<PAGE> 1
VARIABLE ACCOUNT A
OF MONARCH LIFE INSURANCE COMPANY
ANNUAL REPORT
DECEMBER 31, 1999
This is a copy of the annual report of the variable account in which your
Monarch Life Insurance Company variable life insurance policy invests. We take
pride in our continued commitment to provide prompt, courteous service to our
policy owners. For inquiries regarding your policy, please call our Variable
Life Service Center at 1-800-544-0049.
[MONARCH LOGO]
The investment results presented in this report are historical and are no
indication of future performance.
<PAGE> 2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Receiver of Monarch Life Insurance Company
and Policyholders of Variable Account A of Monarch Life Insurance Company:
In our opinion, the accompanying statements of net assets and the related
statements of operations and changes in net assets present fairly, in all
material respects, the financial position of the Money Reserve, Intermediate
Government Bond, Long-Term Corporate Bond, Capital Stock, Growth Stock, Multiple
Strategy, High Yield, Natural Resources, Global Strategy, Balanced, U.S.
Treasury Securities, 1999 Trust through 2011 Trust, 2013 Trust and 2014 Trust
Divisions at December 31, 1999 and 1998; and the U.S. Securities, 2019 Trust
Division at December 31, 1999; and the U.S. Securities, 1998 Trust Division at
December 31, 1998 (constituting Variable Account A of Monarch Life Insurance
Company) and the results of each of their operations and changes in their net
assets for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of Monarch Life Insurance
Company'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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of investments at December 31, 1999, by
correspondence with the custodians, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
<PAGE> 3
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS COST SHARES/UNITS MARKET VALUE
---------------- --------------- ----------------
<S> <C> <C> <C>
Investment in Merrill Lynch Series Fund, Inc.,
at Market Value (Note 2):
Money Reserve Portfolio $ 39,827,188 39,827,188 $ 39,827,188
Intermediate Government Bond Portfolio 8,992,300 820,469 8,573,898
Long-Term Corporate Bond Portfolio 7,518,516 654,062 7,083,487
Capital Stock Portfolio 26,979,774 1,099,734 32,365,177
Growth Stock Portfolio 45,870,809 1,340,271 50,970,519
Multiple Strategy Portfolio 78,806,310 4,756,217 86,515,583
High Yield Portfolio 2,758,334 372,428 2,774,589
Natural Resources Portfolio 921,535 108,241 898,397
Global Strategy Portfolio 6,878,037 424,232 7,271,329
Balanced Portfolio 4,675,837 312,941 4,619,011
---------------- ----------------
223,228,640 240,899,178
---------------- ----------------
Investment in The Merrill Lynch Fund of Stripped
U.S. Treasury Securities, at Market Value (Note 2):
2000 Trust 729,793 895,206 891,724
2001 Trust 522,977 675,364 634,214
2002 Trust 85,136 113,469 99,747
2003 Trust 517,528 652,117 520,037
2004 Trust 25,529 32,721 25,171
2005 Trust 615,950 817,680 593,619
2006 Trust 101,781 192,733 133,275
2007 Trust 371,195 559,135 360,055
2008 Trust 433,762 1,296,349 762,681
2009 Trust 131,208 281,660 154,863
2010 Trust 231,049 453,858 230,728
2011 Trust 81,898 166,546 79,977
2013 Trust 6,015 14,203 5,901
2014 Trust 474,802 1,197,740 458,722
2019 Trust 81,719 291,909 80,736
---------------- ----------------
4,410,342 5,031,450
---------------- ----------------
Total Invested Assets $ 227,638,982 $ 245,930,628
================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 4
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS AT DECEMBER 31, 1999 (CONTINUED)
<TABLE>
<S> <C>
TOTAL INVESTED ASSETS, AT MARKET VALUE $ 245,930,628
Pending Trades 10,327
----------------
Total Assets 245,940,955
----------------
LIABILITIES
Payable to Monarch Life Insurance Company 2,932,835
----------------
Total Liabilities 2,932,835
----------------
Net Assets $ 243,008,120
================
NET ASSETS
For Variable Life Insurance Policies $ 242,967,999
Unamortized Allocated Policy Loading (Note 6) 40,121
----------------
Total Net Assets $ 243,008,120
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 5
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS COST SHARES/UNITS MARKET VALUE
---------------- --------------- ----------------
<S> <C> <C> <C>
Investment in Merrill Lynch Series Fund, Inc.,
at Market Value (Note 2):
Money Reserve Portfolio $ 40,783,219 40,783,219 $ 40,783,219
Intermediate Government Bond Portfolio 11,017,984 986,539 11,167,621
Long-Term Corporate Bond Portfolio 8,281,769 706,725 8,417,094
Capital Stock Portfolio 23,648,359 1,030,260 27,847,932
Growth Stock Portfolio 30,776,703 1,055,195 38,725,659
Multiple Strategy Portfolio 72,919,419 4,409,942 80,128,646
High Yield Portfolio 3,033,099 396,472 3,132,130
Natural Resources Portfolio 768,009 105,580 724,279
Global Strategy Portfolio 6,470,074 423,080 6,769,288
Balanced Portfolio 4,523,195 307,228 4,970,943
---------------- ----------------
202,221,830 222,666,811
---------------- ----------------
Investment in The Merrill Lynch Fund of Stripped
U.S. Treasury Securities, at Market Value (Note 2):
1999 Trust 186,602 237,471 236,383
2000 Trust 792,057 997,678 950,897
2001 Trust 548,815 740,390 674,754
2002 Trust 73,521 100,992 87,760
2003 Trust 795,961 1,395,709 1,131,976
2004 Trust 16,666 21,386 16,880
2005 Trust 699,488 946,857 717,121
2006 Trust 125,758 266,868 196,276
2007 Trust 375,505 777,663 540,483
2008 Trust 490,259 1,543,887 996,641
2009 Trust 134,202 288,945 176,164
2010 Trust 201,165 439,938 249,805
2011 Trust 35,696 65,081 35,111
2013 Trust 6,419 15,165 7,199
2014 Trust 413,548 952,193 420,498
---------------- ----------------
4,895,662 6,437,948
---------------- ----------------
Total Invested Assets $ 207,117,492 $ 229,104,759
================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 6
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS AT DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<S> <C>
TOTAL INVESTED ASSETS, AT MARKET VALUE $ 229,104,759
Pending Trades 107,246
----------------
Total Assets 229,212,005
----------------
LIABILITIES
Payable to Monarch Life Insurance Company 2,885,837
----------------
Total Liabilities 2,885,837
----------------
Net Assets $ 226,326,168
================
NET ASSETS
For Variable Life Insurance Policies $ 226,502,905
Amounts Provided for Future Policy Benefits,
Net of Unamortized Allocated Policy Loading (Note 6) -176,737
----------------
Total Net Assets $ 226,326,168
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 7
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
TOTALS - ALL DIVISIONS
---------------------------------------------------------------------
