<PAGE> 1
'33 ACT FILE NO. 2-75533
'40 ACT FILE NO. 811-3365
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. 32 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
AMENDMENT NO. 106 [X]
(CHECK APPROPRIATE BOX OR BOXES.)
SECURITY FIRST LIFE SEPARATE ACCOUNT A
(EXACT NAME OF REGISTRANT)
SECURITY FIRST LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
11365 WEST OLYMPIC BOULEVARD, LOS ANGELES, CALIFORNIA 90064
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 312-6100
RICHARD C. PEARSON
PRESIDENT AND GENERAL COUNSEL
SECURITY FIRST LIFE INSURANCE COMPANY
11365 WEST OLYMPIC BOULEVARD, LOS ANGELES, CALIFORNIA 90064
(NAME AND ADDRESS OF AGENT FOR SERVICE)
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE SPACE)
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485
[ ] ON [ DATE ] PURSUANT TO PARAGRAPH (b) OF RULE 485
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a) OF RULE 485
[X] ON MAY 1, 1999 PURSUANT TO PARAGRAPH (a) OF RULE 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
THE COMPANY HAS ELECTED PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940 TO REGISTER AN INDEFINITE NUMBER OF SECURITIES. THE MOST RECENT RULE
24F-2 NOTICE WAS FILED ON ___________, 1999.
<PAGE> 2
SECURITY FIRST LIFE SEPARATE ACCOUNT A
CROSS REFERENCE SHEET
PART A - PROSPECTUS
<TABLE>
<CAPTION>
Item Number in Form N-4 Caption in Prospectus
- ----------------------- ---------------------
<S> <C>
1. Cover Page Cover Page
2. Definition Glossary
3. Synopsis Summary of the Contracts
4. Condensed Financial Information Condensed Financial Information;
Financial Information
5. General Description of Registrant Description of Security First Life
Depositor, and Portfolio Companies Insurance Company, The General
Account, The Separate Account and The
Funds; Voting Rights; Servicing Agent
6. Deductions and Expenses Contract Charges
7. General Description of Variable Description of the Contracts;
Annuity Contracts Accumulation Period; Annuity Benefits
8. Annuity Period Annuity Benefits
9. Death Benefit Death Benefits
10. Purchases and Contract Value Description of the Contracts;
Accumulation Period; Principal
Underwriter
11. Redemptions Accumulation Period
12. Taxes Federal Income Tax Status
13. Legal Proceedings Legal Proceedings
14. Table of Contents of Statement of Table of Contents of Statement of
Additional Information Additional Information
</TABLE>
<PAGE> 3
PART B - STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company; The Separate
Account; The Funds
18. Services Servicing Agent; Safekeeping of
Securities; Independent Public
Accountant; Legal Matters
19. Purchase of Securities Being Offered Purchase of Securities Being Offered
20. Underwriters Distribution of the Contracts
21. Calculation of Yield Quotations of Not Applicable
Money Market Subaccounts
22. Annuity Payments Annuity Payments
23. Financial Statements Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this registration statement.
<PAGE> 4
[FRONT PAGE] PROSPECTUS
May 1, 1999
GROUP FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACTS
issued through
SECURITY FIRST LIFE SEPARATE ACCOUNT A
by
SECURITY FIRST LIFE INSURANCE COMPANY
----------------------------------------------------------------------
This Prospectus gives you important information about the group flexible payment
variable annuity contracts issued through Security First Life Separate Account A
by Security First Life Insurance Company (the "Contracts"). Please read it
carefully before you invest and keep it for future reference. The Contracts
provide annuity benefits through distributions made from certain retirement
plans that qualify for special Federal income tax treatment and from employer
deferred compensation plans that qualify under provisions of Section 457 of the
Internal Revenue Code of 1986 ("the Plans").
You decide how to allocate your money among the available investment choices.
Your payments will be allocated to Separate Account A (the "Separate Account").
The Separate Account, in turn, invests in the following underlying mutual funds:
SECURITY FIRST TRUST
Bond Series
T. Rowe Price Growth & Income Series
<PAGE> 5
VARIABLE INSURANCE PRODUCTS FUND
Money Market Portfolio
Growth Portfolio
VARIABLE INSURANCE PRODUCT FUND II
Asset Manager Portfolio
Index 500 Portfolio
T. ROWE PRICE GROWTH STOCK FUND
T. ROWE PRICE INTERNATIONAL STOCK FUND
You can choose any combination of these investment choices. Your Participant's
Account will vary daily to reflect the investment experience of the funding
options selected. These mutual funds are described in detail in the fund
prospectuses that are attached to attached to or delivered with this Prospectus.
Please read these prospectuses carefully before you invest. This Prospectus is
not valid unless accompanied by the mutual fund prospectuses.
