<PAGE> 1
VARIABLE ACCOUNT A
OF MONARCH LIFE INSURANCE COMPANY
ANNUAL REPORT
DECEMBER 31, 1998
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 LIFE INSURANCE COMPANY 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, and U.S.
Treasury Securities, Series A through K 1996 Trust through 2011 Trust, 2013
Trust and 2014 Trust Divisions (constituting Variable Account A of Monarch Life
Insurance Company) at December 31, 1998 and 1997 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, 1998, in conformity with generally accepted
accounting principles. 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 generally accepted
auditing standards 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, 1998, by
correspondence with the Series Fund and Trusts, provide a reasonable basis for
the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 22, 1999
<PAGE> 3
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, Series A through K --
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.
2
<PAGE> 4
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.
3
<PAGE> 5
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS AT DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<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 $ 31,993,731 31,993,731 $ 31,993,731
Intermediate Government Bond Portfolio 10,293,127 912,534 10,110,873
Long-Term Corporate Bond Portfolio 8,090,536 688,719 8,071,790
Capital Stock Portfolio 20,765,710 949,424 25,435,078
Growth Stock Portfolio 21,708,195 811,295 26,626,712
Multiple Strategy Portfolio 70,441,769 4,265,319 80,913,100
High Yield Portfolio 15,029,884 1,644,895 15,116,585
Natural Resources Portfolio 1,334,636 142,925 1,160,554
Global Strategy Portfolio 7,411,920 435,163 7,589,244
Balanced Portfolio 4,148,411 288,806 4,557,363
------------ ------------
191,217,919 211,575,030
------------ ------------
Investment in The Merrill Lynch Fund of Stripped
U.S. Treasury Securities, Series A through K --
at Market Value (Note 2):
1998 Trust 432,259 522,060 519,308
1999 Trust 192,138 245,018 230,387
2000 Trust 724,006 1,010,201 899,352
2001 Trust 621,611 1,028,115 866,711
2002 Trust 84,469 121,687 96,661
2003 Trust 827,592 1,776,061 1,294,766
2004 Trust 26,049 43,951 31,061
2005 Trust 581,907 1,014,908 682,820
2006 Trust 127,653 273,145 176,208
2007 Trust 255,121 703,358 425,785
2008 Trust 472,451 1,637,908 914,886
2009 Trust 173,488 373,789 196,437
2010 Trust 141,933 334,255 163,625
2011 Trust 21,145 64,803 30,188
2013 Trust 4,661 14,533 5,967
2014 Trust 810,169 2,245,402 859,944
------------ ------------
5,496,652 7,394,106
------------ ------------
Total Invested Assets $196,714,571 $218,969,136
============ ============
</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, 1997 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
TOTAL INVESTED ASSETS, AT MARKET VALUE $218,969,136
Pending Trades 2,579
------------
Total Assets 218,971,715
------------
LIABILITIES
Payable to Monarch Life Insurance Company 2,541,227
------------
Total Liabilities 2,541,227
------------
Net Assets $216,430,488
============
NET ASSETS
For Variable Life Insurance Policies $216,517,367
Amounts Provided for Future Policy Benefits,
Net of Unamortized Allocated Policy Loading (Note 6) (86,879)
------------
Total Net Assets $216,430,488
============
</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, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTALS - ALL DIVISIONS
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 25,237,079 $ 14,322,426 $ 18,987,183
Expenses:
Risk Charges and Administrative
Expenses (Note 3) (1,272,544) (1,240,569) (1,187,489)
Transaction Charges (Note 4) (22,807) (25,557) (33,193)
------------ ------------ ------------
Net Investment Income 23,941,728 13,056,300 17,766,501
------------ ------------ ------------
Net Realized Gains 3,587,094 6,723,725 3,392,898
Net Unrealized Gains (Losses) (267,296) 11,361,469 (530,425)
------------ ------------ ------------
Net Realized and Unrealized Gains 3,319,798 18,085,194 2,862,473
------------ ------------ ------------
Net Increase in Net Assets
Resulting from Operations 27,261,526 31,141,494 20,628,974
------------ ------------ ------------
Transfers of Net Premiums 5,185,955 5,802,348 6,678,446
Transfers of Policy Loading, Net (133,170) (520,088) (826,215)
Transfers Due to Deaths (2,438,226) (1,858,089) (2,089,356)
Transfers Due to Other Terminations (11,998,198) (14,593,978) (15,546,388)
Transfers Due to Policy Loans (1,814,350) (3,763,114) (3,202,534)
Transfers of Cost of Insurance (5,649,560) (5,524,048) (5,420,400)
Transfers of Loan Processing Charges (518,297) (530,052) (574,528)
Transfers Among Investment Divisions -- -- --
------------ ------------ ------------
Net Decrease in Net Assets
Resulting from Principal Transactions (17,365,846) (20,987,021) (20,980,975)
------------ ------------ ------------
Total Increase (Decrease) in Net Assets 9,895,680 10,154,473 (352,001)
Net Assets - Beginning of Year 216,430,488 206,276,015 206,628,016
------------ ------------ ------------
Net Assets - End of Year $226,326,168 $216,430,488 $206,276,015
============ ============ ============
</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, 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.