1999 1998 1997
---------------- --------------- ----------------
<S> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 37,621,670 $ 25,237,079 $ 14,322,426
Expenses:
Risk Charges and Administrative Expenses (Note 3) -1,318,926 -1,272,544 -1,240,569
Transaction Charges (Note 4) -20,042 -22,807 -25,557
---------------- --------------- ----------------
Net Investment Income 36,282,702 23,941,728 13,056,300
---------------- --------------- ----------------
Net Realized Gains 7,218,205 3,587,094 6,723,725
Net Unrealized Gains (Losses) -3,695,621 -267,296 11,361,469
---------------- --------------- ----------------
Net Realized and Unrealized Gains 3,522,584 3,319,798 18,085,194
---------------- --------------- ----------------
Net Increase in Net Assets
Resulting from Operations 39,805,286 27,261,526 31,141,494
---------------- --------------- ----------------
Transfers of Net Premiums 4,479,601 5,185,955 5,802,348
Transfers of Policy Loading, Net 216,858 -133,170 -520,088
Transfers Due to Deaths -1,664,565 -2,438,226 -1,858,089
Transfers Due to Other Terminations -19,796,356 -11,998,198 -14,593,978
Transfers Due to Policy Loans -332,696 -1,814,350 -3,763,114
Transfers of Cost of Insurance -5,520,934 -5,649,560 -5,524,048
Transfers of Loan Processing Charges -505,242 -518,297 -530,052
Transfers Among Investment Divisions -- -- --
---------------- --------------- ----------------
Net Decrease in Net Assets
Resulting from Principal Transactions -23,123,334 -17,365,846 -20,987,021
---------------- --------------- ----------------
Total Increase in Net Assets 16,681,952 9,895,680 10,154,473
Net Assets - Beginning of Year 226,326,168 216,430,488 206,276,015
---------------- --------------- ----------------
Net Assets - End of Year $ 243,008,120 $ 226,326,168 $ 216,430,488
================ =============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 8
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTERMEDIATE LONG-TERM
MONEY GOVERNMENT CORPORATE
RESERVE BOND BOND
TOTAL DIVISION DIVISION DIVISION
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 37,621,670 $ 1,797,321 $ 652,166 $ 554,620
Expenses:
Risk Charges and Administrative
Expenses (Note 3) -1,318,926 -215,357 -53,759 -42,266
Transaction Charges (Note 4) -20,042 -- -- --
------------- ----------- ----------- -----------
Net Investment Income (Loss) 36,282,702 1,581,964 598,407 512,354
------------- ----------- ----------- -----------
Net Realized Gains (Losses) 7,218,205 -- -219,641 -178,105
Net Unrealized Gains (Losses) -3,695,621 -- -568,039 -570,354
------------- ----------- ----------- -----------
Net Realized and Unrealized Gains (Losses) 3,522,584 -- -787,680 -748,459
------------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 39,805,286 1,581,964 -189,273 -236,105
------------- ----------- ----------- -----------
Transfers of Net Premiums 4,479,601 868,437 257,331 303,829
Transfers of Policy Loading, Net 216,858 250,229 -605 -192
Transfers Due to Deaths -1,664,565 -445,012 -165,100 -50,504
Transfers Due to Other Terminations -19,796,356 -7,199,949 -1,677,016 -789,877
Transfers Due to Policy Loans -332,696 1,357,351 -25,330 26,973
Transfers of Cost of Insurance -5,520,934 -1,042,584 -240,814 -226,079
Transfers of Loan Processing Charges -505,242 -127,472 -15,854 -19,645
Transfers Among Investment Divisions -- 3,657,115 -537,061 -342,007
------------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -23,123,334 -2,681,885 -2,404,449 -1,097,502
------------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets 16,681,952 -1,099,921 -2,593,722 -1,333,607
Net Assets - Beginning of Year 226,326,168 38,004,901 11,167,619 8,417,091
------------- ----------- ----------- -----------
Net Assets - End of Year $ 243,008,120 $ 36,904,980 $ 8,573,897 $ 7,083,484
============= =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
CAPITAL GROWTH MULTIPLE HIGH
STOCK STOCK STRATEGY YIELD
DIVISION DIVISION DIVISION DIVISION
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 5,422,943 $ 12,267,525 $ 14,513,012 $ 751,000
Expenses:
Risk Charges and Administrative
Expenses (Note 3) -163,887 -228,176 -462,893 -45,221
Transaction Charges (Note 4) -- -- -- --
----------- ----------- ----------- ------------
Net Investment Income (Loss) 5,259,056 12,039,349 14,050,119 705,779
----------- ----------- ----------- ------------
Net Realized Gains (Losses) 1,386,310 4,629,011 14,709 332,037
Net Unrealized Gains (Losses) 1,185,830 -2,849,246 500,046 -82,776
----------- ----------- ----------- ------------
Net Realized and Unrealized Gains (Losses) 2,572,140 1,779,765 514,755 249,261
----------- ----------- ----------- ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 7,831,196 13,819,114 14,564,874 955,040
----------- ----------- ----------- ------------
Transfers of Net Premiums 697,379 517,028 1,516,609 48,164
Transfers of Policy Loading, Net -12,242 -11,531 -12,555 -1,197
Transfers Due to Deaths -108,998 -112,953 -662,171 -4,569
Transfers Due to Other Terminations -2,095,979 -1,454,419 -4,581,523 -312,017
Transfers Due to Policy Loans -418,995 -217,445 -1,196,389 194,306
Transfers of Cost of Insurance -694,558 -939,938 -1,865,259 -125,723
Transfers of Loan Processing Charges -59,197 -91,113 -133,987 -19,607
Transfers Among Investment Divisions -612,799 848,900 -1,248,843 -1,091,939
----------- ----------- ----------- ------------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -3,305,389 -1,461,471 -8,184,118 -1,312,582
----------- ----------- ----------- ------------
Total Increase (Decrease) in Net Assets 4,525,807 12,357,643 6,380,756 -357,542
Net Assets - Beginning of Year 27,839,368 38,612,870 80,134,811 3,132,130
----------- ----------- ----------- ------------
Net Assets - End of Year $ 32,365,175 $ 50,970,513 $ 86,515,567 $ 2,774,588
=========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 9
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NATURAL GLOBAL
RESOURCES STRATEGY BALANCED 1999
DIVISION DIVISION DIVISION DIVISION
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 28,720 $ 836,487 $ 797,876 $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -4,830 -40,675 -28,644 -139
Transaction Charges (Note 4) -- -- -- -91
------- ------- ------- ------
Net Investment Income (Loss) 23,890 795,812 769,232 -230
------- ------- ------- ------
Net Realized Gains (Losses) 132,678 381,321 92,725 50,830
Net Unrealized Gains (Losses) 20,592 94,078 -504,574 -49,781
------- ------- ------- ------
Net Realized and Unrealized Gains (Losses) 153,270 475,399 -411,849 1,049
------- ------- ------- ------
Net Increase (Decrease) in Net Assets
Resulting from Operations 177,160 1,271,211 357,383 819
