders  from the
Sub-Accounts  may be delayed  during any period the New York Stock  Exchange  is
closed or trading is restricted,  or when the Securities and Exchange Commission
either:  (1) determines that there is an emergency  which prevents  valuation or
disposal of securities held in the Separate  Account;  or (2) permits a delay in
payment for the protection of security holders.


                                       29

<PAGE>


Systematic Withdrawal

During the Accumulation  Period,  an owner may elect to  automatically  withdraw
money from the Contract.  The Account Value must be at least $10,000 in order to
make a systematic  withdrawal  election.  The minimum monthly amount that can be
withdrawn is $100. The owner may begin or discontinue  systematic withdrawals at
any time by request to the Company, but at least 30 days notice must be given to
change any systematic  withdrawal  instructions that are currently in place. The
Company reserves the right to discontinue offering systematic withdrawals at any
time.  Currently,  the Company does not charge a fee for  systematic  withdrawal
services.  However,  the Company  reserves  the right to impose an annual fee in
such amount as the Company may then determine to be reasonable for participation
in the systematic withdrawal program.

Before  electing a  systematic  withdrawal  program,  you should  consult with a
financial Advisor.  Systematic withdrawal is similar to annuitization,  but will
result in different  taxation of payments and  potentially  different  amount of
total payments over the life of the Contract than if annuitization were elected.

Contract Loans

The Company may make loans to owners of tax-qualified  Contracts. Any such loans
will be secured with an interest in the  Contract,  and the  collateral  for the
loan will be moved to the fixed  accumulation  account  option  and earn a fixed
rate of interest  applicable  to loan  collateral.  Loan  amounts and  repayment
requirements are subject to provisions of the Internal Revenue Code, and default
on a loan will result in a taxable event. You should consult a tax Advisor prior
to  exercising  loan  privileges.  Loan  provisions  are  described  in the loan
endorsement to the Contract.

A loan, whether or not repaid, will have a permanent effect on the Account Value
of a Contract because the collateral  cannot be allocated to the Sub-Accounts or
fixed account guarantee periods. The longer the loan is outstanding, the greater
the effect is likely to be. The effect could be favorable or unfavorable. If the
investment  results are greater than the rate being credited on collateral while
the loan is  outstanding,  the Account  Value will not increase as rapidly as it
would if no loan were  outstanding.  If investment  results are below that rate,
the  Account  Value  will be higher  than it would have been if no loan had been
outstanding.

Termination


The Company  reserves the right to terminate any Contract at any time during the
Accumulation  Period if the Account Value is less than $500.  In that case,  the
Contract will be  involuntarily  surrendered  and the Company will pay the owner
the amount,  which would be due the owner on a full surrender.  A group Contract
may be terminated on 60 days advance notice,  in which case participants will be
entitled to continue their  interests on a deferred,  paid-up basis,  subject to
the Company's involuntary surrender right as described above.



                                       30

<PAGE>


BENEFIT PAYMENT PERIOD

================================================================================

Annuity Benefit

An owner may designate the date that annuity payments will begin, and may change
the date up to 30 days before  annuity  payments are scheduled to begin.  Unless
the Company agrees otherwise, the first day of a Benefit Payment Period in which
annuity  payments  are paid  cannot  be  later  than  the  contract  anniversary
following  the 85th  birthday  of the  eldest  owner,  or five  years  after the
effective date of the Contract, whichever is later.


The amount  applied to a settlement  option will be the Account  Value as of the
end of the Valuation Period  immediately  preceding the first day of the Benefit
Payment  Period.  The owner may select any form of settlement  option,  which is
currently  available.  The standard forms of settlement options are described in
the Settlement Options section beginning on page 31 of this prospectus.

If the owner has not  previously  made an election as to the form of  settlement
option,  the Company will contact the owner to ascertain  the form of settlement
option to be paid. If the owner does not select a settlement  option,  such as a
specific fixed dollar benefit payment,  a variable dollar benefit payment,  or a
combination  of a variable and fixed dollar  benefit  payment,  the Company will
apply the Account Value to a fixed dollar  benefit for the life of the annuitant
with 120 monthly  payments  assured,  as  described  in the  Settlement  Options
section beginning on page 31 of this prospectus.


Death Benefit

A death  benefit  will be paid  under a Contract  if the owner  dies  during the
Accumulation  Period.  If a surviving  spouse  becomes a successor  owner of the
Contract,  the death benefit will be paid on the death of the successor owner if
he or she dies during the Accumulation Period.

The death  benefit  will be an amount equal to the larger of the  following  two
amounts:

o    The Account Value on the Death Benefit Valuation Date

o    The total purchase payment(s) less any partial surrenders


Any  applicable  premium tax or other  taxes not  previously  deducted,  and any
outstanding  loans will be  deducted  from the death  benefit  amount  described
above.

An owner may elect the form of payment of the death  benefit at any time  before
his or her death.  The form of payment may be a lump sum, or any available  form
of settlement  option. The standard forms of settlement options are described in
the Settlement  Options section beginning on page 31 of this prospectus.  If the
owner does not make an election as to the form of death benefit, the beneficiary
may make an election  within one year after the owner's death. If no election as
to form of settlement  option is made;  the Company will apply the death benefit
to a fixed dollar  benefit for a period  certain of 48 months.  The first day of
the Benefit Payment Period in which a death benefit is paid may not be more than
one year after the owner's death;  the day a death benefit is paid in a lump sum
may not be more than five years after the owner's date of death.


Settlement Options

When a  Contract  is  annuitized,  or  when a  death  benefit  is  applied  to a
settlement option,  the Account Value or the death benefit,  as the case may be,
is  surrendered  to the  Company  in  exchange  for a promise to pay a stream of
benefit  payments for the duration of the settlement  option  selected.  Benefit
payments may be calculated and paid: (1) as a variable dollar benefit;  (2) as a
fixed dollar  benefit;  or (3) as a combination of both. The stream of payments,
whether  variable  dollar or fixed  dollar,  is an  obligation  of the Company's
general  account.  However,  only the amount of fixed dollar benefit payments is
guaranteed by the Company. The owner (or payee) bears the risk that any variable
dollar  benefit  payment may be less than the initial  variable  dollar  benefit
payment, or that it may decline to zero, if Benefit Unit Values for that payment
decrease  sufficiently.  Transfers between a variable dollar benefit and a fixed
dollar  benefit  are  not  permitted,  but  transfers  of  Benefit  Units  among
Sub-Accounts  are permitted once each 12 months after a variable  dollar benefit
has been paid for at least 12 months.  The  formulas  for  transferring  Benefit
Units among Sub-Accounts  during the Benefit Payment Period are set forth in the
statement of additional information.


                                       31

<PAGE>


Form of Settlement Option

The Company will make periodic payments in any form of settlement option that is
acceptable  to it at the time of an election.  The standard  forms of settlement
options are described  below.  Payments  under any  settlement  option may be in
monthly,  quarterly,  semi-annual or annual payment intervals.  If the amount of
any regular  payment under the form of settlement  option  elected would be less
than $50, an alternative form of settlement option will have to be elected.  The
Company,  in its discretion,  may require benefit  payments to be made by direct
deposit or wire transfer to the account of a designated payee.

The Company may modify minimum  amounts,  payment  intervals and other terms and
conditions  at any time without prior notice to owners.  If the Company  changes
the  minimum  amounts,  the  Company  may change any  current or future  payment
amounts  and/or  payment  intervals  to conform  with the change.  More than one
settlement  option may be elected if the requirements for each settlement option
elected are  satisfied.  Once  payment  begins under a  settlement  option,  the
settlement option may not be changed or commuted.

The  dollar  amount of  benefit  payments  will vary with the  frequency  of the
payment interval and the duration of the payments.  Generally, each payment in a
stream  of  payments  will be lesser in  amount  as the  frequency  of  payments
increases,  or as the  length of the  payment  period  increases,  because  more
payments will be paid. For life contingent  settlement options,  each payment in
the stream of payments will generally be lesser in amount as the life expectancy
of the annuitant or beneficiary  increases because more payments are expected to
be paid.

Income for a Fixed Period: The Company will make periodic payments at the end of
each payment interval for a fixed period of 5 to 30 years. (Periods of 1-4 years
are available for death benefit settlement options only.)

Life Annuity with  Payments for at Least a Fixed  Period:  The Company will make
periodic  payments at the beginning of each payment interval for a fixed period,
or until the death of the person on whose life benefit  payments are based if he
or she lives longer than the fixed period.

Joint and One-Half Survivor Annuity:  The Company will make periodic payments at
the beginning of each payment  interval until the death of the primary person on
whose  life  benefit  payments  are based;  thereafter,  the  Company  will make
one-half of the  periodic  payment  until the death of the  secondary  person on
whose life benefit payments are based.

Life Annuity:  The Company will make periodic  payments at the beginning of each
payment  interval  until the death of the person on whose life benefit  payments
are based.

Calculation of Fixed Dollar Benefit Payments

Fixed dollar benefit  payments are determined by multiplying  the amount applied
to the fixed  dollar  benefit  (expressed  in  thousands  of  dollars  and after
deduction of any fees and charges,  loans,  or applicable  premium taxes) by the
amount of the payment per $1,000 of value which the Company is currently  paying
for settlement  options of that type.  Fixed dollar benefit payments will remain
level for the duration of the Benefit Payment Period.


The Company  guarantees  minimum fixed dollar benefit  payment  factors based on
1983 annuity  mortality  tables for individuals or groups,  as applicable,  with
interest at 3% per year,  compounded annually.  For group Contracts,  individual
tax-qualified Contracts and individual  non-tax-qualified  Internal Revenue Code
("IRC")  Section 457  Contracts,  the Company uses tables for blended lives (60%
female/40% male). For individual non-tax-qualified Contracts, except IRC Section
457, the Company uses tables for male and female lives.  Where required by state
law, the Company  uses blended  tables for all  Contracts.  The minimum  monthly
payments per $1,000 of value for the Company's  standard  settlement options are
set forth in tables in the  Contracts.  Upon  request,  the Company will provide
minimum  monthly  payments for ages or fixed periods not shown in the settlement
option tables.



                                       32

<PAGE>


Calculation of Variable Dollar Benefit Payments

The first variable dollar benefit payment is the amount it would be if it were a
fixed dollar  benefit  payment  calculated at the Company's  minimum  guaranteed
settlement  option  factors,  reduced  by a pro  rata  portion  of the  contract
maintenance  fee,  equal to the  amount  of the fee  divided  by the  number  of
payments to be made over a 12-month period.


The amount of each  subsequent  variable dollar benefit payment will reflect the
investment performance of the Sub-Account(s)  selected and may vary from payment
to payment. For example, because the first benefit payment includes a 3% rate of
interest, subsequent benefit payments will be less than the first payment if the
net investment performance of the applicable Sub Account is less than 3%.


The amount of each  subsequent  payment is the sum of the  payment  due for each
Sub-Account  selected,  less a pro rata portion of the contract maintenance fee,
as described above. The payment due for a Sub-Account equals the shares for that
Sub-Account,  which are the  Benefit  Units,  times  their  value,  which is the
Benefit  Unit Value for that  Sub-Account  as of the end of the fifth  Valuation
Period preceding the due date of the payment.


The number of Benefit  Units for each  Sub-Account  selected  is  determined  by
allocating  the amount of the first  variable  dollar  benefit  payment  (before
deduction  of the pro rata portion of the  contract  maintenance  fee) among the
Sub-Account(s)  selected in the  percentages  indicated by the owner (or payee).
The dollar  amount  allocated  to a  Sub-Account  is divided by the Benefit Unit
Value for that  Sub-Account as of the first day of the Benefit  Payment  Period.
The  result is the number of Benefit  Units that the  Company  will pay for that
Sub-Account  at each  payment  interval.  The number of  Benefit  Units for each
Sub-Account remains fixed during the Benefit Payment Period,  except as a result
of any transfers among  Sub-Accounts.  An explanation of how Benefit Unit Values
are calculated is included in the Glossary of Financial Terms on page 37 of this
prospectus.



                                       33

<PAGE>


FEDERAL TAX MATTERS

================================================================================


This section provides a general description of federal income tax considerations
relating to the  Contracts.  The purchase of a Contract may have federal  estate
and gift tax  consequences  in addition to income tax  consequences.  Estate and
gift  taxation  is not  discussed  in this  prospectus  or in the  statement  of
additional  information.  State  taxation will vary  depending on the State,  in
which you reside, and is not discussed in this prospectus or in the statement of
additional information.


The tax  information  provided in the  prospectus  and  statement of  additional
information  should  not be used as tax  advice.  Federal  income  tax  laws are
subject to interpretation  by the IRS and may be changed by future  legislation.
You should  consult a  competent  tax  Advisor to discuss  how  current tax laws
affect your particular situation.

Tax Deferral On Annuities


Internal  Revenue  Code  ("IRC")  Section 72 governs  taxation of  annuities  in
general.  The income  earned  during the  Accumulation  Period of a Contract  is
generally  not  includable in income until it is  withdrawn.  In other words,  a
Contract  is  a  tax-deferred  investment.   The  Contracts  must  meet  certain
requirements  in order to qualify for  tax-deferred  treatment under IRC Section
72. These requirements are discussed in the statement of additional information.
In addition,  tax deferral is generally  not  available  for a Contract when the
owner is not a natural  person  unless the  Contract is part of a  tax-qualified
plan or the  owner is a mere  agent  for a natural  person.  For a  nonqualified
deferred  compensation  plan,  this rule means that the employer as owner of the
Contract will generally be taxed currently on any increase in the Account Value,
although the plan may provide a tax deferral to the participating  employee. For
a group  nonqualified  Contract  where the owner has no rights over the separate
interests, this rule is applied to each participant who is not a natural person.



                                       34

<PAGE>


Tax-Qualified Plans


Annuities  may also qualify for  tax-deferred  treatment,  or serve as a funding
vehicle,  under other IRC provisions governing  tax-qualified  retirement plans.
These  provisions  include IRC Sections 401 (pension and profit sharing  plans),
403(b)   (tax-sheltered   annuities),   408  and  408A  (individual   retirement
annuities),  and 457(g) (governmental  deferred  compensation).  [In some cases,
tax-deferral  may be available  under these IRC  Sections  without the use of an
annuity.  Please consult your  registered  representative.]  Contributions  to a
tax-qualified   Contract  are  typically  made  with  pre-tax   dollars,   while
contributions to a non-tax-qualified  Contract are typically made from after-tax
dollars, though there are exceptions in either case. Tax-qualified Contracts may
also  be  subject  to  restrictions   on  withdrawals   that  do  not  apply  to
non-tax-qualified  Contracts. These restrictions may be imposed by the IRC or by
an employer plan. Following is a brief description of the types of tax-qualified
retirement plans for which the Contracts are available.


Individual Retirement Annuities

IRC Sections 219 and 408 permit  individuals or their employers to contribute to
an individual retirement program known as an "Individual  Retirement Annuity" or
"IRA".  Under applicable  limitations,  certain amounts may be contributed to an
IRA that are deductible  from an individual's  gross income.  Employers also may
establish a Simplified  Employee  Pension (SEP) Plan or Savings  Incentive Match
Plan for  Employees  (SIMPLE)  to provide IRA  contributions  on behalf of their
employees.

Roth IRAs

IRC Section  408A  permits  certain  individuals  to  contribute  to a Roth IRA.
Contributions are not deductible.  Tax-free distributions may be made after five
years once the owner  attains  age 59 1/2,  becomes  disabled,  or dies,  or for
qualified first-time homebuyer expenses.

Tax-Sheltered Annuities

IRC 403(b) of the Code  permits the  purchase of  "tax-sheltered  annuities"  by
public schools and certain  charitable,  religious,  educational  and scientific
organizations described in IRC Section 501(c)(3). These qualifying employers may
make contributions to the Contracts for the benefit of their employees.  Subject
to certain limits,  such contributions are not includable in the gross income of
the  employee  until the employee  receives  distributions  under the  Contract.
Amounts  attributable to contributions  made under a salary reduction  agreement
cannot be  distributed  until the employee  attains age 59 1/2,  separates  from
service, becomes disabled, incurs a hardship, or dies.

Texas Optional Retirement Program

The Texas  Optional  Retirement  Program  ("ORP")  provides  for the purchase of
tax-sheltered  annuities with fixed employer and employee  contributions.  Under
Section 830.105 of the Texas Government Code, amounts cannot be distributed from
a Contract  issued under the ORP until the employee  terminates  employment from
all Texas public institutions of higher education,  retires, attains age 70 1/2,
or  dies.   Section   830.205  of  the  Texas   Government  Code  provides  that
employer-provided   ORP   benefits   vest  after  one  year  of   participation.
Accordingly,  no distribution can be made without written certification from the
employer of the ORP  participant's  vesting  status and, if the  participant  is
living and under age 70 1/2, the  participant's  retirement or other termination
from employment.

Pension and Profit Sharing Plans

IRC Section 401 permits employers to establish various types of retirement plans
for employees,  and permits  self-employed  individuals to establish  retirement
plans for themselves and their employees.  These retirement plans may permit the
purchase of annuity contracts to accumulate  retirement savings under the plans.
Purchasers  of a Contract for use with such plans should seek  competent  advice
regarding the  suitability  of the proposed plan  documents and the Contract for
their specific needs.

Governmental Deferred Compensation Plans

State and local  government  employers  may purchase  annuity  contracts to fund
deferred compensation plans for the benefit of their employees under IRC Section
457(g).

Nonqualified Deferred Compensation Plans

Governmental and other tax-exempt  employers may invest in annuity  contracts in
connection with  nonqualified  deferred  compensation  plans established for the
benefit of their  employees  under IRC Section 457 (other  than  457(g)).  Other
employers  may invest in  annuity  contracts  in  connection  with  nonqualified
deferred  compensation plans established for the benefit of their employees.  In
most cases,  these plans are designed so that contributions made for the benefit
of the employees generally will not be includable in the employees' gross income
until  distributed from the plan. In these  situations,  the Contract is usually
owned by the employer and is subject to the claims of its general creditors.


                                       35

<PAGE>


Summary of Income Tax Rules

The  following   chart   summarizes   the  basic  income  tax  rules   governing
tax-qualified and non-tax-qualified Contracts:

<TABLE>
<CAPTION>
====================================================================================================================================
                              Tax-Qualified Plans                                   Basic Non-Tax-Qualified Contracts
                              Nonqualified Deferred Compensation Plans
- ----------------------------- ----------------------------------------------------- ------------------------------------------------
<S>                           <C>                                                   <C>
Plan Types                    o    IRC ss.401 (Pension and Profit Sharing)          o    IRC ss.72 only
                              o    IRC ss.403 (Tax-Sheltered Annuities)
                              o    IRC ss.408 (IRA, SIMPLE IRA)
                              o    IRC ss.408A (Roth IRA)
                              o    IRC ss.457
                              o    Nonqualified Deferred Compensation
- ----------------------------- ----------------------------------------------------- ------------------------------------------------
Who May Purchase Contract     Natural person, employer, or employer plan.           Anyone. Non-natural person may purchase but will
                              Nonqualified deferred compensation plans will         generally lose tax-deferred status.
                              generally lose tax-deferred status.
- ----------------------------- ----------------------------------------------------- ------------------------------------------------
Taxation of Surrenders        If there is an after-tax "investment in the           Account Value in excess of investment in the
                              contract," a pro rata portion of amount               contract is taxable. Generally, the "investment
                              surrendered is taxable based on ratio of              in the contract" will equal the sum of all
                              "investment in the contract" to Account Value.        purchase payments. Surrenders are deemed to come
                              Usually, 100% of distributions from a qualified       from earnings first, and purchase payments last.
                              plan will be taxed because there was no after-tax
                              contribution and therefore no "investment in the      For a Contract purchased as part of an IRC
                              contract." Qualified distributions fromss.408A        Section 1035 exchange which includes
                              Roth IRA may be completely tax-free.                  contributions made before August 14, 1982
                                                                                    ("pre-TEFRA contributions") partial withdrawals
                              Surrenders prior to age 59 1/2 may be subject to      are not taxable until the pre-TEFRA
                              10% or greater tax penalty depending on the type      contributions have been returned.
                              of qualified plan.
                                                                                    The taxable portion of any surrenders prior to
                              Surrenders from tax-qualified  Contracts may be       age 59 1/2 may be subject to a 10% tax penalty.
                              restricted  by the Internal  Revenue Code or by
                              the terms of a retirement plan.
- ----------------------------- ------------------------------------------------------------------------------------------------------
Taxation of Benefit           May vary depending on type of settlement option selected, but generally, for fixed dollar benefit
Payments (annuity             payments, a pro rata portion of each payment equal to [100% - (investment in contract/total expected
benefit payments or           payments)] is subject to income tax. For variable dollar benefit payments, a specific dollar amount
death benefit payments)       of each payment is taxable, as predetermined by a pro rata formula, rather than subjecting a
                              percentage of each payment to taxation. Once the investment in the contract has been recovered, the
                              full amount of each benefit payment is taxable. Qualified distributions from a ss.408A Roth IRA may
                              be completely tax-free.
- ----------------------------- ------------------------------------------------------------------------------------------------------
Taxation of Lump Sum          Taxed to recipient generally in same manner as full surrender. Tax penalties do not apply to death
Death Benefit  Payment        benefit distributions.
- ----------------------------- ------------------------------------------------------------------------------------------------------
Assignment of                 Assignment and transfer of ownership generally not    Generally, deferred earnings become taxable to
Contract/Transfer of          permitted.                                            transferor at time of transfer and transferee
Ownership                                                                           receives an investment in the contract equal to
                                                                                    the Account Value at that time. Gift tax
                                                                                    consequences not discussed herein.
- ----------------------------- ----------------------------------------------------- ------------------------------------------------
Withholding                   Eligible rollover distributions fromss.401 and        Generally, payee may elect to have taxes
                              ss.403(b) Contracts subject to 20% mandatory          withheld or not.
                              withholding on taxable portion unless direct
                              rollover. Section 457 plan benefits and
                              nonqualified deferred compensation plan benefits
                              subject to wage withholding. For all other
                              payments, payee may elect to have taxes withheld
                              or not.
====================================================================================================================================
</TABLE>


                                       36

<PAGE>


GLOSSARY OF FINANCIAL TERMS
================================================================================


The following  financial terms explain how the variable portion of the Contracts
is valued.  Read these terms in  conjunction  with the  Definitions on page 4 of
this prospectus.


Accumulation   Unit  Value:  The  initial   Accumulation  Unit  Value  for  each
Sub-Account other than the money market  Sub-Account was set at $10. The initial
Accumulation  Unit  Value for the money  market  Sub-Account  was set at $1. The
initial  Accumulation  Unit  Value  for a  Sub-Account  was  established  at the
inception  date of the  Separate  Account,  or on the date the  Sub-Account  was
established, if later. The Company establishes distinct Accumulation Unit Values
for Contracts with different  Separate  Account fee structures,  as described in
the Fee Table.

After the initial Accumulation Unit Value is established,  the Accumulation Unit
Value for a Sub-Account at the end of each Valuation  Period is the Accumulation
Unit Value at the end of the previous  Valuation  Period  multiplied  by the Net
Investment Factor for that Sub-Account for the current Valuation Period.

A Net Investment  Factor of 1 produces no change in the Accumulation  Unit Value
for that Valuation Period. A Net Investment Factor of more than 1 or less than 1
produces an increase or a decrease, respectively, in the Accumulation Unit Value
for that Valuation Period.

Benefit Unit Value: The initial Benefit Unit Value for a Sub-Account will be set
equal to the  Accumulation  Unit  Value for that  Sub-Account  at the end of the
first Valuation  Period in which a variable dollar benefit is established by the
Company.  The Company will establish  distinct Benefit Unit Values for Contracts
with different Separate Account fee structures, as described in the Fee Table.


The Benefit Unit Value for a  Sub-Account  at the end of each  Valuation  Period
after the first is the Benefit Unit Value at the end of the  previous  Valuation
Period  multiplied by the Net  Investment  Factor for that  Sub-Account  for the
current  Valuation   Period,   and  multiplied  by  a  daily  investment  factor
(0.99991789) for each day in the Valuation  Period.  The daily investment factor
reduces  the  previous  Benefit  Unit Value by the daily  amount of the  assumed
interest rate (3% per year,  compounded  annually) which is already incorporated
in the stream of variable dollar benefit payments.


Net Investment  Factor:  The Net Investment  Factor for any  Sub-Account for any
Valuation Period is determined by dividing NAV2 by NAV1 and subtracting a factor
representing the mortality and expense risk charge and the administration charge
deducted from the Sub-Account during that Valuation Period, where:

NAV1 is  equal  to the Net  Asset  Value  for the  Portfolio  for the  preceding
Valuation Period; and

NAV2 is equal to the Net Asset Value for the Portfolio for the current Valuation
Period  plus  the  per  share  amount  of  any  dividend  or  net  capital  gain
distributions  made by the Portfolio during the current  Valuation  Period,  and
plus or minus a per  share  charge  or credit  if the  Company  adjusts  its tax
reserves due to investment operations of the Sub-Account or changes in tax law.

In other words, the Net Investment  Factor  represents the percentage  change in
the total value of assets invested by the Separate Account in a Portfolio.  That
percentage is then applied to  Accumulation  Unit Values and Benefit Unit Values
as described in the discussion of those terms in this section of the prospectus.


                                       37

<PAGE>


THE REGISTRATION STATEMENT

================================================================================

The Company filed a  Registration  Statement  with the  Securities  and Exchange
Commission under the Securities Act of 1933 relating to the Contracts offered by
this  prospectus.  This  prospectus  was  filed as an  annual  amendment  to the
Registration  Statement,  but it does not constitute  the complete  Registration
Statement.  The Registration  Statement contains further information relating to
the Company and the  Contracts.  Statements in this  prospectus  discussing  the
content of the Contracts and other legal  instruments are summaries.  The actual
documents are filed as exhibits to the  Registration  Statement.  For a complete
statement of the terms of the  Contracts or any other legal  document,  refer to
the  appropriate  exhibit  to  the  Registration  Statement.   The  Registration
Statement and the exhibits  thereto may be inspected and copied at the office of
the  Securities  and Exchange  Commission,  located at 450 Fifth  Street,  N.W.,
Washington,  D.C.,  and may also be  accessed  at the  Securities  and  Exchange
Commission's  Web  site  http://www.sec.gov.  The  registration  number  for the
Registration Statement is 333-51955.

OTHER INFORMATION

================================================================================



Legal Proceedings

The  Company is  involved  in  various  kinds of routine  litigation  which,  in
management's judgment, are not of material importance to the Company's assets or
the  Separate  Account.  There are no  pending  legal  proceedings  against  the
Separate Account or AAG Securities, Inc.


                                       38

<PAGE>


STATEMENT OF ADDITIONAL INFORMATION

================================================================================

A statement of additional  information is available  which contains more details
concerning the subjects discussed in this prospectus. The following is the table
of contents for the statement of additional information:

                                                                            Page

ANNUITY INVESTORS LIFE INSURANCE COMPANY(R)..................................3
         General Information and History.....................................3
         State Regulation....................................................3

SERVICES.....................................................................3
         Safekeeping of Separate Account Assets..............................3
         Records and Reports.................................................3
         Experts.............................................................3

DISTRIBUTION OF THE CONTRACTS................................................3

CALCULATION OF PERFORMANCE INFORMATION.......................................4
         Money Market Sub-Account Standardized Yield Calculation.............4
         Average Annual Total Return Calculation.............................5
         Cumulative Total Return Calculation.................................5
         Standardized Average Annual Total Return Data.......................6
         Non-Standardized Average Annual Total Return Data...................8
         Other Performance Measures..........................................9

BENEFIT UNITS--TRANSFER FORMULAS.............................................10

FEDERAL TAX MATTERS..........................................................11
         Taxation of Separate Account Income.................................11
         Tax Deferred Status of Non-Qualified Contracts......................11

FINANCIAL STATEMENTS.........................................................12



Copies  of the  statement  of  additional  information  dated  May 1,  2000  are
available  without  charge.  To request a copy,  please  clip this coupon on the
dotted line below, enter your name and address in the spaces provided below, and
mail to: Annuity Investors Life Insurance Company(R), P.O. Box 5423, Cincinnati,
Ohio 45201-5423.


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

Name:
________________________________________________________________________________

Address:
________________________________________________________________________________

City:
________________________________________________________________________________

State:
________________________________________________________________________________

Zip:
________________________________________________________________________________


                                       39

<PAGE>




ANNUITY INVESTORS LIFE INSURANCE COMPANY(R)
ANNUITY INVESTORS (R) VARIABLE ACCOUNT B
STATEMENT OF ADDITIONAL INFORMATION for


Individual and Group Flexible Premium Deferred Annuities

                                                          May 1, 2000




This statement of additional  information  supplements the current  prospectuses
for  Individual  and  Group  Flexible   Premium   Deferred   Annuity   Contracts
(collectively,  the  "Contracts")  offered by Annuity  Investors  Life Insurance
Company(R)  through  Annuity  Investors(R)  Variable Account B (the  "Separate
Account" ). This  statement of additional  information  is not a prospectus  and
should  be read  only in  conjunction  with the  prospectus  for the  applicable
Contract.  Terms used in this statement of additional  information have the same
meaning as in the prospectuses.


A copy of any of the prospectuses  dated May 1, 2000, as supplemented  from time
to time,  may be obtained  free of charge by writing to Annuity  Investors  Life
Insurance  Company,  Administrative  Office,  P.O.  Box 5423,  Cincinnati,  Ohio
45201-5423.  Terms  used  in the  current  prospectuses  for the  Contracts  are
incorporated in this statement of additional information.



<PAGE>

                                        2

                                TABLE OF CONTENTS
                                                                           Page

ANNUITY INVESTORS LIFE INSURANCE COMPANY(R)...................................3

   General Information and History............................................3
   State Regulation...........................................................3

SERVICES......................................................................3

   Safekeeping of Separate Account Assets.....................................3
   Records and Reports........................................................3
   Experts....................................................................3

DISTRIBUTION OF THE CONTRACTS.................................................3


CALCULATION OF PERFORMANCE INFORMATION........................................4

   Money Market Sub-Account Standardized Yield Calculation....................4
   Average Annual Total Return Calculation....................................5
   Cumulative Total Return Calculation........................................5
   Standardized Average Annual Total Return Data..............................6
   Non-Standardized Average Annual Total Return Data..........................8
   Other Performance Measures.................................................9

BENEFIT UNITS--TRANSFER FORMULAS.............................................10


FEDERAL TAX MATTERS..........................................................11

   Taxation of Separate Account Income.......................................11
   Tax Deferral On Nonqualified Contracts....................................11

FINANCIAL STATEMENTS.........................................................12




<PAGE>


                                        3


ANNUITY INVESTORS LIFE INSURANCE COMPANY(R)
- --------------------------------------------------------------------------------

General Information and History
Annuity Investors Life Insurance Company(R)  (the  "Company")  is a stock life
insurance company incorporated under the laws of the State of Ohio in 1981. The
Company  is  principally  engaged  in the sale of  fixed  and  variable  annuity
policies.

