<PAGE> 1
As filed with the Securities and Exchange Commission.
`33 Act File No. 33-60239
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES [X]
ACT OF 1933
Post-Effective Amendment No. 1
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940[ ]
Amendment No. 2
NATIONWIDE VARIABLE ACCOUNT
(EXACT NAME OF REGISTRANT)
NATIONWIDE LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216-6609
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
GORDON E. MCCUTCHAN, SECRETARY, ONE NATIONWIDE PLAZA,
COLUMBUS, OHIO 43216-6609
(Name and Address of Agent for Service)
This Post-Effective Amendment amends the Registration Statement in respect
of the Prospectus, the Statement of Additional Information and the Financial
Statements.
It is proposed that this filing will become effective (check appropriate
space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1996 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing 60 pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] this post-effective amendment designates a new effective date for
previously filed post-effective amendment.
The registrant has registered an indefinite number of securities by prior
registration statement in accordance with Rule 24f-2 under the Investment
Company Act of 1940. Pursuant to Paragraph (a)(3) thereof, a non-refundable fee
in the amount of $500 has been paid to the Commission. Registrant filed its Rule
24f-2 Notice for the fiscal year ended December 31, 1995 on February 15, 1996.
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<PAGE> 2
NATIONWIDE VARIABLE ACCOUNT
REFERENCE TO ITEMS REQUIRED BY FORM N-4
Caption in Prospectus and Statement of Additional Information and Other
Information
<TABLE>
<CAPTION>
N-4 ITEM PAGE
Part A INFORMATION REQUIRED IN A PROSPECTUS
<S> <C>
Item 1. Cover page......................................... 3
Item 2. Definitions........................................ 4
Item 3. Synopsis or Highlights............................. 11
Item 4. Condensed Financial Information.................... N/A
Item 5. General Description of Registrant, Depositor,
and Portfolio Companies............................ 12
Item 6. Deductions and Expenses............................ 13
Item 7. General Description of Variable Annuity Contracts.. 14
Item 8. Annuity Period..................................... 17
Item 9. Death Benefit and Distributions.................... 19
Item 10. Purchases and Contract Value....................... 22
Item 11. Redemptions........................................ 24
Item 12. Taxes.............................................. 24
Item 13. Legal Proceedings.................................. 26
Item 14. Table of Contents of the Statement
of Additional Information.......................... 26
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION
Item 15. Cover Page......................................... 32
Item 16. Table of Contents..................................
Item 17. General Information and History.................... 32
Item 18. Services........................................... 32
Item 19. Purchase of Securities Being Offered............... 32
Item 20. Underwriters....................................... 33
Item 21. Calculation of Performance Information............. 33
Item 22. Annuity Payments................................... 34
Item 23. Financial Statements............................... 35
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits.................. 77
Item 25. Directors and Officers of the Depositor............ 79
Item 26. Persons Controlled by or Under Common Control
with the Depositor or Registrant................... 81
Item 27. Number of Contract Owners.......................... 90
Item 28. Indemnification.................................... 90
Item 29. Principal Underwriter.............................. 90
Item 30. Location of Accounts and Records................... 92
Item 31. Management Services................................ 92
Item 32. Undertakings....................................... 92
</TABLE>
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<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE
P.O. BOX 16609
COLUMBUS, OHIO 43216-6609, 1-800-848-6331
TDD 1-800-238-3035
INDIVIDUAL MODIFIED SINGLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY THE NATIONWIDE VARIABLE ACCOUNT
OF NATIONWIDE LIFE INSURANCE COMPANY
The Individual Modified Single Premium Deferred Variable Annuity Contracts
described in this prospectus are modified single premium payment contracts
(collectively referred to as the "Contracts"). The Contracts, by themselves, do
not qualify for tax-deferral under federal tax rules governing Non-Qualified
Annuities and Individual Retirement Annuities. The Contracts are, however,
issued to custodians of Individual Retirement Accounts ("IRAs") for the benefit
of individual IRA account holders. Such account holders shall be the Annuitant
under these Contracts. The Contracts may also be issued to the trustee(s) of
Qualified Plans which qualify for favorable tax treatment under Sections 401(a)
or 403(a) of the Internal Revenue Code (the "Code"). Annuity payments under the
Contracts are deferred until a selected later date.
Purchase Payments are allocated to the Nationwide Variable Account
("Variable Account"), a separate account of Nationwide Life Insurance
Company (the "Company"). The Variable Account is divided into
Sub-Accounts, each of which invests in shares of one of the underlying
Mutual Fund options described below:
<TABLE>
<S> <C>
-Delchester Fund-Institutional Class -Nationwide(R) Money Market Fund
-Dreyfus A Bonds Plus, Inc. -Neuberger & Berman Guardian Fund, Inc.
-Dreyfus S & P 500 Index Fund (Formerly, Peoples -Neuberger & Berman Limited Maturity Bond Index Fund, Inc.)
Index Fund, Inc.)
-The Dreyfus Third Century Fund, Inc. -Neuberger & Berman Partners Fund, Inc.
-The Evergreen Total Return Fund -Oppenheimer Global Fund
-Fidelity Asset Manager TM -Phoenix Balanced Fund Series
-Fidelity Equity-Income Fund -Strong Total Return Fund, Inc.
-Fidelity Magellan(R)Fund -Templeton Foreign Fund
-Fidelity Puritan Fund -Twentieth Century Growth Investors
-Janus Twenty Fund -Twentieth Century International Equity Fund
-MFS(R)World Governments Fund -Twentieth Century Ultra Investors
-Nationwide(R)Bond Fund -Twentieth Century U.S. Governments Short-
-Nationwide(R) Fund Term
-Nationwide(R) Growth Fund
</TABLE>
This prospectus provides you with the basic information you should know
about the Individual Modified Single Premium Deferred Variable Annuity Contracts
issued by the Nationwide Variable Account before investing. You should read it
and keep it for future reference. A Statement of Additional Information dated
May 1, 1996 containing further information about the Contracts and the
Nationwide Variable Account has been filed with the Securities and Exchange
Commission. You can obtain a copy without charge from Nationwide Life Insurance
Company by calling 1-800-848-6331, or writing P.O. Box 16609, Columbus, Ohio
43216-6609.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1996 IS INCORPORATED
HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL
INFORMATION APPEARS ON PAGE 24 OF THE PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996.
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<PAGE> 4
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the Variable
Account Contract Value prior to the Annuitization Date.
ANNUITANT- The person designated to receive annuity payments and upon whose
continuation of life any annuity payment involving life contingencies depends.
This person must be age 85 or younger at the time of Contract issuance, unless
the Company has approved a request for an Annuitant of greater age. Although not
the Owner of the Contract, the Annuitant may exercise rights of ownership in the
Contract, if so authorized by the holder of the Contract (an IRA custodian or
Qualified Plan trustee(s)).
ANNUITIZATION- The period during which annuity payments are actually received.
ANNUITIZATION DATE- The date on which annuity payments actually commence.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
commence. The Annuity Commencement Date is shown on the Data Page of the
Contract, and is subject to change by the Owner (or Annuitant, if so
authorized).
ANNUITY PAYMENT OPTION- The chosen form of making annuity payments. Several
options are available under this Contract.
ANNUITY UNIT- An accounting unit of measure used to calculate the value of
Variable Annuity payments.
BENEFICIARY- The Beneficiary is the person designated to receive certain
benefits under the Contract upon the death of the Annuitant prior to the
Annuitization Date. The Beneficiary can be changed by the Contract Owner as set
forth in the Contract.
CODE- The Internal Revenue Code of 1986, as amended.
COMPANY- Nationwide Life Insurance Company.
CONTINGENT BENEFICIARY- The Contingent Beneficiary is the person designated to
be the Beneficiary if the named Beneficiary is not living at the time of the
death of the Annuitant.
CONTRACT- The Individual Modified Single Premium Deferred Variable Annuity
Contract described in this prospectus.
CONTRACT ANNIVERSARY- An anniversary of the Date of Issue of the Contract.
CONTRACT OWNER (OWNER)- The Contract Owner shall be an IRA custodian, or
Qualified Plan trustee(s). Contractual rights, however, may be exercised by the
Annuitant pursuant to authorization by the Owner. (Such ownership rights include
the right to change the allocation of investment options, or designations of the
Beneficiary, Contingent Beneficiary, the Annuity Payment Options or the Annuity
Commencement Date.)
CONTRACT VALUE- The sum of the value of all Variable Account Accumulation Units
attributable to the Contract plus any amount held under the Contract in the
Fixed Account.
CONTRACT YEAR- Each year the Contract remains in force commencing with the Date
of Issue.
DATE OF ISSUE- The date shown as the Date of Issue on the Data Page of the
Contract.
DEATH BENEFIT- The benefit payable upon the death of the Annuitant prior to the
Annuitization Date. If the Annuitant dies after the Annuitization Date, any
benefit that may be payable shall be as specified in the Annuity Payment Option
elected.
DISTRIBUTION- Any payment of part or all of the Contract Value.
FIXED ACCOUNT- The Fixed Account is made up of all assets of the Company other
than those in the Variable Account or any other segregated asset account of the
Company.
FIXED ANNUITY- An annuity providing for payments which are guaranteed by the
Company as to dollar amount during Annuitization.
HOME OFFICE- The main office of the Company located in Columbus, Ohio.
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<PAGE> 5
INDIVIDUAL RETIREMENT ACCOUNT (IRA)- A custodial account which qualifies for
favorable tax treatment under Section 408 of the Code. The Contracts described
in this prospectus may be purchased as assets of such accounts.
INTEREST RATE GUARANTEE PERIOD- An Interest Rate Guarantee Period is the
interval of time during which an interest rate credited to the Fixed Account
under the Contract is guaranteed to remain the same. For new Purchase Payments
to the Fixed Account or transfers from the Variable Account, this period begins
upon the date of deposit or transfer and ends at the end of the calendar quarter
at least one year (but not more than 15 months) from deposit or transfer. At the
end of an Interest Rate Guarantee Period, a new interest rate is declared with
an Interest Rate Guarantee Period starting at the end of the prior period and
ending at the end of the calendar quarter one year later.
MUTUAL FUND (FUND) - A registered management investment company in which the
assets of the Sub-Accounts of the Variable Account will be invested.
PURCHASE PAYMENT- A deposit of new value into the Contract. The term "Purchase
Payment" does not include transfers between the Variable Account and Fixed
Account, or among the Sub-Accounts.
QUALIFIED PLANS- Retirement Plans which receive favorable tax treatment under
Sections 401 or 403(a) of the Code.
SUB-ACCOUNTS- Separate and distinct divisions of the Variable Account, to which
specific underlying Mutual Fund shares are allocated and for which Accumulation
Units and Annuity Units are separately maintained.
TAX SHELTERED ANNUITY- An annuity which qualifies for favorable tax treatment
under Section 403(b) of the Code.
VALUATION DATE- Each day the New York Stock Exchange and the Company's Home
Office is open for business or any other day during which there is a sufficient
degree of trading of the Variable Account's underlying Mutual Fund shares that
the current net asset value of its Accumulation Units might be materially
affected.
VALUATION PERIOD- The period of time commencing at the close of business of the
New York Stock Exchange and ending at the close of business for the next
succeeding Valuation Date.
VARIABLE ACCOUNT- The Nationwide Variable Account, a separate investment account
of the Company into which Variable Account Purchase Payments are allocated. The
Variable Account is divided into Sub-Accounts, each of which invests in shares
of a separate underlying Mutual Fund.
VARIABLE ANNUITY- An annuity providing for payments which vary in amount with
the investment experience of the Variable Account.
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<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS ................................................. 2
SUMMARY OF CONTRACT EXPENSES .............................................. 5
UNDERLYING MUTUAL FUND ANNUAL EXPENSES .................................... 6
SYNOPSIS .................................................................. 9
NATIONWIDE LIFE INSURANCE COMPANY ......................................... 10
THE VARIABLE ACCOUNT ...................................................... 10
Underlying Mutual Fund Options ....................................... 10
Voting Rights ........................................................ 10
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND
OTHER DEDUCTIONS .......................................................... 11
Mortality Risk Charge ................................................ 11
Expense Risk Charge .................................................. 11
Contingent Deferred Sales Charge ..................................... 11
Administration Charge ................................................ 12
Premium Taxes ........................................................ 12
Expenses of Variable Account ......................................... 12
Investments of the Variable Account .................................. 12
Right to Revoke ...................................................... 13
Transfers ............................................................ 13
Loan Privilege ....................................................... 13
Beneficiary Provisions ............................................... 15
Ownership Provisions ................................................. 15
Substitution of Securities ........................................... 15
Inquiries ............................................................ 15
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT ................................... 15
Value of an Annuity Unit ............................................. 15
Assumed Investment Rate .............................................. 16
Frequency and Amount of Annuity Payments ............................. 16
Annuitization Date ................................................... 16
Change in Annuitization Date ......................................... 16
Change in Form of Annuity ............................................ 16
Annuity Payment Options .............................................. 16
Death of Annuitant Prior to the Annuitization
Date ................................................................. 17
Death of Annuitant After the Annuitization
Date ................................................................. 17
Required Distributions for IRA Accounts .............................. 17
Required Distributions for Qualified Contracts ....................... 18
Generation-Skipping Transfers ........................................ 19
GENERAL INFORMATION ....................................................... 19
Services ............................................................. 19
Statements and Reports ............................................... 20
Allocation of Purchase Payments and Contract
Value ................................................................ 20
Value of a Variable Account Accumulation Unit ........................ 21
Net Investment Factor ................................................ 21
Valuation of Assets .................................................. 21
Determining the Contract Value ....................................... 21
Surrender (Redemption) ............................................... 22
Taxes ................................................................ 22
IRAs ................................................................. 22
Advertising .......................................................... 23
LEGAL PROCEEDINGS ......................................................... 24
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL
INFORMATION ............................................................... 24
APPENDIX A ................................................................ 25
APPENDIX B ................................................................ 27
</TABLE>
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<PAGE> 7
SUMMARY OF CONTRACT EXPENSES
Maximum Contingent Deferred Sales Charge(1)....... 7 %
-------
RANGE OF CONTINGENT DEFERRED SALES CHARGE OVER TIME
<TABLE>
<CAPTION>
Number of Completed Years from Contingent Deferred Sales Load
Date of Purchase Payment Percentage
<S> <C>
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
</TABLE>
VARIABLE ACCOUNT ANNUAL EXPENSES
<TABLE>
<S> <C>
Mortality and Expense Risk Charges............ 1.25 %
-------
Administration Charge......................... 0.15 %
-------
Total Variable Account Annual Expenses....... 1.40 %
-------
</TABLE>
(1) Each Contract Year, the Owner (or Annuitant, if so authorized) may withdraw
without a Contingent Deferred Sales Charge (CDSC) an amount equal to 10% of
the total sum of all Purchase Payments made to the Contract at the time of
withdrawal. In addition, any amount withdrawn in order for the Contract to
meet minimum Distribution requirements under the Code shall be free of CDSC.
Withdrawals may be restricted for Contracts issued pursuant to the terms of
a Tax Sheltered Annuity. This CDSC-free withdrawal privilege is
non-cumulative, that is, free amounts not taken during any given Contract
Year cannot be taken as free amounts in a subsequent Contract Year (see
"Contingent Deferred Sales Charge").
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<PAGE> 8
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(2)
<TABLE>
<CAPTION>
Total Portfolio
Management Other Company
Fees Expenses Expenses
- ------------------------------------------------------------------------
<S> <C> <C> <C>
DELCHESTER FUND-INSTITUTIONAL 0.58% 0.25% 0.83%
CLASS
- ------------------------------------------------------------------------
DREYFUS A BONDS PLUS, INC. 0.65% 0.34% 0.99%
- ------------------------------------------------------------------------
DREYFUS S & P 500 INDEX FUND
(FORMERLY PEOPLES INDEX 0.10% 0.45% 0.55%
FUND(R), INC.)
- ------------------------------------------------------------------------
THE DREYFUS THIRD CENTURY 0.75% 0.37% 1.12%
FUND, INC.
- ------------------------------------------------------------------------
THE EVERGREEN TOTAL RETURN 0.98% 0.21% 1.19%
FUND
- ------------------------------------------------------------------------
FIDELITY ASSET MANAGER 0.72% 0.25% 0.97%
- ------------------------------------------------------------------------
FIDELITY EQUITY-INCOME FUND 0.44% 0.24% 0.68%
- ------------------------------------------------------------------------
FIDELITY MAGELLAN(R) FUND 0.75% 0.22% 0.97%
- ------------------------------------------------------------------------
FIDELITY PURITAN FUND 0.52% 0.77% 1.29%
- ------------------------------------------------------------------------
JANUS TWENTY FUND 0.67% 0.35% 1.02%
- ------------------------------------------------------------------------
MFS(R) WORLD GOVERNMENTS FUND 0.90% 0.71% 1.61%
- ------------------------------------------------------------------------
NATIONWIDE(R) BOND FUND 0.50% 0.21% 0.71%
- ------------------------------------------------------------------------
NATIONWIDE(R) FUND 0.50% 0.13% 0.63%
- ------------------------------------------------------------------------
NATIONWIDE(R) GROWTH FUND 0.50% 0.16% 0.66%
- ------------------------------------------------------------------------
NATIONWIDE(R) MONEY MARKET 0.45% 0.17% 0.62%
- ------------------------------------------------------------------------
NEUBERGER & BERMAN GUARDIAN 0.72% 0.13% 0.85%
FUND, INC.
- ------------------------------------------------------------------------
NEUBERGER & BERMAN LIMITED
MATURITY BOND FUND 0.51% 0.19% 0.70%
- ------------------------------------------------------------------------
NEUBERGER & BERMAN PARTNERS 0.76% 0.11% 0.87%
FUND, INC.
- ------------------------------------------------------------------------
OPPENHEIMER GLOBAL FUND 0.72% 0.48% 1.20%
- ------------------------------------------------------------------------
PHOENIX BALANCED FUND SERIES 0.50% 0.52% 1.02%
- ------------------------------------------------------------------------
STRONG TOTAL RETURN FUND, 0.80% 0.34% 1.14%
INC.
- ------------------------------------------------------------------------
TEMPLETON FOREIGN FUND 0.63% 0.52% 1.15%
- ------------------------------------------------------------------------
TWENTIETH CENTURY GROWTH 1.00% 0.00% 1.00%
INVESTORS
- ------------------------------------------------------------------------
TWENTIETH CENTURY 1.77% 0.00% 1.77%
INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------------------
TWENTIETH CENTURY ULTRA 1.00% 0.00% 1.00%
INVESTORS
- ------------------------------------------------------------------------
TWENTIETH CENTURY U.S.
GOVERNMENTS SHORT TERM 0.70% 0.00% 0.70%
- ------------------------------------------------------------------------
</TABLE>
(2) The Mutual Fund expenses shown above are assessed at the underlying Mutual
Fund level and are not direct charges against Variable Account assets or
reductions from Contract Values. These underlying Mutual Fund expenses are
taken into consideration in computing each underlying Mutual Fund's net asset
value, which is the share price used to calculate the unit values of the
Variable Account. The management fees and other expenses, some of which may be
subject to fee waivers or expense reimbursements, are more fully described in
the prospectuses for each underlying Mutual Fund. The information relating to
the underlying Mutual Fund expenses was provided by the underlying Mutual Fund
and was not independently verified by the Company.
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<PAGE> 9
EXAMPLE
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 investment and 5% annual return. These
dollar figures are illustrative only and should not be considered a
representation of past or future expenses. Actual expenses may be greater or
lesser than those shown below.
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER YOUR IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE CONTRACT AT THE END OF THE CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ------------------------------------------------------------------------------------------------------------
1 YR. 3 5 YRS. 10 YRS. 1 YR. 3 5 YRS. 10 YRS. 1 YR. 3 5 YRS. 10 YRS.
YRS. YRS. YRS.
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delchester 86 117 150 264 23 72 123 264 72 123 264
xFund-Inst'l *
- ------------------------------------------------------------------------------------------------------------
Dreyfus A 88 122 159 281 25 77 132 281 77 132 281
Bonds Plus *
- ------------------------------------------------------------------------------------------------------------
Dreyfus S
& P 500 83 108 136 234 20 63 109 234 * 63 109 234
Index Fund
(Formerly
Peoples
Index
Fund), Inc.(R)
- ------------------------------------------------------------------------------------------------------------
The 89 126 166 294 26 81 139 294 81 139 294
Dreyfus *
Third
Century
Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
The 90 128 169 302 27 83 142 302 83 142 302
Evergreen *
Total
Return Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity 88 122 158 279 25 77 131 279 77 131 279
Asset *
Manager(TM)
- ------------------------------------------------------------------------------------------------------------
Fidelity 85 112 143 248 22 67 116 248 67 116 248
Equity-Income *
Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity 88 122 158 279 25 77 131 279 77 131 279
Magellan *
Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity 91 132 175 312 28 87 148 312 87 148 312
Puritan *
Fund
- ------------------------------------------------------------------------------------------------------------
Janus 88 123 160 284 25 78 133 284 78 133 284
Twenty Fund *
- ------------------------------------------------------------------------------------------------------------
MFS(R) 95 142 191 344 32 97 164 344 97 164 344
World *
Governments
Fund
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) 85 113 144 251 22 68 117 251 68 117 251
Bond Fund *
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) 84 111 140 243 21 66 113 243 66 113 243
Fund *
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) 85 112 141 246 22 67 114 246 67 114 246
Growth Fund *
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) 84 110 139 242 21 65 112 242 65 112 242
Money *
Market Fund
- ------------- ----------------------------------------------------------------------------------------------
Neuberger 87 118 152 266 24 73 125 266 73 125 266
& Berman *
Guardian
Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Neuberger
& Berman 85 113 144 250 22 68 117 250 * 68 117 250
Limited
Maturity
Bond Fund
- ------------------------------------------------------------------------------------------------------------
Neuberger 87 118 153 268 24 73 126 268 73 126 268
& Berman *
Partners
Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Oppenheimer 90 129 170 303 27 84 143 303 84 143 303
Global Fund *
- ------------------------------------------------------------------------------------------------------------
Phoenix 88 123 160 284 25 78 133 284 78 133 284
Balanced *
Fund Series
- ------------------------------------------------------------------------------------------------------------
Strong 90 127 167 297 27 82 140 297 82 140 297
Total *
Return
Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Templeton 90 127 167 298 27 82 140 298 82 140 298
Foreign *
Fund
- ------------------------------------------------------------------------------------------------------------
Twentieth 88 122 159 282 25 77 132 282 77 132 282
Century *
Growth
Investors
- ------------------------------------------------------------------------------------------------------------
Twentieth 96 147 199 359 33 10 2172 359 10 2172 359
Century *
Int'l
Equity Fund
- ------------------------------------------------------------------------------------------------------------
Twentieth 88 122 159 282 25 77 132 282 77 132 282
Century *
Ultra
Investors
- ------------------------------------------------------------------------------------------------------------
Twentieth
Century 85 113 144 250 22 68 117 250 * 68 117 250
U.S.
Governments
Short-Term
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 10
* The Contracts sold under this prospectus do not permit annuitizations during
the first two Contract years.
The purpose of the Summary of Contract Expenses and Example is to depict the
various costs and expenses that will be borne directly or indirectly. The
expenses of the Nationwide Variable Account as well as those of the underlying
Mutual Funds are reflected in the table. For more complete descriptions of the
expenses of the Nationwide Variable Account, see "Variable Account Charges,
Purchase Payments, and Other Deductions." For more complete information
regarding expenses paid out of the assets of a particular underlying Mutual
Fund, see the underlying Mutual Fund's prospectus. Deductions for premium taxes
may also apply but are not reflected in the Example shown above (see "Premium
Taxes").
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<PAGE> 11
SYNOPSIS
The Company does not deduct a sales charge from Purchase Payments made for
these Contracts. However, if any part of the Contract Value of such Contracts is
surrendered, the Company will, with certain exceptions, deduct from the Contract
Value a Contingent Deferred Sales Charge not to exceed 7% of the lesser of the
total of all Purchase Payments made within 84 months prior to the date of the
request to surrender, or the amount surrendered. This charge, when applicable,
is imposed to permit the Company to recover sales expenses which have been
advanced by the Company (see "Contingent Deferred Sales Charge").
The Company will also assess an Administration Charge equal to an annual
rate of 0.15% of the daily net asset value of the Variable Account. This charge
is to reimburse the Company for administrative expenses related to the issue and
maintenance of the Contracts. The Company does not expect to recover from this
charge an amount in excess of accumulated administrative expenses (see
"Administration Charge").
The Company deducts a Mortality Risk Charge equal to an annual rate of 0.80%
of the daily net asset value of the Variable Account for mortality risk assumed
by the Company (see "Mortality Risk Charge").
The Company deducts an Expense Risk Charge equal to an annual rate of 0.45%
of the daily net asset value of the Variable Account as compensation for the
Company's risk in undertaking not to increase administrative charges on the
Contracts regardless of the actual administrative costs (see "Expense Risk
Charge").
The initial Purchase Payment must be at least $15,000 and subsequent
Purchase Payments, if any, must be at least $1,000. Subsequent Purchase Payments
are not permitted for Contracts purchased in the states of New York, Oregon, and
Washington. The cumulative total of all Purchase Payments under Contracts issued
on the life of any one Designated Annuitant may not exceed $1,000,000 without
the prior consent of the Company (see "Allocation of Purchase Payments and
Contract Value").
If the Contract Value at the Annuitization Date is less than $5000, the
Contract Value may be distributed in one lump sum in lieu of annuity payments.
If any annuity payment would be less than $50, the Company shall have the right
to change the frequency of payments to such intervals as will result in payments
of at least $50. In no event, however, will annuity payments be made less
frequently than annually (see "Frequency and Amount of Annuity Payments").
Premium taxes payable to any governmental entity will be charged against the
Contracts (see "Premium Taxes"). If any such premium taxes are payable by the
Company at the time Purchase Payments are made, an equal premium tax deduction
will be made from the Contract prior to the allocation of any Purchase Payment
to any underlying Mutual Fund option.
To be sure that the Owner (or Annuitant, if the Annuitant has been
authorized to exercise ownership rights under the Contract) is satisfied with
the Contract, the Owner (or Annuitant, if so authorized) has a ten day free
look. Within ten days of the day the Contract is received, it may be returned to
the Home Office of the Company, at the address shown on page 1 of this
prospectus. When the Contract is received by the Company, the Company will void
the Contract and refund the Contract Value in full unless otherwise required by
state and/or federal law (see "Right to Revoke").
9
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<PAGE> 12
NATIONWIDE LIFE INSURANCE COMPANY
The Company is a stock life insurance company organized under the laws of
the State of Ohio in March 1929. The Company is a member of the Nationwide
Insurance Enterprise, with its Home Office at One Nationwide Plaza, Columbus,
Ohio 43216-6609. The Company offers a complete line of life insurance, including
annuities and accident and health insurance. It is admitted to do business in
the District of Columbia, Puerto Rico, and in all states.
THE VARIABLE ACCOUNT
The Variable Account was established by the Company on March 3, 1976,
pursuant to the provisions of Ohio law. The Company has caused the Variable
Account to be registered with the Securities and Exchange Commission as a unit
investment trust pursuant to the provisions of the Investment Company Act of
1940. Such registration does not involve supervision of the management of the
Variable Account or the Company by the Securities and Exchange Commission.
The Variable Account is a separate investment account of the Company and, as
such, is not chargeable with liabilities arising out of any other business the
Company may conduct. The Company does not guarantee the investment performance
of the Variable Account. Obligations under the Contracts, however, are
obligations of the Company. Income, gains and losses, whether or not realized,
from the assets of the Variable Account are, in accordance with the Contracts,
credited to or charged against the Variable Account without regard to other
income, gains, or losses of the Company.
Purchase Payments are allocated within the Variable Account among one or
more Sub-Accounts made up of shares in the underlying Mutual Fund options.
UNDERLYING MUTUAL FUND OPTIONS
Contract Owners (or Annuitants, if so authorized) may choose from among a
number of different Sub-Account options (see Appendix B which contains a summary
of investment objectives for each underlying Mutual Fund held in the
Sub-Accounts). More detailed information may be found in the current prospectus
for each underlying Mutual Fund offered. Such a prospectus for the underlying
Mutual Fund option(s) being considered must accompany this prospectus and should
be read in conjunction herewith. A copy of each prospectus may be obtained
without charge from Nationwide Life Insurance Company by calling 1-800-848-6331,
TDD 1-800-238-3035 or writing P.O. Box 16609, Columbus, Ohio 43216-6609.
The underlying Mutual Fund options are available to the general public.
Based on the Company's marketing plan for the Contracts (the Contracts will be
exclusively marketed through IRA custodial accounts or as Qualified Plan
Investments), the Company does not anticipate any disadvantages to this. There
is, however, a possibility that a material conflict may arise between those with
interests in the Variable Account and the various individuals and entities
holding shares of the Mutual Funds. A conflict may occur due to a change in law
affecting the operations of variable annuity separate accounts, differences in
the voting instructions of the Contract Owners (or Annuitants, if so authorized)
and others maintaining a voting interest in the underlying Mutual Funds, or some
other reason. In the event of conflict, the Company will take any steps
necessary to protect those with interests in the Contracts including withdrawal
of the Variable Account from participation in the underlying Mutual Fund(s)
which are involved in the conflict.
VOTING RIGHTS
Voting rights under the Contracts apply ONLY with respect to Purchase
Payments or accumulated amounts allocated to the Variable Account.
In accordance with its view of present applicable law, the Company will vote
the shares of the underlying Mutual Funds held in the Variable Account at
regular and special meetings of the shareholders of the underlying Mutual Funds.
