SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 8 (File No. 33-52518) [x]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 9 (File No. 811-3217) [x]
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(Check appropriate box or boxes)
IDS LIFE ACCOUNT F
IDS LIFE ACCOUNT IZ
IDS LIFE ACCOUNT JZ
IDS LIFE ACCOUNT G
IDS LIFE ACCOUNT H
IDS LIFE ACCOUNT N
IDS LIFE ACCOUNT KZ
IDS LIFE ACCOUNT LZ
IDS LIFE ACCOUNT MZ
- --------------------------------------------------------------------------
(Exact Name of Registrant)
IDS Life Insurance Company
- --------------------------------------------------------------------------
(Name of Depositor)
IDS Tower 10, Minneapolis, MN 55440-0010
- --------------------------------------------------------------------------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-3678
- --------------------------------------------------------------------------
Mary Ellyn Minenko, IDS Tower 10, Minneapolis, MN 55440-0010
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1998, pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on (date), pursuant to paragraph (a)(i) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for
previously filed post-effective amendment.
<PAGE>
CROSS REFERENCE SHEET
Cross reference sheet showing location in the prospectus of the information
called for by the items enumerated in Part A and B of Form N-4.
Negative answers omitted from the prospectus and Statement of Additional
Information are so indicated.
PART A
Item No. Section in Prospectus
1 Cover page
2 Key terms
3 (a) Expense Summary
(b) The Employee Benefit Annuity in brief
4 (a) Condensed financial information
(b) Performance information
(c) Financial statements
5 (a) Cover page; About IDS Life
(b) The variable accounts
(c) The funds
(d) Cover page; The funds
(e) Voting rights
(f) NA
(g) NA
6 (a) Certificate charges
(b) Expense Summary; Certificate charges
(c) Certificate charges
(d) Distribution of the contracts
(e) The funds
(f) NA
7 (a) Buying the contract and certificate; Benefits in case of
death; The annuity payout period
(b) The variable accounts; Making the most of your annuity
(c) The funds; Certificate charges
(d) Cover page
8 (a) The annuity payout period
(b) Buying the contract and certificate
(c) The annuity payout period
(d) The annuity payout period
(e) The annuity payout period
(f) The annuity payout period
9 (a) Benefits in case of death
(b) Benefits in case of death
10 (a) Buying the contract and certificate; Valuing your investment
(b) Valuing your investment
(c) Buying the contract and certificate; Valuing your investment
(d) NA
11 (a) Surrendering a certificate
(b) TSA - Special surrender provisions
(c) Surrendering a certificate
(d) Buying the contract and certificate
(e) The Employee Benefit Annuity in brief
12 (a) Taxes
(b) Key terms
(c) NA
13 About IDS Life
14 Table of contents of the Statement of Additional Information
<PAGE>
PART B
Section in
Item No. Statement of Additional Information
15 (a) Cover page
(b) NA
16 Table of Contents
17 (a) NA
(b) NA
(c) About IDS Life*
18 (a) NA
(b) NA
(c) Independent Auditors
(d) NA
(e) NA
(f) Principal underwriter
19 (a) Distribution of the certificates*; About IDS Life*
(b) Certificate charges*
20 (a) Principal underwriter
(b) Principal underwriter
(c) Principal underwriter
(d) NA
21 (a) Performance information
(b) Performance information
22 Calculating annuity payouts
23 (a) Financial statements
(b) Financial statements
*Designates section in the prospectus, which is hereby incorporated by reference
in this Statement of Additional Information.
<PAGE>
IDS Life Employee Benefit Annuity
Prospectus
May 1, 1998
The Employee Benefit Annuity is a flexible premium group deferred fixed/variable
annuity contract (the contract) offered by IDS Life Insurance Company (IDS Life)
a subsidiary of American Express Financial Corporation (AEFC). Participation in
the contract will be accounted for separately by the issuance of a certificate
showing the participant's interest under the contract.
The contract is a group deferred annuity in which purchase payments are
accumulated on a fixed and/or variable basis and retirement benefits are paid to
the participant on a fixed or variable basis or a combination of both. It is
available for a salary-reduction plan that meets the requirements of Section
403(b) of the Code.
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
Sold by: IDS Life Insurance Company, IDS Tower 10, Minneapolis, MN 55440-0010
Telephone: 800-437-0602.
This prospectus contains the information about the variable accounts that you
should know before investing. Refer to "The variable accounts" in this
prospectus. As in the case of other annuities, it may not be advantageous to
purchase this annuity as a replacement for, or in addition to an existing
annuity.
The prospectus is accompanied or preceded by the Retirement Annuity Mutual Fund
prospectus for IDS Life Aggressive Growth Fund, IDS Life International Equity
Fund, IDS Life Capital Resource Fund, IDS Life Managed Fund, IDS Life Special
Income Fund, IDS Life Moneyshare Fund, IDS Life Growth Dimensions Fund, IDS Life
Global Yield Fund and IDS Life Income Advantage Fund. Please read these
documents carefully and keep them for future reference.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any state securities commission, nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
IDS Life is not a bank or financial institution and the securities it offers are
not deposits or obligations of, backed or guaranteed or endorsed by any bank or
financial institution nor are they insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency.
<PAGE>
A Statement of Additional Information (SAI) (incorporated by reference into this
prospectus) filed with the Securities and Exchange Commission (SEC) is available
without charge by contacting IDS Life at the telephone number above or by
completing and sending the order form on the last page of this prospectus.
The table of contents of the SAI is on the last page of this prospectus.
<PAGE>
Table of contents
Key terms
The Employee Benefit Annuity in brief
Expense summary
Condensed financial information
Financial statements
Performance information
The variable accounts
The funds
IDS Life Aggressive Growth Fund IDS Life International Equity Fund IDS Life
Capital Resource Fund IDS Life Managed Fund IDS Life Special Income Fund IDS
Life Moneyshare Fund IDS Life Growth Dimensions Fund IDS Life Global Yield Fund
IDS Life Income Advantage Fund
The fixed account
Buying the contract and certificate
The retirement date
Beneficiary
How to make purchase payments
Certificate charges
Administrative charge
Mortality and expense risk fee
Surrender charge
Premium taxes
Valuing your investment
Number of units
Accumulation unit value
Net investment factor
Factors that affect variable account accumulation units
<PAGE>
Making the most of your certificate Automated dollar-cost averaging Transferring
money between accounts Transfer policies How to request a transfer or a
surrender
Surrendering a certificate
Surrender policies
Receiving payment when a participant requests a surrender
TSA special surrender provisions
Changing ownership
Benefits in case of death
The annuity payout period
Annuity payout plans
Death after annuity payouts begin
Taxes
Voting rights
Distribution of the certificates
About IDS Life
Legal proceedings
Year 2000
Regular and special reports
Services
Table of contents of the Statement of Additional Information
<PAGE>
Key terms
These terms can help you understand details about your annuity.
Annuity - A contract purchased from an insurance company that offers
tax-deferred growth of the investment until earnings are withdrawn and that can
be tailored to meet the specific needs of the individual during retirement.
Accumulation unit - A measure of the value of each variable account before
annuity payouts begin.
Annuitant - The participant on whose life or life expectancy the annuity payouts
are based.
Annuity payouts - An amount paid at regular intervals under one of several plans
available to a participant and/or any other payee. This amount may be paid on a
variable or fixed basis or a combination of both.
Annuity unit - A measure of the value of each variable account used to calculate
the annuity payouts a participant receives.
Beneficiary - The person designated to receive annuity benefits in case of a
participant's death. Each participant may name a beneficiary in accordance with
the applicable provisions of the Code.
Certificate - The document delivered to each participant that evidences the
participant's coverage under the contract.
Certificate value - The total value of the certificate before any applicable
surrender charge and any administrative charge have been deducted.
Certificate year - A period of 12 months, starting on the effective date of the
certificate and on each anniversary of the effective date.
Close of business - When the New York Stock Exchange (NYSE) closes, normally 3
p.m. Central time.
Code - Internal Revenue Code of 1986, as amended.
Contract owner (owner) - The person or party entitled to ownership rights stated
in the contract and in whose name the contract is issued.
Fixed account - An account to which a participant may allocate purchase
payments. Amounts allocated to this account earn interest at rates that are
declared periodically by IDS Life.
<PAGE>
IDS Life - In this prospectus, "we," "us," "our" and "IDS Life" refer to IDS
Life Insurance Company.
Mutual funds (funds) - Nine IDS Life Retirement Annuity mutual funds, each with
a different investment objective. (See "The funds.") Purchase payments can be
allocated into variable accounts investing in shares of any or all of these
funds.
Participant - The person named in the certificate who is entitled to exercise
all rights and privileges of ownership under the certificate, except as reserved
by the owner. In this prospectus, "you" and "your" refer to the participant.
Purchase payments - Payments made to IDS Life under the contract by or on behalf
of a participant.
Retirement date - The date when annuity payouts are scheduled to begin. This
date is first established when enrollment in the certificates takes place. It
can be changed in the future.
Surrender charge - A deferred sales charge that may be applied if a participant
surrenders the certificate before the retirement date.
Surrender value - The amount a participant is entitled to receive if the
certificate is surrendered. It is the certificate value minus any applicable
surrender charge and administrative charge.
Valuation date - Any normal business day, Monday through Friday, that the NYSE
is open. The value of each variable account is calculated at the close of
business on each valuation date.
Variable accounts - Separate accounts to which a participant may allocate
purchase payments; each invests in shares of one mutual fund. (See "The variable
accounts.") The value of your investment in each variable account changes with
the performance of the particular fund.
<PAGE>
The Employee Benefit Annuity in brief
Purpose: The Employee Benefit Annuity is designed to allow you to build up funds
for retirement. This is done by making one or more investments (purchase
payments) that may earn returns that increase the value of your certificate.
Beginning at a specified future date (the retirement date), the contract and
related certificate provide you with lifetime or other forms of annuity payouts.
Ten-day free look: You may return a certificate to the financial advisor or our
Minneapolis office within 10 days after it is delivered and receive a full
refund of the certificate value. No charges will be deducted. However, you bear
the investment risk from the time of purchase until return of the certificate;
the refund amount may be more or less than the payment made. (Exception: If the
law so requires, all of the purchase payment will be refunded.)
Accounts: You may allocate purchase payments among any or all of:
o nine variable accounts, each of which invests in mutual funds with a
particular investment objective. The value of each variable account
varies with the performance of the particular fund. We cannot guarantee
that the value at the retirement date will equal or exceed the total of
purchase payments allocated to the variable accounts. (p.)
o one fixed account, which earns interest at rates that are adjusted
periodically by IDS Life. (p.)
Buying the contract and certificate: A financial advisor will help the owner
complete and submit an application for a contract and help you complete and
submit an enrollment form for the certificate. Applications and enrollment forms
are subject to acceptance at our Minneapolis office. The maximum amount of
purchase payments is determined by any restrictions imposed by the Code.
o Minimum purchase payment - ($1,000) unless you pay in installments
under a group billing arrangement such as a payroll deduction.
o Minimum installment payment - $25 monthly or $300 annually.
o Maximum first-year payment(s) - $50,000 to $1,000,000 depending
on your age.
o Maximum payment for each subsequent year - $50,000. (p.)
Transfers: Subject to certain restrictions, you may redistribute money among
accounts without charge at any time until annuity payouts begin and once per
year among the variable accounts thereafter. You may establish automated
transfers among the fixed and variable account(s). (p.)
<PAGE>
Surrenders: You may surrender all or part of your certificate value at any time
before the retirement date subject to certain restrictions imposed by the Code
and the plan. Surrenders may be subject to charges and tax penalties and may
have other tax consequences. (p.)
Changing ownership: Restrictions apply concerning change of ownership of rights
under a contract or certificate. (p.)
Benefits in case of death: If the participant dies before annuity payouts begin,
we will pay the beneficiary an amount at least equal to the certificate value.
(p.)
Annuity payouts: The certificate value of your investment can be applied to an
annuity payout plan that begins on the retirement date. You may choose from a
variety of plans to make sure that payouts continue as long as they are needed.
Payouts may be made on a fixed or variable basis, or both. Total monthly payouts
include amounts from each variable account and the fixed account. During the
annuity payout period, you cannot be invested in more than five variable
accounts at any one time unless we agree otherwise. (p.)
Taxes: Generally, your certificate value grows tax deferred until you surrender
it or begin to receive payouts (under certain circumstances, IRS penalty taxes
may apply). Even if you direct payouts to someone else, you will still be taxed
on the distribution. (p.)
Certificate charges: Your certificate is subject to an annual administrative
charge of $30, a 1% mortality and expense risk fee, a surrender charge and any
premium taxes that may be imposed by state or local governments and deducted
either from your purchase payments or upon total withdrawal or when annuity
payments begin. (p.)
Expense summary
The purpose of this table is to help the owner and participant understand the
various costs and expenses associated with the contract and related
certificates.
There is no sales charge when purchasing the contract or certificate. All direct
and indirect costs for the variable accounts and underlying mutual funds are
shown below. Some expenses may vary as explained under "Certificate charges."
<PAGE>
Contract Owner Expenses*
Surrender charge**
(Contingent deferred sales charge as percentage amount surrendered)
Certificate Year Percentage
---------------- ----------
1 8%
2 8
3 8
4 8
5 7
6 6
7 5
8 4
9 3
10 2
11 1
12 and later 0
Annual administrative charge: $30
(Deducted from certificate value of each Certificate)
Separate account annual expenses
(As a percentage of average daily net assets)
Mortality and expense risk fee: 1%
* Premium taxes imposed by some state and local governments are not reflected.
** The surrender charge is further limited so that it will
never exceed 8.5% of aggregate purchase payments made to the
certificate.
Annual operating expenses of underlying mutual funds
(Management fees and other expenses deducted as a percentage
of average net assets)
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive InternationalCapital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 0.60% 0.83% 0.60% 0.59% 0.60% 0.51% 0.63% 0.84% 0.62%
Other expenses 0.07% 0.11% 0.07% 0.05% 0.07% 0.06% 0.08% 0.07% 0.03%
Total * 0.67% 0.94% 0.67% 0.64% 0.67% 0.57% 0.71% 0.91% 0.65%
</TABLE>
<PAGE>
*Annualized operating expenses of underlying mutual funds at Dec. 31, 1997.
Example:* As a participant, you would pay the following expenses on a $1,000
investment, assuming 5% annual return and surrender at the end of each time
period:
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive InternationalCapital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $101.35 $103.90 $101.35 $101.07 $101.35 $99.84 $101.73 $103.61 $101.16
3 years $146.07 $153.75 $146.07 $145.21 $146.07 $141.50 $147.21 $152.89 $145.50
5 years $181.96 $194.96 $181.96 $180.50 $181.96 $174.18 $183.89 $193.52 $180.99
10 years $244.52 $272.54 $244.52 $241.37 $244.52 $227.57 $248.72 $269.47 $242.42
</TABLE>
You would pay the following expenses on the same investment assuming no
surrender or selection of an annuity payout plan at the end of each time period:
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive InternationalCapital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $18.86 $21.63 $18.86 $18.55 $18.86 $17.22 $19.27 $21.32 $18.66
3 years $58.36 $66.74 $58.36 $57.43 $58.36 $53.37 $59.60 $65.81 $57.74
5 years $100.36 $114.45 $100.36 $98.78 $100.36 $91.93 $102.46 $112.89 $99.31
10 years $217.35 $246.08 $217.35 $214.11 $217.35 $199.95 $221.65 $242.93 $215.19
</TABLE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
* In this example, the $30 annual administrative charge is approximated as a
0.170% charge based on our average certificate size.
<TABLE>
<CAPTION>
Condensed Financial Information (Unaudited)
The following tables give per-unit information about the financial history of
each variable account.
Year Ended Dec. 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Account F (investing in shares of Capital Resource Fund)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit $6.67 $6.25 $4.94 $4.93 $4.82 $4.67 $3.22 $3.23 $2.57 $2.31
value at beginning
of period
Accumulation unit value $8.21 $6.67 $6.25 $4.94 $4.93 $4.82 $4.67 $3.22 $3.22 $2.57
at end of period
Number of accumulation 556,866 628,555 641,903 576,724 488,632 402,977 309,984 242,767 204,645 186,639
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
expense to average
Account IZ1 (investing in shares of International Equity Fund)
Accumulation unit $1.49 $1.38 $1.25 $1.29 $0.98 $1.00 -- -- -- --
value at beginning
of period
Accumulation unit value $1.52 $1.49 $1.38 $1.25 $1.29 $0.98 -- -- -- --
at end of period
Number of accumulation 1,168,353 1,220,486 1,088,874 913,364 405,536 69,874 -- -- -- --
units outstanding at end
of period (000 omitted)
Ration of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% -- -- -- --
expense to average
net assets
Account JZ1 (investing in shares of Aggressive Growth Fund)
Accumulation unit $1.68 $1.46 $1.12 $1.21 $1.08 $1.00 -- -- -- --
value at beginning
of period
Accumulation unit value $1.88 $1.68 $1.46 $1.12 $1.21 $1.08 -- -- -- --
at end of period
Number of accumulation 1,168,829 1,172,793 1,007,976 780,423 347,336 115,574 -- -- -- --
units outstanding at end
of period (000 omitted)
Ration of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% -- -- -- --
expense to average
net assets
<PAGE>
Account G (investing in shares of Special Income Fund)
Accumulation unit $4.86 $4.59 $3.80 $3.99 $3.48 $3.21 $2.76 $2.67 $2.48 $2.27
value at beginning
of period
Accumulation unit value $5.25 $4.86 $4.59 $3.80 $3.99 $3.48 $3.21 $2.76 $2.67 $2.48
at end of period
Number of accumulation 316,789 362,167 393,697 361,640 405,429 330,000 270,858 236,926 222,248 175,878
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
expense to average
net assets
Account H (investing in shares of Moneyshare Fund)
Accumulation unit $2.36 $2.27 $2.18 $2.12 $2.09 $2.04 $1.95 $1.82 $1.69 $1.59
value at beginning
of period
Accumulation unit value $2.46 $2.36 $2.27 $2.18 $2.12 $2.09 $2.04 $1.95 $1.82 $1.69
at end of period
Number of accumulation 87,255 89,644 102,568 84,475 74,935 102,277 126,489 139,005 108,690 63,005
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
expense to average
net assets
Simple yield2 4.06% 3.73% 3.97% 4.12% -1.56% 1.67% 3.26% 6.25% 6.81% 7.30%
Compound yield2 4.14% 3.80% 4.04% 4.21% -1.55% 1.69% 3.31% 6.44% 7.04% 7.57%
Account N (investing in shares of Managed Fund)
Accumulation unit $2.97 $2.56 $2.09 $2.21 $1.98 $1.86 $1.45 $1.42 $1.14 $1.06
value at beginning
of period
Accumulation unit value $3.51 $2.97 $2.56 $2.09 $2.21 $1.98 $1.86 $1.45 $1.42 $1.14
at end of period
Number of accumulation 1,178,735 1,197,162 1,212,021 1,127,834 910,254 650,797 496,554 400,961 331,315 325,918
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
expense to average
net assets
<PAGE>
Account KZ3 (investing in shares of Global Yield Fund)
Accumulation unit $1.07 $1.00 -- -- -- -- -- -- -- --
value at beginning
of period
Accumulation unit value $1.10 $1.07 -- -- -- -- -- -- -- --
at end of period
Number of accumulation 65,609 24,878 -- -- -- -- -- -- -- --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% -- -- -- -- -- -- -- --
expense to average
net assets
Account LZ3 (investing in shares of Income Advantage Fund)
Accumulation unit $1.05 $1.00 -- -- -- -- -- -- --
value at beginning
of period
Accumulation unit value $1.18 $1.05 -- -- -- -- -- -- --
at end of period
Number of accumulation 175,024 59,939 -- -- -- -- -- -- --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% -- -- -- -- -- -- --
expense to average
net assets
Account MZ3 (investing in shares of Growth Dimensions Fund)
Accumulation unit $1.11 $1.00 -- -- -- -- -- --
value at beginning
of period
Accumulation unit value $1.37 $1.11 -- -- -- -- -- --
at end of period
Number of accumulation 831,259 350,598 -- -- -- -- -- --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% -- -- -- -- -- --
expense to average
net assets
1 Accounts IZ and JZ commenced operations on Jan. 13, 1992.
2 Net of annual contract administrative charge and mortality and expense risk
fee. 3 Accounts KZ, LZ and MZ commenced operations on April 30, 1996.
