File Nos. 333-90737
811-09693
================================================================================
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. 2 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 3 [X]
(Check appropriate box or boxes.)
CONSECO VARIABLE ANNUITY ACCOUNT H
-------------------------------------------------
(Exact Name of Registrant)
CONSECO VARIABLE INSURANCE COMPANY
----------------------------------------
(Name of Depositor)
11815 N. Pennsylvania Street
Carmel, Indiana 46032-4572
--------------------------------------------------- ----------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (317) 817-3700
Name and Address of Agent for Service
Michael A. Colliflower
Conseco Variable Insurance Company
11815 N. Pennsylvania Street
Carmel, Indiana 46032-4572
(317) 817-3700
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on December 31, 2000 pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following:
_____ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Registered:
Individual Variable Annuity Contracts
CROSS REFERENCE SHEET
(required by Rule 495)
<TABLE>
<CAPTION>
ITEM NO. Location
-------- --------
<S> <C> <C>
PART A
Item 1. Cover Page Cover Page
Item 2. Definitions Index of Special Terms
<PAGE>
Item 3. Synopsis Highlights
Item 4. Condensed Financial Information Appendix B
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies Other Information -
Conseco Variable; The
Separate Account;
Investment Options;
Appendix A
Item 6. Deductions and Expenses Expenses
Item 7. General Description of Variable
Annuity Contracts The Annuity Contract
Item 8. Annuity Period Annuity Payments
(The Annuity Period)
Item 9. Death Benefit Death Benefit
Item 10. Purchases and Contract Value Purchase
Item 11. Redemptions Access to Your Money
Item 12. Taxes Taxes
Item 13. Legal Proceedings None
Item 14. Table of Contents of the Statement
of Additional Information Table of Contents of the
Statement of Additional
Information
</TABLE>
CROSS REFERENCE SHEET
(required by Rule 495)
<TABLE>
<CAPTION>
ITEM NO. LOCATION
-------- --------
<S> <C> <C>
PART B
Item 15. Cover Page Cover Page
Item 16. Table of Contents Table of Contents
<PAGE>
Item 17. General Information and History Company
Item 18. Services Not Applicable
Item 19. Purchase of Securities Being Offered Not Applicable
Item 20. Underwriters Distribution
Item 21. Calculation of Performance Data Calculation of Performance
Information
Item 22. Annuity Payments Annuity Provisions
Item 23. Financial Statements Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered in Part C to this Registration Statement.
PART A
The Prospectus was filed in Post-Effective Amendment No. 1 to Form N-4 on April
28, 2000 and was amended as of July 17, 2000 and filed pursuant to Securities
Act Rule 497 and is incorporated herein by reference.
CONSECO ADVANTAGE PLUS
CONSECO VARIABLE ANNUITY ACCOUNT H
CONSECO VARIABLE INSURANCE COMPANY
Supplement dated January 1, 2001
The following supplements certain information contained in your prospectus for
the Conseco Advantage Plus fixed and variable annuity:
1. Effective as of the date of this supplement, you may also invest in the
following investment portfolios:
Pioneer Variable Contracts Trust, Class II Shares
Managed by Pioneer Investment Management, Inc.
Pioneer Fund VCT Portfolio
Pioneer Equity-Income VCT Portfolio
Pioneer Europe VCT Portfolio
2. As of the date of this supplement, you may invest in the INVESCO VIF - High
Yield Fund and the INVESCO VIF - Equity Income Fund of INVESCO Variable
Investment Funds, Inc. Information regarding these funds is contained in the
prospectus.
3. The following is added to the "Investment Portfolio Expenses" table:
<TABLE>
<CAPTION>
Other Expenses* Total Annual
(after expense Portfolio Expenses*
reimbursement, if (after expense
any, for certain reimbursement, if
portfolios) any, for certain
Management Fees 12b-1 Fees portfolios)
------------------------ --------------------- ---------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Pioneer Fund
VCT Portfolio .65% .25% .07% .97%
Pioneer Equity-
Income VCT Portfolio .65% .25% .09% .99%
Pioneer Europe
VCT Portfolio** 1.00% .25% .47% 1.72%
* Expenses for fiscal year ended December 31, 2000 are estimated.
** Absent expense offsets, other expenses are estimated to be .49% for the year
ended December 31, 2000.
</TABLE>
4. The following Examples are added to the prospectus:
Chart 1:
Time Periods
1 Year 3 Years
Pioneer Fund VCT Portfolio (a)$107 (a)$172
(b)$ 32 (b)$ 98
Pioneer Equity-Income VCT Portfolio (a)$107 (a)$173
(b)$ 32 (b)$ 98
Pioneer Europe VCT Portfolio (a)$115 (a)$195
(b)$ 40 (b)$121
Chart 2:
Time Periods
1 Year 3 Years
Pioneer Fund VCT Portfolio (a)$113 (a)$192
(b)$ 39 (b)$118
Pioneer Equity-Income VCT Portfolio (a)$114 (a)$193
(b)$ 39 (b)$118
Pioneer Europe VCT Portfolio (a)$121 (a)$215
(b)$ 46 (b)$140
5. The following accumulation unit values for the period ended September 30,
2000 are added to the prospectus:
ACCUMULATION UNIT VALUE HISTORY
The following schedule includes Accumulation Unit values for the period
indicated. This data has been taken from the Conseco Variable Annuity Account
H's financial statements. This information should be read in conjunction with
Conseco Variable Annuity Account H's financial statements and related notes
which are included in the Statement of Additional Information.
STANDARD CONTRACT
THE ALGER AMERICAN FUND:
Leveraged AllCap
Accumulation unit value at beginning of $27.188
period
Accumulation unit value at end of $24.875
period
Number of accumulation units 92,938
outstanding at end of period
Small
Capitalization
Accumulation unit value at beginning of $17.030
period
Accumulation unit value at end of $14.224
period
Number of accumulation units 34,680
outstanding at end of period
Growth Portfolio
Accumulation unit value at beginning of $18.274
period
Accumulation unit value at end of $18.140
period
<PAGE>
Number of accumulation units 89,501
outstanding at end of period
Midcap Growth Portfolio
Accumulation unit value at beginning of $16.997
period
Accumulation unit value at end of $19.384
period
Number of accumulation units 120,864
outstanding at end of period
---------------------------------------------------
AMERICAN CENTURY VARIABLE PORTFOLIO, INC.:
International Fund
Accumulation unit value at beginning of $19.265
period
Accumulation unit value at end of $15.617
period
Number of accumulation units 66,319
outstanding at end of period
Value Fund
Accumulation unit value at beginning of $8.867
period
Accumulation unit value at end of $10.331
period
Number of accumulation units 30,804
outstanding at end of period
Income and Growth Fund
Accumulation unit value at beginning of $13.065
period
Accumulation unit value at end of $13.356
period
Number of accumulation units 23,721
outstanding at end of period
---------------------------------------------------
BERGER INSTITUTIONAL PRODUCTS TRUST:
<PAGE>
Growth Fund
Accumulation unit value at beginning of $17.075
period
Accumulation unit value at end of $17.588
period
Number of accumulation units 28,649
outstanding at end of period
---------------------------------------------------
Growth & Income Fund
Accumulation unit value at beginning of $20.314
period
Accumulation unit value at end of $20.932
period
Number of accumulation units 85,325
outstanding at end of period
New Generation
Accumulation unit value at beginning of $10.000
period
Accumulation unit value at end of $10.398
period
Number of accumulation units 8,886
outstanding at end of period
Small Company Growth Fund
Accumulation unit value at beginning of $21.009
period
Accumulation unit value at end of $21.306
period
Number of accumulation units 45,324
outstanding at end of period
BIAM International Fund
Accumulation unit value at beginning of $13.741
period
Accumulation unit value at end of $12.549
<PAGE>
period
Number of accumulation units 3,864
outstanding at end of period
---------------------------------------------------
CONSECO SERIES TRUST:
BALANCED
Accumulation unit value at beginning of $14.840
period
Accumulation unit value at end of $16.375
period
Number of accumulation units 159,592
outstanding at end of period
---------------------------------------------------
EQUITY
Accumulation unit value at beginning $18.002
of period
Accumulation unit value at end of $20.306
period
Number of accumulation units 46,481
outstanding at end of period
FIXED INCOME
Accumulation unit value at beginning of $10.193
period
Accumulation unit value at end of $10.773
period
Number of accumulation units 6,554
outstanding at end of period
Conseco 20 Focus
Accumulation unit value at beginning of $10.000
period
Accumulation unit value at end of $13.358
period
<PAGE>
Number of accumulation units 11,274
outstanding at end of period
GOVERNMENT SECURITIES
Accumulation unit value at beginning of $10.058
period
Accumulation unit value at end of $10.672
period
Number of accumulation units 12,696
outstanding at end of period
Conseco High Yield
Accumulation unit value at beginning of $10.000
period
Accumulation unit value at end of $10.102
period
Number of accumulation units 44,369
outstanding at end of period
MONEY MARKET
Accumulation unit value at beginning of $10.742
period
Accumulation unit value at end of $11.056
period
Number of accumulation units 395,684
outstanding at end of period
---------------------------------------------------
DREYFUS STOCK INDEX FUND:
Accumulation unit value at beginning of $13.601
period
Accumulation unit value at end of $14.043
period
Number of accumulation units 110,547
outstanding at end of period
---------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND,
INC.
<PAGE>
Accumulation unit value at beginning of $15.216
period
Accumulation unit value at end of $15.853
period
Number of accumulation units 22,910
outstanding at end of period
---------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND:
Disciplined Stock Portfolio
Accumulation unit value at beginning of $11.947
period
Accumulation unit value at end of $12.553
period
Number of accumulation units 20,753
outstanding at end of period
International Value Portfolio
Accumulation unit value at beginning of $10.970
period
Accumulation unit value at end of $10.798
period
Number of accumulation units 2,034
outstanding at end of period
---------------------------------------------------
FEDERATED INSURANCE SERIES:
High Income Bond II
Accumulation unit value at beginning of $9.909
period
Accumulation unit value at end of $9.678
period
Number of accumulation units 19,089
outstanding at end of period
International Equity
II
Accumulation unit value at beginning of $23.610
<PAGE>
period
Accumulation unit value at end of $17.736
period
Number of accumulation units 12,706
outstanding at end of period
Utility II
Accumulation unit value at beginning of $11.425
period
Accumulation unit value at end of $11.233
period
Number of accumulation units 20,430
outstanding at end of period
---------------------------------------------------
INVESCO VARIABLE INVESTMENT FUND:
High Yield Portfolio
Accumulation unit value at beginning of $10.164
period
Accumulation unit value at end of $9.968
period
Number of accumulation units 21,765
outstanding at end of period
---------------------------------------------------
Equity Income Portfolio
Accumulation unit value at beginning of $11.178
period
Accumulation unit value at end of $12.228
period
Number of accumulation units 6,932
outstanding at end of period
---------------------------------------------------
JANUS ASPEN SERIES:
Aggressive Growth
<PAGE>
Accumulation unit value at beginning of $32.871
period
Accumulation unit value at end of $28.088
period
Number of accumulation units 119,141
outstanding at end of period
Growth
Accumulation unit value at beginning of $18.730
period
Accumulation unit value at end of $18.319
period
Number of accumulation units 169,027
outstanding at end of period
Worldwide Growth
Accumulation unit value at beginning of $21.113
period
Accumulation unit value at end of $18.441
period
Number of accumulation units 164,987
outstanding at end of period
---------------------------------------------------
LAZARD RETIREMENT SERIES INC.:
Equity Portfolio
Accumulation unit value at beginning of $10.639
period
Accumulation unit value at end of $11.570
period
Number of accumulation units 2,105
outstanding at end of period
Small Cap Portfolio
Accumulation unit value at beginning of $9.382
period
<PAGE>
Accumulation unit value at end of $10.954
period
Number of accumulation units 13,632
outstanding at end of period
---------------------------------------------------
LORD ABBETT SERIES FUND, INC. :
Growth & Income Portfolio
Accumulation unit value at beginning of $11.333
period
Accumulation unit value at end of $13.073
period
Number of accumulation units 18,368
outstanding at end of period
---------------------------------------------------
MITCHELL HUTCHINS SERIES TRUST:
Growth & Income Portfolio
Accumulation unit value at beginning of $11.533
period
Accumulation unit value at end of $11.424
period
Number of accumulation units 4,407
outstanding at end of period
---------------------------------------------------
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio
Accumulation unit value at beginning of $10.212
period
Accumulation unit value at end of $10.562
period
Number of accumulation units 24,393
outstanding at end of period
Partners Portfolio
Accumulation unit value at beginning of $10.062
period
<PAGE>
Accumulation unit value at end of $10.551
period
Number of accumulation units 4,641
outstanding at end of period
---------------------------------------------------
RYDEX VARIABLE TRUST
NOVA Portfolio
Accumulation unit value at beginning of $18.407
period
Accumulation unit value at end of $17.573
period
Number of accumulation units 58,308
outstanding at end of period
OTC Portfolio
Accumulation unit value at beginning of $39.086
period
Accumulation unit value at end of $36.495
period
Number of accumulation units 42,658
outstanding at end of period
---------------------------------------------------
SELIGMAN PORTFOLIOS, INC.
Communications and Information Portfolio
Accumulation unit value at beginning of $10.000
period
Accumulation unit value at end of $7.735
period
Number of accumulation units 41,126
outstanding at end of period
Global Technology Portfolio
Accumulation unit value at beginning of $10.000
period
Accumulation unit value at end of $8.459
period
<PAGE>
Number of accumulation units 49,837
outstanding at end of period
---------------------------------------------------
STRONG VARIABLE INSURANCE FUNDS, INC.:
Mid Cap Growth Fund II
Accumulation unit value at beginning of $25.427
period
Accumulation unit value at end of $25.851
period
Number of accumulation units 87,516
outstanding at end of period
---------------------------------------------------
STRONG OPPORTUNITY FUND II :
Accumulation unit value at beginning of $14.103
period
Accumulation unit value at end of $15.164
period
Number of accumulation units 22,326
outstanding at end of period
---------------------------------------------------
THE VAN ECK WORLDWIDE INSURANCE TRUST:
Worldwide Hard Assets Fund
Accumulation unit value at beginning of $7.839
period
Accumulation unit value at end of $9.062
period
Number of accumulation units 10,592
outstanding at end of period
Worldwide Bond
Accumulation unit value at beginning of $9.858
period
Accumulation unit value at end of $9.596
period
<PAGE>
Number of accumulation units 1,485
outstanding at end of period
Worldwide Emerging Markets Fund
Accumulation unit value at beginning of $14.919
period
Accumulation unit value at end of $9.950
period
Number of accumulation units 27,627
outstanding at end of period
Real Estate
Accumulation unit value at beginning of $8.068
period
Accumulation unit value at end of $9.437
period
Number of accumulation units 1,730
outstanding at end of period
---------------------------------------------------
CONTRACTS WITH GMDB
THE ALGER AMERICAN FUND:
Leveraged AllCap
Accumulation unit value at beginning of $27.164
period
Accumulation unit value at end of $24.806
period
Number of accumulation units 26,858
outstanding at end of period
Small
Capitalization
Accumulation unit value at beginning of $17.015
period
Accumulation unit value at end of $14.185
period
Number of accumulation units 16,179
outstanding at end of period
<PAGE>
Growth Portfolio
Accumulation unit value at beginning of $18.258
period
Accumulation unit value at end of $18.090
period
Number of accumulation units 18,804
outstanding at end of period
Midcap Growth Portfolio
Accumulation unit value at beginning of $16.983
period
Accumulation unit value at end of $19.331
period
Number of accumulation units 34,971
outstanding at end of period
---------------------------------------------------
AMERICAN CENTURY VARIABLE PORTFOLIO, INC.:
International Fund
Accumulation unit value at beginning of $19.248
period
Accumulation unit value at end of $15.574
period
Number of accumulation units 14,212
outstanding at end of period
Value Fund
Accumulation unit value at beginning of $8.860
period
Accumulation unit value at end of $10.302
period
Number of accumulation units 3,630
outstanding at end of period
Income and Growth Fund
Accumulation unit value at beginning of $13.054
period
<PAGE>
Accumulation unit value at end of $13.319
period
Number of accumulation units 4,617
outstanding at end of period
---------------------------------------------------
BERGER INSTITUTIONAL PRODUCTS TRUST:
Growth Fund
Accumulation unit value at beginning of $17.060
period
Accumulation unit value at end of $17.539
period
Number of accumulation units 8,812
outstanding at end of period
---------------------------------------------------
Growth & Income Fund
Accumulation unit value at beginning of $20.296
period
Accumulation unit value at end of $20.874
period
Number of accumulation units 18,994
outstanding at end of period
New Generation
Accumulation unit value at beginning of $10.000
period
Accumulation unit value at end of $10.385
period
Number of accumulation units 4,669
outstanding at end of period
Small Company Growth Fund
Accumulation unit value at beginning of $20.991
period
Accumulation unit value at end of $21.247
<PAGE>
period
Number of accumulation units 21,535
outstanding at end of period
BIAM International Fund
Accumulation unit value at beginning of $13.729
period
Accumulation unit value at end of $12.515
period
Number of accumulation units 0
outstanding at end of period
---------------------------------------------------
CONSECO SERIES TRUST:
BALANCED
Accumulation unit value at beginning of $14.827
period
Accumulation unit value at end of $16.330
period
Number of accumulation units 25,265
outstanding at end of period
---------------------------------------------------
EQUITY
Accumulation unit value at beginning $17.987
of period
Accumulation unit value at end of $20.250
period
Number of accumulation units 12,311
outstanding at end of period
FIXED INCOME
Accumulation unit value at beginning of $10.184
period
Accumulation unit value at end of $10.744
<PAGE>
period
Number of accumulation units 922
outstanding at end of period
Conseco 20 Focus
Accumulation unit value at beginning of $10.000
period
Accumulation unit value at end of $13.341
period
Number of accumulation units 2,312
outstanding at end of period
GOVERNMENT SECURITIES
Accumulation unit value at beginning of $10.049
period
Accumulation unit value at end of $10.642
period
Number of accumulation units 630
outstanding at end of period
Conseco High Yield
Accumulation unit value at beginning of $10.000
period
Accumulation unit value at end of $10.090
period
Number of accumulation units 0
outstanding at end of period
MONEY MARKET
Accumulation unit value at beginning of $10.733
period
Accumulation unit value at end of $11.026
period
Number of accumulation units 23,903
outstanding at end of period
---------------------------------------------------
<PAGE>
DREYFUS STOCK INDEX FUND:
Accumulation unit value at beginning of $13.589
period
Accumulation unit value at end of $14.005
period
Number of accumulation units 47,711
outstanding at end of period
---------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND,
INC.
Accumulation unit value at beginning of $15.203
period
Accumulation unit value at end of $15.809
period
Number of accumulation units 7,922
outstanding at end of period
---------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND:
Disciplined Stock Portfolio
Accumulation unit value at beginning of $11.937
period
Accumulation unit value at end of $12.518
period
Number of accumulation units 3,018
outstanding at end of period
International Value Portfolio
Accumulation unit value at beginning of $10.961
period
Accumulation unit value at end of $10.768
period
Number of accumulation units 0
outstanding at end of period
---------------------------------------------------
FEDERATED INSURANCE SERIES:
<PAGE>
High Income Bond II
Accumulation unit value at beginning of $9.901
period
Accumulation unit value at end of $9.652
period
Number of accumulation units 8,405
outstanding at end of period
International Equity
II
Accumulation unit value at beginning of $23.589
period
Accumulation unit value at end of $17.687
period
Number of accumulation units 4,091
outstanding at end of period
Utility II
Accumulation unit value at beginning of $11.415
period
Accumulation unit value at end of $11.202
period
Number of accumulation units 870
outstanding at end of period
---------------------------------------------------
INVESCO VARIABLE INVESTMENT FUND:
High Yield Portfolio
Accumulation unit value at beginning of $10.155
period
Accumulation unit value at end of $9.941
period
Number of accumulation units 60
outstanding at end of period
---------------------------------------------------
Equity Income Portfolio
<PAGE>
Accumulation unit value at beginning of $11.168
period
Accumulation unit value at end of $12.195
period
Number of accumulation units 3,898
outstanding at end of period
---------------------------------------------------
JANUS ASPEN SERIES:
Aggressive Growth
Accumulation unit value at beginning of $32.843
period
Accumulation unit value at end of $28.010
period
Number of accumulation units 39,666
outstanding at end of period
Growth
Accumulation unit value at beginning of $18.714
period
Accumulation unit value at end of $18.268
period
Number of accumulation units 59,928
outstanding at end of period
Worldwide Growth
Accumulation unit value at beginning of $21.095
period
Accumulation unit value at end of $18.391
period
Number of accumulation units 34,111
outstanding at end of period
---------------------------------------------------
LAZARD RETIREMENT SERIES INC.:
Equity Portfolio
Accumulation unit value at beginning of $10.630
period
<PAGE>
Accumulation unit value at end of $11.538
period
Number of accumulation units 0
outstanding at end of period
Small Cap Portfolio
Accumulation unit value at beginning of $9.374
period
Accumulation unit value at end of $10.924
period
Number of accumulation units 1,203
outstanding at end of period
---------------------------------------------------
LORD ABBETT SERIES FUND, INC. :
Growth & Income Portfolio
Accumulation unit value at beginning of $11.324
period
Accumulation unit value at end of $13.037
period
Number of accumulation units 18,992
outstanding at end of period
---------------------------------------------------
MITCHELL HUTCHINS SERIES TRUST:
Growth & Income Portfolio
Accumulation unit value at beginning of $11.523
period
Accumulation unit value at end of $11.392
period
Number of accumulation units 3,737
outstanding at end of period
---------------------------------------------------
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio
Accumulation unit value at beginning of $10.203
period
<PAGE>
Accumulation unit value at end of $10.533
period
Number of accumulation units 1,615
outstanding at end of period
Partners Portfolio
Accumulation unit value at beginning of $10.053
period
Accumulation unit value at end of $10.522
period
Number of accumulation units 10,610
outstanding at end of period
---------------------------------------------------
RYDEX VARIABLE TRUST
NOVA Portfolio
Accumulation unit value at beginning of $18.407
period
Accumulation unit value at end of $17.551
period
Number of accumulation units 1,796
outstanding at end of period
OTC Portfolio
Accumulation unit value at beginning of $39.086
period
Accumulation unit value at end of $36.449
period
Number of accumulation units 1,501
outstanding at end of period
---------------------------------------------------
SELIGMAN PORTFOLIOS, INC.
