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CONSECO VARIABLE INSURANCE COMPANY
FORMERLY
GREAT AMERICAN RESERVE INSURANCE COMPANY
SEMIANNUAL REPORT TO CONTRACT OWNERS
JUNE 30, 1999
CONSECO VARIABLE ANNUITY ACCOUNT F
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SEMIANNUAL REPORT TO CONTRACT OWNERS
TABLE OF CONTENTS
JUNE 30, 1999
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CONSECO VARIABLE ANNUITY ACCOUNT F PAGE
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Statement of Assets and Liabilities as of June 30, 1999........................................................................ 2
Statements of Operations for the Six Months Ended June 30, 1999, and the Period
February 12, 1998 through December 31, 1998................................................................................. 4
Statements of Changes in Net Assets for the Six Months Ended June 30, 1999, and the Period
February 12, 1998 through December 31, 1998................................................................................. 4
Notes to Financial Statements.................................................................................................. 5
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CONSECO VARIABLE ANNUITY ACCOUNT F
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
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SHARES COST REPORTED VALUE
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Assets:
Market value adjustment cash account................................................ $ 208,033
Investments in portfolio shares, at net asset value (Note 2):
The Alger American Fund:
Growth Portfolio................................................................ 363,698.4 $ 19,083,542 20,308,919
Leveraged AllCap Portfolio...................................................... 257,293.4 10,259,282 10,515,580
MidCap Portfolio................................................................ 182,123.3 4,905,088 5,026,603
Small Capitalization Portfolio.................................................. 84,572.1 3,463,827 3,685,652
American Century Variable Portfolios, Inc.:
Income and Growth Fund.......................................................... 1,011,936.8 6,625,918 7,528,810
International Fund.............................................................. 262,470.9 1,988,696 2,147,012
Value Fund...................................................................... 583,613.5 3,691,308 3,962,736
Berger Institutional Products Trust:
100 Fund........................................................................ 106,587.8 1,320,602 1,513,547
Growth and Income Fund.......................................................... 288,005.8 4,999,417 5,667,953
Small Company Growth Fund....................................................... 124,126.2 1,467,243 1,763,833
BIAM International Fund......................................................... 21,398.4 224,525 254,855
Conseco Series Trust:
Balanced Portfolio.............................................................. 431,275.0 5,757,678 6,220,892
Equity Portfolio................................................................ 292,715.5 5,763,274 7,000,791
Fixed Income Portfolio.......................................................... 730,087.9 7,267,954 6,991,526
Government Securities Portfolio................................................. 367,323.0 4,373,501 4,147,698
Money Market Portfolio.......................................................... 22,622,803.5 22,622,803 22,622,803
Dreyfus Stock Index Fund.......................................................... 975,176.4 31,248,150 35,213,622
The Dreyfus Socially Responsible Growth Fund, Inc................................. 193,316.8 6,212,265 6,775,755
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio..................................................... 65,661.4 1,529,813 1,664,515
International Value Portfolio................................................... 36,838.3 497,713 534,524
Federated Insurance Series:
High Income Bond Fund II........................................................ 744,694.4 7,856,968 7,648,012
International Equity Fund II.................................................... 48,402.5 712,197 771,052
Utility Fund II................................................................. 363,957.5 5,187,439 5,288,302
Invesco Variable Investment Funds, Inc:
High Yield Fund................................................................. 306,164.4 3,672,329 3,680,096
Equity Income Fund.............................................................. 140,243.6 2,692,034 2,968,957
Janus Aspen Series:
Aggressive Growth Portfolio..................................................... 288,554.6 9,225,494 9,989,760
Growth Portfolio................................................................ 884,373.0 21,476,403 24,134,538
Worldwide Growth Portfolio...................................................... 622,254.4 18,169,835 20,372,609
Lazard Retirement Series, Inc.:
Equity Portfolio................................................................ 120,441.0 1,245,499 1,488,650
Small Cap Portfolio............................................................. 64,585.7 596,393 689,129
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio..................................................... 261,100.2 5,545,990 6,190,686
Mitchell Hutchins Series Trust:
Growth and Income Portfolio..................................................... 30,379.4 438,875 465,109
Neuberger Berman Advisers Management Trust:
Limited Maturity Bond Portfolio................................................. 441,223.2 5,921,943 5,775,611
Partners Portfolio.............................................................. 237,939.0 4,364,635 4,930,097
Strong Variable Insurance Funds, Inc.:
Mid Cap Growth Fund II.......................................................... 104,432.8 1,951,909 2,130,428
Strong Opportunity Fund II, Inc................................................... 169,272.8 3,563,458 3,903,431
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund............................................................. 73,068.1 842,389 787,674
Worldwide Emerging Markets Fund................................................. 82,046.5 664,824 852,463
Worldwide Hard Assets Fund...................................................... 87,374.7 911,879 935,783
Worldwide Real Estate Fund...................................................... 35,276.9 337,377 364,763
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TOTAL ASSETS .............................................................................................. 257,122,809
Liabilities:
Amounts due to Conseco Variable Insurance Company ............................................................... 299,942
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Net assets (Note 6) ....................................................................................... $256,822,867
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The accompanying notes are an integral part of
these financial statements.