</TABLE>
<PAGE>
Financial statements
The SAI dated May 1, 1998, contains:
o complete audited financial statements of the variable accounts including:
- statements of net assets as of Dec. 31, 1997;
- statements of operations for the year ended Dec. 31, 1997; and
- statements of changes in net assets for the years ended Dec. 31, 1997
and Dec. 31, 1996, except for IDS Life Accounts KZ, LZ and MZ which are
for the year ended Dec. 31, 1997 and the period April 30, 1996
(commencement of operations) to Dec. 31, 1996.
o complete audited financial statements for IDS Life including:
- consolidated balance sheets as of Dec. 31, 1997 and Dec. 31, 1996; and
- related consolidated statements of income, stockholder's equity and cash
flows for each of the three years in the period ended Dec. 31, 1997.
Performance information
Performance information for the variable accounts may appear from time to time
in advertisements or sales literature. In all cases, such information reflects
the performance of a hypothetical investment in a particular account during a
particular time period. Calculations are performed as follows:
Simple yield - Account H (investing in IDS Life Moneyshare Fund): Income over a
given seven-day period (not counting any change in the capital value of the
investment) is annualized (multiplied by 52) by assuming that the same income is
received for 52 weeks. This annual income is then stated as an annual percentage
return on the investment.
Compound yield - Account H: Calculated like simple yield, except that, when
annualized, the income is assumed to be reinvested. Compounding of reinvested
returns increases the yield as compared to a simple yield.
Yield - For accounts investing in income funds: Net investment income (income
less expenses) per accumulation unit during a given 30-day period is divided by
the value of the unit on the last day of the period. The result is converted to
an annual percentage.
<PAGE>
Average annual total return: Expressed as an average annual compounded rate of
return of a hypothetical investment over a period of one, five and 10 years (or
up to the life of the account if it is less than 10 years old). This figure
reflects deduction of all applicable charges, including the administrative
charge, mortality and expense risk fee and surrender charge, assuming a
surrender at the end of the illustrated period. Optional average annual total
return quotations may be made that do not reflect a surrender charge deduction
(assuming no surrender).
Aggregate total return: Represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in an account's
accumulation unit value). The calculation assumes reinvestment of investment
earnings and reflects the deduction of all applicable charges, including the
administrative charge, mortality and expense risk fee and surrender charge,
assuming a surrender at the end of the illustrated period. Optional aggregate
total return quotations may be made that do not reflect a surrender charge
deduction (assuming no surrender). Aggregate total return may be shown by means
of schedules, charts or graphs.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the fund in which the
account invests and the market conditions during the given time period. Such
information is not intended to indicate future performance. Because advertised
yields and total return figures include all charges attributable to the
certificates, which has the effect of decreasing advertised performance, account
performance should not be compared to that of mutual funds that sell their
shares directly to the public. (See the SAI for a further description of methods
used to determine yield and total return for the accounts.)
If you would like additional information about actual performance, contact your
financial advisor.
The variable accounts
Purchase payments can be allocated to any or all of the variable accounts that
invest in shares of the following funds:
IDS Life Account Established
IDS Life Aggressive Growth Fund JZ Sept. 20, 1991
IDS Life International Equity Fund IZ Sept. 20, 1991
IDS Life Capital Resource Fund F May 13, 1981
IDS Life Managed Fund N April 17, 1985
IDS Life Special Income Fund G May 13, 1981
IDS Life Moneyshare Fund H May 13, 1981
IDS Life Growth Dimensions Fund MZ April 2, 1996
IDS Life Global Yield Fund KZ April 2, 1996
IDS Life Income Advantage Fund LZ April 2, 1996
<PAGE>
Each variable account meets the definition of a separate account under federal
securities laws. Income, capital gains and capital losses of each account are
credited or charged to that account alone. No variable account will be charged
with liabilities of any other account or of our general business. Each variable
account's net assets are held in relation to the contracts described in this
prospectus as well as other variable annuity contracts that we issue that are
not described in this prospectus. All obligations arising under the contracts
are general obligations of IDS Life.
All variable accounts were established under Minnesota law and are registered
together as a single unit investment trust under the Investment Company Act of
1940 (the 1940 Act). This registration does not involve any supervision of our
management or investment practices and policies by the SEC.
The funds
IDS Life Aggressive Growth Fund
Objective: capital appreciation. Invests primarily in common stock of small- and
medium-size companies. The fund also may invest in warrants or debt securities
or in large well-established companies when the portfolio manager believes such
investments offer the best opportunity for capital appreciation.
IDS Life International Equity Fund
Objective: capital appreciation. Invests primarily in common stock of foreign
issuers and foreign securities convertible into common stock. The fund also may
invest in certain international bonds if the portfolio manager believes they
have a greater potential for capital appreciation than equities.
IDS Life Capital Resource Fund
Objective: capital appreciation. Invests primarily in U.S. common stocks and
other securities convertible into common stock, diversified over many different
companies in a variety of industries.
IDS Life Managed Fund
Objective: maximum total investment return. Invests primarily in U.S. common
stocks, securities convertible into common stock, warrants, fixed income
securities (primarily high-quality corporate bonds) and money-market
instruments. The fund invests in many different companies in a variety of
industries.
IDS Life Special Income Fund
Objective: to provide a high level of current income while conserving the value
of the investment for the longest time period. Invests primarily in
high-quality, lower-risk corporate bonds issued by many different companies in a
variety of industries and in government bonds.
<PAGE>
IDS Life Moneyshare Fund
Objective: maximum current income consistent with liquidity and conservation of
capital. Invests in high-quality money market securities with remaining
maturities of 13 months or less. The fund also will maintain a dollar-weighted
average portfolio maturity not exceeding 90 days. The fund attempts to maintain
a constant net asset value of $1 per share.
IDS Life Growth Dimensions Fund
Objective: long-term growth of capital. Invests primarily in common stocks of
U.S. and foreign companies showing potential for significant growth.
IDS Life Global Yield Fund
Objective: high total return through income and growth of capital. Invests
primarily in a non-diversified portfolio of debt securities of U.S. and foreign
issuers.
IDS Life Income Advantage Fund
Objective: high current income, with capital growth as a secondary objective.
Invests in long-term, high-yielding, high-risk debt securities below investment
grade issued by U.S. and foreign corporations.
More comprehensive information regarding each fund is contained in the fund
prospectus. You should read the fund prospectus and consider carefully, and on a
continuing basis, which fund or combination of funds is best suited to your
long-term investment needs. There is no assurance that the investment objectives
of the funds will be attained nor is there any guarantee that the certificate
value will equal or exceed the total purchase payments made. Some funds may
involve more risk than others--please monitor your investments accordingly.
The Internal Revenue Service (IRS) has issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each mutual fund
intends to comply with these requirements.
The U.S. Treasury and the IRS have indicated that they may provide additional
guidance concerning how many variable accounts may be offered and how many
exchanges among variable accounts may be allowed before the participant is
considered to have investment control and thus is currently taxed on income
earned within variable account assets. We do not know at this time what the
additional guidance will be or when action will be taken. We reserve the right
to modify the contract/certificate, as necessary, to ensure that the participant
will not be subject to current taxation as the owner of the variable account
assets.
<PAGE>
We intend to comply with all federal tax laws to ensure that the
contract/certificate continues to qualify as an annuity for federal income tax
purposes. We reserve the right to modify the contract/certificate as necessary
to comply with any new tax laws.
IDS Life is the investment manager and AEFC is the investment advisor for each
of the funds. American Express Asset Management International Inc., a
wholly-owned subsidiary of AEFC, is the sub-investment advisor for IDS Life
International Equity Fund. The investment manager and advisors cannot guarantee
that the funds will meet their investment objectives. Please read the Retirement
Annuity Mutual Fund prospectus for complete information on investment risks,
deductions, expenses and other facts you should know before investing. It is
available by contacting IDS Life at the address or telephone number on the front
of this prospectus, or from your financial advisor.
The fixed account
Purchase payments also may be allocated to the fixed account. The cash value of
the fixed account increases as interest is credited to the account. Purchase
payments and transfers to the fixed account become part of the general account
of IDS Life, the company's main portfolio of investments. Interest is credited
daily and compounded annually. We may change the interest rates from time to
time.
Because of exemptive and exclusionary provisions, interests in the fixed account
have not been registered under the Securities Act of 1933 (1933 Act), nor is the
fixed account registered as an investment company under the 1940 Act.
Accordingly, neither the fixed account nor any interests in it are generally
subject to the provisions of the 1933 or 1940 Acts, and we have been advised
that the staff of the SEC has not reviewed the disclosures in this prospectus
that relate to the fixed account. Disclosures regarding the fixed account,
however, may be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses.
Buying the contract and certificate
A financial advisor will help the owner prepare and submit an application. The
financial advisor will also help each participant prepare and submit an
enrollment form. These forms will be sent to our Minneapolis office. Unless
otherwise provided in the contract, the owner has all rights under the contract.
Your interest under the contract, as evidenced by your certificate, is subject
to the terms of the owner's contract. Please remember that investment
performance, expenses and deduction of certain charges affect accumulation unit
value.
<PAGE>
When you enroll in the certificate, you can select:
o the account(s) in which you want to invest;
o the date you want to start receiving annuity payouts
(the retirement date); and
o a beneficiary.
The owner selects the frequency with which it will make purchase payments.
If the application and enrollment forms are complete, we will process them
within two business days after we receive them at our Minneapolis office. If the
application is accepted, we will send the owner a contract. If your enrollment
form is accepted, we will send you a certificate. If we cannot accept an
application or enrollment form within five business days, we will decline it and
return any payment. We will credit additional purchase payments to the
account(s) at the next close of business after we receive your payments at our
Minneapolis office.
The retirement date
Upon processing your application, we will establish the retirement date to the
maximum age or date as specified below. You can also select a date within the
maximum limits. This date can be aligned with your actual retirement from a job,
or it can be a different future date, depending on your needs and goals and on
certain restrictions. You can also change the date, provided you send us written
instructions at least 30 days before annuity payouts begin.
To avoid IRS penalty taxes, the retirement date generally must be:
o on or after the date you reach age 59 1/2; and
o by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2 or, if later, retires; except that 5% business
owners may not select a retirement date that is later than April 1 of
the year following the calendar year when they reach age 70 1/2.
If you are taking the minimum 403(b) plan distributions as required by the Code
from another tax-qualified investment, or in the form of partial surrenders
under the certificate, retirement payments can start as late as your 85th
birthday or the 10th contract anniversary.
Certain restrictions on retirement dates apply to participants in the Texas
Optional Retirement Program, should the Employee Benefit Annuity be available in
the program. (See "Special surrender provisions.")
<PAGE>
Beneficiary
If death benefits become payable before the retirement date, your named
beneficiary will receive all or part of the certificate value. If there is no
named beneficiary, then your estate will be the beneficiary. (See "Benefits in
case of death" for more about beneficiaries.)
Minimum purchase payments
$25 monthly
Installments must total at least $300 per year.*
*If no purchase payments have been made on a participant's behalf for 24 months
and previous payments total $600 or less, we have the right to pay the
participant the total value of the certificate in a lump sum. This right does
not apply to contracts sold to New Jersey residents.
Minimum lump sum purchase payment
Initial payment: $1,000
Minimum additional purchase payment(s): $50
Maximum first-year payment(s):
This maximum is based on the participant's age on the effective date of the
certificate.
Up to age 75 $1 million
76 to 85 $500,000
86 to 90 $50,000
Maximum payment for each subsequent year: $50,000**
**These limits apply in total to all IDS Life annuities you own. We reserve the
right to increase maximum limits or reduce age limits. The Code's limits on
annual contribution also apply.
How to make purchase payments
By scheduled payment plan: A financial advisor can help the owner set up an
automatic salary reduction arrangement.
<PAGE>
Certificate charges
Administrative charge
This fee is for establishing and maintaining records for each certificate under
the contract. We deduct $30 from the certificate value at the end of each
certificate year.
If a participant surrenders a certificate, the annual charge will be deducted at
the time of surrender. The annual charge cannot be increased and does not apply
after annuity payouts begin.
Mortality and expense risk fee
This fee is to cover the mortality risk and expense risk and is applied daily to
the variable accounts and reflected in the unit values of the accounts. The
variable accounts pay this fee at the time that dividends are distributed from
the funds in which they invest. Annually, the fee totals 1% of the variable
accounts' average daily net assets. Approximately two-thirds of this amount is
for our assumption of mortality risk and one-third is for our assumption of
expense risk. This fee does not apply to the fixed account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract and
certificates, no matter how long a specific annuitant lives and no matter how
long the entire group of IDS Life annuitants live. If, as a group, IDS Life
annuitants outlive the life expectancy we have assumed in our actuarial tables,
then we must take money from our general assets to meet our obligations. If, as
a group, IDS Life annuitants do not live as long as expected, we could profit
from the mortality risk fee.
Expense risk arises because the administrative charge cannot be increased and
may not cover our expenses. Any deficit would have to be made up from our
general assets.
We may use any profits realized from the mortality and expense risk fee for any
proper corporate purpose, including, among others, payment of distribution
(selling) expenses. We do not expect that the surrender charge, discussed in the
following paragraphs, will cover sales and distribution expenses.
<PAGE>
Surrender charge
If part or all of a certificate is surrendered within the first 11 certificate
years, the following surrender charge applies:
Surrender Charge as
Percent of
Certificate Year Amount Surrendered
---------------- ------------------
1 8%
2 8
3 8
4 8
5 7
6 6
7 5
8 4
9 3
10 2
11 1
12 and later 0
The surrender charge is further limited so that it will never exceed 8.5% of
aggregate purchase payments made to the certificate. IDS Life reserves the right
to reduce or eliminate the surrender charge. The surrender charge is calculated
so that the amount surrendered, minus any surrender charge, equals the amount
you request.
Example of surrender charge:
Owner requests a $1,000 partial surrender and the surrender charge
is 5%:= $1000/(1.00-.05) = $1,052.63
Total amount surrendered.............................$ 1,052.63
x 0.05
Total surrender charge...............................$ 52.63
No surrender charge: There is no surrender charge on amounts surrendered:
o........after the 11th certificate year;
o........due to a participant's retirement under the plan on or after age 55;
o........due to the death of the participant; or o........upon settlement of the
certificate under an annuity payout plan
<PAGE>
Possible group reductions: In some cases lower sales and administrative expenses
may be incurred due to the size of the group, the average contribution and the
use of group enrollment procedures. In such cases, we may be able to reduce or
eliminate the administrative and surrender charges. However, we expect this to
occur infrequently.
Premium taxes
Certain state and local governments may impose premium taxes. A charge may be
made by us against the certificate value for any state premium taxes to the
extent the taxes are payable.
Valuing your investment
Here is how your accounts are valued:
Fixed account: The amounts allocated to the fixed account are valued directly in
dollars and equal the sum of your purchase payments, plus interest earned, less
any amounts surrendered or transferred (including the administrative charge).
Variable accounts: Amounts allocated to the variable accounts are converted into
accumulation units. Each time you make a purchase payment or transfer amounts
into one of the variable accounts, a certain number of accumulation units are
credited to your certificate for that account. Conversely, each time you take a
partial surrender, transfer amounts out of a variable account or are assessed an
administrative charge, a certain number of accumulation units are subtracted
from your certificate.
The accumulation units are the true measure of investment value in each account
during the accumulation period. They are related to, but not the same as, the
net asset value of the underlying fund. The dollar value of each accumulation
unit can rise or fall daily depending on the performance of the underlying
mutual fund and on certain fund expenses. Here is how unit values are
calculated:
Number of units
To calculate the number of accumulation units for a particular account, we
divide the investment, after deduction of any premium taxes, by the current
accumulation unit value.
Accumulation unit value
The current accumulation unit value for each variable account equals the last
value times the account's current net investment factor.
<PAGE>
Net investment factor
o Determined by adding the underlying mutual fund's current net asset
value per share, plus per share amount of any current dividend or
capital gain distribution; then
o dividing that sum by the previous net asset value per share; and
o subtracting the percentage factor representing the mortality and
expense risk fee from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the
accumulation unit value may increase or decrease. The owner bears this
investment risk in a variable account.
Factors that affect variable account accumulation units
Accumulation units may change in two ways; in number and in value. Here are the
factors that influence those changes:
The number of accumulation units owned may fluctuate due to:
o additional purchase payments allocated to the variable account(s);
o transfers into or out of the variable account(s);
o partial surrenders;
o surrender charges; and/or
o administrative charges.
Accumulation unit values will fluctuate due to:
o changes in underlying mutual fund(s) net asset value;
o dividends distributed to the variable account(s);
o capital gains or losses of underlying mutual funds;
o mutual fund operating expenses; and/or
o mortality and expense risk fees.
Making the most of your certificate
Automated dollar-cost averaging
You can use automated transfers to take advantage of dollar-cost averaging
(investing a fixed amount at regular intervals). For example, you might have a
set amount transferred monthly from a relatively conservative variable account
to a more aggressive one or to several others, or from the fixed account to one
or more variable accounts. There is no charge for dollar-cost averaging.
<PAGE>
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market value(s) of the underlying
mutual fund(s). Since you invest the same amount each period, you automatically
acquire more units when the market value falls, fewer units when it rises. The
potential effect is to lower the average cost per unit. For specific features
contact your financial advisor.
How dollar-cost averaging works
Amount invested Accumulation unit Number of units
Month value purchased
Jan $100 $20 5.00
Feb 100 18 5.56
March 100 17 5.88
April 100 15 6.67
May 100 16 6.25
June 100 18 5.56
July 100 17 5.88
Aug 100 19 5.26
Sept 100 21 4.76
Oct 100 20 5.00
(footnotes to table) By investing an equal number of dollars each month...
(arrow in table pointing to April) you automatically buy more units when the per
unit market price is low...
(arrow in table pointing to September) and fewer units when the per unit market
price is high.
You have paid an average price of only $17.91 per unit over the 10 months, while
the average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any variable account will gain in
value, nor will it protect against a decline in value if market prices fall.
Because this strategy involves continuous investing, your success with
dollar-cost averaging will depend upon your willingness to continue to invest
regularly through periods of low price levels. Dollar-cost averaging can be an
effective way to help meet your long-term goals.
<PAGE>
Transferring money between accounts
You may transfer money from any one account, including the fixed account, to
another before the annuity payouts begin. We will process your transfer request
at the next close of business after we receive it. There is no charge for
transfers. Before making a transfer, you should consider the risks involved in
switching investments.
We may suspend or modify transfer privileges at any time. Certain restrictions
apply to transfers involving the fixed account.
Transfer policies
o You may transfer certificate values between the variable accounts, or
from the variable account(s) to the fixed account at any time. However,
if a transfer has been made from the fixed account to the variable
account(s), you may not make a transfer (including automated transfers)
from any variable account back to the fixed account until the next
eligible transfer period as defined in the plan, if any, or otherwise
until the next certificate anniversary.
o You may transfer certificate values from the fixed account to the
variable account(s) once per certificate year, (except for automated
transfers, which can be set up for certain transfer periods subject to
certain minimums).
o Once annuity payouts begin, no transfers may be made to or from the
fixed account, but transfers may be made once per contract year among
the variable accounts.
How to request a transfer or a surrender
1 By letter
Send your name, account number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or surrender to:
Regular mail:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Express mail:
IDS Life Insurance Company
733 Marquette Avenue
Minneapolis, MN 55402
<PAGE>
Minimum amount
Mail transfers: $250 or entire account balance
Mail surrenders: $250 or entire account balance
Maximum amount
Mail transfers: None (up to certificate value)
Mail surrenders: None (up to certificate value)
2 By phone
For salary reduction plans only.