Communications and Information Portfolio
Accumulation unit value at beginning of $10.000
period
Accumulation unit value at end of $7.725
period
<PAGE>
Number of accumulation units 9,231
outstanding at end of period
Global Technology Portfolio
Accumulation unit value at beginning of $10.000
period
Accumulation unit value at end of $8.448
period
Number of accumulation units 5,033
outstanding at end of period
---------------------------------------------------
STRONG VARIABLE INSURANCE FUNDS, INC.:
Mid Cap Growth Fund II
Accumulation unit value at beginning of $25.405
period
Accumulation unit value at end of $25.779
period
Number of accumulation units 22,574
outstanding at end of period
---------------------------------------------------
STRONG OPPORTUNITY FUND II :
Accumulation unit value at beginning of $14.091
period
Accumulation unit value at end of $15.122
period
Number of accumulation units 17,123
outstanding at end of period
---------------------------------------------------
THE VAN ECK WORLDWIDE INSURANCE TRUST:
Worldwide Hard Assets Fund
Accumulation unit value at beginning of $7.832
period
Accumulation unit value at end of $9.037
period
Number of accumulation units 0
outstanding at end of period
<PAGE>
Worldwide Bond
Accumulation unit value at beginning of $9.849
period
Accumulation unit value at end of $9.569
period
Number of accumulation units 1,100
outstanding at end of period
Worldwide Emerging Markets Fund
Accumulation unit value at beginning of $14.906
period
Accumulation unit value at end of $9.922
period
Number of accumulation units 268
outstanding at end of period
Real Estate
Accumulation unit value at beginning of $8.061
period
Accumulation unit value at end of $9.411
period
Number of accumulation units 1,403
outstanding at end of period
---------------------------------------------------
CONTRACTS WITH GMDB & GMIB
THE ALGER AMERICAN
FUND:
Leveraged AllCap
Accumulation unit value at beginning of $27.141
period
Accumulation unit $24.738
value at end of period
Number of accumulation units 8,287
<PAGE>
outstanding at end of period
Small Capitalization
Accumulation unit value at beginning of $17.001
period
Accumulation unit $14.146
value at end of period
Number of accumulation units 11,551
outstanding at end of period
Growth Portfolio
Accumulation unit value at beginning of $18.243
period
Accumulation unit $18.040
value at end of period
Number of accumulation units 5,692
outstanding at end of period
Midcap Growth
Portfolio
Accumulation unit value at beginning of $16.968
period
Accumulation unit $19.277
value at end of period
Number of accumulation units 2,205
outstanding at end of period
------------------------------------------------------
AMERICAN CENTURY VARIABLE PORTFOLIO,
INC.:
International Fund
Accumulation unit value at beginning of $19.232
period
Accumulation unit $15.531
value at end of period
Number of accumulation units 316
outstanding at end of period
<PAGE>
Value Fund
Accumulation unit value at beginning of $8.852
period
Accumulation unit $10.274
value at end of period
Number of accumulation units 1,561
outstanding at end of period
Income and Growth
Fund
Accumulation unit value at beginning of $13.042
period
Accumulation unit $13.282
value at end of period
Number of accumulation units 2,989
outstanding at end of period
------------------------------------------------------
BERGER INSTITUTIONAL PRODUCTS TRUST:
Growth Fund
Accumulation unit value at beginning of $17.045
period
Accumulation unit $17.491
value at end of period
Number of accumulation units 1,707
outstanding at end of period
------------------------------------------------------
Growth & Income Fund
Accumulation unit value at beginning of $20.279
period
Accumulation unit $20.816
value at end of period
Number of accumulation units 4,730
outstanding at end of period
New Generation
<PAGE>
Accumulation unit value at beginning of $10.000
period
Accumulation unit $10.372
value at end of period
Number of accumulation units 450
outstanding at end of period
Small Company Growth
Fund
Accumulation unit value at beginning of $20.973
period
Accumulation unit $21.188
value at end of period
Number of accumulation units 5,284
outstanding at end of period
BIAM International
Fund
Accumulation unit value at beginning of $13.717
period
Accumulation unit $12.480
value at end of period
Number of accumulation units 0
outstanding at end of period
------------------------------------------------------
CONSECO SERIES TRUST:
BALANCED
Accumulation unit value at beginning of $14.814
period
Accumulation unit $16.285
value at end of period
Number of accumulation units 2,915
outstanding at end of period
------------------------------------------------------
EQUITY
Accumulation unit value at beginning $17.971
of period
<PAGE>
Accumulation unit $20.194
value at end of period
Number of accumulation units 315
outstanding at end of period
FIXED INCOME
Accumulation unit value at beginning of $10.175
period
Accumulation unit $10.714
value at end of
period
Number of accumulation units 3,364
outstanding at end of period
Conseco 20 Focus
Accumulation unit value at beginning of $10.000
period
Accumulation unit $13.324
value at end of
period
Number of accumulation units 0
outstanding at end of period
GOVERNMENT SECURITIES
Accumulation unit value at beginning of $10.041
period
Accumulation unit $10.613
value at end of period
Number of accumulation units 2,359
outstanding at end of period
Conseco High Yield
Accumulation unit value at beginning of $10.000
period
Accumulation unit $10.077
value at end of period
Number of accumulation units 0
outstanding at end of period
<PAGE>
MONEY MARKET
Accumulation unit value at beginning of $10.724
period
Accumulation unit $10.996
value at end of period
Number of accumulation units 12,848
outstanding at end of period
------------------------------------------------------
DREYFUS STOCK INDEX
FUND:
Accumulation unit value at beginning of $13.577
period
Accumulation unit $13.966
value at end of period
Number of accumulation units 5,762
outstanding at end of period
------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH
FUND, INC.
Accumulation unit value at beginning of $15.189
period
Accumulation unit $15.766
value at end of period
Number of accumulation units 830
outstanding at end of period
------------------------------------------------------
DREYFUS VARIABLE
INVESTMENT FUND:
Disciplined Stock
Portfolio
Accumulation unit value at beginning of $11.926
period
Accumulation unit $12.483
value at end of period
Number of accumulation units 1,622
outstanding at end of period
<PAGE>
International Value
Portfolio
Accumulation unit value at beginning of $10.951
period
Accumulation unit $10.739
value at end of period
Number of accumulation units 277
outstanding at end of period
------------------------------------------------------
FEDERATED INSURANCE
SERIES:
High Income Bond II
Accumulation unit value at beginning of $9.892
period
Accumulation unit $9.625
value at end of period
Number of accumulation units 818
outstanding at end of period
International Equity
II
Accumulation unit value at beginning of $23.569
period
Accumulation unit $17.639
value at end of period
Number of accumulation units 840
outstanding at end of period
Utility II
Accumulation unit value at beginning of $11.406
period
Accumulation unit $11.171
value at end of period
Number of accumulation units 0
outstanding at end of period
------------------------------------------------------
<PAGE>
INVESCO VARIABLE
INVESTMENT FUND:
High Yield Portfolio
Accumulation unit value at beginning of $10.146
period
Accumulation unit $9.913
value at end of period
Number of accumulation units 672
outstanding at end of period
------------------------------------------------------
Equity Income
Portfolio
Accumulation unit value at beginning of $11.158
period
Accumulation unit $12.161
value at end of period
Number of accumulation units 389
outstanding at end of period
------------------------------------------------------
JANUS ASPEN SERIES:
Aggressive Growth
Accumulation unit value at beginning of $32.815
period
Accumulation unit $27.933
value at end of period
Number of accumulation units 7,380
outstanding at end of period
Growth
Accumulation unit value at beginning of $18.697
period
Accumulation unit $18.218
value at end of period
Number of accumulation units 18,139
outstanding at end of period
<PAGE>
Worldwide Growth
Accumulation unit value at beginning of $21.077
period
Accumulation unit $18.340
value at end of period
Number of accumulation units 13,131
outstanding at end of period
------------------------------------------------------
LAZARD RETIREMENT
SERIES INC.:
Equity Portfolio
Accumulation unit value at beginning of $10.621
period
Accumulation unit $11.506
value at end of period
Number of accumulation units 400
outstanding at end of period
Small Cap Portfolio
Accumulation unit value at beginning of $9.366
period
Accumulation unit $10.894
value at end of period
Number of accumulation units 0
outstanding at end of period
------------------------------------------------------
LORD ABBETT SERIES
FUND, INC. :
Growth & Income
Portfolio
Accumulation unit value at beginning of $11.314
period
Accumulation unit $13.001
value at end of period
Number of accumulation units 1,423
outstanding at end of period
------------------------------------------------------
<PAGE>
MITCHELL HUTCHINS SERIES TRUST:
Growth & Income
Portfolio
Accumulation unit value at beginning of $11.514
period
Accumulation unit $11.361
value at end of period
Number of accumulation units 1,139
outstanding at end of period
------------------------------------------------------
NEUBERGER BERMAN ADVISERS MANAGEMENT
TRUST
Limited Maturity Bond
Portfolio
Accumulation unit value at beginning of $10.194
period
Accumulation unit $10.504
value at end of period
Number of accumulation units 4,015
outstanding at end of period
Partners Portfolio
Accumulation unit value at beginning of $10.044
period
Accumulation unit $10.493
value at end of period
Number of accumulation units 0
outstanding at end of period
------------------------------------------------------
RYDEX VARIABLE TRUST
NOVA Portfolio
Accumulation unit value at beginning of $18.407
period
Accumulation unit $17.528
value at end of period
Number of accumulation units 251
<PAGE>
outstanding at end of period
OTC Portfolio
Accumulation unit value at beginning of $39.086
period
Accumulation unit $36.402
value at end of period
Number of accumulation units 808
outstanding at end of period
------------------------------------------------------
SELIGMAN PORTFOLIOS, INC.
Communications and Information
Portfolio
Accumulation unit value at beginning of $10.000
period
Accumulation unit $7.716
value at end of period
Number of accumulation units 427
outstanding at end of period
Global Technology
Portfolio
Accumulation unit value at beginning of $10.000
period
Accumulation unit $8.437
value at end of period
Number of accumulation units 1,123
outstanding at end of period
------------------------------------------------------
STRONG VARIABLE INSURANCE FUNDS, INC.:
Mid Cap Growth Fund
II
Accumulation unit value at beginning of $25.383
period
Accumulation unit $25.708
value at end of period
Number of accumulation units 6,442
<PAGE>
outstanding at end of period
------------------------------------------------------
STRONG OPPORTUNITY
FUND II :
Accumulation unit value at beginning of $14.079
period
Accumulation unit $15.081
value at end of period
Number of accumulation units 1,646
outstanding at end of period
------------------------------------------------------
THE VAN ECK WORLDWIDE INSURANCE TRUST:
Worldwide Hard Assets
Fund
Accumulation unit value at beginning of $7.825
period
Accumulation unit $9.012
value at end of period
Number of accumulation units 0
outstanding at end of period
Worldwide Bond
Accumulation unit value at beginning of $9.841
period
Accumulation unit $9.543
value at end of period
Number of accumulation units 0
outstanding at end of period
Worldwide Emerging
Markets Fund
Accumulation unit value at beginning of $14.893
period
Accumulation unit $9.895
value at end of period
Number of accumulation units 1,612
outstanding at end of period
<PAGE>
Real Estate
Accumulation unit value at beginning of $8.054
period
Accumulation unit $9.385
value at end of period
Number of accumulation units 0
outstanding at end of period
------------------------------------------------------
There are no accumulation unit values shown for the sub-accounts investing
Pioneer Fund VCT Portfolio, Pioneer Equity-Income VCT Portfolio and Pioneer
Europe VCT Portfolio because they were not available under your contract until
the date of this supplement.
6. The following is added to Appendix A:
Pioneer Variable Contracts Trust
Pioneer Variable Contracts Trust is managed by Pioneer Investment Management,
Inc. The Pioneer Variable Contracts Trust is a mutual fund with multiple
portfolios. The following Class II portfolios are available under the contract:
Pioneer Fund VCT Portfolio
The Pioneer Fund VCT Portfolio seeks reasonable income and capital growth. The
Portfolio invests the major portion of its assets in equity securities,
primarily of U.S. issuers.
Pioneer Equity-Income VCT Portfolio
The Pioneer Equity-Income VCT Portfolio seeks current income and long-term
growth of capital from a portfolio consisting primarily of income producing
equity securities of U.S. corporations.
Pioneer Europe VCT Portfolio
The Pioneer Europe VCT Portfolio seeks long-term growth of capital. The
portfolio invests primarily in equity securities of European issuers.
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL VARIABLE DEFERRED ANNUITY CONTRACTS
issued by
CONSECO VARIABLE ANNUITY ACCOUNT H
and
CONSECO VARIABLE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED JANUARY 1, 2001, FOR THE
INDIVIDUAL VARIABLE DEFERRED ANNUITY CONTRACTS WHICH ARE DESCRIBED HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL US AT (800)
342-6307 OR WRITE US AT OUR ADMINISTRATIVE OFFICE: 11815 N. PENNSYLVANIA STREET,
CARMEL, INDIANA 46032.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED JANUARY 1, 2001.
<PAGE>
TABLE OF CONTENTS
PAGE
COMPANY ...............................................................
INDEPENDENT ACCOUNTANTS ...............................................
LEGAL OPINIONS ........................................................
DISTRIBUTION ..........................................................
Reduction or Elimination of the Contingent Deferred Sales Charge .....
CALCULATION OF PERFORMANCE INFORMATION ................................
Total Return .........................................................
Performance Information ..............................................
Historical Unit Values ...............................................
Reporting Agencies ...................................................
FEDERAL TAX STATUS
General ..............................................................
Diversification ......................................................
Multiple Contracts ...................................................
Partial 1035 Exchanges ...............................................
Contracts Owned by Other than Natural Persons ........................
<PAGE>
Tax Treatment of Assignments .........................................
Death Benefits .......................................................
Income Tax Withholding ...............................................
Tax Treatment of Withdrawals-- Non-Qualified Contracts ...............
Qualified Plans ......................................................
Roth IRAs ............................................................
Tax Treatment of Withdrawals-- Qualified Contracts ...................
Tax-Sheltered Annuities-- Withdrawal Limitations .....................
Mandatory Distributions-- Qualified Plans ............................
ANNUITY PROVISIONS ....................................................
Variable Annuity Payout ..............................................
Annuity Unit .........................................................
Fixed Annuity Payout .................................................
FINANCIAL STATEMENTS ..................................................
<PAGE>
COMPANY
Information regarding Conseco Variable Insurance Company ("Company" or "Conseco
Variable") is contained in the prospectus. On October 7, 1998, the Company
changed its name from Great American Reserve Insurance Company to its present
name.
INDEPENDENT ACCOUNTANTS
The financial statements of Conseco Variable as of December 31, 1999 and 1998,
and for the years ended December 31, 1999, 1998 and 1997, included in this
statement of additional information, have been audited by PricewaterhouseCoopers
LLP, 2900 One American Square, Indianapolis, Indiana 46282, independent
accountants, as set forth in their report appearing therein.
LEGAL OPINIONS
Blazzard, Grodd & Hasenauer, P.C. of Westport, Connecticut has provided advice
on certain matters relating to the federal securities and income tax laws in
connection with the Contracts described in the prospectus.
DISTRIBUTION
Conseco Equity Sales, Inc., an affiliate of the Company, acts as the
distributor. The offering is on a continuous basis.
REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
The amount of the Contingent Deferred Sales Charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals or to
a group of individuals in a manner that results in savings of sales expenses.
<PAGE>
The entitlement to reduction of the Contingent Deferred Sales Charge will be
determined by the Company after examination of all the relevant factors such as:
1. The size and type of group to which sales are to be made will be considered.
Generally, the sales expenses for a larger group are less than for a smaller
group because of the ability to implement large numbers of Contracts with fewer
sales contacts.
2. The total amount of purchase payments to be received will be considered. Per
Contract sales expenses are likely to be less on larger purchase payments than
on smaller ones.
3. Any prior or existing relationship with the Company will be considered. Per
Contract sales expenses are likely to be less when there is a prior existing
relationship because of the likelihood of implementing the Contract with fewer
sales contacts.
4. There may be other circumstances, of which the Company is not presently
aware, which could result in reduced sales expenses.
If, after consideration of the foregoing factors, the Company determines that
there will be a reduction in sales expenses, the Company may provide for a
reduction or elimination of the Contingent Deferred Sales Charge.
The Contingent Deferred Sales Charge may be eliminated when the Contracts are
issued to an officer, director or employee of the Company or any of its
affiliates. In no event will any reduction or elimination of the Contingent
Deferred Sales Charge be permitted where the reduction or elimination will be
unfairly discriminatory to any person.
CALCULATION OF PERFORMANCE INFORMATION
TOTAL RETURN
From time to time, we may advertise performance data. Such data will show the
percentage change in the value of an Accumulation Unit based on the performance
of an investment portfolio over a period of time, usually a calendar year,
determined by dividing the increase (decrease) in value for that unit by the
Accumulation Unit value at the beginning of the period.
Any such advertisement will include standardized average annual total return
figures for the time periods indicated in the advertisement. Such total return
figures will reflect the deduction of the Insurance Charge and the expenses for
the underlying investment portfolio being advertised and any applicable Contract
Maintenance Charges and Contingent Deferred Sales Charges.
The Company may also advertise performance data which will be calculated in the
same manner as described above but which will not reflect the deduction of any
Contract Maintenance Charge and Contingent Deferred Sales Charge. The deduction
of any Contract Maintenance Charge and Contingent Deferred Sales Charge would
reduce any percentage increase or make greater any percentage decrease.
The hypothetical value of a Contract purchased for the time periods described in
the advertisement will be determined by using the actual Accumulation Unit
values for an initial $1,000 purchase payment, and deducting any applicable
Contract Maintenance Charges and any applicable Contingent Deferred Sales
Charges to arrive at the ending hypothetical value. The average annual total
return is then determined by computing the fixed interest rate that a $1,000
purchase payment would have to earn annually, compounded annually, to grow to
the hypothetical value at the end of the time periods described. The formula
used in these calculations is:
n
P (1+T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods
used (or fractional portion thereof) of a hypothetical
$1,000 payment made at the beginning of the time periods
used.
You should note that the investment results of each investment portfolio will
fluctuate over time, and any presentation of the investment portfolio's total
return for any period should not be considered as a representation of what an
investment may earn or what your total return may be in any future period.
PERFORMANCE INFORMATION
The Contracts and the Separate Account are relatively new and therefore do not
have a meaningful investment performance history. However, certain corresponding
Portfolios have been in existence for some time and consequently have investment
performance history. In order to demonstrate how the actual investment
experience of the Portfolios affects Accumulation Unit values, the Company has
developed performance information. The information is based upon the historical
experience of the Portfolios and is for the periods shown.
Future performance of the portfolios will vary and the results shown are not
necessarily representative of future results. Performance for periods ending
after those shown may vary substantially from the examples shown. The
performance of the portfolios is calculated for a specified period of time by
assuming an initial purchase payment of $1,000 allocated to the portfolio. The
percentage increases (decreases) are determined by subtracting the initial
purchase payment from the ending value and dividing the remainder by the
beginning value. The performance may also show figures when no withdrawal is
assumed.
<PAGE>
The following charts reflect performance information for the periods shown.
Section I is standardized performance information which presents performance
data commencing from the date the Separate Account first invested in the
portfolio. Section II presents performance data commencing from the inception
date of the underlying portfolio (which may precede the date the Separate
Account first invested in the portfolio). Column A is average annual total
return which reflects the deduction of the insurance charges, contract
maintenance charge, contingent deferred sales charge and the fees and expenses
of the portfolios. Column B reflects the deduction of the insurance charges and
the fees and expenses of the portfolios.
Chart 1 in each section is for the standard contracts; Chart 2 in each section
is for contracts with the guaranteed minimum death benefit; and Chart 3 in each
section is for contracts with the guaranteed minimum death benefit and
guaranteed minimum income benefit.
SECTION I
CHART 1 - STANDARD CONTRACT
TOTAL RETURN FOR THE PERIODS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
COLUMN A COLUMN B
SEPARATE
ACCOUNT 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- --------- ----- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio ............................. 02/11/2000 N/A N/A N/A 2.40 N/A N/A N/A 10.35
Equity Portfolio ............................... 02/11/2000 N/A N/A N/A 4.68 N/A N/A N/A 12.80
Fixed Income Portfolio ......................... 02/11/2000 N/A N/A N/A (1.92) N/A N/A N/A 5.69
Government Securities Portfolio ................ 02/11/2000 N/A N/A N/A (1.54) N/A N/A N/A 6.10
Conseco 20 Focus Portfolio...................... 02/11/2000 N/A N/A N/A 23.96 N/A N/A N/A 33.58
High Yield Portfolio............................ 02/11/2000 N/A N/A N/A (6.25) N/A N/A N/A 1.02
THE ALGER AMERICAN FUND
Alger American Growth Portfolio ................ 02/11/2000 N/A N/A N/A (7.88) N/A N/A N/A (.73)
Alger American Leveraged AllCap Portfolio ...... 02/11/2000 N/A N/A N/A (15.10) N/A N/A N/A (8.51)
Alger American MidCap Growth Portfolio ......... 02/11/2000 N/A N/A N/A 5.83 N/A N/A N/A 14.04
Alger American Small Capitalization Portfolio .. 02/11/2000 N/A N/A N/A (22.49) N/A N/A N/A (16.48)
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income & Growth ............................. 02/11/2000 N/A N/A N/A (5.13) N/A N/A N/A 2.23
VP International ............................... 02/11/2000 N/A N/A N/A (24.77) N/A N/A N/A (18.93)
VP Value ....................................... 02/11/2000 N/A N/A N/A 8.12 N/A N/A N/A 16.51
<PAGE>
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT--Growth Fund ........................ 02/11/2000 N/A N/A N/A (4.41) N/A N/A N/A 3.00
Berger IPT--Growth and Income Fund ............. 02/11/2000 N/A N/A N/A (4.38) N/A N/A N/A 3.04
Berger IPT--Small Company Growth Fund .......... 02/11/2000 N/A N/A N/A (5.89) N/A N/A N/A 1.42
Berger/BIAM IPT-International Fund ............ 02/11/2000 N/A N/A N/A (15.25) N/A N/A N/A (8.67)
Berger IPT -- New Generation Fund .............. 02/11/2000 N/A N/A N/A (3.50) N/A N/A N/A 3.98
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC. .............................. 02/11/2000 N/A N/A N/A (3.32) N/A N/A N/A 4.19
DREYFUS STOCK INDEX FUND ....................... 02/11/2000 N/A N/A N/A (4.18) N/A N/A N/A 3.25
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus VIF Disciplined Stock Portfolio ........ 02/11/2000 N/A N/A N/A (2.50) N/A N/A N/A 5.07
Dreyfus VIF International Value Portfolio ...... 02/11/2000 N/A N/A N/A (8.66) N/A N/A N/A (1.57)
</TABLE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
SEPARATE
ACCOUNT 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............. 02/11/2000 N/A N/A N/A (9.37) N/A N/A N/A (2.33)
Federated International Equity Fund II.......... 02/11/2000 N/A N/A N/A (30.29) N/A N/A N/A (24.88)
Federated Utility Fund II ......... 02/11/2000 N/A N/A N/A (8.77) N/A N/A N/A (1.69)
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-Equity Income Fund ..................02/11/2000 N/A N/A N/A 1.52 N/A N/A N/A 9.40
INVESCO VIF-High Yield Fund ................ 02/11/2000 N/A N/A N/A (8.99) N/A N/A N/A (1.92)
JANUS ASPEN SERIES
Aggressive Growth Portfolio .................... 02/11/2000 N/A N/A N/A (20.71) N/A N/A N/A (14.55)
Growth Portfolio ............................... 02/11/2000 N/A N/A N/A (9.24) N/A N/A N/A (2.19)
Worldwide Growth Portfolio ..................... 02/11/2000 N/A N/A N/A (18.94) N/A N/A N/A (12.65)
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............. 02/11/2000 N/A N/A N/A .92 N/A N/A N/A 8.75
Lazard Retirement Small Cap Portfolio .......... 02/11/2000 N/A N/A N/A 8.35 N/A N/A N/A 16.76
LORD ABBETT SERIES FUND, INC.