These shares will be voted in accordance with instruction received from Contract
Owners who have an interest in the Variable Account. If the Investment Company
Act of 1940 or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as result the Company determines that
it is permitted to vote the shares of the underlying Mutual Funds in its own
right, it may elect to do so.
The person having the voting interest under a Contract shall be the Contract
Owner. The number of shares held in the Variable Account which are attributable
to each Contract Owner is determined by dividing the Contract Owner's interest
in the Variable Account by the net asset value of the applicable shares of the
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underlying Mutual Funds. The number of shares which a Contract Owner has the
right to vote will be determined as of a date chosen by the Company not more
than 90 days prior to the meeting of the underlying Mutual Fund and voting
instructions will be solicited by written communication at least 21 days prior
to such meeting.
Underlying Mutual Fund shares held in the Variable Account as to which no
timely instructions are received will be voted by the Company in the same
proportion as the voting instructions which are received with respect to all
Contracts participating in the Variable Account.
Each person having a voting interest in the Variable Account will receive
periodic reports relating to the underlying Mutual Fund, proxy material and a
form with which to give such voting instructions.
In those cases in which ownership rights may be exercised by the Annuitant,
the Company will accept voting instructions from the Annuitant and provide all
necessary information to the Annuitant as if he or she was the Contract Owner.
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS
MORTALITY RISK CHARGE
The Company assumes a "mortality risk" by virtue of annuity rates
incorporated into the Contract which cannot be changed regardless of the death
rates of persons receiving annuity payments or of the general population.
For assuming this mortality risk, the Company deducts a Mortality Risk
Charge from the Variable Account. This amount is computed on a daily basis and
is equal on to an annual rate of 0.80% of the daily net asset value of the
Variable Account. The Company expects to generate a profit through assessing
this charge.
EXPENSE RISK CHARGE
The Company will not increase charges for administration of the Contracts
regardless of its actual expenses. For assuming this expense risk, the Company
deducts an Expense Risk Charge from the Variable Account. This amount is
computed on a daily basis and is equal to an annual rate of 0.45% of the daily
net asset value of the Variable Account. The Company expects to generate a
profit through assessing this charge.
CONTINGENT DEFERRED SALES CHARGE
No deduction for a sales charge is made from the Purchase Payments for these
Contracts. However, if any part of the Contract Value of such Contracts is
surrendered, the Company will, with certain exceptions, deduct from the Contract
Value a Contingent Deferred Sales Charge not to exceed 7% of the lesser of the
total of all Purchase Payments made within 84 months prior to the date of the
request to surrender, or the amount surrendered. The Contingent Deferred Sales
Charge, when it is applicable, will be used to cover expenses relating to the
sale of the Contracts, including commissions paid to sales personnel, the costs
of preparation of sales literature and other promotional activity. The Company
attempts to recover its distribution costs relating to the sale of the Contracts
from the Contingent Deferred Sales Charge. Any shortfall will be made up from
the general account of the Company, which may indirectly include portions of the
Mortality and Expense Risk Charges, since the Company expects to generate a
profit from these charges. The maximum amount that may be paid to a selling
agent on the sale of these Contracts is 6.25% of Purchase Payments.
If part or all of the Contract Value is surrendered, a Contingent Deferred
Sales Charge may be deducted by the Company. The Contingent Deferred Sales
Charge is calculated by multiplying the applicable Contingent Deferred Sales
Charge percentages noted below by the Purchase Payments that are surrendered.
For purposes of calculating the Contingent Deferred Sales Charge, surrenders are
considered to come first from the oldest Purchase Payment made to the Contract,
then the next oldest Purchase Payment and so forth, with any earnings
attributable to such Purchase Payments considered only after all Purchase
Payments made to the Contract have been considered. For tax purposes, a
surrender is usually treated as a withdrawal of earnings first. This charge will
apply in the amounts set forth below to Purchase Payments within the time
periods set forth.
The Contingent Deferred Sales Charge applies to Purchase Payments as follows:
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<TABLE>
<CAPTION>
NUMBER OF COMPLETED CONTINGENT DEFERRED NUMBER OF COMPLETED CONTINGENT DEFERRED
YEARS FROM DATE OF SALES CHARGE YEARS FROM DATE OF SALES CHARGE
PURCHASE PAYMENT PERCENTAGE PURCHASE PAYMENT PERCENTAGE
<S> <C> <C> <C>
0 7% 4 3%
1 6% 5 2%
2 5% 6 1%
3 4% 7 0%
</TABLE>
Each Contract Year, the Owner (or Annuitant, if so authorized) may withdraw
without a Contingent Deferred Sales Charge (CDSC) an amount equal to 10% of the
total sum of all Purchase Payments made to the Contract at the time of
withdrawal. In addition, any amount withdrawn in order for the Contract to meet
minimum Distribution requirements under the Code shall be free of CDSC.
Withdrawals may be restricted for Contracts issued pursuant to the terms of a
Tax Sheltered Annuity. This CDSC-free withdrawal privilege is non-cumulative,
that is, free amounts not taken during any given Contract Year cannot be taken
as free amounts in a subsequent Contract Year (see "Contingent Deferred Sales
Charge").
No Contingent Deferred Sales Charge will be deducted: (1) upon the
Annuitization of Contracts which have been in force for at least two years, (2)
upon payment of a death benefit pursuant to the death of the Designated
Annuitant, or (3) from any values which have been held under Contract for at
least 84 months. In addition, no Contingent Deferred Sales Charge applies upon
the transfer of value amount the Sub-Accounts or between the Fixed Account and
the Variable Account and vice-versa.
When a Contract described in this prospectus is exchanged for another
Contract issued by the Company or any of its affiliate insurance companies, of
the type and class which the Company determined Is eligible for such exchange,
the Company will waive the Contingent Deferred Sales Charge on the first
Contract.
ADMINISTRATION CHARGE
The Company assesses an Administration Charge equal on an annual basis to
0.15% of the daily net asset value of the Variable Account. The Administration
Charge is designed only to reimburse the Company for administrative expenses
related to the issuance and maintenance of the Contract. The Company will
monitor this charge to ensure that it does not exceed annual administration
expenses.
PREMIUM TAXES
The Company will charge against the Contract Value the amount of any premium
taxes levied by a state or any other governmental entity upon Purchase Payments
received by the Company. Premium taxes currently imposed by certain
jurisdictions range from 0% to 3.5%. This range is subject to change. The method
used to recoup premium tax expense will be determined by the Company at its sole
discretion and in compliance with applicable state law. The Company currently
deducts such charges from an Annuitant's Contract Value either: (1) at the time
the Contract is surrendered, (2) at Annuitization, or (3) at such earlier date
as the Company may become subject to such taxes.
EXPENSES OF VARIABLE ACCOUNT
The Variable Account is responsible for the following types of expenses:
(1) administrative expenses relating to the issuance and maintenance of the
Contract; (2) mortality risk charge associated with guaranteeing the annuity
purchase rates at issue for the life of the Contracts; and (3) expense risk
charge associated with guaranteeing that the Mortality Risk, Expense Risk and
Administration Charges described in this prospectus will not be changed
regardless of actual expenses. If these charges are insufficient to cover these
expenses, the loss will be borne by the Company.
Deductions from and expenses paid out of the assets of the underlying Mutual
Funds are described in each of the underlying Mutual Funds' prospectuses.
INVESTMENTS OF THE VARIABLE ACCOUNT
At the time of purchase, Purchase Payments are allocated among one or more
of the Sub-Accounts which consist of shares in the underlying Mutual Funds.
Shares of the respective underlying Mutual Funds are purchased at net asset
value for the respective Sub-Account(s) and converted into Accumulation Units.
At the
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time of purchase, the Owner (or Annuitant, if applicable) designates the
underlying Mutual Funds to which he or she desires to have Purchase Payments
allocated. The election as to allocation of Purchase Payments or the election to
exchange amounts among the Sub-Account options are subject to such terms and
conditions applicable to such transactions as may be imposed by each of the
underlying Mutual Funds, in addition to those set forth in the Contracts.
RIGHT TO REVOKE
The Owner (or Annuitant, if so authorized) may revoke the Contract at any
time between the Date of Issue and the date 10 days after receipt of the
Contract and receive a refund of the Contract Value unless otherwise required by
state and/or federal law. In order to revoke the Contract, it must be mailed or
delivered to the Home Office of the Company at the mailing address shown on page
1 of this Prospectus. Mailing or delivery must occur on or before 10 days after
receipt of the Contract for revocation to be effective. In order to revoke the
Contract, if it has not been received, written notice must be mailed or
delivered to the Home Office of the Company at the mailing address shown on page
1 of this Prospectus.
The liability of the Variable Account under this provision is limited to the
Contract Value in each Sub-Account on the date of revocation. Any additional
amounts refunded will be paid by the Company.
TRANSFERS
The Company currently allows transfers of up to 100% of the Contract Value
from the Variable Account to the Fixed Account without penalty or adjustment.
However, the Company reserves the right to restrict transfers from the Variable
Account to the Fixed Account to 10% of the Variable Account Contract Value for
any 12 month period. All amounts transferred to the Fixed Account must remain on
deposit in the Fixed Account until the expiration of the Interest Rate Guarantee
Period. Transfers from the Fixed Account may not be made prior to the first
Contract Anniversary. The Interest Rate Guarantee Period for any amount
allocated to the Fixed Account expires on the final day of a calendar quarter
during which the one year anniversary of the allocation of the Fixed Account
occurs. Transfers must also be made prior to the Annuitization Date. For all
transfers involving the Variable Account, the Annuitant's value in each
Sub-Account will be determined as of the date the transfer request is received
in the Home Office in good order. The Company reserves the right to refuse
transfers or Purchase Payments into the Fixed Account if the Fixed Account is
greater than or equal to 30% of the Contract Value.
At the maturity of an Interest Rate Guarantee Period, a portion of the value
of the Fixed Account may be transferred to the Variable Account. The amount that
may be transferred from the Fixed Account to the Variable Account will be
determined by the Company, at its sole discretion, but will not be less than 10%
of the total value of the portion of the Fixed Account that is maturing and will
be declared upon the expiration date of the then current Interest Rate Guarantee
Period. The specific percentage will be declared upon the expiration date of the
Interest Rate Guarantee Period. Transfers from the Fixed Account must be made
within 45 days after the expiration date of the Interest Rate Guarantee Period.
If a Dollar Cost Averaging agreement with the Company (see "Dollar Cost
Averaging") has been established the terms of that agreement will govern
transfers from the Fixed Account to the Variable Account.
Transfers may be made either in writing or, in states allowing such
transfers, by telephone. This telephone exchange privilege is made available
without any affirmative election of the privilege. The Company will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine. Such procedures may include any or all of the following, or such other
procedures as the Company may, from time to time, deem reasonable: requesting
identifying information, such as name, contract number, Social Security number,
and/or personal identification number; tape recording all telephone
transactions; and providing written confirmation thereof to both the Annuitant
(or Owner, if applicable) and any agent of record, at the last address of
record. The Company will not be liable for following instructions communicated
by telephone which it reasonably believes to be genuine. Any losses incurred
pursuant to actions taken by the Company in reliance on telephone instructions
reasonably believed to be genuine shall not be borne by the Company. The Company
may withdraw the telephone exchange privilege upon 30 days' written notice to
Annuitants.
LOAN PRIVILEGE
Prior to the Annuitization Date, the Owner of a Qualified Contract may
receive a loan from the Contract Value subject to the terms of the Contract,
the Plan, and the Code, which may impose restrictions on loans.
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Loans from Qualified Contracts are available beginning 30 days after the
Date of Issue. The Contract Owner may borrow a minimum of $1,000. In non-ERISA
plans, for Contract Values up to $20,000, the maximum loan balance which may be
outstanding at any time is 80% of the Contract Value, but not more than $10,000.
If the Contract Value is $20,000 or more, the maximum loan balance which may be
outstanding at any time is 50% of the Contract Value, but not more than $50,000.
For ERISA plans, the maximum loan balance which may be outstanding at any time
is 50% of the Contract Value, but not more than $50,000. The $50,000 limit will
be reduced by the highest loan balances owed during the prior one-year period.
Additional loans are subject to the contract minimum amount. The aggregate of
all loans may not exceed the Contract Value limitations stated above.
For salary reduction Qualified Contracts, loans may only be secured by the
Contract Value. For loans from Qualified Contracts the Company reserves the
right to limit a loan to 50% of the Contract Value subject to the acceptance by
the Contract Owner of the Company's loan agreement. Where permitted, the Company
may require other named collateral where the loan from a Contract exceeds 50% of
the Contract Value.
All loans are made from a collateral fixed account. An amount equal to the
principal amount of the loan will be transferred to the collateral fixed
account. Unless instructed to the contrary by the Contract Owner, the Company
will first transfer to the collateral fixed account the Variable Account units
from the Contract Owner's investment options in proportion to the assets in each
option until the required balance is reached or all such variable units are
exhausted. The remaining required collateral will next be transferred from the
Fixed Account. No withdrawal charges are deducted at the time of the loan, or on
the transfer from the Variable Account to the collateral fixed account.
Until the loan has been repaid in full, that portion of the collateral fixed
account equal to the outstanding loan balance shall be credited with interest at
a rate 2.25% less than the loan interest rate fixed by the Company for the term
of the loan. However, the interest rate credited to the collateral fixed account
will never be less than 3.0%. Specific loan terms are disclosed at the time of
loan application or loan issuance.
Loans must be repaid in substantially level payments, not less frequently
than quarterly, within five years. Loans used to purchase the principal
residence of the Contract Owner must be repaid within 15 years. During the loan
term, the outstanding balance of the loan will continue to earn interest at an
annual rate as specified in the loan agreement. Loan repayments will consist of
principal and interest in amounts set forth in the loan agreement. Loan
repayments will be allocated between the Fixed and Variable Accounts in the same
proportion as when the loan was made.
If the Contract is surrendered while the loan is outstanding, the surrender
value will be reduced by the amount of the loan outstanding plus accrued
interest. If the Contract Owner/Annuitant dies while the loan is outstanding,
the Death Benefit will be reduced by the amount of the loan outstanding plus
accrued interest. If annuity payments start while the loan is outstanding, the
Contract Value will be reduced by the amount of the outstanding loan plus
accrued interest. Until the loan is repaid, the Company reserves the right to
restrict any transfer of the Contract which would otherwise qualify as a
transfer as permitted in the Code.
If a loan payment is not made when due, interest will continue to accrue. A
grace period may be available under the terms of the loan agreement. If a loan
payment is not made when due, or by the end of the applicable grace period, then
that payment, which may be a single periodic payment or payment of the entire
loan, will be treated as a deemed Distribution, as permitted by law, may be
taxable to the borrower, and may be subject to the early withdrawal tax penalty.
Interest which subsequently accrues on defaulted amounts may also be treated as
additional deemed Distributions each year. Any defaulted amounts, plus accrued
interest, will be deducted from the Contract when the Participant becomes
eligible for a Distribution of at least that amount, and this amount may again
be treated as a Distribution where required by law. Additional loans may not be
available while a previous loan remains in default.
Loans may also be subject to additional limitations or restrictions under
the terms of the employer's plan. Loans permitted under this Contract may still
be taxable in whole or part if the Participant has additional loans from other
plans or contracts. The Company will calculate the maximum nontaxable loan based
on the information provided by the Participant or the Employer.
Loan repayments must be identified as such or else they will be treated as
Purchase Payments and will not be used to reduce the outstanding loan principal
or interest due. The Company reserves the right to modify the term or procedures
associated with the loan in the event of a change in the laws or regulations
relating to
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the treatment of loans. The Company also reserves the right to assess a loan
processing fee. Individual Retirement Annuities and Non-Qualified Contracts are
not eligible for loans.
BENEFICIARY PROVISIONS
The Beneficiary is the person or persons who may receive certain benefits
under the Contract in the event the Annuitant dies prior to the Annuitization
Date. If more than one Beneficiary survives the Annuitant, each will share
equally unless otherwise specified in the Beneficiary designation. If no
Beneficiary survives the Annuitant, all rights and interest of the Beneficiary
shall vest in the Contingent Beneficiary, and if more than one Contingent
Beneficiary survives, each will share equally unless otherwise specified in the
Contingent Beneficiary designation. If a Contingent Beneficiary is not named or
predeceases the Annuitant, all rights and interest of the Contingent Beneficiary
will vest with the Annuitant's estate. The Annuitant may change the Beneficiary
or Contingent Beneficiary from time to time, by written notice to the Company.
The change, upon receipt by the Company at its Home Office, will take effect as
of the time the written notice was signed, whether or not the Annuitant is
living at the time of recording, but without further liability as to any payment
or settlement made by the Company before receipt of such change.
OWNERSHIP PROVISIONS
Unless otherwise provided, the Owner has all rights under the Contract. The
Owner may, however, authorize the Annuitant to exercise some or all of the
rights under the Contract. The exercise of any ownership right in the Contract
(including the right to surrender or partially surrender the Contract, to change
the Beneficiary, the Contingent Beneficiary, the Annuity Payment Option or the
Annuitization Date) shall require a written indication of an intent to exercise
that right, which must be signed by the Annuitant.
SUBSTITUTION OF SECURITIES
If the shares of the underlying Mutual Funds described in this Prospectus
should no longer be available for investment by the Variable Account or if, in
the judgment of the Company's management, further investment in such underlying
Mutual Fund shares should become inappropriate, the Company may eliminate
Sub-Accounts, combine two or more Sub-Accounts, or substitute one or more
underlying Mutual Fund for other underlying Mutual Fund shares already purchased
or to be purchased in the future by Purchase Payments under the Contract. No
substitution of securities in the Variable Account may take place without prior
approval of the Securities and Exchange Commission, and under such requirements
as it may impose.
INQUIRIES
Inquiries may be directed to Nationwide Life Insurance Company by writing
P.O. Box 16609, Columbus, Ohio 43216-6609, or calling 1-800-848-6331, TDD
1-800-238-3035.
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT
At the Annuitization Date the Variable Account Contract Value is applied to
the Annuity Payment Option elected and the amount of the first such payment
shall be determined in accordance with the Annuity Table in the Contract.
Subsequent Variable Annuity payments vary in amount in accordance with the
investment performance of the Variable Account. The dollar amount of the first
annuity payment determined as above is divided by the value of an Annuity Unit
as of the Annuitization Date to establish the number of Annuity Units
representing each monthly annuity payment. This number of Annuity Units remains
fixed during the annuity payment period. The dollar amount of the second and
subsequent payments is not predetermined and may change from month to month. The
dollar amount of each subsequent payment is determined by multiplying the fixed
number of Annuity Units by the Annuity Unit Value for the Valuation Period in
which the payment is due. The Company guarantees that the dollar amount of each
payment after the first will not be affected by variations in mortality
experience from mortality assumptions used to determine the first payment.
VALUE OF AN ANNUITY UNIT
The value of an Annuity Unit was arbitrarily set initially at $10 when the
first underlying Mutual Fund shares were purchased. The value of an Annuity Unit
for a Sub-Account for any subsequent Valuation Period is determined by
multiplying the Annuity Unit Value for the immediately preceding Valuation
Period by the Net Investment Factor for the Valuation Period for which the
Annuity Unit Value is being calculated, and multiplying
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the result by an interest factor to neutralize the assumed investment rate of
3.5% per annum (see "Net Investment Factor").
ASSUMED INVESTMENT RATE
A 3.5% Assumed Investment Rate is built into the Annuity Tables contained in
the Contracts. A higher assumption would mean a higher initial payment but more
slowly rising or more rapidly falling subsequent payments. A lower assumption
would have the opposite effect. If the actual investment rate is at the annual
rate of 3.5%, the annuity payments will be level.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments. However, if the net
amount available to apply under any Annuity Payment Option is less than $5,000,
the Company shall have the right to pay such amount in one lump sum in lieu of
the payments otherwise provided for. In addition, if the payments provided for
would be or become less than $50, the Company shall have the right to change the
frequency of payments to such intervals as will result in payments of at least
$50. In no event will the Company make payments under an annuity option less
frequently than annually.
ANNUITIZATION DATE
The Annuitization Date is selected at the time of application. Such date may
be the first day of a calendar month or any other agreed upon date and must be
at least 2 years after the Date of Issue.
CHANGE IN ANNUITIZATION DATE
Upon prior written notice to the Company, the Annuitization Date may be
changed. The date to which such a change may be made shall be the first day of a
calendar month.
If requested in writing (see "Ownership Provisions"), and the Company
approves the request, the Annuitization Date may be deferred. The amount of the
Death Benefit will be limited to the Contract Value if the Annuitization Date is
postponed beyond the first day of the calendar month after the Annuitant's 86th
birthday.
CHANGE IN FORM OF ANNUITY
Upon prior written notice to the Company, at any time prior to the
Annuitization Date, any one of the Annuity Payment Options may be elected.
ANNUITY PAYMENT OPTIONS
Any of the following Annuity Payment Options may be elected:
Option 1-Life Annuity-An annuity payable monthly during the lifetime of the
Annuitant, ceasing with the last payment due prior to the death of the
Annuitant. IT WOULD BE POSSIBLE UNDER THIS OPTION FOR THE ANNUITANT TO
RECEIVE ONLY ONE ANNUITY PAYMENT IF HE OR SHE DIED BEFORE THE SECOND ANNUITY
PAYMENT DATE, TWO ANNUITY PAYMENTS IF HE OR SHE DIED BEFORE THE THIRD
ANNUITY PAYMENT DATE, AND SO ON.
Option 2-Joint and Last Survivor Annuity-An annuity payable monthly during
the joint lifetimes of the Annuitant and designated second person and
continuing thereafter during the lifetime of the survivor. AS IS THE CASE
UNDER OPTION 1 ABOVE, THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED
UNDER THIS OPTION. PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVING
ANNUITANT REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
Option 3-Life Annuity With 120 or 240 Monthly Payments Guaranteed-An annuity
payable monthly during the lifetime of the Annuitant with the guarantee that
if at the death of the Annuitant payments have been made for fewer than 120
or 240 months, as selected, payments will be made as follows:
(1) If the Annuitant is the payee, any guaranteed annuity payments will be
continued during the remainder of the selected period to such recipient
as chosen by the Annuitant at the time the Annuity Payment Option was
selected. In the alternative, the recipient may, at any time, elect to
have the present value of the guaranteed number of annuity payments
remaining paid in a lump sum as specified in section (2) below.
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(2) If someone other than the Annuitant is the payee, the present value,
computed as of the date on which notice of death is received by the
Company at its Home Office, of the guaranteed number of annuity
payments remaining after receipt of such notice and to which the
deceased would have been entitled had he or she not died, computed at
the Assumed Investment Rate effective in determining the Annuity
Tables, shall be paid in a lump sum.
Some of the stated Annuity Options may not be available in all states. The
Annuitant may request an alternative non-guaranteed option by giving notice in
writing prior to annuitization. If such a request is approved by the Company, it
will be permitted under the Contract.
If the Annuitant fails to elect an Annuity Payment Option, the Contract
Value will continue to accumulate. Individual Retirement Accounts and Annuities
are subject to the minimum Distribution requirements set forth in the Code.
DEATH OF ANNUITANT PRIOR TO THE ANNUITIZATION DATE
If the Annuitant dies prior to the Annuitization Date, a Death Benefit is
payable to the Beneficiary. If no Beneficiary is named (or if the Beneficiary
predeceases the Annuitant), then the Death Benefit is payable to the Contingent
Beneficiary. If no Contingent Beneficiary is named (or if the Contingent
Beneficiary predeceases the Annuitant), then the Death Benefit will be paid to
the Annuitant's estate.
The value of the Death Benefit will be determined as of the Valuation Date
coincident with or next following the date the Company receives in writing: (1)
due proof of the Annuitant's death, (2) an election for either a single sum
payment or an Annuity Payment Option, and (3) any form required by state
insurance laws. If a single sum payment is requested, payment will be made in
accordance with any applicable laws and regulations governing the payment of
Death Benefits. If an Annuity Payment Option is requested, election must be made
by the Beneficiary during the 90-day period commencing with the date written
notice is received by the Company. If no election has been made by the end of
such 90-day period commencing with the date written notice is received by the
Company, the Death Benefit will be paid in a single sum payment. If the
Annuitant dies prior to his or her 86th birthday, the value of the Death Benefit
will be the greater of (1) the sum of all Purchase Payments, made to the
Contract less any amounts surrendered, (2) the Contract Value, or (3) the
Contract Value as of the most recent five-year Contract Anniversary, less any
amounts surrendered since the most recent five-year Contract Anniversary. If the
Annuitant dies on or after his or her 86th birthday, then the Death Benefit will
be equal to the Contract Value.
As an alternative to the death benefit described above, the beneficiary may
choose a Distribution that is consistent with the Distribution at death rules
set forth below in "Required Distributions for IRA Accounts."
DEATH OF ANNUITANT AFTER THE ANNUITIZATION DATE
If the Annuitant dies after the Annuitization Date, any benefit that may be
payable shall be as specified in the Annuity Payment Option selected.
REQUIRED DISTRIBUTIONS FOR IRA ACCOUNTS
Distribution from an IRA must begin not later than April 1 of the calendar
year following the calendar year in which the IRA account holder (the Annuitant)
attains age 70 1/2. Distribution may be accepted in a lump sum or in nearly
equal payments over: (a) the Annuitant's life or the lives of the Annuitant and
the Annuitant's spouse or designated beneficiary, or (b) a period not extending
beyond the life expectancy of the Annuitant and the Annuitant's spouse or
designated beneficiary.
If the Annuitant dies prior to the commencement of the Distribution, the
interest in the Annuity held by the custodial account must be distributed by
December 31 of the calendar year in which the fifth anniversary of the
Annuitant's death occurs unless:
(a) The Annuitant has named his or her surviving spouse as the designated
beneficiary and such spouse elects to:
(i) treat the annuity as an asset of an IRA established for his or her
benefit; or
(ii) receive Distribution of the Contract in nearly equal payments over his
or her life (or a period not exceeding his or her life expectancy) and
commencing not later than December 31 of the year in which the
Annuitant would have attained age 70 1/2; or
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(b) The Annuitant has named a beneficiary other than his or her surviving spouse
and such beneficiary elects to receive a Distribution of the account in
nearly equal payments over his or her life (or a period not exceeding his or
her life expectancy) commencing not later than December 31 of the year
following the year in which the Annuitant dies.
If the Annuitant dies after Distribution has commenced, the Distribution
must continue at least as rapidly as under the schedule being used prior to the
Annuitant's death, except to the extent that a surviving spouse beneficiary may
elect to treat the Contract as his or her own, in the same manner as is
described in section (a)(i) of this provision.
If the amounts distributed to the Annuitant are less than those mentioned
above, a penalty tax of 50% is levied on the amount that should have been
distributed for that year.
All or a portion of each Distribution will be included in the gross income
of the person receiving the Distribution and taxed at ordinary income tax rates.
The portion of the Distribution which is taxable is based on the ratio between
the amount by which non-deductible Purchase Payments exceed prior non-taxable
Distributions and total account balances at the time of the Distribution. The
Annuitant must annually report the amount of non-deductible Purchase Payments,
the amount of any Distribution, the amount by which non-deductible Purchase
Payments for all years exceed non-taxable Distributions for all years, and the
total balance of all IRAs.
IRA Distributions will not receive the benefit of the tax treatment of a
lump sum Distribution from a Qualified Plan. If the Annuitant dies prior to the
time Distribution of the Annuitant's interest in the annuity is completed, the
balance will also be included in the Annuitant's gross estate.
REQUIRED DISTRIBUTION FOR QUALIFIED CONTRACTS
The entire interest of an Annuitant under a Qualified Contract will be
distributed in a manner consistent with the Minimum Distribution and Incidental
Benefit (MDIB) provisions of Section 401(a)(9) of the Code and regulations
thereunder, as applicable, and will be paid, notwithstanding anything else
contained herein, to the Owner/Annuitant under the Annuity Payments Option
selected, over a period not exceeding:
A. the life of the Owner/Annuitant or the lives of the Owner/Annuitant and
the Owner/Annuitant's Designated Beneficiary; or
B. a period not extending beyond the life expectancy of the Owner/Annuitant
or the life expectancy of the Owner/Annuitant and the Owner/Annuitant's
Designated Beneficiary provided that, for Tax Sheltered Annuity
Contracts, no Distributions will be required from this Contract if
Distributions otherwise required from this Contract are being withdrawn
from another Tax Sheltered Annuity Contract of the Annuitant.
If the Owner/Annuitant's entire interest is to be distributed in equal or
substantially equal payments over a period described in A or B, such payments
will commence not later than the first day of April following the calendar year
in which the Owner/Annuitant attains age 70 1/2 (the Required Beginning Date).
In the case of a governmental plan (as defined in Code Section 414(d)), or
church plan (as defined in Code Section 401(a)(9)(C)), the Required Beginning
Date will be the later of the dates determined under the preceding sentence
or April 1 of the calendar year following the calendar year in which the
Annuitant retires.
If the Owner dies prior to the commencement of his or her Distribution, the
interest in the Qualified Contract must be distributed by December 31 of the
year in which the fifth anniversary of his or her death occurs unless the Owner
names a Beneficiary other than his or her surviving spouse and such beneficiary
elects to receive a Distribution of the account in nearly equal payments over
his or her life (or a period not exceeding his or her life expectancy)
commencing not later than December 31 of the year following the year in which
the Owner dies.
If the Owner/Annuitant dies after Distribution has commenced, Distribution
must continue at least as rapidly as under the schedule being used prior to his
or her death, except that a surviving spouse may treat a Tax Sheltered Annuity
as his or her own to the extent permitted by law.