For more information:
If you would like more information about the Contracts, you can obtain a copy of
the Statement of Additional Information (SAI) dated May 1, 1999. The SAI is
legally considered a part of this Prospectus as though it were included in the
Prospectus. The Table of Contents of the SAI appears on page ____ of the
Prospectus. To request a free copy of the SAI or to ask questions, write or
call:
Security First Life Insurance Company
P.O. Box 92193
Los Angeles, California 90009
Phone: (800) 284-4536
The Securities and Exchange Commission ("SEC") has a website
(http://www.sec.gov) which you may visit to view this Prospectus, the SAI, or
additional material that also is legally considered a part of this Prospectus,
as well as other information.
2
<PAGE> 6
The SEC has not approved or disapproved these securities nor determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
[Side Bar: An investment in any of these variable annuities involves investment
risk. You could lose money you invest. The Contracts and the mutual funds are:
- not bank deposits or obligations
- not federally insured or guaranteed
- not endorsed by any bank or government agency
- not guaranteed to achieve their investment objective]
3
<PAGE> 7
TABLE OF CONTENTS
Page
Glossary
Summary of the Contracts
Fee Tables and Examples
Condensed Financial Information
Financial Information
Description of Security First Life Insurance Company, The General Account
The Separate Account, The Funds and Service Providers
The Insurance Company
The General Account
The Separate Account
The Funds
Principal Underwriter
Servicing Agent
Custodian
Contract Charges
Administration Fee
Premium Taxes
Surrender Charges
Transaction Charges
Mortality and Expense Risk Charge
Federal, State and Local Taxes
Free Look Period
Description of the Contracts
General
Purchase Payments
Transfers to Another Contract
Transfers
Modification of the Contracts
Accumulation Period
Crediting Accumulation Units in the Separate Account
Surrender from the Separate Account
Account Statements
Annuity Benefits
Variable Annuity Payments
Election of Annuity Date and Form of Annuity
Frequency of Payment
Level Payments Varying Annually
Annuity Unit Values
Death Benefits
Death Before the Annuity Date
4
<PAGE> 8
Death After the Annuity Date
Federal Tax Considerations
General Taxation of Annuities
Qualified Contracts
Withholding
Voting Rights
Year 2000 Issue
Legal Proceedings
Additional Information
Table of Contents of Statement of Additional Information
Security First Life does not intend to offer the Contracts anywhere or to anyone
to whom they may not lawfully be offered or sold. Security First Life has not
authorized any information or representations about the Contracts other than the
information in this Prospectus, the attached prospectuses, or supplements to the
prospectuses or any supplemental sales material Security First Life authorizes.
5
<PAGE> 9
GLOSSARY
These terms have the following meanings when used in this Prospectus:
ACCUMULATION UNIT - A measuring unit used to determine the value of your
interest in a Separate Account Series under a Contract at any time before
Annuity payments commence.
ANNUITANT - The person on whose life Annuity payments under a Contract are
based.
ANNUITY - A series of income payments made to an Annuitant for a defined period
of time.
ANNUITIZATION or ANNUITY DATE - The date on which Annuity payments begin.
ANNUITY UNIT - A measuring unit used to determine the amount of Variable Annuity
payments based on a Separate Account Series under a Contract after such payments
have commenced.
ASSUMED INVESTMENT RETURN - The investment rate selected by the Annuitant for
use in determining the Variable Annuity payments.
BENEFICIARY - The person who has the right to a Death Benefit upon your death.
BUSINESS DAY - Each Monday through Friday except for days the New York Stock
Exchange is not open for trading.
CERTIFICATE - The form you are given which describes your rights under the
Contract. No Certificates are issued for certain deferred compensation or
qualified retirement plans.
CERTIFICATE DATE - The date you are issued a Certificate. If you are not issued
a Certificate, this is the date when your Account is established.
CERTIFICATE YEAR - The 12 month period which begins on your Certificate Date and
on each anniversary of this date.
CONTRACT - The agreement between the group contract holder and Security First
Life covering your rights.
CONTRACT DATE - The date the Contract was issued.
6
<PAGE> 10
FIXED ANNUITY - An Annuity providing guaranteed level payments. These payments
are not based upon the investment experience of the Separate Account.
FREE LOOK PERIOD - The 20-day period after the Contract is first received by the
Owner. During this time period, the Contract may be canceled for a full refund
of all Purchase Payments (or the greater of Purchase Payments or the value of
the Participant's Account).
FUND - A diversified, open-end management investment company, or series thereof,
registered under the Investment Company Act of 1940 ("1940 Act") which serves as
the underlying investment medium for a Series in the Separate Account.
GENERAL ACCOUNT - All assets of Security First Life other than those in the
Separate Account or any of its other segregated asset accounts.