------- --------- ------- ------
Transfers of Net Premiums 19,434 121,575 102,938 --
Transfers of Policy Loading, Net -450 -2,464 -2,722 --
Transfers Due to Deaths -2,994 -41,023 -43,157 --
Transfers Due to Other Terminations -71,213 -293,841 -239,985 648
Transfers Due to Policy Loans 37,513 -87,393 -67,497 --
Transfers of Cost of Insurance -18,254 -132,435 -103,761 1,757
Transfers of Loan Processing Charges -2,223 -11,932 -9,873 235
Transfers Among Investment Divisions 35,131 -434,441 -347,642 -239,825
------- ------- ------- -------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -3,056 -881,954 -711,699 -237,185
------- ------- ------- -------
Total Increase (Decrease) in Net Assets 174,104 389,257 -354,316 -236,366
Net Assets - Beginning of Year 724,279 6,882,071 4,973,326 236,366
------- ------- ------- -------
Net Assets - End of Year $ 898,383 $ 7,271,328 $ 4,619,010 $ --
============ =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
2000 2001 2002 2003
DIVISION DIVISION DIVISION DIVISION
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -5,203 -3,618 -554 -4,818
Transaction Charges (Note 4) -3,176 -2,241 -334 -2,784
----------- ----------- ---------- -----------
Net Investment Income (Loss) -8,379 -5,859 -888 -7,602
----------- ----------- ---------- -----------
Net Realized Gains (Losses) 38,118 34,463 825 309,071
Net Unrealized Gains (Losses) 3,091 -14,702 372 -333,506
----------- ----------- ---------- -----------
Net Realized and Unrealized Gains (Losses) 41,209 19,761 1,197 -24,435
----------- ----------- ---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 32,830 13,902 309 -32,037
----------- ----------- ---------- -----------
Transfers of Net Premiums 171 791 -- 5,142
Transfers of Policy Loading, Net -400 -400 -200 2,612
Transfers Due to Deaths -- -9,476 -- --
Transfers Due to Other Terminations -99,169 -25,150 -17 -572,282
Transfers Due to Policy Loans 2,082 38,457 -- -1,684
Transfers of Cost of Insurance -18,768 -12,337 -1,666 -11,751
Transfers of Loan Processing Charges -923 -1,650 -26 -57
Transfers Among Investment Divisions 24,983 -44,691 13,604 -1,880
----------- ----------- ---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -92,024 -54,456 11,695 -579,900
----------- ----------- ---------- -----------
Total Increase (Decrease) in Net Assets -59,194 -40,554 12,004 -611,937
Net Assets - Beginning of Year 950,874 674,738 87,738 1,131,947
----------- ----------- ---------- -----------
Net Assets - End of Year $ 891,680 $ 634,184 $ 99,742 $ 520,010
=========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 10
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
2004 2005 2006 2007
DIVISION DIVISION DIVISION DIVISION
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -123 -3,526 -1,031 -3,069
Transaction Charges (Note 4) -84 -2,241 -626 -1,778
----------- ---------- ----------- -----------
Net Investment Income (Loss) -207 -5,767 -1,657 -4,847
----------- ---------- ----------- -----------
Net Realized Gains (Losses) 3 10,071 27,363 132,423
Net Unrealized Gains (Losses) -572 -39,964 -39,024 -176,118
----------- ---------- ----------- -----------
Net Realized and Unrealized Gains (Losses) -569 -29,893 -11,661 -43,695
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations -776 -35,660 -13,318 -48,542
----------- ---------- ----------- -----------
Transfers of Net Premiums 122 458 1,172 4,778
Transfers of Policy Loading, Net -100 1,057 91 1,900
Transfers Due to Deaths -- -12,214 -- -6,394
Transfers Due to Other Terminations -37 912 202 -305,884
Transfers Due to Policy Loans -- -30,693 1,290 46,750
Transfers of Cost of Insurance -1,786 -10,348 -3,232 -13,240
Transfers of Loan Processing Charges -602 -469 -280 -1,491
Transfers Among Investment Divisions 11,472 -36,557 -48,917 141,691
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions 9,069 -87,854 -49,674 -131,890
----------- ---------- ----------- -----------
Total Increase (Decrease) in Net Assets 8,293 -123,514 -62,992 -180,432
Net Assets - Beginning of Year 16,879 717,103 196,260 540,469
----------- ---------- ----------- -----------
Net Assets - End of Year $ 25,172 $ 593,589 $ 133,268 $ 360,037
=========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
2008 2009 2010 2011
DIVISION DIVISION DIVISION DIVISION
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -4,379 -961 -1,548 -257
Transaction Charges (Note 4) -2,936 -556 -795 -127
----------- ----------- ----------- -----------
Net Investment Income (Loss) -7,315 -1,517 -2,343 -384
----------- ----------- ----------- -----------
Net Realized Gains (Losses) 94,327 1,088 22,140 -1,535
Net Unrealized Gains (Losses) -177,463 -18,307 -48,961 -1,336
----------- ----------- ----------- -----------
Net Realized and Unrealized Gains (Losses) -83,136 -17,219 -26,821 -2,871
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations -90,451 -18,736 -29,164 -3,255
----------- ----------- ----------- -----------
Transfers of Net Premiums 2,571 3,878 281 2,388
Transfers of Policy Loading, Net -601 -307 -3 251
Transfers Due to Deaths -- -- -- --
Transfers Due to Other Terminations -80,213 116 -6 -221
Transfers Due to Policy Loans 6,913 1,090 -- --
Transfers of Cost of Insurance -37,033 -5,692 -2,330 -973
Transfers of Loan Processing Charges -4,788 -1,362 -2 -117
Transfers Among Investment Divisions -30,371 -283 12,149 46,806
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -143,522 -2,560 10,089 48,134
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets -233,973 -21,296 -19,075 44,879
Net Assets - Beginning of Year 996,618 176,151 249,784 35,094
----------- ----------- ----------- -----------
Net Assets - End of Year $ 762,645 $ 154,855 $ 230,709 $ 79,973
=========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 11
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
2013 2014 2019
DIVISION DIVISION DIVISION
----------- ---------- -----------
<S> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -31 -3,827 -134
Transaction Charges (Note 4) -22 -2,175 -76
----------- ---------- -----------
Net Investment Income (Loss) -53 -6,002 -210
----------- ---------- -----------
Net Realized Gains (Losses) 2 -70,661 -1,368
Net Unrealized Gains (Losses) -894 -23,030 -983
----------- ---------- -----------
Net Realized and Unrealized Gains (Losses) -892 -93,691 -2,351
----------- ---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations -945 -99,693 -2,561
----------- ---------- -----------
Transfers of Net Premiums -- 5,125 --
Transfers of Policy Loading, Net -300 6,987 --
Transfers Due to Deaths -- -- --
Transfers Due to Other Terminations 6 653 -95
Transfers Due to Policy Loans -- 5 --
Transfers of Cost of Insurance -38 -13,113 -979