Growth & Income Portfolio ...................... 02/11/2000 N/A N/A N/A 7.05 N/A N/A N/A 15.35
MITCHELL HUTCHINS SERIES TRUST
<PAGE>
Growth and Income Portfolio .................... 02/11/2000 N/A N/A N/A (8.08) N/A N/A N/A (.95)
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio ................ 02/11/2000 N/A N/A N/A (4.01) N/A N/A N/A 3.43
Partners Portfolio ............................. 02/11/2000 N/A N/A N/A (2.69) N/A N/A N/A 4.86
RYDEX VARIABLE TRUST
Nova Fund ...................................... 02/11/2000 N/A N/A N/A (11.41) N/A N/A N/A (4.54)
OTC Fund ...................................... 02/11/2000 N/A N/A N/A (13.35) N/A N/A N/A (6.63)
SELIGMAN PORTFOLIOS, INC.
Seligman Communications and Information Portfolio02/11/2000 N/A N/A N/A (28.22) N/A N/A N/A (22.65)
Seligman Global Technology Portfolio ........... 02/11/2000 N/A N/A N/A (21.50) N/A N/A N/A (15.41)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
SEPARATE
ACCOUNT 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II ......................... 02/11/2000 N/A N/A N/A (.22) N/A N/A N/A 7.53
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong MidCap Growth Fund II ................ 02/11/2000 N/A N/A N/A (5.65) N/A N/A N/A 1.67
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund ......................... 02/11/2000 N/A N/A N/A (9.67) N/A N/A N/A (2.66)
Worldwide Emerging Markets Fund ............. 02/11/2000 N/A N/A N/A (38.11) N/A N/A N/A (33.31)
Worldwide Hard Assets Fund .................. 02/11/2000 N/A N/A N/A 7.28 N/A N/A N/A 15.61
Worldwide Real Estate Fund .................. 02/11/2000 N/A N/A N/A 8.55 N/A N/A N/A 16.97
</TABLE>
<PAGE>
CHART 2 - CONTRACTS WITH GMDB
TOTAL RETURN FOR THE PERIODS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
COLUMN A COLUMN B
SEPARATE
ACCOUNT 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio ............................. 02/11/2000 N/A N/A N/A 2.21 N/A N/A N/A 10.14
Equity Portfolio ............................... 02/11/2000 N/A N/A N/A 4.48 N/A N/A N/A 12.58
Fixed Income Portfolio ......................... 02/11/2000 N/A N/A N/A (2.10) N/A N/A N/A 5.49
Government Securities Portfolio ................ 02/11/2000 N/A N/A N/A (1.73) N/A N/A N/A 5.90
Conseco 20 Focus Portfolio...................... 02/11/2000 N/A N/A N/A 23.80 N/A N/A N/A 33.41
High Yield Portfolio............................ 02/11/2000 N/A N/A N/A (6.37) N/A N/A N/A .90
THE ALGER AMERICAN FUND
Alger American Growth Portfolio ................ 02/11/2000 N/A N/A N/A (8.06) N/A N/A N/A (.92)
Alger American Leveraged AllCap Portfolio ...... 02/11/2000 N/A N/A N/A (15.26) N/A N/A N/A (8.68)
Alger American MidCap Growth Portfolio ......... 02/11/2000 N/A N/A N/A 5.63 N/A N/A N/A 13.83
Alger American Small Capitalization Portfolio .. 02/11/2000 N/A N/A N/A (22.64) N/A N/A N/A (16.63)
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income & Growth ............................. 02/11/2000 N/A N/A N/A (5.31) N/A N/A N/A 2.03
VP International ............................... 02/11/2000 N/A N/A N/A (24.91) N/A N/A N/A (19.09)
VP Value ....................................... 02/11/2000 N/A N/A N/A 7.91 N/A N/A N/A 16.29
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT--Growth Fund ........................ 02/11/2000 N/A N/A N/A (4.59) N/A N/A N/A 2.81
Berger IPT--Growth and Income Fund ............. 02/11/2000 N/A N/A N/A (4.56) N/A N/A N/A 2.85
Berger IPT--Small Company Growth Fund .......... 02/11/2000 N/A N/A N/A (6.07) N/A N/A N/A 1.22
Berger/BIAM IPT-International Fund ............ 02/11/2000 N/A N/A N/A (15.41) N/A N/A N/A (8.85)
Berger IPT -- New Generation Fund .............. 02/11/2000 N/A N/A N/A (3.62) N/A N/A N/A 3.85
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC. .............................. 02/11/2000 N/A N/A N/A (3.50) N/A N/A N/A 3.99
DREYFUS STOCK INDEX FUND ....................... 02/11/2000 N/A N/A N/A (4.36) N/A N/A N/A 3.06
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus VIF Disciplined Stock Portfolio ........ 02/11/2000 N/A N/A N/A (2.68) N/A N/A N/A 4.87
Dreyfus VIF International Value Portfolio ...... 02/11/2000 N/A N/A N/A (8.83) N/A N/A N/A (1.76)
</TABLE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
SEPARATE
ACCOUNT 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
--------- ---- ----- ---- ----------- ---- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............. 02/11/2000 N/A N/A N/A (9.54) N/A N/A N/A (2.52)
Federated International Equity Fund II ......... 02/11/2000 N/A N/A N/A (30.42) N/A N/A N/A (25.02)
Federated Utility Fund II ......... 02/11/2000 N/A N/A N/A (8.94) N/A N/A N/A (1.88)
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-Equity Income Fund ..................02/11/2000 N/A N/A N/A 1.33 N/A N/A N/A 9.19
INVESCO VIF-High Yield Fund ................ 02/11/2000 N/A N/A N/A (9.16) N/A N/A N/A (2.11)
JANUS ASPEN SERIES
Aggressive Growth Portfolio .................... 02/11/2000 N/A N/A N/A (20.86) N/A N/A N/A (14.72)
Growth Portfolio ............................... 02/11/2000 N/A N/A N/A (9.41) N/A N/A N/A (2.38)
Worldwide Growth Portfolio ..................... 02/11/2000 N/A N/A N/A (19.10) N/A N/A N/A (12.82)
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............. 02/11/2000 N/A N/A N/A .73 N/A N/A N/A 8.54
Lazard Retirement Small Cap Portfolio .......... 02/11/2000 N/A N/A N/A 8.15 N/A N/A N/A 16.54
LORD ABBETT SERIES FUND, INC.
Growth & Income Portfolio ...................... 02/11/2000 N/A N/A N/A 6.84 N/A N/A N/A 15.13
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio .................... 02/11/2000 N/A N/A N/A (8.26) N/A N/A N/A (1.14)
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio ................ 02/11/2000 N/A N/A N/A (4.20) N/A N/A N/A 3.24
Partners Portfolio ............................. 02/11/2000 N/A N/A N/A (2.87) N/A N/A N/A 4.67
RYDEX VARIABLE TRUST
Nova Fund ...................................... 02/11/2000 N/A N/A N/A (11.52) N/A N/A N/A (4.66)
OTC Fund ...................................... 02/11/2000 N/A N/A N/A (13.46) N/A N/A N/A (6.75)
SELIGMAN PORTFOLIOS, INC.
Seligman Communications and Information Portfolio02/11/2000 N/A N/A N/A (28.31) N/A N/A N/A (22.75)
Seligman Global Technology Portfolio ........... 02/11/2000 N/A N/A N/A (21.60) N/A N/A N/A (15.52)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
SEPARATE
ACCOUNT 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II ......................... 02/11/2000 N/A N/A N/A (.41) N/A N/A N/A 7.32
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong MidCap Growth Fund II ................ 02/11/2000 N/A N/A N/A (5.83) N/A N/A N/A 1.48
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund ......................... 02/11/2000 N/A N/A N/A (9.84) N/A N/A N/A (2.84)
Worldwide Emerging Markets Fund ............. 02/11/2000 N/A N/A N/A (38.23) N/A N/A N/A (33.43)
Worldwide Hard Assets Fund .................. 02/11/2000 N/A N/A N/A 7.08 N/A N/A N/A 15.39
Worldwide Real Estate Fund .................. 02/11/2000 N/A N/A N/A 8.35 N/A N/A N/A 16.75
</TABLE>
6
<PAGE>
CHART 3 - CONTRACTS WITH GMIB & GMDB
TOTAL RETURN FOR THE PERIODS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
COLUMN A COLUMN B
SEPARATE
ACCOUNT 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
-------- ----- ----- ----- --------- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio ............................. 02/11/2000 N/A N/A N/A 2.01 N/A N/A N/A 9.93
Equity Portfolio ............................... 02/11/2000 N/A N/A N/A 4.28 N/A N/A N/A 12.37
Fixed Income Portfolio ......................... 02/11/2000 N/A N/A N/A (2.29) N/A N/A N/A 5.29
Government Securities Portfolio ................ 02/11/2000 N/A N/A N/A (1.91) N/A N/A N/A 5.70
Conseco 20 Focus Portfolio...................... 02/11/2000 N/A N/A N/A 23.65 N/A N/A N/A 33.24
High Yield Portfolio............................ 02/11/2000 N/A N/A N/A (6.49) N/A N/A N/A .77
THE ALGER AMERICAN FUND
Alger American Growth Portfolio ................ 02/11/2000 N/A N/A N/A (8.23) N/A N/A N/A (1.11)
Alger American Leveraged AllCap Portfolio ...... 02/11/2000 N/A N/A N/A (15.42) N/A N/A N/A (8.86)
Alger American MidCap Growth Portfolio ......... 02/11/2000 N/A N/A N/A 5.43 N/A N/A N/A 13.61
Alger American Small Capitalization Portfolio .. 02/11/2000 N/A N/A N/A (22.78) N/A N/A N/A (16.79)
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
<PAGE>
VP Income & Growth ............................. 02/11/2000 N/A N/A N/A (5.49) N/A N/A N/A 1.84
VP International ............................... 02/11/2000 N/A N/A N/A (25.06) N/A N/A N/A (19.24)
VP Value ....................................... 02/11/2000 N/A N/A N/A 7.71 N/A N/A N/A 16.07
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT--Growth Fund ........................ 02/11/2000 N/A N/A N/A (4.77) N/A N/A N/A 2.62
Berger IPT--Growth and Income Fund ............. 02/11/2000 N/A N/A N/A (4.74) N/A N/A N/A 2.65
Berger IPT--Small Company Growth Fund .......... 02/11/2000 N/A N/A N/A (6.25) N/A N/A N/A 1.03
Berger/BIAM IPT-International Fund ............ 02/11/2000 N/A N/A N/A (15.57) N/A N/A N/A (9.02)
Berger IPT -- New Generation Fund .............. 02/11/2000 N/A N/A N/A (3.75) N/A N/A N/A 3.72
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC. .............................. 02/11/2000 N/A N/A N/A (3.68) N/A N/A N/A 3.79
DREYFUS STOCK INDEX FUND ....................... 02/11/2000 N/A N/A N/A (4.54) N/A N/A N/A 2.86
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus VIF Disciplined Stock Portfolio ........ 02/11/2000 N/A N/A N/A (2.87) N/A N/A N/A 4.67
Dreyfus VIF International Value Portfolio ...... 02/11/2000 N/A N/A N/A (9.00) N/A N/A N/A (1.94)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEPARATE
ACCOUNT 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
--------- ---- ----- ---- ----------- ---- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............. 02/11/2000 N/A N/A N/A (9.71) N/A N/A N/A (2.70)
Federated International Equity Fund II ......... 02/11/2000 N/A N/A N/A (30.55) N/A N/A N/A (25.16)
Federated Utility Equity Fund II ........ 02/11/2000 N/A N/A N/A (9.11) N/A N/A N/A (2.06)
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-Equity Income Fund ..................02/11/2000 N/A N/A N/A 1.14 N/A N/A N/A 8.98
INVESCO VIF-High Yield Fund ................ 02/11/2000 N/A N/A N/A (9.33) N/A N/A N/A (2.30)
JANUS ASPEN SERIES
Aggressive Growth Portfolio .................... 02/11/2000 N/A N/A N/A (21.01) N/A N/A N/A (14.88)
Growth Portfolio ............................... 02/11/2000 N/A N/A N/A (9.58) N/A N/A N/A (2.57)
Worldwide Growth Portfolio ..................... 02/11/2000 N/A N/A N/A (19.25) N/A N/A N/A (12.99)
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............. 02/11/2000 N/A N/A N/A .54 N/A N/A N/A 8.34
Lazard Retirement Small Cap Portfolio .......... 02/11/2000 N/A N/A N/A 7.94 N/A N/A N/A 16.32
LORD ABBETT SERIES FUND, INC.
Growth & Income Portfolio ...................... 02/11/2000 N/A N/A N/A 6.64 N/A N/A N/A 14.92
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio .................... 02/11/2000 N/A N/A N/A (8.43) N/A N/A N/A (1.33)
<PAGE>
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio ................ 02/11/2000 N/A N/A N/A (4.38) N/A N/A N/A 3.04
Partners Portfolio ............................. 02/11/2000 N/A N/A N/A (3.06) N/A N/A N/A 4.47
RYDEX VARIABLE TRUST
Nova Fund ...................................... 02/11/2000 N/A N/A N/A (11.63) N/A N/A N/A (4.78)
OTC Fund ...................................... 02/11/2000 N/A N/A N/A (13.57) N/A N/A N/A (6.86)
SELIGMAN PORTFOLIOS, INC.
Seligman Communications and Information Portfolio02/11/2000 N/A N/A N/A (28.40) N/A N/A N/A (22.84)
Seligman Global Technology Portfolio ........... 02/11/2000 N/A N/A N/A (21.70) N/A N/A N/A (15.63)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
SEPARATE
ACCOUNT 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
-------- ----- ----- ----- --------- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II ......................... 02/11/2000 N/A N/A N/A (.59) N/A N/A N/A 7.12
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong MidCap Growth Fund II ................ 02/11/2000 N/A N/A N/A (6.01) N/A N/A N/A 1.28
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund ......................... 02/11/2000 N/A N/A N/A (10.01) N/A N/A N/A (3.03)
Worldwide Emerging Markets Fund ............. 02/11/2000 N/A N/A N/A (38.34) N/A N/A N/A (33.56)
Worldwide Hard Assets Fund .................. 02/11/2000 N/A N/A N/A 6.88 N/A N/A N/A 15.17
Worldwide Real Estate Fund .................. 02/11/2000 N/A N/A N/A 8.14 N/A N/A N/A 16.53
</TABLE>
SECTION II
CHART 1 - STANDARD CONTRACT
TOTAL RETURN FOR THE PERIODS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PORTFOLIO 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- --------- ----- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio ............................. 05/01/93 34.99 15.40 19.32 19.67 45.58 18.38 20.93 20.60
Equity Portfolio ............................... 11/03/86 54.17 23.07 28.04 28.47 66.25 26.24 29.76 29.48
Fixed Income Portfolio ......................... 11/03/86 (2.00) .83 3.46 5.49 5.70 3.44 4.87 6.32
Government Securities Portfolio ................ 05/01/93 (2.83) .59 2.40 4.03 4.80 3.19 3.79 4.84
Conseco 20 Focus Portfolio...................... 05/01/00 N/A N/A N/A 23.91 N/A N/A N/A 33.58
High Yield Portfolio............................ 05/01/00 N/A N/A N/A (6.30) N/A N/A N/A 1.02
THE ALGER AMERICAN FUND
Alger American Growth Portfolio ................ 12/31/89 11.12 19.35 18.48 24.16 19.85 22.42 20.08 24.19
Alger American Leveraged AllCap Portfolio ...... 01/24/95 23.40 31.49 25.69 35.40 33.08 34.86 27.39 36.74
Alger American MidCap Growth Portfolio ......... 04/30/93 39.65 19.24 17.11 24.71 50.60 22.31 18.70 25.19
Alger American Small Capitalization Portfolio .. 12/31/89 8.78 7.85 7.08 18.05 17.32 10.64 8.54 18.08
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income & Growth ............................. 02/06/98 .06 N/A N/A 8.39 7.92 N/A N/A 11.55
VP International ............................... 05/02/94 18.49 13.61 16.03 15.77 27.79 16.53 17.59 16.65
VP Value ....................................... 05/01/96 (5.88) (1.44) N/A 7.39 1.51 1.11 N/A 9.03
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT--Growth Fund ........................ 05/01/96 46.82 18.39 N/A 17.65 58.33 21.44 N/A 19.46
Berger IPT--Growth and Income Fund ............. 05/01/96 40.73 24.40 N/A 25.03 51.77 27.60 N/A 26.95
Berger IPT--Small Company Growth Fund .......... 05/01/96 65.25 25.30 N/A 22.18 78.20 28.52 N/A 24.06
Berger/BIAM IPT-International Fund ............ 04/30/97 .47 5.28 N/A 5.35 8.37 8.00 N/A 7.73
Berger IPT -- New Generation Fund .............. 05/01/00 N/A N/A N/A (3.55) N/A N/A N/A 3.98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PORTFOLIO 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC. .............................. 10/07/93 11.69 14.97 19.39 20.95 20.46 17.93 21.00 21.77
DREYFUS STOCK INDEX FUND ....................... 12/31/89 3.34 11.66 18.04 19.72 11.45 14.54 19.63 19.75
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus VIF Disciplined Stock Portfolio ........ 04/30/96 6.04 8.82 N/A 16.23 14.37 11.63 N/A 18.00
Dreyfus VIF International Value Portfolio ...... 05/01/96 (8.17) .61 N/A 4.30 ( .95) 3.21 N/A 5.90
<PAGE>
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............. 03/01/94 (8.66) (2.28) 3.96 4.73 (1.48) .25 5.37 5.50
Federated International Equity Fund II ......... 05/08/95 24.26 19.67 16.35 15.49 34.02 22.75 17.92 16.72
Federated Utility Fund II ...................... 02/10/94 (6.05) 5.00 8.70 9.86 1.33 7.70 10.17 10.66
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-Equity Income Fund ................ 12/15/93 4.53 8.42 13.32 15.15 12.74 11.22 14.85 15.95
INVESCO VIF--High Yield Fund ................... 12/15/93 (6.91) (0.35) 2.68 6.39 .41 2.23 4.08 7.15
JANUS ASPEN SERIES
Aggressive Growth Portfolio .................... 09/13/93 44.63 39.63 27.67 30.26 55.98 43.22 29.39 30.80
Growth Portfolio ............................... 09/13/93 16.31 20.97 21.98 22.55 25.44 24.08 23.62 23.05
Worldwide Growth Portfolio ..................... 09/13/93 25.73 20.70 24.54 23.61 35.59 23.80 26.22 24.13
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............. 01/30/98 (1.96) N/A N/A 2.64 5.74 N/A N/A 5.61
Lazard Retirement Small Cap Portfolio .......... 11/04/97 6.21 N/A N/A .83 14.55 N/A N/A 3.51
LORD ABBETT SERIES FUND, INC.
Growth & Income Portfolio ...................... 12/31/89 7.16 7.56 10.48 14.24 15.58 10.34 11.98 14.28
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio .................... 02/06/98 (.89) N/A N/A 2.18 6.90 N/A N/A 5.16
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio ................ 12/31/89 (4.31) (.18) 2.15 4.57 3.21 2.40 3.54 4.62
Partners Portfolio ............................. 03/22/94 (.37) (.32) 11.49 14.57 7.45 2.25 13.00 15.00
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Equity-Income VCT Portfolio .......... 09/14/99 (10.59) N/A N/A (13.34) (3.60) N/A N/A (6.81)
Pioneer Fund VCT Portfolio ................... 05/01/00 N/A N/A N/A (8.26) N/A N/A N/A (1.09)
RYDEX VARIABLE TRUST
Nova Fund ....................................... 10/25/96 1.99 10.29 N/A 14.73 10.00 13.13 N/A 17.32
OTC Fund ...................................... 10/25/96 33.19 41.50 N/A 42.24 43.64 45.13 N/A 45.45
SELIGMAN PORTFOLIOS, INC.