7
<PAGE> 9
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.
8
<PAGE> 10
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.
9
<PAGE> 11
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.
10
<PAGE> 12
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.
11
<PAGE> 13
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.
12
<PAGE> 14
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.
13
<PAGE> 15
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.
14
<PAGE> 16
VARIABLE ACCOUNT A
MONARCH LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<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) $ 18,987,183 $ 1,953,814 $ 740,427 $ 606,161
Expenses:
Risk Charges and Administrative Expenses (Note 3) (1,187,489) (218,895) (60,260) (47,967)
Transaction Charges (Note 4) (33,193) -- -- --
------------- ------------ ------------ -----------
Net Investment Income (Loss) 17,766,501 1,734,919 680,167 558,194
------------- ------------ ------------ -----------
Net Realized Gains (Losses) 3,392,898 -- (205,868) (58,852)
Net Unrealized Gains (Losses) (530,425) -- (294,938) (332,355)
------------- ------------ ------------ -----------
Net Realized and Unrealized Gains (Losses) 2,862,473 -- (500,806) (391,207)
------------- ------------ ------------ -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 20,628,974 1,734,919 179,361 166,987
------------- ------------ ------------ -----------
Transfers of Net Premiums 6,678,446 1,390,653 376,810 469,719
Transfers of Policy Loading, Net (826,215) (186,546) (30,199) (22,352)
Transfers Due to Deaths (2,089,356) (539,195) (320,149) (150,387)
Transfers Due to Other Terminations (15,546,388) (4,071,685) (622,483) (493,596)
Transfers Due to Policy Loans (3,202,534) (808,391) (199,883) (207,878)
Transfers of Cost of Insurance (5,420,400) (1,096,123) (197,432) (291,535)
Transfers of Loan Processing Charges (574,528) (148,506) (22,179) (25,695)
Transfers Among Investment Divisions -- (707,280) (707,920) (516,212)
------------- ------------ ------------ -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions (20,980,975) (6,167,073) (1,723,435) (1,237,936)
------------- ------------ ------------ -----------
Total Increase (Decrease) in Net Assets (352,001) (4,432,154) (1,544,074) (1,070,949)
Net Assets - Beginning of Year 206,628,016 34,550,651 11,812,232 9,499,738
------------- ------------ ------------ -----------
Net Assets - End of Year $ 206,276,015 $ 30,118,497 $ 10,268,158 $ 8,428,789
============= ============ ============ ===========
</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) $ 3,648,547 $ 630,799 $ 9,895,507 $ 1,013,989
Expenses:
Risk Charges and Administrative Expenses (Note 3) (127,867) (105,641) (425,770) (65,968)
Transaction Charges (Note 4) -- -- -- --
------------ ------------ ------------ ------------
Net Investment Income (Loss) 3,520,680 525,158 9,469,737 948,021
------------ ------------ ------------ ------------
Net Realized Gains (Losses) (553,576) 2,366,424 657,056 320,976
Net Unrealized Gains (Losses) 222,558 184,380 (635,033) 125,517
------------ ------------ ------------ ------------
Net Realized and Unrealized Gains (Losses) (331,018) 2,550,804 22,023 446,493
------------ ------------ ------------ ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,189,662 3,075,962 9,491,760 1,394,514
------------ ------------ ------------ ------------
Transfers of Net Premiums 983,546 589,029 2,304,353 85,778
Transfers of Policy Loading, Net (74,123) (70,623) (267,746) (55,165)
Transfers Due to Deaths (288,823) (130,987) (627,831) --
Transfers Due to Other Terminations (1,656,408) (1,218,537) (5,392,022) (598,006)
Transfers Due to Policy Loans (364,439) (543,659) (917,996) (192,457)
Transfers of Cost of Insurance (657,865) (558,150) (1,908,400) (206,994)
Transfers of Loan Processing Charges (52,769) (52,671) (168,573) (35,076)
Transfers Among Investment Divisions 362,333 1,109,839 (1,267,633) 1,605,252
