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<PAGE> 1
PROVIDENT NATIONAL ASSURANCE COMPANY
SEPARATE ACCOUNT B
JUNE 30, 1995
SEMIANNUAL REPORT
<PAGE> 2
MANAGEMENT
BOARD OF MANAGERS OF SEPARATE ACCOUNT B
Henry E. Blaine
H. Grant Law, Jr.
David G. Fussell
Susan N. Roth, Secretary
to the Board of Managers
PRINCIPAL OFFICERS OF
PROVIDENT NATIONAL ASSURANCE COMPANY
Eugene A. Jones, President
J. Harold Chandler, Executive Vice President
Thomas R. Watjen, Executive Vice President and
Chief Financial Officer
Robert O. Best, Senior Vice President and
Chief Information Officer
Thomas B. Heys, Jr., Senior Vice President
Alberto J. Morales, Senior Vice President,
Chief Administrative Officer and Asst.
Secretary
Ralph A. Rogers, Vice President and Controller
Kenneth Blankenship, Vice President,
Internal Audit
Glenn P. Felton, Vice President, Managing
Corporate Counsel and Assistant Secretary
Susan N. Roth, Corporate Secretary and Counsel
George A. Shell, Jr., Treasurer
This report and the financial statements attached are submitted solely for the
general information of contract owners of Separate Account B and are not
authorized for other use.
<PAGE> 3
MESSAGE TO PARTICIPANTS IN
PROVIDENT NATIONAL'S
VARIABLE ANNUITY CONTRACTS
This semiannual report of Separate Account B contains the financial
statements and portfolio information of Separate Account B for the six months
ended June 30, 1995. Comparative figures which relate to Separate Account B's
activities during the first half of 1995 are provided below.
The accumulation unit value for Separate Account B increased 14.5% in
the first half of 1995, from $5.410722 at year end 1994 to $6.194660 on June
30, 1995. During this same period, the S&P 500 Index rose by a yield adjusted
18.1%. Reflecting transfers to the fixed-dollar account, as well as
withdrawals and retirements, the number of accumulation units outstanding on
June 30, 1995, was 1,883,861, down from 2,097,793 six months earlier. As a
result of withdrawals, net purchase payments received, and changes in the
accumulation unit value, total contract owners' equity on June 30, 1995, was
$12,570,675 compared to $12,171,347 on December 31, 1994.
The economy is likely to average 3% growth for this year, and the rate
of inflation should be 3% or lower. We seem to be in a "soft landing" phase,
with slower economic growth, but not slow enough to push us into recession.
Most companies reported earnings above expectations for the first half
of the year, and stock prices appreciated in response. Stock market
performance in the second half of the year is unlikely to match the first half.
However, attractive second half returns are possible in individual stocks and
market sectors that are currently priced below their fundamental value.
Thank you for your continued support.
/s/ David Fussell
-------------------------------------
David Fussell
Chairman, Board of Managers
Provident National Assurance Company
Separate Account B
<PAGE> 4
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
(UNAUDITED)
JUNE 30, 1995
<TABLE>
<S> <C>
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Statements of Changes in Variable Annuity Contract Owners' Equity . . . . . . . . . . . . . . . . . . . . . . . 2
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Accumulation Unit Value Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 5
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
<TABLE>
<CAPTION>
June 30, 1995
-------------
<S> <C>
ASSETS
Investments:
Common stocks--at market value
(cost: $10,167,896) $12,235,757
Short-term investments--at cost plus
accrued interest (approximately market) 399,862
Cash 99,880
Accrued dividends 27,391
Amounts due from Provident National Assurance Company 519
-----------
TOTAL ASSETS 12,763,409
-----------
LIABILITIES AND CONTRACT OWNERS' EQUITY
Amounts payable for purchase of investments 80,400
Amounts payable for terminations 99,011
Management fee and other amounts due Provident
National Assurance Company 13,323
-----------
TOTAL LIABILITIES 192,734
-----------
Variable annuity contract owners' equity:
Deferred annuity contracts terminable by owners--accumulation
units outstanding: 1,883,860.984; unit value: $6.194660) 11,669,878
Annuity contracts in pay-out period 900,797
-----------
TOTAL CONTRACT OWNERS' EQUITY $12,570,675
===========
</TABLE>
See notes to financial statements.