Transfers of Loan Processing Charges 1 -2,718 -90
Transfers Among Investment Divisions -17 140,965 84,457
----------- ---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -348 137,904 83,293
----------- ---------- -----------
Total Increase (Decrease) in Net Assets -1,293 38,211 80,732
Net Assets - Beginning of Year 7,194 420,487 --
----------- ---------- -----------
Net Assets - End of Year $ 5,901 $ 458,698 $ 80,732
=========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 12
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
INTERMEDIATE LONG-TERM
MONEY GOVERNMENT CORPORATE
RESERVE BOND BOND
TOTAL DIVISION DIVISION DIVISION
------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 25,237,079 $ 1,910,996 $ 658,848 $ 541,089
Expenses:
Risk Charges and Administrative Expenses (Note 3) -1,272,544 -211,171 -57,160 -45,233
Transaction Charges (Note 4) -22,807 -- -- --
------------- ---------- ----------- -----------
Net Investment Income (Loss) 23,941,728 1,699,825 601,688 495,856
------------- ---------- ----------- -----------
Net Realized Gains (Losses) 3,587,094 -- -111,974 -22,972
Net Unrealized Gains (Losses) -267,296 -- 331,891 154,072
------------- ---------- ----------- -----------
Net Realized and Unrealized Gains (Losses) 3,319,798 -- 219,917 131,100
------------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 27,261,526 1,699,825 821,605 626,956
------------- ---------- ----------- -----------
Transfers of Net Premiums 5,185,955 1,091,598 285,490 345,546
Transfers of Policy Loading, Net -133,170 -48,574 -4,633 -3,557
Transfers Due to Deaths -2,438,226 -613,381 -51,008 -71,200
Transfers Due to Other Terminations -11,998,198 -3,733,678 -315,152 -491,805
Transfers Due to Policy Loans -1,814,350 -1,063,047 94,471 34,656
Transfers of Cost of Insurance -5,649,560 -1,142,826 -264,395 -268,965
Transfers of Loan Processing Charges -518,297 -133,472 -18,058 -22,911
Transfers Among Investment Divisions -- 13,815,008 508,427 196,585
------------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -17,365,846 8,171,628 235,142 -281,651
------------- ---------- ----------- -----------
Total Increase (Decrease) in Net Assets 9,895,680 9,871,453 1,056,747 345,305
Net Assets - Beginning of Year 216,430,488 28,133,448 10,110,872 8,071,786
------------- ---------- ----------- -----------
Net Assets - End of Year $ 226,326,168 $ 38,004,901 $ 11,167,619 $ 8,417,091
============= ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH MULTIPLE HIGH
STOCK STOCK STRATEGY YIELD
DIVISION DIVISION DIVISION DIVISION
----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 3,233,660 $ 5,121,132 $ 11,007,325 $ 1,063,283
Expenses:
Risk Charges and Administrative Expenses (Note 3) -150,576 -168,621 -465,573 -57,124
Transaction Charges (Note 4) -- -- -- --
----------- ----------- ---------- -------------
Net Investment Income (Loss) 3,083,084 4,952,511 10,541,752 1,006,159
----------- ----------- ---------- -------------
Net Realized Gains (Losses) 1,145,519 2,223,181 231,993 -127,532
Net Unrealized Gains (Losses) -469,794 3,030,439 -3,262,104 12,330
----------- ----------- ---------- -------------
Net Realized and Unrealized Gains (Losses) 675,725 5,253,620 -3,030,111 -115,202
----------- ----------- ---------- -------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,758,809 10,206,131 7,511,641 890,957
----------- ----------- ---------- -------------
Transfers of Net Premiums 759,604 516,966 1,815,130 56,619
Transfers of Policy Loading, Net -19,838 -10,066 -30,089 -4,543
Transfers Due to Deaths -309,987 -371,862 -705,550 -25,039
Transfers Due to Other Terminations -1,381,404 -1,070,293 -3,658,335 -204,129
Transfers Due to Policy Loans -273,401 -326,936 282,017 -389,163
Transfers of Cost of Insurance -690,027 -770,025 -2,040,317 -49,419
Transfers of Loan Processing Charges -55,353 -79,671 -153,815 -6,174
Transfers Among Investment Divisions 660,038 3,942,976 -3,798,958 -13,559,818
----------- ----------- ---------- -------------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -1,310,368 1,831,089 -8,289,917 -14,181,666
----------- ----------- ---------- -------------
Total Increase (Decrease) in Net Assets 2,448,441 12,037,220 -778,276 -13,290,709
Net Assets - Beginning of Year 25,390,927 26,575,650 80,913,087 16,422,839
----------- ----------- ---------- -------------
Net Assets - End of Year $ 27,839,368 $ 38,612,870 $ 80,134,811 $ 3,132,130
============ ============ ============ ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 13
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NATURAL GLOBAL
RESOURCES STRATEGY BALANCED 1998
DIVISION DIVISION DIVISION DIVISION
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 26,255 $ 1,235,025 $ 439,466 $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -5,449 -44,629 -29,207 -328
Transaction Charges (Note 4) -- -- -- -212
----------- ---------- ----------- -----------
Net Investment Income (Loss) 20,806 1,190,396 410,259 -540
----------- ---------- ----------- -----------
Net Realized Gains (Losses) -289,597 -685,839 126,101 90,214
Net Unrealized Gains (Losses) 130,352 121,890 38,796 -87,049
----------- ---------- ----------- -----------
Net Realized and Unrealized Gains (Losses) -159,245 -563,949 164,897 3,165
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations -138,439 626,447 575,156 2,625
----------- ---------- ----------- -----------
Transfers of Net Premiums 24,627 139,493 112,968 --
Transfers of Policy Loading, Net -2,997 -7,817 -4,042 --
Transfers Due to Deaths -- -35,087 -108,975 --
Transfers Due to Other Terminations -173,831 -301,374 -411,094 -5,348
Transfers Due to Policy Loans -8,881 -230,603 -88,819 --
Transfers of Cost of Insurance -20,955 -142,633 -112,363 4,053
Transfers of Loan Processing Charges -6,135 -16,233 -10,934 541
Transfers Among Investment Divisions -109,664 -849,736 464,067 -521,155
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -297,836 -1,443,990 -159,192 -521,909
----------- ---------- ----------- -----------
Total Increase (Decrease) in Net Assets -436,275 -817,543 415,964 -519,284
Net Assets - Beginning of Year 1,160,554 7,699,614 4,557,362 519,284
----------- ---------- ----------- -----------
Net Assets - End of Year $ 724,279 $ 6,882,071 $ 4,973,326 $ --
=========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
1999 2000 2001 2002
DIVISION DIVISION DIVISION DIVISION
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -1,204 -5,130 -4,287 -541
Transaction Charges (Note 4) -788 -3,151 -2,666 -313
---------- ----------- ---------- -----------
Net Investment Income (Loss) -1,992 -8,281 -6,953 -854
---------- ----------- ---------- -----------
Net Realized Gains (Losses) 1,828 79,588 180,891 6,150