Call between 7 a.m. and 6 p.m. Central time:
1-800-437-0602 (toll free) or
(612) 671-9900 (Minneapolis/St. Paul area)
TTY service for the hearing impaired:
1-800-285-8846 (toll free)
Minimum amount
Phone transfers: $250 or entire account balance
Phone surrenders: $250 or entire account balance
Maximum amount
Phone transfers: None (up to certificate value)
Phone surrenders: $50,000
We answer phone requests promptly, but you may experience delays when the call
volume is unusually high. If unable to get through, you can use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender request believed to be
authentic and will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. A telephone
surrender will not be allowed within 30 days of a phoned-in address change. As
long as these procedures are followed, neither IDS Life nor its affiliates will
be liable for any loss resulting from fraudulent requests.
Telephone transfers or surrenders are automatically available. You may request
that telephone transfers or surrenders not be authorized from your account by
writing IDS Life.
<PAGE>
3 By automated transfers
Your financial advisor can help you set up automated transfers among your
accounts.
You can start or stop this service by written request or other method acceptable
to IDS Life. You must allow 30 days for IDS Life to change any instructions that
are currently in place.
o Automated transfers from the fixed to variable account(s) may not
exceed an amount that, if continued, would deplete the fixed account
within 12 months.
o Automated transfers are subject to all of the contract provisions and
terms, including transfer of certificate values between accounts.
Minimum amount
Automated transfers: $50
Maximum amount
Automated transfers: None (except for automated transfers
from the fixed account)
Surrendering a certificate
Subject to certain restrictions imposed by the Code, you may surrender all or
part of your certificate at any time before annuity payouts begin by sending a
written request or calling us. For total surrenders, we will compute the value
of the certificate at the next close of business after we receive the request.
We may ask you to return the certificate. You may have to pay surrender charges
(see "Surrender charge") and IRS taxes and penalties (see "Taxes"). No
surrenders may be made after annuity payouts begin.
Surrender policies
If you have a balance in more than one account and request a partial surrender,
we will withdraw money from all of your accounts in the same proportion as your
value in each account correlates to the total certificate value, unless
requested otherwise.
Receiving payment when a participant requests a surrender
By regular or express mail:
o payable to participant;
o mailed to address of record.
Note: You will be charged a fee if you request express mail delivery.
<PAGE>
By wire:
o request that payment be wired to your bank;
o bank account must be in the same ownership as your contract; and
o pre-authorization required. For instructions, contact your
financial advisor.
Payment normally will be sent within seven days after receiving the request.
However, we may postpone the payment if:
- the surrender amount includes a purchase payment check that has not
cleared; - the NYSE is closed, except for normal holiday and weekend
closings; - trading on the NYSE is restricted, according to SEC rules; -
an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA special surrender provisions
The Code imposes certain restrictions on a participant's right to receive early
distributions attributable to salary reduction contributions from a Tax
Sheltered Annuity (TSA):
o Distributions attributable to salary reduction contributions made after
Dec. 31, 1988, plus the earnings on them, or to transfers or rollovers
of such amounts from other contracts, may be made from the TSA only if:
- the participant has attained age 59-1/2; - the participant has
become disabled as defined in the Code; - the participant has
separated from the service of the employer who purchased the
contract; or
- the distribution is made to the participant's beneficiary
because of death.
o If you should encounter a financial hardship (within the meaning of the
Code), you may receive a distribution of all certificate values
attributable to salary reduction contributions made after Dec. 31,
1988, but not the earnings on them.
o Even though a distribution may be permitted under the above rules, it
still may be subject to IRS taxes and penalties. (See "Taxes.")
o The above restrictions on the right to receive a distribution do not
affect the availability of the amount transferred or rolled over to the
certificate as of Dec. 31, 1988. The restrictions do not apply to
transfers or exchanges of certificate values within the annuity, or to
another registered variable annuity contract or investment vehicle
available through the employer.
<PAGE>
o If the contract/certificate has a loan provision, the right to receive
a loan from your fixed account continues to exist and is described in
detail in your contract/certificate. You may borrow from the
certificate value allocated to the fixed account.
o For certain types of contributions under a TSA contract to be excluded
from taxable income, the employer must comply with certain
nondiscrimination requirements. You should consult your employer to
determine whether the nondiscrimination rules apply to you.
Participation in the Texas Optional Retirement Program: Should the Employee
Benefit Annuity be available in this program, participants cannot receive any
distribution before retirement unless they become totally disabled or end their
employment at a Texas college or university. This restriction affects a
participant's right to:
o surrender all or part of the certificate at any time; and
o move up the retirement date.
If a participant is in the program for only one year, the portion of the
purchase payments made by the state of Texas will be refunded to the state with
no surrender charge. These restrictions are based on an opinion of the Texas
Attorney General interpreting Texas law.
Changing ownership
The contract and related certificates cannot be sold, assigned, transferred,
discounted or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose to any person other than
IDS Life. Your vested rights under the certificate are nonforfeitable.
Benefits in case of death
If you die before annuity payouts begin, we will pay your beneficiary as
follows:
If death occurs before your 75th birthday, the beneficiary receives the
greater of:
o the certificate value; or
o purchase payments made to the certificate, minus any surrenders.
If death occurs on or after your 75th birthday, the beneficiary receives the
certificate value.
<PAGE>
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the certificate in force. To do this your spouse must, within 60
days after we receive proof of death, give us written instructions to keep the
certificate in force. If you die before the retirement date, your spouse may
keep the certificate in force until the date on which you would have reached age
70 1/2 or any other date permitted by the Code.
Payments: We will pay the beneficiary in a single sum unless you have given us
other written instructions, or the beneficiary may receive payouts under any
annuity payout plan available under this contract if:
o the beneficiary asks us in writing within 60 days after we receive
proof of death;
o payouts begin no later than one year after death, or other date as
permitted by the Code; and
o the payout period does not extend beyond the beneficiary's life
or life expectancy.
When paying the beneficiary, we will determine the certificate's value at the
next close of business after our death claim requirements are fulfilled.
Interest, if any, will be paid from the date of death at a rate no less than
required by law. We will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled. (See "Taxes.")
The annuity payout period
As the participant, you have the right to decide how and to whom annuity payouts
will be made starting at the retirement date. You may select one of the annuity
payout plans outlined below or we will mutually agree on other payout
arrangements. The amount available for payouts under the plan you select is the
certificate value on the retirement date. No surrender charges are deducted
under the payout plans listed below.
The contract and related certificates allow you to determine whether payouts are
to be made on a fixed or variable basis, or a combination of fixed and variable.
Amounts of fixed and variable payouts depend on:
o the annuity payout plan you select;
o your age;
o the annuity table in the contract and related certificates; and
o the amounts allocated to the account(s) at settlement on the
retirement date.
<PAGE>
In addition, for variable payouts only, amounts depend on:
o the investment performance of the account(s) selected.
These payouts will vary from month to month because the performance of the
underlying mutual funds will fluctuate. (In the case of fixed annuities, payouts
remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin, see "Transfer policies."
Annuity payout plans
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before certificate values are to be used to
purchase the payout plan.
o Plan A - Life annuity - no refund: Monthly payouts are made until the
annuitant's death. Payouts end with the last payout before the annuitant's
death; no further payouts will be made. This means that if the annuitant dies
after only one monthly payout has been made, no more payouts will be made.
o Plan B - Life annuity with five, 10 or 15 years certain: Monthly payouts are
made for a guaranteed payout period of five, 10 or 15 years that you elect. This
election will determine the length of the payout period to the beneficiary if
the annuitant should die before the elected period has expired. The guaranteed
payout period is calculated from the retirement date. If the annuitant outlives
the elected guaranteed payout period, payouts will continue until the
annuitant's death.
o Plan C - Life annuity - installment refund: Monthly payouts are made until the
annuitant's death, with our guarantee that payouts will continue for some period
of time. Payouts will be made for at least the number of months determined by
dividing the amount applied under this option by the first monthly payout,
whether or not the annuitant is living.
o Plan D - Joint and last survivor life annuity - no refund: Monthly payouts are
made while both the annuitant and a joint annuitant are living. If either
annuitant dies, monthly payouts continue at the full amount until the death of
the surviving annuitant. Payouts end with the death of the second annuitant.
o Plan E - Payouts for a specified period: Monthly payouts are made for a
specific payout period of 10 to 30 years that you elect. Payouts will be made
only for the number of years specified whether the annuitant is living or not.
Depending on the time period selected, it is foreseeable that an annuitant can
outlive the payout period selected. In addition, a 10% IRS penalty tax could
apply under this payout plan. (See "Taxes.")
<PAGE>
Restrictions on payout options: You must select a payout plan that provides for
payouts:
o over the life of the annuitant;
o over the joint lives of the annuitant and a designated beneficiary;
o for a period not exceeding the life expectancy of the annuitant; or
o for a period not exceeding the joint life expectancies of the
annuitant and a designated beneficiary.
If we do not receive instructions: You must give us written instructions for the
annuity payouts at least 30 days before your retirement date. If you do not, we
will make payouts under Plan B, with 120 monthly payouts guaranteed, unless this
option is contrary to applicable provisions of the Code.
If monthly payouts would be less than $20: We will calculate the amount of
monthly payouts at the time the certificate value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the certificate value to the participant in a lump sum.
Death after annuity payouts begin
If the annuitant dies after annuity payouts begin, any amount payable to the
beneficiary will be as provided in the annuity payout plan in effect.
Taxes
Generally, under current law, any increase in your certificate value is taxable
when you receive a payout or surrender except to the extent that contributions
were made with after-tax dollars. (See detailed discussion below.) Any portion
of the annuity payouts and any surrenders requested that represent ordinary
income are normally taxable. You will receive a 1099 tax information form for
any year in which a taxable distribution was made according to our records.
Annuity payouts: The entire payout generally will be includable as ordinary
income and subject to tax. If you or your employer invested in the certificate
with pre-tax dollars, such amounts are not considered to be part of your
investment in the certificate and will be taxed when paid to you.
Surrenders: Generally, if you surrender part or all of the certificate before
annuity payouts begin, the surrender payment will be taxed. You also may have to
pay a 10% IRS penalty for surrenders before reaching age 59 1/2. Other penalties
may apply.
<PAGE>
Death benefits to beneficiaries: The death benefit under an annuity is not tax
exempt. Any amount received by the beneficiary that represents previously
deferred earnings within the certificate, is taxable as ordinary income to the
beneficiary in the year(s) he or she receives the payments.
Penalties: If you receive amounts from the certificate before reaching age 59
1/2, you may have to pay a 10% IRS penalty on the amount includable in your
ordinary income. However, this penalty will not apply to any amount received by
you or your beneficiary:
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially equal periodic
payments, after separation from service, made at least annually, over
your life or life expectancy (or joint lives or life expectancies of
you and your designated beneficiary); or
o after you separate from service during or after the year you attain age 55.
Other penalties or exceptions may apply if you surrender your certificate before
your plan specifies that payments can be made.
Mandatory withholding: If you receive directly all or part of the certificate
value, mandatory 20% income tax withholding generally will be imposed at the
time the payment is made. Any withholding that is done represents a prepayment
of your tax due for the year and you would take credit for such amounts on the
annual tax return you file. This mandatory withholding will not be imposed if: o
instead of receiving the distribution check, you elect to have the distribution
rolled over
directly to an IRA or another eligible plan;
o the payment is one in a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or
the joint lives or life expectancies of you and your designated
beneficiary) or over a specified period of 10 years or more; or
o the payment is a minimum distribution required under the Code.
Payments made to a surviving spouse instead of being directly rolled over to an
IRA may also be subject to mandatory 20% income tax withholding.
Elective withholding: If the distribution is not subject to mandatory
withholding as described above, you can elect not to have any withholding occur.
To do this you must provide us with a valid Social Security Number or Taxpayer
Identification Number.
<PAGE>
If you do not make this election and if the payout is part of an annuity payout
plan, the amount of withholding generally is computed using payroll tables. You
can provide us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full surrender), withholding is computed using 10% of the taxable portion.
Some states also impose withholding requirements similar to the federal
withholding described above. If this should be the case any payment from which
federal withholding is deducted may also have state withholding deducted.
The withholding requirements may differ if payment is being made to a non-U.S.
citizen or if the payment is being delivered outside the United States.
Important: Our discussion of federal tax laws is based upon our understanding of
these laws as they are currently interpreted. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of the contract
and/or related certificates.
Tax qualification: The contract (and your certificate of participation
thereunder) is intended to qualify as an annuity for Federal income tax
purposes. To that end, the provisions of the contract and your certificate are
to be interpreted to ensure or maintain such tax qualification, notwithstanding
any other provisions to the contrary. We reserve the right to amend the contract
and/or related certificates to reflect any clarifications that may be needed or
are appropriate to maintain such qualification or to conform the contract and/or
certificates to any applicable changes in the tax qualification requirements. We
will send you a copy of any such amendment.
Voting rights
As owner or participant with investments in the variable account(s) you may vote
on important mutual fund policies. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes is determined by applying the
percentage interest in each variable account to the total number of votes
allowed to the account.
<PAGE>
After annuity payouts begin, the number of votes is equal to:
o the reserve held in each account for the contract or certificate, divided by
o the net asset value of one share of the applicable underlying mutual fund.
As we make annuity payouts, the reserve for the annuity decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each account not more than 60 days before a
shareholders' meeting. Notice of these meetings, proxy materials and a statement
of the number of votes to which the voter is entitled, will be sent.
We will vote shares for which we have not received instructions in the same
proportion as the votes for which we have received instructions. We also will
vote the shares for which we have voting rights in the same proportion as the
votes for which we have received instructions.
Distribution of the certificates
IDS Life, a registered broker/dealer, is the sole distributor of the
certificates. IDS Life pays total commissions of up to 7.0% of the total
purchase payments received on the certificates. A portion of this total
commission is paid to district managers and field vice presidents of the selling
representative.
About IDS Life
The Employee Benefit Annuity is issued by IDS Life, a wholly-owned subsidiary of
AEFC, which itself is a wholly-owned subsidiary of the American Express Company,
a financial services company headquartered in New York City.
IDS Life is a stock life insurance company organized in 1957 under the laws of
the State of Minnesota and located at IDS Tower 10, Minneapolis, MN 55440-0010.
IDS Life conducts a conventional life insurance business in the District of
Columbia and all states except New York.
American Express Financial Advisors Inc. offers mutual funds, investment
certificates and a broad range of financial management services. IDS Life
offers insurance and annuities.
<PAGE>
American Express Financial Advisors Inc. serves individuals and businesses
through its nationwide network of more than 175 offices and more than 8,600
financial advisors.
Other subsidiaries provide investment management and related services for
pension, profit-sharing, employee savings and endowment funds of businesses and
institutions.
Legal proceedings
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and its subsidiaries do business involving
insurers' sales practices, alleged agent misconduct, failure to properly
supervise agents, and other matters. In December 1996, an action of this type
was brought against IDS Life and its parent, AEFC. A second action was filed in
March 1997. The plaintiffs purport to represent a class consisting of all
persons who replaced existing IDS Life policies with new IDS Life policies from
and after January 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties and
alleged violations of consumer fraud statutes. Plaintiffs seek damages in an
unspecified amount and also seek to establish a claims resolution facility for
the determination of individual issues.
IDS Life believes it has meritorious defenses to these and other actions arising
in connection with the conduct of its business activities and intends to defend
them vigorously. IDS Life believes that it is not party to, nor are any of its
properties the subject of, any pending legal proceedings which would have a
material adverse effect on its consolidated financial condition.
Year 2000
The Year 2000 issue is the result of computer programs having been written using
two-digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Variable Accounts.
The Variable Accounts have no computer systems of their own but are dependent
upon the systems maintained by AEFC and certain other third parties.
<PAGE>
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999. The Year 2000 readiness of
other third parties whose system failures could have an impact on the Variable
Account's operations currently is being evaluated. The potential materiality of
any such impact is not known at this time.
Regular and special reports
Services
To help you track and evaluate the performance of your annuity, we provide:
Quarterly statements showing the value of your investment.
Annual reports containing required information on the annuity and its underlying
investments.
A personalized annuity progress report detailing the cumulative return since the
certificate was purchased and the average annual rate of return on the
investments. This report, which is unique in the industry, is available upon
request from your financial advisor.
<PAGE>
Table of contents of the Statement of Additional Information
Performance information.................................................
Calculating annuity payouts.............................................
Rating agencies.........................................................
Principal underwriter...................................................
Independent auditors....................................................
Prospectus..............................................................
Financial statements -
.........IDS Life Accounts F, IZ, JZ, G, H, N,
.........KZ, LZ and MZ
.........IDS Life Insurance Company
- ------------------------------------------------------------------------
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
_____ IDS Life Employee Benefit Annuity
_____ IDS Life Retirement Annuity Mutual Funds
Please return this request to:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Your name _______________________________________________________________
Address _________________________________________________________________
City ______________________ State ______________ Zip ___________________
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
EMPLOYEE BENEFIT ANNUITY
IDS LIFE ACCOUNTS F, IZ, JZ, G, H, N, KZ, LZ and MZ
May 1, 1998
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ are separate accounts
established and maintained by IDS Life Insurance Company (IDS Life).
This Statement of Additional Information, dated May 1, 1998, is not a
prospectus. It should be read together with the accounts' prospectus, dated May
1, 1998, which may be obtained from your financial advisor, or by writing or
calling IDS Life at the address or telephone number below.
IDS Life Insurance Company
P10/199
P.O. Box 74
Minneapolis, MN 55440-0074
800-437-0602
<PAGE>
TABLE OF CONTENTS
Performance Information................................................p. 3
Calculating Annuity Payouts............................................p. 6
Rating Agencies........................................................p. 8
Principal Underwriter..................................................p. 8
Independent Auditors....................................................p.9
Prospectus.............................................................p. 9
Financial Statements
.........- IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
.........- IDS Life Insurance Company
<PAGE>
PERFORMANCE INFORMATION
Calculation of yield for Account H
IDS Life Account H, which invests in IDS Life Moneyshare Fund, calculates an
annualized simple yield and compound yield based on a seven-day period.
The simple yield is calculated by determining the net change in the value of a
hypothetical account having the balance of one accumulation unit at the
beginning of the seven-day period. (The net change does not include capital
change, but does include a pro rata share of the annual certificate charges,
including the annual administrative charge and the mortality and expense risk
fee.) The net change in the account value is divided by the value of the account
at the beginning of the period to obtain the return for the period. That return
is then multiplied by 365/7 to obtain an annualized figure. The value of the
hypothetical account includes the amount of any declared dividends, the value of
any shares purchased with any dividend paid during the period and any dividends
declared for such shares. The variable account's (account) yield does not
include any realized or unrealized gains or losses, nor does it include the
effect of any applicable surrender charge.
The account calculates its compound yield according to the following formula:
Compound Yield = [(return for seven-day period +1) x (365/7)] - 1
Based on the seven-day period ended Dec. 31, 1997, the account's annualized
simple yield was 4.06% and its compound yield was 4.14%.
The rate of return, or yield, on the account's accumulation unit may fluctuate
daily and does not provide a basis for determining future yields. Investors must
consider, when comparing an investment in Account H with fixed annuities, that
fixed annuities often provide an agreed-to or guaranteed fixed yield for a
stated period of time, whereas the variable account's yield fluctuates. In
comparing the yield of Account H to a money market fund, you should consider the
different services that the annuity provides.
Calculation of yield for accounts investing in income funds
Quotations of yield will be based on all investment income earned during a
particular 30-day period, less expenses accrued during the period (net
investment income) and will be computed by dividing net investment income per
accumulation unit by the value of an accumulation unit on the last day of the
period, according to the following formula:
YIELD = 2[(a-b + 1)6 - 1]
cd
<PAGE>
where: a = dividends and investment income earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of accumulation units outstanding during
the period that were entitled to receive dividends.
d = the maximum offering price per accumulation unit on the last
day of the period.
Yield on the account is earned from the increase in the net asset value of
shares of the fund in which the account invests and from dividends declared and
paid by the fund, which are automatically invested in shares of the fund.