The  Company is a wholly  owned  subsidiary  of Great  American  Life  Insurance
Company(R)  which is a wholly owned  subsidiary  of American  Annuity  Group(R),
Inc., ("AA") a publicly traded insurance holding company (NYSE:  AAG). AAG is in
turn indirectly  controlled by American Financial Group, Inc., a publicly traded
holding company (NYSE: AFG).


State Regulation
The  Company  is  subject  to the  insurance  laws  and  regulations  of all the
jurisdictions  where it is  licensed  to operate.  The  availability  of certain
Contract  rights and  provisions  depends on state  approval  and/or  filing and
review processes in each such jurisdiction. Where required by law or regulation,
the Contracts will be modified accordingly.

SERVICES
- --------------------------------------------------------------------------------

Safekeeping of Separate Account Assets
Title to assets of the  Separate  Account is held by the  Company.  The Separate
Account assets are segregated from the Company's general account assets. Records
are maintained of all purchases and redemptions of Portfolio shares held by each
of the Sub-Accounts.

Title to assets  invested  in the fixed  account  options is held by the Company
together with the Company's general account assets.

Records and Reports
All records and accounts  relating to the fixed account options and the Separate
Account  will  be  maintained  by the  Company.  As  presently  required  by the
provisions of the Investment  Company Act of 1940, as amended ("1940 Act"),  and
rules and  regulations  promulgated  thereunder  which  pertain to the  Separate
Account,  reports  containing such information as may be required under the 1940
Act or by other  applicable  law or regulation  will be sent to each owner of an
individual  Contract  and to each  group  Contract  owner  semi-annually  at the
owner's last known address.




Experts
The  financial  statements  of the  Separate  Account  and  the  statutory-basis
financial  statements  of the Company as of December 31, 1999 and 1998,  and for
the years then ended, appearing in this statement of additional information have
been audited by Ernst & Young LLP, independent  auditors,  as set forth in their
reports thereon appearing  elsewhere  herein,  and are included in reliance upon
such reports given upon the authority of such firm as experts in accounting  and
auditing.


DISTRIBUTION OF THE CONTRACTS
- --------------------------------------------------------------------------------

The offering of the Contracts is expected to be continuous. Although the Company
does not anticipate  discontinuing  the offering of the  Contracts,  the Company
reserves the right to discontinue offering any one or more of the Contracts.

The approximate commissions received and retained by AAG Securities,  Inc. ("AAG
Securities")  for sale of the  Contracts for each of the last three fiscal years
are as follows:

- ------------------- -------------- --------------- ---------------
Year Ended            12/31/99        12/31/98        12/31/97
- ------------------- -------------- --------------- ---------------
333-19725                                          (7/15 -12/31)
  Received              3,599,453      $1,857,198        $296,000
  Retained               $179,972         $98,600         $18,000
- ------------------- -------------- --------------- ---------------
333-51971                             (7/22 to          N/A
                                       12/31)
  Received               $239,721         $23,827       N/A
  Retained                $11,986              $0       N/A
- ------------------- -------------- --------------- ---------------
333-51955                             (7/22 to          N/A
                                       12/31)
  Received                 49,751          $3,143       N/A
  Retained                 $4,487              $0       N/A
- ------------------- -------------- --------------- ---------------
N/A = Contract not available and no commissions paid.
- --------------------------------------------------------------------------------





                                                                  4
- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

Money Market Sub-Account Standardized Yield Calculation
In accordance with rules and regulations  adopted by the Securities and Exchange
Commission,   the  Company  computes  the  money  market  Sub-Account's  current
annualized  yield for a  seven-day  period in a manner  which does not take into
consideration  any realized or unrealized gains or losses on shares of the money
market Portfolio or on its portfolio  securities.  This current annualized yield
is calculated according to the following formula:

YIELD = (BASE PERIOD RETURN/7)*365

         Where:

        BASE PERIOD RETURN = The percentage (or net) change in the Accumulation
                              Unit Value for the money market  Sub-Account
                              ("AUV") over a 7 day period determined as follows:

          AUV at end of 7 day period - AUV at beginning of 7 day period
                        AUV at beginning of 7 day period

Because the Net Asset Value of the money market  Portfolio  rarely deviates from
1.000000  per unit,  the  change in the  Accumulation  Unit  Value for the money
market   Sub-Account  (the  numerator  of  the  above  fraction)  is  ordinarily
attributable  exclusively to dividends paid and reinvested over the 7 day period
less  mortality and expense risk and  administration  charges  deducted from the
Sub-Account  over the 7 day period.  Because of the deductions for mortality and
expense  risk  and  administration  charges,  the  yield  for the  money  market
Sub-Account  of the Separate  Account will be lower than the yield for the money
market Portfolio or any comparable substitute funding vehicle.

The Securities and Exchange  Commission also permits the Company to disclose the
effective yield of the money market  Sub-Account for the same seven-day  period,
which  is  yield  determined  on a  compounded  basis.  The  effective  yield is
calculated according to the following formula:

EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) 365/7] - 1


The  yields  and  effective  yields  for the money  market  Sub-Account  for the
seven-day period ended December 31, 1999 are as follows:
- ----------------------- -------------------- -----------------------------------
      Contract            Total Separate        Yeild        Effective
                          Account Charges                      Yield
- ----------------------- ------------------- ------------------------------
- ----------------------- ------------------- ----------------- ------------
333-19725                    1.40%                3.84%        3.92%
- ----------------------- ------------------- ------------------------------
- ----------------------- ------------------- ----------------- ------------
                             1.25%                3.99%        4.07%
- ----------------------- ------------------- ----------------- ------------
- ----------------------- ------------------- ----------------- ------------
                             0.95%                4.28%        4.38%
- ----------------------- ------------------- ----------------- ------------
- ----------------------- ------------------- ----------------- ------------
333-51971                    1.40%                3.84%        3.92%
- ----------------------- ------------------- ----------------- ------------
- ----------------------- ------------------- ----------------- ------------
333-51955                    1.40%                3.84%        3.92%
- ----------------------- ------------------- ----------------- ------------
- ----------------------- ------------------- ----------------- ------------
                             0.75%                4.49%        4.60%
- ----------------------- ------------------- ----------------- ------------
- --------------------------------------------------------------------------



The  yield  on  amounts  held in the  money  market  Sub-Account  normally  will
fluctuate on a daily basis.  Therefore,  the disclosed  yield for any given past
period is not an indication or representation of future yields. The money market
Sub-Account's  actual  yield is affected  by changes in interest  rates on money
market  securities,  average portfolio maturity of the money market Portfolio or
substitute funding vehicle,  the types and quality of portfolio  securities held
by the money market  Portfolio or  substitute  funding  vehicle,  and  operating
expenses.  IN  ADDITION,  THE YIELD  FIGURES  DO NOT  REFLECT  THE EFFECT OF ANY
CONTINGENT  DEFERRED  SALES  CHARGES OR  CONTRACT  MAINTENANCE  FEES THAT MAY BE
APPLICABLE ON SURRENDER UNDER ANY CONTRACT.

<PAGE>


Average Annual Total Return Calculation
The Company may from time to time disclose  average annual total returns for one
or more of the  Sub-Accounts  for various periods of time.  Average annual total
return quotations are computed by finding the average annual compounded rates of
return over one-, five- and ten-year periods that would equal the initial amount
invested to the ending redeemable value, according to the following formula:

P(1 + T)n = ERV

Where:

         P........=        a hypothetical initial payment of $1,000
         T........=        average annual total return
         n........=        number of years
         ERV      =        "ending redeemable value" of a hypothetical $1,000
                           payment made at the beginning of the one-, five- or
                           ten-year period at the end of the one-, five- or
                           ten-year period (or fractional portion thereof)

Average  annual  total  return  may  be  presented  in  either  standardized  or
nonstandardized  form.  Average  annual total  return data may be either  actual
return  or  hypothetical   return.  It  will  be  hypothetical  if  it  reflects
performance  for  a  period  of  time  before  the  Separate  Account  commenced
operations.  The  ERV  for  standardized  data  reflects  the  deduction  of all
recurring fees, such as contract  maintenance  fees,  contingent  deferred sales
charges,  mortality and expense risk charges, and administration  charges, which
are charged to all  Contracts  of that type.  The ERV for  nonstandardized  data
reflects the deduction of mortality and expense risk charges and  administration
charges, but not contract maintenance fees or contingent deferred sales charges.
Non-standardized  performance  data  will be  advertised  only if the  requisite
standardized performance data is also disclosed.

Cumulative Total Return Calculation
The Company may from time to time disclose  cumulative  total return for various
periods  of  time.  Cumulative  total  return  reflects  the  performance  of  a
Sub-Account  over the entire period  presented.  Cumulative  total return may be
either actual  return or  hypothetical  return.  It will be  hypothetical  if it
reflects  performance for a period of time before the Separate Account commenced
operations. Cumulative total return is calculated using the following formula:

CTR = (ERV/P) - 1

Where:

         CTR    =    the cumulative total return net of Sub-Account recurring
                     charges, other than the contract maintenance fee, for the
                     period


         ERV    =    ending redeemable value of a hypothetical $1,000
                     payment at the beginning of the one-, five- or ten-year
                     period at the end of the one-, five- or ten-year period
                     (or fractional portion thereof)

         P      =    a hypothetical initial payment of $1,000


Although  cumulative  total return can be presented  in either  standardized  or
non-standardized  form, the Company currently  advertises only  non-standardized
cumulative total return, which assumes a contingent deferred sales charge of 0%,
and no contract  maintenance fee.  Non-standardized  cumulative total return can
only  be  advertised  if  standardized  average  annual  total  return  is  also
disclosed.

<PAGE>

                                                                   6

<TABLE>
<CAPTION>



                                                                                                  S.E.C. File No.
Standardized Average Annual Total Return Data                                                  333-19725 Contracts
(Data reflects deduction of all recurring charges                     Standard                 Enhanced         Enhanced Contracts
including contingent deferred sales charges and                      Contracts1/             Contracts2/      With Administration
contract maintenance fees)                                                                                       Charge Waived3/
- -------------------------------------------------------------------------------------------------------------------------------
                                                              1 Year    Life of     1 Year    Life of      1 Year    Life of
          All Periods Ending 12/31/99                         Separate              Separate               Separate
                                                                        Account4/             Account4/              Account4/
- ----------------------------------------------------------- ----------- ---------- ---------- ----------- ---------- ----------
<S>                                                         <C>          <C>        <C>        <C>        <C>          <C>

Janus A.S.-Aggressive Growth Portfolio                       113.30%     56.63%     113.96%     57.12%     117.29%     59.23%
Janus A.S.-Worldwide Growth Portfolio                         53.18%     30.05%     53.66%      30.47%     56.90%      33.12%
Janus A.S.-Balanced Portfolio                                 16.01%     21.53%     16.38%      21.92%     19.57%      24.81%
Janus A.S.-Growth Portfolio                                   33.00%     27.14%     33.42%      27.54%     36.63%      30.27%
Janus A.S.-International Growth Portfolio                     70.76%     29.35%     71.29%      29.76%     74.56%      32.43%
Janus A.S.-Capital Appreciation Portfolio                     55.69%     42.78%     56.18%      43.22%     59.43%      45.58%
Dreyfus V.I.F.-Appreciation Portfolio                         0.92%      10.77%      1.24%      11.14%      4.41%      14.38%
Dreyfus V.I.F.-Money Market Portfolio                         -6.44%     -2.51%     -6.26%      -2.31%     -6.18%      -2.22%
Dreyfus V.I.F.-Growth and Income Portfolio                    6.27%       6.07%      6.61%      6.43%       9.79%       9.86%
Dreyfus V.I.F.-Small Cap Portfolio                            12.45%      2.33%     12.81%      2.67%      15.99%       6.28%
The Dreyfus Socially Responsible Growth Fund, Inc.            19.28%     19.48%     19.66%      19.87%     22.86%      22.81%
Dreyfus Stock Index Fund                                      9.94%      15.84%     10.29%      16.22%     13.47%      19.29%
Strong Opportunity Fund II, Inc.                              24.05%     16.57%     24.44%      16.95%     27.64%      19.99%
Strong Variable Insurance Funds, Inc.-                        78.26%     42.84%     78.81%      43.29%     82.09%      45.66%
Strong Mid Cap Growth Fund II
Deutsche VIT EAF(R) Equity Index Fund                        16.84%    10.39%5/    17.21%     10.76%5/    20.40%     14.19%5/
Deutsche VIT Equity 500 Index Fund                            9.72%     15.79%6/    10.08%     16.17%6/    13.25%     19.62%6/
Deutsche VIT Small Cap Index Fund                             9.51%      2.32%7      9.86%     2.66%7/     13.03%     6.42%7/
INVESCO VIF-Equity Income Fund                                4.26%       9.16%      4.59%      9.52%       7.76%      12.83%
INVESCO VIF-Total Return Fund                                -13.73%     -2.49%     -13.45%     -2.17%     -10.31%     -1.66%
INVESCO VIF-High Yield Fund                                   -1.32%      0.56%     -1.00%      0.92%       2.16%       4.60%
Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio              9.45%      13.48%      9.80%      13.85%     12.98%      17.00%
Morgan Stanley UIF, Inc.-Value Portfolio                     -12.17%     -8.04%     -11.88%     -7.72%     -8.74%      -3.58%
Morgan Stanley UIF, Inc.-Fixed Income Portfolio              -11.99%     -2.70%     -11.70%     -2.36%     -8.55%      -1.48%
Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio          -11.83%     -8.29%     -11.54%     -7.97%     -8.40%      -3.82%
Morgan Stanley UIF, Inc.-Emerging Markets                     83.99%      0.06%     84.55%      0.41%      87.84%       4.12%
Equity Portfolio
PBHG Insurance Series Fund, Inc.-PBHG Growth II               86.46%     28.22%     87.04%      28.63%     90.33%      31.33%
Portfolio
PBHG Insurance Series Fund, Inc.-PBHG Large Cap               53.94%     32.29%     54.42%      32.71%     57.67%      35.31%
Growth Portfolio
PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm.          220.77%     71.20%     221.75%     71.73%     225.24%     73.63%
Portfolio
The Timothy Plan Small-Cap Variable Series                    8.64%      5.30%8/     8.99%     5.65%8/     12.16%     9.25%8/

</TABLE>

<PAGE>
<TABLE>
<CAPTION>




                                                              S.E.C. File No.                   S.E.C. File No.
Standardized Average Annual Total Return Data                33-51971 Contracts               333-5195 Contracts
(Data reflects deduction of all recurring charges           ---------------------- ---------------------------------------------
including contingent deferred sales charges and                  Standard                  Standard            Enhanced
contract maintenance fees)                                      Contracts1/              Contracts1/          Contracts9/
- --------------------------------------------------------------------------------------------------------------------------------
                                                              1 Year    Life of     1 Year    Life of      1 Year    Life of
                   All Periods Ending 12/31/99                          Separate              Separate               Separate
                                                                        Account4/             Account4/              Account4/
- ----------------------------------------------------------- ----------- ---------- ---------- ----------- ---------- ----------
<S>                                                         <C>          <C>        <C>         <C>        <C>         <C>

Janus A.S.-Aggressive Growth Portfolio                       111.30%     56.00%     118.30%     57.06%     119.73%     58.11%
Janus A.S.-Worldwide Growth Portfolio                         51.18%     29.21%     58.18%      30.60%     59.23%      31.50%
Janus A.S.-Balanced Portfolio                                 14.01%     20.61%     21.01%      22.14%     21.81%      22.98%
Janus A.S.-Growth Portfolio                                   31.00%     26.27%     38.00%      27.71%     38.91%      28.59%
Janus A.S.-International Growth Portfolio                     68.76%     28.51%     75.76%      29.91%     76.92%      30.79%
Janus A.S.-Capital Appreciation Portfolio                     53.69%     42.05%     60.69%      43.26%     61.75%      44.22%
Dreyfus V.I.F.-Appreciation Portfolio                         -1.08%      9.71%      5.92%      11.46%      6.63%      12.25%
Dreyfus V.I.F.-Money Market Portfolio                         -8.44%     -3.79%     -1.44%      -2.09%     -1.06%      -1.67%
Dreyfus V.I.F.-Growth and Income Portfolio                    4.27%       4.95%     11.27%      6.82%      12.01%       7.58%
Dreyfus V.I.F.-Small Cap Portfolio                            10.45%      1.14%     17.45%      3.11%      18.23%       3.85%
The Dreyfus Socially Responsible Growth Fund, Inc.            17.28%     18.53%     24.28%      20.10%     25.11%      20.94%
Dreyfus Stock Index Fund                                      7.94%      14.85%     14.94%      16.50%     15.71%      17.31%
Strong Opportunity Fund II, Inc.                              22.05%     15.59%     29.05%      17.22%     29.90%      18.03%
Strong Variable Insurance Funds, Inc.-Strong                  76.26%     42.11%     83.26%      43.32%     84.47%      44.30%
Mid Cap Growth Fund II
Deutsche VIT EAFE(R) Equity Index Fund                       14.84%     9.27%5/    21.84%     11.13%5/    22.65%     11.91%5/
Deutsche VIT Equity 500 Index Fund                            7.72%     14.67%6/    14.72%     16.53%6/    15.49%     17.34%6/
Deutsche VIT Small Cap Index Fund                             7.51%      1.08%7/    14.51%     3.14%7/     15.27%     3.88%7/
INVESCO VIF-Equity Income Fund                                2.26%       8.08%      9.26%      9.87%       9.99%      10.65%
INVESCO VIF-Total Return Fund                                -15.73%     -3.77%     -8.73%      -1.65%     -8.12%      -0.95%
INVESCO VIF-High Yield Fund                                   -3.32%     -0.66%      3.68%      1.36%       4.39%       2.11%
Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio              7.45%      12.46%     14.45%      14.16%     15.22%      14.95%
Morgan Stanley UIF, Inc.-Value Portfolio                     -14.17%     -9.43%     -7.17%      -7.13%     -6.55%      -6.45%
Morgan Stanley UIF, Inc.-Fixed Income Portfolio              -13.99%     -3.98%     -6.99%      -1.86%     -6.36%      -1.14%
Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio          -13.83%     -9.69%     -6.83%      -7.38%     -6.21%      -6.68%
Morgan Stanley UIF, Inc.-Emerging Markets                     81.99%     -1.17%     88.99%      0.87%      90.23%      1.61%
Equity Portfolio
PBHG Insurance Series Fund, Inc.-PBHG Growth II               84.46%     27.37%     91.46%      28.79%     92.72%      29.67%
Portfolio
PBHG Insurance Series Fund, Inc.-PBHG Large Cap               51.94%     31.47%     58.94%      32.83%     59.99%      33.74%
Growth Portfolio
PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm.          218.77%     70.64%     255.77%     71.57%     227.89%     72.71%
Portfolio
The Timothy Plan Small-Cap Variable Series                    6.64%      4.13%8/    13.64%     7.60%8/      14.40%      8.35%8/

</TABLE>


<PAGE>
<TABLE>
<CAPTION>



Non-Standardized Average Annual Total Return Data
(Data reflects deduction of all recurring charge                                        333-19725;
except contingent deferred sales charges                                        333-51971; 333-51955
and contract maintenance fee-data is the
same for all Standard Contracts)                                                 Standard Contracts1/
                                                                                ------------------------
                                                                                  1 Year    Life of
                       All Periods Ending 12/31/99                               Separate
                                                                                            Account4/
- -------------------------------------------------------------------------------- ---------- -------------
<S>                                                                              <C>          <C>
Janus A.S.-Aggressive Growth Portfolio                                            122.30%     59.56%
Janus A.S.-Worldwide Growth Portfolio                                             62.18%      33.85%
Janus A.S.-Balanced Portfolio                                                     25.01%      25.71%
Janus A.S.-Growth Portfolio                                                       42.00%      31.06%
Janus A.S.-International Growth Portfolio                                         79.76%      33.18%
Janus A.S.-Capital Appreciation Portfolio                                         64.69%      46.11%
Dreyfus V.I.F.-Appreciation Portfolio                                              9.92%      15.52%
Dreyfus V.I.F.-Money Market Portfolio                                              2.56%      2.76%
Dreyfus V.I.F.-Growth and Income Portfolio                                        15.27%      11.12%
Dreyfus V.I.F.-Small Cap Portfolio                                                21.45%      7.63%
The Dreyfus Socially Responsible Growth Fund, Inc.                                28.28%      23.76%
Dreyfus Stock Index Fund                                                          18.94%      20.31%
Strong Opportunity Fund II, Inc.                                                  33.05%      21.00%
Strong Variable Insurance Funds, Inc.-Strong Mid Cap Growth Fund II               87.26%      46.17%
Deutsche VIT EAFE (R) Equity Index Fund                                           25.84%     15.43%5/
Deutsche VIT Equity 500 Index Fund                                                18.72%     20.84%6/
Deutsche VIT Small Cap Index Fund                                                 18.51%     7.87%7/
INVESCO VIF-Equity Income Fund                                                    13.26%      14.01%
INVESCO VIF-Total Return Fund                                                     -4.73%      3.17%
INVESCO VIF-High Yield Fund                                                        7.68%      5.99%
Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio                                  18.45%      18.08%
Morgan Stanley UIF, Inc.-Value Portfolio                                          -3.17%      -1.91%
Morgan Stanley UIF, Inc.-Fixed Income Portfolio                                   -2.99%      2.98%
Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio                               -2.83%      -2.14%
Morgan Stanley UIF, Inc.-Emerging Markets Equity Portfolio                       92.99%      5.53%
PBHG Insurance Series Fund, Inc.-PBHG Growth II Portfolio                         95.46%      32.10%
PBHG Insurance Series Fund, Inc.-PBHG Large Cap Growth Portfolio                  62.94%      36.00%
PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm. Portfolio                     229.77%     73.78%
The Timothy Plan  Small-Cap Variable Series                                       17.64%     12.12%8/
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


Non-Standardized Average Annual                                                              333-19725
Total Return Data
(Data reflects deduction of all recurring charges                                                   Enhanced Contracts With
except contingent deferred sales charges and Contract                                                   Administration
maintenance fees-data is the same for all Standard Contracts)            Enhanced Contracts2/          Charge Waived3/
- ----------------------------------------------------------------- ----------------- -------------- ------------ ------------

                                                                                    Life of                    Life of
         All Periods Ending 12/31/99                                   1 Year      Separate      1 Year        Separate
                                                                                   Account4/                  Account4/
- ----------------------------------------------------------------- ----------------------------------------------------------
<S>                                                                   <C>           <C>           <C>          <C>

Janus A.S.-Aggressive Growth Portfolio                                122.96%       60.03%        123.29%       60.27
Janus A.S.-Worldwide Growth Portfolio                                  62.66%       34.25%        62.90%        34.45%
Janus A.S.-Balanced Portfolio                                          25.38%       26.08%        25.57%        26.27%
Janus A.S.-Growth Portfolio                                            42.42%       31.45%        42.63%        31.65%
Janus A.S.-International Growth Portfolio                              80.29%       33.57%        80.56%        33.77%
Janus A.S.-Capital Appreciation Portfolio                              65.18%       46.54%        65.43%        46.76%
Dreyfus V.I.F.- Appreciation Portfolio                                 10.24%       15.87%        10.41%        16.04%
Dreyfus V.I.F.-Money Market Portfolio                                  2.74%         2.94%         2.82%        3.03%
Dreyfus V.I.F.-Growth and Income Portfolio                             15.61%       11.45%        15.79%        11.61%
Dreyfus V.I.F.-Small Cap Portfolio                                     21.81%        7.95%        21.99%        8.12%
The Dreyfus Socially Responsible Growth Fund, Inc.                     28.66%       24.13%        28.86%        24.31%
Dreyfus Stock Index Fund                                               19.29%       20.67%        19.47%        20.85%
Strong Opportunity Fund II, Inc.                                       33.44%       21.36%        33.64%        21.54%
Strong Variable Insurance Funds, Inc.-Strong Mid Cap                   87.81%       46.61%        88.09%        46.83%
Growth Fund II
Deutsche VIT EAFE(R)Equity Index Fund                                  26.21%      15.77%5/       26.40%       15.94%5/
Deutsche VIT Equity 500 Index Fund                                     19.08%      21.20%6/       19.25%       21.38%6/
Deutsche VIT Small Cap Index Fund                                      18.86%       8.19%7/       19.03%       8.35%7/
INVESCO VIF-Equity Income Fund                                         13.59%       14.35%        13.76%        14.52%
INVESCO VIF-Total Return Fund                                          -4.45%        3.47%        -4.31%        3.62%
INVESCO VIF-High Yield Fund                                            8.00%         6.32%         8.16%        6.48%
Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio                       18.80%       18.43%        18.98%        18.60%
Morgan Stanley UIF, Inc.-Value Portfolio                               -2.88%       -1.62%        -2.74%        -1.47%
Morgan Stanley UIF, Inc.-Fixed Income Portfolio                        -2.70%        3.29%        -2.55%        3.44%
Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio                    -2.54%       -1.85%        -2.40%        -1.70%
Morgan Stanley UIF, Inc.-Emerging Markets Equity                      93.55%        5.85%        93.84%        6.01%
 Portfolio
PBHG Insurance Series Fund, Inc.-PBHG Growth II Portfolio              96.04%       32.49%        96.33%        32.69%
PBHG Insurance Series Fund, Inc.-PBHG Large Cap                        63.42%       36.41%        63.67%        36.61%
Growth Portfolio
PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm.                   230.75%       74.30%        231.24%       74.55%
 Portfolio
The Timothy Plan  Small-Cap Variable Series                            17.99%      12.46%8/       18.16%       12.62%8/


</TABLE>

                                                                  9


<PAGE>

<TABLE>
<CAPTION>

                                                                                 333-51955

Non-Standardized Average Annual Total Return Data                          Enhanced Contracts9/
 (Data reflects deduction of all recurring charges
except contingent deferred sales charges and contract maintenance
fees-data is the same for all Standard Contracts)
- -------------------------------------------------------------------------- ---------------------- ---------------
                                                                                  1 Year             Life of
All Periods Ending 12/31/99                                                                          Separate
                                                                                                    Account4/
- -------------------------------------------------------------------------- ---------------------- ---------------
<S>                                                                             <C>                <C>
Janus A.S.-Aggressive Growth Portfolio                                            123.73%             60.59%
Janus A.S.-Worldwide Growth Portfolio                                             63.23%              34.72%
Janus A.S.-Balanced Portfolio                                                     25.81%              26.52%
Janus A.S.-Growth Portfolio                                                       42.91%              31.91%
Janus A.S.-International Growth Portfolio                                         80.92%              34.03%
Janus A.S.-Capital Appreciation Portfolio                                         65.75%              47.05%
Dreyfus V.I.F.- Appreciation Portfolio                                            10.63%              16.27%
Dreyfus V.I.F.-Money Market Portfolio                                              2.94%               3.15%
Dreyfus V.I.F.-Growth and Income Portfolio                                        16.01%              11.84%
Dreyfus V.I.F.-Small Cap Portfolio                                                22.23%              8.33%
The Dreyfus Socially Responsible Growth Fund, Inc.                                29.11%              24.56%
Dreyfus Stock Index Fund                                                          19.71%              21.09%
Strong Opportunity Fund II, Inc.                                                  33.90%              21.78%
Strong Variable Insurance Funds, Inc.-Strong Mid Cap Growth Fund II               88.47%              47.12%
Deutsche VIT EAFE(R) Equity Index Fund                                            26.65%             16.17%5/
Deutsche VIT Equity 500 Index Fund                                                19.49%             21.62%6/
Deutsche VIT Small Cap Index Fund                                                 19.27%             8.57%7/
INVESCO VIF-Equity Income Fund                                                    13.99%              14.75%
INVESCO VIF-Total Return Fund                                                     -4.12%               3.83%
INVESCO VIF-High Yield Fund                                                        8.38%               6.69%
Morgan Stanley UIF, Inc.-Mid Cap Value Portfolio                                  19.22%              18.84%
Morgan Stanley UIF, Inc.-Value Portfolio                                          -2.55%              -1.28%
Morgan Stanley UIF, Inc.-Fixed Income Portfolio                                   -2.36%               3.65%
Morgan Stanley UIF, Inc.-U.S. Real Estate Portfolio                               -2.21%              -1.50%
Morgan Stanley UIF, Inc.-Emerging Markets Equity Portfolio                        94.23%              6.22%
PBHG Insurance Series Fund, Inc.-PBHG Growth II Portfolio                         96.72%              32.95%
PBHG Insurance Series Fund, Inc.-PBHG Large Cap Growth Portfolio                  63.99%              36.88%
PBHG Insurance Series Fund, Inc.-PBHG Tech. & Comm. Portfolio                     231.89%             74.90%
The Timothy Plan  Small-Cap Variable Series                                       18.19%             12.85%8/
1/ Annual  mortality  and expense  risk charge of 1.25% of
   daily net asset value and annual administration charge of
    0.15% of daily net asset value.
2/ Annual  mortality  and expense  risk charge of 0.95% of
   daily net asset value and annual administration charge
   of 0.15% of daily net asset value.
3/ Annual mortality and expense risk charge of
   0.95% of daily net asset value.
4/ From Separate Account commencement date (7/15/97)
    to 12/31/99 unless otherwise noted.
5/ From inception date of Portfolio (8/22/97) to 12/31/99.
6/ From inception date of Portfolio (10/1/97) to 12/31/99.
7/ From inception date of (8/25/97) to 12/31/99.
8/ From  inception date of Portfolio (5/1/98) to 12/31/99.
9/ Annual mortality and expense risk charge of 0.75% of
   daily net asset value.
</TABLE>


<PAGE>

Other Performance Measures
Any of the Contracts may be compared in advertising materials to certificates of
deposit  ("CDs")  or other  investments  issued  by  banks  or other  depository
institutions.  Variable  annuities  differ  from  bank  investments  in  several
respects.  For example,  variable  annuities may offer higher potential  returns
than CDs.  However,  unless you have elected to invest in only the fixed account
options,  the  Company  does  not  guarantee  your  return.  Also,  none of your
investments  under the Contract,  whether allocated to the fixed account options
or to a Sub-Account, are FDIC-insured.

