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BANKERS NATIONAL LIFE INSURANCE COMPANY
ANNUAL REPORT
TO CONTRACT OWNERS
DECEMBER 31, 1999
BANKERS NATIONAL VARIABLE ACCOUNT B
<PAGE>
ANNUAL REPORT TO CONTRACT OWNERS
TABLE OF CONTENTS
DECEMBER 31, 1999
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BANKERS NATIONAL VARIABLE ACCOUNT B PAGE
Statement of Assets and Liabilities as of December 31, 1999............ 1
Statements of Operations and Statements of Changes in
Net Assets for the Year Ended December 31, 1999...................... 2
Statements of Operations and Statements of Changes in
Net Assets for the Year Ended December 31, 1998...................... 3
Notes to Financial Statements.......................................... 4
Report of Independent Accountants...................................... 6
<PAGE>
BANKERS NATIONAL VARIABLE ACCOUNT B
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
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NET ASSET
VALUE
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Assets:
Investments in Conseco Series Trust portfolio shares (Note 2):
Balanced Portfolio, 167,358 shares, (cost--$2,194,362) ........ $ 2,451,923
Equity Portfolio, 387,720 shares, (cost--$8,108,872) .......... 8,987,630
Fixed Income Portfolio, 339 shares, (cost--$3,431) ............ 3,183
Government Securities Portfolio, 217,126 shares,
(cost--$2,582,745)........................................... 2,379,926
Money Market Portfolio, 626,263 shares, (cost--$626,263) ...... 626,263
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Total assets................................................ 14,448,925
Liabilities:
Net amount due to Bankers National Life Insurance Company....... 41,125
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Net assets (Note 5)............................................ $14,407,800
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TOTAL VALUE
UNITS UNIT VALUE OF UNITS
-------------------------------
Net assets attributable to:
Contract owners' deferred annuity reserves:
Contracts issued prior to August 20, 1984:
Government Securities Portfolio........... 264.8 $ 30.101282 $ 7,971
Money Market Portfolio.................... 87.7 20.797666 1,825
Contracts issued on or after August 20,
1984:
Balanced Portfolio........................ 55,959.7 43.679599 2,444,299
Equity Portfolio.......................... 80,511.4 111.212460 8,953,869
Fixed Income Portfolio.................... 231.8 13.691814 3,173
Government Securities Portfolio........... 84,990.8 26.904112 2,286,601
Money Market Portfolio.................... 33,439.6 18.614678 622,468
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Net assets attributable to contract
owners' deferred annuity reserves.......................... 14,320,206
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Contract owners' annuity payment reserves:
Equity Portfolio............................................... 5,498
Government Securities Portfolio................................ 82,096
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Net assets attributable to contract owners' annuity
payment reserves............................................ 87,594
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Net assets................................................ $14,407,800
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The accompanying notes are an integral part of these financial statements.