-1-
<PAGE> 6
STATEMENTS OF CHANGES IN VARIABLE ANNUITY CONTRACT OWNERS' EQUITY
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD $12,171,347 $13,594,156
----------- -----------
FROM INVESTMENT ACTIVITIES:
Net investment income 71,965 219,880
Net realized gain on investments 1,174,057 487,864
Increase (decrease) in net unrealized appreciation of investments 432,845 (1,264,220)
----------- -----------
Increase (decrease) in contract owners' equity from
investment activities 1,678,867 (556,476)
----------- -----------
FROM VARIABLE ANNUITY CONTRACT TRANSACTIONS:
Net contract purchase payments (Units purchased:
1995--6,776.909;
1994--13,985.385) 39,934 75,685
Terminations and death benefits (Units terminated:
1995--218,293.476;
1994--153,401.946) (1,269,121) (841,067)
Variable annuity benefits paid (Number of units:
1995--8,694.022;
1994--18,478.239) (50,352) (100,951)
----------- -----------
Decrease in contract owners' equity from variable
contract transactions (1,279,539) (866,333)
----------- -----------
NET INCREASE (DECREASE) IN CONTRACT OWNERS' EQUITY 399,328 (1,422,809)
----------- -----------
BALANCE AT END OF PERIOD $12,570,675 $12,171,347
=========== ===========
</TABLE>
See notes to financial statements.
-2-
<PAGE> 7
STATEMENT OF OPERATIONS
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995
-----------------
<S> <C>
INVESTMENT INCOME
Income:
Dividends $ 131,157
Interest 15,751
----------
146,908
----------
Expenses--Note C:
Investment advisory services 31,226
Mortality and expense assurances 43,717
----------
74,943
----------
NET INVESTMENT INCOME 71,965
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS--NOTE A
Net realized gain from investment transactions
(excluding short-term securities):
Proceeds from sales 7,658,220
Cost of investments sold 6,407,203
Adjustment for impairment of value (76,960)
----------
Net realized gain 1,174,057
----------
Net unrealized appreciation of investments:
At end of period 2,067,861
At beginning of period 1,635,016
----------
Increase in net unrealized appreciation of investments 432,845
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,606,902
----------
NET GAIN $1,678,867
==========
Ratio of expenses to total investment income 51.01%
==========
</TABLE>
See notes to financial statements.
-3-
<PAGE> 8
SCHEDULE OF INVESTMENTS
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
JUNE 30, 1995
<TABLE>
<CAPTION>
Number of Market
Shares Value
------------ -----------
<S> <C> <C>
COMMON STOCKS
CAPITAL GOODS (4.7%)
Astec Industries, Inc. 4,900 $ 55,738
General Electric Company 9,400 529,925
-----------
585,663
CONSUMER (39.9%)
Atlantic Southeast Airlines, Inc. 5,000 150,625
Bristol-Myers Squibb Company 4,500 306,562
Coca-Cola Company 3,000 191,250
Franklin Quest Company 5,000 120,000
Gannett Company, Inc. 8,000 434,000
General Motors Corporation 7,000 328,125
McDonald's Corporation 6,000 234,750
Pentos PLC 160,000 0
PepsiCo, Inc. 5,000 227,500
Philip Morris Companies, Inc. 9,500 706,563
Premark International, Inc. 5,000 259,375
Sara Lee Corporation 6,000 171,000
Sears Roebuck & Company 5,000 297,500
Skywest, Inc. 1,500 33,937
UST, Inc. 18,750 557,813
Viacom, Inc. Class A 688 31,992
Viacom, Inc. Class B 13,712 635,894
Wal-Mart Stores, Inc. 9,000 240,750
Younkers, Inc. 5,000 85,940
-----------
5,013,576
ENERGY (4.4%)
Mobil Corporation 5,800 556,800
</TABLE>
See notes to financial statements.