Advertising  materials for any of the Contracts may, from time to time,  address
retirement needs and investing for retirement, the usefulness of a tax-qualified
retirement  plan,  saving for college,  or other investment  goals.  Advertising
materials  for any of the Contracts may discuss,  generally,  the  advantages of
investing in a variable annuity and the Contracts' particular features and their
desirability  and may compare  Contract  features  with those of other  variable
annuities and investment  products of other issuers.  Advertising  materials may
also include a discussion of the balancing of risk and return in connection with
the  selection  of  investment   options  under  the  Contracts  and  investment
alternatives  generally,  as well as a  discussion  of the risks and  attributes
associated with the investment options under the Contracts. A description of the
tax  advantages  associated  with  the  Contracts,   including  the  effects  of
tax-deferral  under a variable  annuity or  retirement  plan  generally,  may be
included as well.  Advertising  materials  for any of the Contracts may quote or
reprint  financial or business  publications  and  periodicals,  including model
portfolios  or  allocations,  as they relate to current  economic and  political
conditions,  management and composition of the underlying Portfolios, investment
philosophy,  investment techniques,  the desirability of owning the Contract and
other products and services offered by the Company or AAG Securities, Inc. ("AAG
Securities").

The  Company  or  AAG  Securities  may  provide  information  designed  to  help
individuals  understand  their  investment  goals and explore various  financial
strategies.  Such information may include:  information  about current economic,
market and political  conditions;  materials that describe general principles of
investing,  such as asset allocation,  diversification,  risk tolerance and goal
setting;  questionnaires  designed to help create a personal  financial profile;
worksheets used to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and alternative investment strategies and plans.

Ibbotson  Associates  of Chicago,  Illinois  ("Ibbotson"),  provides  historical
returns of the capital  markets in the United States,  including  common stocks,
small  capitalization  stocks,  long-term  corporate  bonds,   intermediate-term
government bonds,  long-term government bonds,  Treasury bills, the U.S. rate of
inflation  (based on the Consumer  Price  Index),  and  combinations  of various
capital  markets.  The  performance  of these  capital  markets  is based on the
returns of different indices.

Advertising  materials for any of the Contracts may use the performance of these
capital markets in order to demonstrate  general  risk-versus-reward  investment
scenarios.  Performance comparisons may also include the value of a hypothetical
investment  in any of  these  capital  markets.  The  risk  associated  with the
security types in any capital market may or may not correspond directly to those
of the Sub-Accounts and the Portfolios.  Advertising  materials may also compare
performance to that of other  compilations  or indices that may be developed and
made available in the future.

In addition,  advertising materials may quote various measures of volatility and
benchmark  correlations for the  Sub-Accounts and the respective  Portfolios and
compare these volatility  measures and correlations with those of other separate
accounts and their  underlying  funds.  Measures of volatility seek to compare a
Sub-Account's,   or  its   underlying   Portfolio's,   historical   share  price
fluctuations  or total  returns to those of a  benchmark.  Measures of benchmark
correlation  indicate how valid a comparative  benchmark may be. All measures of
volatility and correlation are calculated using averages of historical data.

<PAGE>

BENEFIT UNITS--TRANSFER FORMULAS
- --------------------------------------------------------------------------------


Transfers of a Contract  owner's Benefit Units between  Sub-Accounts  during the
Benefit Payment Period are implemented according to the following formulas:

     (1)    The number of Benefit Units to be transferred from a given
            Sub-Account is BU1(trans).

     (2)    The number of the Contract owner's Benefit Units remaining in such
            Sub-Account (after the transfer)
                       = UNIT1 - BU1(trans).

     (3)    The number of Benefit Units transferred to the new Sub-Account
            is BU2(trans).
                       BU2(trans) = BU1(trans) * BUV1/BUV2.

     (4)    The number of the Contract owner's Benefit Units in the new
            Sub-Account (after the transfer)
                       = UNIT2 + BU2(trans).

     (5)    Subsequent variable dollar benefit payments will be based on the
            number of the Contract owner's Benefit Units in each
            Sub-Account (after the transfer) as of the next variable dollar
            benefit payment's due date.

     Where:

            BU1(trans) is the number of the Contract owner's Benefit Units
            transferred from a given Sub-Account.

            BUV1 is the Benefit Unit Value of the Sub-Account from which
            the transfer is being made as of the end of the Valuation
            Period in which the transfer request was received.

            BU2(trans) is the number of the Contract owner's Benefit Units
            transferred into the new Sub-Account.

            BUV2 is the Benefit Unit Value of the Sub-Account to which the
            transfer is being made as of the end of the Valuation
            Period in which the transfer request was received.

            UNIT1 is the number of the Contract owner's Benefit Units in
            the Sub-Account from which the transfer is being made,
            before the transfer.

            UNIT2 is the number of the Contract owner's Benefit Units in
            the Sub-Account to which the transfer is being made,
            before the transfer.



<PAGE>

FEDERAL TAX MATTERS
- --------------------------------------------------------------------------------
The following  discussion  supplements  the discussion of federal tax matters in
the  prospectuses  for the  Contracts.  This  discussion  is general  and is not
intended as tax advice.  Federal income tax laws or the  interpretation of those
laws by the Internal Revenue Service may change at any time.

Taxation of Separate Account Income
The Company is taxed as a life insurance company under Part I of Subchapter L of
the Internal  Revenue Code ("IRC").  Since the Separate Account is not an entity
separate from the Company,  and its  operations  form a part of the Company,  it
will  not  be  taxed  separately  as  a  "regulated  investment  company"  under
Subchapter  M of the IRC.  Investment  income  and  realized  capital  gains are
automatically  applied to increase reserves under the Contracts.  Under existing
federal  income tax law, the Company  believes  that it will not be taxed on the
Separate Account  investment income and realized net capital gains to the extent
that such  income  and gains are  applied to  increase  the  reserves  under the
Contracts.

Accordingly,  the  Company  does not  anticipate  that it will incur any federal
income tax liability  attributable to the Separate Account and,  therefore,  the
Company  does not intend to make  provisions  for any such  taxes.  However,  if
changes in the federal tax laws or interpretations thereof result in the Company
being taxed on income or gains  attributable to the Separate  Account,  then the
Company may impose a charge  against the Separate  Account (with respect to some
or all Contracts) in order to set aside provisions to pay such taxes.

In certain  circumstances,  owners of individual  variable annuity contracts and
participants  under group  variable  annuity  contracts  may be  considered  the
owners, for federal income tax purposes,  of the assets of the separate accounts
used to support their contracts.  In those circumstances,  income and gains from
the separate  account assets would be included in the owner's gross income.  The
Internal  Revenue  Service  has  stated in  published  rulings  that a  variable
contract  owner will be considered  the owner of separate  account assets if the
owner possesses  incidents of ownership in those assets,  such as the ability to
exercise investment control over the assets.


The Treasury  Department has also announced,  in connection with the issuance of
regulations concerning  diversification,  that those regulations "do not provide
guidance   concerning  the  circumstances  in  which  investor  control  of  the
investments  of a segregated  asset  account may cause the investor  (i.e.,  the
owner or participant),  rather than the insurance company,  to be treated as the
owner of the assets in the account." This announcement also stated that guidance
would be  issued  by way of  regulations  or  rulings  on the  "extent  to which
policyholders  may direct their investments to particular  sub-accounts  without
being  treated  as  owners  of the  underlying  assets."  As of the date of this
statement of additional information, no guidance has been issued.

The  ownership  rights  under the  Contracts  are similar to, but  different  in
certain  respects  from,  those  described  by the Internal  Revenue  Service in
rulings  in which it was  determined  that  contract  owners  were not owners of
separate  account  assets.  For  example,  the  owner  of a  Contract  has  more
flexibility  in  allocating   purchase  payments  and  Account  Value  than  was
contemplated  in the  rulings.  These  differences  could  result in an owner or
participant  being  treated as the owner of a pro rata  portion of the assets of
the Separate  Account  and/or Fixed Account.  In addition,  the Company does not
know what  standards  will be set forth,  if any, in the  regulations or rulings
which the  Treasury  Department  has  stated it expects  to issue.  The  Company
therefore  reserves the right to modify the Contracts as necessary to attempt to
prevent an owner or  participant  from being  considered the owner of a pro rata
share of the assets of the Separate Account.

Tax Deferral On Nonqualified Contracts
Section 817(h) of the Code requires that with respect to nonqualified Contracts,
the investments of the Portfolios be "adequately diversified" in accordance with
Treasury  regulations in order for the Contracts to qualify as annuity contracts
under federal tax law. The Separate Account, through the Portfolios,  intends to
comply with the diversification  requirements prescribed by the Treasury in Reg.
Sec. 1.817-5,  which affect how the Portfolios' assets may be invested.  Failure
of a Portfolio to meet the  diversification  requirement would result in loss of
tax deferred status to owners of nonqualified Contracts.



FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

The audited  financial  statements  of the Separate  Account for the years ended
December 31, 1999 and 1998 and the Company's audited  statutory-basis  financial
statements for the years ended  December 31, 1999 and 1998 are included herein.
The financial statements of the Company included in this statement of additional
information  should be considered  only as bearing on the ability of the Company
to meet its  obligations  under the Contracts.  They should not be considered as
bearing  on the  investment  performance  of the  assets  held  in the  Separate
Account.



<PAGE>
                                ANNUITY INVESTORS

                               VARIABLE ACCOUNT B

                              Financial Statements

                          Year ended December 31, 1999
                       With Report of Independent Auditors

<PAGE>


                      ANNUITY INVESTORS VARIABLE ACCOUNT B

                              Financial Statements

                          Year ended December 31, 1999



                                    Contents


     Report of Independent Auditors................................1


     Audited Financial Statements

     Statements of Assets and Liabilities - Current Year...........3
     Statements of Operations - Current Year.......................6
     Statements of Changes in Net Assets - Current Year............8
     Statements of Changes in Net Assets - Prior Year.............13
     Notes to Financial Statements................................14



<PAGE>


                         Report of Independent Auditors

Contractholders  of Annuity Investors  Variable Account B
And
Board of Directors of Annuity  Investors Life Insurance Company

We have audited the accompanying  statement of assets and liabilities of Annuity
Investors Variable Account B (comprising,  respectively,  the BT Insurance Funds
Trust EAFE Equity Index Fund, BT Insurance Funds Trust Equity 500 Index Fund, BT
Insurance  Funds Trust Small Cap Index Fund,  Dreyfus  Variable  Investment Fund
Capital  Appreciation  Portfolio,  Dreyfus  Variable  Investment Fund Growth and
Income  Portfolio,  Dreyfus  Variable  Investment  Fund Money Market  Portfolio,
Dreyfus  Variable  Investment  Fund Small Cap Portfolio,  Dreyfus Funds Socially
Responsible  Growth Fund,  Inc.,  Dreyfus Funds Stock Index Fund,  Invesco Funds
Group,  Inc.  High-Yield  Fund,  Invesco Funds Group,  Inc.  Equity Income Fund,
Invesco  Funds Group,  Inc.  Total  Return Fund , Janus Aspen Series  Aggressive
Growth  Portfolio,  Janus Aspen Series  Balanced  Portfolio,  Janus Aspen Series
Capital Appreciation Portfolio, Janus Aspen Series Growth Portfolio, Janus Aspen
Series  International  Growth  Portfolio,  Janus Aspen Series  Worldwide  Growth
Portfolio,  Morgan Stanley Dean Witter  Universal Funds,  Inc.  Emerging Markets
Equity Portfolio,  Morgan Stanley Dean Witter Universal Funds, Inc. Fixed Income
Fund Portfolio,  Morgan Stanley Dean Witter Universal Funds,  Inc. Mid-Cap Value
Portfolio,  Morgan Stanley Dean Witter  Universal  Funds,  Inc. U.S. Real Estate
Portfolio,  Morgan Stanley Dean Witter  Universal  Funds,  Inc. Value Portfolio,
PBHG Insurance  Series Fund,  Inc.  Growth II Portfolio,  PBHG Insurance  Series
Fund,  Inc.  Large Cap  Growth  Portfolio,  PBHG  Insurance  Series  Fund,  Inc.
Technology  &  Communications  Portfolio,  Strong  Funds Mid Cap Growth Fund II,
Strong Funds  Opportunity Fund II, and Timothy  Partners,  Ltd. the Timothy Plan
Variable Series Sub Accounts) as of December 31, 1999, and the related statement
of operations and changes in net assets for the periods indicated therein. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of  each  of the  respective
sub-accounts  constituting the Annuity Investors  Variable Account B at December
31, 1999,  and the results of their  operations  and changes in their net assets
for  each of the  periods  indicated  therein,  in  conformity  with  accounting
principles generally accepted in the United States.


                                             /s/---------------------
                                              Ernst & Young LLP

Cincinnati,  OH
February 7, 2000





<PAGE>

                      ANNUITY INVESTORS VARIABLE ACCOUNT B

                       STATEMENT OF ASSETS AND LIABILITIES
                                December 31, 1999


<TABLE>
<CAPTION>

===================================================================================================================================
                                                                                                                           Market
                                                                                       Shares           Cost               Value
                                                                                     -----------    -----------        -----------
<S>                                                                                <C>              <C>                <C>
Assets:
      Investments in portfolio shares, at net asset value (Note 2):
         BT Insurance Funds Trust:
              EAFE Equity Index Fund:.....................................             5,998.438    $    74,997        $    81,578
              Equity 500 Index Fund.......................................            52,529.349        745,703            797,394
              Small Cap Index Fund........................................            15,254.245        159,689            177,102
         Dreyfus Variable Investment Fund:
              Capital Appreciation Portfolio ..............................          186,049.137      6,930,713          7,417,778
              Growth and Income Portfolio .................................          169,089.174      3,868,913          4,308,393
              Money Market Portfolio ......................................        2,869,109.650      2,869,110          2,869,110
              Small Cap Portfolio .........................................           49,893.630      2,713,736          3,309,943
          Dreyfus Funds:
              Socially Responsible Growth Fund, Inc. ......................          176,782.631      5,783,272          6,906,898
              Stock Index Fund ............................................          873,325.926     29,186,372         33,579,383
          INVESCO Variable Investment Funds, Inc.:
              High-Yield Portfolio ........................................          221,766.073      2,651,878          2,552,529
              Equity Income Portfolio .....................................          362,851.506      7,117,116          7,623,510
              Total Return Portfolio ......................................          180,966.300      2,975,320          2,819,454
          Janus Aspen Series:
              Aggressive Growth Portfolio .................................          174,935.474      6,698,550         10,441,899
              Balanced Portfolio ..........................................          990,136.857     23,511,840         27,644,621
              Capital Appreciation Portfolio...............................          188,368.634      4,986,868          6,248,188
              Growth Portfolio ............................................          372,888.658      9,511,290         12,547,703
              International Growth Portfolio ..............................           75,712.217      1,884,056          2,927,792
         Worldwide Growth Portfolio .......................................          174,687.736      4,616,525          5,081,666
              Worldwide Growth Portfolio...................................          441,294.659     13,675,527         21,071,820
          Morgan Stanley Dean Witter Universal Funds, Inc.:
              Emerging Markets Equity Portfolio ...........................           46,136.031        417,812            641,752
              Fixed Income Portfolio ......................................          300,201.549      3,174,939          3,017,025
              Mid Cap Value Portfolio .....................................          177,493.539      2,573,295          2,772,448
              U.S. Real Estate Portfolio ..................................           91,264.643        893,438            831,421
              Value Portfolio .............................................           70,049.485        781,450            753,733
          PBHG Insurance Series Fund, Inc.:
              Growth II Portfolio .........................................           58,085.851        887,955          1,338,880
              Large Cap Growth Portfolio ..................................          132,944.781      2,149,837          3,391,422
              Technology & Communications Portfolio .......................          367,857.212      8,216,666         16,925,109
          Strong Funds:
              Mid Cap Growth Fund II ......................................          101,144.051      1,980,186          3,071,744
              Opportunity Fund II .........................................           85,625.956      1,858,122          2,225,418
          Timothy Partners, Ltd.:
              The Timothy Plan Small-Cap Variable Series ..................           92,607.694        959,457          1,144,631

                       Total cost...............................................................   $149,238,107
==================================================================================================================================

                       Total assets............................................................................        189,438,678


Liabilities:
      Amounts due to Annuity Investors Life Insurance Company (Note 4).........................................                153
- ----------------------------------------------------------------------------------------------------------------------------------

                       Net assets..............................................................................       $189,438,525
==================================================================================================================================
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      -3-
<PAGE>

                      ANNUITY INVESTORS VARIABLE ACCOUNT B

                 STATEMENT OF ASSETS AND LIABILITIES (continued)
                                December 31, 1999


<TABLE>
<CAPTION>
===============================================================================================================================
                                                                                                                     Market
                                                                                       Units        Unit Value       Value
                                                                                    -----------    -----------     -----------
<S>                                                                                 <C>            <C>             <C>
Net assets attributable to variable annuity contract holders (Note 2):
      BT Insurance Funds Trust:
         EAFE Equity Index Fund - Basic contract..............................        6,821.832    $11.958486      $      81,579
         EAFE Equity Index Fund - Enhanced contract...........................            0.000     11.981984                  0
         EAFE Equity Index Fund - Modified Enhanced contract..................            0.000     11.993767                  0
         Equity 500 Index Portfolio - Basic contract..........................       73,596.514     10.815237            795,963
         Equity 500 Index Portfolio - Enhanced contract.......................            0.000     10.836517                  0
         Equity 500 Index Portfolio - Modified Enhanced contract..............          131.993     10,847192              1,431
         Small Cap Index Portfolio - Basic contract...........................       15,259.149     11,606269            177,102
         Small Cap Index Portfolio - Enhanced contract........................            0.000     11,629080                  0
         Small Cap Index Portfolio - Modified Enhanced contract...............            0.000     11.640544                  0
      Dreyfus Variable Investment Fund:
         Capital Appreciation Portfolio - Basic contract .....................      517,772.082     14.262203          7,384,571
         Capital Appreciation Portfolio - Enhanced contract ..................        2,156.774     14.366606             30,986
         Capital Appreciation Portfolio - Modified Enhanced contract..........          154.147     14.419045              2,223
         Growth and Income Portfolio - Basic contract ........................      331,756.261     12.961023          4,299,901
         Growth and Income Portfolio - Enhanced contract .....................          650.409     13.055905              8,492
         Growth and Income Portfolio - Modified Enhanced contract.............            0.000     13.103601                  0
         Money Market Portfolio - Basic contract .............................    2,638,837.162      1.083700          2,859,708
         Money Market Portfolio - Enhanced contract ..........................        8,490.939      1.090994              9,264
         Money Market Portfolio - Modified Enhanced contract..................            0.000      1.096462                  0
         Small Cap Portfolio - Basic contract ................................      275,503.637     11.984035          3,301,645
         Small Cap Portfolio - Enhanced contract .............................          486.764     12.071820              5,876
         Small Cap Portfolio - Modified Enhanced contract.....................          199.908     12.116077              2,422
      Dreyfus Funds:
         Socially Responsible Growth Fund, Inc. - Basic contract .............      408,482.196     16.894039          6,900,915
         Socially Responsible Growth Fund, Inc. - Enhanced contract ..........          351.586     17.017705              5,983
         Socially Responsible Growth Fund, Inc. - Modified Enhanced Contract..            0.000     17.079770                  0
         Stock Index Fund - Basic contract ...................................    2,129,772.165     15.760394         33,566,049
         Stock Index Fund - Enhanced contract ................................          616.234     15.875757              9,784
         Stock Index Fund - Modified Enhanced contract........................          222.802     15.933836              3,550
      INVESCO Funds Group, Inc.:
         High-Yield Fund - Basic contract ....................................      221,636.210     11.510803          2,551,212
         High-Yield Fund - Enhanced contract .................................          113.564     11.595106              1,317
         High-Yield Fund - Modified Enhanced contract.........................            0.000     11.637523                  0
         Equity Income Fund - Basic contract .................................      553,696.171     13.726769          7,600,459
         Equity Income Fund - Enhanced contract ..............................        1,667.041     13.827281             23,051
         Equity Income Fund - Modified Enhanced contract......................            0.000     13.877907                  0
         Total Return Fund - Basic contract ..................................      258,825.173     10.811807          2,798,367
         Total Return Fund - Enhanced contract ...............................        1,936.199     10.890979             21,087
         Total Return Fund - Modified Enhanced contract.......................            0.000     10.930872                  0
      Janus Aspen Series:
         Aggressive Growth Portfolio - Basic contract ........................      329,807.902     31.565210         10,410,456
         Aggressive Growth Portfolio - Enhanced contract .....................          829.264     31.796057             26,368
         Aggressive Growth Portfolio - Modified Enhanced contract.............          159.044     31.911561              5,075
         Balanced Portfolio - Basic contract .................................    1,571,579.505     17.556100         27,590,807
         Balanced Portfolio - Enhanced contract ..............................        2,931.027     17.684597             51,834
         Balanced Portfolio - Modified Enhanced contract .....................          111.555     17.749154              1,980
         Capital Appreciation Portfolio - Basic contract .....................      471,936.628     13.234548          6,245,868
         Capital Appreciation Portfolio - Enhanced contract...................            4.141     13.260556                 55
         Capital AppreciationPortfolio - Modified Enhanced contract...........          170.622     13.273610              2,265
         Growth Portfolio - Basic contract ...................................      643,514.256     19.453513         12,518,613
         Growth Portfolio - Enhanced contract ................................        1,374.992     19.595874             26,944
         Growth Portfolio - Modified Enhanced contract........................          109.122     19.667608              2,146
         International Growth Portfolio - Basic contract .....................      142,343.325     20.234788          2,880,287
         International Growth Portfolio - Enhanced contract ..................        2,330.619     20.382770             47,505
         International Growth Portfolio - Modified Enhanced contract..........            0.000     20.457001                  0
         Worldwide Growth Portfolio - Basic contract .........................    1,026,072.851     20.488548         21,022,743
         Worldwide Growth Portfolio - Enhanced contract ......................        2,225.846     20.638429             45,938
         Worldwide Growth Portfolio - Modified Enhanced contract..............          151.550     20.713399              3,139
      Morgan Stanley Dean Witter Universal Funds, Inc.:
         Emerging Markets Equity Portfolio - Basic contract ..................       56,080.554     11.416896            640,266
         Emerging Markets Equity Portfolio - Enhanced contract ...............          128.179     11.500499              1,474
         Emgerging Markets Equity Portfolio - Modified Enhanced contract......            0.000     11.542646                  0
         Fixed Income Portfolio - Basic contract .............................      279,193.758     10.749115          3,001,086
         Fixed Income Portfolio - Enhanced contract ..........................        1,472.104     10.827853             15,939
         Fixed Income Portfolio - Modified Enhanced contract .................            0.000     10.867507                  0
         Mid-Cap Value Portfolio - Basic contract ............................      183,388.647     15.049488          2,759,905
         Mid-Cap Value Portfolio - Enhanced contract .........................          827.448     15.159702             12,543
         Mid-Cap Value Portfolio - Modified contract .........................            0.000     15.215264                  0
         U.S. Real Estate Portfolio - Basic contract .........................       86,941.426      9.482378            824,412
         U.S. Real Estate Portfolio - Enhanced contract ......................          733.827      9.551867              7,009
         U.S. Real-Estate Portfolio - Modified Enhanced contract..............            0.000      9.586849                  0
         Value Portfolio - Basic contract ....................................       78,330.649      9.536137            746,972
         Value Portfolio - Enhanced contract .................................          703.796      9.605992              6,761
         Value Portfolio - Modified Enhanced contract.........................            0.000      9.641132                  0
      PBHG Insurance Series Fund, Inc.:
         Growth II Portfolio - Basic contract ................................       67,359.578     19.835104          1,336,085
         Growth II Portfolio - Enhanced contract .............................          139.873     19.980260              2,795
         Growth II Portfolio - Modified Enhanced contract.....................            0.000     20.053445                  0
         Large Cap Growth Portfolio - Basic contract .........................      158,614.893     21.307087          3,379,622
         Large Cap Growth Portfolio - Enhanced contract ......................          549.785     21.462991             11,800
         Large Cap Growth Portfolio - Modified Enhanced contract .............            0.000     21.541442                  0
         Technology & Communications Portfolio - Basic contract ..............      433,441.908     38.941384         16,878,828
         Technology & Communications Portfolio - Enhanced contract ...........          904.009     39.226135             35,460
         Technology & Communications Portfolio - Modified Enhanced contract...          274.877     39.369150             10,822
      Strong Funds:
         Growth Fund II - Basic contract .....................................      120,559.085     25.444156          3,067,524
         Growth Fund II - Enhanced contract ..................................          164.682     25.630290              4,220
         Growth Fund II - Modified Enhanced contract..........................            0.000     25.723816                  0
         Opportunity Fund II - Basic contract ................................      138,453.066     15.981484          2,212,685
         Opportunity Fund II - Enhanced contract .............................          790.953     16.098506             12,733
         Opportunity Fund II - Modified Enhanced contract.....................            0.000     16.157323                  0
      Timothy Partners Ltd.:
         The Timothy Plan Small-Cap Variable Series - Basic contract .........       94,238.615     12.097693          1,140,070
         The Timothy Plan Small-Cap Variable Series - Enhanced contract ......          374.501     12.157659              4,553
         The Timothy Plan Small-Cap Variable Series - Modified Enhanced contract          0.000     12.137973                  0
- ---------------------------------------------------------------------------------------------------------------------------------

                       Net assets attributable to variable annuity contract holds.............................       189,438,525
- ---------------------------------------------------------------------------------------------------------------------------------

                       Net assets.............................................................................     $ 189,438,525
=================================================================================================================================
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      -4-
<PAGE>





                      ANNUITY INVESTORS VARIABLE ACCOUNT B

                            STATEMENTS OF OPERATIONS
                          YEAR ENDED DECEMBER 31, 1999


<TABLE>
<CAPTION>

                                                                                    BT Insurance Funds Trust
                                                                                -----------------------------------------
                                                                                   EAFE        Equity        Small
                                                                                  Equity        500           Cap
                                                                                   Index       Index         Index
                                                                                   Fund*       Funds*        Funds*
====================================================================================================================================
<S>                                                                             <C>            <C>            <C>
Investment income:
     Dividends from investments in portfolio shares ....................        $   3,438      $  6,609       $  6,454

Expenses:
     Mortality and expense risk fees (Note 4) ..........................              284         2,437            698
- ------------------------------------------------------------------------------------------------------------------------------------
          Net investment income (loss) .................................            3,154         4,172          5,756

Net realized gain (loss) and unrealized appreciation (depreciation)
     on investments:
     Net realized gain (loss) on sale of investments in portfolio shares               37           214              2
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................            6,582        51,692         17,413
- ------------------------------------------------------------------------------------------------------------------------------------
          Net gain (loss) on investments in portfolio shares ...........            6,619        51,906         17,415
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase (decrease) in net assets from operations ...        $   9,773      $ 56,078     $   23,171
====================================================================================================================================
<CAPTION>

====================================================================================================================================

                                                                                       Dreyfus Variable Investment Fund
                                                                           -------------------------------------------------------
                                                                                             Growth
                                                                             Capital           and           Money         Small
                                                                           Appreciation      Income          Market         Cap
                                                                             Portfolio      Portfolio      Portfolio     Portfolio
====================================================================================================================================
<S>                                                                          <C>            <C>            <C>           <C>
Investment income:
     Dividends from investments in portfolio shares ....................     $    67,948    $  147,614     $  96,066    $   1,462

Expenses:
     Mortality and expense risk fees (Note 4) ..........................          74,555        42,244         32,780       33,949
                                                                                ----------------------------------------------------
          Net investment income (loss) .................................          (6,607)      105,370         63,286      (32,487)

Net realized gain (loss) and unrealized appreciation (depreciation)
     on investments:
     Net realized gain (loss) on sale of investments in portfolio shares         238,043        19,012             0       (21,349)
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................         259,369       342,538             0       595,527
- ------------------------------------------------------------------------------------------------------------------------------------
          Net gain (loss) on investments in portfolio shares ...........         497,412       361,550             0       574,178
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase (decrease) in net assets from operations ...     $   490,805    $  466,920     $   63,286    $ 541,691
====================================================================================================================================
<PAGE>

<CAPTION>
====================================================================================================================================

                                                                                  Dreyfus Funds
                                                                            ------------------------
                                                                             Socially
                                                                            Responsible        Stock
                                                                              Growth           Index
                                                                             Fund, Inc.         Fund
===========================================================================================================
<S>                                                                          <C>            <C>
Investment income:
     Dividends from investments in portfolio shares ....................     $    231,100   $   469,755

Expenses:
     Mortality and expense risk fees (Note 4) ..........................           55,968       301,566
- -----------------------------------------------------------------------------------------------------------
          Net investment income (loss) .................................          175,132       168,189

Net realized gain (loss) and unrealized appreciation (depreciation)
     on investments:
     Net realized gain (loss) on sale of investments in portfolio shares           41,381       529,386
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................          927,407     3,280,156
- -----------------------------------------------------------------------------------------------------------
          Net gain (loss) on investments in portfolio shares ...........          968,788     3,809,542
- -----------------------------------------------------------------------------------------------------------
               Net increase (decrease) in net assets from operations ...     $  1,143,920   $ 3,977,731
===========================================================================================================

<CAPTION>
=====================================================================================================================

                                                                                     INVESCO Funds Group, Inc.
                                                                             --------------------------- ------------
                                                                                High        Equity          Total
                                                                                Yield       Income         Return
                                                                                Fund         Fund           Fund
=====================================================================================================================
<S>                                                                          <C>            <C>            <C>
Investment income:
     Dividends from investments in portfolio shares ....................     $  157,291     $ 125,224      $  74,416

Expenses:
     Mortality and expense risk fees (Note 4) ..........................         20,348        72,959         34,257
- ---------------------------------------------------------------------------------------------------------------------
          Net investment income (loss) .................................        136,943        52,265         40,159
Net realized gain (loss) and unrealized appreciation (depreciation)
     on investments:
     Net realized gain (loss) on sale of investments in portfolio shares        (29,520)       86,162        (11,234)
     Net change in unrealized appreciation (depreciation)
          of investments in portfolio shares ...........................        (17,860)      437,941       (165,855)
- ---------------------------------------------------------------------------------------------------------------------
          Net gain (loss) on investments in portfolio shares ...........        (47,380)      524,103       (177,089)
- ---------------------------------------------------------------------------------------------------------------------
               Net increase (decrease) in net assets from operations ...     $   89,563     $ 576,368      $ (136,930)
=====================================================================================================================

<CAPTION>
====================================================================================================================================

                                                                                              Janus Aspen Series
                                                                                  ---------------------------------------------
                                                                                     Aggressive                      Capital
                                                                                      Growth       Balanced        Appreciation
                                                                                     Portfolio     Portfolio         Portfolo*
====================================================================================================================================
<S>                                                                                <C>             <C>             <C>
Investment income:
     Dividends from investments in portfolio shares ....................           $    94,859     $   439,435      $    11,901

Expenses:
     Mortality and expense risk fees (Note 4) ..........................                52,637         209,733           21,529
- ------------------------------------------------------------------------------------------------------------------------------------
          Net investment income (loss) .................................                42,222         229,702           (9,628)