NORMAL ANNUITY DATE - The first day of the month on or before the date on which
a distribution must begin under the terms of the Plan to which the Contract is
issued, but in no event later than the month in which the participant attains
age 85.
OWNER - The person who has title to the Contract.
PARTICIPANT - You, the person who makes Purchase Payments, or the person for
whom Purchase Payments are made.
PARTICIPANT'S ACCOUNT - The sum of the values of all Accumulated Units credited
for you under the Contract.
PLAN(S) - The qualified plan or deferred compensation plan for which the
Contract is issued.
PURCHASE PAYMENT - The amounts paid by or for you to Security First Life in
order to provide benefits under the Contract.
SEPARATE ACCOUNT - The segregated asset account entitled "Security First Life
Separate Account A" which has been established by Security First Life under
Delaware law to receive and invest amounts allocated by your and by other
contract owners and to provide Variable Annuity benefits under the Contracts.
The Separate Account is registered as a unit investment trust under the 1940
Act.
SERIES - The Accumulation Unit values and Annuity Unit values maintained
separately for each Fund whose securities are owned by the Separate Account.
7
<PAGE> 11
SURRENDER CHARGE - A percentage charge which is deducted when you fully or
partially surrender. The amount varies depending on how long Purchase Payments
have been with Security First Life.
VALUATION DATE - Any Business Day used by the Separate Account to determine the
value of part or all of its assets for purposes of determining Accumulation and
Annuity Unit values for the Contract. Accumulation Unit values will be
determined each Business Day. There will be one Valuation Date in each calendar
week for Annuity Unit values. Security First Life will establish the Valuation
Date at its discretion, but until notice to the contrary is given, that date
will be the last Business Day in a week.
VALUATION PERIOD - The period of time from one Valuation Date through the next
Valuation Date.
VARIABLE ANNUITY - An Annuity providing payments that will vary annually in
accordance with the net investment experience of the applicable Separate Account
Series.
8
<PAGE> 12
SUMMARY OF THE CONTRACTS
The Contracts
The Contract may be offered to Qualified Plans such as:
- Section 457 deferred compensation plans
- Section 401 pension and profit sharing plans
[Side Bar: Please see the section "Qualified Contracts"
on page ____ for more information.]
Purchase Payments
Purchase Payments under the Contracts are made to the Separate Account. The
minimum Purchase Payment is $20, with an annual minimum of $240. There is no
initial sales charge; however, the charges and deductions described under
"Contract Charges" on page ___ will be deducted from the Participant's Account.
These charges include an administrative fee that is $9.50 plus $2.50 for each
Series in which you invest. This amount is deducted from the Separate Account on
a pro rata basis on the anniversary of the Certificate Date until Annuitization.
You can transfer amounts allocated to the Separate Account between any of the
mutual fund investment choices, at any time and as many times as you choose. The
minimum transfer is the lesser of $500 or the balance in a Series.
[Side Bar: Please see "Transfers" on page ____ for more information.]
Separate Account
Purchase Payments allocated to the Separate Account are invested at net asset
value in Accumulation Units in one or more of eight Series, each of which
invests in one of the following eight Funds:
9
<PAGE> 13
<TABLE>
<CAPTION>
Funds Advisers/Subadvisers
- ---------------------------------------------------- -------------------------------------
<S> <C>
SECURITY FIRST TRUST Security First Investment
Management Corporation; Neuberger &
Berman, LLC (subadviser)
Bond Series Security First Investment
Management Corporation; T. Rowe
Price and Associates, Inc.
(subadviser)
T. Rowe Price Growth & Income Series Fidelity Management & Research
Company (FMR)
VARIABLE INSURANCE PRODUCTS FUND FMR
Money Market Portfolio FMR
Growth Portfolio FMR
VARIABLE INSURANCE PRODUCTS FUND II FMR
Asset Manager Portfolio FMR
Index 500 Portfolio FMR
T. ROWE PRICE GROWTH STOCK FUND T. Rowe Price and Associates, Inc.
T. ROWE PRICE INTERNATIONAL STOCK FUND T. Rowe Price - Fleming
International, Inc.
</TABLE>
[Side Bar: Please see "The Separate Account" on page ____ and "The Funds" on
page ____ for more information.]
Charges and Deductions
The following fees and expenses apply to your Contract:
Fee or expense Amount of fee
Daily deductions
- Mortality and Expense risks .002438%
(.89% per year)
Surrender charge (contingent deferred sales charge)
- Deducted if you request a full or 5% of Purchase Payment
partial withdrawal of Purchase and amounts credited to
Payments from the it.