Based on the 30-day period ended Dec. 31, 1997, the annualized yield was 6.85%
for Account G, 5.88% for Account KZ, and 8.24% for Account LZ.
Calculation of average annual total return
Quotations of average annual total return for an account will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in the annuity contract over a period of one, five and ten years (or,
if less, up to the life of the Account), calculated according to the following
formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the one, five, or
ten year (or other) period at the end of the one,
five, or ten year (or other) period (or fractional
portion thereof).
<PAGE>
The following performance figures are calculated on the basis of historical
performance of the funds.
Average Annual Total Return For Period Ended: Dec. 31, 1997
Average Annual Total Return with Surrender
<TABLE>
<CAPTION>
Since
Account investing in: 1 Year 5 Year 10 Year Inception
- --------------------
IDS Life
<S> <C> <C> <C> <C>
Aggressive Growth Fund (1/92)* 3.28% 10.58% -- 10.35%
Capital Resource Fund (10/81) 14.65% 10.17% 13.35% --
International Equity Fund (1/92) -6.52% 8.02% -- 6.32%
Managed Fund (4/86) 10.07% 11.03% 12.55% --
Moneyshare Fund (10/81) -4.10% 1.94% 4.32% --
Special Income Fund (10/81) -0.48% 7.28% 8.57% --
Growth Dimensions Fund (4/96) 14.86% -- -- 15.98%
Global Yield Fund (4/96) -5.42% -- -- 1.06%
Income Advantage Fund (4/96) 4.01% -- -- 5.56%
Average Annual Total Return without Surrender
Since
Account investing in: 1 Year 5 Year 10 Year Inception
- --------------------
IDS Life
Aggressive Growth Fund (1/92) 11.28% 11.51% -- 11.06%
Capital Resource Fund (10/81) 22.65% 11.10% 13.35% --
International Equity Fund (1/92) 1.48% 9.03% -- 7.17%
Managed Fund (4/86) 18.07% 11.94% 12.62% --
Moneyshare Fund (10/81) 3.90% 3.21% 4.32% --
Special Income Fund (10/81) 7.52% 8.31% 8.57% --
Growth Dimensions Fund (4/96) 22.94% -- -- 20.34%
Global Yield Fund (4/96) 2.58% -- -- 5.75%
Income Advantage Fund (4/96) 12.01% -- -- 10.12%
</TABLE>
* inception dates of the funds are shown in parentheses
Aggregate total return
Aggregate total return represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in an account's
accumulation unit value) and is computed by the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000.
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the one, five, or ten year
(or other) period at the end of the one, five, or
ten year (or other) period (or fractional portion
thereof).
<PAGE>
The Securities and Exchange Commission requires that an assumption be made that
the contract owner surrenders the entire contract at the end of the one, five
and ten year periods (or, if less, up to the life of the account) for which
performance is required to be calculated. In addition, performance figures may
be shown without the deduction of a surrender charge.
Total return figures reflect the deduction of all applicable charges including
the administrative charge and mortality and expense risk fee.
Performance of the accounts may be quoted or compared to rankings, yields, or
returns or used in variable annuity accumulation or settlement illustrations as
published or prepared by independent rating or statistical services or
publishers or publications such as The Bank Rate Monitor National Index,
Barron's, Business Week, CDA Technologies, Donoghue's Money Market Fund Report,
Financial Services Week, Financial Times, Financial World, Forbes, Fortune,
Global Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
The following calculations are done separately for each of the variable
accounts. The separate monthly payouts, added together, make up your total
variable annuity payout.
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your certificate as of the valuation date seven
days before the retirement date and then deduct any applicable premium tax.
o apply the result to the annuity table contained in the certificate or another
table at least as favorable. The annuity table shows the amount of the first
monthly payment for each $1,000 of value which depends on factors built into the
table, as described below.
Annuity Units: The value of your account is then converted to annuity units. To
compute the number credited to you, we divide the first monthly payment by the
annuity unit value (see below) on the valuation date on (or next day preceding)
the seventh calendar day before the retirement date. The number of units in your
account is fixed. The value of the units fluctuate with the performance of the
underlying mutual fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date on or immediately preceding the
seventh calendar day before the payout is due; by o the fixed number of annuity
units credited to you.
<PAGE>
Annuity Table: The table shows the amount of the first monthly payment for each
$1,000 of certificate value according to the age of the annuitant. (Where
required by law, we will use a unisex table of settlement rates.) The table
assumes that the certificate value is invested at the beginning of the annuity
payout period and earns a 5% rate of return, which is reinvested and helps to
support future payouts.
Substitution of 3.5% Table: If you ask us at least 30 days before the retirement
date, we will substitute an annuity table based on an assumed 3.5% investment
rate for the 5% table in the certificate. The assumed investment rate affects
both the amount of the first payout and the extent to which subsequent payouts
increase or decrease. Using the 5% table results in a higher initial payment,
but later payouts will increase more slowly when annuity unit values are rising
and decrease more rapidly when they are declining.
Annuity Unit Values: This value was originally set at $1 for each variable
account. To calculate later values we multiply the last annuity value by the
product of: o the net investment factor; and o the neutralizing factor. The
purpose of the neutralizing factor is to offset the effect of the assumed
investment rate built into the annuity table. With an assumed investment rate of
5%, the neutralizing factor is 0.999866 for a one day valuation period.
Net Investment Factor:
o Determined by adding the underlying mutual fund's current net asset value per
share plus per share amount of any current dividend or capital gain
distribution; then o dividing that sum by the previous net asset value per
share; and o subtracting the percentage factor representing the mortality and
expense risk fee from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the net
investment factor may be greater or less than one, and the accumulation unit
value may increase or decrease. You bear this investment risk in a variable
account.
The Fixed Account
Your fixed annuity payout amounts are guaranteed. Once calculated, your payout
will remain the same and never change. To calculate your annuity payouts we:
o take the value of your fixed account at the retirement date or the date you
have selected to begin receiving your annuity payouts; then o using an annuity
table we apply the value according to the annuity payout plan you select; and
o the annuity payout table we use will be the one in effect at the time you
choose to begin your annuity payouts. The table will be equal to or greater than
the table in your certificate.
<PAGE>
RATING AGENCIES
The following chart reflects the ratings given to IDS Life by independent rating
agencies. These agencies evaluate the financial soundness and claims-paying
ability of insurance companies based on a number of different factors. This
information does not relate to the management or performance of the variable
accounts of the annuity. This information relates only to the fixed account and
reflects IDS Life's ability to make annuity payouts and to pay death benefits
and other distributions from the annuity.
Rating agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
Moody's Aa2
PRINCIPAL UNDERWRITER
The principal underwriter for the accounts is IDS Life which offers the variable
annuities on a continuous basis.
Surrender charges received by IDS Life for 1997, 1996 and 1995, aggregated
$14,502,145, $11,956,753 and $10,125,726, respectively. Commissions paid by IDS
Life for 1997, 1996 and 1995, aggregated $17,883,488, $17,247,007 and
$9,019,184, respectively. The surrender charges were applied toward payment of
commissions.
INDEPENDENT AUDITORS
The financial statements of IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
including the statements of net assets as of December 31, 1997, and the related
statements of operations for the year then ended, and the related statements of
changes in net assets for each of the two years in the period then ended, except
for IDS Life Accounts KZ, LZ and MZ which are for the year then ended and the
period April 30, 1996 (commencement of operations) to December 31, 1996 and the
consolidated financial statements of IDS Life Insurance Company as of December
31, 1997 and for each of the three years in the period then ended, appearing in
this SAI, have been audited by Ernst & Young LLP, independent auditors, as
stated in their reports appearing herein.
PROSPECTUS
The prospectus dated May 1, 1998, is hereby incorporated in this Statement of
Additional Information by reference.
<PAGE>
<PAGE>
Annual Financial Information
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying individual and combined statements of net
assets of IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ as of December
31, 1997, and the related statements of operations for the year then ended, and
the statements of changes in net assets for each of the two years in the period
then ended, except for IDS Life Accounts KZ, LZ and MZ, which are for the year
ended December 31, 1997 and for the period from April 30, 1996 (commencement of
operations) to December 31, 1996. These financial statements are the
responsibility of the management of IDS Life Insurance Company. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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. Our procedures included
confirmation of securities owned at December 31, 1997 with the affiliated mutual
fund manager. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial position of IDS
Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ at December 31, 1997, and the
individual and combined results of their operations and changes in their net
assets for the periods described above, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
March 13, 1998
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets Dec. 31, 1997
Segregated Asset Account
-----------------------------------------------------------------------------------------
Assets F IZ JZ G H
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund -
160,437,800 shares at net asset value
<S> <C> <C> <C> <C> <C>
of $28.58 per share (cost $3,678,651,426) $ 4,584,683,419 $ - $ - $ - $ -
IDS Life International Equity Fund -
130,686,066 shares at net asset value
of $13.63 per share (cost $1,613,121,841) - 1,781,109,841 - - -
IDS Life Aggressive Growth Fund -
137,156,967 shares at net asset value
of $16.07 per share (cost $1,792,720,995) - - 2,204,202,588 - -
IDS Life Special Income Fund -
141,282,453 shares at net asset value
of $11.80 per share (cost $1,612,063,279) - - - 1,666,436,859 -
IDS Life Moneyshare Fund, Inc. -
215,138,258 shares at net asset value
of $1.00 per share (cost $215,120,122) - - - - 215,120,328
IDS Life Managed Fund, Inc. -
230,299,831 shares at net asset value
of $18.04 per share (cost $3,193,105,944) - - - - -
IDS Life Global Yield Fund -
6,971,024 shares at net asset value
of $10.39 per share (cost $71,568,627) - - - - -
IDS Life Income Advantage Fund -
19,912,683 shares at net asset value
of $10.38 per share (cost $202,033,753) - - - - -
IDS Life Growth Dimensions Fund -
83,118,305 shares at net asset value
of $13.70 per share (cost $962,791,340) - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
4,584,683,419 1,781,109,841 2,204,202,588 1,666,436,859 215,120,328
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends receivable - - - 10,348,791 1,022,824
Accounts receivable from
IDS Life for contract
purchase payments 349,345 188,022 225,771 108,828 5,559,283
Receivable from mutual funds for
share redemptions 4,644,465 1,457,983 2,801,461 304,372 327
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 4,589,677,229 1,782,755,846 2,207,229,820 1,677,198,850 221,702,762
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable to IDS Life for:
Mortality and expense risk fee 4,154,706 1,619,451 1,993,160 1,513,283 196,340
Contract terminations 4,644,465 1,457,983 2,801,461 304,372 327
Payable to mutual funds for investments
purchased 349,345 188,022 225,771 8,944,363 6,385,768
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 9,148,516 3,265,456 5,020,392 10,762,018 6,582,435
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period 4,570,911,413 1,777,169,898 2,198,611,830 1,662,313,715 214,938,668
Net assets applicable to contracts in
payment period 9,617,300 2,320,492 3,597,598 4,123,117 181,659
- ------------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 4,580,528,713 $ 1,779,490,390 $ 2,202,209,428 $ 1,666,436,832 $ 215,120,327
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 556,866,324 1,168,353,202 1,168,829,188 316,788,701 87,255,005
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $8.21 $1.52 $1.88 $5.25 $2.46
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets - continued Dec. 31, 1997
Segregrated Asset Account
------------------------------------------------------------------------- Combined
Assets N KZ LZ MZ Variable
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund -
160,437,800 shares at net asset value
<S> <C> <C> <C> <C> <C>
of $28.58 per share (cost $3,678,651,426) $ - $ - $ - $ - $ 4,584,683,419
IDS Life International Equity Fund -
130,686,066 shares at net asset value
of $13.63 per share (cost $1,613,121,841) - - - - 1,781,109,841
IDS Life Aggressive Growth Fund -
137,156,967 shares at net asset value
of $16.07 per share (cost $1,792,720,995) - - - - 2,204,202,588
IDS Life Special Income Fund -
141,282,453 shares at net asset value
of $11.80 per share (cost $1,612,063,279) - - - - 1,666,436,859
IDS Life Moneyshare Fund, Inc. -
215,138,258 shares at net asset value
of $1.00 per share (cost $215,120,122) - - - - 215,120,328
IDS Life Managed Fund, Inc. -
230,299,831 shares at net asset value
of $18.04 per share (cost $3,193,105,944) 4,154,046,191 - - - 4,154,046,191
IDS Life Global Yield Fund -
6,971,024 shares at net asset value
of $10.39 per share (cost $71,568,627) - 72,415,160 - - 72,415,160
IDS Life Income Advantage Fund -
19,912,683 shares at net asset value
of $10.38 per share (cost $202,033,753) - - 206,790,315 - 206,790,315
IDS Life Growth Dimensions Fund -
83,118,305 shares at net asset value
of $13.70 per share (cost $962,791,340) - - - 1,138,720,608 1,138,720,608
- ------------------------------------------------------------------------------------------------------------------------------------
4,154,046,191 72,415,160 206,790,315 1,138,720,608 16,023,525,309
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends receivable - 383,982 1,514,846 - 13,270,443
Accounts receivable from
IDS Life for contract
purchase payments 337,735 4,853 305,852 1,029,184 8,108,873
Receivable from mutual funds for
share redemptions 931,768 49,818 321 1,502 10,192,017
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 4,155,315,694 72,853,813 208,611,334 1,139,751,294 16,055,096,642
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable to IDS Life for:
Mortality and expense risk fee 3,757,501 64,967 183,116 1,012,641 14,495,165
Contract terminations 931,768 49,818 321 1,502 10,192,017
Payable to mutual funds for investments
purchased 337,735 323,868 1,637,582 1,029,184 19,421,638
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 5,027,004 438,653 1,821,019 2,043,327 44,108,820
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period 4,140,286,625 72,324,955 206,374,719 1,135,319,470 15,978,251,293
Net assets applicable to contracts in
payment period 10,002,065 90,205 415,596 2,388,497 32,736,529
- ------------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 4,150,288,690 $ 72,415,160 $ 206,790,315 $ 1,137,707,967 $ 16,010,987,822
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 1,178,734,680 65,608,959 175,023,644 831,259,213
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $3.51 $1.10 $1.18 $1.37
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Operations Year ended Dec. 31, 1997
Segregated Asset Account
----------------------------------------------------------------------------------------
Investment income F IZ JZ G H
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds $ 126,502,302 $ 67,130,767 $ 193,435,313 $ 157,493,878 $ 11,494,327
Mortality and expense risk fee 44,568,477 18,423,272 20,668,494 17,084,438 2,286,046
- ------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net 81,933,825 48,707,495 172,766,819 140,409,440 9,208,281
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments - net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales
of investments in mutual funds:
Proceeds from sales 550,019,453 154,762,560 116,634,433 227,994,923 227,989,506
Cost of investments sold 480,242,340 134,945,151 91,242,736 217,907,534 227,989,718
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 69,777,113 19,817,409 25,391,697 10,087,389 (212)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments 748,884,487 (34,561,365) 31,135,686 (23,859,115) (586)
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 818,661,600 (14,743,956) 56,527,383 (13,771,726) (798)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 900,595,425 $ 33,963,539 $ 229,294,202 $ 126,637,714 $ 9,207,483
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
Statements of Operations - continued Year ended Dec. 31, 1997
Segregated Asset Account
-------------------------------------------------------------------------------- Combined
Investment income N KZ LZ MZ Variable
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds $ 416,352,602 $ 2,693,029 $ 12,724,423 $ 7,014,788 $ 994,841,429
Mortality and expense risk fee 39,781,435 530,675 1,377,872 8,113,272 152,833,981
- ------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net 376,571,167 2,162,354 11,346,551 (1,098,484) 842,007,448
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments - net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales
of investments in mutual funds:
Proceeds from sales 103,684,853 1,443,742 679,825 717,699 1,383,926,994
Cost of investments sold 74,961,930 1,417,139 656,625 612,142 1,229,975,315
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 28,722,923 26,603 23,200 105,557 153,951,679
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments 246,854,996 88,527 3,906,529 157,444,749 1,129,893,908
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 275,577,919 115,130 3,929,729 157,550,306 1,283,845,587
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 652,149,086 $ 2,277,484 $ 15,276,280 $ 156,451,822 $ 2,125,853,035
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1997
Segregated Asset Account
----------------------------------------------------------------------------------------
Operations F IZ JZ G H
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 81,933,825 $ 48,707,495 $ 172,766,819 $ 140,409,440 $ 9,208,281
Net realized gain (loss) on investments 69,777,113 19,817,409 25,391,697 10,087,389 (212)
Net change in unrealized appreciation or
depreciation of investments 748,884,487 (34,561,365) 31,135,686 (23,859,115) (586)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 900,595,425 33,963,539 229,294,202 126,637,714 9,207,483
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 134,271,812 78,292,637 87,605,673 49,361,355 26,471,423
Net transfers* (330,558,730) (40,464,119) 30,217,819 (141,589,262) 2,490,728
Transfers for policy loans 6,741,393 2,538,097 2,700,859 1,893,361 415,203
Annuity payments (839,990) (218,797) (325,569) (404,625) (21,359)
Contract charges (4,189,959) (1,744,401) (1,879,204) (1,396,704) (170,801)
Contract terminations:
Surrender benefits (306,180,259) (110,545,864) (118,237,119) (119,861,011) (33,151,710)
Death benefits (20,091,752) (9,311,925) (8,138,343) (15,519,877) (2,393,157)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions (520,847,485) (81,454,372) (8,055,884) (227,516,763) (6,359,673)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 4,200,780,773 1,826,981,223 1,980,971,110 1,767,315,881 212,272,517
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 4,580,528,713 $ 1,779,490,390 $ 2,202,209,428 $ 1,666,436,832 $ 215,120,327
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 628,555,221 1,220,479,990 1,172,792,754 362,167,237 89,644,495
Contract purchase payments 18,318,230 51,062,806 50,910,206 9,842,757 10,978,965
Net transfers* (46,459,818) (25,974,782) 17,204,464 (28,290,096) 1,243,189
Transfers for policy loans 911,718 1,642,862 1,552,061 376,163 172,138
Contract charges (572,335) (1,139,369) (1,087,659) (279,982) (71,845)
Contract terminations:
Surrender benefits (40,932,101) (71,076,097) (67,429,599) (23,650,436) (13,512,157)
Death benefits (2,954,591) (6,642,208) (5,113,039) (3,376,942) (1,199,780)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 556,866,324 1,168,353,202 1,168,829,188 316,788,701 87,255,005
- ------------------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other accounts and transfers (from) to IDS
Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued Year ended Dec. 31, 1997
Segregated Asset Account
---------------------------------------------------------------------------- Combined
Operations N KZ LZ MZ Variable
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 376,571,167 $ 2,162,354 $ 11,346,551 $ (1,098,484) $ 842,007,448
Net realized gain (loss) on investments 28,722,923 26,603 23,200 105,557 153,951,679
Net change in unrealized appreciation or
depreciation of investments 246,854,996 88,527 3,906,529 157,444,749 1,129,893,908
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 652,149,086 2,277,484 15,276,280 156,451,822 2,125,853,035
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 125,778,517 3,443,369 10,032,844 58,794,952 574,052,582
Net transfers* 72,184,459 42,846,230 125,588,307 572,710,885 333,426,317
Transfers for policy loans 4,673,820 43,334 80,094 1,398,475 20,484,636
Annuity payments (818,698) (7,873) (31,168) (147,303) (2,815,382)
Contract charges (3,418,455) (26,651) (70,043) (632,210) (13,528,428)
Contract terminations:
Surrender benefits (236,462,530) (2,695,820) (6,707,680) (37,984,244) (971,826,237)
Death benefits (25,132,076) (163,126) (464,874) (2,163,641) (83,378,771)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions (63,194,963) 43,439,463 128,427,480 591,976,914 (143,585,283)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 3,561,334,567 26,698,213 63,086,555 389,279,231 14,028,720,070
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 4,150,288,690 $ 72,415,160 $ 206,790,315 $ 1,137,707,967 $ 16,010,987,822
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 1,197,162,300 24,878,248 59,938,791 350,597,571
Contract purchase payments 38,914,736 3,250,861 9,009,695 47,250,516
Net transfers* 23,088,309 40,199,836 112,669,161 465,445,880
Transfers for policy loans 1,423,911 40,853 70,990 1,099,049
Contract charges (1,055,013) (24,882) (62,522) (502,902)
Contract terminations:
Surrender benefits (72,296,420) (2,560,115) (6,187,383) (30,794,587)
Death benefits (8,503,143) (175,842) (415,088) (1,836,314)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 1,178,734,680 65,608,959 175,023,644 831,259,213
- ------------------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other accounts and transfers (from) to IDS
Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1996
Segregated Asset Account
------------------------------------------------------------------------------------------------------------
Operations F IZ JZ G H
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 626,663,819 $ 48,620,781 $ 188,771,679 $ 121,009,234 $ 8,463,581
Net realized gain (loss)
on investments 39,842,450 5,627,173 9,280,782 6,148,079 (748)
Net change in unrealized appreciation or
depreciation of investments (394,337,953) 81,683,280 42,813,163 (25,950,503) 825
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 272,168,316 135,931,234 240,865,624 101,206,810 8,463,658
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 247,034,837 136,590,270 137,497,822 136,598,453 71,251,781
Net transfers** 7,353,251 158,214,068 227,344,754 (130,631,868) (73,493,878)
Transfers for policy loans 6,524,720 2,185,648 2,289,136 1,948,047 542,980
Annuity payments (618,433) (145,076) (211,338) (302,440) (16,311)
Contract charges (4,665,100) (1,844,449) (1,844,915) (1,651,986) (186,455)
Contract terminations:
Surrender benefits (323,487,903) (99,067,158) (97,711,535) (138,993,547) (26,610,434)
Death benefits (19,407,560) (6,956,648) (6,698,818) (13,852,642) (1,119,093)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions (87,266,188) 188,976,655 260,665,106 (146,885,983) (29,631,410)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 4,015,878,645 1,502,073,334 1,479,440,380 1,812,995,054 233,440,269
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 4,200,780,773 $ 1,826,981,223 $ 1,980,971,110 $ 1,767,315,881 $ 212,272,517
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 641,902,761 1,088,873,599 1,007,975,519 393,696,727 102,567,540
Contract purchase payments 38,493,929 95,677,544 87,429,534 29,931,965 31,461,578
Net transfers** 1,526,639 110,170,298 143,201,245 (28,111,632) (32,033,370)
Transfers for policy loans 1,013,895 1,512,631 1,436,806 419,834 233,492
Contract charges (729,091) (1,286,561) (1,166,154) (358,645) (81,536)
Contract terminations:
Surrender benefits (50,461,665) (69,287,451) (61,605,600) (30,226,184) (11,981,080)
Death benefits (3,191,247) (5,180,070) (4,478,596) (3,184,828) (522,129)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 628,555,221 1,220,479,990 1,172,792,754 362,167,237 89,644,495
- ------------------------------------------------------------------------------------------------------------------------------------
**Includes transfer activity from (to) other accounts and transfers (from) to
IDS Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued Year ended Dec. 31, 1996
Segregated Asset Account
------------------------------------------------------------------------------- Combined
Operations N KZ * LZ * MZ * Variable
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 274,337,654 $ 248,565 $ 1,417,383 $ (217,794) $ 1,269,314,902
Net realized gain (loss) on investments 28,800,977 1,196 - 1,551 89,701,460
Net change in unrealized appreciation or
depreciation of investments 191,117,363 758,006 850,033 18,484,519 (84,581,267)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 494,255,994 1,007,767 2,267,416 18,268,276 1,274,435,095
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 178,726,120 2,213,183 4,646,202 18,844,441 933,403,109
Net transfers** 11,968,781 23,859,394 57,148,839 358,733,822 640,497,163
Transfers for policy loans 4,253,041 4,127 18,815 208,070 17,974,584
Annuity payments (458,457) (1,456) (4,943) (17,149) (1,775,603)
Contract charges (3,435,971) (4,484) (10,289) (88,337) (13,731,986)
Contract terminations:
Surrender benefits (219,622,814) (377,077) (950,606) (6,499,453) (913,320,527)
Death benefits (15,758,360) (3,241) (28,879) (170,439) (63,995,680)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions (44,327,660) 25,690,446 60,819,139 371,010,955 599,051,060
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 3,111,406,233 - - - 12,155,233,915
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 3,561,334,567 $ 26,698,213 $ 63,086,555 $ 389,279,231 $ 14,028,720,070
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 1,212,021,386 - - -
Contract purchase payments 67,036,198 2,150,213 4,593,557 17,880,563
Net transfers** 5,024,835 23,110,914 56,411,486 339,165,647
Transfers for policy loans 1,578,243 3,961 18,315 194,231
Contract charges (1,282,363) (4,320) (10,113) (82,302)
Contract terminations:
Surrender benefits (80,844,746) (379,430) (1,045,166) (6,403,548)
Death benefits (6,371,253) (3,090) (29,288) (157,020)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 1,197,162,300 24,878,248 59,938,791 350,597,571
- ------------------------------------------------------------------------------------------------------------------------------------
*For the period April 30, 1996 (commencement of operations) to Dec. 31, 1996.