Net realized gain (loss) and unrealized appreciation(depreciation)on investments:
     Net realized gain (loss) on sale of investments in portfolio shares                60,355         104,795           74,558
     Net change in unrealized appreciation (depreciation)                            3,600,903       3,431,852        1,261,320
- ------------------------------------------------------------------------------------------------------------------------------------
          Net gain (loss) on investments in portfolio shares ...........             3,661,258       3,536,647        1,335,878
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase (decrease) in net assets from operations ...           $ 3,703,480     $ 3,766,349      $ 1,326,250
====================================================================================================================================
</TABLE>

                                       1
<PAGE>
<TABLE>

<CAPTION>

                                                                                                Janus Aspen Series
                                                                                   -------------------------------------------
                                                                                                   International   Worldwide
                                                                                   Growth            Growth          Growth
                                                                                   Portfolio       Portfolio       Portfolio
====================================================================================================================================
<S>                                                                               <C>             <C>             <C>
Investment income:
     Dividends from investments in portfolio shares ....................          $   51,556      $   2,401       $   19,416

Expenses:
     Mortality and expense risk fees (Note 4) ..........................              94,822         18,274          171,124
- ------------------------------------------------------------------------------------------------------------------------------------
          Net investment income (loss) .................................             (43,266)       (15,873)        (151,708)
Net realized gain (loss) and unrealized appreciation (depreciation)
     on investments:
     Net realized gain (loss) on sale of investments in portfolio shares              63,610         51,427          306,342
     Net change in unrealized appreciation (depreciation)
          of investments in portfolio shares ...........................           2,661,896      1,017,938        6,931,151
- ------------------------------------------------------------------------------------------------------------------------------------
          Net gain (loss) on investments in portfolio shares ...........           2,725,506      1,069,365        7,237,493
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase (decrease) in net assets from operations ...         $ 2,682,240    $ 1,053,492      $ 7,085,785
====================================================================================================================================

<CAPTION>
====================================================================================================================================

                                                                                Morgan Stanley Dean Witter Universal Funds, Inc.
                                                                         -----------------------------------------------------------
                                                                          Emerging
                                                                          Markets      Fixed       Mid-Cap       U.S.
                                                                           Equity      Income      Value     Real Estate    Value
                                                                         Portfolio   Portfolio   Portfolio    Portfolio   Portfolio
====================================================================================================================================
<S>                                                                      <C>          <C>        <C>          <C>         <C>
Investment income:
     Dividends from investments in portfolio shares .................... $      63   $  132,926  $  317,551    $  40,924   $  8,877

Expenses:
     Mortality and expense risk fees (Note 4) ..........................     4,770       27,694      28,429        8,867      7,892
- ------------------------------------------------------------------------------------------------------------------------------------
          Net investment income (loss) .................................    (4,707)     105,232     289,122       32,057        985

Net realized gain (loss) and unrealized appreciation (depreciation)
     on investments:
     Net realized gain (loss) on sale of investments in portfolio shares    (1,692)      (9,201)     28,294      (17,801)   (11,045)
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................   246,465     (149,045)     95,581      (35,769)    (1,062)
- ------------------------------------------------------------------------------------------------------------------------------------
          Net gain (loss) on investments in portfolio shares ...........   244,773     (158,246)    123,875      (53,570)   (12,107)
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase (decrease) in net assets from operations ... $ 240,066   $  (53,014)  $ 412,997    $ (21,513)  $(11,122)
====================================================================================================================================

<CAPTION>
====================================================================================================================================

                                                                                       PBHG Insurance Series Fund, Inc.
                                                                         -----------------------------------------------------------
                                                                                                             Technology
                                                                                               Large Cap         and
                                                                                Growth II       Growth      Communications
                                                                                Portfolio      Portfolio       Portfolio
===================================================================================================================================
<S>                                                                           <C>             <C>             <C>
Investment income:
     Dividends from investments in portfolio shares ....................      $        0      $        0      $       0

Expenses:
     Mortality and expense risk fees (Note 4) ..........................           8,087          24,711           84,616
- -----------------------------------------------------------------------------------------------------------------------------------
          Net investment income (loss) .................................          (8,087)        (24,711)         (84,616)

Net realized gain (loss) and unrealized appreciation (depreciation)
     on investments:
     Net realized gain (loss) on sale of investments in portfolio shares          40,307          59,889          172,517
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................         432,229       1,167,374        8,559,584
- -----------------------------------------------------------------------------------------------------------------------------------
          Net gain (loss) on investments in portfolio shares ...........         472,536       1,227,263        8,732,101
- -----------------------------------------------------------------------------------------------------------------------------------
               Net increase (decrease) in net assets from operations ...      $  464,449      $1,202,552      $ 8,647,485
===================================================================================================================================
<PAGE>
<CAPTION>

===================================================================================================================================

                                                                           Strong Funds            Timothy Partners
                                                                        ----------------------------------------------------------
                                                                          Mid Cap
                                                                          Growth     Opportunity   The Timothy
                                                                           Fund         Fund       Plan Variable
                                                                            II           II       Small Cap Series        Total
===================================================================================================================================
<S>                                                                      <C>         <C>           <C>                <C>
Investment income:
     Dividends from investments in portfolio shares .................... $    1,120   $ 129,340    $   1,972          $  2,639,718

Expenses:
     Mortality and expense risk fees (Note 4) ..........................      9,893      20,906        9,802             1,485,831
- -----------------------------------------------------------------------------------------------------------------------------------
          Net investment income (loss) .................................    (18,773)    108,434       (7,830)            1,153,887

Net realized gain (loss) and unrealized appreciation (depreciation)
     on investments:
     Net realized gain (loss) on sale of investments in portfolio shares     24,467      (3,523)       6,613             1,802,046
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................  1,024,601     333,962      176,337             36,490,227
- -----------------------------------------------------------------------------------------------------------------------------------
          Net gain (loss) on investments in portfolio shares ...........  1,049,068     330,439      182,950            38,292,273
- -----------------------------------------------------------------------------------------------------------------------------------
               Net increase (decrease) in net assets from operations ... $1,030,295   $ 438,873   $  175,120          $ 39,446,160
===================================================================================================================================
</TABLE>

*For the period May 1, 1999 (commencement of operations) to December 31, 1999

   The accompanying notes are an integral part of these financial statements.
                                      -7-
<PAGE>




                      ANNUITY INVESTORS VARIABLE ACCOUNT B

                       STATEMENTS OF CHANGES IN NET ASSETS
                          YEAR ENDED DECEMBER 31, 1999



<TABLE>
<CAPTION>
==================================================================================================================================

                                                                                       BT Insurance Funds Trust
                                                                                --------------------------------------
                                                                                 EAFE         Equity         Small
                                                                                Equity          500           Cap
                                                                                 Index         Index         Index
                                                                                 Fund*         Fund*         Fund*
==================================================================================================================================
<S>                                                                             <C>            <C>           <C>
Changes from operations:
     Net investment income (loss) ......................................        $   3,154      $  4,172      $  5,756
     Net realized gain (loss) on sale of investments in portfolio shares               37           214             2
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................            6,582        51,692        17,413
- -------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........            9,773        56,078        23,171

Changes from principal transactions:
     Contract purchase payments ........................................           37,818       515,478       113,079
     Contract redemptions ..............................................             (123)       (3,245)            0
     Net transfers (to) from fixed account .............................           34,110       229,083        40,852
- -------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......           71,805       741,316       153,931
- -------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................           81,578       797,394       177,102
Net assets, beginning of period ........................................                0             0             0
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ..............................................        $  81,578      $797,394     $ 177,102
==================================================================================================================================

<CAPTION>
==================================================================================================================================

                                                                                       Dreyfus Variable Investment Fund
                                                                                  -----------------------------------------
                                                                                                  Growth
                                                                                  Capital           and           Money
                                                                                Appreciation      Income          Market
                                                                                 Portfolio       Portfolio      Portfolio
==================================================================================================================================
<S>                                                                             <C>            <C>            <C>
Changes from operations:
     Net investment income (loss) .........................................     $   (6,607)     $   105,370     $   63,286
     Net realized gain (loss) on sale of investments in portfolio shares ..        238,043           19,012              0
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares .................................        259,369          342,538              0
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ...........        490,805          466,920         63,286

Changes from principal transactions:
     Contract purchase payments ...........................................      5,084,456        1,865,486      4,017,759
     Contract redemptions .................................................       (134,245)         (75,414)       (26,507)
     Net transfers (to) from fixed account ................................       (237,158)         258,973     (1,878,656)
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions ..........      4,713,053        2,049,045      2,112,596
- ----------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets .................................      5,203,858        2,515,965      2,175,882
Net assets, beginning of period ...........................................      2,213,920        1,792,428        693,094
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period .................................................     $7,417,778      $ 4,308,393    $ 2,868,976
==================================================================================================================================

<PAGE>
<CAPTION>
==================================================================================================================================

                                                                                              Dreyfus Funds
                                                                            ----------------------------------------------------
                                                                                                 Socially
                                                                                   Small       Responsible    Stock
                                                                                    Cap          Growth       Index
                                                                                  Portfolio      Fund, Inc.    Fund
==================================================================================================================================
<S>                                                                             <C>             <C>            <C>
Changes from operations:
     Net investment income (loss) .........................................     $   (32,487)    $    175,132       168,189
     Net change in unrealized appreciation (depreciation) of                        (21,349)          41,381       529,386
          investments in portfolio shares ..................................        595,527          927,407     3,280,156
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ............        541,691        1,143,920     3,977,731

Changes from principal transactions:
     Contract purchase payments ............................................      1,237,855        3,437,034     19,622,971
     Contract redemptions ..................................................        (67,011)         (81,945)      (568,106)
     Net transfers (to) from fixed account .................................        (99,634)         555,059        217,350
- ---------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions ...........      1,071,210        3,910,148     19,272,215
- ---------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..................................      1,612,901        5,054,068     23,249,946
Net assets, beginning of period ............................................      1,697,042        1,852,830     10,329,437
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period .................................................     $ 3,309,943     $  6,906,898   $ 33,579,383
=================================================================================================================================

<CAPTION>
===================================================================================================================================

                                                                                        Invesco Funds Group, Inc.
                                                                                ------------------------------------------
                                                                                    High          Equity             Total
                                                                                   Yield          Income             Return
                                                                                    Fund           Fund              Fund
==================================================================================================================================
<S>                                                                              <C>               <C>               <C>
Changes from operations:
     Net investment income (loss) ......................................         $   136,943       $   52,265        $    40,159
     Net realized gain (loss) on sale of investments in portfolio shares             (29,520)          86,162            (11,234)
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................             (17,860)         437,941           (165,855)
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........              89,563          576,368           (136,930)

Changes from principal transactions:
     Contract purchase payments ........................................           1,241,157       4,179,217          1,394,116
     Contract redemptions ..............................................             (65,263)       (136,289)           (64,428)
     Net transfers (to) from fixed account .............................             538,217         571,629           (130,922)
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......           1,714,111       4,614,557          1,198,766
- ----------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................           1,803,674       5,190,925          1,061,836
Net assets, beginning of period ........................................             748,855       2,432,585          1,757,618
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ..............................................        $  2,552,529     $ 7,623,510        $ 2,819,454
==================================================================================================================================

<PAGE>
<CAPTION>
==================================================================================================================================

                                                                                              Janus Aspen Series
                                                                                 ----------------------------------------------
                                                                                    Aggressive                       Capital
                                                                                     Growth         Balanced      Appreciation
                                                                                    Portfolio       Portfolio       Portfolio
==================================================================================================================================
<S>                                                                               <C>               <C>            <C>
Changes from operations:
     Net investment income (loss) ......................................          $     42,222      $    229,702   $    (9,628)
     Net realized gain (loss) on sale of investments in portfolio shares                60,355           104,795        74,558
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................             3,600,903         3,431,852     1,261,320
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........             3,703,480         3,766,349     1,326,250

Changes from principal transactions:
     Contract purchase payments ........................................             4,534,253        15,693,612     3,105,966
     Contract redemptions ..............................................               (50,438)         (409,983)      (20,685)
     Net transfers (to) from fixed account .............................             1,488,790         3,349,214     1,836,657
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......             5,972,605        18,632,843     4,921,938
- ----------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................             9,676,085        22,399,192     6,248,188
Net assets, beginning of period ........................................               765,814         5,245,429             0
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ..............................................          $ 10,441,899      $ 27,644,621   $ 6,248,188
==================================================================================================================================
<CAPTION>

====================================================================================================================================

                                                                                                Janus Aspen Series
                                                                                    ---------------------------------------
                                                                                                International      Worldwide
                                                                                  Growth           Growth           Growth
                                                                                 Portfolio       Portfolio         Portfolio
==================================================================================================================================
<S>                                                                              <C>              <C>              <C>
Changes from operations:
     Net investment income (loss) ......................................         $    (43,266)     $    (15,873)    $   (151,708)
     Net realized gain (loss) on sale of investments in portfolio shares               63,610            51,427          306,342
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................            2,661,896         1,017,938        6,931,151
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........            2,682,240         1,053,492        7,085,785

Changes from principal transactions:
     Contract purchase payments ........................................            6,675,682         1,171,333        9,061,058
     Contract redemptions ..............................................             (141,914)          (39,980)        (293,429)
     Net transfers (to) from fixed account .............................              971,572           231,436          136,740
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......            7,505,340         1,362,789        8,904,369
- ----------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................           10,187,580         2,416,281       15,990,154
Net assets, beginning of period ........................................            2,360,123           511,511        5,081,666
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ..............................................         $ 12,547,703      $  2,927,792     $ 21,071,820
==================================================================================================================================
<PAGE>

<CAPTION>
==================================================================================================================================

                                                                               Morgan Stanley Dean Witter Universal Funds, Inc.
                                                                         ---------------------------------------------------------
                                                                          Emerging
                                                                          Markets      Fixed      Mid-Cap       U.S.
                                                                           Equity      Income      Value     Real Estate    Value
                                                                         Portfolio   Portfolio   Portfolio    Portfolio   Portfolio
===================================================================================================================================
<S>                                                                      <C>         <C>          <C>          <C>        <C>
Changes from operations:
     Net investment income (loss) ...................................... $  (4,707)  $  105,232   $  289,122   $ 32,057  $     985
     Net realized gain (loss) on sale of investments in portfolio shares    (1,692)      (9,201)      28,294    (17,801)   (11,045)
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................   246,465     (149,045)      98,581    (35,769)    (1,062)
- -----------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........   240,066      (53,014)     412,997    (21,513)   (11,122)

Changes from principal transactions:
     Contract purchase payments ........................................   261,307    1,252,573      870,326    339,310    391,649
     Contract redemptions ..............................................    (8,163)     (55,730)     (43,262)   (17,610)   (28,873)
     Net transfers (to) from fixed account .............................   (30,458)   1,359,317      120,956    103,827     64,914
- -----------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......   222,686    2,556,160      948,020    425,527    427,690
- -----------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................   462,752    2,503,146    1,361,017    404,014    416,568
Net assets, beginning of period ........................................   178,988      513,879    1,411,431    427,407    337,165
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period .............................................. $ 641,740   $3,017,025   $2,772,448  $ 831,421  $ 753,733
===================================================================================================================================

<CAPTION>
==================================================================================================================================

                                                                                   PBHG Insurance Series Fund, Inc.
                                                                                --------------------------------------------
                                                                                                                Technology
                                                                                               Large Cap           and
                                                                                Growth II       Growth        Communications
                                                                                Portfolio      Portfolio        Portfolio
==================================================================================================================================
<S>                                                                            <C>             <C>            <C>
Changes from operations:
     Net investment income (loss) ......................................        $   (8,087)     $   (24,711)   $    (84,616)
     Net realized gain (loss) on sale of investments in portfolio shares            40,307           59,889         172,517
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................           432,229        1,167,374       8,559,584
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........           464,449        1,202,552       8,647,485

Changes from principal transactions:
     Contract purchase payments ........................................           546,169        1,708,934       5,304,053
     Contract redemptions ..............................................            (8,514)         (29,829)       (122,730)
     Net transfers (to) from fixed account .............................            86,887           98,187       2,319,044
- ----------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......           624,542        1,777,292       7,500,367
- ----------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................         1,088,991        2,979,844      16,147,852
Net assets, beginning of period ........................................           249,889          411,578         777,257
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ..............................................        $1,338,880      $ 3,391,422    $ 16,925,109
==================================================================================================================================
<PAGE>
<CAPTION>

==================================================================================================================================
                                                                               Strong Funds         Timothy Partners
                                                                        -------------------------------------------------
                                                                          Mid Cap     Opportunity   The Timothy Plan
                                                                           Fund           Fund         Small Cap
                                                                            II             II        Variable Series       Total
====================================================================================================================================
<S>                                                                       <C>           <C>          <C>              <C>
Changes from operations:
     Net investment income (loss) ......................................  $  (18,773)   $  108,434   $   (7,830)      $   1,153,887
     Net realized gain (loss) on sale of investments in portfolio shares      24,467        (3,523)       6,613           1,802,046
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................   1,024,601       333,962      176,337          36,490,227
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........   1,030,295       438,873      175,120          39,446,160

Changes from principal transactions:
     Contract purchase payments ........................................   1,346,916       964,598      503,451          96,477,616
     Contract redemptions ..............................................     (63,446)      (44,752)     (31,051)         (2,632,965
     Net transfers (to) from fixed account .............................     306,781        (6,091)     195,671          12,732,347
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......   1,590,251       913,755      668,071         106,576,998
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................   2,620,546     1,352,628      843,191         146,023,158
Net assets, beginning of period ........................................     451,198       872,790      301,433          43,415,367
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period .............................................. $ 3,071,744   $ 2,225,418   $1,144,624       $ 189,438,525
====================================================================================================================================
</TABLE>

*For the period May 1, 1999 (commencement date of operations)
   to December 31, 1999

   The accompanying notes are an integral part of these financial statements.




                                      -9-
<PAGE>

                      ANNUITY INVESTORS VARIABLE ACCOUNT B

                 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
                          YEAR ENDED DECEMBER 31, 1999

                                Basic Contracts
<TABLE>
<CAPTION>
====================================================================================================================================

                                                            BT Insurance Funds Trust
                                              -------------------------------------------------------
                                                  EAFE          Equity          Small
                                                Equity            500            Cap
                                                 Index          Index           Index
                                                 Fund*          Fund*           Fund*
=====================================================================================================
<S>                                           <C>              <C>             <C>
Units outstanding, December 31, 1998               0.000            0.000             0.000

Units purchased                                6,832.096       73,908.864        15,259.832

Units redeemed                                   (10.264)        (312.350)           (0.683)
                                              -----------      -----------      ------------

Units outstanding December 31, 1999            6,821.832       73,596.514        15,259.149
                                              ===========      ===========      ============
====================================================================================================================================


                                                            Dreyfus Variable Investment Fund                  Dreyfus Funds
                                          ---------------------------------------------------------------------------------------
                                                        Growth                                            Socially
                                          Capital         and             Money            Small        Responsible      Stock
                                       Appreciation     Income           Market             Cap           Growth         Index
                                        Portfolio      Portfolio       Portfolio        Portfolio        Fund, Inc.       Fund
====================================================================================================================================
<S>                                    <C>             <C>               <C>            <C>            <C>            <C>
Units outstanding, December 31, 1998    170,523.015    159,409.837       658,981.650    171,968.905    140,614.024     779,485.606

Units purchased                         372,946.146    178,753.260     3,758,398.024    119,600.564    273.663.600    1,389,766.200

Units redeemed                          (25,697.079)    (6,406.836)   (1,778,542.512)   (16,065.832)    (5,795.428)     (39,479.641)
                                       -------------    ------------   ---------------  -------------  -------------  --------------

Units outstanding December 31, 1999     517,772.082    331,756.261     2,638,837.162     275,503.637    408,482.196   2,129,772.165
                                       ============    ============   ===============   =============  ============   =============
====================================================================================================================================

                                                      Invesco Funds Group, Inc.
                                             ------------------------------------------

                                                High             Equity             Total
                                                Yield            Income             Return
                                               Fund              Fund                Fund
====================================================================================================================================
<S>                                          <C>                <C>                <C>
Units outstanding, December 31, 1998          70,047.913        200,541.938        154,762.526

Units purchased                               157,413.43        363,563.92         120,990.59

Units redeemed                                 (5,825.13)        (10,409.69)       (16,927.94)
                                               ----------       ------------      -------------

Units outstanding December 31, 1999          221,636.210        553,696.171        258,825.173
                                            =============      =============     ==============


====================================================================================================================================


                                                                            Janus Aspen Series
                                         -------------------------------------------------------------------------------------------
                                          Aggressive                     Capital                      International      Worldwide
                                           Growth        Balanced     Appreciation      Growth           Growth          Growth
                                          Portfolio      Portfolio      Portfolio      Portfolio       Portfolio         Portfolio
====================================================================================================================================
<S>                                      <C>             <C>            <C>          <C>              <C>              <C>
Units outstanding, December 31, 1998      53,896.345       373,285.807        0.000   172,190.630      45,382.775       402,131.168

Units purchased                          278,080.656     1,224,730.099  473,953.960   480,342.283     100,167.009       643,927.060

Units redeemed                            (2,169.099)      (26,436.401)  (2,017.332)   (9,018.657)     (3,206.459)      (19,985.377)
                                         ------------      ------------    --------   ------------     ------------     ------------

Units outstanding December 31, 1999      329,807.902     1,571,579.505  471,936.628   643,514.256     142,343.325     1,026,072.851
                                         ============    ============== ===========   ============    ============    ==============
====================================================================================================================================
<PAGE>
<CAPTION>

                                                             Morgan Stanley Dean Witter Universal Funds, Inc.
                                              --------------------------------------------------------------------------------------
                                                  Emerging
                                                  Markets       Fixed        Mid-Cap         U.S.
                                                  Equity        Income        Value      Real Estate      Value
                                                 Portfolio    Portfolio     Portfolio     Portfolio     Portfolio
====================================================================================================================================
<S>                                             <C>            <C>          <C>            <C>           <C>
Units outstanding, December 31, 1998            30,255.642     46,348.096   111,076.120    43,786.457    34,212.111

Units purchased                                 34,003.778    237,990.514    75,629.717    44,901.681    47,456.893

Units redeemed                                  (8,178.866)    (5,144.852)   (3,317.190)   (1,746.712)   (3,338.355)
                                                 ----------   ------------   -----------   -----------   -----------

Units outstanding December 31, 1999             56,080.554    279,193.758    183,388.647   86,941.426    78,330.649
                                                ===========  ============   ============  ============   ===========
====================================================================================================================================

<CAPTION>
                                               PBHG Insurance Series Fund, Inc.                Strong Funds       Timothy Partners
                                         ----------------------------------------------   ----------------------  ----------------
                                                                         Technology       Mid Cap
                                                         Large Cap           and          Growth     Opportunity    The Timothy
                                          Growth II       Growth        Communications     Fund         Fund       Plan Variable
                                          Portfolio      Portfolio       Portfolio          II           II           Series
====================================================================================================================================
<S>                                      <C>             <C>            <C>             <C>           <C>           <C>
Units outstanding, December 31, 1998     24,618.770       31,474.961     65,820.143      33,197.715    72,644.387    29,293.327

Units purchased                          43,279.210      129,400.234    374,005.518      91,173.444    70,112.940    68,160.700

Units redeemed                             (538.402)      (2,260.302)    (6,383.753)     (3,812.074)   (4,304.261)   (3,215.412)
                                          ----------     ------------   -----------     ------------   -----------    ----------

Units outstanding December 31, 1999      67,359.578      158,614.893    433,441.908     120,559.085   138,453.066    94,238.615
                                         ===========     ============   ============    ===========   ============  ===========
==================================================================================================================================
*For the period May 1, 1999 (commencement date of operations) to December 31, 1999


The accompanying notes are an integral  part of these financial statements.
</TABLE>


<PAGE>


                      ANNUITY INVESTORS VARIABLE ACCOUNT B

                 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
                          YEAR ENDED DECEMBER 31, 1999

                                Enhanced Contracts
<TABLE>

<CAPTION>
====================================================================================================================================

                                                            BT Insurance Funds Trust
                                              -------------------------------------------------------
                                                  EAFE          Equity          Small
                                                Equity            500            Cap
                                                 Index          Index           Index
                                                 Fund*          Fund*           Fund*
=====================================================================================================
<S>                                           <C>              <C>             <C>
Units outstanding, December 31, 1998               0.000            0.000             0.000

Units purchased                                    0.000            0.000             0.000

Units redeemed                                     0.000            0.000             0.000
                                              -----------      -----------      ------------

Units outstanding December 31, 1999                0.000            0.000             0.000
                                              ===========      ===========      ============
====================================================================================================================================


                                                            Dreyfus Variable Investment Fund                  Dreyfus Funds
                                          ---------------------------------------------------------------------------------------
                                                        Growth                                            Socially
                                          Capital         and             Money            Small        Responsible      Stock
                                       Appreciation     Income           Market             Cap           Growth         Index
                                        Portfolio      Portfolio       Portfolio        Portfolio        Fund, Inc.       Fund
====================================================================================================================================
<S>                                    <C>             <C>               <C>            <C>            <C>             <C>
Units outstanding, December 31, 1998      100.415           5.049          555.360        14.492        80.398          56.321

Units purchased                         2,140.239         681.763        7,935.579       475.924       271.188         664.191

Units redeemed                            (83.880)        (36.403)           0.000        (3.652)        0.000        (104.278)
                                       -----------       ----------   -------------     ----------    ---------      ----------

Units outstanding December 31, 1999     2,156.774         650.409        8,490.939        486.764      351.586         616.234
                                       ===========       ==========    ============     ==========    =========      ==========
====================================================================================================================================

                                                      Invesco Funds Group, Inc.
                                             ------------------------------------------

                                                High             Equity             Total
                                                Yield            Income             Return
                                                Fund              Fund                Fund
====================================================================================================================================
<S>                                          <C>                <C>                <C>
Units outstanding, December 31, 1998            7.556            163.123             111.314

Units purchased                               106.052           1,503.918          1,830.682

Units redeemed                                 (0.044)             0.000              (5.797)
                                              --------         ----------         ------------

Units outstanding December 31, 1999           113.564           1,667.041          1,936.199
                                             =========         ===========        ============


====================================================================================================================================


                                                                            Janus Aspen Series
                                         -------------------------------------------------------------------------------------------
                                          Aggressive                     Capital                      International      Worldwide
                                           Growth        Balanced     Appreciation      Growth           Growth          Growth
                                          Portfolio      Portfolio      Portfolio      Portfolio       Portfolio         Portfolio
====================================================================================================================================
<S>                                       <C>             <C>              <C>          <C>              <C>              <C>
Units outstanding, December 31, 1998       36.621           214.770        0.000           84.318           58.950          123.659

Units purchased                           792.817         2,812.213        4.141        1,290.674        2,321.121        2,207.180

Units redeemed                             (0.174)          (95.956)       0.000            0.000          (49.452)        (104.993)
                                         ----------       ----------      -------       ----------       ----------      -----------

Units outstanding December 31, 1999       829.264         2,931.027        4.141        1,374.992        2,330.619        2.225.846
                                         =========        ==========      =======      ===========       ==========      ===========
====================================================================================================================================
<PAGE>

<CAPTION>

                                                             Morgan Stanley Dean Witter Universal Funds, Inc.
                                              --------------------------------------------------------------------------------------
                                                  Emerging
                                                  Markets       Fixed          Mid-Cap          U.S.
                                                  Equity        Income          Value        Real Estate      Value
                                                 Portfolio    Portfolio       Portfolio      Portfolio     Portfolio
====================================================================================================================================
<S>                                             <C>            <C>            <C>             <C>           <C>
Units outstanding, December 31, 1998              0.000           30.906       15.684          10.564         23.284

Units purchased                                 128.179        1,441.432      811.880         758.015        682.745

Units redeemed                                    0.000           (0.234)      (0.116)        (34.752)        (2.233)
                                                --------      -----------     ---------      ---------      ---------

Units outstanding December 31, 1999             128.179        1,472.104      827.448         733.827        703.796
                                               =========      ===========   ==========       =========      =========
====================================================================================================================================

<CAPTION>
                                               PBHG Insurance Series Fund, Inc.                Strong Funds       Timothy Partners
                                         ----------------------------------------------   ----------------------  ----------------
                                                                         Technology       Mid Cap
                                                         Large Cap           and          Growth     Opportunity    The Timothy
                                          Growth II       Growth        Communications     Fund         Fund       Plan Variable
                                          Portfolio      Portfolio       Portfolio          II           II           Series
====================================================================================================================================
<S>                                       <C>             <C>            <C>             <C>           <C>           <C>
Units outstanding, December 31, 1998        6.572           0.000          2.516           9.046         15.156        17.653

Units purchased                           133.301         565.456        920.935         155.911        781.126       357.270

Units redeemed                              0.000         (15.671)       (19.442)         (0.275)        (5.329)       (0.422)
                                         ---------       ---------      ---------        ---------     ---------      --------

Units outstanding December 31, 1999       139.873         549.785        904.009         164.682        790.953       374.501
                                         =========       =========      =========       =========      =========      ========
==================================================================================================================================
</TABLE>

*For the period May 1, 1999 (commencement date of operations)
     to December 31, 199

The accompanying notes are an integral  part of these financial statements.
<PAGE>


                      ANNUITY INVESTORS VARIABLE ACCOUNT B

                 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
                          YEAR ENDED DECEMBER 31, 1999

                                Modified Enhanced Contracts
<TABLE>

<CAPTION>
====================================================================================================================================

                                                            BT Insurance Funds Trust
                                              -------------------------------------------------------
                                                  EAFE          Equity          Small
                                                Equity            500            Cap
                                                 Index          Index           Index
                                                 Fund*          Fund*           Fund*
=====================================================================================================
<S>                                           <C>              <C>             <C>
Units outstanding, December 31, 1998           0.000             0.000          0.000

Units purchased                                0.000           132.541          0.000

Units redeemed                                 0.000          (312.350)         0.000
                                              -------         ---------       --------

Units outstanding December 31, 1999            0.000           131.993          0.000
                                              =======         =========       ========
====================================================================================================================================


                                                            Dreyfus Variable Investment Fund                  Dreyfus Funds
                                          ---------------------------------------------------------------------------------------
                                                        Growth                                            Socially
                                          Capital         and             Money            Small        Responsible      Stock
                                       Appreciation     Income           Market             Cap           Growth         Index
                                        Portfolio      Portfolio       Portfolio        Portfolio        Fund, Inc.       Fund
====================================================================================================================================
<S>                                    <C>             <C>               <C>            <C>            <C>            <C>
Units outstanding, December 31, 1998      0.000          0.000             0.000           0.000         0.000           0.000

Units purchased                         179.381          0.000             0.000         202.376         0.000         246.175

Units redeemed                          (25.234)         0.000             0.000          (2.468)        0.000         (23.373)
                                       ---------      ---------         ---------       ---------      --------       ----------

Units outstanding December 31, 1999     154.147          0.000             0.000         199.908         0.000         222.802
                                       =========     ==========         =========       =========      ========       =========
====================================================================================================================================

                                                      Invesco Funds Group, Inc.
                                             ------------------------------------------

                                                High             Equity             Total
                                                Yield            Income             Return
                                               Fund              Fund                Fund
====================================================================================================================================
<S>                                          <C>                <C>                <C>
Units outstanding, December 31, 1998          0.000              0.000              0.000

Units purchased                               0.000              0.000              0.000

Units redeemed                                0.000              0.000              0.000
                                             -------            -------            -------

Units outstanding December 31, 1999           0.000              0.000              0.000
                                            ========           ========           ========


====================================================================================================================================


                                                                            Janus Aspen Series
                                         -------------------------------------------------------------------------------------------
                                          Aggressive                     Capital                      International     Worldwide
                                           Growth        Balanced     Appreciation      Growth           Growth          Growth
                                          Portfolio      Portfolio      Portfolio*      Portfolio       Portfolio       Portfolio
====================================================================================================================================
<S>                                      <C>             <C>            <C>            <C>              <C>              <C>
Units outstanding, December 31, 1998       0.000           0.000          0.000          0.000          0.000              0.000

Units purchased                          159.044         111.697        172.055        109.122          0.000            176.308

Units redeemed                             0.000          (0.142)        (1.433)         0.000          0.000            (24.758)
                                         --------       ---------       --------       --------       --------           --------

Units outstanding December 31, 1999      159.044         111.555        170.622        109.122          0.000            151.550
                                         ========      ==========      =========      =========       ========          =========
====================================================================================================================================
<PAGE>


<CAPTION>

                                                             Morgan Stanley Dean Witter Universal Funds, Inc.
                                              --------------------------------------------------------------------------------------
                                                  Emerging
                                                  Markets       Fixed        Mid-Cap         U.S.
                                                  Equity        Income        Value      Real Estate      Value
                                                 Portfolio    Portfolio     Portfolio     Portfolio     Portfolio
====================================================================================================================================
<S>                                             <C>            <C>          <C>            <C>           <C>
Units outstanding, December 31, 1998             0.000          0.000        0.000          0.000         0.000

Units purchased                                  0.000          0.000        0.000          0.000         0.000

Units redeemed                                   0.000          0.000        0.000          0.000         0.000
                                                ------         -------      -------        -------       -------

Units outstanding December 31, 1999              0.000          0.000        0.000          0.000         0.000
                                               ========       ========     ========        =======       =======
====================================================================================================================================

<CAPTION>
                                               PBHG Insurance Series Fund, Inc.                Strong Funds       Timothy Partners
                                         ----------------------------------------------   ----------------------  ----------------
                                                                         Technology       Mid Cap
                                                         Large Cap           and          Growth     Opportunity    The Timothy
                                          Growth II       Growth        Communications     Fund         Fund       Plan Variable
                                          Portfolio      Portfolio       Portfolio          II           II           Series
====================================================================================================================================
<S>                                      <C>             <C>            <C>             <C>           <C>           <C>
Units outstanding, December 31, 1998      0.000           0.000           0.000          0.000         0.000         0.000

Units purchased                           0.000           0.000         295.741          0.000         0.000         0.000

Units redeemed                            0.000           0.000         (20.864)         0.000         0.000         0.000
                                         -------        --------       ---------        -------       -------       -------

Units outstanding December 31, 1999       0.000           0.000         274.877          0.000         0.000         0.000
                                        ========        ========       =========        =======      ========       =======
==================================================================================================================================

 *For the period May 1, 1999 (commencement date of operations) to December 31, 1999


The accompanying notes are an integral  part of these financial statements.