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BANKERS NATIONAL VARIABLE ACCOUNT B
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
===================================================================================================================================
FIXED GOVERNMENT MONEY COMBINED
BALANCED EQUITY INCOME SECURITIES MARKET TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends from investments in portfolio shares ............ $446,051 $2,522,213 $ 203 $ 216,596 $29,748 $ 3,214,811
Expenses:
Mortality and expense risk fees ........................... 28,628 96,076 40 34,360 7,826 166,930
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Net investment income .................................... 417,423 2,426,137 163 182,236 21,922 3,047,881
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Net realized gains (losses) and unrealized
appreciation (depreciation) of investments
Net realized gains (losses) on sales of investments
in portfolio shares ....................................... 99,421 367,810 (2) (21,841) -- 445,388
Net change in unrealized appreciation (depreciation)
of investments in portfolio shares ........................ 42,871 199,689 (214) (270,021) -- (27,675)
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Net gain (loss) on investments in portfolio shares ....... 142,292 567,499 (216) (291,862) -- 417,713
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Net increase (decrease) in net assets from operations .. $559,715 $2,993,636 $ (53) $(109,626) $21,922 $ 3,465,594
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</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
===================================================================================================================================
FIXED GOVERNMENT MONEY COMBINED
BALANCED EQUITY INCOME SECURITIES MARKET TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Changes from operations:
Net investment income ........................... $ 417,423 $ 2,426,137 $ 163 $ 182,236 $ 21,922 $ 3,047,881
Net realized gains (losses) on sales
of investments in portfolio shares ............ 99,421 367,810 (2) (21,841) -- 445,388
Net change in unrealized appreciation
(depreciation) of investments in
portfolio shares .............................. 42,871 199,689 (214) (270,021) -- (27,675)
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Net increase (decrease) in net assets
from operations .............................. 559,715 2,993,636 (53) (109,626) 21,922 3,465,594
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Changes from contract owners' transactions:
Net contract purchase payments .................. 300 16,046 -- 2,404 -- 18,750
Contract redemptions ............................ (565,712) (1,197,227) (3) (746,599) (15,224) (2,524,765)
Net transfers ................................... 52,896 2,351 -- (55,247) -- --
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Net decrease in net assets from
contract owners' transactions ................... (512,516) (1,178,830) (3) (799,442) (15,224) (2,506,015)
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Net increase (decrease) in net assets ........ 47,199 1,814,806 (56) (909,068) 6,698 959,579
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Net assets, beginning of year ..................... 2,397,100 7,144,561 3,229 3,285,736 617,595 13,448,221
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Net assets, end of year ...................... $ 2,444,299 $ 8,959,367 $ 3,173 $ 2,376,668 $ 624,293 $ 14,407,800
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
BANKERS NATIONAL VARIABLE ACCOUNT B
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
===================================================================================================================================
FIXED GOVERNMENT MONEY COMBINED
BALANCED EQUITY INCOME SECURITIES MARKET TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends from investments in portfolio shares ......... $189,600 $596,333 $ 218 $195,543 $32,291 $1,013,985
Expenses:
Mortality and expense risk fees ........................ 31,566 80,297 40 41,907 7,972 161,782
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Net investment income ................................. 158,034 516,036 178 153,636 24,319 852,203
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Net realized gains (losses) and unrealized
appreciation (depreciation) of investments:
Net realized gains on sales of investments
in portfolio shares .................................... 43,731 119,066 2 12,409 -- 175,208
Net change in unrealized appreciation
(depreciation) of investments in portfolio shares ...... 9,407 302,195 (29) 14,166 -- 325,739
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Net gain (loss) on investments in portfolio shares .... 53,138 421,261 (27) 26,575 -- 500,947
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Net increase in net assets from operations .......... $211,172 $937,297 $ 151 $180,211 $24,319 $1,353,150
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</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
===================================================================================================================================
FIXED GOVERNMENT MONEY COMBINED
BALANCED EQUITY INCOME SECURITIES MARKET TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Changes from operations:
Net investment income .............................. $ 158,034 $ 516,036 $ 178 $ 153,636 $ 24,319 $ 852,203
Net realized gains on sales of investments
in portfolio shares .............................. 43,731 119,066 2 12,409 -- 175,208
Net change in unrealized appreciation (depreciation)
of investments in portfolio shares ............... 9,407 302,195 (29) 14,166 -- 325,739
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Net increase in net assets
from operations ................................. 211,172 937,297 151 180,211 24,319 1,353,150
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Changes from contract owners' transactions:
Net contract purchase payments ..................... 736 7,199 (1) 4,798 899 13,631
Contract redemptions ............................... (220,874) (660,438) (3) (272,256) (31,612) (1,185,183)
Net transfers ...................................... (54,040) 11,572 -- 44,403 (1,935) --
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Net decrease in net assets from
contract owners' transactions ...................... (274,178) (641,667) (4) (223,055) (32,648) (1,171,552)
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Net increase (decrease) in net assets ........... (63,006) 295,630 147 (42,844) (8,329) 181,598
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Net assets, beginning of year ........................ 2,460,106 6,848,931 3,082 3,328,580 625,924 13,266,623
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Net assets, end of year ......................... $ 2,397,100 $ 7,144,561 $ 3,229 $ 3,285,736 $ 617,595 $13,448,221
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
BANKERS NATIONAL VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(1) GENERAL
Bankers National Variable Account B (the "Account") is registered under the
Investment Company Act of 1940, as amended, as a unit investment trust. The
Account was established on June 8, 1982, as a segregated investment account for
individual variable annuity contracts issued by Bankers National Life Insurance
Company (the "Company"). The operations of the Account are included in the
operations of the Company pursuant to the provisions of the Texas Insurance
Code. The Company is an indirect wholly owned subsidiary of Conseco, Inc., a
publicly-held specialized financial services holding company listed on the New
York Stock Exchange.