**Includes transfer activity from (to) other accounts and transfers (from) to
IDS Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
Notes to Financial Statements
1. Organization
IDS Life Accounts F, G, H and N were established as segregated asset accounts of
IDS Life Insurance Company (IDS Life) under Minnesota law and are registered
collectively as a single unit investment trust under the Investment Company Act
of 1940. Accounts F, G and H were established on May 13, 1981 and commenced
operations on Oct. 13, 1981. Account N was established on April 17, 1985 and
commenced operations on April 30, 1986. Accounts IZ and JZ were established as
segregated asset accounts on Sept. 20, 1991 and commenced operations on Jan. 13,
1992. Accounts KZ, LZ and MZ were established as segregated asset accounts on
April 2, 1996 and commenced operations on April 30, 1996. IDS Life Accounts F,
IZ, JZ, G, H, N, KZ, LZ and MZ are collectively referred to as "the Accounts."
The assets of the Accounts are held for the exclusive benefit of the variable
annuity contract owners and are not chargeable with liabilities arising out of
the business conducted by any other segregated asset accounts or by IDS Life.
Contract owners allocate their variable purchase payments to one or more of the
nine segregated asset accounts. Such funds are then invested in shares of nine
mutual funds organized by IDS Life as the investment vehicles for variable
annuity contracts issued by IDS Life and its subsidiaries.
Each Fund is registered under the Investment Company Act of 1940 as a
diversified, (non-diversified for Global Yield) open-end management investment
company or series of an open-end management company. IDS Life Capital Resource
Fund, IDS Life Special Income Fund and IDS Life Moneyshare Fund, Inc. commenced
operations Oct. 13, 1981. IDS Life Managed Fund, Inc. commenced operations April
30, 1986. IDS Life Aggressive Growth Fund and IDS Life International Equity Fund
commenced operations on Jan. 13, 1992. IDS Life Global Yield Fund, IDS Life
Income Advantage Fund and IDS Life Growth Dimensions Fund commenced operations
on April 30, 1996. Funds allocated to IDS Life Account F are invested in the
shares of IDS Life Capital Resource Fund; IDS Life Account IZ invests in the
shares of IDS Life International Equity Fund; IDS Life Account JZ invests in the
shares of IDS Life Aggressive Growth Fund; IDS Life Account G invests in the
shares of IDS Life Special Income Fund; IDS Life Account H invests in the shares
of IDS Life Moneyshare Fund, Inc.; IDS Life Account N invests in the shares of
IDS Life Managed Fund, Inc.; IDS Life Account KZ invests in the shares of IDS
Life Global Yield Fund; IDS Life Account LZ invests in the shares of IDS Life
Income Advantage Fund and IDS Life Account MZ invests in the shares of IDS Life
Growth Dimensions Fund.
IDS Life serves as investment manager and principal underwriter for the Accounts
and the underlying nine mutual funds. American Express Financial Corporation
(AEFC), an affiliated company, is the investment advisor for each of the funds.
American Express Asset Management International, Inc., an affiliated company, is
the sub-investment advisor for IDS Life International Equity Fund.
2. Summary of Significant Accounting Policies
Investments in Mutual Funds
Investments in shares of the mutual funds are stated at market value, which is
the net asset value per share as determined by the respective funds. Investment
transactions are accounted for on the date the shares are purchased and sold.
The cost of investments sold and redeemed is determined on the average cost
method. Dividend distributions received from the mutual funds are reinvested in
additional shares of the mutual funds and are recorded as income by the Accounts
on the ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the Accounts' share of the mutual funds'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Federal Income Taxes
IDS Life is taxed as a life insurance company. The Accounts are treated as part
of IDS Life for federal income tax purposes. Under existing federal income tax
law, no income taxes are payable with respect to any investment income of the
Accounts.
3. Mortality and Expense Risk Fee and Contract Charges
IDS Life makes contractual assurances to the Accounts that possible future
adverse changes in administrative expenses and mortality experience of the
annuitants and beneficiaries will not affect the Accounts. The mortality and
expense risk fee paid to IDS Life is computed daily and is equal, on an annual
basis, to 1 percent of the average daily net assets of the Accounts.
An annual charge of $20 is deducted from the contract value of each Variable
Retirement Annuity contract. An annual charge of $30 is deducted from the
contract value of each Combination Retirement Annuity contract. A quarterly
charge of $125 is deducted from the contract value of each Group Variable
Annuity contract. An annual charge of $30 is deducted from the certificate value
of each Employee Benefit Annuity certificate. A quarterly charge of $6 is
deducted from the contract value of each Flexible Annuity contract. The annual
charges are deducted at contract or certificate year end and the quarterly
charges are deducted at contract quarter end, during the accumulation period,
for administrative services provided to the Accounts by IDS Life.
A contingent deferred sales charge (surrender charge or withdrawal charge) will
be imposed upon:
a) certain Variable Retirement Annuity contract surrenders during
the first seven years,
b) Combination Retirement Annuity contract surrenders during the first seven,
eight or eleven years, depending on type of contract,
c) Group Variable Annuity contract withdrawals during the first seven years,
d) Employee Benefit Annuity certificate surrenders during the first eleven
years, and
e) Flexible Annuity contract surrenders of amounts other than those
representing earnings or those representing purchase payments six contract
years old or more.
Charges by IDS Life for surrenders are not identified on an individual
segregated asset account basis. Charges for all segregated asset accounts
amounted to $14,502,145 in 1997 and $11,956,753 in 1996. Such charges are not
treated as a separate expense of the Accounts. They are ultimately deducted from
contract surrender benefits paid by IDS Life.
4. Investment Transactions
The Accounts' purchases of mutual fund shares, including reinvestment of
dividend distributions, were as follows:
Year ended Dec. 31,
Account Investment 1997 1996
- --------------------------------------------------------------------------------
F IDS Life Capital Resource Fund..... $ 111,547,849 $ 842,940,565
IZ IDS Life International Equity Fund. 122,035,293 295,290,858
JZ IDS Life Aggressive Growth Fund.... 281,608,415 488,497,853
G IDS Life Special Income Fund ...... 140,887,599 175,575,133
H IDS Life Moneyshare Fund, Inc...... 230,838,115 198,361,500
N IDS Life Managed Fund, Inc......... 417,692,561 372,910,559
KZ IDS Life Global Yield Fund ........ 47,045,559 26,031,598*
LZ IDS Life Income Advantage Fund .... 140,453,856 62,236,522*
MZ IDS Life Growth Dimensions Fund ... 592,288,967 371,131,317*
- --------------------------------------------------------------------------------
Combined Variable Account.......... $2,084,398,214 $2,832,975,905
- --------------------------------------------------------------------------------
*For the period April 30, 1996 (commencement of operations)to Dec. 31, 1996.
5. Year 2000 Issue (Unaudited)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Variable Accounts.
The Variable Accounts have no computer systems of their own but are dependent
upon the systems maintained by AEFC and certain other third parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999.
The Year 2000 readiness of other third parties whose system failures could have
an impact on the Variable Accounts' operations is currently being evaluated. The
potential materiality of any such impact is not known at this time.
<PAGE>
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying consolidated balance sheets of IDS Life
Insurance Company (a wholly owned subsidiary of American Express Financial
Corporation) as of December 31, 1997 and 1996 and the related consolidated
statements of income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of IDS Life Insurance
Company at December 31, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
IDS Life Financial Information
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
ASSETS 1997 1996
(thousands)
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1997, $9,743,410; 1996, $10,521,650) $9,315,450 $10,236,379
Available for sale, at fair value (Amortized cost:
1997, $12,515,030; 199, $11,008,622) 12,876,694 11,146,845
Mortgage loans on real estate 3,618,647 3,493,364
Policy loans 498,874 459,902
Other investments 318,591 251,465
Total investments 26,628,256 25,587,955
Cash and cash equivalents 19,686 224,603
Amounts recoverable from reinsurers 205,716 157,722
Amounts due from brokers 8,400 11,047
Other accounts receivable 37,895 44,089
Accrued investment income 357,390 343,313
Deferred policy acquisition costs 2,479,577 2,330,805
Deferred income taxes, net -- 33,923
Other assets 22,700 37,364
Separate account assets 23,214,504 18,535,160
Total assets $52,974,124 $47,305,981
========= =========
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (continued)
Dec. 31, Dec. 31
LIABILITIES AND STOCKHOLDER'S EQUITY 1997 1996
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities $22,009,747 $21,838,008
Universal life-type insurance 3,280,489 3,177,149
Traditional life insurance 213,676 209,685
Disability income and long-term care insurance 533,124 424,200
Policy claims and other policyholders' funds 68,345 83,634
Deferred income taxes, net 61,582 --
Amounts due to brokers 381,458 261,987
Other liabilities 345,383 332,078
Separate account liabilities 23,214,504 18,535,160
Total liabilities 50,108,308 44,861,901
Stockholder's equity:
Capital stock, $30 par value per share;
100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 290,847 283,615
Net unrealized gain on investments 226,359 86,102
Retained earnings 2,345,610 2,071,363
Total stockholder's equity 2,865,816 2,444,080
Total liabilities and stockholder's equity $52,974,124 $47,305,981
========= =========
See accompanying notes.
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 52,473 $ 51,403 $ 50,193
Disability income and long-term care insurance 154,021 131,518 111,337
Total premiums 206,494 182,921 161,530
Policyholder and contractholder charges 341,726 302,999 256,454
Management and other fees 340,892 271,342 215,581
Net investment income 1,988,389 1,965,362 1,907,309
Net realized gain (loss) on investments 860 (159) (4,898)
Total revenues 2,878,361 2,722,465 2,535,976
Benefits and expenses:
Death and other benefits:
Traditional life insurance 28,951 26,919 29,528
Universal life-type insurance
and investment contracts 92,814 85,017 71,691
Disability income and
long-term care insurance 22,333 19,185 16,259
Increase (decrease) in liabilities for
future policy benefits:
Traditional life insurance 3,946 1,859 (1,315)
Disability income and
long-term care insurance 63,631 57,230 51,279
Interest credited on universal life-type
insurance and investment contracts 1,386,448 1,370,468 1,315,989
Amortization of deferred policy acquisition costs 322,731 278,605 280,121
Other insurance and operating expenses 276,596 261,468 211,642
Total benefits and expenses 2,197,450 2,100,751 1,975,194
Income before income taxes 680,911 621,714 560,782
Income taxes 206,664 207,138 195,842
Net income $ 474,247 $ 414,576 $ 364,940
======== ======== =======
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended Dec. 31, 1997
(thousands)
<TABLE>
<CAPTION>
Additional Net Unrealized
Capital Paid-In Gain (Loss) on Retained
Stock Capital on Investments Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, Dec. 31, 1994 3,000 222,000 (275,708) 1,639,399 1,588,691
Net income -- -- -- 364,940 364,940
Change in net unrealized
gain (loss) on investments -- -- 505,837 -- 505,837
Capital contribution from parent -- 56,814 -- -- 56,814
Loss on reinsurance transaction
with affiliate -- -- -- (4,574) (4,574)
Cash dividends -- -- -- (180,000) (180,000)
Balance, Dec. 31, 1995 3,000 278,814 230,129 1,819,765 2,331,708
Net income -- -- -- 414,576 414,576
Change in net unrealized
gain (loss) on investments -- -- (144,027) -- (144,027)
Capital contribution from parent -- 4,801 -- -- 4,801
Other changes -- -- -- 2,022 2,022
Cash dividends -- -- -- (165,000) (165,000)
Balance, Dec. 31, 1996 $3,000 $283,615 $ 86,102 $2,071,363 $2,444,080
Net income -- -- -- 474,247 474,247
Change in net unrealized
gain (loss) on investments -- -- 140,257 -- 140,257
Capital contribution from parent -- 7,232 -- -- 7,232
Cash dividends -- -- -- (200,000) (200,000)
Balance, Dec. 31, 1997 $3,000 $290,847 $226,359 $2,345,610 $2,865,816
===== ======= ======= ========= ========
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 474,247 $ 414,576 $ 364,940
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Policy loan issuance, excluding universal
life-type insurance (54,665) (49,314) (46,011)
Policy loan repayment, excluding universal
life-type insurance 46,015 41,179 36,416
Change in amounts recoverable from reinsurers (47,994) (43,335) (34,083)
Change in other accounts receivable 6,194 (4,981) 12,231
Change in accrued investment income (14,077) 4,695 (30,498)
Change in deferred policy acquisition
costs, net (156,486) (294,755) (196,963)
Change in liabilities for future policy
benefits for traditional life,
disability income and
long-term care insurance 112,915 97,479 85,575
Change in policy claims and other
policyholders' funds (15,289) 27,311 6,255
Change in deferred income tax provision (benefit) 19,982 (65,609) (33,810)
Change in other liabilities 13,305 46,724 (6,548)
(Accretion of discount)
amortization of premium, net (5,649) (23,032) (22,528)
Net realized (gain) loss on investments (860) 159 4,898
Policyholder and contractholder
charges, non-cash (160,885) (154,286) (140,506)
Other, net 7,161 (10,816) 3,849
Net cash provided by (used in) operating
activities $ 223,914 $ (14,005) $ 3,217
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ (1,996) $ (43,751) $ (1,007,208)
Maturities, sinking fund payments and calls 686,503 759,248 538,219
Sales 236,761 279,506 332,154
Fixed maturities available for sale:
Purchases (3,160,133) (2,299,198) (2,452,181)
Maturities, sinking fund payments and calls 1,206,213 1,270,240 861,545
Sales 457,585 238,905 136,825
Other investments, excluding policy loans:
Purchases (524,521) (904,536) (823,131)
Sales 335,765 236,912 160,521
Change in amounts due from brokers 2,647 (11,047) 7,933
Change in amounts due to brokers 119,471 140,369 (105,119)
Net cash used in investing activities (641,705) (333,352) (2,350,442)
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 2,785,758 3,567,586 4,189,525
Surrenders and death benefits (3,736,242) (4,250,294) (3,141,404)
Interest credited to account balances 1,386,448 1,370,468 1,315,989
Universal life-type insurance policy loans:
Issuance (84,835) (86,501) (84,700)
Repayment 54,513 58,753 52,188
Capital contribution from parent 7,232 4,801 --
Dividends paid (200,000) (165,000) (180,000)
Net cash provided by financing activities 212,874 499,813 2,151,598
Net (decrease) increase in cash and
cash equivalents (204,917) 152,456 (195,627)
Cash and cash equivalents at
beginning of year 224,603 72,147 267,774
Cash and cash equivalents at
end of year $ 19,686 $ 224,603 $ 72,147
======= ======== ========
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
($ thousands)
1. Summary of significant accounting policies
------------------------------------------
Nature of business
IDS Life Insurance Company (the Company) is a stock life insurance
company organized under the laws of the State of Minnesota. The
Company is a wholly owned subsidiary of American Express Financial
Corporation (AEFC), which is a wholly owned subsidiary of American
Express Company. The Company serves residents of all states except New
York. IDS Life Insurance Company of New York is a wholly owned
subsidiary of the Company and serves New York State residents. The
Company also wholly owns American Enterprise Life Insurance Company,
American Centurion Life Assurance Company (ACLAC), American Partners
Life Insurance Company and American Express Corporation.