</TABLE>
<PAGE>

                      ANNUITY INVESTORS VARIABLE ACCOUNT B

                       STATEMENTS OF CHANGES IN NET ASSETS
                          YEAR ENDED DECEMBER 31, 1998



<TABLE>

<CAPTION>
====================================================================================================================================

                                                                                       Dreyfus Variable Investment Fund
                                                                           -------------------------------------------------------
                                                                                             Growth
                                                                             Capital           and           Money         Small
                                                                           Appreciation      Income          Market         Cap
                                                                             Portfolio      Portfolio      Portfolio     Portfolio
====================================================================================================================================
<S>                                                                          <C>            <C>            <C>           <C>
Changes from operations:
     Net investment income (loss) ......................................... $   (1,543)     $    6,892     $   13,138    $   10,853
     Net realized gain (loss) on sale of investments in portfolio shares ..     16,652          (1,836)             0       (82,430)
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares .................................    226,268         115,821              0        25,412
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ...........    241,377         120,877         13,138       (46,165)

Changes from principal transactions:
     Contract purchase payments ...........................................  1,508,433       1,155,499      1,405,487     1,210,765
     Contract redemptions .................................................    (36,808)        (21,639)       (72,744)      (25,868)
     Net transfers (to) from fixed account ................................    315,535         209,039       (652,787)      129,730
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions ..........  1,787,160       1,342,899        679,956     1,314,627
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets .................................  2,028,537       1,463,776        693,094     1,268,462
Net assets, beginning of period ...........................................    185,383         328,652              0       428,580
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ................................................. $2,213,920      $1,792,428     $  693,094    $1,697,042
====================================================================================================================================

<CAPTION>
====================================================================================================================================

                                                                                  Dreyfus Funds                   Strong Funds
                                                                            ------------------------       -------------------------
                                                                             Socially
                                                                            Responsible        Stock         Growth      Opportunity
                                                                              Growth           Index          Fund           Fund
                                                                             Fund, Inc.         Fund           II             II
====================================================================================================================================
<S>                                                                          <C>            <C>            <C>           <C>
Changes from operations:
     Net investment income (loss) .......................................... $   55,768     $    22,396    $   (2,299)   $   21,580
     Net realized gain (loss) on sale of investments in portfolio shares ...      5,292         108,435         1,666        (6,713)
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..................................    201,887       1,115,334        67,633        32,683
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ............    262,947       1,246,165        67,000        47,550

Changes from principal transactions:
     Contract purchase payments ............................................  1,348,395       7,674,437       306,962       763,304
     Contract redemptions ..................................................     (9,281)        (58,961)         (461)       (1,505)
     Net transfers (to) from fixed account .................................    (21,006)        739,354        54,703        (5,388)
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions ...........  1,318,108       8,354,830       361,204       756,411
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..................................  1,581,055       9,600,995       428,204       803,961
Net assets, beginning of period ............................................    271,775         728,442        22,994        68,829
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period .................................................. $1,852,830     $10,329,437    $  451,198    $  872,790
====================================================================================================================================
<PAGE>

<CAPTION>

==================================================================================================================================

                                                                                Timothy Partners
                                                                                ----------------

                                                                                   The Timothy
                                                                                  Plan Variable
                                                                                      Series
==================================================================================================================================
<S>                                                                               <C>
Changes from operations:
     Net investment income (loss) ..........................................      $   (1,244)
     Net realized gain (loss) on sale of investments in portfolio shares ...             273
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..................................           8,837
- ------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ............           7,866

Changes from principal transactions:
     Contract purchase payments ............................................         298,657
     Contract redemptions ..................................................            (559)
     Net transfers (to) from fixed account .................................          (4,531)
- ------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions ...........         293,567
- ------------------------------------------------------------------------------------------------
               Net increase in net assets ..................................         301,433
Net assets, beginning of period ............................................               0
- ------------------------------------------------------------------------------------------------
Net assets, end of period ..................................................      $  301,433
==================================================================================================================================


<CAPTION>
=====================================================================================================================

                                                                                     Invesco Funds Group, Inc.
                                                                             ----------------------------------------
                                                                                High        Industrial       Total
                                                                               Yield          Income         Return
                                                                                Fund           Fund           Fund
=====================================================================================================================
<S>                                                                          <C>            <C>            <C>
Changes from operations:
     Net investment income (loss) ......................................     $   66,061     $   94,784     $   58,820
     Net realized gain (loss) on sale of investments in portfolio shares         (7,511)         3,746         15,273
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................        (74,743)        82,412         10,551
- ---------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........        (16,193)       180,942         84,644

Changes from principal transactions:
     Contract purchase payments ........................................        546,771      1,705,341      1,533,836
     Contract redemptions ..............................................        (18,798)       (13,427)       (21,158)
     Net transfers (to) from fixed account .............................        127,417        205,099          6,510
- ---------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......        655,390      1,897,013      1,519,188
- ---------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................        639,197      2,077,955      1,603,832
Net assets, beginning of period ........................................        109,658        354,630        153,786
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period ..............................................     $  748,855     $2,432,585     $1,757,618
=====================================================================================================================
<PAGE>

<CAPTION>
====================================================================================================================================

                                                                                              Janus Aspen Series
                                                                        -----------------------------------------------------------
                                                                          Aggressive                        International  Worldwide
                                                                            Growth    Balanced      Growth      Growth       Growth
                                                                          Portfolio   Portfolio   Portfolio   Portfolio    Portfolio
====================================================================================================================================
<S>                                                                      <C>         <C>         <C>         <C>         <C>
Changes from operations:
     Net investment income (loss) ...................................... $   (3,848) $   77,629  $   45,244  $      881  $   50,441
     Net realized gain (loss) on sale of investments in portfolio shares      4,948      20,467       2,481       4,688      13,836
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................    140,760     696,632     374,448      26,364     465,843
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........    141,860     794,728     422,173      31,933     530,120

Changes from principal transactions:
     Contract purchase payments ........................................    526,231   3,636,681   1,536,593     333,700   3,571,970
     Contract redemptions ..............................................     (1,769)    (29,318)    (12,570)    (13,844)    (51,084)
     Net transfers (to) from fixed account .............................     69,142     519,688      78,695      37,625     467,637
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......    593,604   4,127,051   1,602,718     357,481   3,988,523
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................    735,464   4,921,779   2,024,891     389,414   4,518,643
Net assets, beginning of period ........................................     30,350     323,650     335,232     122,097     563,023
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period .............................................. $  765,814  $5,245,429  $2,360,123  $  511,511  $5,081,666
====================================================================================================================================


<CAPTION>
====================================================================================================================================

                                                                                      Morgan Stanley Universal Funds, Inc.
                                                                         -----------------------------------------------------------
                                                                         Emerging
                                                                          Markets      Fixed       Mid-Cap       U.S.
                                                                           Equity      Income      Value     Real Estate    Value
                                                                         Portfolio   Portfolio   Portfolio    Portfolio   Portfolio
====================================================================================================================================
<S>                                                                      <C>          <C>        <C>          <C>         <C>
Changes from operations:
     Net investment income (loss) ...................................... $    (841)  $  16,978   $   26,301   $   9,903   $   8,984
     Net realized gain (loss) on sale of investments in portfolio shares   (28,159)        987      (12,000)    (11,717)     (3,838)
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................    (8,506)     (8,866)     111,030     (29,207)    (22,344)
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........   (37,506)      9,099      125,331     (31,021)    (17,198)

Changes from principal transactions:
     Contract purchase payments ........................................    99,696     399,377    1,042,503     428,467     254,152
     Contract redemptions ..............................................       (15)    (29,179)     (33,448)    (11,751)     (5,163)
     Net transfers (to) from fixed account .............................    45,269     134,534       91,732     (38,218)      3,901
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......   144,950     504,732    1,100,787     378,498     252,890
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................   107,444     513,831    1,226,118     347,477     235,692
Net assets, beginning of period ........................................    71,544          48      185,313      79,930     101,473
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period .............................................. $ 178,988   $ 513,879   $1,411,431   $ 427,407   $ 337,165
====================================================================================================================================
<PAGE>

<CAPTION>
====================================================================================================================================

                                                                                       PBHG Insurance Series Fund, Inc.
                                                                         -----------------------------------------------------------
                                                                                                        Technology
                                                                                          Large Cap         and
                                                                           Growth II       Growth      Communications
                                                                           Portfolio      Portfolio       Portfolio         Total
====================================================================================================================================
<S>                                                                      <C>             <C>             <C>            <C>
Changes from operations:
     Net investment income (loss) ...................................... $   (2,021)     $   (3,194)     $   (5,880)    $   565,783
     Net realized gain (loss) on sale of investments in portfolio shares       (437)          1,576          (2,660)         43,019
     Net change in unrealized appreciation (depreciation) of
          investments in portfolio shares ..............................     19,329          72,732         163,166       3,813,476
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase (decrease) in net assets from operations ........     16,871          71,114         154,626       4,422,278

Changes from principal transactions:
     Contract purchase payments ........................................    174,105         216,405         463,808      32,141,575
     Contract redemptions ..............................................       (347)         (1,537)        (30,665)       (501,899)
     Net transfers (to) from fixed account .............................        330           9,726            (474)      2,523,262
- ------------------------------------------------------------------------------------------------------------------------------------
          Net increase in net assets from principal transactions .......    174,088         224,594         432,669      34,162,938
- ------------------------------------------------------------------------------------------------------------------------------------
               Net increase in net assets ..............................    190,959         295,708         587,295      38,585,216
Net assets, beginning of period ........................................     58,930         115,870         189,962       4,830,151
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period .............................................. $  249,889      $  411,578      $  777,257     $43,415,367
====================================================================================================================================
</TABLE>

<PAGE>


                      ANNUITY INVESTORS VARIABLE ACCOUNT B
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1999

(1)  GENERAL Annuity Investors  Variable Account B (the "Account")is registered
     under the Investment Company Act of 1940, as amended,  as a unit investment
     trust.  The Account was  established  on  December  19, 1996 and  commenced
     operations  on  July  15,  1997  as a  segregated  investment  account  for
     individual and group variable annuity  contracts which are registered under
     the  Securities  Act of 1933. The operations of the Account are included in
     the operations of Annuity Investors Life Insurance Company (the "Company")
     pursuant to the  provisions of the Ohio  Insurance  Code. The Company is an
     indirect wholly owned subsidiary of American Annuity Group, Inc., ("AAG"),
     a publicly  traded  insurance  holding company listed on the New York Stock
     Exchange.  The Company is licensed in 47 states.  At December 31, 1999, the
     following investment options were available:

                  BT Insurance Funds Trust:
o        EAFE Equity Index Portfolio
o        Equity 500 Index Portfolio
o        Small Cap Index Portfolio
                  The Dreyfus Variable Investment Fund:
o        Capital Appreciation Portfolio
o        Growth and Income Portfolio
o        Money Market Portfolio
o        Small-Cap Portfolio
                  Dreyfus Funds:
o        Socially Responsible Growth Fund, Inc.
o        Stock Index Fund
                  Invesco Funds:
o        High-Yield Fund
o        Equity Income Fund
o        Total Return Fund
                  Janus Aspen Series:
o        Aggressive Growth Portfolio
o        Balanced Portfolio
o        Capital Appreciation Portfolio
o        Growth Portfolio
o        International Growth Portfolio
o        Worldwide Growth Portfolio
                  Morgan Stanley Dean Witter Universal Funds, Inc.:
o        Emerging Markets Equity Portfolio
o        Fixed Income Portfolio
o        Mid-Cap Value Portfolio
o        U.S. Real Estate Portfolio
o        Value Portfolio
                  PBHG Insurance Series Fund, Inc.:
o        Growth II Portfolio
o        Large Cap Growth Portfolio
o        Technology & Communications Portfolio
                  Strong Funds:
o        Mid Cap Growth Fund II
o        Opportunity Fund II
                  Timothy Partners, Ltd.:
o        The Timothy Plan Variable Series

<PAGE>


                      ANNUITY INVESTORS VARIABLE ACCOUNT B
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                                December 31, 1999

The following variable sub-accounts were added to the account on May 1, 1999: BT
Insurance Funds Trust EAFE Equity Index Fund,  Equity 500 Index Fund,  Small Cap
Index Fund;  Janus Aspen  Series  Capital  Appreciation  Portfolio.  No variable
sub-accounts  were  deleted  from the  account  in 1999.

In 1999,  the Invesco  Industrial  Income  Fund  changed its name to the Invesco
Equity Income Fund, and the Strong Growth Fund II changed its name to the Strong
Mid Cap Growth Fund II.

(2)  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

     Basis of  Presentation

     The preparation  of  financial   statements  in  conformity   with
     accounting principles  generally accepted in the United States requires
     management to make  estimates  and  assumptions  that  affect the amount
     reported in the financial statements and accompanying notes. Changes in
     circumstances could cause actual results to differ materially from those
     estimates.

     Investments

     Investments  are  valued  using  the  net  asset  value  of the  respective
     portfolios at the end of each business day of the New York Stock  Exchange,
     with the  exception  of  business  holidays.  Investment  transactions  are
     accounted  for on the  trade  date  (the  date the  order to buy or sell is
     executed).  The  cost of  investments  sold is  determined  on a  first-in,
     first-out  basis.  The  Account  does not hold any  investments  which  are
     restricted as to resale.

     Net investment income (loss), net realized gain (loss) and unrealized
     appreciation(depreciation)on investments are allocated to the contracts on
     each valuation date based on each contract's pro rata share of the assets
     of the Account as of the beginning of the valuation date.

     Federal Income Taxes

     No provision for federal income taxes has  been  made in the  accompanying
     financial statements because the operations  of the Account  are  included
     in the total  operations  of the Company,  which is treated as a life
     insurance  company for federal income tax  purposes  under  Subchapter  L
     of  the  Internal  Revenue  Code.  Net investment  income (loss) and
     realized  gains  (losses) will be retained in the Account and will not be
     taxable until received by the contract owner or beneficiary  in the form
     of annuity  payments or other  distributions.

     Net Assets  Attributable  to Variable  Annuity  Contract  Holders

     The  variable annuity contract  reserves are comprised of net contract
     purchase payments less  redemptions  and benefits.  These reserves are
     adjusted daily for the net investment  income  (loss), net realized gain
     (loss) and  unrealized appreciation (depreciation) on investments.



<PAGE>

                      ANNUITY INVESTORS VARIABLE ACCOUNT B
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                                December 31, 1999

(3)  PURCHASES AND SALES OF INVESTMENTS  IN PORTFOLIO  SHARES The aggregate cost
     of purchases and proceeds from sales of investments in all portfolio shares
     for the year ended December 31, 1999 is as follows:

                                                                 1999
                                                     -------------------------
                                                                       Proceeds
                                                        Cost of         from
                                                        Purchaes        Sales


   BT Insurance Funds Trust:
        EAFE Equity Index Portfolio                  $     75,924   $       964
        Equity 500 Index Portfolio                        756,411        10,922
        Small Cap Index Portfolio                         162,532         2,845
   Dreyfus Variable Investment Fund:
        Capital Appreciation Portfolio                  5,994,536     1,288,089
        Growth and Income Portfolio                     2,418,517       264,102
        Money Market Portfolio                          4,932,966     2,756,951
        Small Cap Portfolio                             1,463,685       424,962
   Dreyfus Funds:
        Socially Responsible Growth Fund, Inc.          4,236,425       151,145
        Stock Index Fund                               22,558,560     3,118,158
   Invesco Funds:
        High-Yield Fund                                 2,131,822       280,769
        Industrial Income Fund                          5,288,028       621,205
        Total Return Fund                               1,847,611       608,686
   Janus Aspen Series:
        Aggressive Growth Portfolio                     6,187,083       172,257
        Balanced Portfolio                             19,205,526       342,980
        Capital Appreciation Portfolio                  5,397,253       484,943
        Growth Portfolio                                7,660,504       198,430
        International Growth Portfolio                  1,562,618       215,702
        Worldwide Growth Portfolio                      9,573,649       820,989
   Morgan Stanley Dean Witter Universal Funds, Inc.:
        Emerging Markets Equity Portfolio                 345,980       127,989
        Fixed Income Portfolio                          2,993,137       331,744
        Mid-Cap Value Portfolio                         1,575,444       338,301
        U.S. Real Estate Portfolio                        593,357       135,773
        Value Portfolio                                   613,170       184,496
   PBHG Insurance Series Fund, Inc.:
        Growth II Portfolio                               741,214       124,759
        Large Cap Growth Portfolio                      1,929,951       177,371
        Technology & Communications Portfolio           7,705,231       289,479
   Strong Funds:
        Growth Fund II                                  1,638,049        66,570
        Opportunity Fund II                             1,212,944       190,754
   The Timothy Plan Variable Series:
        The Timothy Plan Variable Series                  867,375       207,127
                                                      -------------  ----------
              Total                                  $121,669,502   $13,938,462




<PAGE>

                      ANNUITY INVESTORS VARIABLE ACCOUNT B
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                                December 31, 1999


(4)  DEDUCTIONS  AND  EXPENSES

     Although periodic annuitization  payments to contract owners vary according
     to the investment performance of the sub-accounts, affected by mortality or
     expense  experience  because the Company  assumes the mortality and expense
     risks  under the  contracts.

     The  mortality  risk  assumed by the Company results from the life annuity
     payment option in the contracts,in which the Company agrees to make annuity
     payments regardless of how long a particular annuitant or other payee
     lives. The annuity payments are determined in accordance with annuity
     purchase rate provisions established at the time the contracts are issued.
     Based on the actuarial determination of expected mortality, the Company is
     required to fund any deficiency in the annuity payment reserves from its
     general account assets.

     The expense risk assumed by the Company is the risk that the deductions for
     sales and administrative expenses may prove insufficient to cover the
     actual sales and administrative expenses.  Under the Basic Contract,  the
     Company deducts a fee from the Account each day for assuming the mortality
     and expense risks. This fee is equal on an  annual  basis to 1.40% of the
     daily  value of the total investments of the Account. These fees aggregated
     $1,483,303 for the year ended December 31, 1999.

     In connection with certain contracts in which the Company incurs reduced
     sales and servicing expenses, such as contracts offered to active employees
     of the Company or any of its subsidiaries and/or  affiliates, the Company
     may  offer an Enhanced Contract, or a Modified Enhanced contract. Under the
     Enhanced Contract, the Company deducts a fee from the Account each day for
     assuming the mortality and expense  risks.  This fee is equal on an annual
     basis to 1.10% of the daily value of the total investments of the Account.
     These fees aggregated $2,361 for the year ended December 31, 1999. Under
     the Modified Enhanced contract, the Company deducts a fee from the  account
     each day for assuming the mortality and expense risks. This fee is equal on
     an annual basis to 0.95% of the daily value of the total investments of the
     account. These fees aggregated $167 for the year ended December 31, 1999.

     Pursuant to an administrative  agreement  between AAG and the Company, AAG
     subsidiaries provide sales and  administrative  services to the Company and
     the Account. The Company may deduct a percentage  of purchase  payments
     surrendered to cover sales expenses. The percentage decreases to 0% from a
     maximum of 8.0% depending on the product and based upon the number of years
     the purchase payment has been held.  In addition,  the  Company  may deduct
     units from contracts  annually and upon full surrender to cover an
     administrative fee ranging from $30 to $40. These expenses totaled $114,366
     for the year ended December 31, 1999.

(5)  OTHER  TRANSACTIONS  WITH AFFILIATES

     AAG Securities,  Inc., an affiliate of the Company, is the principal
     underwriter and performs all variable annuity sales functions on behalf of
     the Company.

<PAGE>
                      ANNUITY INVESTORS VARIABLE ACCOUNT B
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                                December 31, 1999

(6)  NET ASSETS

     The following is a reconciliation of net assets at December 31, 1999:


                                                                         1999
                                                                  -------------


     Proceeds from the sales of units since organization,
        less cost of units redeemed                                $145,559,825
     Undistributed net investment income                              1,832,888
     Undistributed net realized gains on sale of investments          1,845,239
     Net unrealized appreciation (depreciation) of investments       40,200,573
                                                                  -------------
     Net assets, end of period                                     $189,438,525
                                                                 ==============



<PAGE>
                             ANNUITY INVESTORS LIFE

                                INSURANCE COMPANY


                      Statutory-Basis Financial Statements
                         and Other Financial Information

                     Years ended December 31, 1999 and 1998
                       With Report of Independent Auditors

<PAGE>









                    ANNUITY INVESTORS LIFE INSURANCE COMPANY

                      Statutory-Basis Financial Statements
                         and Other Financial Information

                     Years ended December 31, 1999 and 1998




                                Contents


Report of Independent Auditors............................................1

Audited Statutory-Basis Financial Statements

Balance Sheets - Statutory-Basis..........................................2
Statements of Operations - Statutory-Basis................................3
Statements of Changes in Capital and Surplus -
Statutory-Basis...........................................................4
Statements of Cash Flows - Statutory-Basis................................5
Notes to Statutory-Basis Financial Statements.............................6


<PAGE>

                       Report of Independent Auditors


Board of Directors
Annuity Investors Life Insurance Company


We have  audited  the  accompanying  statutory-basis  balance  sheets of Annuity
Investors  Life  Insurance  Company as of December  31,  1999 and 1998,  and the
related  statutory-basis  statements  of  operations,  changes  in  capital  and
surplus, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial  statements based on our audits.  We conducted our
audits in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable  assurance about
whether the financial  statements  are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion. As described in Notes B and I
to the financial  statements,  the Company presents its financial  statements in
conformity  with  accounting  practices  prescribed  or  permitted  by the  Ohio
Insurance Department,  which practices differ from generally accepted accounting
principles.   The  variances  between  such  practices  and  generally  accepted
accounting  principles and the effects on the accompanying  financial statements
are  described in Notes B and I. In our  opinion,  because of the effects of the
matter described in the preceding  paragraph,  the financial statements referred
to above do not present fairly, in conformity with generally accepted accounting
principles,  the financial  position of Annuity Investors Life Insurance Company
at December  31, 1999 and 1998,  or the  results of its  operations  or its cash
flows  for  the  years  then  ended.  However,  in our  opinion,  the  financial
statements  referred to above  present  fairly,  in all material  respects,  the
financial  position of Annuity  Investors Life Insurance Company at December 31,
1999 and 1998,  and the  results  of its  operations  and its cash flows for the
years then ended in conformity with accounting practices prescribed or permitted
by the Ohio Insurance Department.


                                          /S/ Ernst & Young, LLP
                                          -------------------------
                                             Ernst & Young, LLP
March 9, 2000
<PAGE>

                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                STATUTORY-BASIS

                                                                                             December 31
                                                                                1999                       1998
<S>                                                                         <C>                       <C>
     ADMITTED ASSETS
     Cash and investments
         Fixed maturities - at amortized cost
              (market value - $182,867,342 and $105,451,926)                $193,743,079               $104,080,672
         Policy loans                                                          3,047,433                  1,293,252
         Short-term investments                                               10,926,798                 15,489,533
         Cash                                                                    3,899,250                4,400,560

         Total cash and investments                                          211,616,560                125,264,017

     Investment income due and accrued                                         2,755,329                  1,787,577
     Reinsurance ceded receivable                                                 29,185                     36,505
     Other admitted assets                                                       350,792                     67,656

         Total General Account admitted assets                               214,751,866                127,155,755
     Separate Account assets                                                 354,371,093                120,049,207

         Total admitted assets                                              $569,122,959               $247,204,962

     LIABILITIES, CAPITAL AND SURPLUS
     Annuity reserves                                                       $193,500,443               $106,630,855
     Policy and contract claims                                                1,113,896                  1,190,191
     Commissions due and accrued                                                 438,742                    312,211
     General expenses due and accrued                                            386,507                    258,781
     Transfers to Separate Accounts due and
     accrued (contingent deferred sales charges)                             (14,823,799)                (6,469,163)
     Taxes, licenses and fees due and accrued                                     19,861                     79,500
     Asset valuation reserve                                                     736,841                    370,700
     Reinsurance ceded payable                                                    58,000                    416,051
     Payable to parent and affiliates                                            322,213                    288,222
     Payable for securities                                                            -                  2,005,397
     Remittances and items not allocated                                       5,862,365                    497,147
     Other liabilities                                                             21,380                     227,316

         Total General Account liabilities                                   187,636,449                105,807,208
     Separate Account liabilities                                            354,371,093                120,049,207

         Total liabilities                                                   542,007,542                225,856,415

     Common stock, par value- $125 per share:
         - 25,000 shares authorized
         - 20,000 shares issued and outstanding                                2,500,000                  2,500,000
     Gross paid-in and contributed surplus                                    34,550,000                 24,550,000
     Unassigned deficit                                                       (9,934,583)                (5,701,453)
                                                                              ----------                 ----------

         Total capital and surplus                                            27,115,417                 21,348,547

         Total liabilities, capital and surplus                             $569,122,959               $247,204,962

</TABLE>

                See notes to statutory-basis financial statements
                                        2

<PAGE>


                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
                            STATEMENTS OF OPERATIONS
                                 STATUTORY-BASIS

<TABLE>
<CAPTION>


                                                                                    Year ended December 31

                                                                                   1999                 1998
<S>                                                                         <C>                   <C>
     Revenues
         Premiums and annuity considerations                                $  59,560,346         $  72,586,568
         Deposit-type funds                                                   204,983,631            89,221,073
         Net investment income                                                 10,592,696             4,811,248
         Amortization of interest maintenance reserve                             (23,774)               (2,884)
         Commission and expense allowance on reinsurance ceded                     11,920                36,505
         Contract charges - Separate Accounts                                   2,975,960               938,114
         Other income                                                             624,366               175,491

                Total revenue                                                 278,725,145           167,766,115

     Benefits and expenses
         Increase in aggregate reserves                                        86,869,589            83,443,867
         Increase (decrease) in policy and contract claim
         reserves                                                                 (76,295)            1,190,191
         Policyholders' benefits                                               25,208,176             6,298,169
         Commissions                                                           17,014,820            12,860,357
         General insurance expenses                                             8,852,677             5,805,845
         Taxes, licenses and fees                                                 489,962               437,001
         Net transfers to Separate Accounts                                   144,083,078            62,546,680

                Total benefits and expenses                                   282,442,007           172,582,110

     Loss from operations before federal income taxes                          (3,716,862)           (4,815,995)

     Benefit for federal income taxes                                                    -                     -

     Loss from operations after federal income taxes before                    (3,716,862)           (4,815,995)
     net realized capital losses

     Net realized capital losses:
         Net realized capital losses before federal income                       (412,324)               (2,828)
         taxes and transfer to IMR
         Capital loss tax benefit                                                       -                     -
         Interest maintenance reserve transfer (net of tax)                       268,011                 1,838

                Net realized capital losses after transfer to IMR                (144,313)                 (990)

     Net loss                                                               $  (3,861,175)          $(4,816,985)



                                         See notes to statutory-basis financial statements
</TABLE>









                                                                 3

<PAGE>

                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
                  STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
                                 STATUTORY-BASIS
<TABLE>
<CAPTION>



                                                                                   Year ended December 31

<S>                                                                              <C>                    <C>
                                                                                 1999                   1998
     Common stock
         Balance at beginning and end of year                               $   2,500,000         $   2,500,000


     Gross paid-in and contributed surplus
         Balance at beginning of year                                       $  24,550,000         $  17,550,000
         Surplus contribution by parent                                        10,000,000             7,000,000

                Balance at end of year                                      $  34,550,000         $  24,550,000


     Unassigned deficit
         Balance at beginning of year                                       $  (5,701,453)        $    (154,910)
         Net loss                                                              (3,861,175)           (4,816,985)
         Increase in non-admitted assets                                          (39,698)             (336,458)
         Increase in asset valuation reserve                                     (366,142)             (244,624)
         Adjustment for prior year taxes                                           33,885              (148,476)

                Balance at end of year                                      $  (9,934,583)        $  (5,701,453)


     Total capital and surplus                                              $  27,115,417         $  21,348,547


                                           See notes to statutory-basis financial statements

</TABLE>



                                                                 4

<PAGE>


                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
                            STATEMENTS OF CASH FLOWS
                                 STATUTORY-BASIS

<TABLE>
<CAPTION>

                                                                                   Year ended December 31

<S>                                                                               <C>                   <C>
                                                                                  1999                  1998
     Operations:
         Premiums and annuity considerations                                $  59,560,346         $  72,586,568
         Deposit-type funds                                                   204,983,631            89,221,073
         Net investment income                                                  9,706,002             3,673,508
         Net increase in policy loans                                          (1,754,181)           (1,011,494)
         Policyholder benefits paid                                           (25,232,406)           (6,298,169)
         Commissions, expenses and other taxes paid                           (26,183,048)          (18,779,248)
         Net transfers to Separate Accounts                                  (152,437,714)          (66,844,972)
         Contract charges - Separate Accounts                                   2,975,960               938,114
         Other cash provided (used)                                             5,414,876              (200,930)

                Net cash provided by operations                                77,033,466            73,284,450

     Investing activities:
         Sale, maturity or repayment of fixed maturities                       17,388,402             4,617,366
         Purchase of fixed maturities                                        (107,480,516)          (75,650,853)
         Cash (used) provided from receivable/payable
         for securities                                                        (2,005,397)            2,005,397

                Net cash used in investment activities                        (92,097,511)          (69,028,090)

     Financing activities:
         Surplus paid in                                                       10,000,000             7,000,000

                Net cash provided by financing activities                      10,000,000             7,000,000


     Net (decrease) increase in cash and short-term
     investments                                                               (5,064,045)           11,256,360

     Cash and short-term investments at beginning of year                      19,890,093             8,633,733

     Cash and short-term investments at end of year                         $  14,826,048         $  19,890,093

</TABLE>


                See notes to statutory-basis financial statements


                                                                 5

<PAGE>


                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
                  NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

A.  GENERAL

Annuity  Investors Life Insurance  Company  ("AILIC" or "the Company"),  a stock
life insurance  company  domiciled in the State of Ohio, is an indirectly  owned
subsidiary of American Annuity Group, Inc. ("AAG"),  a publicly traded financial
services holding company of which American  Financial Group,  Inc.("AFG")  owned
83% as of December 31, 1999.