Payments commencing on the Required Beginning Date will not be less than the
lesser of the quotient obtained by dividing the entire interest of the
Owner/Annuitant by the life expectancy of the Owner/Annuitant, or the joint and
last survivor expectancy of the Owner/Annuitant and the Owner/Annuitant's
Designated Beneficiary (whichever is applicable under the applicable Minimum
Distribution or MDIB provisions). Life
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expectancy and joint and last survivor expectancy are computed by the use of
return multiples contained in Section 1.72-9 of the Treasury Regulations.
GENERATION-SKIPPING TRANSFERS
The Company may determine whether the Death Benefit or any other payment
constitutes a direct skip as defined in Section 2612 of the Code, and the amount
of the tax on the generation-skipping transfer resulting from such direct skip.
If applicable, the payment will be reduced by any tax the Company is required to
pay by Section 2603 of the Code.
A direct skip may occur when property is transferred to or a Death Benefit
is paid to an individual two or more generations younger than the Annuitant.
GENERAL INFORMATION
SERVICES
ASSET REBALANCING - The Owner (or Annuitant, if so authorized) may direct
the automatic reallocation of contract values to the underlying Mutual Fund
options on a predetermined percentage basis every three months. If the last day
of the three month period falls on a Saturday, Sunday, recognized holiday or any
other day when the New York Stock Exchange is closed, the Asset Rebalancing
exchange will occur on the last business day before that day. Asset Rebalancing
will not affect future allocations of Purchase Payments. An Asset Rebalancing
request must be in writing on a form provided by the Company. A financial
adviser should be consulted with respect to the use of Asset Rebalancing.
The Company reserves the right to discontinue offering Asset Rebalancing
upon 30 days' written notice; any discontinuation will not affect Asset
Rebalancing programs which have already commenced. The Company also reserves the
right to assess a processing fee for this service.
DOLLAR COST AVERAGING- The Owner (or Annuitant, if so authorized) may direct
the Company to automatically transfer a specified amount from the Money Market
Fund Sub-Account, the Limited Maturity Bond Portfolio Sub-Account or the Fixed
Account to any other Sub-Account within the Variable Account on a monthly basis.
This service is intended to allow for Dollar Cost Averaging, a long-term
investment program which provides for regular, level investments over time. The
Company makes no guarantees that Dollar Cost Averaging will result in a profit
or protect against loss in a declining market. Transfers for purposes of Dollar
Cost Averaging can only be made from the Money Market Fund Sub-Account, the
Limited Maturity Bond Portfolio Sub-Account or the Fixed Account. The minimum
monthly Dollar Cost Averaging transfer is $100. In addition, Dollar Cost
Averaging monthly transfers from the Fixed Account must be equal to or less than
1/30th of the Fixed Account value when the Dollar Cost Averaging program is
requested. Transfers out of the Fixed Account, other than for Dollar Cost
Averaging, may be subject to certain additional restrictions (see "Transfers").
A written election of this service, on a form provided by the Company, must be
in order to begin transfers. Once elected, transfers from the Money Market Fund
Sub-Account, the Limited Maturity Bond Portfolio Sub-Account or the Fixed
Account will be processed monthly until either the value in the Money Market
Fund Sub-Account, the Limited Maturity Bond Portfolio Sub-Account or the Fixed
Account is completely depleted or the Annuitant instructs the Company in writing
to cancel the monthly transfers.
The Company reserves the right to discontinue offering Dollar Cost Averaging
upon 30 days' written notice, however, any discontinuation will not affect
Dollar Cost Averaging programs already commenced. The Company also reserves the
right to assess a processing fee for this service.
SYSTEMATIC WITHDRAWALS- The Owner (or Annuitant, if so authorized) may elect
in writing on a form provided by the Company to take Systematic Withdrawals of a
specified dollar amount (of at least $100) on a monthly, quarterly, semi-annual
or annual basis. The Company will process the withdrawals as directed by
surrendering on a pro-rata basis Accumulation Units from all of the Sub-Accounts
in which an interest is maintained, and the Fixed Account. A Contingent Deferred
Sales Charge may apply to Systematic Withdrawals in accordance with the
considerations set forth in the "Contingent Deferred Sales Charge" section. Each
Systematic Withdrawal is subject to federal income taxes on the taxable portion.
In addition, a 10% federal penalty tax may be assessed on Systematic Withdrawals
if the recipient is under age 59 1/2. If so directed, the Company will withhold
federal income taxes from each Systematic Withdrawal. A Systematic Withdrawal
program will terminate automatically at the end of each Contract Year and may be
reinstated only
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pursuant to a new request. Systematic Withdrawals may be discontinued at any
time by notifying the Company in writing.
If amounts are withdrawn pursuant to a Systematic Withdrawal program, then
each year the greater of the following amounts may be withdrawn free of CDSC:
(i) 10% of the total sum of all Purchase Payments made to the Contract at the
time of withdrawal, less any Purchase Payments previously withdrawn that were
subject to a CDSC, or (ii) the specified percentage of the Contract Value based
on the Annuitant's age, as shown in the following table:
<TABLE>
<CAPTION>
Annuitant's Percentage of
Age Contract Value
<S> <C>
Under 59-1/2 5%
59-1/2 to 70-1/2 7%
70-1/2 to 75 9%
75 and Over 13%
</TABLE>
If the total amounts withdrawn in any Contract Year exceed the CDSC-free
amount as calculated under the Systematic Withdrawal method described above,
then such total withdrawn amounts will be eligible only for the 10% of Purchase
Payment CDSC-free withdrawal privilege described in the "Contingent Deferred
Sales Charge" section, and the total amount of CDSC charged during the Contract
Year will be determined in accordance with that provision.
The Contract Value and the Annuitant's age for purposes of applying the
CDSC-free withdrawal percentage described above are determined as of the date
the request for a Systematic Withdrawal program is received and recorded by the
Company at its Home Office. The election to take such CDSC-free amounts may only
be made once each Contract Year. This CDSC-free withdrawal privilege for
Systematic Withdrawals is non-cumulative, that is, free amounts not taken during
any given Contract Year cannot be taken as free amounts in a subsequent Contract
Year.
Systematic Withdrawals are not available prior to the expiration of the ten
day free look provision of the Contract. The Company also reserves the right to
assess a processing fee for this service.
STATEMENTS AND REPORTS
The Company will mail to Owners (or Annuitants, as applicable), at their
last known address of record, any statements and reports required by applicable
law or regulation. Annuitants should therefore give the Company prompt notice of
any address change. The Company will send a confirmation statement each time a
transaction is made affecting the Variable Account Contract Value, such as
making additional Purchase Payments, transfers, exchanges or withdrawals.
Quarterly statements are also mailed detailing the Contract activity during the
calendar quarter. Instead of an immediate confirmation of transactions made
pursuant to some types of periodic payment plan (such as a dollar cost averaging
program) or salary reduction arrangement, confirmation of such transactions in
quarterly statements may be received. Information in these statements should be
reviewed carefully. All errors or corrections must be reported to the Company
immediately to assure proper crediting to the Contract. The Company will assume
all transactions are accurately reported on quarterly statements or confirmation
statements unless otherwise notified within 30 days after receipt of the
statement. The Company will also send each year an annual report and a
semi-annual report containing financial statements for the Variable Account, as
of December 31 and June 30, respectively.
ALLOCATION OF PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase Payments are allocated to one or more Sub-Accounts within the
Variable Account in accordance with the designation of the underlying Mutual
Funds by the Owner (or Annuitant, if so authorized), and converted into
Accumulation Units.
The initial Purchase Payment must be at least $15,000. Subsequent Purchase
Payments, if any, must be at least $1,000. Subsequent Purchase Payments are not
permitted in the states of New York, Oregon, and Washington. The cumulative
total of all Purchase Payments under Contracts issued on the life of any one
Designated Annuitant may not exceed $1,000,000 without prior consent of the
Company.
The initial Purchase Payment allocated to designated Sub-Accounts of the
Variable Account will be priced not later than 2 business days after receipt of
an order to purchase, if the application and all information
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necessary for processing the purchase order are complete upon receipt by the
Company. The Company may, however, retain the Purchase Payment for up to 5
business days while attempting to complete an incomplete application. If the
application cannot be made complete within 5 days, the prospective purchaser
will be informed of the reasons for the delay and the Purchase Payment will be
returned immediately unless the prospective purchaser specifically consents to
the Company retaining the Purchase Payment until the application is made
complete. Thereafter, subsequent Purchase Payments will be priced on the basis
of the Accumulation Unit Value next computed for the appropriate Sub-Account
after the additional Purchase Payment is received.
Purchase Payments will not be priced on the following nationally
recognized holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
VALUE OF A VARIABLE ACCOUNT ACCUMULATION UNIT
The value of a Variable Account Accumulation Unit for each Sub-Account was
arbitrarily set initially at $10 when the underlying Mutual Fund shares in that
Sub-Account were available for purchase. The value for any subsequent Valuation
Period is determined by multiplying the Accumulation Unit value for each
Sub-Account for the immediately preceding Valuation Period by the Net Investment
Factor for the Sub-Account during the subsequent Valuation Period. The value of
an Accumulation Unit may increase or decrease from Valuation Period to Valuation
Period. The number of Accumulation Units will not change as a result of
investment experience.
NET INVESTMENT FACTOR
The Net Investment Factor for any Valuation Period is determined by dividing
(a) by (b) and subtracting (c) from the result where:
(a) is the net of:
(1) the net asset value per share of the underlying Mutual Fund held in the
Sub-Account determined at the end of the current Valuation Period, plus
(2) the per share amount of any dividend or capital gain Distributions made
by the underlying Mutual Fund held in the Sub-Account if the
"ex-dividend" date occurs during the current Valuation Period.
(b) is the net of:
(1) the net asset value per share of the underlying Mutual Fund held in the
Sub-Account determined at the end of the immediately preceding
Valuation Period, plus or minus
(2) The per share charge or credit, if any, for any taxes reserved
for in the immediately preceding Valuation Period.
(c) is a factor representing the daily Mortality Risk Charge, Expense Risk
Charge and Administration Charge deducted from the Variable Account. Such
factor is equal to an annual rate of 1.40% of the daily net asset value of
the Variable Account.
For underlying Mutual Funds that credit dividends on a daily basis and pay
such dividends once a month (the Nationwide Money Market Fund), the Net
Investment Factor allows for the monthly reinvestment of these daily dividends.
The Net Investment Factor may be greater or less than one; therefore, the
value of an Accumulation Unit may increase or decrease. It should be noted that
changes in the Net Investment Factor may not be directly proportional to changes
in the net asset value of underlying Mutual Fund shares, because of the
deduction for Mortality Risk Charge, Expense Risk Charge and Administration
Charge.
VALUATION OF ASSETS
Underlying Mutual Fund shares in the Variable Account will be valued at
their net asset value.
DETERMINING THE CONTRACT VALUE
The sum of the value of all Variable Account Accumulation Units attributable
to the Contract and amounts credited to the Fixed Account is the Contract Value.
The number of Accumulation Units credited per each Sub-Account are determined by
dividing the net amount allocated to the Sub-Account by the
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Accumulation Unit Value for the Sub-Account for the Valuation Period during
which the Purchase Payment is received by the Company. If part or all of the
Contract Value is surrendered or charges or deductions are made against the
Contract Value, an appropriate number of Accumulation Units from the Variable
Account and an appropriate amount from the Fixed Account will be deducted in the
same proportion that the amounts in the Variable Account and the Fixed Account
bear to the total Contract Value.
SURRENDER (REDEMPTION)
While the Contract is in force and prior to the earlier of the Annuitization
Date or the death of the Annuitant, the Company will, upon proper written
application deemed by the Company to be in good order, allow the surrender of a
portion or all of the Contract Value. "Proper written application" means a
request for the surrender in writing and includes the Contract. The Company may
require that signature(s) be guaranteed by a member firm of a major stock
exchange or other depository institution qualified to give such a guaranty.
The Company will, upon receipt of any such written request, surrender a
number of Accumulation Units from the Variable Account and an amount from the
Fixed Account necessary to equal the gross dollar amount requested, less any
applicable Contingent Deferred Sales Charge (see "Contingent Deferred Sales
Charge"). In the event of a partial surrender, the Company will, unless
instructed to the contrary, surrender Accumulation Units from all Sub-Accounts
in which the Annuitant has an interest, and the Fixed Account. The number of
Accumulation Units surrendered from each Sub-Account and the amount surrendered
from the Fixed Account will be in the same proportion that the amounts in the
Sub-Accounts and Fixed Account bear to the total Contract Value.
The Company will pay any funds applied for from the Variable Account within
7 days of receipt of such application in the Company's Home Office. However, the
Company reserves the right to suspend or postpone the date of any payment of any
benefit or values for any Valuation Period (1) when the New York Stock Exchange
("Exchange") is closed, (2) when trading on the Exchange is restricted, (3) when
an emergency exists as a result of which disposal of securities held in the
Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets, or (4)
during any other period when the Securities and Exchange Commission, by order,
so permits for the protection of security holders; provided that applicable
rules and regulations of the Securities and Exchange Commission shall govern as
to whether the conditions prescribed in (2) and (3) exist. The Contract Value on
surrender may be more or less than the total of Purchase Payments made by an
Annuitant, depending on the market value of the underlying Mutual Fund shares.
TAXES
INFORMATION CONTAINED HEREIN SHOULD NOT BE SUBSTITUTED FOR THE ADVICE OF A
PERSONAL TAX ADVISER.
The Company does not make any guarantee regarding the tax status for any
Contract or any transaction involving the Contracts. The Contracts, by
themselves, do not qualify for tax-deferral under the federal tax rules
governing Non-Qualified Annuities and Individual Retirement Annuities. Instead,
the Contracts have been designed to be purchased as assets of IRA custodial
accounts pursuant to certain regulations under section 408 of the Code.
Annuitants should consult their financial or tax consultants to discuss in
detail their particular tax situation and the use of the Contracts.
Generally, the amount of any payment of items of interest to a nonresident
alien of the United State shall be subject to withholding of a tax equal to
thirty percent (30%) of such amount or, if applicable, a lower treaty rate. A
payment may not be subject to withholding where the recipient sufficiently
establishes that such payment is effectively connected to the recipient's
conduct of a trade or business in the United States and such payment is
includable in the recipient's gross income.
IRAS
The Contract is intended to be purchased as an asset of IRA custodial
accounts established pursuant to regulations 1.408-2(b)(2)(ii) and 1.408-2(d)
under Section 408 of the Code. Because the Contract's minimum initial and
subsequent Purchase Payments are greater than the maximum yearly contribution
permitted an IRA, the Contract may be purchased only in connection with a
"rollover" (including a direct trustee-to-trustee transfer, where permitted).
Specifically, Contracts may be purchased only in connection with a rollover or
transfer (if applicable) of amounts from a Qualified Plan, Tax-Sheltered
Annuity, IRA or Individual Retirement
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Annuity. The Annuitant should seek competent advice as to the tax consequences
associated with the use of this Contract.
Recent changes to the Code permit the rollover of most Distributions from
Qualified Plans to other Qualified Plans or Individual Retirement Accounts. Most
Distributions from Tax-Sheltered Annuities may be rolled into another
Tax-Sheltered Annuity or an IRA. Distributions which may not be rolled over are
those which are:
1. one of a series of substantially equal annual (or more frequent) payments
made: a) over the life (or life expectancy) of the employee, b) the joint
lives (or joint life expectancies) of the employee and the employee's
designated beneficiary, or c) for a specified period of ten years or more,
or
2. a required minimum Distribution.
Any Distribution from a Qualified Plan or Tax Sheltered Annuity that is
eligible for rollover will be subject to federal tax withholding at a rate of
twenty percent (20%) unless the Distribution is transferred directly to an
appropriate plan as described above.
Individual Retirement Accounts may not provide life insurance benefits. If
the Death Benefit associated with the Contracts offered hereunder exceeds the
greater of the cash value of the Contract or the sum of all Purchase Payments
(less any surrenders), it is possible the Internal Revenue Service could
determine that the Individual Retirement Account does not qualify for the
desired tax treatment.
ADVERTISING
A "yield" and "effective yield" may be advertised for the Nationwide Money
Market Fund Sub-Account. "Yield" is a measure of the net dividend and interest
income earned over a specific seven-day period (which period will be stated in
the advertisement) expressed as a percentage of the offering price of the
Sub-Account's units. Yield is an annualized figure, which means that it is
assumed that the Sub-Account generates the same level of net income over a
52-week period. The "effective yield" is calculated similarly but includes the
effect of assumed compounding, calculated under rules prescribed by the
Securities and Exchange Commission. The effective yield will be slightly higher
than yield due to this compounding effect.
The Company may also from time to time advertise the performance of the
Sub-Account of the Variable Account relative to the performance of other
variable annuity Sub-Accounts or underlying Mutual Funds with similar or
different objectives, or the investment industry as a whole. Other investments
to which the Sub-Accounts may be compared include, but are not limited to:
precious metals, real estate, stocks and bonds, closed-end funds, CDs, bank
money market deposit accounts and passbook savings, and the Consumer Price
Index.
The Sub-Accounts of the Variable Account may also be compared to certain
market indexes, which may include, but are not limited to: the S&P 500;
Shearson/Lehman Intermediate Government/Corporate Bond Index; Shearson/Lehman
Long-Term Government/Corporate Bond Index; Donoghue Money Fund Average; U.S.
Treasury Note Index; Bank Rate Monitor National Index of 2 Year CD Rates; and
Dow Jones Industrial Average.
Normally these rankings and ratings are published by independent tracking
services and publications of general interest including, but not limited to:
Lipper Analytical Services, Inc., CDA/ Wiesenberger, Morningstar, Donoghue's;
magazines such as Money, Forbes, Kiplinger's Personal Finance Magazine,
Financial World, Consumer Reports, Business Week, Time, Newsweek, National
Underwriter, U.S. News and World Report; rating services such as LIMRA, Value,
Best's Agent Guide, Western Annuity Guide, Comparative Annuity Reports; and
other publications such as the Wall Street Journal, Barron's, Investor's Daily,
and Standard & Poor's Outlook. In addition, Variable Annuity Research & Data
Service (The VARDS Report) is an independent rating service that ranks over 500
variable annuity Funds based upon total return performance. These rating
services and publications rank the performance of the underlying Mutual Funds
against all underlying Mutual Funds over specified periods and against Funds in
specified categories. The rankings may or may not include the effects of sales
or other charges.
The Company is also ranked and rated by independent financial rating
services, among which are Moody's, Standard & Poor's and A.M. Best Company. The
purpose of these ratings is to reflect the financial strength or claims-paying
ability of the Company. The ratings are not intended to reflect the investment
experience or financial strength of the Variable Account. The Company may
advertise these ratings from time
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to time. In addition, the Company may include in certain advertisements,
endorsements in the form of a list of organizations, individuals or other
parties which recommend the Company or the Contracts. Furthermore, the Company
may occasionally include in advertisements comparisons of currently taxable and
tax deferred investment programs, based on selected tax brackets, or discussions
of alternative investment vehicles and general economic conditions.
The Company may from time to time advertise several types of historical
performance for the Sub-Accounts of the Variable Account. The Company may
advertise for the Sub-Accounts standardized "average annual total return,"
calculated in a manner prescribed by the Securities and Exchange Commission, and
nonstandardized "total return." "Average annual total return" will show the
percentage rate of return of a hypothetical initial investment of $1,000 for at
least the most recent one, five and ten year period, or for a period covering
the time the underlying Mutual Fund option held in the Sub-Account has been in
existence, if the underlying Mutual Fund option has not been in existence for
one of the prescribed periods. This calculation reflects the deduction of all
applicable charges made to the Contracts except for premium taxes, which may be
imposed by certain states.
Nonstandardized "total return" will be calculated in a similar manner and
for the same time periods as the average annual total return except total return
will assume an initial investment of $10,000 and will not reflect the deduction
of any applicable Contingent Deferred Sales Charge, which, if reflected, would
decrease the level of performance shown. The Contingent Deferred Sales Charge is
not reflected because the Contracts are designed for long term investment. An
assumed initial investment of $10,000 will be used because that figure more
closely approximates the size of a typical Contract than does the $1,000 figure
used in calculating the standardized average annual total return quotations.
For those underlying Mutual Fund options which have not been held as
Sub-Accounts within the Variable Account for one of the quoted periods, the
standardized average annual total return and nonstandardized total return
quotations will show the investment performance such underlying Mutual Fund
options would have achieved (reduced by the applicable charges) had they been
held as Sub-Accounts within the Variable Account for the period quoted.
ALL PERFORMANCE INFORMATION AND COMPARATIVE MATERIAL ADVERTISED BY THE COMPANY
IS HISTORICAL IN NATURE AND IS NOT INTENDED TO REPRESENT OR GUARANTEE FUTURE
RESULTS. AN ANNUITANT'S CONTRACT VALUE AT REDEMPTION MAY BE MORE OR LESS THAN
ORIGINAL COST.
LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary routine
litigation incidental to the business to which the Company and the Variable
Account are parties or to which any of their property is the subject.
The General Distributor, Nationwide Financial Services, Inc., is not engaged
in any litigation of any material nature.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Information and History........................ 1
Services............................................... 1
Purchase of Securities Being Offered................... 1
Underwriters........................................... 2
Calculations of Performance............................ 2
Fund Performance Summary............................... N/A
Annuity Payments....................................... 3
Financial Statements................................... 4
</TABLE>
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APPENDIX A
FIXED ACCOUNT
Purchase payments under the Fixed Account portion of the Contract and
transfers to the Fixed Account portion become part of the general account of the
Company, which support insurance and annuity obligations. Because of exemptive
and exclusionary provisions, interests in the general account have not been
registered under the Securities Act of 1933 ("1933 Act"), nor is the general
account registered as an investment company under the Investment Company Act of
1940 ("1940 Act"). Accordingly, neither the general account nor any interest
therein are generally subject to the provisions of the 1933 or 1940 Acts, and we
have been advised that the staff of the Securities and Exchange Commission has
not reviewed the disclosures in this prospectus which related to the guaranteed
interest portion. Disclosures regarding the Fixed Account portion of the
Contract and the general account, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
FIXED ACCOUNT ALLOCATIONS
THE FIXED ACCOUNT
The Fixed Account is made up of all the general assets of the Company, other
than those in the Variable Account and any other segregated asset account. Fixed
Account Purchase Payments will be allocated to the Fixed Account by election of
the Annuitant at the time of purchase.
The Company will invest the assets of the Fixed Account in those assets
chosen by the Company and allowed by applicable law. Investment income from such
Fixed Account assets will be allocated by the Company between itself and the
Contracts participating in the Fixed Account.
The level of annuity payments made to Annuitants under the Contracts will
not be affected by the mortality experience (death rate) of persons receiving
such payments or of the general population. The Company assumes this "mortality
risk" by virtue of annuity rates incorporated in the Contract which cannot be
changed. In addition, the Company guarantees that it will not increase charges
for maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The amount of such investment income allocated to
the Contracts will vary from year to year in the sole discretion of the Company
at such rate or rates as the Company prospectively declares from time to time.
Any such rate or rates so determined will remain effective for a period of not
less than twelve months, and remain at such rate unless changed. However, the
Company guarantees that it will credit interest at not less than 3.0% per year
(or as otherwise required under state law, or at such minimum rate as stated in
the Contract when sold). ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED
ACCOUNT IN EXCESS OF 3.0% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF
THE COMPANY. THE ANNUITANT ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED
ACCOUNT ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3.0% FOR ANY GIVEN
YEAR. New Purchase Payments deposited to the Contract which are allocated to the
Fixed Account may receive a different rate of interest than money transferred
from the Variable Sub-Accounts to the Fixed Account and amounts maturing in the
Fixed Account at the expiration of an Interest Rate Guarantee Period.
The Company guarantees that, at any time, the Fixed Account Contract Value
will not be less than the amount of the Purchase Payments allocated to the Fixed
Account, plus interest credited as described above, less the sum of all
administrative charges, any applicable premium taxes, and less any amounts
surrendered. If the Annuitant effects a surrender, the amount available from the
Fixed Account will be reduced by any applicable Contingent Deferred Sales Charge
(see "Contingent Deferred Sales Charge").
TRANSFERS
Annuitants may at the maturity of an Interest Rate Guarantee Period,
transfer a portion of the value of the Fixed Account to the Variable Account.
The maximum percentage that may be transferred will be determined by the Company
at its sole discretion, but will not be less than 10% of the total value of the
portion of the Fixed Account that is maturing and will be declared upon the
expiration date of the then current Interest Rate Guarantee Period. The Interest
Rate Guarantee Period expires on the final day of a calendar quarter. Transfers
must be made within 45 days after the expiration date of the guarantee period.
Annuitants who have
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entered into a Dollar Cost Averaging Agreement with the Company (see "Dollar
Cost Averaging") may transfer from the Fixed Account to the Variable Account
under the terms of that agreement.
Any group annuity Contract offered in conjunction with this Prospectus, the
assets of which are invested in the general account of the Company may be
subject to restrictions on surrender of a plan's or a participant's interest in
the annuity Contract, and may require that such a surrender be completed over a
period of 5 years.
ANNUITY PAYMENT PERIOD-FIXED ACCOUNT
FIRST AND SUBSEQUENT PAYMENTS
A Fixed Annuity is an annuity with payments which are guaranteed by the
Company as to dollar amount during the annuity payment period. The first Fixed
Annuity payment will be determined by applying the Fixed Account Contract Value
to the applicable Annuity Table in accordance with the Annuity Payment Option
elected. This will be done at the Annuitization Date on an age last birthday
basis. Fixed Annuity payments after the first will not be less than the first
Fixed Annuity payment.
The Company does not credit discretionary interest to Fixed Annuity payments
during the annuity payment period for annuity options based on life
contingencies. The Annuitant must rely on the Annuity Tables applicable to the
Contracts to determine the amount of such Fixed Annuity payments.
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APPENDIX B
PARTICIPATING FUNDS
Delchester Fund-Institutional Class
Investment Objective: Seeks to provide high current income by investing
principally in corporate bonds, and also in U.S. Government securities and
commercial paper. This Fund invests primarily in high-yield securities (junk
bonds) and greater risks may be involved with an investment in the Fund than
an investment in a Mutual Fund comprised primarily of investment grade
bonds.
Dreyfus A Bonds Plus, Inc.
Investment Objective: The Fund's goal is to provide the maximum amount of
current income to the extent consistent with the preservation of capital and
the maintenance of liquidity. The Fund invests principally in debt
obligations of corporations, the U.S. Government and its agencies and
instrumentalities, and major U.S. banking institutions. The Fund's
investment objective cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940) of the Fund's
outstanding voting shares. There can be no assurance that the Fund's
investment objective will be achieved.
Dreyfus S & P 500 Index Fund(R) (Formerly Peoples Index Fund, Inc.)
Investment Objective: Seeks to provide investment results that correspond to
the price and yield performance of publicly-traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock Price
Index. The Fund's investment objective cannot be changed without approval by
the holders of a majority of the Fund's outstanding voting shares.
The Dreyfus Third Century Fund, Inc.
Investment Objective: Primarily seeks to provide capital growth through
equity investment in companies that, in the opinion of the Fund's
management, not only meet traditional investment standards but which also
show evidence that they conduct their business, in a manner that contributes
to the enhancement of the quality of life in America. Current income is
secondary to the primary goal.
The Evergreen Total Return Fund
Investment Objective: Seeks to achieve a return consisting of current income
and capital appreciation in the value of its shares. The emphasis on current
income and capital appreciation will be relatively equal although, over
time, changes in the outlook for market conditions and the level of interest
rates will cause the Fund to vary its emphasis between these two elements in
its search for the optimum return for its shareholders. The Fund seeks to
achieve its investment objective through investments in common stocks,
preferred stocks, securities convertible into or exchangeable for common
stocks and fixed income securities. The Fund may also write covered call
options.
Fidelity Asset ManagerTM
Investment Objective: Seeks high total return with reduced risk over the
long term by allocating its assets among stocks, bonds and short-term
instruments.
Fidelity Equity-Income Fund
Investment Objective: Seeks to obtain reasonable income from a portfolio
consisting primarily of income-producing equity securities. The Fund seeks a
yield which exceeds the composite yield on the securities comprising the
Standard & Poor's 500 Composite Stock Price index. In addition, consistent
with the above objective, in managing its portfolio, the Fund will consider
the potential for achieving capital appreciation.
Fidelity Magellan(R) Fund
Investment Objective: Seeks capital appreciation by investing primarily in
common stock and securities convertible into common stock. Up to 20% of the
Fund's assets may also be invested in debt securities of all types and
qualities issued by foreign and domestic issuers if the Fund's management
believes that doing so will result in capital appreciation. No emphasis is
placed on dividend income except when the Fund's management believes that
this income will have a favorable influence on the market value of the
security. Because the Fund has no limitation on the quality of debt
securities in which it may invest, the debt securities in its portfolio may
be of poor quality and may present the risk of default or may be in default.
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Fidelity Puritan Fund
Investment Objective: Seeks to obtain as much income as possible, consistent
with the preservation and conservation of capital, by investing in a broadly
diversified portfolio of high-yielding securities, including common stocks,
preferred stocks, and bonds. While emphasis on income is an important
objective, this does not preclude growth in capital since some securities
offering a better than average yield may also possess some growth
possibilities.
Janus Twenty Fund
Investment Objective: Seeks growth of capital in a manner consistent with
the preservation of capital. Under normal conditions, the Fund will
concentrate its investments in a core position of 20-30 common stocks.