The Company's principal products are deferred annuities and universal
life insurance, which are issued primarily to individuals. It offers
single premium and flexible premium deferred annuities on both a fixed
and variable dollar basis. Immediate annuities are offered as well.
The Company's insurance products include universal life (fixed and
variable), whole life, single premium life and term products (including
waiver of premium and accidental death benefits). The Company also
markets disability income and long-term care insurance.
Basis of presentation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles which vary
in certain respects from reporting practices prescribed or permitted by
state insurance regulatory authorities (see Note 4).
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and
carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale and
carried at fair value. Unrealized gains and losses on securities
classified as available for sale are reported as a separate component
of stockholder's equity, net of deferred taxes.
<PAGE>
Realized investment gain or loss is determined on an identified cost
basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to
recognize interest income. Prepayment estimates are based on
information received from brokers who deal in mortgage-backed
securities.
Mortgage loans on real estate are carried at amortized cost less
reserves for mortgage loan losses. The estimated fair value of the
mortgage loans is determined by a discounted cash flow analysis using
mortgage interest rates currently offered for mortgages of similar
maturities.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Impairment of mortgage loans is measured as the excess of the loan's
recorded investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate, or
the fair value of collateral. The amount of the impairment is recorded
in a reserve for mortgage loan losses. The reserve for mortgage loans
losses is maintained at a level that management believes is adequate to
absorb estimated losses in the portfolio. The level of the reserve
account is determined based on several factors, including historical
experience, expected future principal and interest payments, estimated
collateral values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the reserve
for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for
which interest payments are delinquent more than three months. Based
on management's judgment as to the ultimate collectibility of
principal, interest payments received are either recognized as income
or applied to the recorded investment in the loan.
The cost of interest rate caps and floors is amortized to investment
income over the life of the contracts and payments received as a result
of these agreements are recorded as investment income when realized.
The amortized cost of interest rate caps and floors is included in
other investments. Amounts paid or received under interest rate swap
agreements are recognized as an adjustment to investment income.
During 1997, 1996 and 1995, the Company purchased and wrote index
options to protect against significant declines in fee income as a
result of a decrease in the market value of its managed assets. These
options were marked-to-market through the income statement.
During 1997, the Company purchased and wrote index options to hedge
1998 management fee and other income from separate accounts and the
underlying mutual funds. These index options are carried at market
value and are included in other investments. Gains or losses on these
instruments are deferred and recognized in management and other fees in
the same period as the hedged fee income.
Policy loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related policies.
When evidence indicates a decline, which is other than temporary, in
the underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost, which
approximates fair value.
<PAGE>
Supplementary information to the consolidated statements of cash flows
for the years ended December 31 is summarized as
follows:
1997 1996 1995
---- ---- ----
Cash paid during the year for:
Income taxes $174,472 $317,283 $191,011
Interest on borrowings 8,213 4,119 5,524
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Recognition of profits on annuity contracts and insurance policies
Profits on fixed deferred annuities are recognized by the Company over
the lives of the contracts, using primarily the interest method.
Profits represent the excess of investment income earned from
investment of contract considerations over interest credited to
contract owners and other expenses.
The retrospective deposit method is used in accounting for universal
life-type insurance. Under this method, profits are recognized over
the lives of the policies in proportion to the estimated gross profits
expected to be realized.
Premiums on traditional life, disability income and long-term care
insurance policies are recognized as revenue when due, and related
benefits and expenses are associated with premium revenue in a manner
that results in recognition of profits over the lives of the insurance
policies. This association is accomplished by means of the provision
for future policy benefits and the deferral and subsequent amortization
of policy acquisition costs.
Policyholder and contractholder charges include the monthly cost of
insurance charges and issue and administrative fees. These charges
also include the minimum death benefit guarantee fees received from the
variable life insurance separate accounts. Management and other fees
include investment management fees and mortality and expense risk fees
received from the variable annuity and variable life insurance separate
accounts and underlying mutual funds.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation,
policy issue costs, underwriting and certain sales expenses, have been
deferred on insurance and annuity contracts.The deferred acquisition costs
for most single premium deferred annuities and installment annuities are
amortized in relation to accumulation values and surrender charge revenue.
The costs for universal life-type insurance and certain installment
annuities are amortized as a percentage of the estimated gross profits
expected to be realized on the policies. For traditional life, disability
income and long-term care insurance policies, the costs are amortized over
an appropriate period in proportion to premium revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance and deferred annuities
are accumulation values.
Liabilities for fixed annuities in a benefit status are based on
established industry mortality tables and interest rates ranging from
5% to 9.5%, depending on year of issue.
<PAGE>
Liabilities for future benefits on traditional life insurance are based
on the net level premium method, using anticipated mortality, policy
persistency and interest earning rates. Anticipated mortality rates
are based on established industry mortality tables. Anticipated policy
persistency rates vary by policy form, issue age and policy duration
with persistency on cash value plans generally anticipated to be better
than persistency on term insurance plans. Anticipated interest rates
range from 4% to 10%, depending on policy form, issue year and policy
duration.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Liabilities for future disability income and long-term care policy
benefits include both policy reserves and claim reserves. Policy
reserves are based on the net level premium method, using anticipated
morbidity, mortality, policy persistency and interest earning rates.
Anticipated morbidity and mortality rates are based on established
industry morbidity and mortality tables. Anticipated policy
persistency rates vary by policy form, issue age, policy duration and,
for disability income policies, occupation class. Anticipated interest
rates for disability income and long-term care policy reserves are 3%
to 9.5% at policy issue and grade to ultimate rates of 5% to 10% over 5
to 10 years.
Claim reserves are calculated based on claim continuance tables and
anticipated interest earnings. Anticipated claim continuance rates are
based on a national survey. Anticipated interest rates for claim
reserves for both disability income and long-term care range from 6% to
8%.
Reinsurance
The maximum amount of life insurance risk retained by the Company on
any one life is $750 of life and waiver of premium benefits plus $50 of
accidental death benefits. The maximum amount of disability income
risk retained by the Company on any one life is $6 of monthly benefit
for benefit periods longer than three years. The excesses are
reinsured with other life insurance companies on a yearly renewable
term basis. Graded premium whole life and long-term care policies are
primarily reinsured on a coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated federal
income tax return of American Express Company. The Company provides
for income taxes on a separate return basis, except that, under an
agreement between AEFC and American Express Company, tax benefit is
recognized for losses to the extent they can be used on the
consolidated tax return. It is the policy of AEFC and its subsidiaries
that AEFC will reimburse subsidiaries for all tax benefits.
Included in other liabilities at December 31, 1997 and 1996 are $12,061
and $33,358, respectively, receivable from American Express Financial
Corporation for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for
the exclusive benefit of the variable annuity and variable life
insurance contract owners. The Company receives investment
management fees from the proprietary mutual funds used as investment
options for variable annuities and variable life insurance. The
Company receives mortality and expense risk fees from the separate
accounts.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the separate accounts
will not be affected by future variations in the actual life expectancy
experience of the annuitants and the beneficiaries from the mortality
assumptions implicit in the annuity contracts. The Company makes
periodic fund transfers to, or withdrawals from, the separate accounts
for such actuarial adjustments for variable annuities that are in the
benefit payment period. For variable life insurance, the Company
guarantees that the rates at which insurance charges and administrative
fees are deducted from contract funds will not exceed contractual
maximums. The Company also guarantees that the death benefit will
continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.
Reclassification
Certain 1996 and 1995 amounts have been reclassified to conform to the
1997 presentation.
2. Investments
-----------
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available.
Estimated values are determined by established procedures involving,
among other things, review of market indices, price levels of current
offerings of comparable issues, price estimates and market data from
independent brokers and financial files.
The amortized cost, gross unrealized gains and losses and fair values
of investments in fixed maturities and equity securities at December
31, 1997 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $41,932 $ 2,950 $ -- $ 44,881
State and municipal obligations 9,684 568 -- 10,252
Corporate bonds and obligations 7,280,646 415,700 9,322 7,687,024
Mortgage-backed securities 1,983,188 25,976 7,911 2,001,253
--------- ------ ----- ---------
$9,315,450 $445,194 $17,233 $9,743,410
========= ======= ====== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 65,291 $ 4,154 $ -- $69,445
State and municipal obligations 11,045 1,348 -- 12,393
Corporate bonds and obligations 5,308,129 232,761 30,198 5,510,692
Mortgage-backed securities 7,130,565 160,478 6,879 7,284,164
--------- ------- ----- ---------
Total fixed maturities 12,515,030 398,741 37,077 12,876,694
Equity securities 3,000 361 -- 3,361
---------- ------- ------ ----------
$12,518,030 $399,102 $37,077 $12,880,055
========== ======= ====== ==========
</TABLE>
<PAGE>
2. Investments (continued)
-----------
The amortized cost, gross unrealized gains and losses and fair values
of investments in fixed maturities and equity securities at December
31, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- ---------- ---------- ------
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 44,002 $ 933 $ 1,276 $ 43,659
State and municipal obligations 9,685 412 -- 10,097
Corporate bonds and obligations 8,057,997 356,687 47,639 8,367,045
Mortgage-backed securities 2,124,695 21,577 45,423 2,100,849
---------- ------- ------ ----------
$10,236,379 $379,609 $94,338 $10,521,650
========== ======= ====== ==========
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ ---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 77,944 $ 2,607 $ 96 $ 80,455
State and municipal obligations 11,032 1,336 -- 12,368
Corporate bonds and obligations 3,701,604 122,559 24,788 3,799,375
Mortgage-backed securities 7,218,042 104,808 68,203 7,254,647
--------- ------- ------ ---------
Total fixed maturities 11,008,622 231,310 93,087 11,146,845
Equity securities 3,000 308 -- 3,308
---------- ------- ------ ----------
$11,011,622 $231,618 $93,087 $11,150,153
========== ======= ====== ==========
</TABLE>
The amortized cost and fair value of investments in fixed maturities at
December 31, 1997 by contractual maturity are shown below. Expected
maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call
or prepayment penalties.
<PAGE>
Amortized Fair
Held to maturity Cost Value
---------------- --------- --------
Due in one year or less $ 356,597 $360,956
Due from one to five years 1,536,239 1,619,875
Due from five to ten years 4,337,547 4,577,552
Due in more than ten years 1,101,879 1,183,774
Mortgage-backed securities 1,983,188 2,001,253
--------- ---------
$9,315,450 $9,743,410
========= =========
Amortized Fair
Available for sale Cost Value
--------- -----
Due in one year or less $ 162,663 $ 164,012
Due from one to five years 633,339 679,561
Due from five to ten years 2,418,162 2,517,098
Due in more than ten years 2,170,301 2,231,859
Mortgage-backed securities 7,130,565 7,284,164
---------- ----------
$12,515,030 $12,876,694
========== ==========
<PAGE>
2. Investments (continued)
-----------
During the years ended December 31, 1997, 1996 and 1995, fixed
maturities classified as held to maturity were sold with amortized cost
of $229,848, $277,527 and $333,508, respectively. Net gains and losses
on these sales were not significant. The sale of these fixed
maturities was due to significant deterioration in the issuers' credit
worthiness.
Fixed maturities available for sale were sold during 1997 with proceeds
of $457,585 and gross realized gains and losses of $6,639 and $7,518,
respectively. Fixed maturities available for sale were sold during
1996 with proceeds of $238,905 and gross realized gains and losses of
$571 and $16,084, respectively. Fixed maturities available for sale
were sold during 1995 with proceeds of $136,825 and gross realized
gains and losses of $nil and $5,781, respectively.
At December 31, 1997, bonds carried at $14,351 were on deposit with
various states as required by law.
At December 31, 1997, investments in fixed maturities comprised 83
percent of the Company's total invested assets. These securities are
rated by Moody's and Standard & Poor's (S&P), except for securities
carried at approximately $2.7 billion which are rated by American
Express Financial Corporation internal analysts using criteria similar
to Moody's and S&P. A summary of investments in fixed maturities, at
amortized cost, by rating on December 31 is as follows:
Rating 1997 1996
--------- --------- ---------
Aaa/AAA $ 9,195,619 $ 9,460,134
Aaa/AA -- 2,870
Aa/AA 232,451 241,914
Aa/A 246,792 192,631
A/A 2,787,936 2,949,895
A/BBB 1,200,345 1,034,661
Baa/BBB 5,226,616 4,531,515
Baa/BB 475,084 768,285
Below investment grade 2,465,637 2,063,096
--------- ---------
$21,830,480 $21,245,001
========== ==========
At December 31, 1997, 95 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of any
other issuer are greater than one percent of the Company's total
investments in fixed maturities.
At December 31, 1997, approximately 14 percent of the Company's
invested assets were mortgage loans on real estate. Summaries of
mortgage loans by region of the United States and by type of real
estate are as follows:
<PAGE>
December 31, 1997 December 31, 1996
------------------------ -----------------------
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
------------- ---------- ------------ ---------- -----------
East North Central $ 748,372 $ 32,462 $ 777,960 $ 19,358
West North Central 456,934 14,340 389,285 29,620
South Atlantic 922,172 14,619 891,852 35,007
Middle Atlantic 545,601 15,507 553,869 17,959
New England 316,250 2,136 310,177 14,042
Pacific 184,917 3,204 190,770 4,997
West South Central 125,227 -- 105,173 11,246
East South Central 60,274 -- 75,176 --
Mountain 297,545 28,717 236,597 11,401
--------- ------- --------- -------
3,657,292 110,985 3,530,859 143,630
Less allowance for
losses 38,645 -- 37,495 --
--------- ------- --------- -------
$3,618,647 $110,985 $3,493,364 $143,630
========= ======= ========= =======
<PAGE>
2. Investments (continued)
-----------
December 31, 1997 December 31, 1996
------------------------ -------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
--------------- ---------- ----------- ---------- -----------
Department/retail
stores $1,189,203 $ 27,314 $1,154,179 $ 68,032
Apartments 1,089,127 16,576 1,119,352 23,246
Office buildings 716,729 34,546 611,395 27,653
Industrial buildings 295,889 21,200 296,944 6,716
Hotels/motels 101,052 -- 97,870 6,257
Medical buildings 99,979 9,748 67,178 8,289
Nursing/retirement
homes 72,359 -- 88,226 1,877
Mixed Use 71,007 -- 73,120 --
Other 21,947 1,601 22,595 1,560
--------- ------- --------- ------
3,657,292 110,985 3,530,859 143,630
Less allowance for
losses 38,645 -- 37,495 --
--------- ------- --------- -------
$3,618,647 $110,985 $3,493,364 $143,630
========= ======= ========= =======
Mortgage loan fundings are restricted by state insurance regulatory
authorities to 80 percent or less of the market value of the real
estate at the time of origination of the loan. The Company holds the
mortgage document, which gives it the right to take possession of the
property if the borrower fails to perform according to the terms of the
agreement. The fair value of the mortgage loans is determined by a
discounted cash flow analysis using mortgage interest rates currently
offered for mortgages of similar maturities. Commitments to purchase
mortgages are made in the ordinary course of business. The fair value
of the mortgage commitments is $nil.
At December 31, 1997 and 1996, the Company's recorded investment in
impaired loans was $45,714 and $79,441, respectively, with allowances
of $9,812 and $16,162, respectively. During 1997 and 1996, the average
recorded investment in impaired loans was $61,870 and $74,338,
respectively.
The Company recognized $2,981, $4,889 and $5,014 of interest income
related to impaired loans for the years ended December 31, 1997, 1996
and 1995 respectively.
<PAGE>
The following table presents changes in the allowance for investment
losses related to all loans:
1997 1996 1995
------ ------ ------
Balance, January 1 $37,495 $37,340 $35,252
Provision for investment losses 8,801 10,005 15,900
Loan payoffs (3,851) (4,700) (11,900)
Foreclosures (3,800) (5,150) (1,350)
Other -- -- (562)
------ ------ -------
Balance, December 31 $38,645 $37,495 $37,340
====== ====== ======
At December 31, 1997, the Company had commitments to purchase
investments other than mortgage loans for $234,485. Commitments to
purchase investments are made in the ordinary course of business. The
fair value of these commitments is $nil.
<PAGE>
2. Investments (continued)
-----------
Net investment income for the years ended December 31 is summarized as
follows:
1997 1996 1995
--------- --------- ---------
Interest on fixed maturities $1,692,481 $1,666,929 $1,656,136
Interest on mortgage loans 305,742 283,830 232,827
Other investment income 25,089 43,283 35,936
Interest on cash equivalents 5,914 5,754 5,363
--------- --------- ---------
2,029,226 1,999,796 1,930,262
Less investment expenses 40,837 34,434 22,953
--------- --------- ---------
$1,988,389 $1,965,362 $1,907,309
========= ========= =========
Net realized gain (loss) on investments for the years ended December 31
is summarized as follows:
1997 1996 1995
------ ----- -----
Fixed maturities $ 16,115 $ 8,736 $ 9,973
Mortgage loans (6,424) (8,745) (13,259)
Other investments (8,831) (150) (1,612)
------- ----- -------
$ 860 $ (159) $ (4,898)
======= ====== ======
Changes in net unrealized appreciation (depreciation) of investments
for the years ended December 31 are summarized as follows:
1997 1996 1995
------- ------- -------
Fixed maturities available
for sale $223,441 $(231,853) $811,649
Equity securities 53 (52) 3,118
3. Income taxes
------------
The Company qualifies as a life insurance company for federal income
tax purposes. As such, the Company is subject to the Internal Revenue
Code provisions applicable to life insurance companies.
The income tax expense consists of the following:
1997 1996 1995
Federal income taxes:
Current $176,879 $260,357 $218,040
Deferred 19,982 (65,609) (33,810)
------- -------- -------
196,861 194,748 184,230
State income taxes-current 9,803 12,390 11,612
------- ------- -------
Income tax expense $206,664 $207,138 $195,842
======= ======= =======
<PAGE>
3. Income taxes (continued)
------------
Increases (decreases) to the federal tax provision applicable to pretax
income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1997 1996 1995
---------------- --------------- ---------------
Provision Rate Provision Rate Provision Rate
--------- ---- --------- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Federal income
taxes based on
the statutory rate $238,319 35.0% $217,600 35.0% $196,274 35.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (10,294) (1.5) (9,636) (1.5) (8,524) (1.5)
State Taxes, net of federal
benefit 6,372 0.9 8,053 1.3 7,548 1.3
Low income housing
credits (20,705) (3.0) (5,090) (0.8) (861) (0.2)
Other, net (7,028) (1.0) (3,789) (0.7) 1,405 0.3
------- ----- ------- ---- ------- ----
Federal income taxes $206,664 30.4% $207,138 33.3% $195,842 34.9%
======= ==== ======= ==== ======= ====
</TABLE>
A portion of life insurance company income earned prior to 1984 was not
subject to current taxation but was accumulated, for tax purposes, in a
policyholders' surplus account. At December 31, 1997, the Company had
a policyholders' surplus account balance of $20,114. The
policyholders' surplus account is only taxable if dividends to the
stockholder exceed the stockholder's surplus account or if the Company
is liquidated. Deferred income taxes of $7,040 have not been
established because no distributions of such amounts are contemplated.
Significant components of the Company's deferred tax assets and
liabilities as of December 31 are as follows:
1997 1996
---- ----
Deferred tax assets:
Policy reserves $748,204 $724,412
Life insurance guarantee
fund assessment reserve 20,101 29,854
Other 9,589 2,763
------- -------
Total deferred tax assets 777,894 757,029
------- -------
<PAGE>
Deferred tax
liabilities:
Deferred policy acquisition costs 700,032 665,685
Unrealized gain on investments 121,885 48,486
Investments, other 17,559 8,935
------- -------
Total deferred tax liabilities 839,476 723,106
------- -------
Net deferred tax (liabilities) assets $(61,582) $ 33,923
====== ======
The Company is required to establish a valuation allowance for any
portion of the deferred tax assets that management believes will not be
realized. In the opinion of management, it is more likely than not
that the Company will realize the benefit of the deferred tax assets
and, therefore, no such valuation allowance has been established.