-4-
<PAGE> 9
SCHEDULE OF INVESTMENTS--CONTINUED
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
JUNE 30, 1995
<TABLE>
<CAPTION>
Number of Market
Shares Value
------------- -------------
<S> <C> <C>
COMMON STOCKS - CONTINUED
FINANCIAL (14.7%)
AFLAC, Inc. 6,000 $ 262,500
American Express Company 16,000 564,000
Equifax, Inc. 5,500 182,875
First Interstate Bancorp 3,500 280,875
Wells Fargo & Company 3,100 558,775
-----------
1,849,025
HEALTH CARE (7.0%)
Cordis Corporation 4,000 267,000
HEALTHSOUTH Corporation 4,000 69,500
Merck & Company, Inc. 11,000 540,375
-----------
876,875
HIGH GROWTH TECHNOLOGY (21.5%)
Airtouch Communications, Inc. 6,000 171,000
American Power Conversion Corporation 13,000 297,375
Computer Associates International, Inc. 6,500 438,750
EMC Corporation 4,000 97,000
Intel Corporation 4,000 253,248
International Business Machines Corporation 5,000 480,000
Micron Technology, Inc. 500 27,500
Microsoft Corporation 6,000 542,250
Novell, Inc. 2,500 49,845
Reuters Holdings PLC ADR 7,000 350,875
-----------
2,707,843
MISCELLANEOUS (2.8%)
Minnesota Mining & Manufacturing Company 6,200 355,725
</TABLE>
See notes to financial statements.
-5-
<PAGE> 10
SCHEDULE OF INVESTMENTS -- CONTINUED
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
JUNE 30, 1995
<TABLE>
<CAPTION>
Number of Market
Shares Value
------------- --------------
<S> <C> <C>
COMMON STOCKS - CONTINUED
UTILITIES (2.3%)
Worldcom, Inc. 10,750 $ 290,250
TOTAL COMMON STOCKS (97.3%) 12,235,757
-----------
Principal
Amount
-------------
SHORT-TERM INVESTMENTS
AlliedSignal, Inc. 6.07%
Commercial Paper
due July 3, 1995 $175,000 174,941
Cigna Corporation 6.30%
Commercial Paper
due July 3, 1995 225,000 224,921
-------- -----------
TOTAL SHORT-TERM INVESTMENTS (3.2%) $400,000 399,862
======== -----------
TOTAL INVESTMENTS (100.5%) 12,635,619
CASH AND RECEIVABLES LESS LIABILITIES (-.5%) (64,944)
-----------
TOTAL VARIABLE ANNUITY CONTRACT
OWNERS' EQUITY (100.0%) $12,570,675
===========
</TABLE>
See notes to financial statements.
-6-
<PAGE> 11
SUPPLEMENTARY INFORMATION
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
Selected data for an accumulation unit outstanding throughout each year:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31
June 30, 1995 1994 1993 1992 1991
--------------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income $ .07 $ .15 $ .14 $ .12 $ .13
Expenses .04 .07 .06 .06 .04
--------- --------- --------- --------- ---------
Net investment income .03 .08 .08 .06 .08
Net realized and unrealized
gain (loss) on investments .75 (.32) .54 (.07) 1.22
--------- --------- --------- --------- ---------
Net increase (decrease) in
contract owners' equity .78 (.24) .62 (.01) 1.30
Net contract owners' equity:
Beginning of period 5.41 5.65 5.03 5.04 3.74
--------- --------- --------- --------- ---------
End of period $ 6.19 $ 5.41 $ 5.65 $ 5.03 $5.04
========= ========= ========= ========= =========
Ratio of expenses to average
contract owners' equity .61% 1.21% 1.22% 1.21% 1.21%
Ratio of net investment income to
average contract owners' equity .58% 1.72% 1.39% 1.36% 1.91%
Portfolio turnover 60% 70% 57% 35% 42%
Number of accumulation units
outstanding at end of period 1,883,861 2,097,793 2,242,809 2,655,895 2,854,559
</TABLE>
See notes to financial statements.
-7-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
NOTE A--INVESTMENTS AND ACCOUNTING POLICIES
Separate Account B is a segregated investment account of Provident National
Assurance Company (a wholly-owned subsidiary of Provident Life and Accident
Insurance Company) and is registered under the Investment Company Act of 1940,
as amended, as an open-end diversified management investment company.