However, the percentage of the Fund's assets invested in common stocks will
vary, depending upon its investment adviser's opinion of prevailing market,
financial and economic conditions. Consequently, the Fund may at times hold
substantial positions in cash, or interest bearing securities.
MFS(R) World Governments Fund
Investment Objective: To seek not only preservation, but also growth of
capital, together with moderate current income through a professionally
managed internationally diversified portfolio consisting primarily of debt
securities and, to a lesser extent, equity securities. The Fund is designed
for investors who wish to diversify their investments beyond the United
States and who are prepared to accept the risks entailed in such investments
which may be higher than those associated with certain U.S. Investments.
Nationwide(R) Bond Fund
Investment Objective: Seeks to generate a high level of income consistent
with capital preservation through investments in high quality bonds and
other fixed income securities. Through investment in long-term income
obligations, including corporate debt securities, United States and Canadian
government obligations and commercial paper, this Fund seeks to serve those
who are less willing to accept the greater risk and higher volatility of a
common stock portfolio.
Nationwide(R) Fund
Investment Objective: Seeks to obtain a reasonable current income on
invested capital and possible growth of such income through timely
investments in common stocks, convertible issues or bonds. Major emphasis in
the selection of investments for this Fund is placed on securities which
will provide a reasonable current return. Though growth of capital
considerations is secondary, an effort is made to select those securities
which, while paying a reasonable current return, also hold some promise of
long-term growth as well as possibilities of growth of income.
Nationwide(R) Growth Fund
Investment Objective: Seeks to achieve reasonable growth of capital through
selective participation in the long-term progress of business without
emphasis on current return on invested capital. Major emphasis in the
selection of securities for this Fund is placed on strong companies which
have capable management, and are in fields where social and economic trends,
technical developments and new processes or products indicate greater than
average growth.
Nationwide(R) Money Market Fund
Investment Objective: Seeks to provide as high a level of current income as
is consistent with the preservation of capital and maintenance of liquidity,
through a diversified portfolio of high quality money market instruments
maturing in one year or less.
Neuberger & Berman Guardian Fund, Inc.
Investment Objective: Seeks capital appreciation through investments
generally in dividend-paying issues of established companies that its
investment officers believe are well managed. The emphasis of the Fund's
investments is on common stock. The Fund diversifies its holdings among
different industries and different companies in light of conditions
prevailing at any given time. Current income is a secondary objective.
Neuberger & Berman Limited Maturity Bond Fund
Investment Objective: Seeks highest current income consistent with low risk
to principal and liquidity. The Fund invests in a diversified portfolio of
short-to intermediate-term debt securities and other debt securities with
special features producing similar price characteristics. Total return is a
secondary objective.
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Neuberger & Berman Partners Fund, Inc.
Investment Objective: Seeks capital growth. The Fund invests in securities
solely on the basis of management's evaluation of their investment merit and
potential for growth using a value-oriented approach to the selection of
individual securities. The Fund's management believes that the Fund is an
attractive investment vehicle for conservative investors who are interested
in long-term appreciation from stock investments, but who have a low
tolerance for risk.
Oppenheimer Global Fund
Investment Objective: Seeks capital appreciation. The Fund emphasizes
investment in foreign and domestic securities considered by the Fund's
investment manager to have appreciation possibilities, primarily common
stocks or securities having investment characteristics of common stocks
(such as convertible securities) of "growth-type" companies. As a matter of
fundamental policy, under normal market conditions, the Fund will invest its
total assets in securities of issuers traded in markets in at least three
different countries (which may include the United States). The portfolio may
also emphasize securities of cyclical industries and "special situations"
when the Fund's manager believes that they present opportunities for capital
growth. The remainder of the Fund's invested assets will be invested in
securities for liquidity purposes.
Phoenix Balanced Fund Series
Investment Objective: The Fund seeks reasonable income, long-term capital
growth and conservation of capital. It is intended that the Fund will invest
in common stocks and fixed income securities, with emphasis on
income-producing securities which appear to have some potential for capital
enhancement.
Strong Total Return Fund, Inc.
Investment Objective: Seeks a combination of income and capital appreciation
which will produce the highest total return while assuming reasonable risks.
"Reasonable risks" refers to the advisor's judgment that the risks of
investing in the securities in the Total Return Fund's portfolio are no
greater than normal. The Total Return Fund invests in common stocks and
other equity-type securities; corporate bonds, debentures, and notes; and
short-term money market instruments. Common stocks may be either growth or
income oriented. Other equity-type securities are limited to convertible
bonds, preferred stocks, warrants, and convertible preferred shares.
Short-term money market instruments include U.S. Treasury obligations, bank
certificates of deposit, commercial paper, and variable-rate master demand
notes (floating-rate debt instruments without a fixed maturity). The Total
Return Fund may also invest in debt securities issued or guaranteed by the
U.S. government and its agencies or instrumentalities.
Templeton Foreign Fund
Investment Objective: Seeks long-term capital growth through a flexible
policy of investing in stocks and debt obligations of companies and
governments outside the United States. Any income realized will be
incidental.
Twentieth Century Growth Investors
Investment Objective: Seeks capital growth through investment in securities
which the management considers to have better than average prospects for
appreciation of value. The Fund's investment approach identifies companies
with accelerating earnings and revenues. As part of its strategy, the Fund
remains essentially fully invested in stocks at all times.
Twentieth Century International Equity Fund
Investment Objective: Seeks capital growth by investing in an international
portfolio of common stocks, primarily in developed markets; stocks
considered by the investment manager to have prospects for appreciation. The
Fund will invest primarily in common stocks (defined to include depository
receipts for common stocks) and other equity equivalents of such companies.
Twentieth Century Ultra Investors
Investment Objective: The investment objective of the Fund is to seek
capital growth by investing primarily in common stocks that are considered
by management to have better-than-average prospects for appreciation.
Twentieth Century U.S. Governments Short-Term
Investment Objective: To seek current income and limited
price volatility by maintaining an average weighted
portfolio maturity of four years or less. U.S.
Governments invests in securities of the United States
government and its agencies.
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STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1996
INDIVIDUAL MODIFIED SINGLE PREMIUM DEFERRED VARIABLE ANNUITY
CONTRACTS ISSUED BY THE NATIONWIDE VARIABLE ACCOUNT
OF NATIONWIDE LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the Prospectus
and should be read in conjunction with the Prospectus dated May 1, 1996. The
Prospectus may be obtained from Nationwide Life Insurance Company by writing
P.O. Box 16609, Columbus, Ohio 43216-6609, or calling 1-800-243-6295, TDD
1-800-238-3035.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Information and History.......................... 1
Services................................................. 1
Purchase of Securities Being Offered..................... 1
Underwriters............................................. 2
Calculations of Performance.............................. 2
Fund Performance Summary................................. N/A
Annuity Payments......................................... 3
Financial Statements..................................... 4
</TABLE>
GENERAL INFORMATION AND HISTORY
The Nationwide Variable Account is a separate investment account of
Nationwide Life Insurance Company ("Company"). The Company is a member of the
Nationwide Insurance Enterprise and all of the Company's common stock is owned
by Nationwide Corporation. Nationwide Corporation is a holding company. All of
its common stock is held by Nationwide Mutual Insurance Company (95.3%) and
Nationwide Mutual Fire Insurance Company (4.7%).
SERVICES
The Company, which has responsibility for administration of the Contracts
and the Variable Account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each Annuitant and
the number and type of Contracts issued to each such Annuitant and records with
respect to the Contract Value of each Contract.
The Custodian of the assets of the Variable Account is the Company. The
Company will maintain a record of all purchases and redemptions of shares of the
underlying Mutual Funds. The Company, or affiliates of the Company, have entered
into agreements with either the investment adviser or distributor for several of
the underlying Mutual Funds. The agreements relate to administrative services
provided by the Company or an affiliate of the Company and provide for an annual
fee based on the average aggregate net assets of the Variable Account (and other
separate accounts of the Company or life insurance company subsidiaries of the
Company) invested in particular underlying Mutual Funds. These fees in no way
affect the net asset value of the underlying Mutual Funds or fees paid by the
Contract Owner.
The financial statements and schedules have been included herein in reliance
upon the reports of KPMG Peat Marwick LLP, independent certified public
accountants, Two Nationwide Plaza, Columbus, Ohio 43215, and upon the authority
of said firm as experts in accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The Contracts will be sold by licensed insurance agents in the states where
the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
("NASD").
The Annuitant may transfer up to 100% of the Contract Value from the
Variable Account to the Fixed Account. However, the Company, at its sole
discretion, reserves the right to limit such transfers to 25% of the Contract
Value for any 12 month period. Annuitants may at the maturity of an Interest
Rate Guarantee Period transfer a portion of the Contract Value of the Fixed
Account to the Variable Account. Such portion will be
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determined by the Company at its sole discretion (but will not be less than 10%
of the total value of the portion of the Fixed Account that is maturing), and
will be declared upon the expiration date of the then current Interest Rate
Guarantee Period. The Interest Rate Guarantee Period expires on the final day of
a calendar quarter. Transfer under this provision must be made within 45 days
after the termination date of the guarantee period. Annuitants who have entered
into a Dollar Cost Averaging agreement with the Company may transfer from the
Fixed Account under the terms of that agreement.
Transfers from the Fixed and Variable Accounts may not be made prior to the
first Contract Anniversary. Transfers from the Fixed Account may not be made
within 12 months of any prior Transfer. Transfers must also be made prior to the
Annuitization Date.
UNDERWRITERS
The Contracts, which are offered continuously, are distributed by Nationwide
Financial Services, Inc. ("NFS"), One Nationwide Plaza, Columbus, Ohio 43216, a
wholly owned subsidiary of the Company. During the fiscal years ended December
31, 1995, 1994 and 1993, no underwriting commissions were paid by the Company to
NFS.
CALCULATIONS OF PERFORMANCE
Any current yield quotations of the Nationwide Money Market Fund
Sub-Account, subject to Rule 482 of the Securities Act of 1933, shall consist of
a seven calendar day historical yield, carried at least to the nearest hundredth
of a percent. The yield shall be calculated by determining the net change,
exclusive of capital changes, in the value of hypothetical pre-existing account
having a balance of one accumulation unit at the beginning of the base period,
subtracting a hypothetical charge reflecting deductions from Annuitant accounts,
and dividing the net change in account value by the value of the account at the
beginning of the period to obtain a base period return, and multiplying the base
period return by (365/7) or (366/7) in a leap year.
The Nationwide Money Market Fund Sub-Account's yield and effective yield
will fluctuate daily. Actual yields will depend on factors such as the type of
instruments in the Nationwide Money Market Fund's portfolio, portfolio quality
and average maturity, changes in interest rates, and the Fund's expenses.
Although the Sub-Account determines its yield on the basis of a seven calendar
day period, it may use a different time period on occasion. The yield quotes may
reflect the expense limitation described "Investment Manager and Other Services"
in the Fund's Statement of Additional Information. There is no assurance that
the yields quoted on any given occasion will remain in effect for any period of
time and there is no guarantee that the net asset values will remain constant.
It should be noted that an Annuitant's investment in the Nationwide Money Market
Fund Sub-Account is not guaranteed or insured. Yield of other money market funds
may not be comparable if a different base period or another method of
calculation is used.
All performance advertising shall also include quotations of standardized
average annual total return, calculated in accordance with a standard method
prescribed by rules of the Securities and Exchange Commission, to facilitate
comparison with standardized Average annual total return advertised for a
specific period is found by first taking a hypothetical $1,000 investment in
each of the Sub-Accounts' units on the first day of the period at the offering
price, which is the Accumulation Unit Value per unit ("initial investment") and
computing the ending redeemable value ("redeemable value") of that investment at
the end of the period. The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N represents the number
of years in the period) and 1 is subtracted from the result which is then
expressed as a percentage, carried to at least the nearest hundredth of a
percent. Standardized average annual total return reflects the deduction of a
1.40% Mortality, Expense Risk and Administration Charge. The redeemable value
also reflects the effect of any applicable Contingent Deferred Sales Charge that
may be imposed at the end of the period (See "Contingent Deferred Sales Charge"
located in the prospectus). No deduction is made for premium taxes which may be
assessed by certain states. Nonstandardized total return may also be advertised,
and is calculated in a manner similar to standardized average annual total
return except the nonstandardized total return is based on a hypothetical
initial investment of $25,000 and does not reflect the deduction of any
applicable Contingent Deferred Sales Charge. Reflecting the Contingent Deferred
Sales Charge would decrease the level of the performance advertised. The
Contingent Deferred Sales Charge is not reflected because the Contract is
designed for long term investment. An assumed initial investment of $25,000 will
be used because that figure more closely approximates the size of a typical
Contract than does the $1,000 figure used in calculating the standardized
average annual total return quotations.
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The standardized average annual total return and nonstandardized total
return quotations will be current to the last day of the calendar quarter
preceding the date on which an advertisement is submitted for publication. Both
the standardized average annual return and the nonstandardized total return will
be based on rolling calendar quarters and will cover periods of one, five, and
ten years, or a period covering the time the underlying Mutual Fund option held
in the Sub-Account has been in existence, if the underlying Mutual Fund option
has not been in existence for one of the prescribed periods. For those
underlying Mutual Fund options which have not been held as Sub-Accounts within
the Variable Account for one of the quoted periods, the standardized average
annual total return and nonstandardized total return quotations will show the
investment performance such underlying Mutual Fund options would have achieved
(reduced by the applicable charges) had they been held as Sub-Accounts within
the Variable Account for the period quoted.
Quotations of standardized average annual total return and non-standardized
total return are based upon historical earnings and will fluctuate. Any
quotation of performance, therefore, would not be considered a guarantee of
future performance. Factors affecting a Sub-Account's performance include
general market conditions, operating expenses and investment management. An
Annuitant's account when redeemed may be more or less than original cost.
ANNUITY PAYMENTS
See "Frequency and Amount of Annuity payments" located in the prospectus.
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INDEPENDENT AUDITORS' REPORT
The Board of Directors and Contract Owners of
Nationwide Variable Account
Nationwide Life Insurance Company:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Variable Account as of December 31, 1995,
and the related statements of operations and changes in contract owners' equity
and schedules of changes in unit value for each of the years in the three year
period then ended. These financial statements and schedules of changes in unit
value are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedules of changes in
unit value based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedules of
changes in unit value are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and the
transfer agents of the underlying mutual funds. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and schedules of changes in unit
value referred to above present fairly, in all material respects, the financial
position of Nationwide Variable Account as of December 31, 1995, and the results
of its operations and its changes in contract owners' equity and the schedules
of changes in unit value for each of the years in the three year period then
ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 6, 1996
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<PAGE> 2
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NATIONWIDE VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Delaware Group Delchester High-Yield Bond Fund, Inc. - Delchester Fund
Institutional Class (DeHyBd)
128,274 shares (cost $830,095).......................................... $ 799,146
Dreyfus A Bonds Plus, Inc. (DryABds)
38,435 shares (cost $543,964)........................................... 573,452
Dreyfus S&P 500 Index Fund (Dry500Ix)
25,439 shares (cost $441,378)........................................... 483,346
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
19,137 shares (cost $145,856)........................................... 157,688
The Evergreen Total Return Fund - Class Y (EvTotRet)
38,436 shares (cost $746,258)........................................... 765,641
Fidelity Asset Manager(TM) (FidAsMgr)
140,095 shares (cost $2,053,447)........................................ 2,220,511
Fidelity Capital & Income Fund (FidCapIn)
155,140 shares (cost $1,319,326)........................................ 1,421,081
Fidelity Equity-Income Fund (FidEqInc)
322,227 shares (cost $10,020,804)....................................... 12,222,089
Fidelity Magellan(R) Fund (FidMgln)
105,965 shares (cost $8,110,929)........................................ 9,110,906
Fidelity Puritan Fund (FidPurtn)
255,404 shares (cost $4,071,433)........................................ 4,344,424
Fidelity VIP - High Income Portfolio (FidHiInc)
36,914 shares (cost $421,562)........................................... 444,813
Janus Twenty Fund (Jan20Fd)
44,023 shares (cost $1,120,595)......................................... 1,130,065
MFS(R) World Governments Fund - Class A (MFSWdGvt)
110,656 shares (cost $1,301,562)........................................ 1,219,428
Nationwide(R) Bond Fund (NWBdFd)
152,673 shares (cost $1,466,716)........................................ 1,493,137
Nationwide(R) Fund (NWFund)
101,546 shares (cost $1,541,872)........................................ 1,788,228
Nationwide(R) Growth Fund (NWGroFd)
260,900 shares (cost $2,674,654)........................................ 3,216,893
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Nationwide(R) Money Market Fund (NWMyMkt)
9,255,173 shares (cost $9,255,173)...................................... 9,255,173
Neuberger & Berman Guardian Fund (NBGuard)
75,897 shares (cost $1,645,853)......................................... 1,747,909
Neuberger & Berman Limited Maturity Bond Fund (NBLtdMat)
97,260 shares (cost $969,786)........................................... 987,192
Neuberger & Berman Partners Fund (NBPartFd)
49,549 shares (cost $1,069,012)......................................... 1,097,025
Oppenheimer Global Fund - Class A (OppGlob)
71,647 shares (cost $2,500,229)......................................... 2,499,779
Phoenix Balanced Fund Series - Class A (PhxBalFd)
16,103 shares (cost $257,112)........................................... 270,526
Strong Total Return Fund, Inc. (StTotRet)
21,668 shares (cost $570,584)........................................... 614,935
Templeton Foreign Fund - Class I (TemForFd)
83,517 shares (cost $772,935)........................................... 766,686
Twentieth Century Growth Investors (TCGroInv)
545,125 shares (cost $11,527,624)....................................... 10,569,971
Twentieth Century International Equity (TCIntlEq)
38,477 shares (cost $288,806)........................................... 299,354
Twentieth Century Ultra Investors (TCUltra)
125,466 shares (cost $2,834,209)........................................ 3,275,919
Twentieth Century U.S. Governments Short-Term (TCUSGvt)
463,231 shares (cost $4,415,647)........................................ 4,437,748
-----------
Total investments................................................... 77,213,065
Accounts receivable......................................................... 13,735
-----------
Total assets........................................................ 77,226,800
Accounts payable............................................................ 424
-----------
Contract owners' equity (note 4)............................................ $77,226,376
===========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 4
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NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Investment activity:
Reinvested capital gains and dividends.................. $ 5,403,676 4,476,720 2,952,700
Gain (loss) on investments: ------------ ----------- -----------
Proceeds from redemptions of mutual fund shares..... 19,494,999 19,343,653 14,007,169
Cost of mutual fund shares sold..................... (19,182,917) (18,215,058) (11,941,205)
------------ ----------- -----------
Realized gain (loss) on investments................. 312,082 1,128,595 2,065,964
Change in unrealized gain (loss) on investments..... 6,984,871 (5,977,389) (991,082)
------------ ----------- -----------
Net gain (loss) on investments.................. 7,296,953 (4,848,794) 1,074,882
------------ ----------- -----------
Net investment activity..................... 12,700,629 (372,074) 4,027,582
------------ ----------- -----------
Equity transactions:
Purchase payments received from contract
owners.............................................. 21,817,759 16,078,025 5,555,624
Redemptions............................................. (11,831,829) (5,989,583) (5,484,670)
Annuity benefits........................................ (18,792) (19,197) (19,218)
Adjustments to maintain reserves........................ 5,498 1,593 2,272
------------ ----------- -----------
Net equity transactions..................... 9,972,636 10,070,838 54,008
------------ ----------- -----------
Expenses (note 2):
Contract charges........................................ (898,746) (735,120) (641,707)
Contingent deferred sales charges....................... (43,999) (50,816) (70,164)
------------ ----------- -----------
Total expenses.............................. (942,745) (785,936) (711,871)
------------ ----------- -----------
Net change in contract owners' equity....................... 21,730,520 8,912,828 3,369,719
Contract owners' equity beginning of period................. 55,495,856 46,583,028 43,213,309
------------ ----------- -----------
Contract owners' equity end of period....................... $ 77,226,376 55,495,856 46,583,028
============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE> 5
- --------------------------------------------------------------------------------
NATIONWIDE VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide Variable Account (the Account) was established pursuant to
a resolution of the Board of Directors of Nationwide Life Insurance Company (the
Company) on March 3, 1976. The Account has been registered as a unit investment
trust under the Investment Company Act of 1940.
The Company offers Individual Deferred Variable Annuity Contracts through
the Account. As of December 25, 1982, only tax qualified contracts are issued.
The primary distribution for the contracts is through the Company for Individual
Retirement Account rollovers; however, other distributors may be utilized.
(b) The Contracts
Only contracts without a front-end sales charge, but with a contingent
deferred sales charge and certain other fees, are offered for purchase. See note
2 for a discussion of contract expenses.
With certain exceptions, contract owners in either the accumulation or
the payout phase may invest in the following:
Delaware Group Delchester High-Yield Bond Fund, Inc. - Delchester Fund
Institutional Class (DeHyBd)
Dreyfus A Bonds Plus, Inc. (DryABds)
Dreyfus S&P 500 Index Fund (Dry500Ix) (formerly Peoples Index Fund(R),
Inc. (PeoIxFd))
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
The Evergreen Total Return Fund - Class Y (EvTotRet)
Fidelity Advisor Equity-Income Fund - Class A (FAEqInc)
Fidelity Advisor Growth Opportunities Fund - Class A (FAGrOpp)
Fidelity Advisor High Yield Fund - Class A (FAHiYld)
Fidelity Advisor Income & Growth Fund - Class A (FAIncGr)
Fidelity Asset Manager(TM) (FidAsMgr)
Fidelity Capital & Income Fund (FidCapIn)
(not available for additional purchase payments or exchanges after
May 1, 1991)
Fidelity Equity-Income Fund (FidEqInc)
Fidelity Magellan(R) Fund (FidMgln)
Fidelity Puritan Fund (FidPurtn)
Portfolio of the Fidelity Variable Insurance Products Fund (Fidelity
VIP); Fidelity VIP - High Income Portfolio (FidHiInc) (not
available for additional purchase payments or exchanges after
December 1, 1993)
Janus Fund (JanFund)
Janus Twenty Fund (Jan20Fd)
MFS(R) World Governments Fund - Class A (MFSWdGvt)
Nationwide(R) Bond Fund (NWBdFd) (managed for a fee by an affiliated
investment advisor)
Nationwide(R) Fund (NWFund) (managed for a fee by an affiliated
investment advisor)
Nationwide(R) Growth Fund (NWGroFd) (managed for a fee by an
affiliated investment advisor)
Nationwide(R) Money Market Fund (NWMyMkt) (managed for a fee by an
affiliated investment advisor)
Nationwide(R) U.S. Government Income Fund (NWUSGvt)
(managed for a fee by an affiliated investment advisor)
Neuberger & Berman Guardian Fund (NBGuard)
Neuberger & Berman Limited Maturity Bond Fund (NBLtdMat)
Neuberger & Berman Partners Fund (NBPartFd)
Oppenheimer Global Fund - Class A (OppGlob)
Phoenix Balanced Fund Series - Class A (PhxBalFd)
Strong Total Return Fund, Inc. (StTotRet)
Templeton Foreign Fund - Class I (TemForFd)
Twentieth Century Growth Investors (TCGroInv)
Twentieth Century International Equity (TCIntlEq)
Twentieth Century Ultra Investors (TCUltra)
Twentieth Century U.S. Governments Short-Term (TCUSGvt)
Warburg Pincus Emerging Growth - Common Shares (WPEmGro)
<PAGE> 6
At December 31, 1995, contract owners have invested in all of the above
funds, except the Fidelity Advisor Equity-Income Fund - Class A, the Fidelity
Advisor Growth Opportunities Fund - Class A, the Fidelity Advisor High Yield
Fund - Class A, the Fidelity Advisor Income & Growth Fund - Class A, the Janus
Fund, the Nationwide(R) U.S. Government Income Fund, and the Warburg Pincus
Emerging Growth - Common Shares.
The contract owners' equity is affected by the investment results of each
fund, equity transactions by contract owners and certain contract expenses (see
note 2). The accompanying financial statements include only contract owners'
purchase payments pertaining to the variable portions of their contracts and
exclude any purchase payments for fixed dollar benefits, the latter being
included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing net
asset value per share at December 31, 1995. The cost of investments sold is
determined on a specific identification basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with, operations
of the Company which is taxed as a life insurance company under the Internal
Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, if any, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments
received from the contract owners. However, if any part of the contract value of
such contracts is surrendered, the Company will, with certain exceptions, deduct
from a contract owner's contract value a contingent deferred sales charge. For
contracts issued prior to January 1, 1993, the contingent deferred sales charge
will be equal to 5% of the lesser of the total of all purchase payments made
within 96 months prior to the date of the request for surrender or the amount
surrendered. For contracts issued on or after January 1, 1993, the Company will
deduct a contingent deferred sales charge not to exceed 7% of the lesser of
purchase payments or the amount surrendered, such charge declining 1% per year,
to 0%, after the purchase payment has been held in the contract for 84 months.
No sales charges are deducted on redemptions used to purchase units in the fixed
investment options of the Company.
The following administrative charges are deducted by the Company: (a) an
annual contract maintenance charge of $30, with certain exceptions, which is
satisfied by surrendering units; and (b) for contracts issued prior to January
1, 1993, a charge for mortality and expense risk assessed through the daily unit
value calculation equal to an annual rate of 0.80% and 0.50%, respectively; for
contracts issued on or after January 1, 1993, a mortality risk charge, an
expense risk charge and an administration charge assessed through the daily unit
value calculation equal to an annual rate of 0.80%, 0.45% and 0.05%,
respectively.
<PAGE> 7
(3) SCHEDULE I
Schedule I presents the components of the change in the unit values,
which are the basis for contract owners' equity. This schedule is presented in
the following format:
- Beginning unit value - Jan. 1
- Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to
capital gains and dividend distributions from the underlying
mutual funds.)
- Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)
- Contract charges
(This amount reflects the decrease in the unit value due to the
mortality risk charge, expense risk charge and administration
charge discussed in note 2.)
- Ending unit value - Dec. 31
- Percentage increase (decrease) in unit value.
For contracts in the payout phase, an assumed investment return of 3.5%,
used in the calculation of the annuity benefit payment amount, results in a
corresponding reduction in the components of the unit values as shown in
Schedule I.
<PAGE> 8
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1995,
for each series, in both the accumulation and payout phases.
<TABLE>
<CAPTION>
Contract owners' equity represented by: Units Unit Value
------- ----------
<S> <C> <C>
Contracts in accumulation phase:
Delaware Group Delchester High-Yield
Bond Fund, Inc. - Delchester Fund
Institutional Class:
Tax qualified...................................... 65,214 $12.257125 $ 799,336
Dreyfus A Bonds Plus, Inc.:
Tax qualified...................................... 53,005 10.819193 573,471
Dreyfus S&P 500 Index Fund:
Tax qualified...................................... 33,323 14.505515 483,367
The Dreyfus Third Century Fund, Inc.:
Tax qualified...................................... 12,292 12.829548 157,701
The Evergreen Total Return Fund - Class Y:
Tax qualified...................................... 60,789 12.594984 765,636
Fidelity Asset Manager(TM):
Tax qualified...................................... 198,546 11.183603 2,220,460
Fidelity Capital & Income Fund:
Tax qualified...................................... 37,608 37.550944 1,412,216
Fidelity Equity-Income Fund:
Tax qualified...................................... 263,736 46.285491 12,207,150
Fidelity Magellan(R) Fund:
Tax qualified...................................... 563,859 16.158074 9,110,875
Fidelity Puritan Fund:
Tax qualified...................................... 301,466 14.410892 4,344,394
Fidelity VIP - High Income Portfolio:
Tax qualified...................................... 22,970 19.364421 444,801
Janus Twenty Fund:
Tax qualified...................................... 96,594 11.699046 1,130,058
MFS(R) World Governments Fund - Class A:
Tax qualified...................................... 34,015 35.454983 1,206,001
Nationwide(R) Bond Fund:
Tax qualified...................................... 38,843 37.782872 1,467,600
Non-tax qualified.................................. 622 37.620900 23,400
Nationwide(R) Fund:
Tax qualified...................................... 30,473 57.857937 1,763,105
Non-tax qualified.................................. 258 60.264917 15,548
Nationwide(R) Growth Fund:
Tax qualified...................................... 48,841 65.471148 3,197,676
Non-tax qualified.................................. 120 69.129314 8,296
Nationwide(R) Money Market Fund:
Tax qualified - Pre 12/25/82....................... 49,996 23.797066 1,189,758
Tax qualified...................................... 424,693 18.898613 8,026,109
Non-tax qualified.................................. 1,323 23.947460 31,682
Neuberger & Berman Guardian Fund:
Tax qualified...................................... 139,046 12.571028 1,747,951
Neuberger & Berman Limited Maturity Bond Fund:
Tax qualified...................................... 91,976 10.735070 987,369
Neuberger & Berman Partners Fund:
Tax qualified...................................... 73,504 14.924653 1,097,022
Oppenheimer Global Fund - Class A:
Tax qualified...................................... 160,871 15.538850 2,499,750
Phoenix Balanced Fund Series - Class A:
Tax qualified...................................... 23,786 11.373217 270,523
Strong Total Return Fund, Inc.:
Tax qualified...................................... 41,291 14.893186 614,955
Templeton Foreign Fund - Class I:
Tax qualified...................................... 69,083 11.097523 766,650
Twentieth Century Growth Investors:
Tax qualified...................................... 231,124 45.274141 10,463,941
Twentieth Century International Equity:
Tax qualified...................................... 25,477 11.748911 299,327
Twentieth Century Ultra Investors:
Tax qualified...................................... 266,570 12.289075 3,275,899
Twentieth Century U.S. Governments Short-Term:
Tax qualified...................................... 216,620 20.449954 4,429,869
======= ==========
Reserves for annuity contracts in payout phase:
Tax qualified...................................... 194,480
-----------
$77,226,376
===========
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 9
- --------------------------------------------------------------------------------
SCHEDULE I
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
DeHyBd DryABds Dry500Ix Dry3dCen EvTotRet FidAsMgr FidCapIn FidEqInc
------ ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995***
Beginning unit value - Jan. 1 $10.867271 9.110600 10.749166 9.570659 10.301799 9.589367 32.589111 35.576037
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.215468 .658102 .397253 .897413 .668749 .319835 3.427571 2.721500
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .327407 1.181188 3.524795 2.507797 1.773798 1.408821 2.006467 8.520244
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.153021) (.130697) (.165699) (.146321) (.149362) (.134420) (.472205) (.532290)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $12.257125 10.819193 14.505515 12.829548 12.594984 11.183603 37.550944 46.285491
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 13% 19% 35% 34% 22% 17% 15% 30%
===================================================================================================================================
1994
Beginning unit value - Jan. 1 $11.511092 10.000000 10.819026 10.477293 11.153183 10.415849 34.612981 35.955883
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.272604 .673864 1.169814 1.340681 .771284 .386944 2.899199 3.474735
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.770117) (1.452714) (1.099729) (2.117415) (1.484673) (1.082752) (4.479225) (3.384084)
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.146308) ( .110550) (.139945) (.129900) (.137995) (.130674) (.443844) (.470497)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $10.867271 9.110600 10.749166 9.570659 10.301799 9.589367 32.589111 35.576037
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (6)% (9)%(b) (1)% (9)% (8)% (8)% (6)% (1)%
===================================================================================================================================
1993
Beginning unit value - Jan. 1 $10.000000 ** 10.000000 10.000000 10.000000 10.000000 28.076548 30.029661
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.182306 .620996 .763556 1.208371 .409348 2.810534 1.323037
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .471495 .332942 (.155922) .084471 .034341 4.147502 5.040278
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.142709) (.134912) (.130341) (.139659) (.027840) (.421603) (.437093)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $11.511092 10.819026 10.477293 11.153183 10.415849 34.612981 35.955883
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 15%(b) 8%(b) 5%(b) 12%(b) 4%(b) 23% 20%
===================================================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not utilized for the entire year indicated.
