<PAGE>
[LETTERHEAD OF HORACE MANN]
Dear Valued Customer:
I appreciate your confidence in Horace Mann Life Insurance Company and your
continuing participation in our retirement annuity program.
The total annual return of your variable annuity contract as of December 31,
1999 can be found on page 3 of the accompanying report for the Horace Mann
Mutual Funds. These returns reflect the performance of your underlying
investment in the Horace Mann Growth Fund, less separate account charges for
mortality and expense risk which vary depending on the year your contract was
issued.
For more information about the Growth Fund, please read the enclosed Annual
Report. If you have questions about the Growth Fund, Horace Mann Life Insurance
Company Separate Account A Annual Report or your variable annuity contract,
please call your Horace Mann representative or our toll-free number,
1-800-999-1030.
Sincerely,
/s/ Paul J. Kardos
Paul J. Kardos
Chairman, President and Chief Executive Officer
The Horace Mann Companies
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HORACE MANN LIFE INSURANCE COMPANY ALLEGIANCE SEPARATE ACCOUNT A
Statement of Net Assets
December 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments at market value
Horace Mann Growth Fund
266,456 shares @ $21.92 (cost $5,584,947) $ 5,840,716
================================================================================
NET ASSETS
Net Assets (Indefinite units authorized)
Active contract owners
Horace Mann Growth Fund
258,169 shares @ $21.92 $ 5,659,065
Retired contract owners
Horace Mann Growth Fund
8,287 shares @ $21.92 181,651
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TOTAL NET ASSETS $ 5,840,716
================================================================================
See notes to the financial statements.
2
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HORACE MANN LIFE INSURANCE COMPANY ALLEGIANCE SEPARATE ACCOUNT A
Statement of Operations
For the Year Ended December 31, 1999
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INVESTMENT INCOME
Dividend income distribution $ 62,508
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Net investment income 62,508
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Capital gains distribution 372,474
Net realized gain on sale of investments 182,370
Net unrealized depreciation on investments (781,049)
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Net loss on investments (226,205)
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Net decrease in net assets resulting from operations $ (163,697)
================================================================================
See notes to the financial statements.
3
<PAGE>
HORACE MANN LIFE INSURANCE COMPANY ALLEGIANCE SEPARATE ACCOUNT A
Statements of Changes in Net Assets
For the Years Ended December 31, 1999 and 1998
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<TABLE>
<CAPTION>
1999 1998
----------- ------------
OPERATIONS
<S> <C> <C>
Net investment income $ 62,508 $ 106,866
Capital gains distribution 372,474 731,093
Net realized gain on sale of investments 182,370 391,727
Net unrealized depreciation on investments (781,049) (664,940)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (163,697) 564,746
- ------------------------------------------------------------------------------------------------
CONTRACT OWNERS' TRANSACTIONS
Gross stipulated payments received 8,610 8,287
Administrative expenses (Note 1) (428) (414)
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Net consideration received on annuity contracts 8,182 7,873
Net transfer to fixed accumulation account (212,034) (503,710)
Payments to contract owners (910,025) (1,156,452)
Mortality risk charge (Note 1) (17,363) (21,181)
Mortality guarantee adjustment 5,201 (148,796)
- ------------------------------------------------------------------------------------------------
Net decrease in net assets
resulting from contract owners' transactions (1,126,039) (1,822,266)
- ------------------------------------------------------------------------------------------------
Total decrease in net assets (1,289,736) (1,257,520)
- ------------------------------------------------------------------------------------------------
Net assets, beginning of year 7,130,452 8,387,972
- ------------------------------------------------------------------------------------------------
Net assets, end of year $ 5,840,716 $ 7,130,452
================================================================================================
</TABLE>
See notes to the financial statements.
4
<PAGE>
HORACE MANN LIFE INSURANCE COMPANY ALLEGIANCE SEPARATE ACCOUNT A
Notes to the Financial Statements
December 31, 1999
-------------------------------------------------------------------------------
1. NATURE OF SEPARATE ACCOUNT -- Horace Mann Life Insurance Company Allegiance
Separate Account A ("the Account"), formerly known as Allegiance life Insurance
Company Separate Account A, registered as a unit investment trust under the
Investment Company Act of 1940, is used to fund variable annuity contracts. All
assets are invested in shares of the Horace Mann Growth Fund ("the Fund").
Certain specified amounts, as described in the annuity contracts, are paid to
Horace Mann Life Insurance Company ("HMLIC") to cover death benefits and
administrative expenses. In addition, an annual mortality and expense risk
charge up to .29% of the net variable account value is deducted from the
contract owners' account, depending on year of issue of the contract.
2. SIGNIFICANT ACCOUNTING POLICIES -- The investments in the Fund are valued at
market ("net asset value"). The Account owns approximately 1% of the Fund.
Distributions from the Fund are recorded on the ex-dividend date. Realized
gains and losses are determined on the basis of average cost of shares owned
for each contract owner.
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 amounts of revenue and expenses during the period. Actual results
could differ from those estimates.
3. FEDERAL INCOME TAXES -- Investment income of the Account is included in the
tax return of HMLIC; however, no tax accrues on income attributable to
tax-deferred annuities which comprise the majority of the Account contracts.
4. PURCHASE AND SALES OF HORACE MANN FUND SHARES -- During the year ended
December 31, 1999, purchases and proceeds from sales of Fund shares were as
follows:
1999
----------------------
Active Retired
-------- --------
Purchases $430,317 $ 27,128
----------------------
Sales $952,084 $ 14,047
======================
5. CHANGE IN CONTRACT OWNERS' ACCOUNT UNITS
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
Active Retired Active Retired
------- ------- ------- -------
<S> <C> <C> <C> <C>
Account units outstanding at beginning of year 284,112 8,840 311,879 15,010
Net consideration received 335 577 293 540
Dividend distributions 18,930 630 33,209 1,050
Net transfers to fixed accumulation account (9,252) 0 (18,978) 0
Payments to contract owners (35,956) (1,760) (42,291) (7,760)
-----------------------------------
Account units outstanding at end of year 258,169 8,287 284,112 8,840
===================================
</TABLE>
6. NET ASSETS -- At December 31, 1999 net assets of $5,840,716 were comprised of
the cost of mutual fund shares to contract owners of $5,584,947 and the
adjustment for unrealized appreciation of investments of $255,769.
5
<PAGE>
Independent Auditor's Report
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The Contract owners of Horace Mann
Life Insurance Company Separate
Account A and the Board of Directors
of Horace Mann Life Insurance Company:
We have audited the accompanying statement of net assets of Horace Mann Life
Insurance Company Separate Account A as of December 31, 1999, and the related
statement of operations for the year then ended and the statements of changes in
net assets for each of the years in the two-year period ended December 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. Our procedures included
confirmation of securities owned at December 31, 1999 by correspondence with the
Horace Mann 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 referred to above present fairly, in
all material respects, the financial position of Horace Mann Life Insurance
Company Separate Account A as of December 31, 1999, and the results of their
operations for the year then ended and changes in its net assets for each of the
years in the two-year period ended December 31, 1999, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
Chicago, Illinois
January 25, 2000
6
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(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
Annual Report
December 31, 1999
[GRAPHIC]
Horace Mann Life Insurance Company
Allegiance Separate Account A
This report is submitted for the general information of owners of Horace Mann
Life Insurance Company Separate Account A contracts. The report is not
authorized for distribution to prospective purchasers of variable annuity
contracts.
Horace Mann Life Insurance Company
P.O. Box 4657
Springfield, Illinois
62708-4657
1-800-999-1030