<PAGE>
4. Stockholder's equity
--------------------
Retained earnings available for distribution as dividends to the parent
are limited to the Company's surplus as determined in accordance with
accounting practices prescribed by state insurance regulatory
authorities. Statutory unassigned surplus aggregated $1,468,677 as of
December 31, 1997 and $1,261,592 as of December 31, 1996 (see Note 3
with respect to the income tax effect of certain distributions). In
addition, any dividend distributions in 1998 in excess of approximately
$331,480 would require approval of the Department of Commerce of the
State of Minnesota.
Statutory net income for the years ended December 31 and capital and
surplus as of December 31 are summarized as follows:
1997 1996 1995
---------- ---------- ----------
Statutory net income $ 379,615 $ 365,585 $ 326,799
Statutory capital and surplus 1,765,290 1,565,082 1,398,649
surplus
5. Related party transactions
--------------------------
The Company loans funds to American Express Financial Corporation under
a collateral loan agreement. The balance of the loan was $nil and
$11,800 at December 31, 1997 and 1996, respectively. This loan can be
increased to a maximum of $75,000 and pays interest at a rate equal to
the preceding month's effective new money rate for the Company's
permanent investments. Interest income on related party loans totaled
$103, $780 and $1,371 in 1997, 1996 and 1995, respectively.
The Company purchased a five year secured note from an affiliated
company which was redeemed in 1996. The interest rate on the note was
8.42 percent. Interest income on the above note totaled $1,637 and
$1,937 in 1996 and 1995, respectively.
The Company participates in the American Express Company Retirement
Plan which covers all permanent employees age 21 and over who have met
certain employment requirements. Employer contributions to the plan
are based on participants' age, years of service and total compensation
for the year. Funding of retirement costs for this plan complies with
the applicable minimum funding requirements specified by ERISA. The
Company's share of the total net periodic pension cost was $201, $174
and $155 in 1997, 1996 and 1995, respectively.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a
percent of either each employee's eligible compensation or basic
contributions. Costs of these plans charged to operations in 1997,
1996 and 1995 were $1,245, $990 and $815, respectively.
<PAGE>
The Company participates in defined benefit health care plans of AEFC
that provide health care and life insurance benefits to retired
employees and retired financial advisors. The plans include
participant contributions and service related eligibility
requirements. Upon retirement, such employees are considered to have
been employees of AEFC. AEFC expenses these benefits and allocates the
expenses to its subsidiaries. Accordingly, costs of such benefits to
the Company are included in employee compensation and benefits and
cannot be identified on a separate company basis.
<PAGE>
5. Related party transactions (continued)
--------------------------
Charges by AEFC for use of joint facilities, marketing services and
other services aggregated $414,155, $397,362 and $377,139 for 1997,
1996 and 1995, respectively. Certain of these costs are included in
deferred policy acquisition costs. In addition, the Company rents its
home office space from AEFC on an annual renewable basis.
6. Commitments and contingencies
-----------------------------
At December 31, 1997 and 1996, traditional life insurance and universal
life-type insurance in force aggregated $74,730,720 and $67,274,354,
respectively, of which $4,351,904 and $3,875,921 were reinsured at the
respective year ends. The Company also reinsures a portion of the
risks assumed under disability income and long-term care policies.
Under all reinsurance agreements, premiums ceded to reinsurers amounted
to $60,495, $48,250 and $39,399 and reinsurance recovered from
reinsurers amounted to $19,042, $15,612, and $14,088 for the years
ended December 31, 1997, 1996 and 1995, respectively. Reinsurance
contracts do not relieve the Company from its primary obligation to
policyholders.
A number of lawsuits have been filed against life and health insurers
in jurisdictions in which the Company and its subsidiaries do business
involving insurers' sales practices, alleged agent misconduct, failure
to properly supervise agents, and other matters. In December 1996, an
action of this type was brought against the Company and its parent,
AEFC. A second action was filed in March, 1997. The plaintiffs
purport to represent a class consisting of all persons who replaced
existing Company policies with new Company policies from and after
January 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties
and alleged violations of consumer fraud statutes. Plaintiffs seek
damages in an unspecified amount and seek to establish a claims
resolution facility for the determination of individual issues. The
Company and its parent believe they have meritorious defenses to the
claims raised in the lawsuit. The outcome of any litigation cannot be
predicted with certainty. In the opinion of management, however, the
ultimate resolution of the above lawsuit and others filed against the
Company should not have a material adverse effect on the Company's
consolidated financial position.
The IRS routinely examines the Company's federal income tax returns,
and is currently auditing the Company's returns for the 1990 through
1992 tax years. Management does not believe there will be a material
adverse effect on the Company's consolidated financial position as a
result of this audit.
7. Lines of credit
---------------
The Company has an available line of credit with its parent aggregating
$100,000. The rate for the line of credit is the parent's cost of
funds, ranging from 20 to 45 basis points over the established index.
Borrowings outstanding under this agreement were $nil at
December 31, 1997 and 1996.
<PAGE>
8. Derivative financial instruments
--------------------------------
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk and equity
market risk, including hedging specific transactions. The Company does
not hold derivative instruments for trading purposes. The Company
manages risks associated with these instruments as described below.
<PAGE>
8. Derivative financial instruments (continued)
--------------------------------
Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor from
which the instrument derives its value, primarily an interest rate or
equity market index. The Company is not impacted by market risk
related to derivatives held for non-trading purposes beyond that
inherent in cash market transactions. Derivatives held for purposes
other than trading are largely used to manage risk and, therefore, the
cash flow and income effects of the derivatives are inverse to the
effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not fulfill
the terms of the contract. The Company monitors credit risk related to
derivative financial instruments through established approval
procedures, including setting concentration limits by counterparty, and
requiring collateral, where appropriate. A vast majority of the
Company's counterparties are rated A or better by Moody's and Standard
& Poor's.
Credit risk related to interest rate caps and floors and index options
is measured by the replacement cost of the contracts. The replacement
cost represents the fair value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid
over the life of the agreement. Notional amounts are not recorded on
the balance sheet. Notional amounts far exceed the related credit risk.
The Company's holdings of derivative financial instruments are as
follows:
Notional Carrying Fair Total Credit
December 31, 1997 Amount Amount Value Exposure
----------------- -------- -------- ----- ------------
Assets:
Interest rate caps $ 4,600,000 $ 24,963 $ 15,665 $ 15,665
Interest rate floors 1,000,000 1,561 4,551 4,551
Put index options 221,984 11,120 11,120 11,120
Liabilities:
Call index options 221,984 (8,273) (8,273) --
Off balance sheet:
Interest rate swaps 1,267,000 -- (45,799) --
--------- ------ ------ ------
$29,371 $(22,736) $31,336
====== ====== ======
Notional Carrying Fair Total Credit
December 31, 1996 Amount Amount Value Exposure
Assets:
Interest rate caps $4,000,000 $ 16,227 $ 7,439 $ 7,439
Interest rate floors 1,000,000 2,041 4,341 4,341
Off balance sheet:
Interest rate swaps 1,000,000 -- (24,715) --
--------- ------ -------- ------
$18,268 $(12,935) $11,780
====== ====== ======
<PAGE>
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate caps and
floors expire on various dates from 1998 to 2003. The interest rate
swaps expire on various dates from 2000 to 2003. All put and call
options expire in 1998.
Interest rate caps, swaps and floors are used principally to manage the
Company's interest rate risk. These instruments are used to protect
the margin between interest rates earned on investments and the
interest rates credited to related annuity contract holders.
<PAGE>
8. Derivative financial instruments (continued)
--------------------------------
Index options are used to manage the equity market risk related to the
fee income that the Company receives from its separate accounts and the
underlying mutual funds. The amount of the fee income received is
based upon the daily market value of the separate account and mutual
fund assets. As a result, the Company's fee income could be impacted
significantly by changing economic conditions in the equity market.
The Company entered into index option collars (combination of puts and
calls) to hedge anticipated fee income for 1998 related to separate
accounts and mutual funds which invest in equity securities. Testing
has demonstrated the impact of these instruments on the income
statement closely correlates with the amount of fee income the Company
realizes. In the event that testing demonstrates that this correlation
no longer exists, or in the event the Company disposes of the index
options collars, the instruments will be marked-to-market through the
income statement. At December 31, 1997, deferred gains on purchased
put index options were $11,120 and deferred losses on written call
index options were $8,273.
9. Fair values of financial instruments
------------------------------------
The Company discloses fair value information for most on- and
off-balance sheet financial instruments for which it is practicable to
estimate that value. Fair values of life insurance obligations and all
non-financial instruments, such as deferred acquisition costs are
excluded. Off-balance sheet intangible assets, such as the value of
the field force, are also excluded. Management believes the value of
excluded assets and liabilities is significant. The fair value of the
Company, therefore, cannot be estimated by aggregating the amounts
presented.
<TABLE>
<CAPTION>
1997 1996
------------------ ---------------------
Carrying Fair Carrying Fair
Financial Assets Amount Value Amount Value
---------------- -------- ------ ------- -----
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $9,315,450 $9,743,410 $10,236,379 $10,521,650
Available for sale 12,876,694 12,876,694 11,146,845 11,146,845
Mortgage loans on
real estate (Note 2) 3,618,647 3,808,570 3,493,364 3,606,077
Other:
Equity securities (Note 2) 3,361 3,361 3,308 3,308
Derivative financial
instruments (Note 8) 37,644 31,336 18,268 11,780
Other 82,347 85,383 63,993 66,242
Cash and
cash equivalents (Note 1) 19,686 19,686 224,603 224,603
Separate account assets
(Note 1) 23,214,504 23,214,504 18,535,160 18,535,160
<PAGE>
Financial Liabilities
Future policy benefits
for fixed annuities 20,731,052 19,882,302 20,641,986 19,721,968
Derivative financial
instruments (Note 8) (8,273) (54,072) -- (24,715)
Separate account liabilities 21,488,282 20,707,620 17,358,087 16,688,519
</TABLE>
<PAGE>
9. Fair values of financial instruments (continued)
------------------------------------
At December 31, 1997 and 1996, the carrying amount and fair value of
future policy benefits for fixed annuities exclude life
insurance-related contracts carried at $1,185,155 and $1,112,155,
respectively, and policy loans of $93,540 and $83,867, respectively.
The fair value of these benefits is based on the status of the
annuities at December 31, 1997 and 1996. The fair value of deferred
annuities is estimated as the carrying amount less any applicable
surrender charges and related loans. The fair value for annuities in
non-life contingent payout status is estimated as the present value of
projected benefit payments at rates appropriate for contracts issued in
1997 and 1996.
At December 31, 1997 and 1996, the fair value of liabilities related to
separate accounts is estimated as the carrying amount less any
applicable surrender charges and less variable insurance contracts
carried at $1,726,222 and $1,177,073, respectively.
10. Segment information
-------------------
The Company's operations consist of two business segments; first,
individual and group life insurance, disability income and long-term
care insurance, and second, annuity products designed for individuals,
pension plans, small businesses and employer-sponsored groups. The
consolidated condensed statements of income for the years ended
December 31, 1997, 1996 and 1995 and total assets at December 31, 1997,
1996 and 1995 by segment are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net investment income:
Life, disability income
and long-term care insurance $ 269,874 $ 262,998 $ 256,242
Annuities 1,718,515 1,702,364 1,651,067
--------- --------- ---------
$ 1,988,389 $ 1,965,362 $ 1,907,309
========= ========= =========
Premiums, charges and fees:
Life, disability income
and long-term care insurance $ 514,838 $ 448,389 $ 384,008
Annuities 374,274 308,873 249,557
------- ------- -------
$ 889,112 $ 757,262 $ 633,565
======= ======= =======
Income before income taxes:
Life, disability income
and long-term care insurance $ 178,717 $ 161,115 $ 125,402
Annuities 501,334 460,758 440,278
Net gain (loss) on investments 860 (159) (4,898)
------- ------- -------
$ 680,911 $ 621,714 $ 560,782
======= ======= =======
<PAGE>
Total assets:
Life, disability income
and long-term care insurance $ 8,193,796 $ 7,028,906 $ 6,195,870
Annuities 44,780,328 40,277,075 36,704,208
---------- ---------- ----------
$52,974,124 $47,305,981 $42,900,078
========== ========== ==========
</TABLE>
<PAGE>
Allocations of net investment income and certain general expenses are
based on various assumptions and estimates.
Assets are not individually identifiable by segment and have been
allocated principally based on the amount of future policy benefits by
segment.
Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
11. Year 2000 Issue (unaudited)
---------------
The Year 2000 issue is the result of computer programs having been
written using two digits rather than four to define a year. Any
programs that have time-sensitive software may recognize a date using "00"
as the year 1900 rather than 2000. This could result in the failure of
major systems or miscalculations, which could have a material impact on
the operations of the Company. All of the systems used by the Company are
maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. The Company's business is heavily dependent
upon AEFC's computer systems and has significant interactions with
systems of third parties.
A comprehensive review of AEFC's computer systems and business
processes, including those specific to the Company, has been conducted to
identify the major systems that could be affected by the Year 2000
issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis.
AEFC's goal is to complete internal remediation and testing of each
system by the end of 1998 and to continue compliance efforts through
1999.
AEFC is evaluating the Year 2000 readiness of advisors and other third
parties whose system failures could have an impact on the Company's
operations. The potential materiality of any such impact is not known at
this time.
<PAGE>
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B of this Registration Statement:
IDS Life Accounts F,IZ,JZ,G,H,N,KZ,LZ,& MZ:
Statements of Net Assets at Dec. 31, 1997.
Statements of Operations for the year ended Dec. 31, 1997.
Statements of Changes in Net Assets for the years
ended Dec. 31, 1997 and Dec. 31, 1996.
Notes to Financial Statements.
Report of Independent Auditors dated March 13, 1998.
IDS Life Insurance Company:
Consolidated Balance Sheets at Dec. 31, 1997 and 1996;
Consolidated Statements of Income for the years
ended Dec. 31, 1997, 1996, and 1995;
Consolidated Statements of Stockholder's Equity for
the years ended Dec. 31, 1997, 1996, and 1995;
Consolidated Statements of Cash Flows for the years
ended Dec. 31, 1997, 1996, and 1995; and
Notes to Consolidated Financial Statements.
Report of Independent Auditors dated February 5, 1998.
Exhibits to Financial Statements included in Part C:
Financial Statement Schedules I, III, IV, and V as required by
Regulation S-X:
Schedule I - Consolidated Summary of
Investments Other than Investments in Related Parties
Schedule III - Supplementary Insurance Information
Schedule IV - Reinsurance
Schedule V - Valuation and Qualifying Accounts
Report of Independent Auditors dated February 5, 1998.
All other schedules to the consolidated financial statements required
by Article 7 of Regulation S-X are not required under the related
instructions or are inapplicable and, therefore, have been omitted.
(b) Exhibits:
1.1 Copy of Resolution of the Executive Committee of the Board of Directors
of IDS Life establishing Accounts C, D, E, F, G, and H adopted May 13,
1981, filed electronically as Exhibit 1.1 to Post-Effective Amendment
No. 2 to Registration Statement No. 33-52518 is incorporated herein by
reference.
<PAGE>
1.2 Copy of Resolution of the Board of Directors of IDS Life establishing
Account N on April 17, 1985, filed electronically as Exhibit 1.2 to
Post-Effective Amendment No. 2 to Registration Statement No. 33-52518
is incorporated herein by reference.
1.3 Copy of Resolution of the Board of Directors of IDS Life establishing
Accounts IZ and JZ on September 20, 1991, filed electronically as
Exhibit 1.3 to Post-Effective Amendment No. 2 to Registration Statement
No. 33-52518 is incorporated herein by reference.
1.4 Consent in Writing in Lieu of Meeting of Board of Directors
establishing Accounts MZ, KZ and LZ on April 2, 1996, filed
electronically as Exhibit 1.4 to Post-Effective Amendment No. 6 to
Registration Statement No. 33-52518 is incorporated herein by
reference.
2. Not applicable.
3. Not applicable.
4.1 Copy of Group Deferred Fixed/Variable Contract (form 34607) filed
electronically as Exhibit 4 to Post-Effective Amendment No. 2 to
Registration Statement No. 33-52518 is incorporated herein by
reference.
4.2 Copy of Group Deferred Fixed/Variable Certificate (form 34610-MN)
filed electronically as Exhibit 5 to Post-Effective Amendment No. 2 to
Registration Statement No. 33-52518 is incorporated herein by
reference.
5.1 Form of Master Application for Group Deferred Annuity Contract
(form 34608C) filed electronically as Exhibit 5.1 to Post-Effective
Amendment No. 4 to Registration Statement No. 33-52518 is incorporated
herein by reference.
5.2 Form of Participant Enrollment Form (form 34609A) filed electronically
as Exhibit 5.2 to Post-Effective Amendment No. 4 to Registration
Statement No. 33-52518 is incorporated herein by reference.
6.1 Copy of Articles of Incorporation of IDS Life dated July 24, 1957,
filed electronically as Exhibit 6.1 to Post-Effective Amendment No. 2
to Registration Statement No. 33-52518 is incorporated herein by
reference.
6.2 Copy of Amendment to By-Laws of IDS Life filed electronically as
Exhibit 6.2 to Post-Effective Amendment No. 2 to Registration Statement
No 33-52518 is incorporated herein by reference.
7. Not applicable.
8. Not applicable.
9. Opinion of counsel and consent to its use as to the legality of the
securities registered, filed electronically herewith.
10. Consent of Independent Auditors, filed electronically herewith.
<PAGE>
11. Financial Statement Schedules and Report of Independent Auditors, filed
electronically herewith.
12. Not applicable.
13. Copy of Schedule for computation of each performance quotation filed
electronically as Exhibit 13 to Post-Effective Amendment No. 2 to
Registration Statement No. 33-52518 is incorporated herein by
reference.
14. Financial Data Schedules, filed electronically herewith.
15.1. Power of Attorney to sign Amendments to this Registration Statement
dated August 19, 1997, filed electronically herewith.
15.2. Power of Attorney to sign Amendments to this Registration Statement
dated April 9, 1998, filed electronically herewith.
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor (IDS Life Insurance Company)
Positions and Offices with Depositor
Name Principal Business Address
- -------------------------------- ----------------------------------- ---------------------------------------
<S> <C> <C>
Timothy V. Bechtold IDS Tower 10 Executive Vice President-Risk
Minneapolis, MN 55440 Management Products
David J. Berry IDS Tower 10 Vice President
Minneapolis, MN 55440
Mark W. Carter IDS Tower 10 Executive Vice President-Marketing
Minneapolis, MN 55440
Robert M. Elconin IDS Tower 10 Vice President
Minneapolis, MN 55440
Lorraine R. Hart IDS Tower 10 Vice President-Investments
Minneapolis, MN 55440
David R. Hubers IDS Tower 10 Director
Minneapolis, MN 55440
James M. Jensen IDS Tower 10 Vice President-Insurance Product
Minneapolis, MN 55440 Development
Richard W. Kling IDS Tower 10 Director and President
Minneapolis, MN 55440
Paul F. Kolkman IDS Tower 10 Director and Executive Vice President
Minneapolis, MN 55440
Ryan R. Larson IDS Tower 10 Vice President
Minneapolis, MN 55440
James A. Mitchell IDS Tower 10 Director, Chairman of the Board and
Minneapolis, MN 55440 Chief Executive Officer
Pamela J. Moret IDS Tower 10 Executive Vice President-Variable
Minneapolis, MN 55440 Assets
<PAGE>
Barry J. Murphy IDS Tower 10 Director and Executive Vice
Minneapolis, MN 55440 President-Client Service
James R. Palmer IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
Stuart A. Sedlacek IDS Tower 10 Director and Executive Vice
Minneapolis, MN 55440 President-Assured Assets
F. Dale Simmons IDS Tower 10 Vice President-Real Estate Loan
Minneapolis, MN 55440 Management and Assistant Treasurer
William A. Stoltzmann IDS Tower 10 Vice President, General Counsel and
Minneapolis, MN 55440 Secretary
Philip C. Wentzel IDS Tower 10 Vice President and Controller
Minneapolis, MN 55440
</TABLE>
<TABLE>
<CAPTION>
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant
IDS Life Insurance Company is a wholly-owned subsidiary of
American Express Financial Corporation. American Express
Financial Corporation is a wholly-owned subsidiary of American
Express Company (American Express).