**This investment option was not available or was not utilized.
***No other investment options were being utilized.
<PAGE> 10
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
FidMgln FidPurtn FidHiInc Jan20Fd MFSWdGvt NWBdFd NWFund
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995**
Beginning unit value - Jan. 1 $11.964387 12.020413 16.267014 8.701036 31.104159 30.832258 45.095466
- ----------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .938243 .761762 1.177771 1.991385 4.432437 2.340919 3.894595
- ----------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.445891 1.800691 2.155057 1.142737 .359301 5.062302 9.527720
- ----------------------------------------------------------------------------------------------------------------------
Contract charges (.190447) (.171974) (.235421) (.136112) (.440914) (.452607) (.659844)
- ----------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $16.158074 14.410892 19.364421 11.699046 35.454983 37.782872 57.857937
- ----------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 35% 20% 19% 34% 14% 23% 28%
======================================================================================================================
1994
Beginning unit value - Jan. 1 $12.346838 11.972512 16.739460 9.451097 33.728667 33.991130 45.422888
- ----------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .480494 .964375 1.533862 .025710 1.658769 2.317590 4.420863
- ----------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.704119) (.757623) (1.790091) (.657508) (3.874555) (5.061696) (4.160340)
- ----------------------------------------------------------------------------------------------------------------------
Contract charges (.158826) (.158851) (.216217) (.118263) (.408722) (.414766) (.587945)
- ----------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $11.964387 12.020413 16.267014 8.701036 31.104159 30.832258 45.095466
- ----------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (3)% 0% (3)% (8)% (8)% (9)% (1)%
======================================================================================================================
1993
Beginning unit value - Jan. 1 $10.000000 10.000000 14.073333 10.000000 28.864451 31.104546 43.104048
- ----------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.173742 1.451507 1.157225 .264912 3.190912 2.458273 3.251045
- ----------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.321301 .666192 1.712047 (.787472) 2.083311 .864801 (.371871)
- ----------------------------------------------------------------------------------------------------------------------
Contract charges (.148205) (.145187) (.203145) (.026343) (.410007) (.436490) (.560334)
- ----------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $12.346838 11.972512 16.739460 9.451097 33.728667 33.991130 45.422888
- ----------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 23%(b) 20%(b) 19% (5)%(b) 17% 9% 5%
======================================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not utilized for the entire year indicated.
**No other investment options were being utilized.
<PAGE> 11
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
NWMyMkt
NWGroFd Pre 12/25/82 NWMyMkt NBGuard NBLtdMat NBPartFd OppGlob
--------- ------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995***
Beginning unit value - Jan. 1 $51.535806 22.850271 18.146709 9.640402 9.833352 11.183371 13.503390
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 6.923629 1.251864 .994176 .546753 .635595 1.728556 .955752
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 7.791689 .000000 .000000 2.533695 .401069 2.184589 1.269343
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.779976) (.305069) (.242272) (.149822) (.134946) (.171863) (.189635)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $65.471148 23.797066 18.898613 12.571028 10.735070 14.924653 15.538850
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 27% 4% 4% 30% 9% 33% 15%
=========================================================================================================================
1994
Beginning unit value - Jan. 1 $51.458079 22.315407 17.721943 10.000000 9.995028 11.548721 14.119303
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.956402 .829315 .658609 .249418 .555641 .945341 1.418589
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.208860) .000000 .000000 (.492915) (.588488) (1.162325) (1.850696)
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.669815) (.294451) (.233843) (.116101) (.128829) (.148366) (.183806)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $51.535806 22.850271 18.146709 9.640402 9.833352 11.183371 13.503390
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 0% 2% 2% (4)%(b) (2)% (3)% (4)%
=========================================================================================================================
1993
Beginning unit value - Jan. 1 $46.832151 22.042019 17.504831 ** 10.000000 10.000000 10.000000
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.830294 .563931 .447841 .190065 1.163476 1.251857
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.434588 .000000 .000000 (.162079) .524641 3.014957
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.638954) (.290543) (.230729) (.032958) (.139396) (.147511)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $51.458079 22.315407 17.721943 9.995028 11.548721 14.119303
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 10% 1% 1% 0%(b) 15%(b) 41%(b)
=========================================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance
charge discussed in note 2; and
(b) This investment option was not utilized for the entire year
indicated.
** This investment option was not available or was not utilized.
*** No other investment options were being utilized.
<PAGE> 12
- --------------------------------------------------------------------------------
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
PhxBalFd StTotRet TemForFd TCGroInv TCIntlEq TCUltra TCUSGvt
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995***
Beginning unit value - Jan. 1 $ 9.338434 11.881033 10.000000 38.113717 10.000000 9.043121 18.748399
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .913359 .793239 .700873 6.277505 .010869 .581551 1.086234
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.255938 2.394151 .523675 1.457594 1.867440 2.805900 .873119
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.134514) (.175237) (.127025) (.574675) (.129398) (.141497) (.257798)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $11.373217 14.893186 11.097523 45.274141 11.748911 12.289075 20.449954
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 22% 25% 11%(b) 19% 17%(b) 36% 9%
=========================================================================================================================
1994
Beginning unit value - Jan. 1 $10.000000 12.205201 ** 39.197771 ** 9.505758 19.087872
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .295350 .172665 5.656730 .283163 .888205
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.843207) (.340340) (6.232359) (.626504) (.981660)
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.113709) (.156493) (.508425) (.119296) (.246018)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $9.338434 11.881033 38.113717 9.043121 18.748399
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (7)%(b) (3)% (3)% (5)% (2)%
=========================================================================================================================
1993
Beginning unit value - Jan. 1 ** $10.000000 ** 38.275689 ** 10.000000 18.563845
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .191064 4.379740 .000000 .652799
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.158921 (2.963789) (.468221) .119394
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.144784) (.493869) (.026021) (.248166)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $12.205201 39.197771 9.505758 19.087872
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 22%(b) 2% (5)%(b) 3%
=========================================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance
charge discussed in note 2; and
(b) This investment option was not utilized for the entire year
indicated.
** This investment option was not available or was not utilized.
*** No other investment options were being utilized.
- --------------------------------------------------------------------------------
<PAGE> 13
- --------------------------------------------------------------------------------
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
NWBdFd NWFund NWGroFd NWMyMkt
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $30.700082 46.971513 54.415339 22.994681
- --------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 2.330893 4.056617 7.310483 1.259777
- --------------------------------------------------------------------------------------------------
Unrealized gain (loss) 5.040599 9.924079 8.227039 .000000
- --------------------------------------------------------------------------------------------------
Contract charges (.450674) (.687292) (.823547) (.306998)
- --------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $37.620900 60.264917 69.129314 23.947460
- --------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 23% 28% 27% 4%
==================================================================================================
1994
Beginning unit value - Jan. 1 $33.845410 47.312558 54.333269 22.456439
- --------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 2.307668 4.604779 2.065716 .834547
- --------------------------------------------------------------------------------------------------
Unrealized gain (loss) (5.040000) (4.333421) (1.276404) .000000
- --------------------------------------------------------------------------------------------------
Contract charges (.412996) (.612403) (.707242) (.296305)
- --------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $30.700082 46.971513 54.415339 22.994681
- --------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* (9)% (1)% 0% 2%
==================================================================================================
1993
Beginning unit value - Jan. 1 $30.971200 44.897247 49.448867 22.181323
- --------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 2.447737 3.386294 1.932560 .567483
- --------------------------------------------------------------------------------------------------
Unrealized gain (loss) .861084 (.387333) 3.626496 .000000
- --------------------------------------------------------------------------------------------------
Contract charges (.434611) (.583650) (.674654) (.292367)
- --------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $33.845410 47.312558 54.333269 22.456439
- --------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 9% 5% 10% 1%
==================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as contract charges do not
include the annual contract maintenance charge discussed in note 2.
See note 3.
- -------------------------------------------------------------------------------
<PAGE> 36
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Nationwide Life Insurance Company:
We have audited the consolidated financial statements of Nationwide Life
Insurance Company (a wholly owned subsidiary of Nationwide Corporation) and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the financial
statement schedules as listed in the accompanying index. These consolidated
financial statements and financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
Participating insurance and the related surplus are discussed in note 12. The
Company and its counsel are of the opinion that the ultimate ownership of the
participating surplus in excess of the contemplated equitable policyholder
dividends belongs to the shareholder. The accompanying consolidated financial
statements are presented on such basis.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide Life
Insurance Company and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
In 1994, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities.
In 1993, the Company adopted the provisions of SFAS No. 109, Accounting for
Income Taxes and SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions.
KPMG Peat Marwick LLP
Columbus, Ohio
February 26, 1996
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Balance Sheets
December 31, 1995 and 1994
(000's omitted)
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ----------------- ----------------
<S> <C> <C>
Investments (notes 5, 8 and 9):
Securities available-for-sale, at fair value:
Fixed maturities (cost $13,438,630 in 1995; $8,318,865 in 1994) $ 14,167,377 8,045,906
Equity securities (cost $27,362 in 1995; $18,372 in 1994) 33,718 24,713
Fixed maturities held-to-maturity, at amortized cost (fair value $3,602,310 in 1994) - 3,688,787
Mortgage loans on real estate 4,786,599 4,222,284
Real estate 239,089 252,681
Policy loans 370,908 340,491
Other long-term investments 67,280 63,914
Short-term investments (note 13) 45,732 131,643
----------- -----------
19,710,703 16,770,419
----------- -----------
Cash 10,485 7,436
Accrued investment income 239,881 220,540
Deferred policy acquisition costs 1,094,195 1,064,159
Deferred Federal income tax -- 36,515
Other assets 795,169 790,603
Assets held in Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
$40,614,111 31,112,133
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Future policy benefits and claims (notes 6 and 8) 18,200,128 16,321,461
Policyholders' dividend accumulations 353,554 338,058
Other policyholder funds 71,155 72,770
Accrued Federal income tax (note 7):
Current 34,064 13,126
Deferred 238,877 -
----------- -----------
272,941 13,126
----------- -----------
Other liabilities 284,143 235,778
Liabilities related to Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
37,945,599 29,203,654
----------- -----------
Shareholder's equity (notes 3, 4, 5, 7, 12 and 13):
Capital shares, $1 par value. Authorized 5,000 shares, issued and
outstanding 3,815 shares 3,815 3,815
Additional paid-in capital 673,782 622,753
Retained earnings 1,606,607 1,401,579
Unrealized gains (losses) on securities available-for-sale, net 384,308 (119,668)
----------- -----------
2,668,512 1,908,479
----------- -----------
Commitments and contingencies (notes 9 and 15)
$40,614,111 31,112,133
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Income
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
--------------- -------------- -------------
<S> <C> <C> <C>
Revenues (note 16):
Traditional life insurance premiums $ 274,957 209,538 215,715
Accident and health insurance premiums 509,658 324,524 312,655
Universal life and investment product policy charges 307,676 239,021 188,057
Net investment income (note 5) 1,482,980 1,289,501 1,204,426
Realized gains (losses) on investments (notes 5 and 13) 836 (16,384) 113,673
---------- ---------- ----------
2,576,107 2,046,200 2,034,526
---------- ---------- ----------
Benefits and expenses:
Benefits and claims 1,656,287 1,279,763 1,236,906
Provision for policyholders' dividends on participating policies (note 12) 48,074 46,061 53,189
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Other operating costs and expenses 458,970 352,402 329,396
---------- ---------- ----------
2,256,375 1,772,970 1,721,625
---------- ---------- ----------
Income before Federal income tax expense and cumulative effect of
changes in accounting principles 319,732 273,230 312,901
---------- ---------- ----------
Federal income tax expense (note 7):
Current 103,464 79,847 75,124
Deferred 3,790 9,657 31,634
---------- ---------- ----------
107,254 89,504 106,758
---------- ---------- ----------
Income before cumulative effect of changes in accounting principles 212,478 183,726 206,143
Cumulative effect of changes in accounting principles, net (note 3) -- -- 5,365
---------- ---------- ----------
Net income $ 212,478 183,726 211,508
========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Unrealized
gains (losses)
Additional on securities Total
Capital paid-in Retained available-for- shareholder's
shares capital earnings sale, net equity
----------- ----------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
1993:
Balance, beginning of year $ 3,815 311,753 1,024,150 90,524 1,430,242
Capital contributions -- 111,000 -- -- 111,000
Dividends paid to shareholder -- -- (17,805) -- (17,805)
Net income -- -- 211,508 -- 211,508
Unrealized losses on equity securities, net -- -- -- (83,777) (83,777)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 422,753 1,217,853 6,747 1,651,168
========== ========== ========= ========== ==========
1994:
Balance, beginning of year 3,815 422,753 1,217,853 6,747 1,651,168
Capital contribution -- 200,000 -- -- 200,000
Net income -- -- 183,726 -- 183,726
Adjustment for change in accounting for
certain investments in debt and equity
securities, net (note 3) -- -- -- 216,915 216,915
Unrealized losses on securities available-
for-sale, net -- -- -- (343,330) (343,330)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 622,753 1,401,579 (119,668) 1,908,479
========== ========== ========== ========== ==========
1995:
Balance, beginning of year 3,815 622,753 1,401,579 (119,668) 1,908,479
Capital contribution (note 13) -- 51,029 -- (4,111) 46,918
Dividends paid to shareholder -- -- (7,450) -- (7,450)
Net income -- -- 212,478 -- 212,478
Unrealized gains on securities available-
for-sale, net -- -- -- 508,087 508,087
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 673,782 1,606,607 384,308 2,668,512
========== ========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
-------------- ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 212,478 183,726 211,508
Adjustments to reconcile net income to net cash provided by operating
activities:
Capitalization of deferred policy acquisition costs (349,456) (264,434) (191,994)
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Amortization and depreciation 10,319 6,207 11,156
Realized losses (gains) on invested assets, net 717 15,949 (113,648)
Deferred Federal income tax expense (benefit) 4,023 (2,166) (6,006)
Increase in accrued investment income (19,341) (29,654) (4,218)
Increase in other assets (3,227) (112,566) (549,277)
Increase in policy liabilities 198,200 1,038,641 509,370
Increase in policyholders' dividend accumulations 15,496 15,372 17,316
Increase in accrued Federal income tax payable 20,938 832 16,838
Increase in other liabilities 48,365 17,826 26,958
Other, net (20,556) (19,303) (11,745)
----------- ----------- ------------
Net cash provided by operating activities 211,000 945,174 18,392
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 706,442 579,067 --
Proceeds from sale of securities available-for-sale 131,420 247,876 247,502
Proceeds from maturity of fixed maturities held-to-maturity 633,173 516,003 1,192,093
Proceeds from sale of fixed maturities -- -- 33,959
Proceeds from repayments of mortgage loans on real estate 215,134 220,744 146,047
Proceeds from sale of real estate 48,477 46,713 23,587
Proceeds from repayments of policy loans and sale of other invested assets 79,620 134,998 59,643
Cost of securities available-for-sale acquired (2,232,047) (2,569,672) (12,550)
Cost of fixed maturities held-to-maturity acquired (669,449) (675,835) (2,016,831)
Cost of mortgage loans on real estate acquired (821,078) (627,025) (475,336)
Cost of real estate acquired (10,970) (15,962) (8,827)
Policy loans issued and other invested assets acquired (92,904) (118,012) (76,491)
----------- ----------- ------------
Net cash used in investing activities (2,012,182) (2,261,105) (887,204)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from capital contributions 46,918 200,000 111,000
Dividends paid to shareholder (7,450) -- (17,805)
Increase in universal life and investment product account balances 3,202,135 3,640,958 2,249,740
Decrease in universal life and investment product account balances (1,523,283) (2,449,580) (1,458,504)
----------- ----------- -----------
Net cash provided by financing activities 1,718,320 1,391,378 884,431
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (82,862) 75,447 15,619
Cash and cash equivalents, beginning of year 139,079 63,632 48,013
----------- ----------- -----------
Cash and cash equivalents, end of year $ 56,217 139,079 63,632
=========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(000's omitted)
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS
Nationwide Life Insurance Company (NLIC) is a wholly owned subsidiary of
Nationwide Corporation (Corp.). Wholly-owned subsidiaries of NLIC include
Nationwide Life and Annuity Insurance Company (NLAIC) (formerly known as
Financial Horizons Life Insurance Company), West Coast Life Insurance
Company (WCLIC), Employers Life Insurance Company of Wausau and
subsidiaries (ELICW), National Casualty Company (NCC) and Nationwide
Financial Services, Inc. (NFS). NLIC and its subsidiaries are
collectively referred to as "the Company."
NLIC, NLAIC, WCLIC and ELICW are life and accident and health insurers
and NCC is a property and casualty insurer. The Company is licensed in
all 50 states, the District of Columbia, the Virgin Islands and Puerto
Rico. The Company offers a full range of life insurance, health insurance
and annuity products through exclusive agents, brokers and other
distribution channels and is subject to competition from other insurers
throughout the United States. The Company is subject to regulation by the
Insurance Departments of states in which it is licensed, and undergoes
periodic examinations by those departments.
The following is a description of the most significant risks facing
life and health insurers and how the Company mitigates those risks:
LEGAL/REGULATORY RISK is the risk that changes in the legal or
regulatory environment in which an insurer operates will create
additional expenses not anticipated by the insurer in pricing its
products. That is, regulatory initiatives designed to reduce insurer
profits, new legal theories or insurance company insolvencies through
guaranty fund assessments may create costs for the insurer beyond
those currently recorded in the consolidated financial statements. The
Company mitigates this risk by offering a wide range of products and
by operating throughout the United States, thus reducing its exposure
to any single product or jurisdiction, and also by employing
underwriting practices which identify and minimize the adverse impact
of this risk.
CREDIT RISK is the risk that issuers of securities owned by the
Company or mortgagors on mortgage loans on real estate owned by the
Company will default or that other parties, including reinsurers,
which owe the Company money, will not pay. The Company minimizes this
risk by adhering to a conservative investment strategy, by maintaining
sound reinsurance and credit and collection policies and by
providing for any amounts deemed uncollectible.
INTEREST RATE RISK is the risk that interest rates will change and
cause a decrease in the value of an insurer's investments. This change
in rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent
that liabilities come due more quickly than assets mature, an insurer
would have to borrow funds or sell assets prior to maturity and
potentially recognize a gain or loss.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) which
differ from statutory accounting practices prescribed or permitted by
regulatory authorities. See note 4.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosures of contingent assets and liabilities as of the
date of the consolidated financial statements and the reported amounts of
revenues and expenses for the reporting period. Actual results could differ
significantly from those estimates.
The most significant estimates include those used in determining deferred
policy acquisition costs, valuation allowances for mortgage loans on real
estate and real estate investments and the liability for future policy benefits
and claims. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
(a) CONSOLIDATION POLICY
The December 31, 1995 consolidated financial statements include the
accounts of NLIC and its wholly owned subsidiaries NLAIC, WCLIC, ELICW, NCC
and NFS. The December 31, 1994 and 1993 consolidated financial statements
include the accounts of NLIC, NLAIC, WCLIC, NCC and NFS. The December 31,
1994 consolidated balance sheet also includes the accounts of ELICW, which
was acquired by NLIC effective December 31, 1994. See Note 13. All
significant intercompany balances and transactions have been eliminated.
(b) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES
The Company is required to classify its fixed maturity securities and
equity securities as either held-to-maturity, available-for-sale or
trading. Fixed maturity securities are classified as held-to-maturity when
the Company has the positive intent and ability to hold the securities to
maturity and are stated at amortized cost. Fixed maturity securities not
classified as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the unrealized gains
and losses, net of adjustments to deferred policy acquisition costs and
deferred Federal income tax, reported as a separate component of
shareholder's equity. The adjustment to deferred policy acquisition costs
represents the change in amortization of deferred policy acquisition costs
that would have been required as a charge or credit to operations had such
unrealized amounts been realized. The Company has no fixed maturity
securities classified as held-to-maturity or trading as of
December 31, 1995.
Mortgage loans on real estate are carried at the unpaid principal balance
less valuation allowances. The Company provides valuation allowances for
impairments of mortgage loans on real estate based on a review by portfolio
managers. The measurement of impaired loans is based on the present value
of expected future cash flows discounted at the loan's effective interest
rate or, as a practical expedient, at the fair value of the collateral, if
the loan is collateral dependent. Loans in foreclosure and loans considered
to be impaired are placed on non-accrual status. Interest received on
non-accrual status mortgage loans on real estate are included in interest
income in the period received.
Real estate is carried at cost less accumulated depreciation and valuation
allowances. Other long-term investments are carried on the equity basis,
adjusted for valuation allowances.
Realized gains and losses on the sale of investments are determined on the
basis of specific security identification. Estimates for valuation
allowances and other than temporary declines are included in realized gains
and losses on investments.
In March, 1995, the Financial Accounting Standards Board (FASB) issued
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 121 - ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF
(SFAS 121). SFAS 121 requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. SFAS 121 also addresses
the accounting for long-lived assets that are expected to be disposed of.
The statement is effective for fiscal years beginning after December 15,
1995 and earlier application is permitted. Previously issued consolidated
financial statements shall not be restated. The Company will adopt SFAS 121
in 1996 and the impact on the consolidated financial statements is not
expected to be material.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(c) REVENUES AND BENEFITS
TRADITIONAL LIFE INSURANCE PRODUCTS: Traditional life insurance
products include those products with fixed and guaranteed premiums and
benefits and consist primarily of whole life, limited-payment life, term
life and certain annuities with life contingencies. Premiums for
traditional life insurance products are recognized as revenue when due.
Benefits and expenses are associated with earned premiums so as to result
in recognition of profits over the life of the contract. This association
is accomplished by the provision for future policy benefits and the
deferral and amortization of policy acquisition costs.
UNIVERSAL LIFE AND INVESTMENT PRODUCTS: Universal life products include
universal life, variable universal life and other interest-sensitive life
insurance policies. Investment products consist primarily of individual and
group deferred annuities, annuities without life contingencies and
guaranteed investment contracts. Revenues for universal life and investment
products consist of asset fees, cost of insurance, policy administration
and surrender charges that have been earned and assessed against policy
account balances during the period. Policy benefits and claims that are
charged to expense include benefits and claims incurred in the period in
excess of related policy account balances and interest credited to policy
account balances.
ACCIDENT AND HEALTH INSURANCE: Accident and health insurance premiums
are recognized as revenue over the terms of the policies. Policy claims are
charged to expense in the period that the claims are incurred.
(d) DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions, certain
expenses of the policy issue and underwriting department and certain
variable agency expenses have been deferred. For traditional life and
individual health insurance products, these deferred policy acquisition
costs are predominantly being amortized with interest over the premium
paying period of the related policies in proportion to the ratio of actual
annual premium revenue to the anticipated total premium revenue. Such
anticipated premium revenue was estimated using the same assumptions as
were used for computing liabilities for future policy benefits. For
universal life and investment products, deferred policy acquisition costs
are being amortized with interest over the lives of the policies in
relation to the present value of estimated future gross profits from
projected interest margins, asset fees, cost of insurance, policy
administration and surrender charges. For years in which gross profits are
negative, deferred policy acquisition costs are amortized based on the
present value of gross revenues. Deferred policy acquisition costs are
adjusted to reflect the impact of unrealized gains and losses on fixed
maturity securities available-for-sale as described in note 2(b).
(e) SEPARATE ACCOUNTS
Separate Account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific investment
objectives. The investment income and gains or losses of these accounts
accrue directly to the contractholders. The activity of the Separate
Accounts is not reflected in the consolidated statements of income and cash
flows except for the fees the Company receives for administrative services
and risks assumed.
(f) FUTURE POLICY BENEFITS
Future policy benefits for traditional life and individual health
insurance policies have been calculated using a net level premium method
based on estimates of mortality, morbidity, investment yields and
withdrawals which were used or which were being experienced at the time the
policies were issued, rather than the assumptions prescribed by state
regulatory authorities. See note 6.
Future policy benefits for annuity policies in the accumulation phase,
universal life and variable universal life policies have been calculated
based on participants' contributions plus interest credited less applicable
contract charges.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Future policy benefits and claims for collectively renewable long-term
disability policies (primarily discounted at 5.2%) and group long-term
disability policies (primarily discounted at 5.5%) are the present value of
amounts not yet due on reported claims and an estimate of amounts to be
paid on incurred but unreported claims. The impact of reserve discounting
is not material. Future policy benefits and claims on other
group health insurance policies are not discounted.
(g) PARTICIPATING BUSINESS
Participating business represents approximately 45% (45% in 1994 and
48% in 1993) of the Company's ordinary life insurance in force, 72% (72% in
1994 and 1993) of the number of policies in force, and 39% (41% in 1994 and
45% in 1993) of life insurance premiums. The provision for policyholder
dividends is based on current dividend scales. Future dividends are
provided for ratably in future policy benefits based on dividend scales in
effect at the time the policies were issued. Dividend scales are approved
by the Board of Directors.
Income attributable to participating policies in excess of policyholder
dividends is accounted for as belonging to the shareholder. See note 12.
(h) FEDERAL INCOME TAX
NLIC, NLAIC, WCLIC and NCC file a consolidated Federal income tax
return with Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Corp. Through 1994, ELICW filed a consolidated Federal
income tax return with Employers Insurance of Wausau A Mutual Company.
Beginning in 1995, ELICW files a separate Federal income tax return.
In 1993, the Company adopted STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 109 - ACCOUNTING FOR INCOME TAXES, which required a change
from the deferred method of accounting for income tax of APB Opinion 11 to
the asset and liability method of accounting for income tax. Under the
asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under this method, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when necessary to
reduce the deferred tax assets to the amounts expected to be realized.
The Company has reported the cumulative effect of the change in method
of accounting for income tax in the 1993 consolidated statement of income.
See note 3.
(i) REINSURANCE CEDED
Reinsurance premiums ceded and reinsurance recoveries on benefits and
claims incurred are deducted from the respective income and expense
accounts. Assets and liabilities related to reinsurance ceded are reported
on a gross basis.
(j) CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company
considers all short-term investments with original maturities of three
months or less to be cash equivalents.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(k) RECLASSIFICATION
Certain items in the 1994 and 1993 consolidated financial
statements have been reclassified to conform to the 1995
presentation.
(3) CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1994, the Company changed its method of
accounting for certain investments in debt and equity securities in
connection with the issuance of STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 115 - ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. As of January 1, 1994, the Company classified fixed
maturity securities with amortized cost and fair value of $6,593,844
and $7,024,736, respectively, as available-for-sale and recorded the
securities at fair value. Previously, these securities were recorded
at amortized cost. The effect as of January 1, 1994 has been recorded
as a direct credit to shareholder's equity as follows:
<TABLE>
<CAPTION>
<S> <C>
Excess of fair value over amortized cost of fixed maturity
securities available-for-sale $ 430,892
Adjustment to deferred policy acquisition costs (97,177)
Deferred Federal income tax (116,800)
---------
$ 216,915
=========
During 1993, the Company adopted accounting principles in connection
with the issuance of two accounting standards by the FASB. The effect
as of January 1, 1993, the date of adoption, has been recognized in
the 1993 consolidated statement of income as the cumulative effect of
changes in accounting principles, as follows:
Asset/liability method of recognizing income tax (note 2(h)) $ 26,344
Accrual method of recognizing postretirement benefits other
than pensions (net of tax benefit of $11,296) (note 11) (20,979)
--------
$ 5,365
========
</TABLE>
(4) BASIS OF PRESENTATION
The consolidated financial statements have been prepared in accordance
with GAAP. Annual Statements for NLIC and NLAIC, WCLIC, ELICW and NCC,
filed with the Department of Insurance of the State of Ohio (the
Department), California Department of Insurance, Wisconsin Insurance
Department and Michigan Bureau of Insurance, respectively, are prepared
on the basis of accounting practices prescribed or permitted by such
regulatory authorities. Prescribed statutory accounting practices
include a variety of publications of the National Association of
Insurance Commissioners (NAIC), as well as state laws, regulations and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The Company has
no material permitted statutory accounting practices.