Net Unrealized Gains (Losses) 11,532 -16,506 -119,161 2,047
---------- ----------- ---------- -----------
Net Realized and Unrealized Gains (Losses) 13,360 63,082 61,730 8,197
---------- ----------- ---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 11,368 54,801 54,777 7,343
---------- ----------- ---------- -----------
Transfers of Net Premiums -220 171 907 --
Transfers of Policy Loading, Net -51 -50 -76 --
Transfers Due to Deaths -- -- -134,386 --
Transfers Due to Other Terminations -7,362 -56,697 -25,986 97
Transfers Due to Policy Loans 6,599 53,508 -38,545 -1,521
Transfers of Cost of Insurance -4,037 -19,492 -16,771 -1,264
Transfers of Loan Processing Charges -58 -1,295 -1,290 6
Transfers Among Investment Divisions -251 20,620 -30,561 -13,581
---------- ----------- ---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -5,380 -3,235 -246,708 -16,263
---------- ----------- ---------- -----------
Total Increase (Decrease) in Net Assets 5,988 51,566 -191,931 -8,920
Net Assets - Beginning of Year 230,378 899,308 866,669 96,658
---------- ----------- ---------- -----------
Net Assets - End of Year 236,366 $ 950,874 $ 674,738 $ 87,738
========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 14
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
2003 2004 2005 2006
DIVISION DIVISION DIVISION DIVISION
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -6,745 -330 -3,770 -1,039
Transaction Charges (Note 4) -3,900 -205 -2,384 -630
----------- ---------- ----------- -----------
Net Investment Income (Loss) -10,645 -535 -6,154 -1,669
----------- ---------- ----------- -----------
Net Realized Gains (Losses) 252,200 8,688 165,368 2,504
Net Unrealized Gains (Losses) -131,159 -4,798 -83,280 21,963
----------- ---------- ----------- -----------
Net Realized and Unrealized Gains (Losses) 121,041 3,890 82,088 24,467
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 110,396 3,355 75,934 22,798
----------- ---------- ----------- -----------
Transfers of Net Premiums 6,160 122 1,518 1,172
Transfers of Policy Loading, Net -571 -- 2,281 -9
Transfers Due to Deaths -- -- -- --
Transfers Due to Other Terminations -12,776 -43,621 -15,359 51
Transfers Due to Policy Loans 56 32,080 -1,009 --
Transfers of Cost of Insurance -15,336 -3,862 -13,220 -3,469
Transfers of Loan Processing Charges 494 -1,941 -925 -345
Transfers Among Investment Divisions -251,209 -305 -15,476 -137
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -273,182 -17,527 -42,190 -2,737
----------- ---------- ----------- -----------
Total Increase (Decrease) in Net Assets -162,786 -14,172 33,744 20,061
Net Assets - Beginning of Year 1,294,733 31,051 683,359 176,199
----------- ---------- ----------- -----------
Net Assets - End of Year $ 1,131,947 $ 16,879 $ 717,103 $ 196,260
=========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
2007 2008 2009 2010
DIVISION DIVISION DIVISION DIVISION
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -2,924 -4,869 -1,040 -1,517
Transaction Charges (Note 4) -1,620 -3,271 -593 -795
----------- ---------- ----------- -----------
Net Investment Income (Loss) -4,544 -8,140 -1,633 -2,312
----------- ---------- ----------- -----------
Net Realized Gains (Losses) 70,751 77,206 6,459 10,761
Net Unrealized Gains (Losses) -5,686 63,947 19,013 26,948
----------- ---------- ----------- -----------
Net Realized and Unrealized Gains (Losses) 65,065 141,153 25,472 37,709
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 60,521 133,013 23,839 35,397
----------- ---------- ----------- -----------
Transfers of Net Premiums 4,778 6,657 4,175 465
Transfers of Policy Loading, Net 907 -21 -617 -24
Transfers Due to Deaths -- -- -- --
Transfers Due to Other Terminations -50,704 -32,997 -11,944 -3,187
Transfers Due to Policy Loans 112,566 1,261 -28,133 62
Transfers of Cost of Insurance -12,692 -36,615 -5,512 -2,815
Transfers of Loan Processing Charges -2,205 -5,005 -1,285 -80
Transfers Among Investment Divisions 1,535 15,481 -800 56,349
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions 54,185 -51,239 -44,116 50,770
----------- ---------- ----------- -----------
Total Increase (Decrease) in Net Assets 114,706 81,774 -20,277 86,167
Net Assets - Beginning of Year 425,763 914,844 196,428 163,617
----------- ---------- ----------- -----------
Net Assets - End of Year $ 540,469 $ 996,618 $ 176,151 $ 249,784
=========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 15
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
2011 2013 2014
DIVISION DIVISION DIVISION
----------- ---------- -----------
<S> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -247 -48 -3,782
Transaction Charges (Note 4) -122 -33 -2,124
----------- ---------- -----------
Net Investment Income (Loss) -369 -81 -5,906
----------- ---------- -----------
Net Realized Gains (Losses) 14,798 1,236 129,572
Net Unrealized Gains (Losses) -9,628 -526 -42,825
----------- ---------- -----------
Net Realized and Unrealized Gains (Losses) 5,170 710 86,747
----------- ---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 4,801 629 80,841
----------- ---------- -----------
Transfers of Net Premiums 1,433 -- 10,576
Transfers of Policy Loading, Net 951 500 -234
Transfers Due to Deaths -- -- -11,751
Transfers Due to Other Terminations -162 -9 8,901
Transfers Due to Policy Loans -- -- 18,432
Transfers of Cost of Insurance -739 -56 -15,808
Transfers of Loan Processing Charges -85 -2 -2,066
Transfers Among Investment Divisions -1,267 158 -528,326
----------- ---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions 131 591 -520,276
----------- ---------- -----------
Total Increase (Decrease) in Net Assets 4,932 1,220 -439,435
Net Assets - Beginning of Year 30,162 5,974 859,922
----------- ---------- -----------
Net Assets - End of Year $ 35,094 $ 7,194 $ 420,487
=========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 16
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
INTERMEDIATE LONG-TERM
MONEY GOVERNMENT CORPORATE
RESERVE BOND BOND
TOTAL DIVISION DIVISION DIVISION
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 14,322,426 $ 1,857,965 $ 659,587 $ 564,268
Expenses:
Risk Charges and Administrative Expenses (Note 3) -1,240,569 -204,807 -54,597 -44,952
Transaction Charges (Note 4) -25,557 -- -- --
------------ ----------- ----------- ----------
Net Investment Income (Loss) 13,056,300 1,653,158 604,990 519,316
------------ ----------- ----------- ----------
Net Realized Gains (Losses) 6,723,725 -- -139,132 -55,192
Net Unrealized Gains (Losses) 11,361,469 -- 266,129 191,160
------------ ----------- ----------- ----------
Net Realized and Unrealized Gains (Losses) 18,085,194 -- 126,997 135,968