The Account invests solely in shares of the portfolios of Conseco Series Trust
(the "Trust"), a diversified, open-end management investment company.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported increases and decreases in net assets from operations during the
reporting period. Actual results could differ from those estimates.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION, TRANSACTIONS, AND INCOME
Investments in portfolio shares are valued using the net asset value of the
respective portfolios of the Trust at the end of each New York Stock Exchange
business day. Investment share transactions are accounted for on a trade date
basis (the date the order to purchase or redeem shares is executed) and dividend
income is recorded on the ex-dividend date. The cost of investments in portfolio
shares sold is determined on a first-in first-out basis. The Account does not
hold any investments which are restricted as to resale.
Net investment income and net realized gains (losses) and unrealized
appreciation (depreciation) on investments are allocated to the contracts on
each valuation date based on each contract's pro rata share of the assets of the
Account as of the beginning of the valuation date.
FEDERAL INCOME TAXES
No provision for federal income taxes has been made in the accompanying
financial statements because the operations of the Account are included in the
total operations of the Company, which is treated as a life insurance company
for federal income tax purposes under the Internal Revenue Code. Net investment
income and realized gains (losses) are retained in the Account and are not
taxable until received by the contract owner or beneficiary in the form of
annuity payments or other distributions.
ANNUITY RESERVES
Deferred annuity contract reserves are comprised of net contract purchase
payments less redemptions and benefits. These reserves are adjusted daily for
the net investment income and net realized gains (losses) and unrealized
appreciation (depreciation) on investments.
Annuity payment reserves for the contracts under which the contract owners are
receiving periodic retirement payments are computed according to the 1983 Group
Annuity Mortality table. The assumed net investment rate is equal to the assumed
rate of accumu lation. The annuity unit values for periodic retirement payments
were as shown below:
DECEMBER 31,
1999 1998
================================================================================
Equity Portfolio ............................... $2.519 $1.768
Government Securities Portfolio................. $1.096 $1.177
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(3) PURCHASES AND SALES OF INVESTMENTS IN PORTFOLIO SHARES
The aggregate cost of purchases of investments in portfolio shares for the
years ended December 31, 1999 and 1998 was $3,301,238 and $1,220,705,
respectively. The aggregate proceeds from sales of investments in portfolio
shares for the years ended December 31, 1999 and 1998 were $2,757,385, and
$1,406,528, respectively.
(4) DEDUCTIONS AND EXPENSES
Although periodic retirement payments to contract owners vary according to the
investment performance of the portfolios, such payments are not affected by
expense or mortality experience because the Company assumes the mortality risk
and the expense risk under the contracts.
The mortality risk assumed by the Company results from the life annuity
payment option in the contracts in which the Company agrees to make annuity
payments regardless of how long a particular annuitant or other payee lives. The
annuity payments are determined in accordance with annuity purchase rate
provisions established at the time the contracts are issued. Based on the
actuarial determination of expected mortality, the Company is required to fund
any deficiency in the annuity payment reserves from its general account assets.
The expense risk assumed by the Company is the risk that the deductions for
contract administrative charges and transfer processing fees may prove
insufficient to cover the actual administrative and transfer processing
expenses.