The statutory capital shares and surplus of NLIC as reported to
regulatory authorities as of December 31, 1995, 1994 and 1993 was
$1,363,031, $1,262,861 and $992,631, respectively. The statutory net
income of NLIC as reported to regulatory authorities for the years
ended December 31, 1995, 1994 and 1993 was $86,529, $76,532 and
$185,943, respectively.
<PAGE> 11
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(5) INVESTMENTS
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------ ------------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturities $ 772,589 674,346 --
Equity securities 1,436 550 7,230
Fixed maturities held-to-maturity 232,692 193,009 800,255
Mortgage loans on real estate 410,965 376,783 364,810
Real estate 39,222 40,280 39,684
Short-term investments 12,249 6,990 5,080
Other 61,701 42,831 33,832
---------- ---------- ----------
Total investment income 1,530,854 1,334,789 1,250,891
Less investment expenses 47,874 45,288 46,465
---------- ---------- ----------
Net investment income $1,482,980 1,289,501 1,204,426
========== ========== ==========
</TABLE>
An analysis of realized gains (losses) on investments, net of
valuation allowances, by investment type follows for the years ended
December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- --------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 6,792 (7,120) --
Equity securities 3,435 1,427 129,728
Fixed maturities -- -- 20,225
Mortgage loans on real estate (7,312) (20,462) (28,241)
Real estate and other (2,079) 9,771 (8,039)
-------- -------- --------
$ 836 (16,384) 113,673
======== ======== ========
</TABLE>
The components of unrealized gains (losses) on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
1995 1994
--------------- -------------
<S> <C> <C>
Gross unrealized gains (losses) $ 735,103 (266,618)
Adjustment to deferred policy acquisition costs (143,851) 82,525
Deferred Federal income tax (206,944) 64,425
--------- ---------
$ 384,308 (119,668)
========= =========
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale and fixed maturities held-to-maturity
follows for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- -------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 1,001,706 (703,851) --
Equity securities 15 (1,990) (128,837)
Fixed maturities held-to-maturity 86,477 (421,427) 223,392
----------- ----------- -----------
$ 1,088,198 (1,127,268) 94,555
=========== =========== ===========
</TABLE>
<PAGE> 12
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of securities available-for-sale
were as follows as of December 31, 1995:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
-------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 438,109 36,714 (53) 474,770
Obligations of states and political subdivisions 9,742 1,252 (1) 10,993
Debt securities issued by foreign governments 162,442 9,641 (66) 172,017
Corporate securities 8,902,494 524,796 (30,561) 9,396,729
Mortgage-backed securities 3,925,843 196,645 (9,620) 4,112,868
--------- ----------- ----------- -----------
Total fixed maturities 13,438,630 769,048 (40,301) 14,167,377
Equity securities 27,362 6,441 (85) 33,718
---------- ----------- ----------- -----------
$13,465,992 775,489 (40,386) 14,201,095
=========== =========== ============ ===========
</TABLE>
The amortized cost and estimated fair value of securities available-for-sale
and fixed maturities held-to-maturity were as follows as of December 31, 1994:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE-FOR-SALE
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 393,156 1,794 (18,941) 376,009
Obligations of states and political subdivisions 2,202 55 (21) 2,236
Debt securities issued by foreign governments 177,910 872 (9,205) 169,577
Corporate securities 4,201,738 50,405 (128,698) 4,123,445
Mortgage-backed securities 3,543,859 18,125 (187,345) 3,374,639
---------- ---------- ---------- ---------
Total fixed maturities 8,318,865 71,251 (344,210) 8,045,906
Equity securities 18,372 6,637 (296) 24,713
---------- ---------- ---------- ---------
$8,337,237 77,888 (344,506) 8,070,619
========== ========= ========== =========
FIXED MATURITY SECURITIES HELD-TO-MATURITY
Obligations of states and political subdivisions $ 11,613 92 (255) 11,450
Debt securities issued by foreign governments 16,131 111 (39) 16,203
Corporate securities 3,661,043 34,180 (120,566) 3,574,657
---------- ---------- ---------- ---------
$3,688,787 34,383 (120,860) 3,602,310
========== ========== ========== =========
</TABLE>
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of fixed maturity securities
available-for-sale as of December 31, 1995, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
----------- ------------
<S> <C> <C>
FIXED MATURITY SECURITIES AVAILABLE-FOR-SALE
- --------------------------------------------
Due in one year or less $ 641,490 647,639
Due after one year through five years 5,365,703 5,623,126
Due after five years through ten years 2,477,457 2,609,262
Due after ten years 1,028,137 1,174,482
----------- -----------
9,512,787 10,054,509
Mortgage-backed securities 3,925,843 4,112,868
----------- -----------
$13,438,630 14,167,377
=========== ===========
</TABLE>
Proceeds from the sale of securities available-for-sale during 1995 and 1994
were $131,420 and $247,876, respectively, while proceeds from sales of
investments in fixed maturity securities during 1993 were $33,959. Gross gains
of $7,197 ($3,406 in 1994 and $2,413 in 1993) and gross losses of $2,309
($21,866 in 1994 and $39 in 1993) were realized on those sales.
During 1995, the Company transferred fixed maturity securities classified as
held-to-maturity with amortized cost of $27,929 to available-for-sale
securities due to evidence of a significant deterioration in the issuer's
creditworthiness. The transfer of those fixed maturity securities resulted in
a gross unrealized loss of $4,285.
As permitted by the FASB's Special Report, A GUIDE TO IMPLEMENTATION OF
STATEMENT 115 ON ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES, issued in November, 1995, the Company transferred all of its fixed
maturity securities previously classified as held-to-maturity to
available-for-sale. As of December 14, 1995, the date of transfer, the fixed
maturity securities had amortized cost of $3,705,644, resulting in a gross
unrealized gain of $171,531.
Investments that were non-income producing for the twelve month period
preceding December 31, 1995 amounted to $28,958 ($11,513 for 1994) and
consisted of $8,228 (none in 1994) in fixed maturity securities, $14,740
($11,111 in 1994) in real estate and $5,990 ($402 in 1994) in other long-term
investments.
Real estate is presented at cost less accumulated depreciation of $30,931 in
1995 ($29,275 in 1994) and valuation allowances of $26,250 in 1995 ($27,330 in
1994).
Other long-term investments are presented net of valuation allowances of $457
as of December 31, 1995. There were no such valuation allowances as of December
31, 1994.
As of December 31, 1995, the recorded investment of mortgage loans on real
estate considered to be impaired (under STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN as amended
by STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 118, ACCOUNTING BY CREDITORS
FOR IMPAIRMENT OF A LOAN - INCOME RECOGNITION AND DISCLOSURE) was $44,995,
which includes $23,975 of impaired mortgage loans on real estate for which the
related valuation allowance was $5,276 and $21,020 of impaired mortgage loans
on real estate for which there was no valuation allowance. During 1995, the
average recorded investment in impaired mortgage loans on real estate was
approximately $22,621 and interest income recognized on those loans was $416,
which is equal to interest income recognized using a cash-basis method of
income recognition.
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the year ended December 31, 1995:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Allowance, beginning year $ 47,892
Additions charged to operations 7,653
Direct write-downs charged against the allowance (4,850)
--------
Allowance, end of year $ 50,695
========
</TABLE>
Foresclosures of mortgage loans on real estate were $37,187 in 1994 and
mortgage loans on real estate in process of foreclosure or in-substance
foreclosed as of December 31, 1994 totaled $19,878, which approximated fair
value.
Fixed maturity securities with an amortized cost of $13,982 and $11,137 as
of December 31, 1995 and 1994, respectively, were on deposit with various
regulatory agencies as required by law.
(6) FUTURE POLICY BENEFITS AND CLAIMS
The liability for future policy benefits for investment contracts represents
approximately 82% and 81% of the total liability for future policy benefits
as of December 31, 1995 and 1994, respectively. The average interest rate
credited on investment product policies was approximately 6.5%, 6.5% and
7.0% for the years ended December 31, 1995, 1994 and 1993, respectively.
The liability for future policy benefits for traditional life insurance and
individual health insurance policies has been established based upon the
following assumptions:
INTEREST RATES: Interest rates vary as follows:
<TABLE>
<CAPTION>
Health
Year of issue Life Insurance insurance
-------------- ------------------------------------------------------------ ---------------
<S> <C> <C>
1995 7.6%, not graded - permanent contracts with loan provisions 4.5%
7.7%, not graded - all other contracts
1984-1994 6.0% to 10.5%, not graded 5.0% to 6.0%
1966-1983 6.0% to 8.1%, graded over 20 years to 4.0% to 6.6% 3.5% to 6.0%
1965 and prior generally lower than post 1965 issues 3.5% to 4.0%
</TABLE>
WITHDRAWALS: Rates, which vary by issue age, type of coverage and
policy duration, are based on Company experience.
MORTALITY: Mortality and morbidity rates are based on published tables,
modified for the Company's actual experience.
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the liability for unpaid claims and claim adjustment expenses is
summarized for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 637,998 592,180 760,209
Less reinsurance recoverables 438,761 430,720 547,683
--------- --------- ---------
Net balance, beginning of year 199,237 161,460 212,526
--------- --------- ---------
Incurred related to:
Current year 425,907 273,299 309,721
Prior years (17,203) (26,156) (26,248)
--------- --------- ---------
Total incurred 408,704 247,143 283,473
--------- --------- ---------
Paid related to:
Current year 290,605 175,700 208,978
Prior years 111,353 73,889 125,561
--------- --------- ---------
Total paid 401,958 249,589 334,539
--------- --------- ---------
Unpaid claims of acquired companies 2,542 40,223 --
--------- --------- ---------
Net balance, end of year 208,525 199,237 161,460
Plus reinsurance recoverables 491,321 438,761 430,720
--------- --------- ---------
Balance, end of year $ 699,846 637,998 592,180
========= ========= =========
</TABLE>
Reinsurance recoverables include amounts from affiliates, as discussed in
note 13, of $477,912, $430,936, $430,278 and $534,983 as of December 31,
1995, 1994, 1993 and 1992, respectively.
The provision for claims and claim adjustment expenses for prior years
decreased in each of the three years ended December 31, 1995 due to
lower-than-anticipated costs to settle accident and health insurance claims.
(7) FEDERAL INCOME TAX
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset (liability) as of December 31,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $ 179,916 124,044
Fixed maturity securities available-for-sale -- 95,536
Liabilities in Separate Accounts 129,120 94,783
Mortgage loans on real estate and real estate 26,062 25,632
Other policyholder funds 7,752 7,137
Other assets and other liabilities 47,215 57,528
--------- ---------
Total gross deferred tax assets 390,065 404,660
--------- ---------
Deferred tax liabilities:
Deferred policy acquisition costs 312,616 317,224
Fixed maturity securities available-for-sale 266,184 --
Equity securities available-for-sale and other
long-term investments 3,431 3,620
Other 46,711 47,301
--------- ---------
Total gross deferred tax liabilities 628,942 368,145
--------- ---------
$(238,877) 36,515
========= =========
</TABLE>
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company has determined that valuation allowances are not necessary as
of December 31, 1995, 1994 and 1993 based on its analysis of future
deductible amounts. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion
of the total gross deferred tax assets will not be realized. All future
deductible amounts can be offset by future taxable amounts or recovery of
Federal income tax paid within the statutory carryback period. In
addition, for future deductible amounts for securities available-for-sale,
affiliates of the Company which are included in the same consolidated
Federal income tax return hold investments that could be sold for capital
gains that could offset capital losses realized by the Company should
securities available-for-sale be sold at a loss.
<TABLE>
Total Federal income tax expense for the years ended December 31, 1995,
1994 and 1993 differs from the amount computed by applying the U.S.
Federal income tax rate to income before tax as follows:
<CAPTION>
1995 1994 1993
---------------------- ---------------------- ----------------------
Amount % Amount % Amount %
--------------- ----- -------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $ 111,906 35.0 $ 95,631 35.0 $ 109,515 35.0
Tax exempt interest and dividends
received deduction (137) (0.1) (194) (0.1) (2,322) (0.7)
Current year increase in U.S. Federal
income tax rate -- -- -- -- 1,704 0.5
Other, net (4,515) (1.4) (5,933) (2.1) (2,139) (0.7)
--------- ---- --------- ---- --------- ----
Total (effective rate of each year) $ 107,254 33.5 $ 89,504 32.8 $ 106,758 34.1
========= ==== ========= ==== ========= ====
</TABLE>
Total Federal income tax paid was $75,309, $87,576 and $58,286 during the
years ended December 31, 1995, 1994 and 1993, respectively.
Prior to 1984, the Life Insurance Company Income Tax Act of 1959 as
amended by the Deficit Reduction Act of 1984 (DRA), permitted the deferral
from taxation of a portion of statutory income under certain
circumstances. In these situations, the deferred income was accumulated in
the Policyholders' Surplus Account (PSA). Management considers the
likelihood of distributions from the PSA to be remote; therefore, no
Federal income tax has been provided for such distributions in the
consolidated financial statements. The DRA eliminated any additional
deferrals to the PSA. Any distributions from the PSA, however, will
continue to be taxable at the then current tax rate. The balance of the
PSA was approximately $35,344 as of December 31, 1995.
(8) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 107 - DISCLOSURES ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS (SFAS 107) requires disclosure of fair
value information about existing on and off-balance sheet financial
instruments. SFAS 107 defines the fair value of a financial instrument as
the amount at which the financial instrument could be exchanged in a
current transaction between willing parties. In cases where quoted market
prices are not available, fair value is based on estimates using present
value or other valuation techniques.
These techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. Although
fair value estimates are calculated using assumptions that management
believes are appropriate, changes in assumptions could cause these
estimates to vary materially. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets
and,in many cases, could not be realized in the immediate settlement of
the instruments. SFAS 107 excludes certain assets and liabilities from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from SFAS 107 disclosures, estimated fair value of policy reserves on
life insurance contracts are provided to make the fair value disclosures
more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
CASH, SHORT-TERM INVESTMENTS AND POLICY LOANS: The carrying
amount reported in the consolidated balance sheets for these
instruments approximates their fair value.
FIXED MATURITY AND EQUITY SECURITIES: Fair value for fixed
maturity securities is based on quoted market prices, where available.
For fixed maturity securities not actively traded, fair value is
estimated using values obtained from independent pricing services or,
in the case of private placements, is estimated by discounting
expected future cash flows using a current market rate applicable to
the yield, credit quality and maturity of the investments. The fair
value for equity securities is based on quoted market prices.
SEPARATE ACCOUNT ASSETS AND LIABILITIES: The fair value of
assets held in Separate Accounts is based on quoted market prices. The
fair value of liabilities related to Separate Accounts is the
amount payable on demand.
MORTGAGE LOANS ON REAL ESTATE: The fair value for mortgage
loans on real estate is estimated using discounted cash flow analyses,
using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations. Fair
value for mortgages in default is the estimated fair value of the
underlying collateral.
INVESTMENT CONTRACTS: Fair value for the Company's liabilities under
investment type contracts is disclosed using two methods. For
investment contracts without defined maturities, fair value is the
amount payable on demand. For investment contracts with known or
determined maturities, fair value is estimated using discounted cash
flow analysis. Interest rates used are similar to currently offered
contracts with maturities consistent with those remaining for the
contracts being valued.
POLICY RESERVES ON LIFE INSURANCE CONTRACTS: Included are disclosures
for individual life, universal life and supplementary contracts with
life contingencies for which the estimated fair value is the amount
payable on demand. Also included are disclosures for the Company's
limited payment policies, which the Company has used discounted cash
flow analyses similar to those used for investment contracts with
known maturities to estimate fair value.
POLICYHOLDERS' DIVIDEND ACCUMULATIONS AND OTHER POLICYHOLDER FUNDS:
The carrying amount reported in the consolidated balance sheets for
these instruments approximates their fair value.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Carrying amount and estimated fair value of financial instruments
subject to SFAS 107 and policy reserves on life insurance contracts were
as follow as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------------------------- -------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
- ------
Investments:
Securities available-for-sale:
Fixed maturities $14,167,377 14,167,377 8,045,906 8,045,906
Equity securities 33,718 33,718 24,713 24,713
Fixed maturities held-to-maturity -- -- 3,688,787 3,602,310
Mortgage loans on real estate 4,786,599 5,169,805 4,222,284 4,173,284
Policy loans 370,908 370,908 340,491 340,491
Short-term investments 45,732 45,732 131,643 131,643
Cash 10,485 10,485 7,436 7,436
Assets held in Separate Accounts 18,763,678 18,763,678 12,222,461 12,222,461
LIABILITIES
- -----------
Investment contracts 13,561,943 13,221,724 12,189,894 11,657,556
Policy reserves on life insurance contacts 3,695,814 3,659,074 3,170,085 2,934,384
Policyholders' dividend accumulations 353,554 353,554 338,058 338,058
Other policyholder funds 71,155 71,155 72,770 72,770
Liabilities related to Separate Accounts 18,763,678 18,224,933 12,222,461 11,807,331
</TABLE>
(9) ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURES
--------------------------------------------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: The Company is a party to
financial instruments with off-balance-sheet risk in the normal course of
business through management of its investment portfolio. These financial
instruments include commitments to extend credit in the form of loans. These
instruments involve, to varying degrees, elements of credit risk in excess
of amounts recognized on the consolidated balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are agreements
to lend to a borrower, and are subject to conditions established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a deposit. Commitments
extended by the Company are based on management's case-by-case credit
evaluation of the borrower and the borrower's loan collateral. The
underlying mortgage property represents the collateral if the commitment is
funded. The Company's policy for new mortgage loans on real estate is to
lend no more than 80% of collateral value. Should the commitment be funded,
the Company's exposure to credit loss in the event of nonperformance by the
borrower is represented by the contractual amounts of these commitments less
the net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments. Commitments on
mortgage loans on real estate of $361,974 extending into 1996 were
outstanding as of December 31, 1995.
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the United
States. The Company has a diversified portfolio with no more than 20% (22%
in 1994) in any geographic area and no more than 2% (2% in 1994) with any
one borrower.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The summary below depicts loans by remaining principal balance as of
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995:
East North Central $ 140,732 110,361 534,814 184,201 970,108
East South Central 23,978 15,653 183,790 84,588 308,009
Mountain -- 18,940 144,156 48,727 211,823
Middle Atlantic 124,079 72,201 183,562 18,383 398,225
New England 9,594 39,526 153,644 1 202,765
Pacific 190,628 239,687 395,914 107,650 933,879
South Atlantic 101,904 74,731 458,355 279,692 914,682
West North Central 134,866 14,205 81,521 37,586 268,178
West South Central 69,143 99,618 194,717 272,323 635,801
--------- --------- --------- --------- ---------
$ 794,924 684,922 2,330,473 1,033,151 4,843,470
========= ========= ========= =========
Less valuation allowances and unamortized discount 56,871
---------
Total mortgage loans on real estate, net $4,786,599
=========
</TABLE>
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1994:
East North Central $ 109,233 103,499 540,686 191,489 944,907
East South Central 24,298 10,803 127,845 76,897 239,843
Mountain 3,150 13,770 140,358 39,682 196,960
Middle Atlantic 61,299 53,285 140,847 30,111 285,542
New England 10,536 43,282 139,131 4 192,953
Pacific 195,393 210,930 397,911 68,768 873,002
South Atlantic 87,150 81,576 424,150 210,354 803,230
West North Central 127,760 11,766 80,854 4,738 225,118
West South Central 51,013 84,796 184,923 194,788 515,520
--------- --------- --------- --------- ---------
$ 669,832 613,707 2,176,705 816,831 4,277,075
========= ========= ========= =========
Less valuation allowances and unamortized discount 54,791
---------
Total mortgage loans on real estate, net $4,222,284
=========
</TABLE>
(10) PENSION PLAN
------------
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least one
thousand hours of service within a twelve-month period and who have met
certain age requirements. Benefits are based upon the highest average
annual salary of a specified number of consecutive years of the last ten
years of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company.
Effective January 1, 1995, the plan was amended to provide enhanced
benefits for participants who met certain eligibility requirements and
elected early retirement no later than March 15, 1995. The entire cost of
the enhanced benefit was borne by NMIC and certain of its property and
casualty insurance company affiliates.
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Effective December 31, 1995, the Nationwide Insurance Companies and
Affiliates Retirement Plan was merged with the Farmland Mutual Insurance
Company Employees' Retirement Plan and the Wausau Insurance Companies
Pension Plan to form the Nationwide Insurance Enterprise Retirement
Plan. Immediately prior to the merger, the plans were amended to provide
consistent benefits for service after January 1, 1996. These amendments had
no significant impact on the accumulated benefit obligation or projected
benefit obligation as of December 31, 1995.
Pension costs charged to operations by the Company during the years ended
December 31, 1995, 1994 and 1993 were $14,105, $10,451 and $6,702,
respectively.
The Company's net accrued pension expense as of December 31, 1995 and
1994 was $1,376 and $1,836, respectively.
The net periodic pension cost for the Nationwide Insurance Companies and
Affiliates Retirement Plan as a whole for the years ended December 31,
1995, 1994 and 1993 follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 64,524 64,740 47,694
Interest cost on projected benefit obligation 95,283 73,951 70,543
Actual return on plan assets (249,294) (21,495) (105,002)
Net amortization and deferral 143,353 (62,150) 20,832
--------- --------- ---------
$ 53,866 55,046 34,067
========= ========= =========
</TABLE>
Basis for measurements, net periodic pension cost:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Weighted average discount rate 7.50% 5.75% 6.75%
Rate of increase in future compensation levels 6.25% 4.50% 4.75%
Expected long-term rate of return on plan assets 8.75% 7.00% 7.50%
</TABLE>
Information regarding the funded status of the Nationwide Insurance
Enterprise Retirement Plan as a whole as of December 31, 1995
(post-merger) and the Nationwide Insurance Companies and Affiliates
Retirement Plan as of December 31, 1995 (pre-merger) and 1994 follows:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Accumulated benefit obligation:
Vested $ 1,236,730 1,002,079 914,850
Nonvested 26,503 8,998 7,570
----------- ----------- -----------
$ 1,263,233 1,011,077 922,420
=========== =========== ===========
Net accrued pension expense:
Projected benefit obligation for services rendered
to date $ 1,780,616 1,447,522 1,305,547
Plan assets at fair value 1,738,004 1,508,781 1,241,771
----------- ----------- -----------
Plan assets (less than) in excess of projected
benefit obligation (42,612) 61,259 (63,776)
Unrecognized prior service cost 42,845 42,850 46,201
Unrecognized net (gains) losses (63,130) (86,195) 39,408
Unrecognized net obligation (asset) at transition 41,305 (19,841) (21,994)
----------- ----------- -----------
$ (21,592) (1,927) (161)
=========== =========== ===========
</TABLE>
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Basis for measurements, funded status of plan:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Weighed average discount rate 6.00% 6.00% 7.50%
Rate of increase in future compensation levels 4.25% 4.25% 6.25%
</TABLE>
Assets of the Nationwide Insurance Enterprise Retirement Plan are invested
in group annuity contracts of NLIC and ELICW. Prior to the merger, the
assets of the Nationwide Insurance Companies and Affiliates Retirement
Plan were invested in a group annuity contract of NLIC.
(11) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
-------------------------------------------
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years of
service with the Company after reaching age 40. Postretirement health
care benefit contributions are adjusted annually and contain cost-sharing
features such as deductibles and coinsurance. In addition, there are caps
on the Company's portion of the per-participant cost of the postretirement
health care benefits. These caps can increase annually, but not more than
three percent. The Company's policy is to fund the cost of health care
benefits in amounts determined at the discretion of management. Plan
assets are invested primarily in group annuity contracts of NLIC.
Effective January 1, 1993, the Company adopted the provisions of STATEMENT
OF FINANCIAL ACCOUNTING STANDARDS NO. 106 - EMPLOYERS' ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (SFAS 106), which requires the
accrual method of accounting for postretirement life and health care
insurance benefits based on actuarially determined costs to be recognized
over the period from the date of hire to the full eligibility date of
employees who are expected to qualify for such benefits.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation as of January 1, 1993. Accordingly, a
noncash charge of $32,275 ($20,979 net of related income tax benefit) was
recorded in the 1993 consolidated statement of income as a cumulative
effect of a change in accounting principle. See note 3. The adoption of
SFAS 106, including the cumulative effect of the change in accounting
principle, increased the expense for postretirement benefits by $35,277
to $36,544 in 1993. Certain affiliated companies elected to amortize their
initial transition obligation over periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of
December 31, 1995 and 1994 was $51,490 and $36,001, respectively, and the
net periodic postretirement benefit cost (NPPBC) for 1995 and 1994 was
$8,269 and $4,627, respectively.
The amount of NPPBC for the plan as a whole for the years ended
December 31, 1995, 1994 and 1993 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits attributed to employee service during the year $ 6,235 8,586 7,090
Interest cost on accumulated postretirement benefit obligation 14,151 14,011 13,928
Actual return on plan assets (2,657) (1,622) --
Amortization of unrecognized transition obligation of affiliates 2,966 568 568
Net amortization and deferral (1,619) 1,622 --
-------- -------- --------
$ 19,076 23,165 21,586
======== ======== ========
</TABLE>
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Information regarding the funded status of the plan as a whole as of
December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Accrued postretirement benefit expense:
Retirees $ 88,680 76,677
Fully eligible, active plan participants 28,793 22,013
Other active plan participants 90,375 59,089
--------- ---------
Accumulated postretirement benefit obligation (APBO) 207,848 157,779
Plan assets at fair value 54,325 49,012
--------- ---------
Plan assets less than accumulated postretirement benefit obligation (153,523) (108,767)
Unrecognized transition obligation of affiliates 1,827 6,577
Unrecognized net gains (1,038) (41,497)
--------- ---------
$(152,734) (143,687)
========= =========
</TABLE>
Actuarial assumptions used for the measurement of the APBO as of
December 31, 1995 and 1994 and the NPPBC for 1995, 1994 and 1993 were
as follows:
<TABLE>
<CAPTION>
1995 1995 1994 1994 1993
APBO NPPBC APBO NPPBC NPPBC
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Discount rate 6.75% 8% 8% 7% 8%
Assumed health care cost trend rate:
Initial rate 11% 10% 11% 12% 14%
Ultimate rate 6% 6% 6% 6% 6%
Uniform declining period 12 Years 12 Years 12 Years 12 Years 12 Years
</TABLE>
The health care cost trend rate assumption has an effect on the amounts
reported. For the plan as a whole, a one percentage point increase in
the assumed health care cost trend rate would increase the APBO as of
December 31, 1995 by $641 and the NPPBC for the year ended December 31,
1995 by $107.
(12) REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS AND DIVIDEND
RESTRICTIONS
-------------------------------------------------------------
Each insurance company's state of domicile imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within certain levels, each of
which requires specified corrective action. NLIC and each of its
insurance subsidiaries exceed the minimum risk-based capital
requirements.
In accordance with the requirements of the New York statutes, the
Company has agreed with the Superintendent of Insurance of that state
that so long as participating policies and contracts are held by
residents of New York, no profits on participating policies and
contracts in excess of the larger of (a) ten percent of such profits or
(b) fifty cents per year per thousand dollars of participating life
insurance in force, exclusive of group term, as of the year-end shall
inure to the benefit of the shareholder. Such New York statutes
further provide that so long as such agreement is in effect, such
excess of profits shall be exhibited as "participating policyholders'
surplus" in annual statements filed with the Superintendent and shall
be used only for the payment or apportionment of dividends to
participating policyholders at least to the extent required by statute
or for the purpose of making up any loss on participating policies.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In the opinion of counsel for the Company, the ultimate ownership of the
entire surplus, however classified, of the Company resides with the
shareholder, subject to the usual requirements under state laws and
regulations that certain deposits, reserves and minimum surplus be
maintained for the protection of the policyholders until all policy
contracts are discharged.
Based on the opinion of counsel with respect to the ownership of its
surplus, the Company is of the opinion that the earnings attributable to
participating policies in excess of the amounts paid as dividends to
policyholders belong to the shareholder rather than the policyholders,
and such earnings are so treated by the Company.
The amount of shareholder's equity other than capital shares was
$2,664,697, $1,904,664 and $1,647,353 as of December 31, 1995, 1994 and
1993, respectively. The amount thereof not presently available for
dividends to the shareholder due to the New York restrictions was
$1,503,241, $929,934 and $954,037 as of December 31, 1995, 1994 and 1993,
respectively.
Ohio law limits the payment of dividends to shareholders. The maximum
dividend that may be paid by the Company without prior approval of the
Director of the Department is limited to the greater of statutory gain
from operations of the preceding calendar year or 10% of statutory
shareholder's surplus as of the prior December 31. Therefore, $2,468,687
of shareholder's equity, as presented in the accompanying consolidated
financial statements, is so restricted as to dividend payments in 1996.