2
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CONSECO VARIABLE ANNUITY ACCOUNT F
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
JUNE 30, 1999
(UNAUDITED)
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TOTAL VALUE
UNITS UNIT VALUE OF UNITS
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Net assets attributable to:
Contract owners' deferred annuity reserves:
Market value adjustment accounts - 1 Year......................................... $ 208,032
The Alger American Fund:
Growth Portfolio................................................................ 1,265,621.9 $ 16.027899 20,285,261
Leveraged AllCap Portfolio...................................................... 566,694.3 18.535169 10,503,775
MidCap Portfolio................................................................ 361,396.3 13.893215 5,020,956
Small Capitalization Portfolio.................................................. 292,152.3 12.600864 3,681,372
American Century Variable Portfolios, Inc.:
Income and Growth Fund.......................................................... 572,128.1 13.143444 7,519,734
International Fund.............................................................. 181,046.2 11.844431 2,144,389
Value Fund...................................................................... 344,746.8 11.480936 3,958,016
Berger Institutional Products Trust:
100 Fund........................................................................ 129,208.1 11.699874 1,511,719
Growth and Income Fund.......................................................... 393,686.5 14.381264 5,661,710
Small Company Growth Fund....................................................... 156,442.3 11.261036 1,761,702
BIAM International Fund......................................................... 22,321.6 11.401003 254,489
Conseco Series Trust:
Balanced Portfolio.............................................................. 555,847.0 11.178403 6,213,481
Equity Portfolio................................................................ 583,878.1 11.975781 6,992,396
Fixed Income Portfolio.......................................................... 688,383.5 10.144102 6,983,033
Government Securities Portfolio................................................. 407,502.4 10.164436 4,142,032
Money Market Portfolio.......................................................... 2,153,163.5 10.495493 22,598,512
Dreyfus Stock Index Fund.......................................................... 2,605,876.8 13.497080 35,171,727
The Dreyfus Socially Responsible Growth Fund, Inc................................. 492,864.5 13.731514 6,767,775
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio..................................................... 141,237.1 11.771461 1,662,567
International Value Portfolio................................................... 52,000.1 10.268087 533,942
Federated Insurance Series:
High Income Bond Fund II........................................................ 756,681.1 10.094032 7,637,964
International Equity Fund II.................................................... 63,514.1 12.124007 770,046
Utility Fund II................................................................. 453,589.7 11.645080 5,282,088
Invesco Variable Investment Funds, Inc.:
High Yield Fund................................................................. 366,301.9 10.035694 3,676,094
Equity Income Fund.............................................................. 254,750.3 11.641409 2,965,653
Janus Aspen Series:
Aggressive Growth Portfolio..................................................... 597,456.6 16.701137 9,978,204
Growth Portfolio................................................................ 1,643,101.7 14.671558 24,106,863
Worldwide Growth Portfolio...................................................... 1,528,686.1 13.311137 20,348,550
Lazard Retirement Series, Inc.:
Equity Portfolio................................................................ 122,236.5 12.163566 1,486,832
Small Cap Portfolio............................................................. 66,409.5 10.364001 688,268
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio..................................................... 501,527.3 12.329224 6,183,442
Mitchell Hutchins Series Trust:
Growth and Income Portfolio..................................................... 41,025.7 11.323073 464,537
Neuberger Berman Advisers Management Trust:
Limited Maturity Bond Portfolio................................................. 566,088.1 10.191443 5,769,255
Partners Portfolio.............................................................. 435,275.0 11.312479 4,924,039
Strong Variable Insurance Funds, Inc.:
Mid Cap Growth Fund II.......................................................... 134,330.4 15.840355 2,127,841
Strong Opportunity Fund II, Inc................................................... 301,292.6 12.940622 3,898,914
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund............................................................. 77,378.2 10.167091 786,711
Worldwide Emerging Markets Fund................................................. 87,252.1 9.759679 851,553
Worldwide Hard Assets Fund...................................................... 112,810.0 8.288843 935,064
Worldwide Real Estate Fund...................................................... 38,336.3 9.503505 364,329
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NET ASSETS ................................................................................................ $256,822,867