AILIC's  products are variable and fixed annuities.  The variable  annuities are
reported  as  deposit-type  funds and are  marketed  to  hospitals,  educational
institutions and other qualified and non-qualified  markets.  During 1997, AILIC
also began  writing  individual  fixed  annuity  products  produced by one large
agency,  primarily in the western part of the United  States.  In 1999 and 1998,
the individual fixed annuity  products  represented  approximately  23% and 45%,
respectively, of total production

B.  ACCOUNTING POLICIES

BASIS OF PRESENTATION The accompanying  financial  statements have been prepared
in conformity with accounting  practices prescribed or permitted by the National
Association  of  Insurance   Commissioners   ("NAIC")  and  the  Ohio  Insurance
Department,  which vary in some  respects  from  generally  accepted  accounting
principles ("GAAP"). The more significant of these differences are as follows:

(a)  annuity receipts and deposit-type funds are accounted for as revenues
     versus liabilities;
(b)  costs incurred in the acquisition of new business such as commissions,
     underwriting and policy issuance costs are expensed at the time incurred
     versus being capitalized;
(c)  reserves established for annuity reserves are calculated using more
     conservative assumptions for mortality and interest rates than would be
     used under GAAP;
(d)  an Interest Maintenance Reserve ("IMR") is provided whereby portions of
     realized gains and losses from fixed income investments are deferred and
     amortized into investment income as prescribed by the NAIC;
(e)  investments  in fixed  maturity securities considered  "available for sale"
     (as defined by GAAP)are generally recorded at amortized cost versus market;
(f)  an Asset Valuation Reserve ("AVR")is provided which reclassifies a portion
     of surplus to liabilities; and
(g)  the cost of certain assets designated as "non-admitted assets"
     (principally advance commissions paid to agents)is charged against surplus.

Preparation of the financial  statements  requires  management to make estimates
and  assumptions  that affect amounts  reported in the financial  statements and
accompanying notes. Such estimates and assumptions could change in the future as
more  information  becomes  known which could  impact the amounts  reported  and
disclosed herein.

Certain  reclassifications have been made to the prior year financial statements
to conform with current year presentation.

INVESTMENTS  Asset values are generally  stated as follows:  Bonds not backed by
other loans,  where permitted,  are carried at amortized cost using the interest
method;  loan-backed  bonds and  structured  securities,  where  permitted,  are
carried at amortized cost using the interest method;  short-term investments are
carried at cost; and policy loans are carried at the aggregate unpaid balance.

The Company uses dealer modeled  prepayment  assumptions to determine  effective
yields for loan-backed  bonds and structured  securities.  These assumptions are
consistent with the current interest rate and economic environment.  Significant
changes in  estimated  cash flows from the  original  purchase  assumptions  are
accounted for on a prospective basis.

As  prescribed  by the  NAIC,  the  market  value  for  investments  in bonds is
determined  by the  values  included  in the  Valuations  of  Securities  manual
published by the NAIC's  Securities  Valuation  Office.  Those values  generally
represent  quoted  market  value  prices  for  securities  traded in the  public
marketplace  or  analytically  determined  values  by the  Securities  Valuation
Office.


                                        6
<PAGE>

                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
            NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

INVESTMENTS (continued)

Short-term  investments having original  maturities of three months or less when
purchased  are   considered  to  be  cash   equivalents   for  purposes  of  the
statutory-basis financial statements.

The carrying values of cash and short-term  investments  approximate  their fair
values.

Gains or losses on sales of securities are recognized at the time of disposition
with the amount of gain or loss determined on the specific identification basis.

The IMR applies to  interest-related  realized  capital gains and losses (net of
tax) and is intended to defer realized  gains and losses  resulting from changes
in the general level of interest  rates.  The IMR is amortized  into  investment
income over the approximate remaining life of the investments sold. AILIC has an
IMR asset which is non-admitted and charged against surplus.

The AVR  provides  for  possible  credit-related  losses  on  securities  and is
calculated  according to a specified  formula as  prescribed by the NAIC for the
purpose of  stabilizing  surplus  against  fluctuations  in the market  value of
investment  securities.  Changes in the  required  reserve  balances are made by
direct credits or charges to surplus.

PREMIUMS Annuity premiums and deposit-type  funds are recognized as revenue when
received.

SEPARATE  ACCOUNTS  Separate  account  assets and  liabilities  reported  in the
accompanying  statutory-basis balance sheets represent funds that are separately
administered,   principally   for   annuity   contracts,   and  for   which  the
contractholder,  rather than AILIC,  bears the  investment  risk.  Assets of the
separate  accounts are not  chargeable  with  liabilities  incurred in any other
business  operation  of AILIC.  Separate  account  assets are reported at market
value.  The  operations  of  the  separate  accounts  are  not  included  in the
accompanying  statutory-basis  financial  statements.  Fees  charged on separate
account policyholder deposits are included in other income.

ANNUITY  RESERVES  Annuity  reserves are developed by actuarial  methods and are
determined  based on published tables using statutory  specified  interest rates
and valuation  methods that will provide,  in the  aggregate,  reserves that are
greater than or equal to the minimum amounts required by law.

The fair value of the  liability for annuities in the payout phase is assumed to
be the  present  value of the  anticipated  cash  flows,  discounted  at current
interest rates. Fair value of annuities in the accumulation  phase is assumed to
be no more than the  policyholders'  cash surrender  amount.  The aggregate fair
value of all reserve  liabilities  was  approximately  $193.5 million and $106.6
million at December 31, 1999 and 1998, respectively.

REINSURANCE  Reinsurance premiums,  benefits and expenses are accounted for on a
basis consistent with those used in accounting for the original  policies issued
and the terms of the reinsurance contracts.  AILIC remains obligated for amounts
ceded in the event that the reinsurers do not meet their obligations.

FEDERAL INCOME TAXES American Financial  Corporation  ("AFC") files consolidated
federal income tax returns which include  AILIC.  The provision for income taxes
has been computed as if AILIC had filed tax returns on a separate company basis.
In  accordance  with  terms  of  AAG's  indentures,  AAG  receives  AILIC's  tax
allocation payments and any amounts owed to AFC are paid by AAG.

BENEFIT  PLAN  All  employees  meeting  minimum  requirements  are  eligible  to
participate in an Employee Stock Ownership Retirement Plan ("ESORP") established
by AAG. The ESORP is a noncontributory, trusteed plan which invests primarily in
securities of AAG for the benefit of the employees of AAG and its  subsidiaries.
Contributions are discretionary by the Board of Directors of AAG and are charged
against  earnings in the year for which they are declared.  Qualified  employees
having vested rights are entitled to benefit payments at age 60.

                                                                 7
<PAGE>



                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
            NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

C.   INVESTMENTS

     Fixed maturity investments at December 31 consisted of the following:
<TABLE>
<CAPTION>

                                                                                                 1999
                                                                  Carrying            Market                Gross Unrealized
                                                                   Value              Value             Gains             Losses
<S>                                                             <C>               <C>                  <C>            <C>

     U.S. Government and government
         agencies and authorities                               $  23,638,025      $ 22,894,844      $  13,899      $    757,080
     Public utilities                                               7,860,872         7,467,832              -           393,040
     Mortgage-backed securities                                    84,039,756        78,987,840         22,523         5,074,439
     All other corporate                                           78,204,426        73,516,826        112,294         4,799,894

         Total fixed maturity investments                        $193,743,079      $182,867,342       $148,716       $11,024,453


                                                                                                    1998
                                                                   Carrying            Market                Gross Unrealized
                                                                    Value               Value            Gains              Losses
     U.S. Government and government
         agencies and authorities                               $  11,468,057     $  11,725,221      $   257,164    $          -
     Public Utilities                                               3,515,521         3,572,345           56,824               -
     Mortgage-backed securities                                    36,024,471        35,613,490          241,662         652,643
     All other corporate                                          53,072,623         54,540,870        1,485,224          16,977

         Total fixed maturity investments                        $104,080,672      $105,451,926       $2,040,874        $669,620

</TABLE>

The table below sets forth the scheduled  maturities of AILIC's fixed maturity
investments as of December 31, 1999:

<TABLE>
<CAPTION>                                                                                         Carrying              Market
                                                                                                   Value                Value
<S>                                                                                         <C>                   <C>

Bonds by maturity:
     Due within 1 year or less                                                              $    4,207,465         $   4,174,380
     Over 1 year through 5 years                                                                18,607,502            18,066,284
     Over 5 years through 10 years                                                              93,436,969            88,555,502
     Over 10 years through 20 years                                                             54,382,249            50,109,709
     Over 20 years                                                                              23,108,894            21,961,467

                Total bonds by maturity                                                       $193,743,079          $182,867,342
</TABLE>

The expected  maturities in the foregoing  table may differ from the contractual
maturities   because  certain  borrowers  have  the  right  to  call  or  prepay
obligations with or without call or prepayment penalties.

Proceeds from sales of fixed maturity investments were $17.4 million in 1999 and
$4.6  million in 1998.  Gross  realized  gains of $138,708  and $6,993 and gross
realized  losses of $551,032 and $9,821 were realized on those sales during 1999
and 1998, respectively.

U.S.  Treasury  Notes with a carrying value of $6.8 million at December 31, 1999
and 1998 were on deposit as required  by the  insurance  departments  of various
states.



                                                                 8
<PAGE>


                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
            NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

Net investment income consisted of the following:
<TABLE>
<CAPTION>

                                                                                1999                   1998
<S>                                                                         <C>                    <C>

     Bonds                                                                  $10,314,501            $4,421,263
     Short-term investments                                                     371,460               455,230
     Cash on hand and on deposit                                                  5,357                 1,965
     Policy loans                                                               116,190                32,876
     Miscellaneous                                                               16,137                 6,776

                Gross investment income                                      10,823,645             4,918,110

     Investment expenses                                                       (230,949)             (106,862)

                Net investment income                                       $10,592,696            $4,811,248
</TABLE>

D.   FEDERAL INCOME TAXES

AILIC has no federal  income taxes  available  for  recoupement  in the event of
future  losses.  AILIC has  approximately  $2.9  million,  $4.6 million and $2.0
million in loss  carryforwards  derived from years ended December 31, 1999, 1998
and 1997,  respectively,  to offset future  year's  taxable  income.  These loss
carryforwards  will expire in the year 2019, 2018 and 2012,  respectively.  Loss
carryforwards  derived prior to 1998 will expire in 15 years,  and those derived
in 1998 or after, per new IRS regulations, will expire in 20 years.

E.   RELATED PARTY TRANSACTIONS

On December  31, 1998,  for all  policies  issued by AILIC on or after August 1,
1998,  a  co-insurance  agreement  was  entered  into with Great  American  Life
Insurance  Company  ("GALIC") to reinsure all of AILIC's equity indexed  annuity
premiums,  benefits and expenses  with GALIC.  As of December 31, 1999 and 1998,
AILIC  transferred $0.1 million and $0.4 million,  respectively,  of premiums to
GALIC.

AILIC has an  agreement  with  AAG,  subject  to the  direction  of the  Finance
Committee of AILIC,  whereby AAG, along with services provided by American Money
Management, Inc. (an affiliate), provides for management and accounting services
related to the investment  portfolio.  In 1999 and 1998, AILIC paid $146,072 and
$90,300 respectively, in management fees.

AILIC has an agreement with AAG Securities,  Inc., a wholly-owned  subsidiary of
AAG,  whereby AAG  Securities is the principal  underwriter  and  distributor of
AILIC's variable contracts.  AILIC pays AAG Securities for acting as underwriter
under a distribution  agreement.  In 1999 and 1998,  AILIC paid $5.0 million and
$2.1 million, respectively, in commissions to AAG Securities.

Certain  administrative,  management,  accounting,  actuarial,  data processing,
collection and investment  services are provided under agreements  between AILIC
and affiliates at charges not unfavorable to AILIC or the insurance  affiliates.
In 1999 and 1998,  AILIC paid $2.9 million and $2.4 million,  respectively,  for
services to affiliates.

F.   DIVIDEND RESTRICTIONS

The amount of dividends  which can be paid by AILIC  without  prior  approval of
regulatory  authorities  is  subject to  restrictions  relating  to capital  and
surplus and net income.  The maximum amount of dividends payable in 2000 without
prior approval is $0.






                                        9
<PAGE>

                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
            NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998


G.   ANNUITY RESERVES, EXCLUDING SEPARATE ACCOUNTS

At December 31, 1999, AILIC's annuity reserves that are subject to discretionary
withdrawal  (with  adjustment),  subject to  discretionary  withdrawal  (without
adjustment),  and not subject to  discretionary  withdrawal  are  summarized  as
follows (in millions):

<TABLE>
<CAPTION>
                                                                                        Amount          Percent

<S>                                                                                     <C>              <C>

       Subject to discretionary withdrawal (with adjustment):
           With market value adjustment                                                  $     -              - %
           At book value less current surrender charge of 5% or more                      158.7            29.7
           At market value                                                                339.5            63.7

                  Total with adjustment or at market value                                498.2            93.4

       Subject to discretionary withdrawal (without adjustment) at
                  book value with minimal or no charge or adjustment                       20.9             3.9
       Not subject to discretionary withdrawal                                             14.5             2.7

                  Total annuity reserves-before reinsurance                               533.6           100.0 %

       Less reinsurance ceded                                                              (0.5)

                  Net annuity reserves                                                   $533.1

       Reconciliation to policy benefit reserves for life policies and contracts:
           Annuity reserves                                                              $193.5
           Contingent deferred sales charges                                              (14.8)
           Separate Account Liabilities                                                   354.4
           Net life reserves                                                                   -
           Miscellaneous other reserves                                                        -

           Total policy benefit reserves for life policies and contracts                 $533.1

</TABLE>

                                                                10

<PAGE>


                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
            NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998


H.   SEPARATE ACCOUNTS

The Company writes individual and group non-guaranteed  variable annuities.  Net
transfers to (from) the Separate  Accounts for the years ended December 31, 1999
and 1998 are summarized as follows:

<TABLE>
<CAPTION>
<S>                                                                                          <C>                       <C>
                                                                                             1999                      1998

     Transfers to Separate Accounts - deposit-type funds                                 $141,316,931              $64,500,892
     Transfers to Separate Accounts - withdrawals and other transfers, net                 11,120,629                2,344,080
     Transfers from Separate Accounts - contingent deferred sales charges                  (8,354,482)              (4,298,292)

                  Net transfers to Separate Accounts                                     $144,083,078              $62,546,680
</TABLE>


<TABLE>
<CAPTION>
All Separate Account reserves are non-guaranteed and subject to discretionary withdrawal at market value.  Investments in the
Separate Accounts at December 31 consisted of the following:

                                                                                              1999
                                                                                  Market                  Gross Unrealized
                                                                 Cost             Value               Gains            Losses
<S>                                                          <C>                 <C>               <C>              <C>

     Separate Account A                                      $115,472,858        $164,932,414      $49,962,607     $   503,051
     Separate Account B                                       149,238,107         189,438,679       40,703,435         502,863

         Total Separate Accounts                             $264,710,965        $354,371,093      $90,666,042      $1,005,914


                                                                                              1998
                                                                                   Market                Gross Unrealized
                                                                 Cost              Value
Gains              Losses

     Separate Account A                                     $  64,754,695       $  76,633,840      $12,249,838     $   370,693
     Separate Account B                                        39,705,022          43,415,367        3,876,131         165,786

         Total Separate Accounts                             $104,459,717        $120,049,207      $16,125,969     $   536,479

</TABLE>

                                                                11
<PAGE>

                 ANNUITY INVESTORS LIFE INSURANCE COMPANY
            NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998


I.   VARIANCES FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The  accompanying  financial  statements  have been prepared in conformity  with
accounting  practices prescribed or permitted by the NAIC and the Ohio Insurance
Department,  which  vary  in  some  respects  from  GAAP.  The  following  table
summarizes  the  differences  between  net income and surplus as  determined  in
accordance  with  statutory  accounting  practices  and GAAP for the years ended
December 31, 1999 and 1998:
<TABLE>
<CAPTION>

                                                                         Net Income                  Capital and Surplus
                                                                  1999             1998             1999               1998
<S>                                                         <C>                <C>             <C>                 <C>

As reported on a statutory basis                            $  (3,861,175)     $(4,816,985)    $  27,115,417       $21,348,547
   Commissions capitalized to DAC                            17,014,820       12,860,357        17,014,820        12,860,357
     General expenses capitalized to DAC                        7,100,406        4,064,093         7,100,406         4,064,093
     Taxes, licenses and fees capitalized to DAC                        -          262,200                 -           262,200
     Amortization of DAC                                       (3,516,819)        (752,613)       (3,516,819)         (752,613)
     Capital gains transferred to IMR, net of tax                (268,011)          (1,838)         (268,011)           (1,838)
     Amortization of IMR, net of tax                               23,774            2,884            23,774             2,884
     Contingent deferred sales charge                         (16,639,895)     (11,897,631)      (16,639,895)      (11,897,631)
     Federal income taxes                                          64,886          184,404            64,886           184,404
     Unrealized gain (loss) adjustment                                  -                -        (7,966,827)          460,852
     AVR adjustment                                                     -                -           366,142           244,624
     Non-admitted assets adjustment                                     -                -            39,698           336,457
     Prior year tax adjustment                                          -                -           (33,885)          148,476
     Prior year stat to GAAP cumulative adjustments                     -                -         8,104,502         2,192,237

         Total GAAP adjustments                                 3,779,161        4,721,856         4,288,791         8,104,502

GAAP basis                                                  $     (82,014)    $    (95,129)    $  31,404,208       $29,453,049
</TABLE>

J.   CODIFIED STATUTORY ACCOUNTING PRINCIPLES

In  1998,   the  NAIC   adopted   codified   statutory   accounting   principles
("Codification")  effective January 1, 2001. Codification will likely change, to
some extent, prescribed statutory accounting practices and may result in changes
to the  accounting  practices  that AILIC uses to  prepare  its  statutory-basis
financial  statements.  Codification will require adoption by the various states
before it becomes the  prescribed  statutory  basis of accounting  for insurance
companies  domesticated  within those states.  Accordingly,  before Codification
becomes   effective  for  AILIC,  the  Ohio  Insurance   Department  must  adopt
Codification  as the prescribed  basis of accounting on which domestic  insurers
must report their statutory-basis results to the Insurance Department.  Ohio has
adopted  Codification  effective January 1, 2001.  Management  believes that the
impact of Codification will not be material to AILIC's statutory-basis financial
statements.


                                     12


PART C - 333-51955
Other Information


Item 24.  Financial Statements and Exhibits

(a)      Financial Statements

         All required financial statements are included in Parts A or B of this
         Registration Statement.

(b)      Exhibits

         (1)    Resolution of  the  Board  of  Directors of Annuity  Investors
                Life Insurance Company(R) authorizing establishment of Annuity
                Investors(R) Variable Account B.1/

         (2)    Not Applicable.

         (3)      (a)   Distribution  Agreement  between  Annuity  Investors
                        Life Insurance  Company(R) and AAG Securities, Inc.2/

                         (i)  Amended Schedule 1 to Distribution Agreement. 3/

                  (b)   Form of Selling Agreement between Annuity Investors Life
                        Insurance Company(R), AAG Securities, Inc. and another
                        Broker-Dealer.1/

                  (c)   Revised  form of  Selling  Agreement  between  Annuity
                        Investors Life  Insurance Company(R), AAG Securities,
                        Inc. and another Broker-Dealer. 5/

         (4)    Individual and Group Contract, Forms and Endorsements.

                  (a)   Form of No-Load Qualified Individual Flexible Premium
                        Deferred Annuity Contract. 3/

                  (b)   Form of No-Load Non-Qualified Individual Flexible
                        Premium Deferred Annuity Contract. 3/

                  (c)   Form of Individual Retirement Annuity Endorsement to
                        Individual Qualified Contract. 3/

                  (d)   Form of SIMPLE IRA Endorsement to Qualified Individual
                        Contract. 3/

                  (e)   Form of Roth IRA Endorsement to Qualified Individual
                        Contract. 3/

                  (f)   Form of Employer Plan Endorsement to Qualified
                        Individual Contract. 3/

                  (g)   Form of Tax Sheltered Annuity Endorsement to Qualified
                        Individual Contract. 3/

                  (h)   Form of Qualified  Pension,  Profit Sharing and Annuity
                        Plan  Endorsement to Qualified  Individual
                        Contract. 3/

                  (i)   Form of Governmental Section 457 Plan Endorsement to
                        Qualified Individual Contract. 3/

                  (j)   Form of Texas Optional Retirement Program Endorsement
                        to Individual Contract.2/

                  (k)   Form of Long-Term Care Waiver Rider to Individual
                        Contract.2/

                  (l)   Form of Loan Endorsement to Individual Contract.2/

                  (m)   Form of Group Flexible Premium Deferred Variable Annuity
                        Contract. 10

                  (n)   Form of Certificate of Participation under a Group
                        Flexible Premium Deferred Variable Annuity Contract. 10

                  (o)   Form of Loan Endorsement to Group Contract.2/

                  (p)   Form of Loan Endorsement to Certificate of Participation
                        under a Group Contract. 2/

                  (q)   Form of Tax Sheltered Annuity Endorsement to Group
                        Contract.7/

                  (r)   Form of Tax Sheltered Annuity Endorsement to Certificate
                        of Participation under a Group Contract.7/

                  (s)   Form of Qualified Pension, Profit Sharing and
                        Annuity Plan Endorsement to Group Contract.7/

                  (t)   Form of Qualified Pension, Profit Sharing and Annuity
                        Plan Endorsement to Certificate of Participation under
                        a Group Contract.7/

                  (u)   Form of Employer Plan Endorsement to Group Contract.7/

                  (v)   Form of Employer Plan Endorsement to Certificate of
                        Participation under a Group Contract.7/

                  (w)   Form of Deferred Compensation Endorsement to
                        Group Contract.2/

                  (x)   Form of Deferred Compensation Endorsement to Certificate
                        of Participation under a Group Contract.2/

                  (y)   Form of Texas Optional Retirement Program Endorsement to
                        Group Contract.2/

                  (z)   Form of Texas Optional  Retirement  Program  Endorsement
                        to Certificate of Participation under a Group
                        Contract.2/

                  (aa)  Form of Governmental Section 457 Plan Endorsement to
                        Group Contract. 7/

                  (bb)  Form of Governmental  Section 457 Plan Endorsement to
                        Certificate of  Participation  under a Group
                        Contract. 7/

                  (cc)  Form of Successor Owner Endorsement to Group Contract.10

                  (dd)  Form of Successor Owner Endorsement to Certificate of
                        Participation under a Group Contract.10

                  (ee)  Form of Successor Owner Endorsement to Qualified
                        Individual Contract and Non-Qualified  Individual
                        Contract. 10

                  (ff)  Form of Individual Retirement Annuity Endorsement to
                        Group Contract . 6/

                  (gg)  Form of Individual  Retirement Annuity  Endorsement to
                        Certificate of Participation  under a Group
                        Contract. 6/

                  (hh)  Form of SIMPLE Individual Retirement Annuity Endorsement
                        to Group Contract. 6/

                  (ii)  Form of SIMPLE Individual Retirement Annuity
                        Endorsement to Certificate of Participation under a
                        Group Contract. 6/

                  (jj)  Form of Roth Individual Retirement Annuity Endorsement
                        to Group Contract. 6/

                  (kk)  Form of Roth Individual  Retirement Annuity Endorsement
                        to Certificate of Participation  under a
                        Group Contract. 6/

                  (ll)  Form of Unisex Endorsement to Nonqualified Individual
                        Contract. 6/

         (5)      (a)   Form of Application for Individual Flexible Premium
                        Deferred Annuity Contract. 3/

                  (b)   Form of Application for Group Flexible Premium Deferred
                        Annuity Contract. 8/

         (6)      (a)   Articles of Incorporation of Annuity Investors Life
                        Insurance Company(R).1/

                        (i)   Amendment  to Articles of Incorporation,  adopted
                              April 9, 1996,  and  approved by the Secretary of
                              State, State of Ohio, on July 11, 1996.2/

                        (ii)  Amendment  to Articles of  Incorporation, adopted
                              August 9, 1996, and approved by the Secretary of
                              State, State of Ohio, on December 3, 1996.2/

                  (b)   Code of Regulations of Annuity Investors Life Insurance
                        Company(R). 1/

         (7)            Not Applicable.

         (8)      (a)   Participation  Agreement between Annuity Investors Life
                        Insurance Company(R) and Dreyfus Variable Investment
                        Fund.2/

                        (i)   Letter Agreement dated April 14, 1997 between
                              Annuity Investors Life Insurance Company(R) and
                              Dreyfus Variable Investment Fund.2/

                  (b)   Participation  Agreement between Annuity Investors Life
                        Insurance Company(R) and Dreyfus Life and Annuity Index
                        Fund, Inc. (d/b/a Dreyfus Stock Index Fund).2/

                        (i)   Letter Agreement dated April 14, 1997 between
                              Annuity Investors Life Insurance Company(R) and
                              Dreyfus Life and Annuity Index Fund, Inc.
                              (d/b/a Dreyfus Stock Index Fund).2/

                  (c)   Participation Agreement between Annuity Investors  Life
                        Insurance  Company(R) and The  Dreyfus Socially
                        Responsible Growth Fund, Inc.2/

                        (i)   Letter Agreement dated April 14, 1997 between
                              Annuity Investors Life Insurance Company(R) and
                              The Dreyfus Socially Responsible Growth Fund,
                              Inc.2/

                  (d)   Participation Agreement between Annuity Investors  Life
                        Insurance  Company(R) and Janus  Aspen Series.2/

                        (i)   Amended Schedule A to Participation  Agreement
                              between Annuity  Investors Life Insurance
                              Company and Janus Aspen Series. 3/

                  (e)   Participation Agreement between Annuity Investors Life
                        Insurance Company(R) and Strong Variable Insurance
                        Funds, Inc. and Strong Special Fund II, Inc.2/

                  (f)   Participation  Agreement between Annuity Investors Life
                        Insurance Company(R) and INVESCO Variable Investment
                        Funds, Inc.2/

                        (i)    Amended Schedule B to Participation  Agreement
                               between Annuity  Investors Life Insurance
                               Company and INVESCO Variable Investment Funds,
                               Inc. 3/

                  (g)   Participation Agreement between  Annuity Investors Life
                        Insurance Company(R) and Morgan Stanley Universal
                        Funds, Inc.2/

                        (i)   Amended Schedule B to Participation  Agreement
                              between Annuity Investors Life Insurance
                              Company and Morgan Stanley Universal Funds,
                              Inc. 3/

                  (h)   Participation  Agreement  between  Annuity  Investors
                        Life  Insurance  Company(R) and PBHG Insurance
                        Series Fund, Inc.2/

                  (i)   Service Agreement between Annuity Investors Life
                        Insurance  Company(R) and American Annuity GroupSM,
                        Inc.1/

                  (j)   Agreement between AAG Securities, Inc. and AAG Insurance
                        Agency, Inc.1/

                  (k)   Investment  Service  Agreement  between  Annuity
                        Investors Life  Insurance  Company(R) and American
                        Annuity GroupSM, Inc. 1/

                  (l)   Service Agreement between Annuity Investors Life
                        Insurance Company(R) and Strong Capital Management,
                        Inc.2/

                  (m)   Service Agreement between Annuity Investors Life
                        Insurance Company(R) and Pilgrim Baxter & Associates,
                        Ltd.2/

                  (n)   Service Agreement between Annuity Investors Life
                        Insurance Company(R) and Morgan Stanley Asset
                        Management, Inc. 2/

                  (o)   Amended and Restated Agreement between The Dreyfus
                        Corporation and Annuity Investors Life Insurance
                        Company(R).2/

                  (p)   Service Agreement between Annuity Investors Life
                        Insurance Company(R) and Janus Capital Corporation.2/

                  (q)   Service Agreement between INVESCO Funds Group, Inc. and
                        Annuity Investors Life Insurance Company. 3/

                  (r)   Participation  Agreement  between The Timothy Plan
                        Variable  Series,  Timothy  Partners,  Ltd. and
                        Annuity Investors Life Insurance Company.3/

                  (s)   Service  Agreement  between The Timothy Plan Variable
                        Series and Annuity  Investors Life Insurance
                        Company. 3/

                  (t)   Participation  Agreement  between BT Insurance Funds
                        Trust and Annuity  Investors  Life Insurance
                        Company. 9/

                  (u)   Service Agreement between Bankers Trust Company and
                        Annuity Investors Life Insurance Company. 9/

         (9)    Opinion and Consent of Counsel. 3/

         (10)   Consent of Independent Auditors (filed herewith).