------------ ------------ ------------ ------------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions (1,748,548) (875,759) (8,245,848) 603,332
------------ ------------ ------------ ------------
Total Increase (Decrease) in Net Assets 1,441,114 2,200,203 1,245,912 1,997,846
Net Assets - Beginning of Year 21,803,966 18,401,073 74,611,642 12,945,754
------------ ------------ ------------ ------------
Net Assets - End of Year $ 23,245,080 $ 20,601,276 $ 75,857,554 $ 14,943,600
============ ============ ============ ============
</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, 1996 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Natural Global
Resources Strategy Balanced 1996
Division Division Division Division
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ 27,129 $ 221,559 $ 249,251 $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) (9,175) (44,704) (25,918) (446)
Transaction Charges (Note 4) -- -- -- (258)
----------- ----------- ----------- ---------
Net Investment Income (Loss) 17,954 176,855 223,333 (704)
----------- ----------- ----------- ---------
Net Realized Gains (Losses) 117,627 97,571 56,553 73,608
Net Unrealized Gains (Losses) 57,580 650,114 87,362 (70,492)
----------- ----------- ----------- ---------
Net Realized and Unrealized Gains (Losses) 175,207 747,685 143,915 3,116
----------- ----------- ----------- ---------
Net Increase (Decrease) in Net Assets
Resulting from Operations 193,161 924,540 367,248 2,412
----------- ----------- ----------- ---------
Transfers of Net Premiums 33,315 206,976 172,212 205
Transfers of Policy Loading, Net (9,483) (39,817) (18,958) (1,313)
Transfers Due to Deaths -- (21,707) -- --
Transfers Due to Other Terminations (54,938) (501,822) (205,624) 3,707
Transfers Due to Policy Loans 26,230 3,943 (92,423) --
Transfers of Cost of Insurance (37,113) (166,307) (105,104) 3,002
Transfers of Loan Processing Charges (8,291) (25,441) (8,428) (243)
Transfers Among Investment Divisions 488,528 251,982 (153,712) (609,681)
----------- ----------- ----------- ---------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions 438,248 (292,193) (412,037) (604,323)
----------- ----------- ----------- ---------
Total Increase (Decrease) in Net Assets 631,409 632,347 (44,789) (601,911)
Net Assets - Beginning of Year 1,176,526 6,989,618 4,189,705 601,911
----------- ----------- ----------- ---------
Net Assets - End of Year $ 1,807,935 $ 7,621,965 $ 4,144,916 $ --
=========== =========== =========== =========
</TABLE>
<TABLE>
<CAPTION>
1997 1998 1999 2000
Division Division Division Division
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) (7,711) (3,161) (1,089) (5,303)
Transaction Charges (Note 4) (4,581) (2,016) (718) (3,212)
----------- --------- --------- ---------
Net Investment Income (Loss) (12,292) (5,177) (1,807) (8,515)
----------- --------- --------- ---------
Net Realized Gains (Losses) 84,336 13,159 19,268 47,545
Net Unrealized Gains (Losses) (17,253) 13,909 (12,362) (20,662)
----------- --------- --------- ---------
Net Realized and Unrealized Gains (Losses) 67,083 27,068 6,906 26,883
----------- --------- --------- ---------
Net Increase (Decrease) in Net Assets
Resulting from Operations 54,791 21,891 5,099 18,368
----------- --------- --------- ---------
Transfers of Net Premiums 15,705 468 666 171
Transfers of Policy Loading, Net (5,073) (1,859) (324) (4,263)
Transfers Due to Deaths (2,014) -- -- --
Transfers Due to Other Terminations (172,040) (25,336) (48,988) (120,722)
Transfers Due to Policy Loans 18,991 (4,085) 53 9,478
Transfers of Cost of Insurance (22,897) (10,246) (3,089) (16,487)
Transfers of Loan Processing Charges (2,009) (1,455) 58 (1,431)
Transfers Among Investment Divisions (34,403) 4,702 (41,993) (11,822)
----------- --------- --------- ---------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions (203,740) (37,811) (93,617) (145,076)