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The accompanying notes are an integral part of
these financial statements.
3
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CONSECO VARIABLE ANNUITY ACCOUNT F
STATEMENTS OF OPERATIONS
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FEBRUARY 12,
SIX MONTHS 1998
ENDED THROUGH
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
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Investment income:
Dividends from investments in portfolio shares.................................................... $ 5,990,094 $ 1,088,426
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Expenses:
Mortality and expense risk fees................................................................... 1,033,652 378,316
Administrative fees............................................................................... 124,038 45,397
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Total expenses.................................................................................. 1,157,690 423,713
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Net investment income......................................................................... 4,832,404 664,713
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Net realized gains (losses) and unrealized appreciation (depreciation) on investments:
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Net realized gains (losses) on sales of investments in portfolio shares........................... 1,758,506 (516,677)
Net change in unrealized appreciation of investments in portfolio shares.......................... 10,587,954 7,646,351
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Net gain on investments in portfolio shares..................................................... 12,346,460 7,129,674
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Net increase in net assets from operations.................................................... $ 17,178,864 $ 7,794,387
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STATEMENTS OF CHANGES IN NET ASSETS
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FEBRUARY 12,
SIX MONTHS 1998
ENDED THROUGH
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
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Changes from operations:
Net investment income............................................................................. $ 4,832,404 $ 664,713
Net realized gains (losses) on sales of investments in portfolio shares........................... 1,758,506 (516,677)
Net change in unrealized appreciation of investments in portfolio shares.......................... 10,587,954 7,646,351
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Net increase in net assets from operations...................................................... 17,178,864 7,794,387
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Changes from contract owners' transactions:
Net contract purchase payments.................................................................... 139,370,021 95,358,778
Contract redemptions.............................................................................. (3,654,282) (690,158)
Net transfers..................................................................................... 1,108,806 356,451
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Net increase in net assets from contract owners' transactions................................... 136,824,545 95,025,071
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Net increase in net assets.................................................................... 154,003,409 102,819,458
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Net assets, beginning of period...................................................................... 102,819,458 --
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Net assets, end of period..................................................................... $256,822,867 $102,819,458
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The accompanying notes are an integral part of
these financial statements.
4
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CONSECO VARIABLE ANNUITY ACCOUNT F
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
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(1) GENERAL
Conseco Variable Insurance Company (the "Company") has established two separate
accounts within Conseco Variable Annuity Account F (formerly Great American
Reserve Variable Annuity Account F) ("Account F"). Both accounts were
established on September 26, 1997, and commenced operations on February 12,
1998. Account F is a segregated investment account for individual and group
variable annuity contracts which are registered under the Securities Act of
1933. One account, also named Conseco Variable Annuity Account F ("variable
Account"), which serves the variable annuity portion of the contract, is
registered under the Investment Company Act of 1940, as amended, as a unit
investment trust. The other account, Conseco Variable Market Value Adjustment
Account ("MVA"), offers investments options which pay fixed rates of interest as
declared by the Company for specified periods (one, three and five years) from
the date amounts are allocated to the MVA. The MVA is not registered as an
investment company under the Investment Company Act of 1940.