The following list includes the names of major subsidiaries of
American Express.
Jurisdiction of
Name of Subsidiary Incorporation
<S> <C>
I. Travel Related Services
American Express Travel Related Services Company, Inc. New York
II. International Banking Services
American Express Bank Ltd. Connecticut
III. Companies engaged in Financial Services
Advisory Capital Strategies Group Inc. Minnesota
American Centurion Life Assurance Company New York
American Enterprise Investment Services Inc. Minnesota
American Enterprise Life Insurance Company Indiana
American Express Asset Management Group Inc. Minnesota
American Express Asset Management International Inc. Delaware
American Express Asset Management International (Japan) Ltd. Japan
American Express Asset Management Ltd. England
American Express Client Service Corporation Minnesota
American Express Corporation Delaware
American Express Financial Advisors Inc. Delaware
American Express Financial Corporation Minnesota
Delaware
American Express Insurance Agency of Arizona Inc. Arizona
American Express Insurance Agency of Idaho Inc. Idaho
American Express Insurance Agency of Nevada Inc. Nevada
American Express Insurance Agency of Oregon Inc. Oregon
American Express Minnesota Foundation Minnesota
American Express Property Casualty Insurance Agency of Kentucky Inc. Kentucky
American Express Property Casualty Insurance Agency of Maryland Inc. Maryland
American Express Property Casualty Insurance Agency of Pennsylvania Inc. Pennsylvania
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
IDS Cable Corporation Minnesota
IDS Cable II Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
IDS Futures Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc. Massachusetts
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Utah Inc. Utah
IDS Insurance Agency of Wyoming Inc. Wyoming
IDS Life Insurance Company Minnesota
IDS Life Insurance Company of New York New York
IDS Management Corporation Minnesota
IDS Partnership Services Corporation Minnesota
IDS Plan Services of California, Inc. Minnesota
IDS Property Casualty Insurance Company Wisconsin
IDS Real Estate Services, Inc. Delaware
IDS Realty Corporation Minnesota
IDS Sales Support Inc. Minnesota
IDS Securities Corporation Delaware
Investors Syndicate Development Corp. Nevada
North Dakota Public Employee Payment Company Minnesota
</TABLE>
Item 27. Number of Contractowners
On February 28, 1998, there were 16,742 contract owners of the
Employee Benefit Annuity.
Item 28. Indemnification
The By-Laws of the depositor provide that it shall indemnify any
person who was or is a party or is threatened to be made a party,
by reason of the fact that he is or was a director, officer,
employee or agent of this Corporation, or is or was serving at
the direction of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise, to any threatened, pending or
completed action, suit or proceeding, wherever brought, to the
fullest extent permitted by the laws of the State of Minnesota,
as now existing or hereafter amended, provided that this Article
shall not indemnify or protect any such director, officer,
employee or agent against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason
of willful misfeasance, bad faith, or gross negligence, in the
performance of his duties or by reason of his reckless disregard
of his obligations and duties.
<PAGE>
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 29. Principal Underwriters
(a) IDS Life is the principal underwriter for IDS Life
Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ IDS Life Variable
Annuity Fund A, IDS Life Variable Annuity Fund B, IDS Life
Account RE, IDS Life Account MGA and IDS Life Account SBS,
IDS Life Variable Account 10, IDS Life Variable Life
Separate Account and IDS Life Variable Account for
Smith Barney.
(b) This table is the same as our response to Item 25 of this
Registration Statement.
(c)
<TABLE>
<CAPTION>
Name of Net Underwriting
Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
<S> <C> <C> <C> <C>
IDS Life $17,883,488 $14,502,145 None None
</TABLE>
Item 30. Location of Accounts and Records
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN
Item 31. Management Services
Not applicable.
<PAGE>
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as
is necessary to ensure that the audited financial
statements in the registration statement are never more
than 16 months old for so long as payments under the
variable annuity contracts may be accepted.
(b) Registrant undertakes that it will include either (1) as
part of any application to purchase a contract offered by
the prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or
included in the prospectus that the applicant can remove
to send for a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of
Additional Information and any financial statements
required to be made available under this Form promptly
upon written or oral request to IDS Life Contract Owner
Service at the address or phone number listed in the
prospectus.
(d) The sponsoring insurance company represents that the fees
and charges deducted under the contract, in the aggregate,
are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by
the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, IDS Life Insurance Company, on behalf of the Registrant certifies that it
meets the requirements of Securities Act Rule 485(b) for effectiveness of this
Registration Statement and, has caused this Registration Statement to be signed
on its behalf in the City of Minneapolis, and State of Minnesota, on the 22nd
day of April, 1998.
IDS LIFE ACCOUNT F
IDS LIFE ACCOUNT IZ
IDS LIFE ACCOUNT JZ
IDS LIFE ACCOUNT G
IDS LIFE ACCOUNT H
IDS LIFE ACCOUNT N
IDS LIFE ACCOUNT KZ
IDS LIFE ACCOUNT LZ
IDS LIFE ACCOUNT MZ
(Registrant)
By IDS Life Insurance Company
(Sponsor)
By /s/ James A. Mitchell *
James A. Mitchell
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities indicated on the 22nd day of
April, 1998.
Signature Title
/s/ James A. Mitchell* Chairman of the
James A. Mitchell Board and Chief Executive
Officer
/s/ Richard W. Kling* Director and President
Richard W. Kling
/s/ Jeffrey S. Horton** Vice President and Treasurer
Jeffrey S. Horton
/s/ David R. Hubers* Director
David R. Hubers
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
<PAGE>
Signature Title
/s/ Stuart A. Sedlacek* Director and Executive Vice
Stuart A. Sedlacek President, Assured Assets
/s/ Philip C. Wentzel** Vice President and Controller
Philip C. Wentzel
*Signed pursuant to Power of Attorney dated August 19, 1997, filed
electronically herewith as Exhibit 15.1.
** Signed pursuant to Power of Attorney dated April 9, 1998, filed
electronically herewith as Exhibit 15.2.
- -----------------------------
Mary Ellyn Minenko
Senior Counsel
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 8
This Post-Effective Amendment is comprised of the following papers and
documents:
The Cover Page.
Cross-reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other Information.
The signatures.
Exhibits.
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
Registration No. 33-52518/811-3217
EXHIBIT INDEX
Exhibit 9 Opinion of Counsel
Exhibit 10 Consent of Independent Auditors
Exhibit 11 Financial Statement Schedules and Report of Independent Auditors
Exhibit 14 Financial Data Schedules:
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Insurance Company
Exhibit 15.1 Power of Attorney, dated August 19, 1997
Exhibit 15.2 Power of Attorney, dated April 9, 1998
April 22, 1998
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
RE: Registration Statement on Form N-4
File No.:33-52518
Ladies and Gentlemen:
I am familiar with the establishment of the IDS Life Account F, IZ, JZ, G, H, N,
KZ, LZ, MZ ("Account"), which is a separate account of IDS Life Insurance
Company ("Company") established by the Company's Board of Directors according to
applicable insurance law. I also am familiar with the above-referenced
Registration Statement filed by the Company on behalf of the Account with the
Securities and Exchange Commission.
I have made such examinations of law and examined such documents and records as
in my judgment are necessary and appropriate to enable me to give the following
opinion:
1. The Company is duly incorporated, validly existing and in good standing
under applicable state law and is duly licensed or qualified to do business
in each jurisdiction where it transacts business. The Company has all
corporate powers required to carry on its business and to issue the
contracts.
2. The Account is a validly created and existing separate account of the
Company and is duly authorized to issue the securities registered.
3. The contracts issued by the Company during the past fiscal year, when
offered and sold in accordance with the prospectus contained in the
Registration Statement and in compliance with applicable law, were legally
issued and represent binding obligations of the company in accordance with
their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
Mary Ellyn Minenko
Senior Counsel
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our reports dated February 5, 1998 on the consolidated
financial statements and schedules of IDS Life Insurance Company and our report
dated March 13, 1998 on the financial statements of IDS Life Accounts F, IZ, JZ,
G, H, N, KZ, LZ and MZ in Post Effective Amendment No. 8 to the Registration
Statement (Form N-4 No. 33-52518) and related Prospectus for the registration
of the Employee Benefit Annuity to be offered by IDS Life Insurance Company.
Ernst & Young LLP
Minneapolis, Minnesota
April 20, 1998
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company of New York
We have audited the financial statements of IDS Life Insurance Company of New
York (a wholly owned subsidiary of IDS Life Insurance Company) as of December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997 and have issued our report thereon dated February 5, 1998 (included
elsewhere in this Registration Statement). Our audits also included the
financial statement schedules listed in the index to financial statement
schedules of this Registration Statement. These schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1997
- -----------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -----------------------------------------------------------------------------
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 59,543 $ 59,954 $ 59,543
All other corporate bonds 476,108 503,025 476,108
---------- ----------- ----------------
Total held to maturity 535,651 562,979 535,651
Available for sale:
United States Government and
government agencies and
authorities (b) 293,815 301,506 301,506
States, municipalities and
political subdivisions 104 114 114
All other corporate bonds 289,043 301,956 301,956
---------- ----------- ----------------
Total available for sale 582,962 603,576 603,576
Mortgage loans on real estate 178,826 XXXXXXXXX 178,826
Policy loans 23,349 XXXXXXXXX 23,349
Other investments 970 XXXXXXXXX 970
---------- ----------------
Total investments $ 1,321,758 $XXXXXXXXX $ 1,342,372
========== ================
(a)- Includes mortgage-backed securities with a cost and market value of
$55,853 and $56,011, respectively.
(b)- Includes mortgage-backed securities with a cost and market value of
$293,815 and $301,506, respectively.
(c)- Includes mortgage-backed securities with a cost and market value
of $7,488 and $7,764, respectively.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1997
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other Premium Net Benefits, Amortization Other Premiums
policy policy premiums policy revenue investment claims, of deferred operating written
acquisition benefits, claims income* losses and policy expenses*
cost losses, and settlement acquisition
claims and benefits expenses costs
loss payable
expenses
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $68,386 $964,483 $ - $ 1,848 $ - $ 89,268 $ 495 $ 12,266 $ 4,653 N/A
Life, DI and
Long-term Care
Insurance 58,228 198,213 - 2,165 12,376 17,006 10,969 4,935 5,567 N/A
- -------------------------------------------------------------------------------------------------------------------------
Total $126,614 $1,162,696 $ - $ 4,013 $12,376 $106,274 $11,464 $ 17,201 $10,220 N/A
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Allocations of net investment income and other operating expenses are based on
various assumptions and estimates.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1996
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other Premium Net Benefits, Amortization Other Premiums
policy policy premiums policy revenue investment claims, of deferred operating written
acquisition benefits, claims income* losses and policy expenses*
cost losses, and settlement acquisition
claims and benefits expenses costs
loss payable
expenses
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $67,568 $1,054,954$ - $ 1,055 $ - $ 93,319 $ 80 $ 11,257 $ 3,923 N/A
Life, DI and
Long-term Care
Insurance 51,615 187,616 - 2,100 10,931 16,149 10,835 4,814 5,049 N/A
- -----------------------------------------------------------------------------------------------------------
Total $119,183 $1,242,570$ - $ 3,155 $10,931 $109,468 $10,915 $ 16,071 $ 8,972 N/A
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*Allocations of net investment income and other operating expenses are based on
various assumptions and estimates.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1995
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other Premium Net Benefits, Amortization Other Premiums
policy policy premiums policy revenue investment claims, of deferred operating written
acquisition benefits, claims income* losses and policy expenses*
cost losses, and settlement acquisition
claims and benefits expenses costs
loss payable
expenses
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 65,283 $1,109,167$ - $ 2,222 $ - $ 95,323 $ 171 $ 9,138 $ 6,908 N/A
Life, DI and
Long-term Care
Insurance 44,517 178,952 - 1,422 9,280 15,601 9,689 3,947 566 N/A
- -----------------------------------------------------------------------------------------------------------------
Total $ 109,800 $1,288,119$ - $ 3,644 $ 9,280 $110,924 $ 9,860 $ 13,085 $ 7,474 N/A
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*Allocations of net investment income and other operating expenses are based on
various assumptions and estimates.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- ---------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
Life insurance in force $ 4,209,990 $ 220,798 $ 303,263 $ 4,292,455 7.07%
===================================================================================================
Premiums:
Life insurance & annuities $ 2,822 $ 346 $ -- $ 2,476 0.00%
DI & long-term care insurance 10,658 759 -- 9,899 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 13,480 $ 1,105 $ 0 $ 12,375 0.00%
===================================================================================================
For the year ended
December 31, 1996
Life insurance in force $ 3,707,618 $ 203,963 $ 345,943 $ 3,849,598 8.99%
===================================================================================================
Premiums:
Life insurance & annuities $ 2,634 $ 222 $ -- $ 2,412 0.00%
DI & long-term care insurance 8,651 132 -- 8,519 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 11,285 $ 354 $ 0 $ 10,931 0.00%
===================================================================================================
For the year ended
December 31, 1995
Life insurance in force $ 3,110,745 $ 163,462 $ 392,106 $ 3,339,389 11.74%
===================================================================================================
Premiums:
Life insurance & annuities $ 2,327 $ 185 $ -- $ 2,142 0.00%
DI & long-term care insurance 7,221 83 -- 7,138 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 9,548 $ 268 $ 0 $ 9,280 0.00%
===================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- -----------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
---------------------------------
Balance at Charged to
Description Beginning Charged to Other Accounts-Deductions- Balance at End
of Period Costs & Expenses Describe Describe of Period
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
- ---------------------------
Reserve for Mortgage Loans . $1,300 $ 200 $ 0 $ 0 $1,500
Reserve for Fixed Maturities $ 49 $ 96 $ 0 $ 0 $ 145
For the year ended
December 31, 1996
- ---------------------------
Reserve for Mortgage Loans . $ 445 $ 855 $ 0 $ 0 $1,300
Reserve for Fixed Maturities $ 26 $ 23 $ 0 $ 0 $ 49
For the year ended
December 31, 1995
- ---------------------------
Reserve for Mortgage Loans . $ 445 $ 0 $ 0 $ 0 $ 445
Reserve for Fixed Maturities $ 0 $ 26 $ 0 $ 0 $ 26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 13341177327
<INVESTMENTS-AT-VALUE> 16023525309
<RECEIVABLES> 31571333
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16055096642
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (44108820)
<TOTAL-LIABILITIES> (44108820)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 5548718916
<SHARES-COMMON-PRIOR> 5106216607
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 16010987822
<DIVIDEND-INCOME> 994841429
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (152833981)
<NET-INVESTMENT-INCOME> 842007448
<REALIZED-GAINS-CURRENT> 153951679
<APPREC-INCREASE-CURRENT> 1129893908
<NET-CHANGE-FROM-OPS> 2125853035
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 906679356
<NUMBER-OF-SHARES-REDEEMED> (464177047)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1982267752
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (152833981)
<AVERAGE-NET-ASSETS> 15019853946
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 12876694
<DEBT-CARRYING-VALUE> 9315450
<DEBT-MARKET-VALUE> 9743410
<EQUITIES> 3361
<MORTGAGE> 3618647
<REAL-ESTATE> 102433
<TOTAL-INVEST> 26628256
<CASH> 19686
<RECOVER-REINSURE> 989
<DEFERRED-ACQUISITION> 2479577
<TOTAL-ASSETS> 52974124
<POLICY-LOSSES> 26037036
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 68345
<NOTES-PAYABLE> 0
<COMMON> 3000
0
0
<OTHER-SE> 2862816
<TOTAL-LIABILITY-AND-EQUITY> 52974124
206494
<INVESTMENT-INCOME> 1988389
<INVESTMENT-GAINS> 860
<OTHER-INCOME> 682618
<BENEFITS> 1598123
<UNDERWRITING-AMORTIZATION> 322731
<UNDERWRITING-OTHER> 276596
<INCOME-PRETAX> 680911
<INCOME-TAX> 206664
<INCOME-CONTINUING> 474247
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 474247
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 26387
<PROVISION-CURRENT> 144098
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 143237
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 27248
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as directors of IDS Life Insurance Company on
behalf of the below listed registrants that previously have filed registration
statements and amendments thereto pursuant to the requirements of the Securities
Act of 1933 and the Investment Company Act of 1940 with the Securities and
Exchange Commission:
<TABLE>
<CAPTION>
1933 Act 1940 Act
Reg. Number Reg. Number
<S> <C> <C>
IDS Life Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract (Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity 33-50968 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
Flexible Premium Survivorship Variable Life
Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
</TABLE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko,
Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster, Bruce Kohn and Timothy S.
Meehan or any one of them, as her or his attorney-in-fact and agent, to sign for
her or him in her or his name, place and stead any and all filings, applications
(including applications for exemptive relief), periodic reports, registration
<PAGE>
statements for existing or future products of existing separate accounts (with
all exhibits and other documents required or desirable in connection therewith),
other documents, and amendments thereto and to file such filings, applications,
periodic reports, registration statements, other documents, and amendments
thereto with the Securities and Exchange Commission, and any necessary states,
and grants to any or all of them the full power and authority to do and perform
each and every act required or necessary in connection therewith.
Dated the 19th day of August, 1997.
/s/ David R. Hubers August 15, 1997
- ------------------------------------
David R. Hubers
Director
/s/ Richard W. Kling August 18, 1997
-----------------------------------
Richard W. Kling
Director and President
/s/ Paul F. Kolkman August 19, 1997
- ------------------------------------
Paul F. Kolkman
Director and Executive Vice
President
/s/ James A. Mitchell August 15, 1997
- ------------------------------------
James A. Mitchell
Director, Chairman of the
Board and Chief Executive Officer
/s/ Barry J. Murphy August 14, 1997
- ------------------------------------
Barry J. Murphy
Director and Executive Vice
President, Client Service
/s/ Stuart A. Sedlacek August 19, 1997
- ------------------------------------
Stuart A. Sedlacek
Director and Executive Vice
President, Assured Assets
/s/ Melinda S. Urion August 14, 1997
- ------------------------------------
Melinda S. Urion
Director, Executive Vice
President and Controller
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as principal financial officer and controller,
respectively, of IDS Life Insurance Company on behalf of the below listed
registrants that previously have filed registration statements and amendments
thereto pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 with the Securities and Exchange Commission:
<TABLE>
<CAPTION>
1933 Act 1940 Act
Reg. Number Reg. Number
<S> <C> <C>
IDS Life Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract (Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity 33-50968 N/A
IDS Life Insurance Company
Portfolio Guaranteed Term Annuity 333-42793 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
Flexible Premium Survivorship Variable Life
Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
</TABLE>
<PAGE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko,
Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster, Bruce Kohn and Timothy S.
Meehan or any one of them, as his attorney-in-fact and agent, to sign for him in
his name, place and stead any and all filings, applications (including
applications for exemptive relief), periodic reports, registration statements
for existing or future products of existing separate accounts (with all exhibits
and other documents required or desirable in connection therewith), other
documents, and amendments thereto and to file such filings, applications,
periodic reports, registration statements, other documents, and amendments
thereto with the Securities and Exchange Commission, and any necessary states,
and grants to any or all of them the full power and authority to do and perform
each and every act required or necessary in connection therewith.
Dated the 9th day of April, 1998.
/s/ Jeffrey S. Horton April 8, 1998
- ------------------------------------
Jeffrey S. Horton
Vice President, Treasurer
and Assistant Secretary
/s/ Philip C. Wentzel April 9, 1998
- ------------------------------------
Philip C. Wentzel
Vice President and Controller