------------ ----------- ----------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 31,141,494 1,653,158 731,987 655,284
------------ ----------- ----------- ----------
Transfers of Net Premiums 5,802,348 1,214,316 305,915 403,848
Transfers of Policy Loading, Net -520,088 -95,283 -15,180 -14,203
Transfers Due to Deaths -1,858,089 -86,368 -81,670 -103,941
Transfers Due to Other Terminations -14,593,978 -4,159,758 -722,274 -471,182
Transfers Due to Policy Loans -3,763,114 -460,189 121,512 -203,175
Transfers of Cost of Insurance -5,524,048 -1,098,391 -271,866 -280,571
Transfers of Loan Processing Charges -530,052 -137,912 -20,879 -23,119
Transfers Among Investment Divisions -- 1,185,378 -204,831 -319,944
------------ ----------- ----------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -20,987,021 -3,638,207 -889,273 -1,012,287
------------ ----------- ----------- ----------
Total Increase (Decrease) in Net Assets 10,154,473 -1,985,049 -157,286 -357,003
Net Assets - Beginning of Year 206,276,015 30,118,497 10,268,158 8,428,789
------------ ----------- ----------- ----------
Net Assets - End of Year $ 216,430,488 $ 28,133,448 $ 10,110,872 $ 8,071,786
============= ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
CAPITAL GROWTH MULTIPLE HIGH
STOCK STOCK STRATEGY YIELD
DIVISION DIVISION DIVISION DIVISION
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 1,358,301 $ 2,386,879 $ 5,319,125 $ 1,130,669
Expenses:
Risk Charges and Administrative Expenses (Note 3) -141,898 -134,586 -455,139 -76,843
Transaction Charges (Note 4) -- -- -- --
----------- ----------- ----------- -----------
Net Investment Income (Loss) 1,216,403 2,252,293 4,863,986 1,053,826
----------- ----------- ----------- -----------
Net Realized Gains (Losses) 629,477 2,630,023 998,882 615,555
Net Unrealized Gains (Losses) 2,912,069 1,551,345 7,481,946 -180,101
----------- ----------- ----------- -----------
Net Realized and Unrealized Gains (Losses) 3,541,546 4,181,368 8,480,828 435,454
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 4,757,949 6,433,661 13,344,814 1,489,280
----------- ----------- ----------- -----------
Transfers of Net Premiums 849,606 545,934 2,035,808 64,528
Transfers of Policy Loading, Net -52,548 -56,927 -184,863 -39,920
Transfers Due to Deaths -345,280 -89,374 -981,516 -549
Transfers Due to Other Terminations -1,916,903 -1,517,195 -3,919,728 -122,724
Transfers Due to Policy Loans -385,289 -201,914 -2,473,989 155,155
Transfers of Cost of Insurance -618,116 -596,888 -1,954,451 -216,809
Transfers of Loan Processing Charges -53,708 -65,292 -145,180 -25,013
Transfers Among Investment Divisions -89,864 1,522,369 -665,362 175,291
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -2,612,102 -459,287 -8,289,281 -10,041
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets 2,145,847 5,974,374 5,055,533 1,479,239
Net Assets - Beginning of Year 23,245,080 20,601,276 75,857,554 14,943,600
----------- ----------- ----------- -----------
Net Assets - End of Year $ 25,390,927 $ 26,575,650 $ 80,913,087 $ 16,422,839
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 17
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NATURAL GLOBAL
RESOURCES STRATEGY BALANCED 1997
DIVISION DIVISION DIVISION DIVISION
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 13,459 $ 532,251 $ 499,922 $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -9,447 -49,952 -26,229 -838
Transaction Charges (Note 4) -- -- -- -500
----------- ---------- ----------- -----------
Net Investment Income (Loss) 4,012 482,299 473,693 -1,338
----------- ---------- ----------- -----------
Net Realized Gains (Losses) 102,411 1,077,272 129,795 251,745
Net Unrealized Gains (Losses) -260,133 -683,281 59,966 -245,616
----------- ---------- ----------- -----------
Net Realized and Unrealized Gains (Losses) -157,722 393,991 189,761 6,129
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations -153,710 876,290 663,454 4,791
----------- ---------- ----------- -----------
Transfers of Net Premiums 30,993 172,314 130,610 1,510
Transfers of Policy Loading, Net -13,212 -23,403 -13,828 -718
Transfers Due to Deaths -20,231 -60,261 -79,671 --
Transfers Due to Other Terminations -186,369 -786,616 -284,964 -36,664
Transfers Due to Policy Loans -68,718 -86,811 -108,763 --
Transfers of Cost of Insurance -32,245 -181,206 -111,623 6,497
Transfers of Loan Processing Charges -8,424 -20,541 -9,851 1,415
Transfers Among Investment Divisions -195,465 187,883 227,082 -1,208,862
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -493,671 -798,641 -251,008 -1,236,822
----------- ---------- ----------- -----------
Total Increase (Decrease) in Net Assets -647,381 77,649 412,446 -1,232,031
Net Assets - Beginning of Year 1,807,935 7,621,965 4,144,916 1,232,031
----------- ---------- ----------- -----------
Net Assets - End of Year $ 1,160,554 $ 7,699,614 $ 4,557,362 $ --
=========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
1998 1999 2000 2001
DIVISION DIVISION DIVISION DIVISION
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -3,083 -1,111 -4,978 -4,985
Transaction Charges (Note 4) -1,972 -734 -3,054 -3,132
---------- ----------- ----------- ----------
Net Investment Income (Loss) -5,055 -1,845 -8,032 -8,117
---------- ----------- ----------- ----------
Net Realized Gains (Losses) 20,043 2,284 22,981 93,561
Net Unrealized Gains (Losses) 12,248 10,823 36,817 -26,958
---------- ----------- ----------- ----------
Net Realized and Unrealized Gains (Losses) 32,291 13,107 59,798 66,603
---------- ----------- ----------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 27,236 11,262 51,766 58,486
---------- ----------- ----------- ----------
Transfers of Net Premiums 269 666 171 1,053
Transfers of Policy Loading, Net -506 -38 -968 -907
Transfers Due to Deaths -8,062 -1,166 -- --
Transfers Due to Other Terminations -7,486 -302 -22,601 -160,439
Transfers Due to Policy Loans -29,767 -3,891 -19,496 5,844
Transfers of Cost of Insurance -10,619 -4,286 -18,576 -18,487
Transfers of Loan Processing Charges -1,332 -97 -1,353 -1,619
Transfers Among Investment Divisions -42,144 48,732 45,637 9,120
---------- ----------- ----------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -99,647 39,618 -17,186 -165,435
---------- ----------- ----------- ----------
Total Increase (Decrease) in Net Assets -72,411 50,880 34,580 -106,949
Net Assets - Beginning of Year 591,695 179,498 864,728 973,618
---------- ----------- ----------- ----------
Net Assets - End of Year $ 519,284 $ 230,378 $ 899,308 $ 866,669
========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 18
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005
DIVISION DIVISION DIVISION DIVISION
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -506 -7,500 -163 -4,173