The operations of Account F are included in the operations of the Company
pursuant to the provisions of the Texas Insurance Code. The Company is an
indirect wholly owned subsidiary of Conseco, Inc., a publicly-held specialized
financial services holding company listed on the New York Stock Exchange.
In addition to the three investment options of the MVA, the following
Variable Account investment options are currently available:
THE ALGER AMERICAN FUND
Growth Portfolio
Leveraged AllCap Portfolio
MidCap Portfolio
Small Capitalization Portfolio
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
Income and Growth Fund
International Fund
Value Fund
BERGER INSTITUTIONAL PRODUCTS TRUST
100 Fund
Growth and Income Fund
Small Company Growth Fund
BIAM International Fund
CONSECO SERIES TRUST
Balanced Portfolio
Equity Portfolio
Fixed Income Portfolio
Government Securities Portfolio
Money Market Portfolio
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
DREYFUS STOCK INDEX FUND
DREYFUS VARIABLE INVESTMENT FUND
International Value Portfolio
Disciplined Stock Portfolio
FEDERATED INSURANCE SERIES
High Income Bond Fund II
International Equity Fund II
Utility Fund II
INVESCO VARIABLE INVESTMENT FUNDS, INC.
High Yield Fund
Equity Income Fund
JANUS ASPEN SERIES
Aggressive Growth Portfolio
Growth Portfolio
Worldwide Growth Portfolio
LAZARD RETIREMENT SERIES, INC.
Equity Portfolio
Small Cap Portfolio
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio
Partners Portfolio
STRONG VARIABLE INSURANCE FUNDS, INC.
Mid Cap Growth Fund II
STRONG OPPORTUNITY FUND II, INC.
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund
Worldwide Emerging Markets Fund
Worldwide Hard Assets Fund
Worldwide Real Estate Fund
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported increases and decreases in net assets from operations during the
reporting period. Actual results could differ from those estimates.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION, TRANSACTIONS AND INCOME
Investments in portfolio shares are valued using the net asset value of the
respective portfolios at the end of each New York Stock Exchange business day.
Investment share transactions are accounted for on a trade date basis (the date
the order to purchase or redeem shares is executed) and dividend income is
recorded on the ex-dividend date. The cost of investments in portfolio shares
sold is determined on a first-in first-out basis. Account F does not hold any
investments which are restricted as to resale.
Net investment income and net realized gains (losses) 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
Variable Account as of the beginning of the valuation date.
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CONSECO VARIABLE ANNUITY ACCOUNT F
NOTES TO FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 1999
(UNAUDITED)
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(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
No provision for federal income taxes has been made in the accompanying
financial statements because the operations of Account F are included in the
total operations of the Company, which is treated as a life insurance company
for federal income tax purposes under the Internal Revenue Code. Net investment
income and realized gains (losses) are retained in Account F and are not taxable
until received by the contract owner or beneficiary in the form of annuity
payments or other distributions.
ANNUITY RESERVES
Deferred annuity contract reserves are comprised of net contract purchase
payments less redemptions and benefits. These reserves are adjusted daily for
the net investment income and net realized gains (losses) and unrealized
appreciation (depreciation) on investments.
(3) PURCHASES AND SALES OF INVESTMENTS IN PORTFOLIO SHARES
The aggregate cost of purchases of investments in portfolio shares were
$168,487,633 and $110,554,029 for the six months ended June 30, 1999, and the
period February 12, 1998 through December 31, 1998, respectively. The aggregate
proceeds from sales of investments in portfolio shares were $26,731,134 and
$14,871,886 for the six months ended June 30, 1999, and the period February 12,
1998 through December 31, 1998, respectively.
(4) DEDUCTIONS AND EXPENSES
Although periodic retirement payments to contract owners vary according to
the investment performance of the portfolios, such payments are not 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.