Seligman Communications and Information Portfolio 10/13/94 N/A N/A N/A (28.26) N/A N/A N/A (22.65)
Seligman Global Technology Portfolio ........... 05/02/96 N/A N/A N/A (21.55) N/A N/A N/A (15.41)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PORTFOLIO 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II ......................... 05/08/92 14.09 12.50 16.99 18.18 23.04 15.40 18.57 18.34
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong MidCap Growth Fund II ................ 12/31/96 47.31 31.40 N/A 34.62 58.86 34.78 N/A 37.40
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund ......................... 12/31/89 (13.32) (3.18) (1.07) 6.13 (6.50) (.67) .28 6.17
Worldwide Emerging Markets Fund ............. 12/27/95 8.43 (13.03) N/A (.51) 16.94 (10.76) N/A .91
Worldwide Hard Assets Fund .................. 12/31/89 2.39 (10.80) (1.36) 6.27 10.44 (8.48) (.01) 6.30
Worldwide Real Estate Fund .................. 02/06/98 .46 N/A N/A (4.36) 8.35 N/A N/A (1.58)
</TABLE>
<PAGE>
Section II
CHART 2 - CONTRACTS WITH GMDB
TOTAL RETURN FOR THE PERIODS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PORTFOLIO 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio ............................. 05/01/93 34.59 15.06 18.96 19.31 45.15 18.03 20.57 20.24
Equity Portfolio ............................... 11/03/86 53.70 22.70 27.65 28.08 65.76 25.86 29.37 29.09
Fixed Income Portfolio ......................... 11/03/86 (2.29) .48 2.96 4.93 5.39 3.08 4.36 5.76
Government Securities Portfolio ................ 05/01/93 (3.13) .29 2.09 3.71 4.49 2.88 3.48 4.53
Conseco 20 Focus Portfolio...................... 05/01/00 N/A N/A N/A 23.76 N/A N/A N/A 33.41
High Yield Portfolio............................ 05/01/00 N/A N/A N/A (6.41) N/A N/A N/A .90
THE ALGER AMERICAN FUND
Alger American Growth Portfolio ................ 12/31/89 10.79 18.94 18.18 23.57 19.49 21.99 19.78 23.60
Alger American Leveraged AllCap Portfolio ...... 01/24/95 23.03 30.99 25.06 34.68 32.68 34.35 26.74 36.00
Alger American MidCap Growth Portfolio ......... 04/30/93 39.23 19.49 16.93 24.41 50.15 22.56 18.51 24.89
Alger American Small Capitalization Portfolio .. 12/31/89 8.45 7.48 6.63 17.39 16.97 10.25 8.08 17.42
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income & Growth ............................. 02/06/98 (.24) N/A N/A 8.07 7.60 N/A N/A 11.22
VP International ............................... 05/02/94 18.13 13.21 15.46 15.15 27.41 16.13 17.02 16.03
VP Value ....................................... 05/01/96 (6.16) (1.63) N/A 6.74 1.21 0.91 N/A 8.37
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT--Growth Fund ........................ 05/01/96 46.38 17.98 N/A 17.11 51.32 27.14 N/A 26.57
<PAGE>
Berger IPT--Growth and Income Fund ............. 05/01/96 40.31 23.95 N/A 24.65 57.85 21.02 N/A 18.91
Berger IPT--Small Company Growth Fund .......... 05/01/96 64.75 24.86 N/A 21.62 77.67 28.08 N/A 23.49
Berger IPT-International Fund ............ 04/30/97 .17 4.97 N/A 5.03 8.04 7.68 N/A 7.41
Berger IPT -- New Generation Fund .............. 05/01/00 N/A N/A N/A (3.67) N/A N/A N/A 3.85
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PORTFOLIO 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC. .............................. 10/07/93 11.36 14.63 18.84 20.28 20.10 17.58 20.45 21.09
DREYFUS STOCK INDEX FUND ....................... 12/31/89 3.03 11.28 17.66 19.11 11.12 14.14 19.24 19.14
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus VIF Disciplined Stock Portfolio ........ 04/30/96 5.72 8.71 N/A 15.89 14.02 11.52 N/A 17.65
Dreyfus VIF International Value Portfolio ...... 05/01/96 (8.45) .53 N/A 4.00 (1.25) 3.12 N/A 5.60
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............. 03/01/94 (8.93) (2.61) 3.60 4.33 (1.77) (.10) 5.00 5.10
Federated International Equity Fund II ......... 05/08/95 23.89 19.26 15.78 14.90 33.62 22.32 17.34 16.14
Federated Utility Fund II ...................... 02/10/94 (6.33) 4.63 8.24 9.31 1.03 7.33 9.70 10.12
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-Equity Income Fund ................ 12/15/93 4.21 8.04 12.95 14.78 12.39 10.83 14.47 15.58
INVESCO VIF--High Yield Fund ................... 12/15/93 (7.20) (0.69) 2.34 6.05 .10 1.87 3.73 6.80
JANUS ASPEN SERIES
Aggressive Growth Portfolio .................... 09/13/93 44.19 39.15 27.05 29.55 55.51 42.72 28.76 30.08
Growth Portfolio ............................... 09/13/93 15.96 20.55 21.38 21.87 25.06 23.65 23.02 22.38
Worldwide Growth Portfolio ..................... 09/13/93 25.35 20.28 23.93 22.94 35.19 23.38 25.60 23.45
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............. 01/30/98 (2.26) N/A N/A 2.33 5.42 N/A N/A 5.29
Lazard Retirement Small Cap Portfolio .......... 11/04/97 5.89 N/A N/A .44 14.21 N/A N/A 3.10
LORD ABBETT SERIES FUND, INC.
Growth & Income Portfolio ...................... 12/31/89 6.84 7.19 10.08 13.87 15.23 9.96 11.58 13.90
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio .................... 02/06/98 (1.18) N/A N/A 1.87 6.58 N/A N/A 4.84
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio ................ 12/31/89 (4.59) (.53) 1.64 6.18 2.91 2.04 3.02 6.22
<PAGE>
Partners Portfolio ............................. 03/22/94 (.67) (.67) 10.93 13.94 7.13 1.90 12.43 14.79
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Equity-Income VCT Portfolio .......... 09/14/99(10.85) N/A N/A (13.60) (3.89) N/A N/A (7.09)
Pioneer Fund VCT Portfolio ................... 05/01/00 N/A N/A N/A (8.37) N/A N/A N/A (1.21)
RYDEX VARIABLE TRUST
Nova Fund ....................................... 10/25/96 1.68 9.96 N/A 14.38 9.67 12.79 N/A 16.97
OTC Fund ...................................... 10/25/96 32.79 41.08 N/A 41.82 43.21 44.70 N/A 45.01
SELIGMAN PORTFOLIOS, INC.
Seligman Communications and Information Portfolio 10/13/94 N/A N/A N/A (28.35) N/A N/A N/A (22.75)
Seligman Global Technology Portfolio ........... 05/02/96 N/A N/A N/A (21.65) N/A N/A N/A (15.52)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PORTFOLIO 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II ......................... 05/08/92 13.74 12.11 16.45 17.52 22.67 15.00 18.02 17.68
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong MidCap Growth Fund II ................ 12/31/96 46.87 32.76 N/A 34.93 58.39 36.17 N/A 37.71
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund ......................... 12/31/89 (13.58) (3.51) (1.56) 5.50 (6.78) (1.02)) (.22) 5.53
Worldwide Emerging Markets Fund ............. 12/27/95 8.11 (13.34) N/A (0.98) 16.59 (11.07) N/A .43
Worldwide Hard Assets Fund .................. 12/31/89 2.09 (11.73) (2.10) 5.71 10.11 (9.43) (.76) 5.75
Worldwide Real Estate Fund .................. 02/06/98 .16 N/A N/A (5.22) 8.03 N/A N/A (2.46)
</TABLE>
6
<PAGE>
CHART 3 - CONTRACTS WITH GMDB and GMIB
TOTAL RETURN FOR THE PERIODS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PORTFOLIO 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio ............................. 05/01/93 34.19 14.71 18.60 18.95 44.71 17.67 20.20 19.88
Equity Portfolio ............................... 11/03/86 53.24 22.33 27.27 27.70 65.26 25.48 28.98 28.70
Fixed Income Portfolio ......................... 11/03/86 (2.59) .18 2.65 4.62 5.07 2.77 4.04 5.44
Government Securities Portfolio ................ 05/01/93 (3.42) (.01) 1.78 3.40 4.18 2.57 3.17 4.22
Conseco 20 Focus Portfolio...................... 05/01/00 N/A N/A N/A 23.60 N/A N/A N/A 33.24
High Yield Portfolio............................ 05/01/00 N/A N/A N/A (6.53) N/A N/A N/A 0.77
THE ALGER AMERICAN FUND
Alger American Growth Portfolio ................ 12/31/89 10.46 18.58 17.83 23.20 19.13 21.63 19.42 23.23
Alger American Leveraged AllCap Portfolio ...... 01/24/95 22.66 30.60 24.68 34.28 32.29 33.95 26.36 35.59
Alger American MidCap Growth Portfolio ......... 04/30/93 38.82 19.13 16.58 24.04 49.70 22.20 18.16 24.51
Alger American Small Capitalization Portfolio .. 12/31/89 8.13 7.16 6.31 17.04 16.62 9.92 7.76 17.07
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income & Growth ............................. 02/06/98 (.54) N/A N/A 7.74 7.28 N/A N/A 10.89
VP International ............................... 05/02/94 17.78 12.88 15.11 14.81 27.02 15.78 16.66 15.68
VP Value ....................................... 05/01/96 (6.44) (1.93) N/A 6.42 0.91 0.61 N/A 8.05
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT--Growth Fund ........................ 05/01/96 45.94 17.63 N/A 16.76 57.38 20.66 N/A 18.56
Berger IPT--Growth and Income Fund ............. 05/01/96 39.89 23.58 N/A 24.28 50.86 26.76 N/A 26.19
Berger IPT--Small Company Growth Fund .......... 05/01/96 64.26 24.49 N/A 21.25 77.14 27.70 N/A 23.12
Berger IPT-International Fund ............ 04/30/97 (.13) 4.65 N/A 4.72 7.72 7.35 N/A 7.08
Berger IPT -- New Generation Fund .............. 05/01/00 N/A N/A N/A (3.79) N/A N/A N/A 3.72
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PORTFOLIO 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC. .............................. 10/07/93 11.03 14.28 18.49 19.92 19.74 17.22 20.09 20.73
DREYFUS STOCK INDEX FUND ....................... 12/31/89 2.72 10.94 17.31 18.75 10.79 13.80 18.89 18.78
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus VIF Disciplined Stock Portfolio ........ 04/30/96 5.41 8.39 N/A 15.54 13.68 11.18 N/A 17.30
Dreyfus VIF International Value Portfolio ...... 05/01/96 (8.72) .23 N/A 3.69 (1.55) 2.82 N/A 5.28
<PAGE>
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............. 03/01/94 (9.20) (2.91) 3.29 4.01 (2.07) (.40) 4.69 4.79
Federated International Equity Fund II ......... 05/08/95 23.52 18.90 15.43 14.56 33.22 21.96 16.99 15.79
Federated Utility Fund II ...................... 02/10/94 (6.61) 4.32 7.91 8.99 .73 7.01 9.37 9.79
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-Equity Income Fund ................ 12/15/93 3.89 7.72 12.61 14.43 12.05 10.50 14.13 15.24
INVESCO VIF--High Yield Fund ................... 12/15/93 (7.48) (0.99) 2.03 5.73 (.20) 1.57 3.42 6.48
JANUS ASPEN SERIES
Aggressive Growth Portfolio .................... 09/13/93 43.76 38.73 26.66 29.16 55.04 42.29 28.38 29.69
Growth Portfolio ............................... 09/13/93 15.61 20.19 21.02 21.51 24.69 23.28 22.65 22.01
Worldwide Growth Portfolio ..................... 09/13/93 24.97 19.92 23.56 22.57 34.78 23.01 25.23 23.08
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............. 01/30/98 (2.55) N/A N/A 2.03 5.10 N/A N/A 4.98
Lazard Retirement Small Cap Portfolio .......... 11/04/97 5.58 N/A N/A .14 13.87 N/A N/A 2.80
LORD ABBETT SERIES FUND, INC.
Growth & Income Portfolio ...................... 12/31/89 6.52 6.87 9.75 13.52 14.88 9.63 11.25 13.56
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio .................... 02/06/98 (1.48) N/A N/A 1.57 6.26 N/A N/A 4.53
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio ................ 12/31/89 (4.88) (.83) 1.33 5.86 2.60 1.74 2.71 5.90
Partners Portfolio ............................. 03/22/94 (.97) (.96) 10.60 13.60 6.80 1.59 12.09 14.44
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Equity-Income VCT Portfolio .......... 09/14/99 (11.12) N/A N/A (13.86) (4.18) N/A N/A (7.37)
Pioneer Fund VCT Portfolio ................... 05/01/00 N/A N/A N/A (8.48) N/A N/A N/A (1.33)
RYDEX VARIABLE TRUST
Nova Fund ....................................... 10/25/96 1.38 9.63 N/A 14.04 9.34 12.45 N/A 16.62
OTC Fund ...................................... 10/25/96 32.39 40.66 N/A 41.39 42.78 44.27 N/A 44.58
SELIGMAN PORTFOLIOS, INC.
Seligman Communications and Information Portfolio 10/13/94 N/A N/A N/A (28.45) N/A N/A N/A (22.84)
Seligman Global Technology Portfolio ........... 05/02/96 N/A N/A N/A (21.75) N/A N/A N/A (15.63)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PORTFOLIO 10 YRS/ 10 YRS/
INCEPTION SINCE SINCE
DATE 1 YR 3 YRS 5 YRS INCEPTION 1 YR 3 YRS 5 YRS INCEPTION
---------- ----- ----- ----- ---------- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II ......................... 05/08/92 13.40 11.77 16.10 17.17 22.30 14.65 17.66 17.33
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong MidCap Growth Fund II ................ 12/31/96 46.43 32.36 N/A 34.52 57.92 35.76 N/A 37.29
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund ......................... 12/31/89 (13.84) (3.80) (1.86) 5.18 (7.06) (1.31) (.52) 5.22
Worldwide Emerging Markets Fund ............. 12/27/95 7.79 (13.60) N/A (1.28) 16.24 (11.34) N/A .13
Worldwide Hard Assets Fund .................. 12/31/89 1.78 (11.99) (2.39) 5.39 9.78 (9.70) (1.46) 5.43
Worldwide Real Estate Fund .................. 02/06/98 (.14) N/A N/A (5.50) 7.70 N/A N/A (2.75)
</TABLE>
HISTORICAL UNIT VALUES
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the investment
portfolios against established market indices such as the Standard & Poor's 500
Composite Stock Price Index, the Dow Jones Industrial Average or other
management investment companies which have investment objectives similar to the
investment portfolio being compared. The Standard & Poor's 500 Composite Stock
Price Index is an unmanaged, unweighted average of 500 stocks, the majority of
which are listed on the New York Stock Exchange. The Dow Jones Industrial
Average is an unmanaged, weighted average of thirty blue chip industrial
corporations listed on the New York Stock Exchange. Both the Standard & Poor's
500 Composite Stock Price Index and the Dow Jones Industrial Average assume
quarterly reinvestment of dividends.
REPORTING AGENCIES
The Company may also distribute sales literature which compares the performance
of the Accumulation Unit values of the Contracts with the unit values of
variable annuities issued by other insurance companies. Such information will be
derived from the Lipper Variable Insurance Products Performance Analysis
Service, the VARDS Report or from Morningstar.
8
<PAGE>
The Lipper Variable Insurance Products Performance Analysis Service is published
by Lipper Analytical Services, Inc., a publisher of statistical data which
currently tracks the performance of almost 4,000 investment companies. The
rankings compiled by Lipper may or may not reflect the deduction of asset-based
insurance charges. The Company's sales literature utilizing these rankings will
indicate whether or not such charges have been deducted. Where the charges have
not been deducted, the sales literature will indicate that if the charges had
been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking may address the question as to which funds
provide the highest total return with the least amount of risk.
Other ranking services may be used as sources of performance comparison, such as
CDA/Weisenberger. Morningstar rates a variable annuity against its peers with
similar investment objectives. Morningstar does not rate any variable annuity
that has less than three years of performance data.
FEDERAL TAX STATUS
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE POSSIBILITY
OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO
ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended ("Code") governs
taxation of annuities in general. An Owner is not taxed on increases in the
value of a Contract until distribution occurs, either in the form of a lump sum
payment or as annuity payments under the annuity option selected. For a lump sum
payment received as a total withdrawal (total surrender), the recipient is taxed
on the portion of the payment that exceeds the cost basis of the Contract. For
non-qualified Contracts, this cost basis is generally the purchase payments,
while for qualified Contracts there may be no cost basis. The taxable portion of
the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period or refund feature) bears
to the expected return under the Contract. The exclusion amount for payments
based on a variable annuity option is determined by dividing the cost basis of
the Contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the Contract has been recovered (i.e. when the total of the
excludable amount equals the investment in the Contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the
9
<PAGE>
meaning of Section 72 of the Code. Owners, annuitants and beneficiaries under
the Contracts should seek competent financial advice about the tax consequences
of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in the imposition of federal income
tax to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
Regulations issued by the Treasury Department ("the Regulations") amplify the
diversification requirements for variable contracts set forth in the Code and
provide an alternative to the safe harbor provision described above. Under the
Regulations, an investment portfolio will be deemed adequately diversified if:
(1) no more than 55% of the value of the total assets of the portfolio is
represented by any one investment; (2) no more than 70% of the value of the
total assets of the portfolio is represented by any two investments; (3) no more
than 80% of the value of the total assets of the portfolio is represented by any
three investments; and (4) no more than 90% of the value of the total assets of
the portfolio is represented by any four investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all investment portfolios underlying the Contracts will
be managed in such a manner as to comply with these diversification
requirements.
<PAGE>
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.
10
<PAGE>
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Owners being
retroactively determined to be the owners of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year.
PARTIAL 1035 EXCHANGES
Section 1035 of the Code provides that an annuity contract may be exchanged in a
tax-free transaction for another annuity contract. In 1998 in CONWAY VS.
COMMISSIONER, the Tax Court held that the direct transfer of a portion of an
annuity contract into another annuity contract qualified as a non-taxable
exchange. On November 22, 1999, the Internal Revenue Service filed an Action on
Decision which indicated that it acquiesced in the Tax Court decision in CONWAY.
However, in its acquiescence with the decision of the Tax Court, the Internal
Revenue Service stated that it will challenge transactions where taxpayers enter
into a series of partial exchanges and annuitizations as part of a design to
avoid application of the 10% premature distribution penalty or other limitations
imposed on annuity contracts under the Code. In the absence of further guidance
from the Internal Revenue Service it is unclear what specific types of partial
exchange designs and transactions will be challenged by the Internal Revenue
Service. Due to the uncertainty in this area, owners should consult their own
tax advisers prior to entering into a partial exchange of an annuity contract.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation or certain other entities. Such Contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a Contract held by a trust or other entity as an
agent for a natural person nor to Contracts held by Qualified Plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. You should
therefore consult competent tax advisers should you wish to assign or pledge
your Contract.
If the Contract is issued pursuant to a retirement plan which receives favorable
treatment under the provision of Section 408 of the Code, it may not be
assigned, pledged or otherwise transferred except as allowed under applicable
law.
DEATH BENEFITS
Any death benefits paid under the Contract are taxable to the beneficiary.
The rules governing the taxation of payments from an annuity contract, as
discussed above, generally apply to the payment of death benefits and depend on
whether the death benefits are paid as a lump sum or as annuity payments. Estate
taxes may also apply.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross income
of the Owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the Owner, in many cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Certain distributions from retirement plans qualified under Section 401 or
Section 403(b) of the Code, which are not directly rolled over to another
eligible retirement plan or individual retirement account or individual
retirement annuity, are subject to a mandatory 20% withholding for federal
income tax. The 20% withholding requirement generally does not apply to: a) a
series of substantially equal payments made at least annually for the life or
life expectancy of the participant or joint and last survivor expectancy of the
participant and a designated beneficiary or for a specified period of 10 years
or more; or b) distributions which are required minimum distributions; or c) the
portion of the distributions not includible in gross income (i.e. returns of
after-tax contributions); or d) hardship withdrawals. Participants should
consult their own tax counsel or other tax adviser regarding withholding
requirements.
TAX TREATMENT OF WITHDRAWALS -- NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after you reach age 59 1/2; (b) after your death; (c) if you
become totally disabled (for this purpose disability is as defined in Section
72(m)(7) of the Code); (d) in a series of substantially equal periodic payments
made not less frequently than annually for your life (or life expectancy) or for
the joint lives (or joint life expectancies) of you and your Beneficiary; (e)
under an immediate annuity; or (f) which are allocable to purchase payments made
prior to August 14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals -- Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts are designed to be suitable for use under various types of
Qualified Plans. Taxation of participants in each Qualified Plan varies with the
type of plan and terms and conditions of each specific plan. Owners, annuitants
and beneficiaries are cautioned that benefits under a Qualified Plan may be
subject to the terms and conditions of the plan regardless of the terms and
conditions of the Contracts issued pursuant to the plan. Some retirement plans
are subject to distribution and other requirements that are not incorporated
into the Company's administrative procedures. The Company is not bound by the
terms and conditions of such plans to the extent such terms conflict with the
terms of a Contract, unless the Company specifically consents to be bound.
Owners, participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law.
A Qualified Contract will not provide any necessary or additional tax deferral
if it is used to fund a Qualified Plan that is tax deferred. However, the
Contract has features and benefits other than tax deferral that may make it an
appropriate investment for a Qualified Plan. Following are general descriptions
of the types of Qualified Plans with which the Contracts may be used. Such
descriptions are not exhaustive and are for general informational purposes only.
The tax rules regarding Qualified Plans are very complex and will have differing
applications depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described
herein. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals -- Qualified Contracts" below.)
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
Qualified Plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.
a. TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employees until the
employees receive distributions from the Contracts. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals Qualified Contracts" and "Tax-Sheltered Annuities
Withdrawal Limitations" below.) Any employee should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
b. INDIVIDUAL RETIREMENT ANNUITIES
The Contracts offered by the prospectus are designed to be suitable for use as
an Individual Retirement Annuity (IRA). Generally, individuals who purchase IRAs
are not taxed on increases to the value of the contributions until distribution
occurs. Following is a general description of IRAs with which the Contract may
be used. The description is not exhaustive and is for general informational
purposes only.