         (11)   No financial statements are omitted from Item 23.

         (12)   Not Applicable.

         (13)   Schedule for Computation of Performance Quotations. 3/

         (14)   Not Applicable

         (15)   Powers of Attorney (filed herewith).
________________________

1/    Incorporated  by  reference  to Form N-4,  filed on behalf of  Annuity
      Investors Variable Account B, SEC File No.333-19725 on December 23, 1996.
2/    Incorporated by reference to Pre-Effective  Amendment No. 1, filed on
      behalf of Annuity  Investors  Variable Account B, SEC File No. 333-19725
      on June 3, 1997.
3/    Filed in initial Registration  Statement on N-4, filed on behalf of
      Commodore Independence Contracts, SEC File No. 333-51955, on May 6, 1998.
4/    Filed with Pre-Effective Amendment No. 1 on July 6, 1998.
5/    Incorporated by reference to Post-Effective  Amendment No. 3, filed on
      behalf of Annuity Investors  Variable Account B, SEC File No. 333-19725
      on November 17, 1998.
6/    Incorporated by reference to Post-Effective  Amendment No. 4, filed on
      behalf of Annuity Investors  Variable Account B, SEC File No. 333-19725
      on February 1, 1999.
7/    Incorporated by reference to Post-Effective  Amendment No. 1, filed on
      behalf of Annuity Investors  Variable Account B, SEC File No. 333-19725
      on February 27, 1998.
8/    Incorporated by reference to Post-Effective  Amendment No. 2, filed on
      behalf of Annuity Investors  Variable Account B, SEC File No. 333-19725
      on April 29, 1998.
9/    Incorporated by reference to Post-Effective  Amendment No. 5, filed on
      behalf of Annuity Investors  Variable Account B, SEC File No. 333-19725
      on February 26, 1999.
10/   Filed with Post-Effective Amendment No. 1 on February 26, 1999, on behalf
      of Annuity Investors Variable Account B, SEC File No. 333-19725


<PAGE>


Item 25. Directors and Officers of the Depositor


                            Principal
                             Business     Positions and Offices
         Name                Address        With the Company
Charles R. Scheper             (1)        President, Chief Executive Office
                                          and Director
Stephen Craig Lindner          (1)        Director
William Jack Maney, II         (1)        Assistant Treasurer and Director
Robert Allen Adams             (1)        Chairman of the Board of Directors
Mark Francis Muething          (1)        Executive Vice President, Secretary,
                                          General Counsel and Director
 David B. Rich                 (1)        Chief Operating Officer and Director
Thomas Kevin Liguzinski        (1)        Senior Vice President
Charles Kent McManus           (1)        Senior Vice President
John P Gruber                  (1)        Vice President
Betty Marie Kasprowicz         (1)        Vice President and Assistant Secretary
Michael Joseph O'Connor        (1)        Senior Vice President
Wendy L. Wilson                (1)        Vice President and Treasurer
Thomas E. Mischell             (1)        Assistant Treasurer




(1)      P.O. Box 5423, Cincinnati, Ohio  45201-5423.

Item 26. Persons Controlled by or Under Common Control With the Depositor or
Registrant

The Depositor,  Annuity  Investors Life  Insurance  Company(R) is a wholly owned
subsidiary of Great American(R) Life Insurance Company,  which is a wholly owned
subsidiary  of  American   Annuity   Group,SM  Inc.  The   Registrant,   Annuity
Investors(R)  Variable  Account  B, is a  segregated  asset  account  of Annuity
Investors Life Insurance Company(R).

The  following  chart  shows  the  affiliations  among  Annuity  Investors Life
Insurance Company(R) and its parent, and its affiliated entities.


<PAGE>

<TABLE>
<CAPTION>

AMERICAN FINANCIAL GROUP, INC.                                                            % OF STOCK
                                                                                           OWNED (1)
|                                                     STATE OF           DATE OF          BY IMMEDIATE   NATURE OF
|                                                     DOMICILE           INCORPORATION    PARENT COMPANY BUSINESS
|                                                     --------           -------------    -------------- ---------
<S>                                                   <C>                <C>                   <C>       <C>
|
|_AFC Holding Company                                 Ohio               12/09/1994            100       Holding Company
  |_AHH Holdings, Inc.                                Florida            12/27/1995             49       Holding Company
    |_Columbia Financial Company                      Florida            10/26/1993            100       Real Estate Holding Company
    |_American Heritage Holding Corporation           Delaware           11/02/1994            100       Home Builder
      |_Heritage Homes Realty, Inc.                   Florida            07/20/1993            100       Home Sales
      |_Southeast Title, Inc.                         Florida            05/16/1995            100       Title Company
      |_Columbia Financial Company                    Florida            10/26/1993            100       Real Estate Holding Company
    |_Heritage Home Finance Corporation               Florida            02/10/1994            100       Finance Company
  |_American Financial Capital Trust I                Delaware           09/14/1996            100       Statutory Business Trust
  |_American Financial Corporation                    Ohio               11/15/1955            100       Holding Company
    |_AFC Coal Properties, Inc.                       Ohio               12/18/1996            100       Real Estate Holding Company
    |_American Financial Corporation                  Ohio               08/27/1963            100       Inactive
    |_American Money Management Corporation           Ohio               03/01/1973            100       Investment Management
    |_American Money Management International, N.V    Netherland -       05/10/1985            100       Securities Management
                                                        Antilles
    |_American Premier Underwriters, Inc.             Pennsylvania       00/00/1846            100(2)    Diversified
      |_The Ann Arbor Railroad Company                Michigan           09/21/1895             99       Inactive
      |_The Associates of the Jersey Company          New Jersey         11/10/1804            100       Inactive
      |_Cal Coal, Inc.                                Illinois           05/30/1979            100       Inactive
      |_GAI (Bermuda) Ltd.                            Bermuda            04/06/1998            100       Holding Company
        |_GAI Insurance Company, Ltd.                 Bermuda            09/18/1989            100       Reinsurance Company
      |_The Indianapolis Union Railway Company        Indiana            11/19/1872            100       Inactive
      |_Lehigh Valley Railroad Company                Pennsylvania       04/21/1846            100       Inactive
      |_The New York and Harlem Railroad Company      New York           04/25/1831             97       Inactive
      |_The Owasco River Railway, Inc.                New York           06/02/1881            100       Inactive
      |_PCC Real Estate, Inc.                         New York           12/15/1986            100       Holding Company
        |_PCC Chicago Realty Corp.                    New York           12/23/1986            100       Real Estate Developer
        |_PCC Gun Hill Realty Corp.                   New York           12/18/1985            100       Real Estate Developer
        |_PCC Michigan Realty, Inc.                   Michigan           11/09/1987            100       Real Estate Developer
        |_PCC Scarsdale Realty Corp.                  New York           06/01/1986            100       Real Estate Developer
          |_Scarsdale Depot Associates, L.P.          Delaware           05/05/1989             80       Real Estate Developer
      |_Penn Central Energy Management Company        Delaware           05/11/1987            100       Energy Operations Manager
      |_Pennsylvania Company                          Delaware           12/05/1958            100       Holding Company
        |_Atlanta Casualty Company                    Ohio               06/13/1972            100(2)    Property/Casualty Insurance
          |_American Premier Insurance Company        Indiana            11/30/1989            100       Property/Casualty Insurance
          |_Atlanta Reserve Insurance Company         Ohio               12/07/1998            100       Property/Casualty Insurance
          |_Atlanta Specialty Insurance Company       Ohio               02/06/1974            100       Property/Casualty Insurance
          |_Atlanta Casualty Group, Inc.              Georgia            04/01/1977            100       Insurance Agency
            |_Atlanta Casualty General Agency, Inc.   Texas              03/15/1961            100       Managing General Agency
            |_Atlanta Insurance Brokers, Inc.         Georgia            02/06/1971            100       Insurance Agency
            |_Treaty House, Ltd. (d/b/a Mr. Budget)   Nevada             11/02/1971            100       Insurance Premium Finance
          |_Penn Central U.K. Limited                 United Kingdom     10/28/1992            100       Insurance Holding Company
            |_Insurance (GB) Limited                  United Kingdom     05/13/1992            100       Property/Casualty Insurance
</TABLE>


                                                                - 1 -

<PAGE>



<TABLE>
<CAPTION>
|_AFC Holding Company                                                                  % OF STOCK
  |_American Financial Corporation                                                      OWNED (1)
    |_American Premier Underwriters, Inc.              STATE OF      DATE OF         BY IMMEDIATE   NATURE OF
      |_Pennsylvania Company                           DOMICILE      INCORPORATION   PARENT COMPANY BUSINESS
                                                       --------      -------------   -------------- ---------
<S>                                                    <C>           <C>             <C>            <C>
        |_Delbay Corporation                           Delaware      12/27/1962         100         Inactive
        |_Great Southwest Corporation                  Delaware      10/25/1978         100         Real Estate Developer
          |_World Houston, Inc.                        Delaware      05/30/1974         100         Real Estate Developer
        |_Hangar Acquisition Corp.                     Ohio          10/06/1995         100         Aircraft Investment
        |_Infinity Insurance Company                   Indiana       07/09/1955         100         Property/Casualty Insurance
          |_Infinity Agency of Texas, Inc.             Texas         07/15/1992         100         Managing General Agency
          |_The Infinity Group, Inc.                   Indiana       07/22/1992         100         Services Provider
          |_Infinity National Insurance Company        Indiana       08/05/1992         100         Property/Casualty Insurance
          |_Infinity Select Insurance Company          Indiana       06/11/1991         100         Property/Casualty Insurance
        |_Leader Insurance Company                     Ohio          03/20/1963         100         Property/Casualty Insurance
          |_American Commonwealth Development
            Company                                    Texas         07/23/1963         100         Real Estate Development
            |_ACDC Holdings Corporation                Texas         05/04/1981         100         Real Estate Development
          |_Budget Insurance Premiums, Inc.            Ohio          02/14/1964         100         Premium Finance Company
          |_Leader Group, Inc.                         Ohio          12/12/1997         100         Services Provider
          |_Leader Managing General Agency, Inc.       Texas         05/19/1989         100         Managing General Agency
          |_Leader National Agency, Inc.               Ohio          04/05/1963         100         Brokering Agent
          |_Leader National Agency of Texas, Inc.      Texas         01/25/1994         100         Managing General Agency
          |_Leader Preferred Insurance Company         Ohio          11/07/1994         100         Property/Casualty Insurance
          |_Leader Specialty Insurance Company         Indiana       03/10/1994         100         Property/Casualty Insurance
          |_TICO Insurance Company                     Ohio          06/03/1980         100         Property/Casualty Insurance
        |_PCC Technical Industries, Inc.               California    03/07/1955         100         Holding Company
          |_ESC, Inc.                                  California    11/02/1962         100         Connector Accessories
          |_Marathon Manufacturing Companies, Inc.     Delaware      11/18/1983         100         Holding Company
            |_Marathon Manufacturing Company           Delaware      12/07/1979         100         Inactive
          |_PCC Maryland Realty Corp.                  Maryland      08/18/1993         100         Real Estate Holding Company
          |_Penn Camarillo Realty Corp.                California    11/24/1992         100         Real Estate Holding Company
        |_Penn Towers, Inc.                            Pennsylvania  08/01/1958         100         Inactive
        |_Republic Indemnity Company of America        California    12/05/1972         100         Workers' Compensation Insurance
          |_Republic Indemnity Company of California   California    10/13/1982         100         Workers' Compensation Insurance
          |_Republic Indemnity Medical
            Management, Inc.                           California    03/25/1996         100         Medical Bill Review
        |_Risico Management Corporation                Delaware      01/10/1989         100         Risk Management
        |_Windsor Insurance Company                    Indiana       11/05/1987         100(2)      Property/Casualty Insurance
          |_American Deposit Insurance Company         Oklahoma      12/28/1966         100         Property/Casualty Insurance
            |_Granite Finance Co., Inc.                Texas         11/09/1965         100         Premium Financing
          |_Coventry Insurance Company                 Ohio          09/05/1989         100         Property/Casualty Insurance
          |_El Aguila Compania de
            Seguros, S.A. de C.V.                      Mexico        11/24/1994         100(2)      Property/Casualty Insurance
            |_Financiadora De Primas
               Condor S.A. de C.V.                     Mexico        03/06/1998          99         Premium Finance Company
          |_Moore Group Inc.                           Georgia       12/19/1962         100         Insurance Holding Company/Agency
            |_Casualty Underwriters, Inc.              Georgia       10/01/1954          51         Insurance Agency
            |_Dudley L. Moore Insurance, Inc.          Louisiana     03/30/1978      beneficial     Insurance Agency
                                                                                     interest
            |_Hallmark General Insurance
              Agency, Inc.                             Oklahoma      06/16/1972      beneficial     Insurance Agency
                                                                                     interest
            |_Windsor Group, Inc.                      Georgia       05/23/1991         100         Insurance Holding Company
          |_Regal Insurance Company                    Indiana       11/05/1987         100         Property/Casualty Insurance
          |_Texas Windsor Group, Inc.                  Texas         06/23/1988         100         Insurance Agency

</TABLE>



                                                                - 2 -

<PAGE>



<TABLE>
<CAPTION>
AMERICAN FINANCIAL GROUP, INC.
|_AFC Holding Company                                                                    % OF STOCK
  |_American Financial Corporation                                                        OWNED (1)
    |_American Premier Underwriters, Inc.              STATE OF         DATE OF         BY IMMEDIATE     NATURE OF
      |                                                DOMICILE         INCORPORATION   PARENT COMPANY   BUSINESS
      |                                                --------         -------------   --------------   ---------
<S>                                                    <C>              <C>               <C>            <C>
      |_Pennsylvania-Reading Seashore Lines            New Jersey       06/14/1901           66.67       Inactive
      |_Pittsburgh and Cross Creek Railroad Company    Pennsylvania     08/14/1970           83          Inactive
      |_PLLS, Ltd.                                     Washington       05/14/1990          100          Insurance Agency
      |_Premier Lease & Loan Services Insurance
          Agency, Inc.                                 Washington       12/27/1983          100          Insurance Agency
      |_Premier Lease & Loan Services B.V.             The Netherlands  08/24/1999          100          Insurance Agency
      |_Premier Lease & Loan Services of Canada, Inc.  Washington       02/28/1991          100          Insurance Agency
      |_Terminal Realty Penn Co.                       District of
                                                       Columbia         09/23/1968          100          Inactive
      |_United Railroad Corp.                          Delaware         11/25/1981          100          Inactive
        |_Detroit Manufacturers Railroad Company       Michigan         01/30/1902           82          Inactive
      |_Waynesburg Southern Railroad Company           Pennsylvania     09/01/1966          100          Inactive
    |_Chiquita Brands International, Inc.
          (and subsidiaries)                           New Jersey       03/30/1999           36.48(2)    Production/Processing/
    |                                                                                                      Distribution of Food
                                                                                                             Products
    |_Dixie Terminal Corporation                       Ohio             04/23/1970          100          Commercial Leasing
    |_Fairmont Holdings, Inc.                          Ohio             12/15/1983          100          Holding Company
    |_FWC Corporation                                  Ohio             03/16/1983          100          Financial Services
    |_Great American Insurance Company                 Ohio             03/07/1872          100          Property/Casualty Insurance
      |_Agricultural Excess and Surplus
          Insurance Company                            Delaware         02/28/1979          100          Excess & Surplus Lines
                                                                                                           Insurance
      |_Agricultural Insurance Company                 Ohio             03/23/1905          100          Property/Casualty Insurance
      |_American Alliance Insurance Company            Ohio             09/11/1945          100          Property/Casualty Insurance
      |_American Annuity Group, Inc.                   Delaware         05/15/1987           82.73(2)    Holding Company
        |_AAG Holding Company, Inc.                    Ohio             09/11/1996          100          Holding Company
          |_American Annuity Group Capital Trust I     Delaware         09/13/1996          100          Financing Vehicle
          |_American Annuity Group Capital Trust II    Delaware         03/11/1997          100          Financing Vehicle
          |_American Annuity Group Capital Trust III   Delaware         05/27/1997          100          Financing Vehicle
          |_Great American Life Insurance Company      Ohio             12/15/1959          100          Life Insurance Company
            |_American Retirement Life Insurance
                 Company                               Ohio             05/12/1978          100          Life Insurance Company
            |_Annuity Investors Life Insurance
                 Company                               Ohio             11/31/1981          100          Life Insurance Company
            |_CHATBAR, Inc.                            Massachusetts    11/02/1993          100          Hotel Operator
            |_Driskill Holdings, Inc.                  Texas            06/07/1995        beneficial     Hotel Management
                                                                                          interest
            |_GALIC Brothers, Inc.                     Ohio             11/12/1993           80          Real Estate Management
            |_Great American Life Assurance Company    Ohio             08/10/1967          100          Life Insurance Company
            |_Great American Life Children's           Ohio             08/06/1998        beneficial     Charitable Foundation
              Foundation                                                                  interest
            |_Great American Life Insurance Company
                 of New York                           New York         12/23/1963          100          Life Insurance Company
            |_Loyal American Life Insurance Company    Ohio             05/18/1955          100          Life Insurance Company
              |_ADL Financial Services, Inc.           North Carolina   09/10/1970          100          Marketing Services
              |_Purity Financial Corporation           Florida          12/21/1991          100          Marketing Services
            |_Skipjack Marina Corporation              Maryland         06/24/1999          100          Marine Operator
            |_United Teachers Associates Limited
                 Partnership                           Texas            12-17/1998           99.9(2)     Holding Company
               |_United Teachers Associates Insurance
                   Company                             Texas            12/15/1958          100          Life Insurance Company
        |_AAG Insurance Agency, Inc.                   Kentucky         12/06/1994          100          Life Insurance Agency
          |_AAG Insurance Agency of                    Massachusetts    05/25/1995          100          Insurance Agency
            Massachusetts, Inc.
        |_AAG Securities, Inc.                         Ohio             12/10/1993          100          Broker-Dealer
        |_American Data Source India Private Limited   India            09/03/1997           99          Software Development
        |_American Memorial Marketing Services, Inc.   Washington       06/19/1980          100          Inactive
</TABLE>


                                                               - 3 -

<PAGE>



<TABLE>
<CAPTION>
 AMERICAN FINANCIAL GROUP, INC.
 |_AFC Holding Company
   |_American Financial Corporation                                                       % OF STOCK
     |_Great American Insurance Company                                                    OWNED (1)
        |_American Annuity Group, Inc.                  STATE OF         DATE OF         BY IMMEDIATE    NATURE OF
                                                        DOMICILE         INCORPORATION   PARENT COMPANY  BUSINESS
          |                                             --------         -------------   --------------  ---------
<S>                                                     <C>              <C>               <C>           <C>
          |_Consolidated Financial Corporation          Michigan         09/10/1985           100        Financial Planning
          |_CSW Management Services, Inc.               Texas            06/27/1985           100        Inactive
          |_GALIC Disbursing Company                    Ohio             05/31/1994           100        Payroll Servicer
          |_Great American Life Assurance Company       Puerto Rico      07/01/1964            99        Life Insurance Company
                  of Puerto Rico, Inc.
          |_Keyes-Graham Insurance Agency, Inc.         Massachusetts    12/23/1987           100        Insurance Agency
          |_Laurentian Credit Services Corporation      Delaware         10/07/1994           100        Inactive
          |_Laurentian Marketing Services, Inc.         Delaware         12/23/1987           100        Inactive
          |_Laurentian Securities Corporation           Delaware         01/30/1990           100        Inactive
          |_Lifestyle Financial Investments, Inc.       Ohio             12/29/1993           100        Marketing Services
            |_Lifestyle Financial Investments Agency    Ohio             03/07/1994        beneficial    Life Insurance Agency
              of Ohio,Inc.                                                                 interest
            |_Lifestyle Financial Investments of        Indiana          02/24/1994           100        Life Insurance Agency
              Indiana, Inc.
            |_Lifestyle Financial Investments of        Kentucky         10/03/1994           100        Insurance Agency
              Kentucky, Inc.
            |_Lifestyle Financial Investments of        Minnesota        06/10/1985           100        Insurance Agency
              the Northwest, Inc.
            |_Lifestyle Financial Investments of        North Carolina   07/13/1994           100        Insurance Agency
              the Southeast, Inc.
          |_Loyal Marketing Services, Inc.              Alabama          07/20/1990           100        Marketing Services
          |_Money-Plan International, Inc               Florida          12/31/1979           100        Insurance Agency
          |_New Energy Corporation                      Indiana          01/08/1997            49        Holding Company
          |_Retirement Resource Group, Inc.             Indiana          02/07/1995           100        Insurance Agency
            |_AAG Insurance Agency of Texas, Inc.       Texas            06/02/1995           100        Life Insurance Agency
            |_RRG of Alabama, Inc.                      Alabama          09/22/1995           100        Life Insurance Agency
            |_RRG of Mexico, Inc.                       New Mexico       06/24/1999           100        Insurance Agency
            |_RRG of Ohio, Inc.                         Ohio             02/20/1996        beneficial    Insurance Agency
                                                                                           interest
          |_SPELCO (UK) Ltd.                            United Kingdom   00/00/0000            99        Inactive
          |_SWTC, Inc.                                  Delaware         00/00/0000           100        Inactive
          |_SWTC Hong Kong Ltd.                         Hong Kong        00/00/0000           100        Inactive
          |_Technomil Ltd.                              Delaware         00/00/0000           100        Inactive
          |_UTA Management Company (TX)                 Texas            11/24/1993           100        Management Company
             |_UTA Management Company (DE)              Delaware         01/19/1999           100        Holding Company
                |_UTA Ltd.                              Texas            01/18/1999           100(2)     Real Estate Holding
                                                                                                           Company
      |_American Custom Insurance Services, Inc.        Illinois         07/08/1992           100        Underwriting Office
      |_American Custom Insurance Services, Inc.        Ohio             07/27/1983           100        Management Holding Company
        |_American Custom Insurance Services            California       05/18/1992           100        Insurance Agency &
            California, Inc.                                                                               Brokerage
        |_Eden Park Insurance Brokers, Inc.             California       02/13/1990           100        Wholesale Brokerage for
                                                                                                           Surplus Lines
        |_Professional Risk Brokers, Inc.               Illinois         03/01/1990           100        Insurance Agency
        |_Professional Risk Brokers Insurance, Inc.     Massachusetts    04/19/1994           100        Surplus Lines Brokerage
        |_Professional Risk Brokers of                  Connecticut      07/09/1992           100        Insurance Agency &
          Connecticut, Inc.                                                                               Brokerage
        |_Professional Risk Brokers of Ohio, Inc.       Ohio             12/17/1986           100        Insurance Agency and
                                                                                                           Brokerage
        |_Smith, Evans and Schmitt, Inc.                California       08/05/1988           100        Insurance Agency
           |_Neptune Data Systems, Inc.                 California       08/09/1996           100        Computer Services
|_American Custom Insurance Services Illinois, Inc.     Illinois         07/08/1992           100        Underwriting Office
|_American Dynasty Surplus Lines Insurance Company      Delaware         01/12/1982           100        Excess & Surplus Lines
                                                                                                           Insurance
|_American Empire Surplus Lines Insurance Company       Delaware         07/15/1977           100        Excess & Surplus Lines
                                                                                                           Insurance
        |_American Empire Insurance Company             Ohio             11/26/1979           100        Property/Casualty Insurance
          |_American Signature Underwriters, Inc.       Ohio             04/08/1996           100        Insurance Agency

</TABLE>



                                                               - 4 -

<PAGE>



<TABLE>
<CAPTION>
AMERICAN FINANCIAL GROUP, INC.
|_AFC Holding Company
  |_American Financial Corporation                                                       % OF STOCK
      |_Great American Insurance Company                                                  OWNED (1)
        |                                               STATE OF        DATE OF         BY IMMEDIATE    NATURE OF
                                                        DOMICILE        INCORPORATION   PARENT COMPANY  BUSINESS
                                                        --------        -------------   --------------  ---------
<S>                                                     <C>             <C>               <C>            <C>
          |_Specialty Underwriters, Inc.                Texas           05/19/1976           100        Insurance Agency
        |_Fidelity Excess and Surplus Insurance
          Company                                       Ohio            06/30/1987           100        Property/Casualty Insurance
        |_American Financial Enterprises, Inc.          Connecticut     00/00/1871           100(2)     Closed End Investment
                                                                                                          Company
        |_American Insurance Agency, Inc.               Kentucky        07/27/1967           100        Insurance Agency
        |_American National Fire Insurance Company      New York        08/22/1947           100        Property/Casualty Insurance
        |_American Special Risk, Inc.                   Illinois        12/29/1981           100        Insurance Broker/Managing
                                                                                                          General Agency
        |_American Spirit Insurance Company             Indiana         04/05/1988           100        Property/Casualty Insurance
        |_Aviation Specialty Managers, Inc.             Texas           09/07/1965           100        Texas Managing General
                                                                                                          Agency
        |_Aviation Specialty Services, Inc.             Texas           04/06/1995           100(2)     Texas Local Recording Agency
        |_Brothers Property Corporation                 Ohio            09/08/1987            80        Real Estate Investment
          |_Brothers Cincinnatian Corporation           Ohio            01/25/1994           100        Hotel Manager
          |_Brothers Landing Corporation                Louisiana       02/24/1994           100        Real Estate Holding
                                                                                                          Corporation
          |_Brothers Pennsylvanian Corporation          Pennsylvania    12/23/1994           100        Real Estate Holding
                                                                                                          Corporation
          |_Brothers Port Richey Corporation            Florida         12/06/1993           100        Apartment Manager
          |_Brothers Property Management Corporation    Ohio            09/25/1987           100        Real Estate Management
          |_Brothers Railyard Corporation               Texas           12/14/1993           100        Apartment Manager
        |_Contemporary American Insurance Company       Illinois        04/16/1996           100        Property/Casualty Insurance
        |_Crop Managers Insurance Agency, Inc.          Kansas          08/09/1989           100        Insurance Agency
        |_Dempsey & Siders Agency, Inc.                 Ohio            05/09/1956           100        Insurance Agency
        |_Eagle American Insurance Company              Ohio            07/01/1987           100        Property/Casualty Insurance
        |_Eden Park Insurance Company                   Indiana         01/08/1990           100        Special Risk Surplus Lines
        |_FCIA Management Company, Inc.                 New York        09/17/1991            79        Servicing Agent
        |_The Gains Group, Inc.                         Ohio            01/26/1982           100        Marketing of Advertising
        |_Global Premier Finance Company                Ohio            08/25/1998           100        Premium Finance Company
        |_Great American Insurance Agency, Inc.         Ohio            04/20/1999           100        Insurance Agency
        |_Great American Lloyd's, Inc.                  Texas           08/02/1983           100        Attorney-in-Fact - Texas
                                                                                                          Lloyd's Company
        |_Great American Lloyd's Insurance Company      Texas           10/09/1979        beneficial    Lloyd's Plan Insurer
                                                                                          interest
        |_Great American Management Services, Inc.      Ohio            12/05/1974           100        Data Processing and
                                                                                                          Equipment Leasing
          |_American Payroll Services, Inc.             Ohio            02/20/1987           100        Payroll Services
        |_Great American Re Inc.                        Delaware        05/14/1971           100        Reinsurance Intermediary
        |_Great American Risk Management, Inc.          Ohio            04/21/1980           100        Insurance Risk Management
        |_Great Texas County Mutual Insurance Company   Texas           04/29/1954        beneficial    Property/Casualty Insurance
                                                                                          interest
        |_Grizzly Golf Center, Inc.                     Ohio            11/08/1993           100        Operate Golf Courses
        |_Homestead Snacks Inc.                         California      03/02/1979           100(2)     Meat Snack Distribution
          |_Giant Snacks, Inc.                          Delaware        07/06/1989           100        Meat Snack Distribution
        |_Key Largo Group, Inc.                         Florida         07/28/1981           100        Land Developer & Resort
                                                                                                          Operator
          |_Key Largo Group Utility Company             Florida         11/26/1984           100        Water & Sewer Utility
        |_Mid-Continent Casualty Company                Oklahoma        02/26/1947           100        Property/Casualty Insurance
          |_Mid-Continent Insurance Company             Oklahoma        08/13/1992           100        Property/Casualty Insurance
          |_Oklahoma Surety Company                     Oklahoma        08/05/1968           100        Property/Casualty Insurance
        |_National Interstate Corporation               Ohio            01/26/1989            52.15     Holding Company
          |_Hudson Indemnity, Ltd.                      Cayman Islands  06/12/1996           100        Property/Casualty Insurance

</TABLE>



                                                               - 5 -


<PAGE>


<TABLE>
<CAPTION>
AMERICAN FINANCIAL GROUP, INC.
|_AFC Holding Company                                                                    % OF STOCK
   |_American Financial Corporation                                                       OWNED (1)
     |_Great American Insurance Company                 STATE OF        DATE OF         BY IMMEDIATE    NATURE OF
                                                        DOMICILE        INCORPORATION   PARENT COMPANY  BUSINESS
                                                        --------        -------------   --------------  ---------
<S>                                                     <C>             <C>              <C>          <C>
       |_National Interstate Corporation
       |-
         |_American Highways Insurance Agency, Inc.     California      05/05/1994          100       Insurance Agency
         |_American Highways Insurance Agency, Inc.     Ohio            06/29/1999          100       Insurance Agency
         |_Explorer Insurance Agency, Inc.              Ohio            07/17/1997       beneficial   Insurance Agency
                                                                                         interest
         |_National Interstate Insurance Agency
            of Texas, Inc.                              Texas           06/07/1989       beneficial   Insurance Agency
                                                                                         interest
         |_National Interstate Insurance Agency, Inc.   Ohio            02/13/1989          100       Insurance Agency
         |_National Interstate Insurance Company        Ohio            02/10/1989          100       Property/Casualty Insurance
         |_Safety, Claims & Litigation Services, Inc.   Pennsylvania    06/23/1995          100       Claims Third Party
                                                                                                        Administrator
         |_Sims Insurance Services, Inc.                Hawaii          03/17/1999          100       Insurance Agency
       |_OBGC Corporation                               Florida         11/23/1977            80      Real Estate Development
       |_Pointe Apartments, Inc.                        Minnesota       06/24/1993          100       Real Estate Holding
                                                                                                        Corporation
       |_Premier Dealer Services, Inc.                  Illinois        06/24/1998          100       Third Party Administrator
       |_Seven Hills Insurance Agency, Inc.             Ohio            12/22/1997          100       Insurance Agency
       |_Seven Hills Insurance Company                  New York        06/30/1932          100       Property/Casualty Reinsurance
       |_Seven Seas Insurance Agency                    Ohio            09/10/1998                    Life Insurance Agency
       |_Stonewall Insurance Company                    Alabama         02/00/1866          100       Property/Casualty Insurance
       |_Stone Mountain Professional Liability
         Agency, Inc.                                   Georgia         08/07/1995          100       Insurance Agency
       |_Tamarack American, Inc.                        Delaware        06/10/1986          100       Management Holding Company
       |_Timberglen Limited                             United Kingdom  10/28/1992          100       Investments
       |_Transport Insurance Company                    Ohio            05/25/1976          100       Property/Casualty Insurance
         |_Instech Corporation                          Texas           09/02/1975          100       Claim & Claim Adjustment
         |_Transport Insurance Agency, Inc.             Texas           08/21/1989       beneficial   Insurance Agency
                                                                                         interest       Services
         |_Transport Underwriters Association           California      05/11/1945          100       Holding Company/Agency
       |_Worldwide Insurance Company                    Missouri        10/01/1991          100       Property/Casualty Insurance
         |_Worldwide Direct Auto Insurance Company      Kentucky        11/13/1961          100       Property/Casualty Insurance
           |_Worldwide Casualty Insurance Company       Kentucky        02/17/1981          100       Property/Casualty Insurance
     |_One East Fourth, Inc.                            Ohio            02/03/1964          100       Commercial Leasing
     |_PCC 38 Corp.                                     Illinois        12/23/1996          100       Real Estate Holding Company
     |_Pioneer Carpet Mills, Inc.                       Ohio            04/29/1976          100       Carpet Manufacturing
     |_TEJ Holdings, Inc.                               Ohio            12/04/1984          100       Real Estate Holdings
     |_Three East Fourth, Inc.                          Ohio            08/10/1966          100       Commercial Leasing
|_American Financial General Corporation                Texas           09/14/1998          100       Holding Company
|_American General Financial Corporation                Texas           09/14/1998          100       Holding Company
</TABLE>




(1)  Except Director's Qualifying Shares.