Transaction Charges (Note 4) -288 -4,320 -109 -2,583
----------- ---------- ----------- -----------
Net Investment Income (Loss) -794 -11,820 -272 -6,756
----------- ---------- ----------- -----------
Net Realized Gains (Losses) 743 45,811 696 101,595
Net Unrealized Gains (Losses) 5,750 74,202 2,382 -23,976
----------- ---------- ----------- -----------
Net Realized and Unrealized Gains (Losses) 6,493 120,013 3,078 77,619
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 5,699 108,193 2,806 70,863
----------- ---------- ----------- -----------
Transfers of Net Premiums -- 6,501 122 2,661
Transfers of Policy Loading, Net -224 -2,549 -700 -1,754
Transfers Due to Deaths -- -- -- --
Transfers Due to Other Terminations -432 -53,411 31 -83,418
Transfers Due to Policy Loans -- 1,782 -- -13,834
Transfers of Cost of Insurance -1,971 -21,829 -4,687 -12,590
Transfers of Loan Processing Charges -97 -1,313 -1,861 -600
Transfers Among Investment Divisions 67,099 29,505 -93 -163,703
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions 64,375 -41,314 -7,188 -273,238
----------- ---------- ----------- -----------
Total Increase (Decrease) in Net Assets 70,074 66,879 -4,382 -202,375
Net Assets - Beginning of Year 26,584 1,227,854 35,433 885,734
----------- ---------- ----------- -----------
Net Assets - End of Year $ 96,658 $ 1,294,733 $ 31,051 $ 683,359
=========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
2006 2007 2008 2009
DIVISION DIVISION DIVISION DIVISION
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -976 -2,422 -4,296 -1,117
Transaction Charges (Note 4) -591 -1,340 -2,892 -625
----------- ----------- ----------- -----------
Net Investment Income (Loss) -1,567 -3,762 -7,188 -1,742
----------- ----------- ----------- -----------
Net Realized Gains (Losses) 18,876 7,488 21,570 493
Net Unrealized Gains (Losses) 370 43,371 95,190 26,127
----------- ----------- ----------- -----------
Net Realized and Unrealized Gains (Losses) 19,246 50,859 116,760 26,620
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 17,679 47,097 109,572 24,878
----------- ----------- ----------- -----------
Transfers of Net Premiums 1,172 4,854 7,503 4,266
Transfers of Policy Loading, Net -408 -1,331 -337 -1,959
Transfers Due to Deaths -- -- -- --
Transfers Due to Other Terminations 24 -1,020 -66 -3,251
Transfers Due to Policy Loans -25,783 -317 1,458 60
Transfers of Cost of Insurance -3,048 -11,101 -33,960 -5,939
Transfers of Loan Processing Charges -266 -2,159 -4,897 -2,128
Transfers Among Investment Divisions 89 44,745 87 -61
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -28,220 33,671 -30,212 -9,012
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets -10,541 80,768 79,360 15,866
Net Assets - Beginning of Year 186,740 344,995 835,484 180,562
----------- ----------- ----------- -----------
Net Assets - End of Year $ 176,199 $ 425,763 $ 914,844 $ 196,428
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 19
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2010 2011 2013 2014
Division Division Division Division
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) -1,038 -187 -106 -4,640
Transaction Charges (Note 4) -582 -91 -63 -2,681
-------- ------- ------- ----------
Net Investment Income (Loss) -1,620 -278 -169 -7,321
-------- ------- ------- ----------
Net Realized Gains (Losses) 9,074 200 3,838 133,636
Net Unrealized Gains (Losses) 17,704 4,261 -1,316 -9,010
-------- ------- ------- ----------
Net Realized and Unrealized Gains (Losses) 26,778 4,461 2,522 124,626
-------- ------- ------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 25,158 4,183 2,353 117,305
-------- ------- ------- ----------
Transfers of Net Premiums 624 955 -- 16,149
Transfers of Policy Loading, Net -458 -135 14 2,257
Transfers Due to Deaths -- -- -- --
Transfers Due to Other Terminations 116 -8 138 -137,476
Transfers Due to Policy Loans 1,955 -- -24,300 55,356
Transfers of Cost of Insurance -1,539 -602 55 -19,200
Transfers of Loan Processing Charges -235 -81 34 -3,544
Transfers Among Investment Divisions -35,684 18 -3,237 -613,785
-------- ------- ------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions -35,221 147 -27,296 -700,243
-------- ------- ------- ----------
Total Increase (Decrease) in Net Assets -10,063 4,330 -24,943 -582,938
----------
Net Assets - Beginning of Year 173,680 25,832 30,917 1,442,860
-------- ------- -------
Net Assets - End of Year $163,617 $30,162 $ 5,974 $ 859,922
======== ======= ======= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 20
VARIABLE ACCOUNT A
OF MONARCH LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1-ORGANIZATION
Variable Account A of Monarch Life Insurance Company (the Account) is a
segregated account of Monarch Life Insurance Company (Monarch Life) and is
registered as a unit investment trust under the Investment Company Act of 1940,
as amended (1940 Act), and is currently comprised of twenty-five investment
divisions. Ten of the divisions each invest solely in the shares of the ten
corresponding portfolios of the Merrill Lynch Series Fund, Inc. (Series Fund).
The Series Fund is registered under the 1940 Act as a diversified, open-end
management investment company, with the exceptions of Global Strategy Portfolio
and Natural Resources Portfolio, which are classified as non-diversified. The
Series Fund's investment advisor is Merrill Lynch Asset Management, L.P. Fifteen
of the divisions each invest solely in the units of the fifteen corresponding
series trusts of The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury
Securities (the Trusts), which is registered under the 1940 Act as a unit
investment trust. The sponsor of the Trusts is Merrill Lynch, Pierce, Fenner &
Smith Inc. Under applicable insurance law, the assets and liabilities of the
Account are clearly identified and distinguished from the other assets and
liabilities of Monarch Life. The portion of the Account's assets applicable to
the variable life insurance policies is not chargeable with liabilities arising
out of any other business Monarch Life may conduct.
The change in net assets maintained in the Account provides the basis for the
periodic determination of the amount of increased or decreased benefits under
the policies. The net assets may not be less than the amount required under
state insurance law to provide for death benefits (without regard to the minimum
death benefit guarantee) and other policy benefits. Additional assets are held
in Monarch Life's general account to cover the contingency that the guaranteed
minimum death benefit might exceed the death benefit which would have been
payable in the absence of such guarantee.