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an IRA. Under applicable limitations,
certain amounts may be contributed to an IRA which will be deductible from the
individual's taxable income. These IRAs are subject to limitations on
eligibility, contributions, transferability and distributions. (See "Tax
Treatment of Withdrawals -- Qualified Contracts" below.) Under certain
conditions, distributions from other IRAs and other Qualified Plans may be
rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be
given to persons desiring to establish an IRA. Purchasers of Contracts to
be qualified as Individual Retirement Annuities should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
ROTH IRAS
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues apply to all of
a taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held a Roth IRA for at
least five taxable years and, in addition, that the distribution is made: (i)
after the individual reaches age 59 1/2, (ii) on the individual's death or
disability, or (iii) as a qualified first-time home purchase (subject to a
$10,000 lifetime maximum) for the individual, a spouse, child, grandchild, or
ancestor. Any distribution which is not a qualified distribution is taxable to
<PAGE>
the extent of earnings in the distribution. Distributions are treated as made
from contributions first and therefore no distributions are taxable until
distributions exceed the amount of contributions and conversions to the Roth
IRA. The 10% penalty tax and the regular IRA exceptions to the 10% penalty tax
apply to taxable distributions from a Roth IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, ("conversion deposits") unless the individual has adjusted gross income
over $100,000 or the individual is a married taxpayer filing a separate return.
The individual must pay tax on any portion of the IRA being rolled over that
represents income or a previously deductible IRA contribution. However, for
rollovers in 1998, the individual may pay that tax ratably over the four taxable
year period beginning with tax year 1998. In addition, distribution of amounts
attributable to conversion deposits held for less than 5 taxable years will also
be subject to the penalty tax.
Purchasers of Contracts intended to be qualified as a Roth IRA should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
c. PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employees until distributed from the
Plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations and restrictions on
all Plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
14
<PAGE>
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Special considerations apply to plans covering self-employed
individuals, including limitations on contributions and benefits for key
employees or 5 percent owners. (See "Tax Treatment of Withdrawals -- Qualified
Contracts" below.) Purchasers of Contracts for use with Pension or Profit
Sharing Plans should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
d. GOVERNMENT AND TAX-EXEMPT ORGANIZATION'S DEFERRED COMPENSATION PLAN UNDER
SECTION 457
Under Code provisions, employees and independent contractors performing services
for state and local governments and other tax-exempt organizations may
<PAGE>
participate in Deferred Compensation Plans under Section 457 of the Code. The
amounts deferred under a Plan which meets the requirements of Section 457 of the
Code are not taxable as income to the participant until paid or otherwise made
available to the participant or beneficiary. As a general rule, the maximum
amount which can be deferred in any one year is the lesser of $8,000 or 33 1/3
percent of the participant's includible compensation. However, in limited
circumstances, the plan may provide for additional catch-up contributions in
each of the last three years before normal retirement age. Furthermore, the Code
provides additional requirements and restrictions regarding eligibility and
distributions.
All of the assets and income of a Plan established by a governmental employer
after August 20, 1996, must be held in trust for the exclusive benefit of
participants and their beneficiaries. For this purpose, custodial accounts and
certain annuity contracts are treated as trusts. Plans that were in existence on
August 20, 1996 may be amended to satisfy the trust and exclusive benefit
requirements any time prior to January 1, 1999, and must be amended not later
than that date to continue to receive favorable tax treatment. The requirement
of a trust does not apply to amounts under a Plan of a tax exempt
(non-governmental) employer. In addition, the requirement of a trust does not
apply to amounts under a Plan of a governmental employer if the Plan is not an
eligible plan within the meaning of section 457(b) of the Code. In the absence
of such a trust, amounts under the plan will be subject to the claims of the
employer's general creditors.
In general, distributions from a Plan are prohibited under section 457 of the
Code unless made after the participating employee:
attains age 70 1/2,
separates from service,
dies, or
suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Plan under section 457
of the Code cannot be transferred or rolled over on a tax-deferred basis except
for certain transfers to other Plans under section 457.
TAX TREATMENT OF WITHDRAWALS -- QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b) (Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been rolled over to an IRA or to another eligible Qualified Plan, no
tax penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) made on or after the date on which the Owner or Annuitant (as
applicable) reaches age 59 1/2 (b) following the death or disability of the
Owner or Annuitant (as applicable) (for this purpose disability is as defined in
Section 72(m) (7) of the Code); (c) after separation from service, distributions
that are part of substantially equal periodic payments made not less frequently
than annually for the life (or life expectancy) of the Owner or Annuitant (as
applicable) or the joint lives (or joint life expectancies) of such Owner or
Annuitant (as applicable) and his or her designated Beneficiary; (d) to an Owner
or Annuitant (as applicable) who has separated from service after he has
attained age 55; (e) made to the Owner or Annuitant (as applicable) to the
extent such distributions do not exceed the amount allowable as a deduction
under Code Section 213 to the Owner or Annuitant (as applicable) for amounts
paid during the taxable year for medical care; (f) made to an alternate payee
pursuant to a qualified domestic relations order; (g) made on account of an IRS
levy upon the qualified contract; (h) from an Individual Retirement Annuity for
the purchase of medical insurance (as described in Section 213(d)(1)(D) of the
Code) for the Owner or Annuitant (as applicable) and his or her spouse and
dependents if the Owner or Annuitant (as applicable) has received unemployment
compensation for at least 12 weeks (this exception will no longer apply after
the Owner or Annuitant (as applicable) has been re-employed for at least 60
days); (i) from an Individual Retirement Annuity made to the Owner or Annuitant
(as applicable) to the extent such distributions do not exceed the qualified
higher education expenses (as defined in Section 72(t)(7) of the Code) of the
Owner or Annuitant (as applicable) for the taxable year; and (j) distributions
up to $10,000 from an Individual Retirement Annuity made to the Owner or
Annuitant (as applicable) which are qualified first-time home buyer
distributions (as defined in Section 72(t)(8) of the Code). The exceptions
stated in (d) and (f) above do not apply in the case of an Individual Retirement
Annuity. The exception stated in (c) above applies to an Individual Retirement
Annuity without the requirement that there be a separation from service. With
respect to (c) above, if the series of substantially equal periodic payments is
modified before the later of your attaining age 59 1/2 or 5 years from the date
of the first periodic payment, then the tax for the year of the modification is
increased by an amount equal to the tax which would have been imposed (the 10%
penalty tax) but for the exception, plus interest for the tax years in which the
exception was used.
TAX-SHELTERED ANNUITIES -- WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Owner: (1) attains age 591/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); (5) in the case of hardship; or (6) made pursuant
to a qualified domestic relations order, if otherwise permissible. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
Value which represents contributions made by the Owner and does not include any
investment results. The limitations on withdrawals became effective on January
<PAGE>
1, 1989 and apply only to salary reduction contributions made after December 31,
1988, to income attributable to such contributions and to income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect rollovers and transfers between certain Qualified Plans. Owners should
consult their own tax counsel or other tax adviser regarding any distributions.
MANDATORY DISTRIBUTIONS -- QUALIFIED PLANS
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. There are no mandatory distribution requirements for Roth IRAs prior to
death. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
16
<PAGE>
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
ANNUITY PROVISIONS
The Company makes available payment plans on a fixed and variable basis.
VARIABLE ANNUITY PAYOUT
A variable annuity is an annuity with payments which: (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable investment portfolio. Annuity payments also depend upon the
age of the annuitant and any joint annuitant and the assumed interest factor
utilized. The Annuity Table used will depend upon the annuity option chosen. The
dollar amount of annuity payments after the first is determined as follows:
1. The dollar amount of the first variable annuity payment is divided by the
value of an annuity unit for each investment portfolio as of the annuity date.
This sets the number of annuity units for each monthly payment for the
applicable investment portfolio.
2. The fixed number of annuity units for each payment in each investment
portfolio is multiplied by the annuity unit value for that investment portfolio
for the last valuation period of the month preceding the month for which the
payment is due. This result is the dollar amount of the payment for each
applicable investment portfolio.
The total dollar amount of each variable annuity payment is the sum of all
variable annuity payments reduced by the applicable portion of the Contract
Maintenance Charge.
<PAGE>
The calculation of the first annuity payment is made on the annuity date. The
Company assesses the insurance charges during both the accumulation phase and
the annuity phase. The deduction of the insurance charges will affect the amount
of the first and any subsequent annuity payments. In addition, under certain
circumstances, the Company may assess a contingent deferred sales charge and/or
the contract maintenance charge on the annuity date which would affect the
amount of the first annuity payment (see "Expenses" and "Annuity Payments" in
the prospectus).
ANNUITY UNIT
The value of an annuity unit was arbitrarily set initially at $10. The annuity
unit value at the end of any subsequent valuation period is determined as
follows:
1. The net investment factor for the current valuation period is multiplied by
the value of the annuity unit for investment portfolio for the immediately
preceding valuation period.
2. The result in (1) is then divided by the assumed investment rate factor which
equals 1.00 plus the assumed investment rate for the number of days since the
previous valuation period.
The owner can choose either a 5% or a 3% assumed investment rate.
FIXED ANNUITY PAYOUT
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Company and do not vary with the investment experience of the
investment portfolios. The dollar amount of each fixed annuity payment is
determined in accordance with Annuity Tables contained in the Contract.
17
<PAGE>
FINANCIAL STATEMENTS
The financial statements of the Company included herein should be considered
only as bearing upon the ability of the Company to meet its obligations under
the Contracts.
CONSECO VARIABLE ANNUITY ACCOUNT H
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
Unaudited
<TABLE>
<CAPTION>
========================================================================================================
Shares Cost Value
----------- --------- ---------
<S> <C> <C> <C>
ASSETS:
Investments in portfolio shares, at net asset value (Note 2):
The Alger American Fund:
Growth Portfolio 37,331.4 $2,215,982 $2,068,533
Leveraged AllCap Portfolio 64,119.1 3,310,029 3,186,719
MidCap Growth Portfolio 89,864.1 3,003,216 3,064,366
Small Capitalization Portfolio 30,293.1 896,701 887,286
American Century Variable Portfolios, Inc:
Income and Growth Fund 54,699.7 424,531 418,453
International Fund 116,954.6 1,319,506 1,263,109
Value Fund 63,062.2 356,944 372,067
Berger Institutional Products Trust:
Growth Fund 31,721.9 665,639 688,999
Growth and Income Fund 78,331.8 2,232,334 2,283,372
International Fund 3,662.1 49,690 48,523
New Generation Fund 13,928.2 144,344 145,689
Small Company Growth Fund 56,174.6 1,521,027 1,536,936
Conseco Series Trust:
Balanced Portfolio 175,433.4 2,912,820 3,076,556
Conseco 20 Focus Portfolio 13,515.4 173,496 181,602
Equity Portfolio 40,458.0 1,127,261 1,200,880
Fixed Income Portfolio 12,278.6 116,162 116,685
Government Securities Portfolio 14,941.0 166,838 167,403
High Yield Portfolio 44,650.4 448,671 448,701
Money Market Portfolio 4,783,966.0 4,783,966 4,783,966
The Dreyfus Socially Responsible Growth Fund, Inc 12,617.8 502,254 502,063
Dreyfus Stock Index Fund 61,350.8 2,343,891 2,303,721
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio 11,707.2 317,362 318,905
International Value Portfolio 1,773.8 25,531 24,958
Federated Insurance Series:
High Income Bond Fund II 30,106.9 278,507 273,972
International Equity Fund II 15,261.9 340,753 312,869
Utility Fund II 17,634.6 236,769 239,478
Invesco Variable Investment Funds, Inc:
Equity Income Fund 6,168.9 132,624 137,195
High Yield Fund 19,851.7 225,244 224,523
Janus Aspen Series:
Aggressive Growth Portfolio 88,340.6 5,046,215 4,668,801
Growth Portfolio 141,769.6 4,725,884 4,526,704
Worldwide Growth Portfolio 92,209.0 4,349,953 3,915,196
Lazard Retirement Series, Inc:
Equity Portfolio 2,511.9 29,468 28,988
Small Cap Portfolio 14,438.2 161,423 162,574
Lord Abbett Series Fund, Inc:
Growth and Income Portfolio 21,557.5 494,781 507,033
Mitchell Hutchins Series Trust:
Growth and Income Portfolio 7,240.4 110,046 105,999
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT H
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
Unaudited
<TABLE>
<CAPTION>
===========================================================================================================
Shares Cost Value
----------- --------- ---------
<S> <C> <C> <C>
ASSETS: (CONTINUED)
Investments in portfolio shares, at net asset value (Note 2):
Neuberger Berman Advisers Management Trust:
Limited Maturity Bond Portfolio 24,613.5 315,467 317,021
Partners Portfolio 9,999.0 159,023 160,783
Rydex Variable Trust:
Nova Portfolio 66,064.5 1,122,360 1,061,657
OTC Portfolio 46,745.4 1,759,217 1,642,632
Seligman Portfolios, Inc.
Communications and Information Portfolio 16,609.7 443,307 393,151
Global Technology Portfolio 18,096.8 500,858 473,955
Strong Variable Insurance Funds, Inc:
Mid Cap Growth Fund II 88,939.4 2,913,458 3,013,267
Strong Opportunity Fund II, Inc 22,656.7 631,322 623,060
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund 2,514.5 24,576 24,793
Worldwide Emerging Markets Fund 27,256.0 339,799 293,820
Worldwide Hard Assets Fund 8,153.7 99,881 96,051
Worldwide Real Estate Fund 2,892.7 29,396 29,564
-----------------------------------------------------------------------------------------------------------
TOTAL ASSETS 52,322,578
LIABILITIES:
Amounts payable to Conseco Variable Insurance Company 56,282
-----------
NET ASSETS (NOTE 6) $52,266,296
===========================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT H
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
Unaudited
<TABLE>
<CAPTION>
====================================================================================================================================
Reported Sub - Account
Units Unit Value Value Total
-------------------------- --------- --------------
<S> <C> <C> <C> <C>
NET ASSETS ATTRIBUTABLE TO:
Contract owners' deferred annuity reserves:
The Alger American Fund:
Growth Portfolio
Standard 89,500.8 $18.140001 1,623,544
GMDB * (See note below) 18,803.8 18.089980 340,160
GMDB & GMIB * (See note below) 5,691.7 18.040096 102,679 2,066,383
--------------
Leveraged AllCap Portfolio
Standard 92,937.5 24.874542 2,311,779
GMDB 26,857.5 24.805952 666,227
GMDB & GMIB 8,287.3 24.737551 205,009 3,183,015
--------------
Midcap Growth Portfolio
Standard 120,864.0 19.384003 2,342,828
GMDB 34,970.6 19.330580 676,002
GMDB & GMIB 2,205.0 19.277304 42,506 3,061,336
--------------
Small Capitalization Portfolio
Standard 34,679.6 14.224235 493,291
GMDB 16,179.3 14.184983 229,503
GMDB & GMIB 11,550.6 14.145840 163,392 886,186
--------------
American Century Variable Portfolios, Inc:
Income and Growth Fund
Standard 23,721.1 13.355742 316,813
GMDB 4,617.2 13.318917 61,496
GMDB & GMIB 2,988.7 13.282193 39,696 418,005
--------------
International Fund
Standard 66,318.6 15.617213 1,035,712
GMDB 14,212.1 15.574183 221,342
GMDB & GMIB 315.6 15.531270 4,902 1,261,956
--------------
Value Fund
Standard 30,804.2 10.330874 318,234
GMDB 3,629.6 10.302377 37,394
GMDB & GMIB 1,560.7 10.273958 16,034 371,662
--------------
Berger Institutional Products Trust:
Growth Fund
Standard 28,649.0 17.587851 503,874
GMDB 8,811.9 17.539373 154,556
GMDB & GMIB 1,706.9 17.491027 29,856 688,286
--------------
Growth and Income Fund
Standard 85,325.1 20.931583 1,785,989
GMDB 18,993.7 20.873896 396,472
GMDB & GMIB 4,730.1 20.816367 98,463 2,280,924
--------------
International Fund
Standard 3,863.7 12.549336 48,486
GMDB 0.0 12.514723 0
GMDB & GMIB 0.0 12.480205 0 48,486
--------------
New Generation Fund
Standard 8,886.1 10.398444 92,401
GMDB 4,668.8 10.385300 48,487
GMDB & GMIB 449.8 10.372172 4,666 145,554
--------------
Small Company Growth Fund
Standard 45,324.4 21.305720 965,669
GMDB 21,534.5 21.247017 457,544
GMDB & GMIB 5,284.2 21.188476 111,964 1,535,177
--------------
Conseco Series Trust:
Balanced Portfolio
Standard 159,592.2 16.374883 2,613,304
GMDB 25,265.3 16.329750 412,577
GMDB & GMIB 2,915.3 16.284742 47,474 3,073,355
--------------
Conseco 20 Focus
Standard 11,274.4 13.357758 150,601
GMDB 2,311.7 13.340910 30,841
GMDB & GMIB 0.0 13.324083 0 181,442
--------------
Equity Portfolio
Standard 46,480.8 20.305953 943,837
GMDB 12,311.1 20.249990 249,299
GMDB & GMIB 314.9 20.194180 6,359 1,199,495
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT H
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
Unaudited
<TABLE>
<CAPTION>
====================================================================================================================================
Reported Sub - Account
Units Unit Value Value Total
-------------------------- --------- --------------
<S> <C> <C> <C> <C>
NET ASSETS ATTRIBUTABLE TO:
Contract owners' deferred annuity reserves:
Conseco Series Trust (continued):
Fixed Income Portfolio
Standard 6,553.8 10.773243 70,606
GMDB 921.5 10.743535 9,900
GMDB & GMIB 3,363.8 10.713909 36,040 116,546
--------------
Government Securities Portfolio
Standard 12,695.5 10.671679 135,482
GMDB 629.9 10.642251 6,704
GMDB & GMIB 2,359.1 10.612904 25,037 167,223
--------------
High Yield Portfolio
Standard 44,369.3 10.102369 448,235
GMDB 0.0 10.089591 0
GMDB & GMIB 0.0 10.076830 0 448,235
--------------
Money Market Portfolio
Standard 395,684.4 11.056453 4,374,866
GMDB 23,902.8 11.025968 263,552
GMDB & GMIB 12,848.0 10.995567 141,272 4,779,690
--------------
The Dreyfus Socially Responsible Growth Fund, Inc
Standard 22,909.5 15.852828 363,180
GMDB 7,921.9 15.809130 125,238
GMDB & GMIB 830.4 15.765552 13,092 501,510
--------------
Dreyfus Stock Index Fund
Standard 110,547.2 14.043409 1,552,459
GMDB 47,710.6 14.004694 668,172
GMDB & GMIB 5,762.4 13.966085 80,478 2,301,109
--------------
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio
Standard 20,753.2 12.552580 260,506
GMDB 3,017.9 12.517972 37,779
GMDB & GMIB 1,622.4 12.483458 20,253 318,538
--------------
International Value Portfolio
Standard 2,033.9 10.798062 21,962
GMDB 0.0 10.768269 0
GMDB & GMIB 277.4 10.738557 2,979 24,941
--------------
Federated Insurance Series:
High Income Bond Fund II
Standard 19,089.2 9.678278 184,751
GMDB 8,404.9 9.651585 81,120
GMDB & GMIB 817.7 9.624965 7,870 273,741
--------------
International Equity Fund II
Standard 12,706.3 17.736201 225,361
GMDB 4,090.5 17.687329 72,351
GMDB & GMIB 839.5 17.638591 14,808 312,520
--------------
Utility Fund II
Standard 20,429.8 11.232507 229,478
GMDB 870.3 11.201516 9,749
GMDB & GMIB 0.0 11.170610 0 239,227
--------------
Invesco Variable Investment Funds, Inc:
Equity Income Fund
Standard 6,932.1 12.228354 84,768
GMDB 3,898.2 12.194632 47,538
GMDB & GMIB 388.7 12.161002 4,727 137,033
--------------
High Yield Fund
Standard 21,764.5 9.968372 216,956
GMDB 60.0 9.940881 596
GMDB & GMIB 672.4 9.913466 6,666 224,218
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT H
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
Unaudited
<TABLE>
<CAPTION>
====================================================================================================================================
Reported Sub - Account
Units Unit Value Value Total
-------------------------- --------- --------------
<S> <C> <C> <C> <C>
NET ASSETS ATTRIBUTABLE TO:
Contract owners' deferred annuity reserves:
Janus Aspen Series:
Aggressive Growth Portfolio
Standard 119,140.7 28.087299 3,346,340
GMDB 39,665.7 28.009800 1,111,029
GMDB & GMIB 7,379.9 27.932514 206,138 4,663,507
--------------
Growth Portfolio
Standard 169,026.9 18.318764 3,096,365
GMDB 59,928.3 18.268250 1,094,785
GMDB & GMIB 18,138.5 18.217875 330,446 4,521,596
--------------
Worldwide Growth Portfolio
Standard 164,986.5 18.441370 3,042,577
GMDB 34,111.4 18.390550 627,327
GMDB & GMIB 13,130.9 18.339871 240,819 3,910,723
--------------
Lazard Retirement Series, Inc:
Equity Portfolio
Standard 2,104.8 11.569657 24,352
GMDB 0.0 11.537764 0
GMDB & GMIB 399.9 11.505958 4,601 28,953
--------------
Small Cap Portfolio
Standard 13,632.0 10.954304 149,329
GMDB 1,203.1 10.924102 13,143
GMDB & GMIB 0.0 10.893982 0 162,472
--------------
Lord Abbett Series Fund, Inc:
Growth and Income Portfolio
Standard 18,367.6 13.073428 240,128
GMDB 18,992.2 13.037387 247,608
GMDB & GMIB 1,422.9 13.001445 18,499 506,235
--------------
Mitchell Hutchins Series Trust:
Growth and Income Portfolio
Standard 4,407.4 11.423744 50,349
GMDB 3,737.1 11.392244 42,573
GMDB & GMIB 1,139.2 11.360829 12,942 105,864
--------------
Neuberger Berman Advisers Management Trust:
Limited Maturity Bond Portfolio
Standard 24,393.4 10.562111 257,645
GMDB 1,615.0 10.532987 17,011
GMDB & GMIB 4,015.4 10.503942 42,177 316,833
--------------
Partners Portfolio
Standard 4,640.8 10.551269 48,966
GMDB 10,609.8 10.522165 111,638
GMDB & GMIB 0.0 10.493140 0 160,604
--------------
Rydex Variable Trust:
Nova Portfolio:
Standard 58,308.3 17.572956 1,024,650
GMDB 1,796.0 17.550710 31,521
GMDB & GMIB 251.1 17.528493 4,401 1,060,572
--------------
OTC Portfolio:
Standard 42,658.0 36.494889 1,556,800
GMDB 1,501.2 36.448647 54,716
GMDB & GMIB 807.6 36.402463 29,399 1,640,915
--------------
Seligman Portfolios, Inc.:
Communications and Information Portfolio
Standard 41,126.0 7.735170 318,117
GMDB 9,230.5 7.725370 71,309
GMDB & GMIB 426.5 7.715582 3,291 392,717
--------------
Global Technology Portfolio
Standard 49,836.7 8.458632 421,550
GMDB 5,033.1 8.447926 42,519
GMDB & GMIB 1,122.7 8.437233 9,472 473,541
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT H
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
Unaudited
<TABLE>
<CAPTION>
====================================================================================================================================
Reported Sub - Account
Units Unit Value Value Total
-------------------------- --------- --------------
<S> <C> <C> <C> <C>
NET ASSETS ATTRIBUTABLE TO:
Contract owners' deferred annuity reserves:
Strong Variable Insurance Funds, Inc:
Mid Cap Growth Fund II
Standard 87,515.8 25.850517 2,262,329
GMDB 22,573.7 25.779249 581,933
GMDB & GMIB 6,441.9 25.708176 165,609 3,009,871
--------------
Strong Opportunity Fund II, Inc
Standard 22,325.8 15.164171 338,552
GMDB 17,122.5 15.122368 258,933