The Company deducts daily from the Account a fee, which is equal on an annual
basis to 1.25 percent (0.75 percent for those contracts issued prior to August
20, 1984) of the daily value of the total investments of the Account, for
assuming the mortality and expense risks. These fees were $166,930 and $161,782
for the years ended December 31, 1999 and 1998, respectively.
The Company does not deduct a sales charge from purchase payments received on
contracts issued after August 20, 1984. However, upon surrender, the Company,
with certain exceptions, deducts from the contract value a contingent deferred
sales charge equal to the lesser of: (a) 5.0 percent of the total of all
purchase payments made within 72 months prior to the date of the request for
surrender; or (b) 5.0 percent of the amount surrendered. No charge is made for
such part of a surrender in a contract year that does not exceed 10.0 percent of
the net sum of purchase payments made more than one year prior to the date of
the surrender. A sales charge of 6.5 percent is deducted by the Company on
purchase payments received on contracts issued before August 20, 1984. There
were no sales charges for the year ended December 31, 1999. The sales charges
were $1,176 for the year ended December 31, 1998.
4
<PAGE>
BANKERS NATIONAL VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999 AND 1998
================================================================================
An annual contract administrative charge of $30 ($12 on Individual Retirement
Accounts or "IRAs") on contracts issued after August 20, 1984 and $36 ($12 on
IRAs) on contracts issued prior to August 20, 1984 is deducted in units from
each contract owner's account. Such charges were $8,903 and $10,716 for the
years ended December 31, 1999 and 1998, respectively.
A transfer processing fee (currently at $5 and guaranteed not to exceed $15)
for each transfer between portfolios is deducted from the amount transferred.
These fees were $10 and $25 for the years ended December 31, 1999 and 1998,
respectively.
(5) NET ASSETS
Net assets consisted of the following at December 31, 1999:
================================================================================
Proceeds from sale of units since organization,
less proceeds of units redeemed ............................... $(15,984,857)
Undistributed net investment income .............................. 27,272,840
Undistributed net realized gains on sales of investments ......... 2,186,565
Net unrealized appreciation of investments ....................... 933,252
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Net assets .................................................... $ 14,407,800
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
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TO THE BOARD OF DIRECTORS OF BANKERS NATIONAL LIFE
INSURANCE COMPANY AND CONTRACT OWNERS OF
BANKERS NATIONAL VARIABLE ACCOUNT B
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the Bankers National Variable
Account B (the "Account") at December 31, 1999, and the results of its
operations and the changes in its net assets for each of the two years in the
period then ended, in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of the
Account's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States, which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of portfolio shares owned at December 31,
1999 by correspondence with the funds, provide a reasonable basis for the
opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
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PRICEWATERHOUSECOOPERS LLP
Indianapolis, Indiana
February 10, 2000
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==========================================================
BANKERS NATIONAL VARIABLE ACCOUNT B
SPONSOR
Bankers National Life Insurance Company - Carmel, Indiana.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP - Indianapolis, Indiana.
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BANKERS NATIONAL LIFE INSURANCE COMPANY IS AN INDIRECT WHOLLY OWNED
SUBSIDIARY OF CONSECO, INC., A FINANCIAL SERVICES ORGANIZATION HEADQUARTERED
IN CARMEL, INDIANA. CONSECO, THROUGH ITS SUBSIDIARY COMPANIES, IS ONE OF
MIDDLE AMERICA'S LEADING SOURCES FOR INSURANCE, INVESTMENT AND LENDING
PRODUCTS, HELPING 12 MILLION CUSTOMERS STEP UP TO A BETTER, MORE
SECURE FUTURE.
BANKERS NATIONAL LIFE INSURANCE COMPANY
11815 North Pennsylvania Street
Carmel, Indiana 46032
VA-1001 (2/00) 05960
(C) 1999 Bankers National Life Insurance Company
WWW.CONSECO.COM
INSURANCE INVESTMENTS LENDING
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