Each of NLIC's insurance company subsidiaries are limited in their
payment of dividends by the state insurance department of their
respective state of domicile. As of December 31, 1995, the maximum amount
of shareholder's equity available for dividend payment to NLIC in 1996 by
its insurance company subsidiaries without prior approval are:
<TABLE>
<S> <C>
Nationwide Life and Annuity Insurance Company $10,143
West Coast Life Insurance Company 13,153
Employers Life Insurance Company of Wausau 10,132
National Casualty Company --
-------
$33,428
=======
</TABLE>
(13) TRANSACTIONS WITH AFFILIATES
----------------------------
On March 1, 1995, Corp. contributed all of the outstanding shares of
Farmland Life Insurance Company (Farmland) to NLIC, which then merged
Farmland into WCLIC effective June 30, 1995. The contribution resulted in
a direct increase to consolidated shareholder's equity of $46,918. The
contribution of Farmland has been accounted for in a manner similar to a
pooling of interests and accordingly, Farmland's results are included in
the consolidated statements of income beginning January 1, 1995. However,
prior period consolidated financial statements have not been restated due
to the impact of Farmland being immaterial.
Effective December 31, 1994, NLIC purchased all of the outstanding shares
of ELICW from Wausau Service Corporation (WSC) for $155,000. NLIC
transferred fixed maturity securities and cash with a fair value of
$155,000 to WSC on December 28, 1994, which resulted in a realized loss
of $19,239 on the disposition of the securities. The purchase price
approximated both the historical cost basis and fair value of net assets
of ELICW. ELICW has and will continue to share home office, other
facilities, equipment and common management and administrative services
with WSC.
Certain annuity products are sold through three affiliated companies
which are also subsidiaries of Corp. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1995 were
$57,969, $50,470 and $44,577, respectively.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company shares home office, other facilities, equipment and common
management and administrative services with affiliates.
The Company participates in intercompany repurchase agreements with
affiliates whereby the seller will transfer securities to the buyer at a
stated value. Upon demand or a stated period, the securities will be
repurchased by the seller at the original sales price plus a price
differential. Transactions under the agreements during 1995 and
1994 were not material.
During 1993, the Company sold equity securities with a market value
$194,515 to NMIC, resulting in a realized gain of $122,823. With the
proceeds, the Company purchased securities with a market value of
$194,139 and cash of $376 from NMIC.
Intercompany reinsurance contracts exist between NLIC and NMIC, NLIC and
WCLIC, NLIC and NCC, WCLIC and NMIC and WCLIC and ELICW as of December
31, 1995. These contracts are immaterial to the consolidated financial
statements.
NCC participates in several 100% quota share reinsurance agreements with
NMIC and Nationwide Mutual Fire Insurance Company, the minority
shareholder of Corp. As a result of these agreements, the following
assets and (liabilities) are included in the consolidated financial
statements as of December 31, 1995 and 1994 for reinsurance ceded:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Reinsurance recoverable $ 590,379 541,289
Unearned premium reserves (112,467) (110,353)
Liability for unpaid claims and claim adjustment expense (477,912) (430,936)
</TABLE>
The ceding of reinsurance does not discharge the original insurer from
primary liability to its policyholder. The insurer which assumes the
coverage assumes the related liability and it is the practice of insurers
to treat insured risks, to the extent of reinsurance ceded, as though
they were risks for which the original insurer is not liable. Management
believes the financial strength of NMIC reduces to an acceptable level
any risk to NCC under these intercompany reinsurance agreements.
ELICW assumes certain accident and health insurance business from
Employers Insurance of Wausau A Mutual Company, an affiliate. During
1995, total premiums assumed by ELICW under the reinsurance
agreement were $150,622.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC) and California Cash Management
Company (CCMC), both affiliates, under which NCMC and CCMC act as common
agents in handling the purchase and sale of short-term securities for the
respective accounts of the participants. Amounts on deposit with NCMC and
CCMC were $21,644 and $92,531 as of December 31, 1995 and 1994,
respectively, and are included in short-term investments on the
accompanying consolidated balance sheets.
(14) BANK LINES OF CREDIT
--------------------
As of December 31, 1995 and 1994, NLIC had $120,000 of confirmed but
unused bank lines of credit which support a $100,000 commercial paper
borrowing authorization.
(15) CONTINGENCIES
-------------
The Company is a defendant in various lawsuits. In the opinion of
management, the effects, if any, of such lawsuits are not expected to be
material to the Company's financial position or results of operations.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(16) SEGMENT INFORMATION
-------------------
The Company operates in the long-term savings, life insurance and
accident and health insurance lines of business in the life insurance and
property and casualty insurance industries. Long-term savings operations
include both qualified and non-qualified annuity contracts issued to both
individuals and groups. Life insurance operations include whole life,
universal life, variable universal life and endowment and term life
insurance issued to individuals and groups. Accident and health insurance
operations also provide coverage to individuals and groups. Corporate
primarily includes investments, and the related investment income, which
are not specifically allocated to one of the three operating segments. In
addition, realized gains and losses on all general account investments
are reported as a component of the corporate segment.
During 1995, the Company changed its reporting segments to better reflect
the way the businesses are managed. Prior periods have been restated to
reflect these changes.
The following table summarizes the revenues and income (loss) before
Federal income tax expense and cumulative effect of changes in accounting
principles for the years ended December 31, 1995, 1994 and 1993 and
assets as of December 31, 1995, 1994 and 1993, by business segment.
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Long-term savings $ 1,406,241 1,125,013 1,048,045
Life insurance 502,885 452,795 432,343
Accident and health insurance 532,383 345,545 339,764
Corporate 134,598 122,847 214,374
------------ ------------ ------------
$ 2,576,107 2,046,200 2,034,526
============ ============ ============
Income (loss) before Federal income tax expense and
cumulative effect of changes in accounting principles:
Long-term savings 129,475 95,530 47,966
Life insurance 63,169 46,119 36,383
Accident and health insurance (12,521) 13,221 15,041
Corporate 139,609 118,360 213,511
------------ ------------ ------------
$ 319,732 273,230 312,901
============ ============ ============
Assets:
Long-term savings 34,634,892 25,815,273 20,695,598
Life insurance 3,675,581 3,231,651 2,897,574
Accident and health insurance 307,643 291,296 297,200
Corporate 1,995,995 1,773,913 1,515,989
------------ ------------ ------------
$ 40,614,111 31,112,133 25,406,361
============ ============ ============
</TABLE>
<PAGE> 26
Schedule I
-----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Summary of Investments - Other Than Investments in Related Parties
December 31, 1995
(000's omitted)
<TABLE>
<CAPTION>
----------------- --------------- ------------------
Column B Column C Column D
----------------- --------------- ---------------
Amount at which
shown in the
consolidated
Cost Market value balance sheet
----------------- ---------------- -------------------
<S> <C> <C> <C>
Fixed maturities available-for-sale:
Bonds and notes:
U.S. Government and government agencies and authorities $ 3,913,961 4,116,744 4,116,744
States, municipalities and political subdivisions 9,742 10,993 10,993
Foreign governments 162,442 172,016 172,016
Public utilities 2,053,701 2,146,000 2,146,000
All other corporate 7,298,784 7,721,624 7,721,624
----------------- ---------------- -------------------
Total fixed maturities available-for-sale 13,438,630 14,167,377 14,167,377
----------------- ---------------- -------------------
Equity securities available-for-sale:
Common stocks:
Industrial, miscellaneous and all other 26,037 32,474 32,474
Non-redeemable preferred stock 1,325 1,244 1,244
----------------- ---------------- -------------------
Total equity securities available-for-sale 27,362 33,718 33,718
----------------- ---------------- -------------------
Mortgage loans on real estate 4,838,432 4,786,599*
Real estate:
Investment properties 213,340 171,739*
Acquired in satisfaction of debt 82,930 67,350*
Policy loans 370,908 370,908
Other long-term investments 73,190 67,280#
Short-term investments 45,732 45,732
----------------- -------------------
Total investments $19,090,524 19,710,703
================= ===================
</TABLE>
* Difference from Column B is primarily due to accumulated depreciation
and valuation allowances due to impairments on real estate and
valuation allowances due to impairments on mortgage loans on real
estate. See Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations and note 5 to the consolidated
financial statements.
# Difference from Column B is primarily due to operating losses of
investments in limited partnerships.
See accompanying independent auditors' report.
<PAGE> 27
Schedule III
------------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Supplementary Insurance Information
December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Column A Column B Column C Column D Column E Column F
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Deferred Future policy Other policy
policy benefits, losses, claims and
Segment acquisition claims and Unearned premiums benefits payable Premium
costs loss expenses (1) (2) revenue
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
1995: Long-term savings $ 668,784 14,847,449 455 -
Life insurance 416,209 2,494,344 408,990 274,957
Accident and health
insurance 9,202 858,335 15,264 509,658
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $1,094,195 18,200,128 424,709 784,615
============== ===================== ================== ===============
1994: Long-term savings 663,696 13,300,015 240 -
Life insurance 387,486 2,245,375 397,174 209,538
Accident and health
insurance 12,977 776,071 13,414 324,524
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $1,064,159 16,321,461 410,828 534,062
============== ===================== ================== ===============
1993: Long-term savings 506,243 11,308,024 1,262 -
Life insurance 291,683 2,047,844 378,788 215,715
Accident and health
insurance 14,018 736,387 14,595 312,655
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $ 811,944 14,092,255 394,645 528,370
============== ===================== ================== ===============
- ----------------------------------- -------------- -------------------- ------------------ ----------------- --------------
Column A Column G Column H Column I Column J Column K
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Net Amortization Other
investment Benefits, claims, of deferred operating
Segment income losses and policy expenses Premiums
(3) settlement expenses acquisition costs (3) written
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
1995: Long-term savings $1,124,207 1,009,632 51,998 210,525
Life insurance 202,285 267,123 34,124 94,461
Accident and health
insurance 22,725 379,532 6,922 153,984 473,513
Corporate 133,763 - - -
-------------- -------------------- ------------------- ------------------
Total $1,482,980 1,656,287 93,044 458,970
============== ==================== =================== ==================
1994: Long-term savings 945,318 807,756 56,236 171,038
Life insurance 183,933 237,125 33,394 90,535
Accident and health
insurance 21,020 234,882 5,114 90,829 315,688
Corporate 139,230 - - -
-------------- -------------------- ------------------- ------------------
Total $1,289,501 1,279,763 94,744 352,402
============== ==================== =================== ==================
1993: Long-term savings 897,639 800,385 43,291 157,046
Life insurance 178,978 227,786 35,220 89,496
Accident and health
insurance 27,108 208,735 23,623 82,854 263,117
Corporate 100,701 - - -
-------------- -------------------- ------------------- ------------------
Total $1,204,426 1,236,906 102,134 329,396
============== ==================== =================== ==================
<FN>
(1) Unearned premiums are included in Column C amounts. (3) Allocations of net investment income and certain general
(2) Column E agrees to the sum of the consolidated balance expenses are based on a number of assumptions and
sheet captions, "Policyholders' dividend estimates, and reported operating results would
accumulations" and "Other policyholder funds". change by segment if different methods were applied.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 28
Schedule IV
-----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Reinsurance
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Percentage
Ceded to Assumed from of amount
Gross amount other companies other companies Net amount assumed to net
------------------- ------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
1995:
Life insurance in force $51,613,116 6,865,011 742,451 45,490,556 1.6%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 281,687 12,817 6,087 274,957 2.2%
Accident and health
insurance 427,943 73,131 154,846 509,658 30.4%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 709,630 85,948 160,933 784,615 20.5%
=================== ================== ================= ================== ===============
1994:
Life insurance in force $46,262,595 5,289,259 819,799 41,793,135 2.0%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 209,918 7,551 7,171 209,538 3.4%
Accident and health
insurance 389,573 69,095 4,046 324,524 1.2%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 599,491 76,646 11,217 534,062 2.1%
=================== ================== ================= ================== ===============
1993:
Life insurance in force $39,417,116 4,352,071 180,739 35,245,784 0.5%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 218,764 6,161 3,112 215,715 1.4%
Accident and health
insurance 398,289 88,506 2,872 312,655 0.9%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 617,053 94,667 5,984 528,370 1.1%
=================== ================== ================= ================== ===============
</TABLE>
See accompanying independent auditors' report.
<PAGE> 29
Schedule V
----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
- ------------------------------------------------- ---------------- ----------------------------- ------------- -------------
Column A Column B Column C Column D Column E
- ------------------------------------------------- ---------------- ----------------------------- ------------- -------------
Balance at Charged to Balance at
beginning of costs and Charged to Deductions end of
Description period expenses other accounts (1) period
- ------------------------------------------------- ---------------------------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1995:
Valuation allowances - fixed maturity securities $ - 10,153 - 10,153 -
Valuation allowances - mortgage loans on real
estate 47,892 7,653 - 4,850 50,695
Valuation allowances - real estate 27,330 (1,080) - - 26,250
Valuation allowances - other long-term
investments - 457 - - 457
1994:
Valuation allowances - fixed maturity securities 6,680 (6,680) - - -
Valuation allowances - mortgage loans on real
estate 42,350 21,672 - 16,130 47,892
Valuation allowances - real estate 31,357 (4,027) - - 27,330
1993:
Valuation allowances - fixed maturity securities 5,746 934 - - 6,680
Valuation allowances - mortgage loans on real
estate 31,872 28,241 - 17,763 42,350
Valuation allowances - real estate 35,471 (4,114) - - 31,357
Valuation allowances - other long-term
investments 700 (700) - - -
<FN>
(1) Amounts represent direct write-downs charged against the valuation
allowance.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 37
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: PAGE
(1) Financial statements and schedule included
in Prospectus.
(Part A):
Condensed Financial Information. N/A
(2) Financial statements and schedule included
in Part B:
Those financial statements and schedule 35
required by Item 23 to be included in
Part B have been incorporated therein
by reference to the Prospectus (Part A).
Nationwide Variable Account:
Independent Auditors' Report. 35
Statement of Assets, Liabilities and Contract 36
Owners' Equity as of December 31, 1995.
Statement of Operations and Changes in 38
Contract Owners' Equity for the years ended
December 31, 1995, 1994 and 1993.
Notes to Financial Statements. 39
Schedules of Changes in Unit Value. 43
Nationwide Life Insurance Company:
Independent Auditors' Report. 48
Consolidated Balance Sheets as of December 49
31, 1995 and 1994.
Consolidated Statements of Income for the 50
years ended December 31, 1995, 1994 and
1993.
Consolidated Statements of Shareholder's 51
Equity for the years ended December 31,
1995, 1994 and 1993.
Consolidated Statements of Cash Flows for 52
the years ended December 31, 1995, 1994,
and 1993.
Notes to Consolidated Financial Statements. 53
Schedule I - Summary of Investments - Other
Than Investments in Related Parties 73
Schedule III - Supplementary Insurance
Information 74
Schedule IV - Reinsurance 75
Schedule V - Valuation and Qualifying Accounts 76
77 of 98
<PAGE> 38
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of Directors
authorizing establishment of the separate
account
(Nationwide Variable Account)*
(2) Not Applicable
(3) Underwriting or Distribution Agreement between
Depositor and Principal Underwriter*
(4) Form of Variable Annuity Contract - attached hereto
(5) Form of Application - attached hereto
(6) Articles of Incorporation*
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - attached hereto
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Computation of Performance Quotations**
*Filed previously in conjunction with '33 Act
File No. 2-58043 and '40 Act File No. 811-2716
and hereby incorporated by reference
**Filed previously in conjunction with numerous
prior registrations (see, for example, SEC File
33-82190)
78 of 98
<PAGE> 39
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olives, NC 28365
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
1100 East Main Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Charles L. Fuellgraf, Jr. Director
600 South Washington Street
Butler, PA 16001
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Henry S. Holloway Chairman of the
1247 Stafford Road Board
Darlington, MD 21034
D. Richard McFerson Chairman and Chief Executive Officer-
One Nationwide Plaza Nationwide Insurance Enterprise
Columbus, OH 43215 and Director
David O. Miller Director
115 Sprague Drive
Hebron, Ohio 43025
C. Ray Noecker Director
2770 State Route 674 South
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
</TABLE>
79 of 98
<PAGE> 40
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
10835 Georgetown Street NE
Louisville, OH 44641
Harold W. Weihl Director
14282 King Road
Bowling Green, OH 43402
Gordon E. McCutchan Executive Vice President,
One Nationwide Plaza Law and Corporate Services
Columbus, OH 43215 and Secretary
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, Ohio 43215
James E. Brock Senior Vice President -
One Nationwide Plaza Life Company Operations
Columbus, OH 43215
W. Sidney Druen Senior Vice President and General
One Nationwide Plaza Counsel and Assistant Secretary
Columbus, OH 43215
Harvey S. Galloway, Jr. Senior Vice President-Chief Actuary-
One Nationwide Plaza Life, Health and Annuities
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Michael D. Bleiweiss Vice President-
One Nationwide Plaza Deferred Compensation
Columbus, OH 43215
</TABLE>
80 of 98
<PAGE> 41
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Matthew S. Easley Vice President -
One Nationwide Plaza Annuity and Pension Actuarial
Columbus, OH 43215
Ronald L. Eppley Vice President-
One Nationwide Plaza Pensions
Columbus, OH 43215
Timothy E. Murphy Vice President-
One Nationwide Plaza Strategic Marketing
Columbus, Ohio 43215
R. Dennis Noice Vice President-
One Nationwide Plaza Individual Investment Products
Columbus, OH 43215
Joseph P. Rath Vice President -
One Nationwide Plaza Associate General Counsel
Columbus, OH 43215
</TABLE>
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
* Subsidiaries for which separate financial statements are filed
** Subsidiaries included in the respective consolidated financial
statements
*** Subsidiaries included in the respective group financial
statements filed for unconsolidated subsidiaries
**** other subsidiaries
81 of 98
<PAGE> 42
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency
Affiliate Agency, Inc. Delaware Life Insurance Agency
Allnations, Inc. Ohio Promotes cooperative insurance
corporations worldwide
American Marine Underwriters, Florida Underwriting Manager
Inc.
Auto Direkt Insurance Company Germany Insurance Company
The Beak and Wire Corporation Ohio Radio Tower Joint Venture
California Cash Management California Investment Securities Agent
Company
Colonial County Mutual insurance Texas Insurance Company
Company
Colonial Insurance Company of California Insurance Company
California
Columbus Insurance Brokerage Germany Insurance Broker
and Service GMBH
Companies Agency Insurance California Insurance Broker
Services of California
Companies Agency of Alabama, Alabama Insurance Broker
Inc.
Companies Agency of Idaho, Inc. Idaho Insurance Broker
Companies Agency of Illinois, Inc. Illinois Acts as Collection Agent for Policies
placed through Brokers
Companies Agency of Kentucky, Kentucky Insurance Broker
Inc.
Companies Agency of Massachusetts Insurance Broker
Massachusetts, Inc.
Companies Agency of New York, New York Insurance Broker
Inc.
Companies Agency of Pennsylvania Insurance Broker
Pennsylvania, Inc.
Companies Agency of Phoenix, Arizona Insurance Broker
Inc.
Companies Agency of Texas, Inc. Texas Insurance Broker
Companies Annuity Agency of Texas Insurance Broker
Texas, Inc.
Companies Agency, Inc. Wisconsin Insurance Broker
Companies Annuity Agency of Texas Insurance Broker
Texas, Inc.
Countrywide Services Delaware Products Liability, Investigative and Claims
Corporation Management Services
Employers Insurance of Wausau Wisconsin Insurance Company
A Mutual Company
</TABLE>
82 of 98
<PAGE> 43
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
** Employers Life Insurance Wisconsin Life Insurance Company
Company of Wausau
F & B, Inc. Iowa Insurance Agency
Farmland Mutual Insurance Iowa Insurance Company
Company
Financial Horizons Distributors Alabama Life Insurance Agency
Agency of Alabama, Inc.
Financial Horizons Distributors Ohio Insurance Agency
Agency of Ohio
Financial Horizons Distributors Oklahoma Life Insurance Agency
Agency of Oklahoma, Inc.
Financial Horizons Distributors Texas Life Insurance Agency
Agency of Texas, Inc.
* Financial Horizons Investment Massachusetts Investment Company
Trust
Financial Horizons Securities Oklahoma Broker Dealer
Corporation
Gates, McDonald & Company Ohio Cost Control Business
Gates, McDonald & Company of Nevada Self-Insurance Administration Claims
Nevada Examinations and Data Processing
Services
Gates, McDonald & Company of New York Workers Compensation Claims
New York, Inc. Administration
Greater La Crosse Health Plans, Wisconsin Writes Commercial Health and Medicare
Inc. Supplement Insurance
InHealth Agency, Inc. Ohio Insurance Agency
InHealth Management Systems, Ohio Develops and operates Managed Care
Inc. Delivery System
Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance Agency
Key Health Plan, Inc. California Pre-paid health plans
Landmark Financial Services of New York Life Insurance Agency
New York, Inc.
Leben Direkt Insurance Company Germany Life Insurance Company
Lone Star General Agency, Inc. Texas Insurance Agency
** MRM Investments, Inc. Ohio Owns and operates a Recreational Ski
Facility
** National Casualty Company Michigan Insurance Company
National Casualty Company of Great Britain Insurance Company
America, Ltd.
** National Premium and Benefit Delaware Insurance Administrative Services
Administration Company
Nationwide Agribusiness Iowa Insurance Company
Insurance Company
Nationwide Cash Management Ohio Investment Securities Agent
Company
</TABLE>
83 of 98
<PAGE> 44
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Nationwide Communications, Inc. Ohio Radio Broadcasting Business
Nationwide Community Urban Ohio Redevelopment of blighted areas within
Redevelopment Corporation the City of Columbus, Ohio
Nationwide Corporation Ohio Organized for the purpose of acquiring,
holding, encumbering, transferring, or
otherwise disposing of shares, bonds, and
other evidences of indebtedness,
securities, and contracts of other persons,
associations, corporations, domestic or
foreign and to form or acquire the control
of other corporations
Nationwide Development Ohio Owns, leases and manages commercial
Company real estate
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
** Nationwide Financial Services, Ohio Registered Broker-Dealer, Investment
Inc. Manager and Administrator
Nationwide General Insurance Ohio Insurance Company
Company
Nationwide HMO, Inc. Ohio Health Maintenance Organization
* Nationwide Indemnity Company Ohio Reinsurance Company
Nationwide Insurance Enterprise Ohio Membership Non-Profit Corporation
Foundation
Nationwide Insurance Golf Ohio Membership Non-Profit Corporation
Charities, Inc.
Nationwide Investing Foundation Michigan Investment Company
* Nationwide Investing Massachusetts Investment Company
Foundation II
Nationwide Investment Services Oklahoma Registered Broker-Dealer in Deferred
Corporation Compensation Market
Nationwide Investors Services, Ohio Stock Transfer Agent
Inc.
** Nationwide Life and Annuity Ohio Life Insurance Company
Insurance Company
** Nationwide Life Insurance Ohio Life Insurance Company
Company
Nationwide Lloyds Texas Texas Lloyds Company
Nationwide Mutual Fire Insurance Ohio Insurance Company
Company
Nationwide Mutual Insurance Ohio Insurance Company
Company
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
** Nationwide Property Ohio Owns, leases, manages and deals in Real
Management, Inc. Property
</TABLE>
84 of 98
<PAGE> 45
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
* Nationwide Separate Account Massachusetts Investment Company
Trust
NEA Valuebuilder Investor Alabama Life Insurance Agency
Services of Alabama, Inc.
NEA Valuebuilder Investor Arizona Life Insurance Agency
Services of Arizona, Inc.
NEA Valuebuilder Investor Massachusetts Life Insurance Agency
Services of Massachusetts, Inc.
NEA Valuebuilder Investor Montana Life Insurance Agency
Services of Montana, Inc.
NEA Valuebuilder Investor Nevada Life Insurance Agency
Services of Nevada, Inc.
NEA Valuebuilder Investor Ohio Life Insurance Agency
Services of Ohio, Inc.
NEA Valuebuilder Investor Oklahoma Life Insurance Agency
Services of Oklahoma, Inc.
NEA Valuebuilder Investor Texas Life Insurance Agency
Services of Texas, Inc.
NEA Valuebuilder Investor Wyoming Life Insurance Agency
Services of Wyoming
NEA Valuebuilder Investor Delaware Life Insurance Agency
Services, Inc.
NEA Valuebuilder Services Massachusetts Life Insurance Agency
Insurance Agency, Inc.