GMDB & GMIB 1,646.3 15.080679 24,827 622,312
--------------
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund
Standard 1,484.8 9.595568 14,247
GMDB 1,099.9 9.569097 10,525
GMDB & GMIB 0.0 9.542698 0 24,772
--------------
Worldwide Emerging Markets Fund
Standard 27,626.5 9.950003 274,883
GMDB 267.9 9.922557 2,659
GMDB & GMIB 1,612.4 9.895186 15,955 293,497
--------------
Worldwide Hard Assets Fund
Standard 10,592.2 9.062094 95,987
GMDB 0.0 9.037102 0
GMDB & GMIB 0.0 9.012179 0 95,987
--------------
Worldwide Real Estate Fund
Standard 1,730.3 9.437128 16,329
GMDB 1,402.9 9.411103 13,203
GMDB & GMIB 0.0 9.385150 0 29,532
--------------
NET ASSETS $ 52,266,296
====================================================================================================================================
</TABLE>
* GMDB = Guaranteed minimum death benefit
* GMIB = Guaranteed minimum income benefit
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN
CENTURY
VARIABLE
THE ALGER AMERICAN FUNDS PORTFOLIOS
CONSECO VARIABLE ANNUITY ACCOUNT H ------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 11, 2000 TO SEPTEMBER 30, 2000
Unaudited Leveraged Small Income and
Growth All Cap MidCap Capitalization Growth
==================================================================
<S> <C> <C> <C> <C> <C>
Investment income:
Dividends from investments in portfolio shares $81,098 $142,436 $98,595 $122,528 $ --
-------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fees 7,614 14,988 9,759 3,859 1,876
-------------------------------------------------------------------------------------------------------------------------------
Net investment income 73,484 127,448 88,836 118,669 (1,876)
-------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized
appreciation (depreciation) of investments:
Net realized gains (losses) on sales
of investments in portfolio shares (18,772) (56,223) (18,041) (139,031) (3,248)
Net change in unrealized appreciation
(depreciation) of investments in
portfolio shares (147,449) (123,310) 61,150 (9,415) (6,079)
-------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments
in portfolio shares (166,221) (179,533) 43,109 (148,446) (9,327)
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations ($92,737) ($52,085) $131,945 ($29,777) ($11,203)
===============================================================================================================================
<CAPTION>
AMERICAN CENTURY
VARIABLE PORTFOLIOS CONSECO SERIES TRUST
(CONTINUED) BERGER INSTITUTIONAL PRODUCTS TRUST PORTFOLIOS
--------------------------- -------------------------------------------------------------------------- ------------------------
Growth and New Small Conseco
International Value Growth Income International Generation Company Balanced 20 Focus
================================================================================================================================
-- $ -- $ -- $ -- $ -- $ -- $ -- $ 25,622 $ --
--------------------------------------------------------------------------------------------------------------------------------
3,678 1,913 2,749 7,471 180 258 7,571 9,875 512
--------------------------------------------------------------------------------------------------------------------------------
(3,678) (1,913) (2,749) (7,471) (180) (258) (7,571) 15,747 (512)
--------------------------------------------------------------------------------------------------------------------------------
(5,327) (13,187) (7,862) (3,295) (445) 357 25,124 (12,771) 17,672
(56,397) 15,123 23,360 51,038 (1,167) 1,345 15,908 163,737 8,106
--------------------------------------------------------------------------------------------------------------------------------
(61,724) 1,936 15,498 47,743 (1,612) 1,702 41,032 150,966 25,778
--------------------------------------------------------------------------------------------------------------------------------
($65,402) $23 $12,749 $40,272 ($1,792) $1,444 $33,461 $166,713 $25,266
================================================================================================================================
<CAPTION>
CONSECO SERIES TRUST PORTFOLIOS DREYFUS VARIABLE
(CONTINUED) INVESTMENT FUNDS
--------------------------------------------------------------- ---------------------------------
DREYFUS
SOCIALLY DREYFUS
Fixed Government High Money RESPONSIBLE STOCK Disciplined International
Equity Income Securities Yield Market GROWTH INDEX Stock Value
=================================================================================================================================
$ 24 $1,763 $2,271 $3,315 $75,569 $10 $10,768 $1 $36
---------------------------------------------------------------------------------------------------------------------------------
4,917 307 448 868 17,809 2,246 11,548 1,513 68
---------------------------------------------------------------------------------------------------------------------------------
(4,893) 1,456 1,823 2,447 57,760 (2,236) (780) (1,512) (32)
---------------------------------------------------------------------------------------------------------------------------------
67,525 396 484 110 0 594 2,669 1,324 1
73,619 523 565 30 0 (191) (40,169) 1,543 (573)
---------------------------------------------------------------------------------------------------------------------------------
141,144 919 1,049 140 0 403 (37,500) 2,867 (572)
---------------------------------------------------------------------------------------------------------------------------------
$136,251 $2,375 $2,872 $2,587 $57,760 ($1,833) ($38,280) $1,355 ($604)
=================================================================================================================================
<CAPTION>
INVESCO VARIABLE
FEDERATED INSURANCE SERIES INSURANCE FUNDS
------------------------------------------- -------------------------------
High Income International Equity
Bond II Equity II Utility II Income High Yield
==============================================================================
$ -- $27 $1,919 -- $ --
------------------------------------------------------------------------------
493 1,183 1,043 782 2,317
------------------------------------------------------------------------------
(493) (1,156) 876 (782) (2,317)
------------------------------------------------------------------------------
408 (3,450) (5,323) 1,615 6,888
(4,534) (27,883) 2,709 4,572 (721)
------------------------------------------------------------------------------
(4,126) (31,333) (2,614) 6,187 6,167
------------------------------------------------------------------------------
($4,619) ($32,489) ($1,738) $5,405 $3,850
==============================================================================
<CAPTION>
LAZARD RETIREMENT
JANUS ASPEN SERIES PORTFOLIOS SERIES PORTFOLIOS LORD MITCHELL
------------------------------------------ ------------------------------ ABBETT HUTCHINS
SERIES SERIES
TRUST TRUST
Aggressive Worldwide GROWTH GROWTH
Growth Growth Growth Equity Small Cap AND INCOME AND INCOME
=================================================================================================================
$ $405,153 $240,887 $239,560 $3 $ 8 $ -- $ --
-----------------------------------------------------------------------------------------------------------------
22,650 21,997 18,361 102 545 2,792 565
-----------------------------------------------------------------------------------------------------------------
382,503 218,890 221,199 (99) (537) (2,792) (565)
-----------------------------------------------------------------------------------------------------------------
(64,089) (11,504) (49,151) (1) 3,479 7,838 146
(377,414) (199,180) (434,757) (481) 1,151 12,252 (4,046)
------------------------------------------------------------------------------------------------------------------
(441,503) (210,684) (483,908) (482) 4,630 20,090 (3,900)
------------------------------------------------------------------------------------------------------------------
($59,000) $8,206 ($262,709) ($581) $4,093 $17,298 ($4,465)
==================================================================================================================
<CAPTION>
STRONG
NEUBERGER BERMAN VARIABLE
ADVISERS MANAGEMENT INSURANCE
TRUST PORTFOLIOS RYDEX VARIABLE TRUST SELIGMAN PORTFOLIOS FUNDS
-------------------------- ------------------------- --------------------------- ---------
Communications STRONG
Limited and Global Mid Cap OPPORTUNITY
Maturity Bond Partners Nova OTC Information Technology Growth II FUND II
==================================================================================================================
$ -- $ -- $51,583 $56,575 $ -- $ -- $ -- $ --
------------------------------------------------------------------------------------------------------------------
355 890 3,360 4,652 872 827 9,723 2,930
------------------------------------------------------------------------------------------------------------------
(355) (890) 48,223 51,923 (872) (827) (9,723) (2,930)
------------------------------------------------------------------------------------------------------------------
804 125 72,373 157,242 (1,897) (163) 11,693 753
1,554 1,761 (60,704) (116,585) (50,156) (26,903) 99,809 (8,263)
------------------------------------------------------------------------------------------------------------------
2,358 1,886 11,669 40,657 (52,053) (27,066) 111,502 (7,510)
------------------------------------------------------------------------------------------------------------------
$2,003 $996 $59,892 $92,580 ($52,925) ($27,893) $101,779 ($10,440)
=================================================================================================================
<PAGE>
<CAPTION>
VAN ECK WORLDWIDE INSURANCE TRUST FUNDS
-----------------------------------------------
Emerging Hard Real Combined
Bond Markets Assets Estate Total
=============================================================
$ -- $ -- $ -- $ -- $1,559,751
----------------------------------------------- -----------
93 1,479 343 811 211,192
-------------------------------------------------------------
(93) (1,479) (343) (811) 1,348,559
-------------------------------------------------------------
391 (14,543) (8,555) (13,082) (69,949)
217 (45,979) (3,830) 168 (1,205,946)
-------------------------------------------------------------
608 (60,522) (12,385) (12,914) (1,275,895)
-------------------------------------------------------------
$515 ($62,001) ($12,728) ($13,725) $72,664
=============================================================
</TABLE>
<TABLE>
<CAPTION>
AMERICAN
CENTURY
VARIABLE
THE ALGER AMERICAN FUNDS PORTFOLIOS
STATEMENT OF CHANGES IN NET ASSETS -----------------------------------------------------------------------
For the Period February 11, 2000 to September 30, 2000
Unaudited
Leveraged Small Income and
Growth All Cap MidCap Capitalization Growth
=======================================================================
<S> <C> <C> <C> <C> <C>
Changes from operations:
Net investment income $73,484 $127,448 $88,836 $118,669 ($1,876)
Net realized gains (losses) on sales of investments
in portfolio shares (18,772) (56,223) (18,041) (139,031) (3,248)
Net change in unrealized appreciation (depreciation)
of investments in portfolio shares (147,449) (123,310) 61,150 (9,415) (6,079)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (92,737) (52,085) 131,945 (29,777) (11,203)
------------------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments 1,929,434 2,969,162 2,041,020 797,207 383,646
Contract redemptions (7,468) (5,374) (25,922) (2,813) (4,638)
Net transfers 237,154 271,311 914,293 121,570 50,201
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
contract owners' transactions 2,159,120 3,235,099 2,929,391 915,964 429,209
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 2,066,383 3,183,014 3,061,336 886,187 418,006
------------------------------------------------------------------------------------------------------------------------------------
Net assets, beginning of period 0 0 0 0 0
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (Note 6) $2,066,383 $3,183,014 $3,061,336 $886,187 $418,006
====================================================================================================================================
<CAPTION>
AMERICAN CENTURY
VARIABLE PORTFOLIOS CONSECO SERIES TRUST
(CONTINUED) BERGER INSTITUTIONAL PRODUCTS TRUST PORTFOLIOS
--------------------------- -------------------------------------------------------------------------- -----------------------
Growth and New Small Conseco
International Value Growth Income International Generation Company Balanced 20 Focus
================================================================================================================================
($3,678) ($1,913) ($2,749) ($7,471) ($180) ($258) ($7,571) $15,747 ($512)
(5,327) (13,187) (7,862) (3,295) (445) 357 25,124 (12,771) 17,672
(56,397) 15,123 23,360 51,038 (1,167) 1,345 15,908 163,737 8,106
--------------------------------------------------------------------------------------------------------------------------------
(65,402) 23 12,749 40,272 (1,792) 1,444 33,461 166,713 25,266
--------------------------------------------------------------------------------------------------------------------------------
672,967 215,524 614,800 1,915,077 49,965 127,694 1,435,749 2,818,782 121,720
(6,786) (3,711) (11,650) (8,784) 0 (43) (20,958) (23,945) (44)
661,177 159,826 72,386 334,359 313 16,459 86,925 111,805 34,500
--------------------------------------------------------------------------------------------------------------------------------
1,327,358 371,639 675,536 2,240,652 50,278 144,110 1,501,716 2,906,642 156,176
--------------------------------------------------------------------------------------------------------------------------------
1,261,956 371,662 688,285 2,280,924 48,486 145,554 1,535,177 3,073,355 181,442
--------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------
$1,261,956 $371,662 $688,285 $2,280,924 $48,486 $145,554 $1,535,177 $3,073,355 $181,442
================================================================================================================================
<PAGE>
<CAPTION>
CONSECO SERIES TRUST PORTFOLIOS
(CONTINUED)
-----------------------------------------------------------------------
DREYFUS
SOCIALLY DREYFUS
Fixed Government High Money RESPONSIBLE STOCK
Equity Income Securities Yield Market GROWTH INDEX
========================================================================================================
($4,893) $1,456 $1,823 $2,447 $57,760 ($2,236) ($780)
67,525 396 484 110 0 594 2,669
73,619 523 565 30 0 (191) (40,169)
--------------------------------------------------------------------------------------------------------
136,251 2,375 2,872 2,587 57,760 (1,833) (38,280)
--------------------------------------------------------------------------------------------------------
909,003 86,855 148,073 24,649 10,379,528 487,505 2,245,965
(9,212) (178) (1,458) (756) (169,566) (337) (26,724)
163,453 27,493 17,736 421,755 (5,488,033) 16,175 120,148
--------------------------------------------------------------------------------------------------------
1,063,244 114,170 164,351 445,648 4,721,929 503,343 2,339,389
--------------------------------------------------------------------------------------------------------
1,199,495 116,545 167,223 448,235 4,779,689 501,510 2,301,109
---------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------
$1,199,495 $116,545 $167,223 $448,235 $4,779,689 $501,510 $2,301,109
========================================================================================================
<CAPTION>
DREYFUS VARIABLE INVESCO VARIABLE
INVESTMENT FUNDS FEDERATED INSURANCE SERIES INSURANCE FUNDS
------------------------------ ------------------------------------------- ------------------------
Disciplined International High Income International Equity
Stock Value Bond II Equity II Utility II Income High Yield
=============================================================================================================
($1,512) ($32) ($493) ($1,156) $876 ($782) ($2,317)
1,324 1 408 (3,450) (5,323) 1,615 6,888
1,543 (573) (4,534) (27,883) 2,709 4,572 (721)
-------------------------------------------------------------------------------------------------------------
1,355 (604) (4,619) (32,489) (1,738) 5,405 3,850
-------------------------------------------------------------------------------------------------------------
290,626 13,885 76,546 322,151 214,968 147,900 655,582
(987) 0 (636) (1,131) (875) 0 (683)
27,544 11,661 202,450 23,989 26,872 (16,273) (434,531)
-------------------------------------------------------------------------------------------------------------
317,183 25,546 278,360 345,009 240,965 131,627 220,368
-------------------------------------------------------------------------------------------------------------
318,538 24,942 273,741 312,520 239,227 137,032 224,218
-------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0
-------------------------------------------------------------------------------------------------------------
$318,538 $24,942 $273,741 $312,520 $239,227 $137,032 $224,218
=============================================================================================================
<CAPTION>
LAZARD RETIREMENT
JANUS ASPEN SERIES PORTFOLIOS SERIES PORTFOLIOS LORD MITCHELL
------------------------------------------ ------------------------------ ABBETT HUTCHINS
SERIES SERIES
TRUST TRUST
Aggressive Worldwide GROWTH GROWTH
Growth Growth Growth Equity Small Cap AND INCOME AND INCOME
================================================================================================================
$382,503 $218,890 $221,199 ($99) ($537) ($2,792) ($565)
7,838 146
(64,089) (11,504) (49,151) (1) 3,479
12,252 (4,046)
(377,414) (199,180) (434,757) (481) 1,151
----------------------------------------------------------------------------------------------------------------
(59,000) 8,206 (262,709) (581) 4,093 17,298 (4,465)
----------------------------------------------------------------------------------------------------------------
4,826,696 4,663,317 4,063,576 29,535 52,748 461,663 111,163
(28,341) (33,937) (22,507) 0 0 (4,112) (700)
(75,849) (115,991) 132,363 0 105,631 31,387 (133)
----------------------------------------------------------------------------------------------------------------
4,722,506 4,513,389 4,173,432 29,535 158,379 488,938 110,330
----------------------------------------------------------------------------------------------------------------
4,663,506 4,521,595 3,910,723 28,954 162,472 506,236 105,865
----------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------
$4,663,506 $4,521,595 $3,910,723 $28,954 $162,472 $506,236 $105,865
================================================================================================================
<PAGE>
<CAPTION>
STRONG
NEUBERGER BERMAN VARIABLE
ADVISERS MANAGEMENT INSURANCE
TRUST PORTFOLIOS RYDEX VARIABLE TRUST SELIGMAN PORTFOLIOS FUNDS
------------------------ ------------------------- -------------------------- ---------
Communications STRONG
Limited and Global Mid Cap OPPORTUNITY
Maturity Bond Partners Nova OTC Information Technology Growth II FUND II
================================================================================================================
($355) ($890) $48,223 $51,923 ($872) ($827) ($9,723) ($2,930)
804 125 72,373 157,242 (1,897) (163) 11,693 753
1,554 1,761 (60,704) (116,585) (50,156) (26,903) 99,809 (8,263)
----------------------------------------------------------------------------------------------------------------
2,003 996 59,892 92,580 (52,925) (27,893) 101,779 (10,440)
----------------------------------------------------------------------------------------------------------------
140,286 158,377 190,482 623,918 269,459 180,086 1,879,322 625,331
(231) 0 (13,347) (14,240) (603) (1,518) (11,122) (964)
174,775 1,231 823,545 938,657 176,786 322,866 1,039,893 8,386
----------------------------------------------------------------------------------------------------------------
314,830 159,608 1,000,680 1,548,335 445,642 501,434 2,908,093 632,753
----------------------------------------------------------------------------------------------------------------
316,833 160,604 1,060,572 1,640,915 392,717 473,541 3,009,872 622,313
----------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------
$316,833 $160,604 $1,060,572 $1,640,915 $392,717 $473,541 $3,009,872 $622,313
================================================================================================================
<CAPTION>
VAN ECK WORLDWIDE INSURANCE FUNDS
-----------------------------------------------------------
Emerging Hard Real Combined
Bond Markets Assets Estate Total
===========================================================
($93) ($1,479) ($343) ($811) $1,348,559
391 (14,543) (8,555) (13,082) (69,949)
217 (45,979) (3,830) 168 (1,205,946)
-----------------------------------------------------------
515 (62,001) (12,728) (13,725) 72,664
-----------------------------------------------------------
15,050 418,418 6,800 66,554 50,878,764
(218) (4,706) (299) (6,296) (477,820)
9,424 (58,213) 102,213 (17,001) 1,792,688
-----------------------------------------------------------
24,256 355,499 108,714 43,257 52,193,632
-----------------------------------------------------------
24,771 293,498 95,986 29,532 52,266,296
-----------------------------------------------------------
0 0 0 0 0
-----------------------------------------------------------
$24,771 $293,498 $95,986 $29,532 $52,266,296
===========================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT H
NOTES TO FINANCIAL STATEMENTS
Unaudited
(1) GENERAL
Conseco Variable Annuity Account H ("Account H") is registered under the
Investment Company Act of 1940, as amended, as a unit investment trust. Account
H was established on November 1, 1999, and commenced operations on February 11,
2000, as a segregated investment account for individual variable annuity
contracts which are registered under the Securities Act of 1933. The operations
of Account H are included in the operations of Conseco Variable Insurance
Company (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.
Currently, the following investment options are available:
THE ALGER AMERICAN FUND
Growth Portfolio
Leveraged AllCap Portfolio
MidCap Growth Portfolio
Small Capitalization Portfolio
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
Income and Growth Fund
International Fund
Value Fund
BERGER INSTITUTIONAL PRODUCTS TRUST
Growth Fund
Growth and Income Fund
International Fund
New Generation Fund
Small Company Growth Fund
CONSECO SERIES TRUST
Balanced Portfolio
Conseco 20 Focus Portfolio
Equity Portfolio
Fixed Income Portfolio
Government Securities Portfolio
High Yield Portfolio
Money Market Portfolio
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
DREYFUS STOCK INDEX FUND
DREYFUS VARIABLE INVESTMENT FUND
Disciplined Stock Portfolio
International Value Portfolio
FEDERATED INSURANCE SERIES
High Income Bond Fund II
International Equity Fund II
Utility Fund II
INVESCO VARIABLE INVESTMENT FUNDS, INC.
Equity Income Fund
High Yield 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
RYDEX VARIABLE TRUST
Nova Fund
OTC Fund
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT H
NOTES TO FINANCIAL STATEMENTS
Unaudited
(1) GENERAL (CONTINUED)
SELIGMAN PORTFOLIOS, INC.
Communications and Information Portfolio
Global Technology Portfolio
STRONG VARIABLE INSURANCE FUNDS, INC.
Mid Cap Growth Fund II
STRONG OPPORTUNITY FUND II
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 H 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
Account H 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 Account H 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 H 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
$71,095,680 for the period February 11,2000 through September 30, 2000. The
aggregate proceeds from sales of investments in portfolio shares were
$17,497,205 for the period February 11, 2000 through September 30, 2000.
(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 Account H a
fee, which is equal on an annual basis to 1.40 percent of the daily value of the
total investments of
<PAGE>
CONSECO VARIABLE ANNUITY ACCOUNT H
NOTES TO FINANCIAL STATEMENTS
Unaudited
Account H, for assuming the mortality and expense risks on standard contracts
which do not contain the guaranteed minimum death benefit or the guaranteed
minimum income benefit. For contracts with the guaranteed minimum death benefit,
the fee is 1.70 percent. For contracts that include both the guaranteed minimum
death benefit and the guaranteed minimum income benefit, the fee is 2.00
percent. The total fees for all contracts were $211,192 for the period February
11, 2000 through September 30, 2000.