(2)  Total   percentage   owned  by  parent   shown  and  by  other   affiliated
     company(ies).


                                                               - 6 -


<PAGE>


Item 27.  Number of Contract Owners


As of March 31, 2000, there were 333 Individual Contracts  issued, of which 182
were qualified and 151 were  non-qualified.  As of March 31, 2000, there were 66
Participants   (Certificate   Owners)  in  1  Enhanced   Group   Contract   With
Administration  Charge  Waived (.75% M&E).  There were no other group  Contracts
issued as of March 31, 2000.



Item 28.  Indemnification

     (a)  The Code of Regulations of Annuity  Investors Life Insurance Compan(R)
          provides in Article V as follows:

         The Corporation  shall, to the full extent permitted  by  the  General
          Corporation Law of Ohio, indemnify any person who is or was a director
          or  officer  of the  Corporation  and whom it may  indemnify  pursuant
          thereto.  The Corporation may, within the sole discretion of the Board
          of Directors,  indemnify in whole or in part any other persons whom it
          may indemnify pursuant thereto.

     Insofar as  indemnification  for liability arising under the Securities Act
of 1933 ("1933  Act") may be permitted to  directors,  officers and  controlling
persons of the Depositor pursuant to the foregoing provisions, or otherwise, the
Depositor  has been advised that in the opinion of the  Securities  and Exchange
Commission  such  indemnification  is against  public policy as expressed in the
1933  Act  and is,  therefore,  unenforceable.  In the  event  that a claim  for
indemnification  against  such  liabilities  (other  than  the  payment  by  the
Depositor of expenses  incurred or paid by the director,  officer or controlling
person of the  Registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being  registered,  the Depositor will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.


     (b)  The  directors  and  officers  of  Annuity  Investors  Life  Insurance
          Company(R)  are covered  under a Directors and Officers  Reimbursement
          Policy.  Under the  Reimbursement  Policy,  directors and officers are
          indemnified  for loss arising from any covered  claim by reason of any
          Wrongful Act in their  capacities as directors or officers,  except to
          the extent the  Company has  indemnified  them.  In general,  the term
          "loss"  means any amount  which the  directors or officers are legally
          obligated to pay for a claim for Wrongful  Acts. In general,  the term
          "Wrongful   Acts"   means  any   breach  of  duty,   neglect,   error,
          misstatement,  misleading statement,  omission or act by a director or
          officer while acting individually or collectively in their capacity as
          such claimed  against  them solely by reason of their being  directors
          and officers.  The limit of liability under the program is $20,000,000
          for the policy year ending  September  1, 2001.  The primary  policy
          under the program is with  National  Union Fire  Insurance  Company of
          Pittsburgh, PA in the name of American Premier Underwriters, Inc.



<PAGE>

Item 29.  Principal Underwriter

AAG  Securities,  Inc. is the  underwriter  and  distributor of the Contracts as
defined in the Investment Company Act of 1940 ("1940 Act").

     (a)  AAG  Securities,  Inc.  does  not  act  as  a  principal  underwriter,
          depositor,  sponsor or investment  adviser for any investment  company
          other  than   Annuity   Investors(R)   Variable   Account  A,  Annuity
          Investors(R)  Variable  Account  B, and  GALIC  of New  York  Separate
          Account I.

(b)      Directors and Officers of AAG Securities, Inc.


Name and Principal                 Position with
Business Address                   AAG Securities, Inc.
James Lee Henderson (1)            President
Thomas Kevin Liguzinski (1)        Chief Executive Officer and Director
Charles Kent McManus (1)           Senior Vice President
Mark Francis Muething (1)          Vice President, Secretary and Director
Christopher Gryzen (1)             Vice President and Chief Compliance Officer
James T. McVey (1)                 Vice President
William Claire Bair, Jr. (1)       Treasurer
Peter J. Nerone                    Vice President
Thomas E. Mischell (1)             Assistant Treasurer
Fred J. Runk (1)                   Assistant Treasurer



(1)  250 East Fifth Street, Cincinnati, Ohio  45202

(c)  Not applicable.

Item 30.  Location of Accounts and Records


All accounts and records  required to be maintained by Section 31(a) of the 1940
Act and the rules under it are maintained by Wendy L. Wilson, Vice President and
Treasurer of the Company, at the Administrative Office.


Item 31.  Management Services

Not applicable.


Item 32.  Undertakings

     (a)  Registrant undertakes that it will file a post-effective  amendment to
          this registration  statement as frequently as necessary to ensure that
          the audited  financial  statements in the  registration  statement are
          never  more  than 16  months  old for so long as  payments  under  the
          variable annuity contracts may be accepted.

     (b)  Registrant  undertakes  that it will include either (1) as part of any
          application to purchase a Contract offered by the Prospectus,  a space
          that an  applicant  can check to  request a  Statement  of  Additional
          Information,  or (2) a post  card  or  similar  written  communication
          affixed to or included in the Prospectus that the applicant can remove
          to send for a Statement of Additional Information.

     (c)  Registrant  undertakes  to deliver any  Prospectus  and  Statement  of
          Additional  Information  and any financial  statements  required to be
          made  available  under this Form promptly upon written or oral request
          to  the  Company  at  the  address  or  phone  number  listed  in  the
          Prospectus.

     (d)  The Company  represents  that the fees and charges  deducted under the
          Contract, in the aggregate, are reasonable in relation to the services
          rendered,  the expenses  expected to be incurred and the risks assumed
          by the Company.
<PAGE>

                                   SIGNATURES

As  required by the  Securities  Act of 1933 and the  Investment  Company Act of
1940, the Registrant certifies that it has caused this Post-Effective  Amendment
No.  3 to  its  Registration  Statement  to be  signed  on  its  behalf  by  the
undersigned in the City of  Cincinnati,  State of Ohio on the 14th day of April,
2000


                      ANNUITY INVESTORS VARIABLE ACCOUNT B
                                  (REGISTRANT)

                             /s/ Charles R. Scheper
                       By:________________________________
                               Charles R. Scheper
                       President, Chief Executive Officer
                         and Director, Annuity Investors
                             Life Insurance Company


                    ANNUITY INVESTORS LIFE INSURANCE COMPANY
                                   (DEPOSITOR)

                             /s/ Charles R. Scheper
                       By:________________________________
                               Charles R. Scheper
                       President, Chief Executive Officer
                         and Director, Annuity Investors
                             Life Insurance Company


As required by the Securities Act of 1933, this  Post-Effective  Amendment No. 3
has been  signed by the  following  persons in the  capacities  and on the dates
indicated.

     /s/ Robert Allen Adams
     ___________________________                                April 14, 2000
     Robert Allen Adams*             Chairman and Director


     /s/ Wendy l. Wilson             Principal Financial
     ___________________________     Office                    April 14, 2000
     Wendy L. Wilson*                Principal Acccounting
                                     Officer


     /s/ Stephen Craig Lindner
     ___________________________                                April 14, 2000
     Stephen Craig Lindner*           Director


     /s/ William J. Maney, II
     ___________________________                                April 14, 2000
     William Jack Maney, II*          Director



     /s/ David B. Rich
     ___________________________                                April 14, 2000
     David B. Rich*                   Director


     /s/ Mark F. Muething
     ___________________________                                April 14, 2000
     Mark Francis Muething*           Director











  *Executed by Tina K. Manning on behalf of those indicated pursuant to Power
   of Attorney.

<PAGE>


         (1)      Resolution  of  the  Board  of  Directors  of  Annuity
                  Investors  Life  Insurance   Company(R)  authorizing
                  establishment of Annuity Investors(R) Variable Account B.1/

         (2)      Not Applicable.

         (3)      (a)    Distribution  Agreement  between  Annuity  Investors
                         Life Insurance Company (R) and AAG Securities, Inc.2/

                         (i)   Amended Schedule 1 to Distribution Agreement. 3/

                  (b)    Form of Selling Agreement between Annuity Investors
                         Life Insurance Company(R), AAG Securities,  Inc.
                         and another Broker-Dealer.1/

                  (c)    Revised  form of  Selling  Agreement  between  Annuity
                         Investors  Life  Insurance  Company(R),  AAG
                         Securities, Inc. and another Broker-Dealer. 5/

          (4)     Individual and Group Contract Forms and Endorsements.

                  (a)    Form of No-Load Qualified Individual Flexible Premium
                         Deferred Annuity Contract. 3/

                  (b)    Form of No-Load Non-Qualified Individual Flexible
                         Premium Deferred Annuity Contract. 3/

                  (c)    Form of Individual Retirement Annuity Endorsement to
                         Individual Qualified Contract. 3/

                  (d)    Form of SIMPLE IRA Endorsement to Qualified Individual
                         Contract. 3/

                  (e)    Form of Roth IRA Endorsement to Qualified Individual
                         Contract. 3/

                  (f)    Form of Employer Plan Endorsement to Qualified
                         Individual Contract. 3/

                  (g)    Form of Tax Sheltered Annuity Endorsement to Qualified
                         Individual Contract. 3/

                  (h)    Form of Qualified  Pension, Profit Sharing and Annuity
                         Plan  Endorsement to Qualified  Individual
                         Contract. 3/

                  (i)    Form of Governmental Section 457 Plan Endorsement to
                         Qualified Individual Contract. 3/

                  (j)    Form of Texas Optional Retirement Program Endorsement
                         to Individual Contract.2/

                  (k)    Form of Long-Term Care Waiver Rider to Individual
                         Contract.2/

                  (l)    Form of Loan Endorsement to Individual Contract.2/


                  (m)    Form of Group Flexible Premium Deferred Variable
                         Annuity Contract 10

                  (n)    Form of Certificate of Participation under a Group
                         Flexible Premium Deferred Variable Annuity Contract 10

                  (o)    Form of Loan Endorsement to Group Contract.2/

                  (p)    Form of Loan Endorsement to Certificate of
                         Participation under a Group Contract. 2/

                  (q)    Form of Tax Sheltered Annuity Endorsement to Group
                         Contract.7/

                  (r)    Form of Tax Sheltered Annuity Endorsement to
                         Certificate
                         of Participation under a Group Contract.7/

                  (s)    Form of Qualified Pension, Profit Sharing and
                         Annuity Plan Endorsement to Group Contract.7/

                  (t)    Form of Qualified Pension, Profit Sharing and Annuity
                         Plan Endorsement to Certificate of Participation under
                         a Group
                         Contract.7/

                  (u)    Form of Employer Plan Endorsement to Group Contract.7/

                  (v)    Form of Employer Plan Endorsement to Certificate of
                         Participation under a Group Contract.7/

                  (w)    Form of Deferred Compensation Endorsement to
                         Group Contract.2/

                  (x)    Form of Deferred Compensation Endorsement to
                         Certificate of Participation under a Group Contract.2/

                  (y)    Form of Texas Optional Retirement Program Endorsement
                         to Group Contract.2/

                  (z)    Form of Texas Optional Retirement Program  Endorsement
                         to Certificate of Participation under a Group
                         Contract.2/

                  (aa)   Form of Governmental Section 457 Plan Endorsement to
                         Group Contract. 7/

                  (bb)   Form of Governmental  Section 457 Plan Endorsement to
                         Certificate of  Participation  under a Group
                         Contract. 7/

                  (cc)   Form of Successor Owner Endorsement to Group
                         Contract 10

                  (dd)   Form of Successor Owner Endorsement to Certificate of
                         Participation under a Group Contract 10 .

                  (ee)   Form of Successor Owner Endorsement to Qualified
                         Individual Contract and Non-Qualified  Individual
                         Contract 10

                  (ff)   Form of Individual Retirement Annuity Endorsement to
                         Group Contract . 6/

                  (gg)   Form of Individual  Retirement Annuity  Endorsement to
                         Certificate of Participation under a Group Contract. 6/

                  (hh)   Form of SIMPLE Individual Retirement Annuity
                         Endorsement to Group Contract. 6/

                  (ii)   Form of SIMPLE Individual  Retirement Annuity
                         Endorsement to Certificate of Participation under a
                         Group Contract. 6/

                  (jj)   Form of Roth Individual Retirement Annuity Endorsement
                         to Group Contract. 6/

                  (kk)   Form of Roth Individual Retirement Annuity Endorsement
                         to Certificate of Participation under a Group
                         Contract. 6/

                  (ll)   Form of Unisex Endorsement to Nonqualified Individual
                         Contract. 6/

                  (mm)   Form Of Non-Human Payee Endorsement to Non-Qualified
                         Individual Contract. 11/

                  (nn)   Form of Non-Human Payee Endorsement to Qualified
                         Individual Contract. 11/

         (5)      (a)    Form of Application for Individual Flexible Premium
                         Deferred Annuity Contract. 3/

                  (b)    Form of Application for Group Flexible Premium Deferred
                         Annuity Contract. 8/

         (6)      (a)    Articles of Incorporation of Annuity Investors Life
                         Insurance Company(R).1/

                         (i)   Amendment to Articles of Incorporation, adopted
                               April 9, 1996, and approved by the Secretary of
                               State, State of Ohio, on July 11, 1996.2/

                         (ii)  Amendment to Articles of Incorporation, adopted
                               August 9, 1996, and approved by the Secretary of
                               State, State of Ohio, on December 3, 1996.2/

                  (b)    Code of Regulations of Annuity Investors Life Insurance
                         Company.(R) 1/

         (7)      Not Applicable.

         (8)      (a)    Participation  Agreement  between Annuity  Investors
                         Life Insurance  Company(R) and Dreyfus Variable
                         Investment Fund.2/

                         (i)   Letter Agreement dated April 14, 1997 between
                               Annuity Investors Life Insurance Company(R) and
                               Dreyfus Variable Investment Fund.2/

                  (b)    Participation Agreement between Annuity Investors Life
                         Insurance Company(R) and Dreyfus Life and Annuity Index
                         Fund, Inc. (d/b/a Dreyfus Stock Index Fund).2/

                         (i)   Letter Agreement dated April 14, 1997 between
                               Annuity Investors Life Insurance Company(R) and
                               Dreyfus Life and Annuity Index Fund, Inc.
                               (d/b/a Dreyfus Stock Index Fund).2/

                  (c)    Participation Agreement between Annuity Investors Life
                         Insurance  Company(R) and The Dreyfus Socially
                         Responsible Growth Fund, Inc.2/

                         (i)   Letter Agreement dated April 14, 1997 between
                               Annuity Investors Life Insurance Company(R) and
                               The Dreyfus Socially Responsible Growth
                               Fund, Inc.2/

                  (d)    Participation  Agreement between  Annuity Investors
                         Life  Insurance Company(R) and Janus Aspen Series.2/

                         (i)   Amended Schedule A to Participation  Agreement
                               between Annuity  Investors Life Insurance
                               Company and Janus Aspen Series. 3/

                  (e)    Participation Agreement between Annuity Investors Life
                         Insurance  Company(R) and Strong Variable Insurance
                         Funds, Inc. and Strong Special Fund II, Inc.2/

                  (f)    Participation Agreement between Annuity Investors Life
                         Insurance Company(R) and INVESCO Variable Investment
                         Funds, Inc.2/

                         (i)   Amended Schedule B to Participation Agreement
                               between Annuity  Investors Life Insurance
                               Company and INVESCO Variable Investment Funds
                               Inc. 3/

                  (g)    Participation Agreement between Annuity Investors Life
                         Insurance Company(R) and Morgan Stanley Universal
                         Funds, Inc.2/

                         (i)   Amended Schedule B to Participation  Agreement
                               between Annuity Investors Life Insurance Company
                               and Morgan Stanley Universal Funds, Inc. 3/

                  (h)    Participation Agreement between Annuity Investors Life
                         Insurance Company(R) and PBHG Insurance
                         Series Fund, Inc.2/

                  (i)    Service Agreement between Annuity Investors Life
                         Insurance  Company(R) and American Annuity GroupSM,
                         Inc.1/

                  (j)    Agreement between AAG Securities, Inc. and AAG
                         Insurance Agency, Inc.1/

                  (k)    Investment  Service  Agreement  between  Annuity
                         Investors Life Insurance Company(R) and American
                         Annuity GroupSM, Inc. 1/

                  (l)    Service Agreement between Annuity Investors Life
                         Insurance Company(R) and Strong Capital Management,
                         Inc.2/

                  (m)    Service Agreement between Annuity Investors Life
                         Insurance Company(R) and Pilgrim Baxter & Associates,
                         Ltd.2/

                  (n)    Service Agreement between Annuity Investors Life
                         Insurance Company (R) and Morgan Stanley Asset
                         Management, Inc. 2/

                  (o)    Amended and Restated Agreement between The Dreyfus
                         Corporation and Annuity Investors Life Insurance
                         Company(R).2/

                  (p)    Service Agreement between Annuity Investors Life
                         Insurance Company(R) and Janus Capital Corporation.2/

                  (q)    Service Agreement between INVESCO Funds Group, Inc.
                         and Annuity Investors Life Insurance Company.
                         3/

                  (r)    Participation  Agreement  between The Timothy Plan
                         Variable  Series,  Timothy  Partners,  Ltd. and
                         Annuity Investors Life Insurance Company.3/

                  (s)    Service  Agreement  between The Timothy Plan Variable
                         Series and Annuity Investors Life Insurance Company. 3/

                  (t)    Participation Agreement between BT Insurance Funds
                         Trust and Annuity  Investors  Life Insurance
                         Company. 9/

                  (u)    Service Agreement between Bankers Trust Company and
                         Annuity Investors Life Insurance Company. 9/

         (9)      Opinion and Consent of Counsel. 3/


         (10)     Consent of Independent Auditors (filed herewith).


         (11)     No financial statements are omitted from Item 23.

         (12)     Not Applicable.

         (13)     Schedule for Computation of Performance Quotations. 3/

         (14)     Not Applicable


         (15)     Powers of Attorney (filed herewith).






                         CONSENT OF INDEPENDENT AUDITORS


We  consent  to the  reference  to our firm  under the  captions "Experts"  and
"Financial  Statements"  and to the use of our report dated March 9, 2000,  with
respect to the  statutory-basis  financial  statements of Annuity Investors Life
Insurance  Company,  and our report dated February 7, 2000,  with respect to the
financial  statements of Annuity Investors Variable Account B, in Post-effective
Amendment No. 3 (Form N-4 No.  333-51955)  and  Post-effective  Amendment No. 16
(Form N-4 No. 811-08017) to the Registration Statements and related Statement of
Additional  Information  of Annuity  Investors  Variable  Account B dated May 1,
2000.



                                           /s/ Ernst & Young  LLP
                                           ----------------------
                                           Ernst Y Young LLP


Cincinnati, Ohio
April 26, 2000




                             POWER OF ATTORNEY


     KNOW  ALL  MEN BY  THESE  PRESENTS,  that  the  undersigned  hereby  makes,
constitutes  and appoints Mark F. Muething,  John P. Gruber and Tina K. Manning,
and each of them,  severally,  his true and lawful  attorneys  and agents in his
name,  place  and  stead  and on his  behalf  (a) to sign and  cause to be filed
registration  statements of Annuity Investors(R)  Separate Account A & B under
the  Securities  Act of 1933 and the  Investment  Company  Act of 1940,  and all
amendments,  consents and exhibits  thereto;  (b) to withdraw such statements or
any  amendments  or exhibits and make  requests for  acceleration  in connection
therewith; (c) to take all other action of whatever kind or nature in connection
with such registration  statements which said attorneys may deem advisable;  and
(d) to make, file,  execute,  amend and withdraw documents of every kind, and to
take other action of whatever kind they may elect,  for the purpose of complying
with  the  laws of any  state  relating  to the sale of  securities  of  Annuity
Investors(R)  Separate  Account A & B, hereby ratifying and confirming all
actions of any of said attorneys and agents hereunder.  Said attorneys or agents
may act jointly or severally,  and the action of one shall bind the  undersigned
as fully as if two or more had acted together.




Date     March 14, 2000            /S/   Charles Richard Scheper
      -------------------          -------------------------------
                                   Charles Richard Scheper
                                   President, Chief Executive Officer,
                                   & Director




                                POWER OF ATTORNEY


     KNOW  ALL  MEN BY  THESE  PRESENTS,  that  the  undersigned  hereby  makes,
constitutes  and appoints Mark F. Muething,  John P. Gruber and Tina K. Manning,
and each of them,  severally,  his true and lawful  attorneys  and agents in his
name,  place  and  stead  and on his  behalf  (a) to sign and  cause to be filed
registration statements of Annuity Investors(R) Separate Account A & B under the
Securities  Act of  1933  and  the  Investment  Company  Act of  1940,  and  all
amendments,  consents and exhibits  thereto;  (b) to withdraw such statements or
any  amendments  or exhibits and make  requests for  acceleration  in connection
therewith; (c) to take all other action of whatever kind or nature in connection
with such registration  statements which said attorneys may deem advisable;  and
(d) to make, file,  execute,  amend and withdraw documents of every kind, and to
take other action of whatever kind they may elect,  for the purpose of complying
with  the  laws of any  state  relating  to the sale of  securities  of  Annuity
Investors(R) Separate Account A & B, hereby ratifying and confirming all actions
of any of said attorneys and agents hereunder.  Said attorneys or agents may act
jointly or severally,  and the action of one shall bind the undersigned as fully
as if two or more had acted together.


Date  March 14, 2000               /S/ Robert A. Adams
      ---------------              ------------------------
                                   Robert A. Adams
                                   Chairman & Director




                                POWER OF ATTORNEY


     KNOW  ALL  MEN BY  THESE  PRESENTS,  that  the  undersigned  hereby  makes,
constitutes  and appoints Mark F. Muething,  John P. Gruber and Tina K. Manning,
and each of them,  severally,  his true and lawful  attorneys  and agents in his
name,  place  and  stead  and on his  behalf  (a) to sign and  cause to be filed
registration statements of Annuity Investors(R) Separate Account A & B under the
Securities  Act of  1933  and  the  Investment  Company  Act of  1940,  and  all
amendments,  consents and exhibits  thereto;  (b) to withdraw such statements or
any  amendments  or exhibits and make  requests for  acceleration  in connection
therewith; (c) to take all other action of whatever kind or nature in connection
with such registration  statements which said attorneys may deem advisable;  and
(d) to make, file,  execute,  amend and withdraw documents of every kind, and to
take other action of whatever kind they may elect,  for the purpose of complying
with  the  laws of any  state  relating  to the sale of  securities  of  Annuity
Investors(R) Separate Account A & B, hereby ratifying and confirming all actions
of any of said attorneys and agents hereunder.  Said attorneys or agents may act
jointly or severally,  and the action of one shall bind the undersigned as fully
as if two or more had acted together.





Date  March 14, 2000               /s/  S. Craig Linder
     ------------------            --------------------------
                                   S. Craig Lindner, Director



                                POWER OF ATTORNEY


     KNOW  ALL  MEN BY  THESE  PRESENTS,  that  the  undersigned  hereby  makes,
constitutes  and appoints Mark F. Muething,  John P. Gruber and Tina K. Manning,
and each of them,  severally,  his true and lawful  attorneys  and agents in his
name,  place  and  stead  and on his  behalf  (a) to sign and  cause to be filed
registration statements of Annuity Investors(R) Separate Account A & B under the
Securities  Act of  1933  and  the  Investment  Company  Act of  1940,  and  all
amendments,  consents and exhibits  thereto;  (b) to withdraw such statements or
any  amendments  or exhibits and make  requests for  acceleration  in connection
therewith; (c) to take all other action of whatever kind or nature in connection
with such registration  statements which said attorneys may deem advisable;  and
(d) to make, file,  execute,  amend and withdraw documents of every kind, and to
take other action of whatever kind they may elect,  for the purpose of complying
with  the  laws of any  state  relating  to the sale of  securities  of  Annuity
Investors(R) Separate Account A & B, hereby ratifying and confirming all actions
of any of said attorneys and agents hereunder.  Said attorneys or agents may act
jointly or severally,  and the action of one shall bind the undersigned as fully
as if two or more had acted together.



Date     March 14, 2000            /S/
                                   William J. Maney II,
                                   Assistant Treasurer, Director






                               POWER OF ATTORNEY


     KNOW  ALL  MEN BY  THESE  PRESENTS,  that  the  undersigned  hereby  makes,
constitutes  and appoints Mark F. Muething,  John P. Gruber and Tina K. Manning,
and each of them,  severally,  his true and lawful  attorneys  and agents in his
name,  place  and  stead  and on his  behalf  (a) to sign and  cause to be filed
registration statements of Annuity Investors(R) Separate Account A & B under the
Securities  Act of  1933  and  the  Investment  Company  Act of  1940,  and  all
amendments,  consents and exhibits  thereto;  (b) to withdraw such statements or
any  amendments  or exhibits and make  requests for  acceleration  in connection
therewith; (c) to take all other action of whatever kind or nature in connection
with such registration  statements which said attorneys may deem advisable;  and
(d) to make, file,  execute,  amend and withdraw documents of every kind, and to
take other action of whatever kind they may elect,  for the purpose of complying
with  the  laws of any  state  relating  to the sale of  securities  of  Annuity
Investors(R) Separate Account A & B, hereby ratifying and confirming all actions
of any of said attorneys and agents hereunder.  Said attorneys or agents may act
jointly or severally,  and the action of one shall bind the undersigned as fully
as if two or more had acted together.



Date March 14, 2000                /S/ Mark F. Muething
   ----------------              -------------------------
                                   Mark F. Muething,
                                   Executive Vice President,
                                   General Counsel,
                                   Secretary & Director



                                POWER OF ATTORNEY


     KNOW  ALL  MEN BY  THESE  PRESENTS,  that  the  undersigned  hereby  makes,
constitutes  and appoints John P. Gruber and Tina K. Manning,  and each of them,
severally, his true and lawful attorneys and agents in his name, place and stead
and on his behalf (a) to sign and cause to be filed  registration  statements of
Annuity Investors(R) Separate Account A & B under the Securities Act of 1933 and
the Investment  Company Act of 1940, and all  amendments,  consents and exhibits
thereto;  (b) to withdraw such statements or any amendments or exhibits and make
requests for acceleration in connection therewith;  (c) to take all other action
of whatever kind or nature in connection with such registration statements which
said attorneys may deem advisable;  and (d) to make,  file,  execute,  amend and
withdraw documents of every kind, and to take other action of whatever kind they
may elect,  for the purpose of complying  with the laws of any state relating to
the sale of securities of Annuity  Investors(R) Separate  Account A & B, hereby
ratifying  and  confirming  all  actions  of any of said  attorneys  and  agents
hereunder. Said attorneys or agents may act jointly or severally, and the action
of one shall bind the undersigned as fully as if two or more had acted together.



Date  March 14, 2000               /s/  David B. Rich
     ----------------             -------------------------------
                                   David B. Rich
                                   Chief Operating Officer, Director










                                POWER OF ATTORNEY


     KNOW  ALL  MEN BY  THESE  PRESENTS,  that  the  undersigned  hereby  makes,
constitutes  and appoints Mark F. Muething,  John P. Gruber and Tina  K.Manning,
and each of them,  severally,  his true and lawful  attorneys  and agents in his
name,  place  and  stead  and on his  behalf  (a) to sign and  cause to be filed
registration statements of Annuity Investors(R) Separate Account A & B under the
Securities  Act of  1933  and  the  Investment  Company  Act of  1940,  and  all
amendments,  consents and exhibits  thereto;  (b) to withdraw such statements or
any  amendments  or exhibits and make  requests for  acceleration  in connection
therewith; (c) to take all other action of whatever kind or nature in connection
with such registration  statements which said attorneys may deem advisable;  and
(d) to make, file,  execute,  amend and withdraw documents of every kind, and to
take other action of whatever kind they may elect,  for the purpose of complying
with  the  laws of any  state  relating  to the sale of  securities  of  Annuity
Investors(R) Separate Account A & B, hereby ratifying and confirming all actions
of any of said attorneys and agents hereunder.  Said attorneys or agents may act
jointly or severally,  and the action of one shall bind the undersigned as fully
as if two or more had acted together.


Date  March 14, 2000               /s/  Wendy L. Wilson
     ---------------               -------------------------
                                   Wendy L. Wilson
                                   Vice President & Treasurer








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