Neckura General Insurance Germany Insurance Company
Company
Neckura Holding Company Germany Administrative Service for Neckura
Insurance Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life Insurance Company
NWE, Inc. Ohio Special Investments
PEBSCO of Massachusetts Massachusetts Markets and Administers Deferred
Insurance Agency, Inc. Compensation Plans for Public Employees
PEBSCO of Texas, Inc. Texas Markets and Administers Deferred
Compensation Plans for Public Employees
Pension Associates of Wausau, Wisconsin Pension plan administration, record
Inc. keeping and consulting and compensation
consulting
Public Employees Benefit Delaware Marketing and Administration of Deferred
Services corporation Employee Compensation Plans for Public
Employees
Public Employees Benefit Alabama Markets and Administers Deferred
Services Corporation of Alabama Compensation Plans for Public Employees
</TABLE>
85 of 98
<PAGE> 46
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Public Employees Benefit Arkansas Markets and Administers Deferred
Services Corporation of Arkansas Compensation Plans for Public Employees
Public Employees Benefit Montana Markets and Administers Deferred
Services Corporation of Montana Compensation Plans for Public Employees
Public Employees Benefit New Mexico Markets and Administers Deferred
Services Corporation of New Compensation Plans for Public Employees
Mexico
Scottsdale Indemnity Company Ohio Insurance Company
Scottsdale Insurance Company Ohio Insurance Company
SVM Sales GmbH, Neckura Germany Sales support for Neckura Insurance
Insurance Group Group
Wausau Business Insurance Illinois Insurance Company
Company
Wausau General Insurance Illinois Insurance Company
Company
Wausau Insurance Company United Kingdom Insurance and Reinsurance Company
(U.K.) Limited
Wausau International California Special Risks, Excess and Surplus Lines
Underwriters Insurance Underwriting Manager
** Wausau Preferred Health Wisconsin Insurance and Reinsurance Company
Insurance Company
Wausau Service Corporation Wisconsin Holding Company
Wausau Underwriters Insurance Wisconsin Insurance Company
Company
** West Coast Life Insurance California Life Insurance Company
Company
</TABLE>
86 of 98
<PAGE> 47
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED CHART)
STATE UNLESS OTHERWISE
COMPANY OF ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DC Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Multi-Flex Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
* Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity Contracts
Account-A Annuity Separate Account
* Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity Contracts
Account-B Annuity Separate Account
Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity Contracts
Account-C Annuity Separate Account
* Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity Contracts
Account-Q Annuity Separate Account
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Fidelity Advisor Ohio Nationwide Life Separate Issuer of Annuity Contracts
Variable Account Account
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VL Separate Ohio Nationwide Life and Issuer of Life Insurance
Account-A Annuity Separate Account Contracts
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VLI Separate Ohio Nationwide Life Separate Issuer of Life Insurance
Account-2 Account Contracts
* Nationwide VLI Separate Ohio Nationwide Life Separate Issuer of Life Insurance
Account-3 Account Contracts
</TABLE>
87 of 98
<PAGE> 48
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side}
______________________
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|______________________|
<S> <C> <C>
________________________________________________________________________________________________
| EMPLOYERS INSURANCE OF WAUSAU |
| A MUTUAL COMPANY |
| (EMPLOYERS) |_________________________________
| Contribution Note Cost |_________________________________
| ----------------- ---- |
| Casualty $400,000,000 |
|________________________________________________________________________________________________|
| |
_____________|_________________ _____________|__________________ _____________________ __________________
| WAUSAU INSURANCE CO. | | WAUSAU SERVICE | | | | |
| (U.K.) LIMITED | | CORPORATION (WSC) | | | | |
| | | | | NATIONWIDE LLOYDS | | COMPANIES |
| Common Stock: 8,506,800 | | Common Stock: 1,000 | | | | |
| ------------- Shares | | ------------- Shares |_____| |_____| AGENCY OF |
| | | |_____| |_____| |
| Cost | | Cost | | | | TEXAS, INC. |
| ---- | | ---- | | A TEXAS LLOYDS | | |
| Employers-- | | Employers-- | | | | |
| 100% $15,683,300 | | 100% $106,763,000 | | | | |
|_______________________________| |________________________________| |_____________________| |__________________|
|
| ______________________________
| | WAUSAU BUSINESS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 10,900,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ----- |
| | WSC-100% $21,800,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU UNDERWRITERS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 8,750 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $44,560,006 |
| |______________________________|
|
| ______________________________
| | GREATER LA CROSSE |
| | HEALTH PLANS, INC. |
| | |
| | Common Stock: 3,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-33.3% $861,761 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ALABAMA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF KENTUCKY, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PENNSYLVANIA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF MASSACHUSETTS, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF NEW YORK, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PHOENIX, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF IDAHO, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COUNTRYWIDE SERVICES |
| | CORPORATION |
| | |
| | Common Stock: 100 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $145,852 |
| |______________________________|
|
|
| ______________________________
| | WAUSAU GENERAL |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 200,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $31,000,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU INTERNATIONAL |
| | UNDERWRITERS |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $10,000 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | INSURANCE SERVICES |
| | OF CALIFORNIA |
| | |
|____| Common Stock: 1,000 |
| | ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
| ______________________________
| | AMERICAN MARINE |
| | UNDERWRITERS, INC. |
| | |
| | Common Stock: 20 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $248,222 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ILLINOIS, INC. |
| | |
| | Common Stock: 250 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $2,500 |
| |______________________________|
|
| ______________________________ _____________________________
| | COMPANIES AGENCY, INC. | | PENSION ASSOCIATES |
| | | | OF WAUSAU, INC. |
| | | | |
| | Common Stock: 100 | | Common Stock: 1,000 |
|____| ------------- Shares |____| ------------- Shares |
| | | |
| Cost | | Companies Cost |
| ---- | | Agency, Inc. ---- |
| WSC-100% $10,000 | | (Wisconsin) -- $10,000 |
|______________________________| | 100% |
|_____________________________|
</TABLE>
<PAGE> 49
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C> <C>
_________________________________
| |
| NATIONWIDE INSURANCE |
| ENTERPRISE FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|_________________________________|
_________________________________________ ___________________________
| | | |
___| NATIONWIDE MUTUAL |_____________________________________________| NATIONWIDE MUTUAL |
___| INSURANCE COMPANY |_____________________________________________| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
|_________________________________________| |___________________________|
| || |________________________________________________________________ |
| || | | |
______________|_______________ || | _____________________________ _____________|_______|______________
| | || | | | | |
| ALLNATIONS, INC. | || | | NATIONWIDE GENERAL | | NATIONWIDE |
| | || | | INSURANCE COMPANY | | CORPORATION |
| Common Stock: 2,936 | || | | | | |
| ------------- Shares | || | | Common Stock: 20,000 Shares | | Common Stock: Control |
| Cost | || |___| ------------- | | ------------- ------- |
| ---- | || | | | | $13,642,432 100% |
| Casualty-26% $88,320 | || | | Cost | | |
| Fire-26% $88,463 | || | | ---- | | Shares Cost |
| Preferred Stock: 1,466 Shares| || | | Casualty-100% $5,944,422 | | ----- ---- |
| ---------------- | || | |_____________________________| | Casualty 12,992,922 $751,352,485 |
| Cost | || | | Fire 649,510 24,007,936 |
| ---- | || | | |
| Casualty-6.8% $100,000 | || | | (See Page 2) |
| Fire-6.8% $100,000 | || | |____________________________________|
|______________________________| || |
|| |
_________________________ || | _____________________________
| | || | | |
| FARMLAND MUTUAL | || | | NATIONWIDE PROPERTY |
| INSURANCE COMPANY | || | | AND CASUALTY |
| | || | | INSURANCE COMPANY |
| Guaranty Fund |______|| | | |
| ------------- |_______| | | Common Stock: 60,000 Shares |
| Certificate | | | ------------- |
| ----------- | | | Cost |
| | | | ---- |
| Cost | | | Casualty-100% $6,000,000 |
| ---- | | |_____________________________|
| Casualty $500,000 | |
|_________________________| | _____________________________
| | | |
| | | COLONIAL INSURANCE |
_______________|___________ | | COMPANY OF CALIFORNIA |
| F & B, INC. | | | (COLONIAL) |
| | | | |
| Common Stock: 1 Share | |___| Common Stock: 1,750 Shares |
| ------------- | | | ------------- |
| | | | Cost |
| Cost | | | ---- |
| ---- | | | Casualty-100% $11,750,000 |
| Farmland Mutual- $10 | | |_____________________________|
| 100% | |
|___________________________| | _____________________________ __________________________
____________________________ | | | | |
| | | | SCOTTSDALE | | NATIONAL PREMIUM & |
| NATIONWIDE AGRIBUSINESS | | | INSURANCE COMPANY | | BENEFIT ADMINISTRATION |
| INSURANCE COMPANY | | | | | COMPANY |
| | | | Common Stock: 30,136 Shares | | |
| Common Stock: 1,000,000 |___|___| ------------- |______| Common Stock: 10,000 |
| ------------- Shares | | | | | ------------ Shares |
| | | | Cost | | |
| | | | ---- | | Cost |
| | | | Casualty-100% $150,000,000 | | ---- |
| Casualty-99.9% $26,714,335 | | |_____________________________| | Scottsdale-100% $10,000 |
| | | |__________________________|
| Other Capital: | |
| -------------- | |
| Casualty-Ptd. $ 713,567 | |
|____________________________| |
|
|
|
|
| _____________________________ ______________________________
| | NECKURA HOLDING | | NECKURA |
| | COMPANY (NECKURA) | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 10,000 Shares | | Common Stock: 6,000 Shares |
|___| ------------- |_____________________| ------------- |
| | | | | |
| | Cost | | | Cost |
| | --- | | | ---- |
| | Casualty-100% $87,943,140 | | | Neckura-100% DM 6,000,000 |
| |_____________________________| | |______________________________|
| |
| | _____________________________
| | | NECKURA LIFE |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 4,000 Shares |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 15,825,681 |
| | |_____________________________|
| |
| | _____________________________
| | | NECKURA GENERAL |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| |_____| ------------ |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,656,925 |
| | |_____________________________|
| |
| | _____________________________
| | | COLUMBUS INSURANCE |
| | | BROKERAGE AND SERVICE |
| | | GmbH |
| | | |
| | | Common Stock: 1 Share |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ----- |
| | | Neckura-100% DM 51,639 |
| | |_____________________________|
| |
| | _____________________________
| | | AUTO DIREKT |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| | | ------------- |
| |_____| |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,643,149 |
| | |_____________________________|
| |
| _____________________________ | ____________________________
| | NATIONWIDE | | | SVM SALES |
| | DEVELOPMENT COMPANY | | | GmbH |
| | | | | |
| | Common Stock: 99,000 Shares | | | Common Stock: 50 Shares |
| | ------------- | |_____| ------------- |
| | | | |
|___| Cost | | Cost |
| | --- | | ---- |
| | Casualty-100% $15,100,000 | | Neckura-100% DM 50,000 |
| | Other Capital: | |____________________________|
| | -------------- |
| | Casualty-Ptd. $ 2,796,100 |
| |_____________________________|
|
|
| _____________________________
| | SCOTTSDALE |
| | INDEMNITY COMPANY |
| | |
|___| Common Stock: 50,000 Shares |
| | ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $8,800,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE |
| | INDEMNITY COMPANY |
| | |
| | Common Stock: 28,000 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $294,529,000 |
| |_____________________________|
|
| _____________________________ __________________________
| | LONE STAR | | COLONIAL COUNTY MUTUAL |
| | GENERAL AGENCY, INC. | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 1,000 Shares |______| Surplus Debentures: |
|___| ------------- |______| ------------------- |
| | | | |
| | Cost | | Cost |
| | ---- | | ---- |
| | Casualty-100% $5,000,000 | | Colonial $500,000 |
| |_____________________________| | Lone Star 150,000 |
| |__________________________|
|
| _____________________________
| | NATIONWIDE |
| | COMMUNITY URBAN |
| | REDEVELOPMENT |
| | CORPORATION |
| | |
| | Common Stock: 10 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,000 |
| |_____________________________|
|
| _____________________________
| | INSURANCE |
| | INTERMEDIARIES, INC. |
| | |
| | Common Stock: 1,615 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,615,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 100 Shares |
| | ------------- |
|___| |
| | Cost |
| | ---- |
| | Casualty-90% $9,000 |
| | NW Fin Serv- 1,000 |
| | 10% |
| |_____________________________|
|
|
| _____________________________
| | CALIFORNIA CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 90 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $9,000 |
| |_____________________________|
|
|
| _____________________________ __________________________
| | NATIONWIDE | | THE BEAK AND |
| | COMMUNICATIONS, INC. | | WIRE CORPORATION |
| | | | |
| | Common Stock: 14,750 Shares | | Common Stock: 750 Shares |
|___| ------------- |_____| ------------- |
| | | |
| Cost | | Cost |
| ---- | | ---- |
| Casualty-100% $11,510,000 | | NW Comm- $531,000 |
| | | 100% |
| Other Capital: | |__________________________|
| -------------- |
| Casualty-Ptd. 1,000,000 |
|_____________________________|
<FN>
Subsidiary Companies - Solid Line
Contractual Association - Double Line
December 31, 1995
</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side)
<S> <C> <C>
_______________________________________
| |
| EMPLOYERS INSURANCE |___________________________________________
| OF WAUSAU |___________________________________________
| A MUTUAL COMPANY |
|_______________________________________|
__________________________
|
____________|_________________
| NATIONWIDE LIFE INSURANCE |
| COMPANY (NW LIFE) |
|Common Stock: 3,814,779 Shares|
| ------------- |
| |
| NW Corp.- Cost |
| 100% ---- |
| $950,226,915 |
|______________________________|
_________________________________________________________________________________|
____________|_____________ ___________|_______________ | ______________________________
| NATIONWIDE | | NATIONAL CASUALTY | | | NATIONWIDE LIFE AND |
| FINANCIAL SERVICES, INC. | | COMPANY (NC) | | | ANNUITY INSURANCE COMPANY |
| (NW FIN. SERV.) | | Common Stock: 100 Shares | | | |
______|Common Stock: 7,676 Shares| | ------------- | | | Common Stock: 66,000 Shares |
| ____|------------- | | | |_______| ------------- |
| | | Cost | | Cost | | | NW Life- Cost |
| | | ---- | | ---- | | | 100% ---- |
| | | NW Life-100% $5,996,261 | | NW Life-100% $66,132,811 | | | $58,070,003 |
| | |__________________________| |___________________________| | |______________________________|
| | __________________________ ___________|_______________ | ________________________________
| | | NATIONWIDE | | | | | WEST COAST LIFE |
| | | INVESTOR SERVICES, INC. | | | | | INSURANCE COMPANY |
| | | Common Stock: 5 Shares | | NCC OF AMERICA, INC. | | | Common Stock: 1,000,000 Shares|
| |___| ------------- | | (INACTIVE) | |_______| ------------- |
| | | NW Fin. Serv.-100% | | | | | |
| | | Cost | | NC-100% | | | Cost |
| | | ---- | | | | | ---- |
| | | $5,000 | | | | | NW Life-100% $133,809,265 |
| | |__________________________| |___________________________| | |________________________________|
| | __________________________ ______________________________ | ____________________________
| | | NATIONWIDE | | EMPLOYERS LIFE INSURANCE CO. | | | NATIONWIDE PROPERTY |
| | | INVESTING | | OF WAUSAU (ELIOW) | | | MANAGEMENT, INC. |
| | | FOUNDATION | | | | | Common Stock: 59 Shares |
| |___| | ______| Common Stock: 250,000 Shares |____|_______| ------------ |
| ___| | | | ------------- Cost | | | Cost |
| | | | | | ---- | | | ---- |
| | | | | | NW Life-100% $155,000,000 | | | NW Life-100% $1,907,896 |
| | | COMMON LAW TRUST | | |______________________________| | |__________________________ |
| | |__________________________| | | |
| | | _____________________________ | __________|_______________
| | __________________________ | | WAUSAU PREFERRED | | | MRM INVESTMENTS, INC. |
| | | NATIONWIDE | | | HEALTH INSURANCE CO. | | | |
| | | INVESTING | | | | | | Common Stock: 1 Share |
| |___| FOUNDATION II | |______| Common Stock: 200 Shares | | | ------------ |
| ___| | | | ------------- | | | |
| | | | | | Cost | | | Cost |
| | | | | | ---- | | | Nat. Prop. ---- |
| | | COMMON LAW TRUST | | | ELIOW -- 100% $57,413,193 | | | Mgmt.-100% $550,000 |
| | |__________________________| | |_____________________________| | |___________________________|
| | | |
| | | _____________________________ | ___________________________
| | __________________________ | | KEY HEALTH PLAN, INC. | | | NWE, INC. |
| | | NATIONWIDE | | | | | | |
| | | SEPARATE ACCOUNT | |______| Common Stock: 1,000 Shares | |______| Common Stock: 100 Shares |
| | | TRUST | | ------------- | | ------------ |
| |___| | | Cost | | Cost |
| ___| | | ---- | | ---- |
| | | COMMON LAW TRUST | | ELIOW-80% $2,700,000 | | NW Life-100% $35,971,375 |
| | | | |_____________________________| |___________________________|
| | |__________________________|
| |
| | __________________________
| | | FINANCIAL HORIZONS |
| | | INVESTMENT TRUST |
| |___| |
|_____| |
| COMMON LAW TRUST |
|__________________________|
</TABLE>
<PAGE> 51
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (middle)
<S> <C> <C> <C>
_______________________________________
| |
________________________________| NATIONWIDE MUTUAL |___________________________________________________________
________________________________| INSURANCE COMPANY |___________________________________________________________
| (CASUALTY) |
|_______________________________________|
| _______________________________________________________________
__________________|______________|___
| NATIONWIDE CORPORATION (NW Corp) |
| Common Stock: Control: |
| ------------- ------- |
| 13,642,432 100% |
| |
| Shares Cost |
| ------ ---- |
| Casualty 12,992,922 $751,352,485 |
| Fire 649,510 24,007,936 |
|_____________________________________|
|
____________________________________________________|______________________________________________________________________________
| | |
___________|_________________ _____________|_____________ ____________|______________
| PUBLIC EMPLOYEES BENEFIT | | GATES, McDONALD | | NATIONWIDE FINANCIAL |
|SERVICES CORPORATION (PEBSCO) | | & COMPANY (GATES) | | INSTITUTION DISTRIBUTORS |
______| Common Stock: 236,494 Shares | | Common Stock: 254 Shares | | AGENCY, INC. (NFIDAI)|
| ____| ------------- | | ------------- |___ _____| Common Stock: 1,000 Shares|
| | | Cost | | | | | ___| ------------- |
| | | NW Corp.- ---- | | Cost | | | | | Cost |
| | | 100% $ 7,830,936 | | ---- | | | | | NW Corp. ---- |
| | |______________________________| | NW Corp.- $25,683,532 | | | | | 100% $19,501,000 |
| | | 100% | | | | |___________________________|
| | |___________________________| | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | | ___________________________
| | | PEBSCO SECURITIES | | OF NEW YORK, INC. | | | | | FINANCIAL HORIZONS |
| | | CORP. | | Common Stock: 3 Shares | | | | | DISTRIBUTORS AGY. |
| |____| Common Stock: 5,000 Shares | | ------------- |___| | | | OF ALABAMA, INC. |
| | | ------------- | | | | | |___|Common Stock: 10,000 Shares|
| | | Cost | | Cost | | | | |----------- |
| | | ---- | | ---- | | | | | Cost |
| | | PEBSCO-100% $25,000 | | Gates-100% $106,947 | | | | | ---- |
| | |____________________________| | | | | | | NFIDAI-100% $100 |
| | |___________________________| | | | |___________________________|
| | | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | |
| | | PEBSCO OF | | OF NEVADA | | | | ___________________________
| | | ALABAMA | | | | | | | LANDMARK FINANCIAL |
| | |Common Stock: 100,000 Shares| | Common Stock: 40 Shares |___| | | | SERVICES OF |
| |____|------------- | | | | | | NEW YORK, INC. |
| | | Cost | | Gates-100% Cost | | |___|Common Stock: 10,000 Shares|
| | | ---- | | ---- | | | |------------- |
| | | PEBSCO-100% $1,000 | | $93,750 | | | | Cost |
| | |____________________________| |___________________________| | | | ---- |
| | | | | NFIDAI-100% $10,100 |
| | | | |___________________________|
| | | |
| | | |
| | ____________________________ | |
| | | PEBSCO OF | | |
| | | ARKANSAS | | | ___________________________
| | | Common Stock: 50,000 Shares| | | | FINANCIAL HORIZONS |
| |____| ------------- | | | | SECURITIES CORP. |
| | | Cost | ________________________________|_|___|Common Stock: 10,000 Shares|
| | | ---- | | AFFILIATE AGENCY, INC. | | | |------------- |
| | | PEBSCO-100% $500 | | | | | | Cost |
| | |____________________________| | Common Stock: 100 Shares | | | | ---- |
| | | | | | | NFIDAI-100% $153,000 |
| | | NFIDAI-100% Cost | | | |___________________________|
| | | ---- | | |
| | ___________________________ | $100 | | |
| | | PEBSCO OF MASSACHUSETTS | |___________________________| | |
| | | INSURANCE AGENCY, INC. | | | ___________________________
| |____| Common Stock: 1,000 Shares| | | | |
| | | ------------- | | | | FINANCIAL HORIZONS |
| | | Cost | | |___| DISTRIBUTORS |
| | | ---- | | ___| AGENCY OF OHIO, |
| | | PEBSCO-100% $1,000 | | | | INC. |
| | |___________________________| | | |___________________________|
| | | |
| | | |
| | | |
| | ___________________________ | | ___________________________
| | | PEBSCO OF | | | | |
| | | MONTANA | | |___| FINANCIAL HORIZONS |
| |____| Common Stock: 500 Shares | | ___| DISTRIBUTORS AGENCY |
| | | ------------- | | | | OF OKLAHOMA, INC. |
| | | Cost | | | |___________________________|
| | | ---- | | |
| | | PEBSCO-100% $500 | | |
| | |___________________________| | |
| | | |
| | ___________________________ | |
| | | PEBSCO OF | | | ___________________________
| | | NEW MEXICO | | | | |
| | | | | |___| FINANCIAL HORIZONS |
| |____|Common Stock: 1,000 Shares | | ___| DISTRIBUTORS AGENCY |
| | |------------- | | | | OF TEXAS, INC. |
| | | Cost | | | |___________________________|
| | | ----- | | |
| | | PEBSCO-100% $1,000 | | |
| | |___________________________| | | ___________________________
| | | | | |
| | ___________________________ | |___| AFFILIATE |
| |____| | |_____| AGENCY OF |
|______| PEBSCO OF | | OHIO, INC. |
| TEXAS, INC. | | |
|___________________________| |___________________________|
</TABLE>
<PAGE> 52
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C>
_______________________________________
| |
______________________| NATIONWIDE MUTUAL |
______________________| FIRE INSURANCE COMPANY |
| (FIRE) |
|_______________________________________|
________________________________________|
____________________________________________________________________
| | |
_____________|_____________ | ____________|______________
| NEA VALUEBUILDER | | | NATIONWIDE HMO, INC. |
| INVESTOR SERVICES, INC. | | | (NW HMO) |
| (NEA) | | | Common Stock: 100 Shares |
_______| Common Stock: 500 Shares | |_____| ------------ |
| _____| ------------- | | | Cost |
| | | Cost | | | ---- |
| | | NW Corp.- ---- | | | NW Corp.- |
| | | 100% $5,000 | | | 100% $14,603,732 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH MANAGEMENT |
| | | INVESTOR SERVICES | | | SYSTEMS, INC. |
| |_____| OF ALABAMA, INC. | | | Common Stock: 100 Shares |
| | | Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | | |
| | | Cost | | | Cost |
| | | ---- | | | NW HMO ---- |
| | | NEA-100% $5,000 | | | INC.-100% $25,149 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH |
| | | INVESTOR SERVICES | | | AGENCY, INC. |
| | | OF MONTANA, INC. | | | Common Stock: 100 Shares |
| |_____| Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | Cost |
| | | Cost | | NW HMO ---- |
| | | ----- | | INC.-99% $116,077 |
| | | NEA-100% $500 | |___________________________|
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF NEVADA, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF OHIO, INC. |
| | | Common Stock: 100 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-91% $5,000 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF WYOMING, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | |
| | | NEA VALUEBUILDER |
| |_____| INVESTOR SERVICES |
| | | OF TEXAS, INC. |
| | | |
| | |___________________________|
| |
| | ___________________________
| | | |
| |_____| NEA VALUEBUILDER |
|_______| INVESTOR SERVICES |
| OF OKLAHOMA, INC. |
| |
|___________________________|
</TABLE>
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
December 31, 1995
<PAGE> 53
Item 27. NUMBER OF CONTRACT OWNERS
Not Applicable
Item 28. INDEMNIFICATION
Provision is made in the Company's Amended Code of Regulations and
expressly authorized by the General Corporation Law of the State
of Ohio, for indemnification by the Company of 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 such person is or was a director, officer or
employee of the Company, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding, to the extent and under the circumstances
permitted by the General Corporation Law of the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors,
officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant 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 UNDERWRITER
(a) Nationwide Financial Services, Inc. ("NFS") acts as general
distributor for the Nationwide Multi-Flex Variable Account,
Nationwide DC Variable Account, Nationwide Variable
Account-II, Nationwide Variable Account-5, Nationwide
Variable Account-6, Nationwide VA Separate Account-A,
Nationwide VA Separate Account-B, Nationwide VA Separate
Account-C, Nationwide VL Separate Account-A, Nationwide VLI
Separate Account-2, Nationwide VLI Separate Account-3, NACo
Variable Account and the Nationwide Variable Account, all of
which are separate investment accounts of the Company or its
affiliates. NFS also acts as principal underwriter for the
Nationwide Investing Foundation, Nationwide Separate Account
Trust, Financial Horizons Investment Trust, and Nationwide
Investing Foundation II, which are open-end management
investment companies.
(b) NATIONWIDE FINANCIAL SERVICES, INC.
DIRECTORS AND OFFICERS
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
Joseph J. Gasper President and Director
One Nationwide Plaza
Columbus, Ohio 43215
D. Richard McFerson Chairman of the Board of Directors and
One Nationwide Plaza Chairman and
Columbus, OH 43215 Chief Executive Officer--Nationwide
Insurance Enterprise and Director
Gordon E. McCutchan
One Nationwide Plaza Executive Vice President-Law and
Columbus, OH 43215 Corporate Services and Director
Robert A. Oakley Executive Vice President - Chief
One Nationwide Plaza Financial Officer and Director
Columbus, Ohio 43215
Robert J. Woodward Executive Vice President - Chief
One Nationwide Plaza Investment Officer and Director
Columbus, Ohio 43215
93 of 98
<PAGE> 54
W. Sidney Druen Senior Vice President and
One Nationwide Plaza General Counsel and
Columbus, OH 43215 Assistant Secretary
James F. Laird, Jr. Vice President and General
One Nationwide Plaza Manager and Treasurer
Columbus, OH 43215
Peter J. Neckermann Vice President
One Nationwide Plaza
Columbus, OH 43215
Harry S. Schermer Vice President - Investments
One Nationwide Plaza
Columbus, OH 43215
Rae I. Mercer Secretary
One Nationwide Plaza
Columbus, OH 43215
William G. Goslee Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
<TABLE>
<CAPTION>
(c) NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
----------- ----------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
Nationwide N/A N/A N/A N/A
Financial
Services,
Inc.
</TABLE>
94 of 98
<PAGE> 55
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Robert O. Cline
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43216
Item 31. MANAGEMENT SERVICES
Not Applicable
Item 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) 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 16 months old for so long as payments
under the variable annuity contracts may be accepted;
(b) include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of
Additional Information; and
(c) deliver any Statement of Additional Information and any
financial statements required to be made available under
this form promptly upon written or oral request.
The Registrant hereby represents that any contract offered by the
prospectus and which is issued pursuant to Section 403(b) of the
Code is issued by the Registrant in reliance upon, and in
compliance with, the Securities and Exchange Commission's
no-action letter to the American Council of Life Insurance
(publicly available November 28, 1988) which permits withdrawal
restrictions to the extent necessary to comply with IRC Section
403(b)(11).
95 of 98
<PAGE> 56
Offered by
Nationwide Life Insurance Company
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide Variable Account
Individual Deferred Variable Annuity Contract
PROSPECTUS
May 1, 1996
96 of 98
<PAGE> 57
ACCOUNTANTS' CONSENT AND INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT
SCHEDULES
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide Variable Account:
The audits referred to in our report on Nationwide Life Insurance Company (the
Company) dated February 26, 1996 included the related financial statement
schedules as of December 31, 1995, and for each of the years in the three-year
period ended December 31, 1995, included in the registration statement. These
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Services" in the Statement of Additional Information.
KPMG Peat Marwick LLP
Columbus, Ohio
April 26, 1996
97 of 98
<PAGE> 58
SIGNATURES
As required by the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant, NATIONWIDE VARIABLE ACCOUNT certifies that
it meets the requirements of Securities Act Rule 485(b) for effectiveness of
this Post-Effective Amendment and has caused this Post-Effective Amendment to be
signed on its behalf in the City of Columbus, and State of Ohio, on this 26th
day of April, 1996.
NATIONWIDE VARIABLE ACCOUNT
---------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
---------------------------------------
(Depositor)
By/s/JOSEPH P. RATH
---------------------------------------
Joseph P. Rath
Vice President and
Associate General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 1 has been signed below by the following persons in the capacities
indicated on the 26th day of April, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
LEWIS J. ALPHIN Director
- -------------------------------------------------
Lewis J. Alphin
KEITH W. ECKEL Director
- -------------------------------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- -------------------------------------------------
Willard J. Engel
FRED C. FINNEY Director
- -------------------------------------------------
Fred C. Finney
CHARLES L. FUELLGRAF, JR. Director
- -------------------------------------------------
Charles L. Fuellgraf, Jr.
JOSEPH J. GASPER President/Chief
- ------------------------------------------------- Operating Office and Director
Joseph J. Gasper
HENRY S. HOLLOWAY Chairman of the Board
- ------------------------------------------------- and Director
Henry S. Holloway
D. RICHARD McFERSON Chairman and Chief Executive Officer -
- -------------------------------------------- Nationwide Insurance Enterprise and Director
D. Richard McFerson
DAVID O. MILLER Director
- -------------------------------------------------
David O. Miller
C. RAY NOECKER Director
- -------------------------------------------------
C. Ray Noecker
ROBERT A. OAKLEY Executive Vice President-
- ------------------------------------------------- Chief Financial Officer
Robert A. Oakley
JAMES F. PATTERSON Director By/s/JOSEPH P. RATH
- ------------------------------------------------- ----------------------------
James F. Patterson Joseph P. Rath
Attorney-in-Fact
ARDEN L. SHISLER Director
- -------------------------------------------------
Arden L. Shisler
ROBERT L. STEWART Director
- -------------------------------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- -------------------------------------------------
Nancy C. Thomas
HAROLD W. WEIHL Director
- -------------------------------------------------
Harold W. Weihl
</TABLE>
98 of 98
<PAGE> 59
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as
directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio
corporation, which has filed or will file with the Securities and Exchange
Commission under the provisions of the Securities Act of 1993, as amended,
various Registration Statements and amendments thereto for the registration
under said Act of Individual Deferred Variable Annuity Contracts in connection
with the MFS Variable Account, Nationwide Variable Account, Nationwide Variable
Account-II, Nationwide Variable Account-3, Nationwide Variable Account-4,
Nationwide Variable Account-5, Nationwide Variable Account-6, Nationwide
Fidelity Advisor Variable Account, Nationwide Multi-Flex Variable Account and
Nationwide Variable Account-8; and the registration of fixed interest rate
options subject to a market value adjustment offered under some or all of the
aforementioned individual Variable Annuity Contracts in connection with the
Nationwide Multiple Maturity Separate Account, and the registration of Group
Flexible fund Retirement Contracts in connection with the Nationwide DC
Variable Account, Nationwide DCVA III, and the NACo Variable Account; and the
registration of Group Common Stock Variable Annuity Contracts in connection
with Separate Account No. 1; and the registration of variable life insurance
policies in connection with the Nationwide VLI Separate Account, Nationwide
VLI Separate Account-2, Nationwide VLI Separate Account-3 of Nationwide Life
Insurance Company, hereby constitutes and appoints D. Richard McFerson, Joseph
J. Gasper, Gordon E. McCutchan, W. Sidney Druen, and Joseph P. Rath, and each
of them with power to act without the others, his/her attorney, with full power
of substitution and resubstitution, for and in his/her name, place and stead,
in any and all capacities, to approve, and sign such Registration Statements
and any and all amendments thereto, with power to affix the corporate seal of
said corporation thereto and to attest said seal and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting unto said attorneys, and
each of them, full power and authority to do and perform all and every act and
thing requisite to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming that which said attorneys, or any of
them, may lawfully do or cause to be done by virtue hereof. This instrument
may be executed in one or more counterparts.
IN WITNESS WHEREOF, the undersigned have herewith set their names and
seals as of this 4th day of April, 1996.
/s/ Lewis J. Alphin /s/ David O. Miller
- ------------------------------------- -------------------------------------
Lewis J. Alphin, Director David O. Miller, Director
/s/ Keith W. Eckel /s/ C. Ray Noecker
- ------------------------------------- -------------------------------------
Keith W. Eckel, Director C. Ray Noecker, Director
/s/ Willard P. Engel /s/ Robert A. Oakley
- ------------------------------------- -------------------------------------
Willard P. Engel, Director Robert A. Oakley, Executive Vice
President and Chief Financial Officer
/s/ Fred C. Finney
- ------------------------------------- /s/ James F. Patterson
Fred C. Finney, Director -------------------------------------
James F. Patterson, Director
/s/ Charles L. Fuellgraf
- ------------------------------------- /s/ Arden L. Shisler
Charles L. Fuellgraf, Director -------------------------------------
Arden L. Shisler, Director
/s/ Joseph J. Gasper
- ------------------------------------- /s/ Robert L. Stewart
Joseph J. Gasper, President and Chief -------------------------------------
Operating Officer and Director Robert L. Stewart, Director
/s/ Henry S. Holloway /s/ Nancy C. Thomas
- ------------------------------------- -------------------------------------
Henry S. Holloway, Chairman of the Nancy C. Thomas, Director
Board, Director
/s/ Harold W. Weihl
/s/ D. Richard McFerson -------------------------------------
- ------------------------------------- Harold W. Weihl, Director
D. Richard McFerson, Chairman and
Chief Executive Officer-Nationwide
Insurance Enterprise and Director