Common stocks, preferred stocks, bonds, and U.S. Government securities are
valued at published market quotations which represent the closing sales price
for securities traded on a national stock exchange or the mean between the
quoted bid and asked prices for those traded over-the-counter. Short-term
investments are valued at cost plus accrued interest.
Realized and unrealized gains and losses are credited to or charged to variable
annuity contract owners' equity. The identified cost basis has been used in
determining realized gains and losses on sales of investments. If determined
on the average cost basis, the net realized gain would have been $1,171,737 and
$563,363 for the six months ended June 30, 1995 and the year ended December 31,
1994, respectively. When a security's value is determined to be permanently
impaired, a realized loss is recognized in the Statement of Operations. A
realized loss of $76,960 was recognized for one such security for the six
months ended June 30, 1995. There were gross unrealized gains of $2,204,007
and gross unrealized losses of $136,146 at June 30, 1995. Security
transactions are recorded on the date the securities are purchased or sold
which is the common practice of the industry. Dividends are taken into income
on an accrual basis as of the ex-dividend date.
A summary of the cost of investments purchased and proceeds from investments
sold for the six months ended June 30, 1995 and the year ended December 31,
1994 is shown below.
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
---------------- -----------------
<S> <C> <C>
Cost of investments purchased $18,498,479 $36,509,262
Less: Short-term securities 11,451,723 28,013,052
----------- -----------
$ 7,046,756 $ 8,496,210
=========== ===========
Proceeds from investments sold $19,409,432 $37,415,387
Less: Short-term securities 11,751,212 27,713,432
----------- -----------
$ 7,658,220 $ 9,701,955
=========== ===========
</TABLE>
The aggregate cost of investments for federal income tax purposes is the same
as that presented in the Statements of Assets and Liabilities.
-8-
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
NOTE B--FEDERAL INCOME TAXES
Operations of Separate Account B will form a part of the income tax return of
Provident National Assurance Company, which is taxed as a "life insurance
company" under the Internal Revenue Code.
Under current law, no federal income taxes are payable with respect to Separate
Account B.
NOTE C--EXPENSES
Deductions are made by Provident National Assurance Company at the end of each
valuation period for investment advisory services and for mortality and expense
assurances, which on an annual basis are approximately .50% and .70%,
respectively, of the net assets of Separate Account B.
-9-
<PAGE> 14
ACCUMULATION UNIT VALUE TABLE
(UNAUDITED)
PROVIDENT NATIONAL ASSURANCE COMPANY SEPARATE ACCOUNT B
<TABLE>
<CAPTION>
End of Month Accumulation Unit End of Month Accumulation Unit
------------ ------------------ ------------ ------------------
Value Value
----- -----
<S> <C> <C> <C>
December 1968 1.036279 March 1990 3.729963
December 1969 1.080379 June 4.080042
December 1970 1.030039 September 3.435225
December 1971 1.178612 December 3.736441
December 1972 1.403795
December 1973 1.126624 March 1991 4.312244
December 1974 .863269 June 4.243108
December 1975 1.022844 September 4.513598
December 1976 1.156853 December 5.036212
December 1977 1.064425
December 1978 1.094150 March 1992 4.735470
December 1979 1.219189 June 4.585274
December 1980 1.555258 September 4.694884
December 1981 1.473246 December 5.028547
December 1982 1.812441
December 1983 2.132092 March 1993 5.208499
December 1984 2.029912 June 5.190340
December 1985 2.480050 September 5.441446
December 1986 2.743444 December 5.646864
December 1987 2.734169
March 1994 5.386379
March 1988 2.922656 June 5.274454
June 3.103682 September 5.475394
September 3.094483 December 5.410722
December 3.087892
January 1995 5.439209
March 1989 3.263117 February 5.563510
June 3.506709 March 5.656995
September 3.841545 April 5.820245
December 3.812606 May 6.083322
June 6.194660
</TABLE>
Initial contributions to Separate Account B were received on February 1, 1968,
prior to which time the unit value was set at 1.000000.
The above indicates the accumulation unit value on the last valuation day of
each year from December 1968 through December 1987, on the last valuation day
of each quarter from 1988 through December 1994, and on the last valuation day
during each month of 1995. The results shown should not be considered as a
representation of the results which may be realized in the future.
-10-
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