----------- --------- --------- ---------
Total Increase (Decrease) in Net Assets (148,949) (15,920) (88,518) (126,708)
Net Assets - Beginning of Year 1,380,980 607,615 268,016 991,436
----------- --------- --------- ---------
Net Assets - End of Year $ 1,232,031 $ 591,695 $ 179,498 $ 864,728
=========== ========= ========= =========
</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, 1996 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2001 2002 2003 2004
Division Division Division Division
----------- -------- ----------- --------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) (5,445) (161) (7,458) (193)
Transaction Charges (Note 4) (3,424) (89) (4,297) (126)
----------- -------- ----------- --------
Net Investment Income (Loss) (8,869) (250) (11,755) (319)
----------- -------- ----------- --------
Net Realized Gains (Losses) 89,217 162 87,312 338
Net Unrealized Gains (Losses) (69,116) 244 (85,155) (509)
----------- -------- ----------- --------
Net Realized and Unrealized Gains (Losses) 20,101 406 2,157 (171)
----------- -------- ----------- --------
Net Increase (Decrease) in Net Assets
Resulting from Operations 11,232 156 (9,598) (490)
----------- -------- ----------- --------
Transfers of Net Premiums 1,235 -- 7,967 122
Transfers of Policy Loading, Net (3,230) (22) (5,073) (700)
Transfers Due to Deaths (2,479) -- (2,735) --
Transfers Due to Other Terminations (131,950) 4 (144,534) 41
Transfers Due to Policy Loans 34,414 -- 93,036 --
Transfers of Cost of Insurance (19,122) (332) (18,976) (4,131)
Transfers of Loan Processing Charges (2,186) 1 (1,375) (1,772)
Transfers Among Investment Divisions 18,896 (12) (7,112) (116)
----------- -------- ----------- --------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions (104,422) (361) (78,802) (6,556)
----------- -------- ----------- --------
Total Increase (Decrease) in Net Assets (93,190) (205) (88,400) (7,046)
Net Assets - Beginning of Year 1,066,808 26,789 1,316,254 42,479
----------- -------- ----------- --------
Net Assets - End of Year $ 973,618 $ 26,584 $ 1,227,854 $ 35,433
=========== ======== =========== ========
</TABLE>
<TABLE>
<CAPTION>
2005 2006 2007 2008
Division Division Division Division
----------- --------- --------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) (5,050) (883) (2,076) (4,519)
Transaction Charges (Note 4) (3,067) (547) (1,145) (3,014)
----------- --------- --------- -----------
Net Investment Income (Loss) (8,117) (1,430) (3,221) (7,533)
----------- --------- --------- -----------
Net Realized Gains (Losses) 51,549 6,992 5,571 67,938
Net Unrealized Gains (Losses) (67,154) (6,280) (12,835) (97,804)
----------- --------- --------- -----------
Net Realized and Unrealized Gains (Losses) (15,605) 712 (7,264) (29,866)
----------- --------- --------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations (23,722) (718) (10,485) (37,399)
----------- --------- --------- -----------
Transfers of Net Premiums 2,530 1,172 4,854 7,502
Transfers of Policy Loading, Net (603) (1,478) (1,392) (636)
Transfers Due to Deaths -- (3,049) -- --
Transfers Due to Other Terminations 321 (10,922) 39 182
Transfers Due to Policy Loans (11,564) -- 1,733 (7,994)
Transfers of Cost of Insurance (12,069) (2,983) (9,363) (32,110)
Transfers of Loan Processing Charges (947) (216) (2,114) (4,719)
Transfers Among Investment Divisions (118,339) 67,591 (110) (92,632)
----------- --------- --------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions (140,671) 50,115 (6,353) (130,407)
----------- --------- --------- -----------
Total Increase (Decrease) in Net Assets (164,393) 49,397 (16,838) (167,806)
Net Assets - Beginning of Year 1,050,127 137,343 361,833 1,003,290
----------- --------- --------- -----------
Net Assets - End of Year $ 885,734 $ 186,740 $ 344,995 $ 835,484
=========== ========= ========= ===========
</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, 1996 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2009 2010 2011 2013 2014