The Company deducts daily from the Variable Account a fee, which is equal on
an annual basis to 1.25 percent of the daily value of the total investments of
the Variable Account, for assuming the mortality and expense risks. These fees
were $1,033,652 and $378,316 for the six months ended June 30, 1999, and the
period February 12, 1998 through December 31, 1998, respectively.
Pursuant to an agreement between the Variable Account and the Company (which
may be terminated by the Company at any time), the Company provides sales and
administrative services to the Variable Account, as well as a minimum death
benefit prior to retirement for the contracts. The Company may deduct a
percentage of amounts surrendered to cover sales expenses. The percentage varies
up to 7.00 percent based upon the number of years the contract has been held. In
addition, the Company deducts units from individual contracts annually and upon
full surrender to cover an administrative fee of $30, unless the value of the
contract is $50,000 or greater. This fee is recorded as a redemption in the
accompanying Statements of Changes in Net Assets. Sales and administrative
charges were $93,938 for the six months ended June 30, 1999. There were no sales
and administrative charges for the period February 12, 1998 through December 31,
1998. The Company also deducts daily from the Variable Account a fee, which is
equal on an annual basis to 0.15 percent of the daily value of the total
investments of the Variable Account, for administrative expenses. These expenses
were $124,038 and $45,397 for the six months ended June 30, 1999, and the period
February 12, 1998 through December 31, 1998, respectively.
The MVA account is subject to a market value adjustment if the amounts are
withdrawn prior to the end of the interest guarantee period with certain
exceptions. The adjustment can be positive or negative depending on the changes
in the U.S. Treasury rates during the holding period of the MVA contract. The
adjustment charges were $16 and $527 for the six months ended June 30, 1999, and
the period February 12, 1998 through December 31, 1998, respectively.
(5) OTHER TRANSACTIONS WITH AFFILIATES
Conseco Equity Sales, Inc., an affiliate of the Company, is the principal
underwriter and performs all variable annuity sales functions on behalf of the
Company through various retail broker/dealers including Conseco Financial
Services, Inc., an affiliate of the Company.
(6) NET ASSETS
Net assets consisted of the following at June 30, 1999:
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Proceeds from the sales of units since organization,
less cost of units redeemed................... $231,849,616
Undistributed net investment income.............. 5,497,117
Undistributed net realized gain on
sales of investments ........................ 1,241,829
Net unrealized appreciation of investments....... 18,234,305
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Net assets.................................. $256,822,867
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CONSECO VARIABLE ANNUITY ACCOUNT F
SPONSOR
Conseco Variable Insurance Company - Carmel, Indiana.
DISTRIBUTOR
Conseco Equity Sales, Inc. - Carmel, Indiana.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP - Indianapolis, Indiana.
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CONSECO VARIABLE ANNUITY ACCOUNT F IS ISSUED BY CONSECO
VARIABLE INSURANCE COMPANY. THE PRODUCT IS UNDERWRITTEN, AND
THE SECURITIES WITHIN ARE OFFERED, BY CONSECO EQUITY SALES,
INC., A BROKER-DEALER FOR CONSECO VARIABLE INSURANCE
COMPANY. BOTH COMPANIES ARE SUBSIDIARIES OF CONSECO, INC., A
FINANCIAL SERVICES ORGANIZATION HEADQUARTERED IN CARMEL,
INDIANA. CONSECO, THROUGH ITS SUBSIDIARY COMPANIES, IS ONE
OF MIDDLE AMERICA'S LEADING SOURCES FOR INSURANCE,
INVESTMENT AND LENDING PRODUCTS, HELPING 12 MILLION
CUSTOMERS STEP UP TO A BETTER, MORE SECURE FUTURE.
CONSECO EQUITY SALES, INC., IS A MEMBER OF THE NASD.
CONSECO VARIABLE INSURANCE COMPANY
11815 North Pennsylvania Street
Carmel, Indiana 46032
05-8433 (8/99) 05988
(C) 1999 Conseco Variable Insurance Company
www.conseco.com
INSURANCE INVESTMENTS LENDING
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