Pursuant to an agreement between Account H and the Company (which may be
terminated by the Company at any time), the Company provides sales and
administrative services to Account H. The Company may deduct a percentage of
amounts surrendered to cover sales expenses. The percentage varies up to 8.00
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. There were no sales and administrative
charges for the period February 11, 2000 through September 30, 2000.
(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 Securities,
Inc., an affiliate of the Company.
(6) NET ASSETS
Net assets consisted of the following at September 30, 2000:
Proceeds from the sales of units since organization,
less cost of units redeemed .................................... $52,193,632
Undistributed net investment income .............................. 1,348,559
Undistributed net realized losses on sales of investments ........ (69,949)
Net unrealized depreciation of investments ....................... (1,205,946)
-----------
Net assets ................................................. $52,266,296
===========
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Board of Directors
Conseco Variable Insurance Company
In our opinion, the accompanying balance sheet and the related statements
of operations, shareholder's equity and cash flows present fairly, in all
material respects, the financial position of Conseco Variable Insurance Company
(the "Company") at December 31, 1999 and 1998, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States. 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 of these statements in
accordance with auditing standards generally accepted in the United States which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
--------------------------------
PricewaterhouseCoopers LLP
April 13, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
BALANCE SHEET
December 31, 1999 and 1998
(Dollars in millions)
ASSETS
1999 1998
---- ----
<S> <C> <C>
Investments:
Actively managed fixed maturities at fair value (amortized cost:
1999 - $1,491.8; 1998 - $1,520.5)............................................... $1,398.7 $1,524.1
Equity securities at fair value (cost: 1999 - $47.8 million; 1998 - $46.0 million). 49.8 45.7
Mortgage loans..................................................................... 108.0 110.2
Policy loans....................................................................... 75.5 79.6
Other invested assets ............................................................. 50.8 120.3
-------- --------
Total investments............................................................ 1,682.8 1,879.9
Cash and cash equivalents.............................................................. 81.5 48.4
Accrued investment income.............................................................. 35.6 30.5
Cost of policies purchased............................................................. 131.6 98.0
Cost of policies produced.............................................................. 147.6 82.5
Reinsurance receivables................................................................ 26.4 22.2
Goodwill............................................................................... 45.3 46.7
Assets held in separate accounts....................................................... 1,457.0 696.4
Other assets........................................................................... 6.0 7.1
-------- --------
Total assets................................................................. $3,613.8 $2,911.7
======== ========
</TABLE>
(continued on next page)
The accompanying notes are an
integral part of the financial
statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
BALANCE SHEET (Continued)
December 31, 1999 and 1998
(Dollars in millions, except per share amount)
LIABILITIES AND SHAREHOLDER'S EQUITY
1999 1998
---- ----
<S> <C> <C>
Liabilities:
Insurance liabilities:
Interest-sensitive products..................................................... $1,289.2 $1,365.2
Traditional products............................................................ 242.8 246.2
Claims payable and other policyholder funds..................................... 64.1 62.6
Liabilities related to separate accounts........................................ 1,457.0 696.4
Income tax liabilities............................................................. 33.4 37.5
Investment borrowings.............................................................. 135.1 65.7
Other liabilities.................................................................. 16.5 33.0
-------- --------
Total liabilities.......................................................... 3,238.1 2,506.6
-------- --------
Shareholder's equity:
Common stock and additional paid-in capital (par value $4.80 per share, 1,065,000
shares authorized, 1,043,565 shares issued and outstanding).................... 380.8 380.8
Accumulated other comprehensive loss............................................... (28.4) (.8)
Retained earnings.................................................................. 23.3 25.1
-------- --------
Total shareholder's equity................................................. 375.7 405.1
-------- --------
Total liabilities and shareholder's equity................................. $3,613.8 $2,911.7
======== ========
</TABLE>
The accompanying notes are an
integral part of the financial
statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
STATEMENT OF OPERATIONS
for the years ended December 31, 1999, 1998 and 1997
(Dollars in millions)
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Revenues:
Insurance policy income.......................................... $ 72.1 $ 73.6 $ 75.7
Net investment income............................................ 297.6 198.0 222.6
Net gains (losses) from sale of investments...................... (10.0) 18.5 13.3
------ ------ ------
Total revenues............................................. 359.7 290.1 311.6
------ ------ ------
Benefits and expenses:
Insurance policy benefits........................................ 266.8 170.6 191.0
Amortization..................................................... 13.8 33.6 27.1
Other operating costs and expenses............................... 40.3 38.7 32.2
------ ------ ------
Total benefits and expenses................................ 320.9 242.9 250.3
------ ------ ------
Income before income taxes................................. 38.8 47.2 61.3
Income tax expense................................................... 13.6 16.6 22.1
------ ------ ------
Net income................................................. $ 25.2 $ 30.6 $ 39.2
====== ====== ======
</TABLE>
The accompanying notes are an
integral part of the financial
statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
STATEMENT OF SHAREHOLDER'S EQUITY
for the years ended December 31, 1999, 1998 and 1997
(Dollars in millions)
Common stock Accumulated other
and additional comprehensive Retained
Total paid-in capital income (loss) earnings
----- --------------- ------------- --------
<S> <C> <C> <C> <C>
Balance, December 31, 1996................................. $396.9 $380.8 $ (4.6) $ 20.7
Comprehensive income, net of tax:
Net income............................................ 39.2 - - 39.2
Change in unrealized appreciation (depreciation) of
securities (net of applicable income tax expense
of $7.2)........................................... 13.3 - 13.3 -
------
Total comprehensive income........................ 52.5 - - -
Dividends on common stock............................... (32.5) - - (32.5)
------ ------ ------ ------
Balance, December 31, 1997................................. 416.9 380.8 8.7 27.4
Comprehensive income, net of tax:
Net income............................................ 30.6 - - 30.6
Change in unrealized appreciation (depreciation) of
securities (net of applicable income tax benefit
of $5.1)........................................... (9.5) - (9.5) -
------
Total comprehensive income........................ 21.1
Dividends on common stock............................... (32.9) - - (32.9)
------ ------ ------ ------
Balance, December 31, 1998................................. 405.1 380.8 (.8) 25.1
Comprehensive loss, net of tax:
Net income.............................................. 25.2 - - 25.2
Change in unrealized depreciation of securities (net
of applicable income tax benefit of $15.7 million).... (27.6) - (27.6) -
------
Total comprehensive loss.......................... (2.4)
Dividends on common stock............................... (27.0) - - (27.0)
------ ------ ------ ------
Balance, December 31, 1999................................. $375.7 $380.8 $(28.4) $ 23.3
====== ====== ====== ======
</TABLE>
The accompanying notes are an
integral part of the financial
statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
for the years ended December 31, 1999, 1998 and 1997
(Dollars in millions)
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................................................ $ 25.2 $ 30.6 $ 39.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization................................................ 13.8 43.0 27.1
Income taxes................................................ 11.4 (1.2) 6.7
Insurance liabilities....................................... 162.6 120.0 95.2
Accrual and amortization of investment income............... (11.4) 1.6 .3
Deferral of cost of policies produced....................... (62.7) (35.3) (31.8)
Net (gains) losses from sale of investments................. 10.0 (18.5) (13.3)
Other....................................................... .7 (38.3) (4.6)
--------- --------- -------
Net cash provided by operating activities................... 149.6 101.9 118.8
--------- --------- -------
Cash flows from investing activities:
Sales of investments.............................................. 904.8 1,185.0 755.2
Maturities and redemptions........................................ 109.0 145.5 150.4
Purchases of investments.......................................... (1,502.0) (1,420.7) (923.5)
--------- --------- -------
Net cash used by investing activities....................... (488.2) (90.2) (17.9)
--------- --------- -------
Cash flows from financing activities:
Deposits to insurance liabilities................................. 654.1 400.4 255.9
Investment borrowings............................................. 69.4 4.7 12.6
Withdrawals from insurance liabilities............................ (324.8) (385.0) (302.2)
Dividends paid on common stock.................................... (27.0) (32.9) (32.5)
--------- --------- -------
Net cash provided (used) by financing activities............ 371.7 (12.8) (66.2)
--------- --------- -------
Net increase (decrease) in cash and cash equivalents........ 33.1 (1.1) 34.7
Cash and cash equivalents, beginning of year......................... 48.4 49.5 14.8
--------- --------- -------
Cash and cash equivalents, end of year............................... $ 81.5 $ 48.4 $ 49.5
========= ========= =======
</TABLE>
The accompanying notes are an
integral part of the financial
statements.
F-6
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Conseco Variable Insurance Company ("we" or the "Company") markets
tax-qualified annuities and certain employee benefit-related insurance products
through professional independent agents. Prior to its name change in October
1998, the Company was named Great American Reserve Insurance Company. Since
August 1995, the Company has been a wholly owned subsidiary of Conseco, Inc.
("Conseco"), a financial services holding company operating throughout the
United States. Conseco's life insurance subsidiaries develop, market and
administer supplemental health insurance, annuity, individual life insurance,
individual and group major medical insurance and other insurance products.
Conseco's finance subsidiaries originate, purchase, sell and service consumer
and commercial finance loans. On March 31, 2000, Conseco announced its plan to
explore the sale of its finance subsidiaries and its hiring of Lehman Brothers
to assist in the planned sale.
The following summary explains the accounting policies we use to arrive at
the more significant numbers in our financial statements. We prepare our
financial statements in accordance with generally accepted accounting principles
("GAAP"). We follow the accounting standards established by the Financial
Accounting Standards Board, the American Institute of Certified Public
Accountants and the Securities and Exchange Commission. We reclassified certain
amounts in our 1998 and 1997 financial statements and notes to conform with the
1999 presentation.
Investments
Fixed maturities are securities that mature more than one year after
issuance and include bonds, notes receivable and redeemable preferred stock.
Fixed maturities that we may sell prior to maturity are classified as actively
managed and are carried at estimated fair value, with any unrealized gain or
loss, net of tax and related adjustments, recorded as a component of
shareholder's equity. Fixed maturity securities that we intend to sell in the
near term are classified as trading and included in other invested assets. We
include any unrealized gain or loss on trading securities in net investment
gains.
Equity securities include investments in common stocks and non-redeemable
preferred stock. We carry these investments at estimated fair value. We record
any unrealized gain or loss, net of tax and related adjustments, as a component
of shareholder's equity.
Mortgage loans held in our investment portfolio are carried at amortized
unpaid balances, net of provisions for estimated losses.
Policy loans are stated at their current unpaid principal balances.
Other invested assets include trading securities and certain
non-traditional investments. Non-traditional investments include investments in
certain limited partnerships, mineral rights and promissory notes; we account
for them using either the cost method, or for investments in partnerships over
whose operations the Company exercises significant influence, the equity method.
We defer any fees received or costs incurred when we originate investments
(primarily mortgage loans). We amortize fees, costs, discounts and premiums as
yield adjustments over the contractual lives of the investments. We consider
anticipated prepayments on mortgage-backed securities in determining estimated
future yields on such securities.
When we sell a security (other than a trading security), we report the
difference between our sale proceeds and its amortized cost (determined based on
specific identification) as an investment gain or loss.
We regularly evaluate all of our investments based on current economic
conditions, credit loss experience and other investee-specific developments. If
there is a decline in a security's net realizable value that is other than
temporary, we treat it as a realized loss and reduce our cost basis of the
security to its estimated fair value.
F-7
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Cash and Cash Equivalents
Cash and cash equivalents include commercial paper, invested cash and other
investments purchased with maturities of less than three months. We carry them
at amortized cost, which approximates their estimated fair value.
Separate Accounts
Separate accounts are funds on which investment income and gains or losses
accrue directly to certain policyholders. The assets of these accounts are
legally segregated. They are not subject to the claims that may arise out of any
other business of the Company. We report separate account assets at market
value; the underlying investment risks are assumed by the contract holders. We
record the related liabilities at amounts equal to the market value of the
underlying assets. We record the fees earned for administrative and
contractholder services performed for the separate accounts in insurance policy
income.
Cost of Policies Produced
The costs that vary with, and are primarily related to, producing new
insurance business are referred to as cost of policies produced. We amortize
these costs using the interest rate credited to the underlying policy: (i) in
relation to the estimated gross profits for universal life-type and
investment-type products; or (ii) in relation to future anticipated premium
revenue for other products.
When we realize a gain or loss on investments backing our universal life or
investment-type products, we adjust the amortization to reflect the change in
estimated gross profits from the products due to the current realized gain or
loss and the effect of the event on future investment yields. We also adjust the
cost of policies produced for the change in amortization that would have been
recorded if actively managed fixed maturity securities had been sold at their
stated aggregate fair value and the proceeds reinvested at current yields. We
include the impact of this adjustment in accumulated other comprehensive income
(loss) within shareholder's equity.
Each year, we evaluate the recoverability of the unamortized balance of the
cost of policies produced. We consider estimated future gross profits or future
premiums, expected mortality or morbidity, interest earned and credited rates,
persistency and expenses in determining whether the balance is recoverable.
Cost of Policies Purchased
The cost assigned to the right to receive future cash flows from contracts
existing at the date of an acquisition is referred to as the cost of policies
purchased. The balance of this account is amortized, evaluated for recovery, and
adjusted for the impact of unrealized gains (losses) in the same manner as the
cost of policies produced described above.
The discount rate we use to determine the value of the cost of policies
purchased is the rate of return we need to earn in order to invest in the
business being acquired. In determining this required rate of return, we
consider many factors including: (i) the magnitude of the risks associated with
each of the actuarial assumptions used in determining expected future cash
flows; (ii) the cost of our capital required to fund the acquisition; (iii) the
likelihood of changes in projected future cash flows that might occur if there
are changes in insurance regulations and tax laws; (iv) the acquired company's
compatibility with other Company activities that may favorably affect future
cash flows; (v) the complexity of the acquired company; and (vi) recent prices
(i.e., discount rates used in determining valuations) paid by others to acquire
similar blocks of business.
Goodwill
Goodwill is the excess of the amount paid to acquire the Company over the
fair value of its net assets. Our analysis indicates that the anticipated
ongoing cash flows from the earnings of the Company extends significantly beyond
the maximum 40-year period allowed for goodwill amortization. Accordingly, we
amortize goodwill on the straight-line basis generally over a 40-year period. At
December 31, 1999, the total accumulated amortization of goodwill was $16.1
million. We continually
F-8
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
monitor the value of our goodwill based on our estimates of future earnings. We
determine whether goodwill is fully recoverable from projected undiscounted net
cash flows from our earnings over the remaining amortization period. If we were
to determine that changes in such projected cash flows no longer support the
recoverability of goodwill over the remaining amortization period, we would
reduce its carrying value with a corresponding charge to expense or shorten the
amortization period (no such changes have occurred).
Recognition of Insurance Policy Income and Related Benefits and Expenses
on Insurance Contracts
Generally, we recognize insurance premiums for traditional life and
accident and health contracts as earned over the premium-paying periods. We
establish reserves for future benefits on a net-level premium method based upon
assumptions as to investment yields, mortality, morbidity, withdrawals and
dividends. We record premiums for universal life-type and investment-type
contracts that do not involve significant mortality or morbidity risk as
deposits to insurance liabilities. Revenues for these contracts consist of
mortality, morbidity, expense and surrender charges. We establish reserves for
the estimated present value of the remaining net costs of all reported and
unreported claims.
Reinsurance
In the normal course of business, we seek to limit our exposure to loss on
any single insured or to certain groups of policies by ceding reinsurance to
other insurance enterprises. We currently retain no more than $.5 million of
mortality risk on any one policy. We diversify the risk of reinsurance loss by
using a number of reinsurers that have strong claims-paying ratings. If any
reinsurer could not meet its obligations, the Company would assume the
liability. The likelihood of a material loss being incurred as the result of the
failure of one of our reinsurers is considered remote. The cost of reinsurance
is recognized over the life of the reinsured policies using assumptions
consistent with those used to account for the underlying policy. The cost of
reinsurance ceded totaled $23.1 million, $21.0 million and $24.2 million in
1999, 1998 and 1997, respectively. A receivable is recorded for the reinsured
portion of insurance policy benefits paid and liabilities for insurance
products. Reinsurance recoveries netted against insurance policy benefits
totaled $20.8 million, $21.8 million and $14.9 million in 1999, 1998 and 1997,
respectively.
Income Taxes
Our income tax expense includes deferred income taxes arising from
temporary differences between the tax and financial reporting bases of assets
and liabilities. In assessing the realization of deferred income tax assets, we
consider whether it is more likely than not that the deferred income tax assets
will be realized. The ultimate realization of deferred income tax assets depends
upon generating future taxable income during the periods in which temporary
differences become deductible. If future income is not generated as expected,
deferred income tax assets may need to be written off (no such write-offs have
occurred).
Investment Borrowings
As part of our investment strategy, we may enter into reverse repurchase
agreements and dollar-roll transactions to increase our investment return or to
improve our liquidity. We account for these transactions as collateral
borrowings, where the amount borrowed is equal to the sales price of the
underlying securities. Reverse repurchase agreements involve a sale of
securities and an agreement to repurchase the same securities at a later date at
an agreed-upon price. Dollar rolls are similar to reverse repurchase agreements
except that, with dollar rolls, the repurchase involves securities that are only
substantially the same as the securities sold. Such borrowings averaged $137.7
million during 1999 and $66.0 million during 1998. These borrowings were
collateralized by investment securities with fair values approximately equal to
the loan value. The weighted average interest rate on short-term collateralized
borrowings was 5.0 percent and 4.4 percent in 1999 and 1998, respectively. The
primary risk associated with short-term collateralized borrowings is that a
counterparty will be unable to perform under the terms of the contract. Our
exposure is limited to the excess of the net replacement cost of the securities
over the value of the short-term investments (such excess was not material at
December 31, 1999). We believe the counterparties to our reverse repurchase and
dollar-roll agreements are financially responsible and that the counterparty
risk is minimal.
F-9
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Use of Estimates
When we prepare financial statements in conformity with GAAP, we are
required to make estimates and assumptions that significantly affect various
reported amounts of assets and liabilities, and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting periods. For example, we use significant estimates
and assumptions in calculating values for the cost of policies produced, the
cost of policies purchased, goodwill, insurance liabilities, liabilities related
to litigation, guaranty fund assessment accruals and deferred income taxes. If
our future experience differs materially from these estimates and assumptions,
our financial statements could be affected.
Fair Values of Financial Instruments
We use the following methods and assumptions to determine the estimated
fair values of financial instruments:
Investment securities. For fixed maturity securities (including redeemable
preferred stocks) and for equity and trading securities, we use quotes from
independent pricing services, where available. For investment securities
for which such quotes are not available, we use values obtained from
broker-dealer market makers or by discounting expected future cash flows
using a current market rate appropriate for the yield, credit quality, and
(for fixed maturity securities) the maturity of the investment being
priced.
Cash and cash equivalents. The carrying amount for these instruments
approximates their estimated fair value.
Mortgage loans and policy loans. We discount future expected cash flows for
loans included in our investment portfolio based on interest rates
currently being offered for similar loans to borrowers with similar credit
ratings. We aggregate loans with similar characteristics in our
calculations.
Other invested assets. We use quoted market prices, where available. When
quotes are not available, we estimate the fair value based on: (i)
discounted future expected cash flows; or (ii) independent transactions
which establish a value for our investment. When we are unable to estimate
a fair value, we assume a market value equal to carrying value.
Insurance liabilities for interest-sensitive products. We discount future
expected cash flows based on interest rates currently being offered for
similar contracts with similar maturities.
Investment borrowings. Due to the short-term nature of these borrowings
(terms generally less than 30 days), estimated fair values are assumed to
approximate the carrying amount reported in the balance sheet.
Here are the estimated fair values of our financial instruments:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
Financial assets:
Actively managed fixed maturities............................ $1,398.7 $1,398.7 $1,524.1 $1,524.1
Equity securities ........................................... 49.8 49.8 45.7 45.7
Mortgage loans............................................... 108.0 102.8 110.2 119.0
Policy loans................................................. 75.5 75.5 79.6 79.6
Other invested assets........................................ 50.8 50.8 120.3 120.3
Cash and cash equivalents.................................... 81.5 81.5 48.4 48.4
Financial liabilities:
Insurance liabilities for interest-sensitive products (1).... 1,289.2 1,289.2 1,365.2 1,365.2
Investment borrowings........................................ 135.1 135.1 65.7 65.7
F-10
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
<FN>
(1) The estimated fair value of the liabilities for interest-sensitive
products was approximately equal to its carrying value at December 31,
1999 and 1998. This was because interest rates credited on the vast
majority of account balances approximate current rates paid on similar
products and because these rates are not generally guaranteed beyond
one year. We are not required to disclose fair values for insurance
liabilities, other than those for interest-sensitive products .
However, we take into consideration the estimated fair values of all
insurance liabilities in our overall management of interest rate risk.
We attempt to minimize exposure to changing interest rates by matching
investment maturities with amounts due under insurance contracts.
</FN>
</TABLE>
Recently Issued Accounting Standards
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), as amended by
Statement of Financial Accounting Standards No. 137, "Deferral of the Effective
Date of FASB Statement No. 133" requires all derivative instruments to be
recorded on the balance sheet at estimated fair value. Changes in the fair value
of derivative instruments are to be recorded each period either in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, on the type of hedge
transaction. SFAS 133 is required to be implemented in year 2001. We are
currently evaluating the impact of SFAS 133; at present, we do not believe it
will have a material effect on our consolidated financial position or results of
operations. Because of ongoing changes to implementation guidance, we do not
plan on adopting the new standard until the first quarter of 2001.
We implemented the Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1") on
January 1, 1999. SOP 98-1 defines internal use software and when the costs
associated with internal use software should be capitalized. The implementation
of SOP 98-1 did not have a material effect on our consolidated financial
position or results of operations.