Monarch Life is a wholly-owned subsidiary of Regal Reinsurance Company (Regal
Re). On June 9, 1994, the Insurance Commissioner of the Commonwealth of
Massachusetts (the Commissioner) was appointed receiver (the Receiver) of
Monarch Life in a rehabilitation proceeding pending before the Supreme Judicial
Court for Suffolk County, Massachusetts (the Court). A term sheet dated July 19,
1994 (the Term Sheet) among the Commissioner (in her capacity as Commissioner
and Receiver) and certain Regal Re shareholders and noteholders and holders of
Monarch Life's surplus notes (representing approximately 85% of both the total
outstanding Regal Re notes and common stock) (the Holders) was approved by the
Court on September 1, 1994. Pursuant to the Term Sheet, the Holders transferred
their notes and stock into voting trusts for which the Commissioner is the sole
trustee, which effectively vests control of Monarch Life and Regal Re in the
Commissioner.
Some Insurance Departments have either suspended Monarch Life's certificate of
authority, ordered Monarch Life to cease writing new business, or have requested
a voluntary suspension of sales. In addition, Monarch Life's certificate of
authority has been revoked by the insurance departments of the states of Idaho
(1998), Louisiana (1994), Michigan (1995), Missouri (1994), Nevada (1997), and
Wyoming (1992).
Monarch Life currently limits its business to maintaining its existing blocks of
disability income insurance, variable life, and annuity businesses. Monarch Life
ceased issuing new variable life insurance policies and new annuity contracts
effective May 1, 1992, and new disability income insurance policies effective
June 15, 1993.
The assets of the Account are not available to meet the general obligations of
Monarch Life or Regal Re and are held for the exclusive benefit of the
policyholders participating in the Account.
Effective July 22, 1999, a 2019 series trust was added to the Merrill Trusts and
a corresponding investment division was added to the Account.
19
<PAGE> 21
VARIABLE ACCOUNT A
OF MONARCH LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Account in preparation of its financial statements. Preparation
of financial statements requires the use of estimates made by management. Actual
results may differ from these estimates. The policies are in conformity with
accounting principles generally accepted in the United States.
INVESTMENTS: The investments in shares of the Series Fund and units of
the Trusts are stated at market value which is the net asset value per
share and per unit of the respective portfolios and series trusts of
the Series Fund and the Trusts. Investment transactions are accounted
for on the date the shares and units are purchased or sold. The cost of
shares and units redeemed is determined on the first-in, first-out
method. Dividend and capital gain distributions received from the
Series Fund and the Trusts are reinvested in additional shares of the
Series Fund and in units of the Trusts and are recorded as income by
the Account on the ex-dividend date. Capital gains distributions are
included in dividend income in the Statements of Operations and Changes
in Net Assets.
FEDERAL INCOME TAXES: For federal income tax purposes, operations of
the Account are combined with those of Monarch Life which is taxed as a
life insurance company. Under existing federal income tax law,
investment income (dividends) and capital gains attributable to the
Account are not taxed.
NOTE 3 - EXPENSES
Monarch Life assumes mortality and expense risks related to the operations of
the Account and deducts a daily charge from the assets of the Account to cover
these risks. The daily charge varies by policy form and is currently equal to a
rate of .50% to .90% (on an annual basis) of the policyholders' investment base.
Monarch Life makes certain deductions from the annual or single premium before
such amounts are transferred to the Account. The deductions are for (1) premiums
for optional benefits, (2) additional premiums for extra mortality risks, (3)
sales load, and (4) state premium taxes.
For certain single premium policies, the sum of deductions (3) and (4) is
included in the investment base of a policyholder in the Account on the policy
issue date. Thereafter, this allocated policy loading is subtracted from that
policyholder's investment base in equal installments at the beginning of the
second through eleventh policy years.
NOTE 4-TRANSACTION CHARGES
Monarch Life pays all transaction charges to Merrill Lynch, Pierce, Fenner &
Smith Inc., on the sale of units of the Trusts to the Account and deducts a
daily asset charge against the assets of each series trust division in the
Account for the reimbursement of these transaction charges. The daily charge is
currently equal to a rate of .34% (on annual basis) of the policyholders'
investment base.
NOTE 5-PRINCIPAL UNDERWRITING AND GENERAL DISTRIBUTOR
Baystate Capital Services, Inc. (BCSI), is the principal underwriter and general
distributor of the policies maintained in the Account. BCSI is a wholly-owned
subsidiary of Monarch Life.
20
<PAGE> 22
VARIABLE ACCOUNT A
OF MONARCH LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 6-FUTURE POLICY BENEFITS/ALLOCATED POLICY LOADING
Amounts provided for future policy benefits on certain policies in the Account
were $0 at December 31, 1999 and $269,067 at December 31, 1998. Unamortized
allocated policy loading (note 3) was $40,121 at December 31, 1999 and $92,330
at December 31, 1998. The sum of these two items is presented as a net amount in
the Statement of Net Assets at December 31, 1998.
NOTE 7-PURCHASES AND SALES OF SECURITIES
Total cost of purchases and proceeds from sales of shares of the Series Fund and
units of the Trusts by the Account during the year ended December 31, 1999, are
shown below:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Money Reserve Portfolio $ 88,132,204 $ 89,088,235
Intermediate Government Bond Portfolio 1,682,766 3,488,809
Long-Term Corporate Bond Portfolio 1,140,698 1,725,846
Capital Stock Portfolio 8,732,736 6,787,631
Growth Stock Portfolio 32,974,552 22,509,457
Multiple Strategy Portfolio 16,703,451 10,831,269
High Yield Bond Portfolio 62,445,742 63,052,544
Natural Resources Portfolio 2,377,508 2,356,660
Global Strategy Portfolio 8,275,129 8,248,487
Balanced Portfolio 1,534,671 1,474,754
1999 Trust -- 237,432
2000 Trust 28,305 128,687
2001 Trust 38,610 98,911
2002 Trust 13,528 2,738
2003 Trust 512,062 1,099,566
2004 Trust 11,442 2,582
2005 Trust 327,187 420,796
2006 Trust 1,698 53,038
2007 Trust 191,478 328,211
2008 Trust 8,386 159,210
2009 Trust 2,128 6,210
2010 Trust 104,057 96,313
2011 Trust 207,060 159,323
2013 Trust -- 406
2014 Trust 1,810,203 1,678,288
2019 Trust 152,337 69,250
------------ ------------
Totals $227,407,938 $214,104,653
============ ============
</TABLE>
21
<PAGE> 23
VARIABLE ACCOUNT A
OF MONARCH LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 8-DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code (the Code),
a variable life insurance policy, other than a policy issued in connection with
certain types of employee benefit plans, will not be treated as a life insurance
policy for federal tax purposes for any period for which the investments of the
segregated asset account, on which the policy is based, are not adequately
diversified. The Code provides that the "adequately diversified" requirement may
be met if the underlying investments satisfy either a statutory safe harbor test
or diversification requirements set forth in regulations issued by the Secretary
of the Treasury.
The Internal Revenue Service has issued regulations under Section 817(h) of the
Code. Monarch Life believes, based on assurances from the Series Fund and the
Trusts, that the Account satisfies the current requirements of the regulations.
22