Division Division Division Division Division
--------- --------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends (Note 2) $ -- $ -- $ -- $ -- $ --
Expenses:
Risk Charges and Administrative Expenses (Note 3) (1,599) (1,164) (262) (183) (8,621)
Transaction Charges (Note 4) (895) (653) (134) (106) (4,911)
--------- --------- --------- -------- -----------
Net Investment Income (Loss) (2,494) (1,817) (396) (289) (13,532)
--------- --------- --------- -------- -----------
Net Realized Gains (Losses) 22,760 13,518 19,215 6,649 (14,150)
Net Unrealized Gains (Losses) (50,263) (25,847) (27,619) (9,308) (37,104)
--------- --------- --------- -------- -----------
Net Realized and Unrealized Gains (Losses) (27,503) (12,329) (8,404) (2,659) (51,254)
--------- --------- --------- -------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations (29,997) (14,146) (8,800) (2,948) (64,786)
--------- --------- --------- -------- -----------
Transfers of Net Premiums 4,254 620 1,911 -- 16,673
Transfers of Policy Loading, Net (3,766) (5,610) (306) 601 (16,156)
Transfers Due to Deaths -- -- -- -- --
Transfers Due to Other Terminations (151) (134) (57,880) (40) (22,864)
Transfers Due to Policy Loans 60 1,795 (12,439) -- (29,059)
Transfers of Cost of Insurance (6,636) (2,047) (348) (305) (37,238)
Transfers of Loan Processing Charges (1,957) (363) 72 (10) (6,233)
Transfers Among Investment Divisions 15,313 18,338 (871) 204 326,870
--------- --------- --------- -------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Principal Transactions 7,117 12,599 (69,861) 450 231,993
--------- --------- --------- -------- -----------
Total Increase (Decrease) in Net Assets (22,880) (1,547) (78,661) (2,498) 167,207
Net Assets - Beginning of Year 203,442 175,227 104,493 33,415 1,275,653
--------- --------- --------- -------- -----------
Net Assets - End of Year $ 180,562 $ 173,680 $ 25,832 $ 30,917 $ 1,442,860
========= ========= ========= ======== ===========
</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), a
no-load, open-end, diversified, series management investment company registered
under the 1940 Act. 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, Series A through K (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.
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
generally accepted accounting principles.
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 $269,067 at December 31, 1998 and $312,379 at December 31, 1997.
Unamortized allocated policy loading (note 3) was $92,330 at December 31, 1998
and $225,500 at December 31, 1997. The sum of these two items is presented as a
net amount in the Statement of Net Assets at both December 31, 1998 and 1997.
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, 1998, are
shown below:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Money Reserve Portfolio $ 71,775,133 $ 62,985,647
Intermediate Government Bond Portfolio 2,787,096 1,950,269
Long-Term Corporate Bond Portfolio 1,751,202 1,537,035
Capital Stock Portfolio 8,583,805 6,846,676
Growth Stock Portfolio 20,213,619 13,368,292
Multiple Strategy Portfolio 14,604,836 12,359,219
High Yield Bond Portfolio 40,320,599 52,189,852
Natural Resources Portfolio 1,001,169 1,278,200
Global Strategy Portfolio 7,994,734 8,250,741
Balanced Portfolio 2,134,336 1,885,652
1998 Trust -- 522,476
1999 Trust 68 7,390
2000 Trust 310,180 321,727
2001 Trust 122,661 376,348
2002 Trust -- 17,097
2003 Trust 209,200 493,037
2004 Trust 259,664 277,734
2005 Trust 642,497 690,297
2006 Trust 468 4,867
2007 Trust 171,733 122,111
2008 Trust 68,858 128,262
2009 Trust 1,436 47,211
2010 Trust 87,624 39,196
2011 Trust 305,053 305,342
2013 Trust 15,496 14,974
2014 Trust 1,826,254 2,352,448
------------ ------------
Totals $175,187,721 $168,372,100
============ ============
</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