2. INVESTMENTS:
At December 31, 1999, the amortized cost and estimated fair value of
actively managed fixed maturities and equity securities were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---- ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
Investment grade:
Corporate securities................................................ $ 840.6 $2.2 $59.3 $ 783.5
United States Treasury securities and obligations of
United States government corporations and agencies................ 15.5 .1 .7 14.9
States and political subdivisions................................... 11.7 - 1.1 10.6
Debt securities issued by foreign governments....................... 12.2 - 1.6 10.6
Mortgage-backed securities ......................................... 482.3 .2 22.7 459.8
Below-investment grade (primarily corporate securities)................ 129.5 2.4 12.6 119.3
-------- ---- ----- --------
Total actively managed fixed maturities........................... $1,491.8 $4.9 $98.0 $1,398.7
======== ==== ===== ========
Equity securities...................................................... $47.8 $3.9 $1.9 $49.8
===== ==== ==== =====
</TABLE>
F-11
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
At December 31, 1998, the amortized cost and estimated fair value of
actively managed fixed maturities and equity securities were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---- ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
Investment grade:
Corporate securities................................................ $ 860.4 $20.7 $15.0 $ 866.1
United States Treasury securities and obligations of
United States government corporations and agencies................ 26.9 .8 .2 27.5
States and political subdivisions................................... 17.3 .3 - 17.6
Debt securities issued by foreign governments....................... 11.7 - .8 10.9
Mortgage-backed securities ......................................... 487.4 8.0 1.2 494.2
Below-investment grade (primarily corporate securities)................ 116.8 1.2 10.2 107.8
-------- ----- ----- --------
Total actively managed fixed maturities........................... $1,520.5 $31.0 $27.4 $1,524.1
======== ===== ===== ========
Equity securities...................................................... $ 46.0 $ .8 $ 1.1 $ 45.7
======== ===== ===== ========
</TABLE>
Accumulated other comprehensive loss included in shareholder's equity as of
December 31, 1999 and 1998, is summarized as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
(Dollars in millions)
<S> <C> <C>
Unrealized gains (losses) on investments............................................................. $(90.8) .9
Adjustments to cost of policies purchased and cost of policies produced.............................. 46.3 (2.1)
Deferred income tax benefit.......................................................................... 16.1 .4
------ -----
Accumulated other comprehensive loss.......................................................... $(28.4) $ (.8)
====== =====
</TABLE>
The following table sets forth the amortized cost and estimated fair value
of actively managed fixed maturities at December 31, 1999, by contractual
maturity. Actual maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties. Most of the mortgage-backed securities shown below
provide for periodic payments throughout their lives.
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
---- -----
(Dollars in millions)
<S> <C> <C>
Due in one year or less........................................................................ $ 8.2 $ 8.2
Due after one year through five years.......................................................... 90.8 89.5
Due after five years through ten years......................................................... 279.9 259.6
Due after ten years............................................................................ 628.2 579.4
-------- --------
Subtotal.................................................................................. 1,007.1 936.7
Mortgage-backed securities (a)................................................................. 484.7 462.0
-------- --------
Total actively managed fixed maturities ............................................... $1,491.8 $1,398.7
======== ========
<FN>
--------------------
(a) Includes below-investment grade mortgage-backed securities with an amortized
cost and estimated fair value of $2.4 million and $2.2 million,
respectively.
</FN>
</TABLE>
F-12
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Net investment income consisted of the following:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Actively managed fixed maturity securities........................................... $114.8 $118.4 $133.6
Equity securities.................................................................... 12.2 3.2 1.7
Mortgage loans....................................................................... 9.9 12.1 16.4
Policy loans......................................................................... 4.8 5.1 5.4
Other invested assets................................................................ 3.5 13.3 7.7
Cash and cash equivalents............................................................ 2.1 2.9 3.4
Separate accounts.................................................................... 151.8 44.1 55.7
------ ------ ------
Gross investment income.......................................................... 299.1 199.1 223.9
Investment expenses.................................................................. 1.5 1.1 1.3
------ ------ ------
Net investment income......................................................... $297.6 $198.0 $222.6
====== ====== ======
</TABLE>
The Company had no significant fixed maturity investments or mortgage loans
that were not accruing investment income in 1999, 1998 and 1997.
Investment gains (losses), net of investment expenses, were included in
revenue as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Fixed maturities:
Gross gains........................................................................ $ 8.6 $ 34.0 $20.6
Gross losses....................................................................... (14.5) (12.4) (5.1)
Other than temporary decline in fair value......................................... (1.3) - (.3)
------ ------ -----
Net investment gains (losses) from fixed maturities before expenses........... (7.2) 21.6 15.2
Other.................................................................................. .7 .1 2.2
------ ------ -----
Net investment gains (losses) before expenses................................. (6.5) 21.7 17.4
Investment expenses.................................................................... 3.5 3.2 4.1
------ ------ -----
Net investment gains (losses)................................................. $(10.0) $ 18.5 $13.3
====== ====== =====
</TABLE>
At December 31, 1999, the mortgage loan balance was primarily comprised of
commercial loans. Approximately 16 percent, 11 percent, 10 percent, 8 percent, 8
percent and 8 percent of the mortgage loan balance were on properties located in
Michigan, Texas, Florida, California, Georgia and Tennessee, respectively. No
other state comprised greater than 7 percent of the mortgage loan balance.
Noncurrent mortgage loans were insignificant at December 31, 1999. At December
31, 1999, our allowance for loss on mortgage loans was $.3 million.
Life insurance companies are required to maintain certain investments on
deposit with state regulatory authorities. Such assets had an aggregate carrying
value of $11.5 million at December 31, 1999.
The Company had no investments in any single entity in excess of 10 percent
of shareholder's equity at December 31, 1999, other than investments issued or
guaranteed by the United States government or a United States government agency.
F-13
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
3. INSURANCE LIABILITIES:
These liabilities consisted of the following:
<TABLE>
<CAPTION>
Interest
Withdrawal Mortality rate
assumption assumption assumption 1999 1998
---------- ---------- ---------- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C>
Future policy benefits:
Interest-sensitive products:
Investment contracts............................ N/A N/A (c) $ 976.7 $1,036.0
Universal life-type contracts................... N/A N/A N/A 312.5 329.2
---------- --------
Total interest-sensitive products............. 1,289.2 1,365.2
--------- --------
Traditional products:
Traditional life insurance contracts............ Company (a) 7.6% 137.0 139.9
experience
Limited-payment contracts....................... Company (b) 7.5% 105.8 106.3
experience, ---------- --------
if applicable
Total traditional products.................... 242.8 246.2
---------- --------
Claims payable and other policyholder funds ........ N/A N/A N/A 64.1 62.6
Liabilities related to separate accounts............ N/A N/A N/A 1,457.0 696.4
--------- --------
Total........................................... $3,053.1 $2,370.4
======== ========
<FN>
-------------
(a) Principally, modifications of the 1975 - 80 Basic, Select and Ultimate
Tables.
(b) Principally, the 1984 United States Population Table and the NAIC 1983
Individual Annuitant Mortality Table.
(c) At December 31, 1999 and 1998, approximately 97 percent and 95 percent,
respectively, of this liability represented account balances where
future benefits are not guaranteed. The weighted average interest rate
on the remainder of the liabilities representing the present value of
guaranteed future benefits was approximately 6 percent at December 31,
1999.
</FN>
</TABLE>
4. INCOME TAXES:
Income tax liabilities were comprised of the following:
<TABLE>
<CAPTION>
1999 1998
---- ----
(Dollars in millions)
<S> <C> <C>
Deferred income tax liabilities (assets):
Investments (primarily actively managed fixed maturities).................................. $ 3.6 $ 5.4
Cost of policies purchased and cost of policies produced................................... 75.3 56.7
Insurance liabilities...................................................................... (39.2) (28.2)
Unrealized depreciation.................................................................... (16.1) (.4)
Other...................................................................................... 10.2 (2.2)
------ ------
Deferred income tax liabilities....................................................... 33.8 31.3
Current income tax liabilities (assets)........................................................ (.4) 6.2
------ ------
Income tax liabilities................................................................ $ 33.4 $ 37.5
====== ======
</TABLE>
F-14
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Income tax expense was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Current tax provision..................................................................... $ 4.3 $20.8 $16.3
Deferred tax provision (benefit).......................................................... 9.3 (4.2) 5.8
----- ----- -----
Income tax expense............................................................... $13.6 $16.6 $22.1
===== ===== =====
</TABLE>
A reconciliation of the income tax provisions based on the U.S. statutory
corporate tax rate to the provisions reflected in the statement of operations is
as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Tax on income before income taxes at statutory rate....................................... 35.0% 35.0% 35.0%
State taxes............................................................................... 1.5 1.0 .7
Other..................................................................................... (1.4) (.8) .3
---- ---- ----
Income tax expense............................................................... 35.1% 35.2% 36.0%
==== ==== ====
</TABLE>
5. OTHER DISCLOSURES:
Litigation
The Company is involved on an ongoing basis in lawsuits related to its
operations. Although the ultimate outcome of certain of such matters cannot be
predicted, such lawsuits currently pending against the Company are not expected,
individually or in the aggregate, to have a material adverse effect on the
Company's financial condition, cash flows or results of operations.
Guaranty Fund Assessments
The balance sheet at December 31, 1999, includes: (i) accruals of $1.6
million, representing our estimate of all known assessments that will be levied
against the Company by various state guaranty associations based on premiums
written through December 31, 1999; and (ii) receivables of $1.1 million that we
estimate will be recovered through a reduction in future premium taxes as a
result of such assessments. These estimates are subject to change when the
associations determine more precisely the losses that have occurred and how such
losses will be allocated among the insurance companies. We recognized expense
for such assessments of $1.1 million in 1999, $1.1 million in 1998 and $1.2
million in 1997.
Related Party Transactions
The Company operates without direct employees through management and
service agreements with subsidiaries of Conseco. Fees for such services
(including data processing, executive management and investment management
services) are based on Conseco's direct and directly allocable costs plus a 10
percent margin. Total fees incurred by the Company under such agreements were
$43.4 million in 1999, $37.8 million in 1998 and $36.7 million in 1997.
During 1998 and 1997, the Company purchased $13.0 million and $11.2 million
par value, respectively, of senior subordinated notes issued by subsidiaries of
Conseco. The total carrying value of such notes purchased during 1998, 1997 and
prior years was $45.5 million at December 31, 1998. Such notes are classified as
"other invested assets" in the accompanying balance sheet. In 1999, all such
notes were repurchased from the Company by Conseco or its subsidiaries.
F-15
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
6. OTHER OPERATING STATEMENT DATA:
Insurance policy income consisted of the following:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Traditional products:
Direct premiums collected......................................................... $700.4 $445.8 $309.6
Reinsurance assumed............................................................... 18.7 15.6 14.9
Reinsurance ceded................................................................. (23.1) (21.0) (24.2)
------ ------ ------
Premiums collected, net of reinsurance...................................... 696.0 440.4 300.3
Less premiums on universal life and products
without mortality and morbidity risk which are
recorded as additions to insurance liabilities ................................ 654.1 400.4 255.9
------ ------ ------
Premiums on traditional products with mortality or morbidity risk,
recorded as insurance policy income...................................... 41.9 40.0 44.4
Fees and surrender charges on interest-sensitive products............................. 30.2 33.6 31.3
------ ------ ------
Insurance policy income..................................................... $ 72.1 $ 73.6 $ 75.7
====== ====== ======
</TABLE>
The five states with the largest shares of 1999 collected premiums were
California (14 percent), Texas (14 percent), Florida (13 percent), Michigan (8.8
percent) and Indiana (5.2 percent). No other state accounted for more than 4
percent of total collected premiums.
Changes in the cost of policies purchased were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Balance, beginning of year............................................................ $ 98.0 $106.4 $143.0
Amortization...................................................................... (4.1) (21.1) (15.4)
Amounts related to fair value adjustment of actively managed fixed maturities 37.7 11.8 (21.2)
Other ............................................................................ - .9 -
------ ------ ------
Balance, end of year.................................................................. $131.6 $ 98.0 $106.4
====== ====== ======
</TABLE>
Based on current conditions and assumptions as to future events on all
policies in force, the Company expects to amortize approximately 9 percent of
the December 31, 1999, balance of cost of policies purchased in 2000, 10 percent
in 2001, 9 percent in 2002, 7 percent in 2003 and 6 percent in 2004. The
discount rates used to determine the amortization of the cost of policies
purchased ranged from 3.6 percent to 8.0 percent and averaged 5.8 percent.
Changes in the cost of policies produced were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Balance, beginning of year............................................................ $ 82.5 $ 55.9 $38.2
Additions......................................................................... 62.7 35.3 31.8
Amortization...................................................................... (8.3) (11.0) (10.2)
Amounts related to fair value adjustment of actively managed fixed maturities 10.7 2.3 (3.9)
------ ------ -----
Balance, end of year.................................................................. $147.6 $ 82.5 $55.9
====== ====== =====
</TABLE>
F-16
<PAGE>
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
7. STATEMENT OF CASH FLOWS:
Income taxes paid during 1999, 1998, and 1997, were $2.1 million, $17.1
million and $14.8 million, respectively.
8. STATUTORY INFORMATION:
Statutory accounting practices prescribed or permitted by regulatory
authorities for insurance companies differ from GAAP. The Company reported the
following amounts to regulatory agencies:
<TABLE>
<CAPTION>
1999 1998
---- ----
(Dollars in millions)
<S> <C> <C>
Statutory capital and surplus.................................................. $112.6 $134.0
Asset valuation reserve........................................................ 41.4 30.9
Interest maintenance reserve................................................... 66.7 73.1
------- ------
Total...................................................................... $220.7 $238.0
====== ======
</TABLE>
Our statutory net income was $14.6 million, $32.7 million and $32.7 million
in 1999, 1998 and 1997, respectively. Statutory net income differs from net
income presented in our financial statements prepared in accordance with GAAP,
primarily because for GAAP reporting we are required to defer and amortize costs
that vary with and are primarily related to the production of new business as
described in note 1.
State insurance laws generally restrict the ability of insurance companies
to pay dividends or make other distributions. We may pay dividends to our parent
in 2000 of $12.8 million without permission from state regulatory authorities.
In 1998, the National Association of Insurance Commissioners adopted
codified statutory accounting principles, which are expected to constitute the
only source of prescribed statutory accounting practices and are effective in
2001. The changes to statutory accounting practices resulting from the
codification are not expected to have a material effect on the statutory capital
and surplus or statutory operating earnings data shown above.
F-17
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
The financial statements of Conseco Variable Insurance Company (the "Company")
and the Separate Account are included in Part B hereof.
B. EXHIBITS
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Separate Account.+
2. Not Applicable.
3. (i) Form of Principal Underwriters Agreement.++
(ii) Form of Selling Agreement.++
4. (i) Individual Variable Deferred Annuity Contract.+
(ii) Guaranteed Minimum Death Benefit Rider+
(iii) Guaranteed Minimum Income Benefit Rider+
(iv) Unemployment Benefit Rider+
5. Application Form.
6. (i) Articles of Incorporation of the Company.*
(ii) Articles of Amendment to the Articles of Incorporation
of the Company.+++
(iii) Amended and Restated By-Laws of the Company.+++
7. Not Applicable.
8. (i) Form of Fund Participation Agreement by and among The Alger American
Fund, Great American Reserve Insurance Company and Fred Alger and
Company, Incorporated.**
(ii) Form of Fund Participation Agreement by and among Great American
Reserve Insurance Company, Berger Institutional Products Trust and
BBOI Worldwide LLC.**
(iii)Form of Fund Participation by and between Great American Reserve
<PAGE>
Insurance Company, Insurance Management Series and Federated
Securities Corp.**
(iv) Form of Fund Participation between Great American Reserve Insurance
Company, Van Eck Worldwide Insurance Trust and Van Eck Associates
Corporation.**
(v) Form of Fund Participation Agreement by and between Lord Abbett Series
Fund, Inc., Lord, Abbett and Co. and Great American Reserve Insurance
Company.**
(vi) Form of Fund Participation Agreement by and between American Century
Investment Services, Inc. and Great American Reserve Insurance
Company.**
(vii) Form of Fund Participation Agreement between INVESCO Variable
Investment Funds, Inc., INVESCO Funds Group, Inc. and the Company.***
(viii) Form of Fund Participation Agreement between Rydex Variable Trust and
the Company.+++
(ix) Form of Fund Participation Agreement between Pioneer Variable
Contracts Trust and the Company.
9. Opinion and Consent of Counsel.
10. Consent of Independent Accountants.
11. Not Applicable.
12. Not Applicable.
13. Calculation of Performance Information.
14. Not Applicable.
15. Company Organizational Chart. +++
*Incorporated by reference to Form N-4 (Conseco Variable Annuity Account F -
File Nos. 333-40309 and 811-08483) filed electronically on November 14, 1997.
**Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4
(Conseco Variable Annuity Account F - File Nos. 333-40309 and 811-08483) filed
electronically on February 3, 1998.
***Incorporated by reference to Conseco Variable Annuity Account G, Form N-4,
File Nos. 333-00373 and 811-07501, filed electronically on January 23, 1996.
+Incorporated by reference to Form N-4 (Conseco Variable Annuity Account H -
File Nos. 333-90737 and 811-09693) filed electronically on November 12, 1999.
<PAGE>
++Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4
(File Nos. 333-90737 and 811-09693) filed electronically on February 4, 2000.
+++ Incorporated by reference to Post-Effective Amendment No. 1 to Form N-4
(File No. 333-90737) filed electronically on April 28, 2000.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Executive Officers and Directors of the Company which
are engaged directly or indirectly in activities relating to the Registrant or
the Contracts offered by the Registrant:
Name and Principal Position and Offices
Business Address* with Depositor
------------------- ---------------------------------------
Ngaire E. Cuneo Director
John M. Howard Director
David K. Herzog Director, Executive Vice President,
General Counsel and Secretary
Thomas J. Kilian Director and President
James S. Adams Director and Senior Vice President,
Chief Accounting Officer
and Treasurer
*The Principal business address for all officers and directors listed above is
11825 N. Pennsylvania Street, Carmel, Indiana 46032.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Company organizational chart was filed as Exhibit 15 in Post-Effective
Amendment No. 1 and is incorporated herein by reference.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of September 30, 2000, there were 371 non-qualified contract owners and
538 qualified contract owners.
ITEM 28. INDEMNIFICATION
The Bylaws (Article VI) of the Company provide, in part, that:
The Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative, or investigative,
by reason of the fact that he is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (collectively, "Agent") against expenses
(including attorneys' fees), judgments, fines, penalties, court costs and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement (whether with or
without court approval), conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Agent did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. If several claims, issues or matters are involved, an
Agent may be entitled to indemnification as to some matters even though he is
not entitled as to other matters. Any director or officer of the Corporation
serving in any capacity of another corporation, of which a majority of the
shares entitled to vote in the election of its directors is held, directly or
indirectly, by the Corporation, shall be deemed to be doing so at the request of
the Corporation.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company 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
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Conseco Equity Sales, Inc. is the principal underwriter for the following
investment companies (other than the Registrant):
Conseco Variable Annuity Account C
Conseco Variable Annuity Account E
Conseco Variable Annuity Account F
Conseco Variable Annuity Account G
Conseco Fund Group
Rydex Advisor Variable Annuity Account
BMA Variable Life Account A
(b) Conseco Equity Sales, Inc. ("CES") is the principal underwriter for the
Contracts. The following persons are the officers and directors of CES. The
principal business address for each officer and director of CES is 11815 N.
Pennsylvania Street, Carmel, Indiana 46032.
Name and Principal Positions and Offices
Business Address with Underwriter
------------------------ ---------------------------------------
L. Gregory Gloeckner President and Director
William P. Kovacs Vice President, General Counsel,
Secretary and Director
James S. Adams Senior Vice President, Chief Accounting Officer,
Treasurer and Director
William T. Devanney, Jr. Senior Vice President, Corporate
Taxes
Donald B. Johnston Vice President, Director Mutual Fund
Sales & Marketing
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
K. Lowell Short, whose address is 11815 N. Pennsylvania Street, Carmel, IN
46032, maintains physical possession of the accounts, books or documents of the
Separate Account required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to 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
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under this
Form promptly upon written or oral request.
d. Conseco Variable Insurance Company (the "Company") hereby represents
that the fees and charges deducted under the Contracts described in the
Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
e. The Securities and Exchange Commission (the "SEC") issued the American
Council of Life Insurance an industry wide no-action letter dated November 28,
1988, stating that the SEC would not recommend any enforcement action if
registered separate accounts funding tax-sheltered annuity contracts restrict
distributions to plan participants in accordance with the requirements of
Section 403(b)(11), provided certain conditions and requirements were met. Among
these conditions and requirements, any registered separate account relying on
the no-action position of the SEC must:
(1) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in each registration statement,
including the prospectus, used in connection with the offer of the
contract;
(2) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403 (b)(11) in any sales literature used in
connection with the offer in the contract;
(3) Instruct sales representatives who solicit participants to
purchase the contract specifically to bring the redemption restrictions
imposed by Section 403(b)(11) to the attention of the potential
participants; and
(4) Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of (i) the
restrictions on redemption imposed by Section 403(b)(11), and (ii) the
investment alternatives available under the employer's Section 403(b)
arrangement, to which the participant may elect to transfer his contract
value.
The Registrant is relying on the no-action letter. Accordingly, the
provisions of paragraphs (1) - (4) above have been complied with.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Registration Statement and has caused this
Registration Statement to be signed on its behalf, in the City of Carmel, and
State of Indiana on this 26th day of December, 2000.
CONSECO VARIABLE ANNUITY
ACCOUNT H
Registrant
By: CONSECO VARIABLE INSURANCE COMPANY
By: /S/ THOMAS J. KILIAN
------------------------------
By: CONSECO VARIABLE INSURANCE COMPANY
Depositor
By: /S/ THOMAS J. KILIAN
-------------------------------
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------------------ -------------------------- ---------------
<S> <C> <C>
Director
--------------------------------- --------------
Ngaire E. Cuneo
/S/ THOMAS J. KILIAN Director and President December 26, 2000
-------------------------------- (principal executive officer) -----------------
Thomas J. Kilian
/S/ JAMES S. ADAMS Senior Vice President, December 26, 2000
--------------------------------- Chief Accounting Officer and Treasurer -----------------
James S. Adams and Director (principal financial
officer and principal accounting officer)
/S/ DAVID K. HERZOG December 26, 2000
--------------------------------- Director --------------
David K. Herzog
<PAGE>
/S/ JOHN M. HOWARD December 26, 2000
------------------------------ Director ------------------
John M. Howard
</TABLE>
EXHIBITS TO
POST-EFFECTIVE AMENDMENT NO. 2 TO
FORM N-4
INDEX TO EXHIBITS
EX-99.B8(ix) Form of Fund Participation Agreement between Pioneer Variable
Contracts Trust and the Company
EX-99.B9 Opinion and Consent of Counsel
EX-99.B10 Consent of Independent Accountants
EX-99.B13 Calculation of Performance Information