Separate Account within the first six
Certificate Years. No charge will be
deducted for surrenders as a result of
the following under a Plan:
10
<PAGE> 14
- death
- disability
- retirement
- hardship
Transaction Charges
A charge of $10 may be deducted for:
- A transfer from any Series; or
- A full or partial surrender (the charge will be no more than
2% of the amount of the surrender)
Side bar: Please see "Transaction Charges" on page ____ and "Transfers" on page
___ for more information.
Fee or expense Amount of fee
Premium Taxes
- Payable to a state or government 0% - 2.35%
agency with respect to your Contract. (3.50% in Nevada)
It may be deducted on or after the date
the tax is incurred.
Currently, Security First Life
deducts these taxes upon
annuitization.
[Side Bar: Please see "Charges and Deductions" on page ___ for more
information.]
Free Look Period
An Owner may cancel the Contract within 20 days after receipt (or longer
depending on state law) for a full refund of all Purchase Payments (or the
greater of Purchase Payments or the Participant's Account in some states).
[Side Bar: Please see "Free Look Period" on page ____ for more information.]
11
<PAGE> 15
Variable Annuity Payments
You select the Annuity Date, an Annuity payment option and an assumed investment
return. You may change any of your selections before your Annuity Date. Your
monthly Annuity payments will start on the Annuity Date and will vary from year
to year based on a comparison of the assumed investment returns you selected
with the actual investment experience of the Series in which the Participant's
Account is invested.
If your monthly payments from a particular Series are less than $50, Security
First Life may change the frequency of your payments so that each payment will
be at least $50 from that Series.
Surrender
You may surrender all or part of the Participant's Account before the Annuity
Date. You may not make a partial withdrawal if:
- it would cause your interest in any Series to fall
below $500 (unless you are surrendering your entire
interest in a Series
However, if you are withdrawing the entire amount allocated to a Series, these
restrictions do not apply.
You may be assessed a surrender charge and a transaction charge. In addition,
any earnings surrendered will be taxed as ordinary income and may be subject to
a penalty tax under the Internal Revenue Code. Certain restrictions apply for
withdrawals from qualified Contracts.
[Side Bar: Please see "Surrender Charge" on page ___ and "Federal Tax
Considerations" on page ___ for more information.
Death Benefit
One of the insurance guarantees we provide you under the Contract is that your
Beneficiary(ies) will be protected against market downturns. You name your
Beneficiary(ies). If you die before attaining age 65 and prior to the Annuity
Date, the amount of any lump sum settlement will be the greater of:
- the total of all Purchase Payments less any partial
withdrawals; or
- the value of the Participant's Account at settlement
12
<PAGE> 16
Otherwise, the death benefit will be equal to the Participant's Account.
Your Beneficiar(ies) may elect to receive the death benefit as a lump sum or an
annuity.
[Side Bar: Please see "Death Benefits" on page ____ for more information.]
FEE TABLE AND EXAMPLES
The purpose of these fee tables and examples is to assist you in understanding
the various costs and expenses that you will bear, directly or indirectly, under
your Contract.
Expense Data
The table reflects expenses of the Separate Account as well as expenses of the
underlying Funds that make up the investment options for the Separate Account.
In addition to the expenses listed below, premium taxes may be applicable.*
Please see the Fund prospectuses for a more complete description of the various
costs and expenses of the Funds.
* Under State law, premium taxes may be deducted from each Purchase Payment or
upon annuitization. At this time Security First Life deducts the premium tax
only from amounts annuitized.
13
<PAGE> 17
FEE TABLES
Your Transaction Expenses
<TABLE>
<CAPTION>
Years Percentage
----- ----------
<S> <C> <C>
Surrender Charge (Deferred Sales During first 5%
Charge) (as a percentage six
of amounts accumulated with respect to Certificate
a purchase payment) Years
</TABLE>
<TABLE>
<CAPTION>
Minimum Maximum
- --------------------------------- ------------------------------------- ----------------
<S> <C> <C>
Administration Charges (per year) $12.00 $29.50
- --------------------------------- ------------------------------------- ----------------
Transaction Charges $10 per transfer from a Series or
the greater of 2% of amount
surrendered or $10 per surrender
</TABLE>
Separate Account Expenses
(As a percentage of average Participant's Account.
Deducted daily from the Separate Account.)
Mortality and Expense Risk Fees .89% per year
Total Separate Account Annual .89% per year
Expenses
Fund Annual Expenses
(As a percentage of average net assets)
(Net of reimbursement)
<TABLE>
<CAPTION>
T. Rowe Price Asset
Growth & Money Market Manager Index 500
Bond Series Income Series Portfolio Growth Portfolio Portfolio Portfolio
- -------- ----------------------- ----------------- ---------------- -------------- ------------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
(a) Management Fee % % % % % %
- -------- ----------------------- ----------------- ---------------- -------------- ------------------ ------------- ---------------
(b) Other Expenses % % % % % %
- -------- ----------------------- ----------------- ---------------- -------------- ------------------ ------------- ---------------
(c) Total Annual Expenses % % % % % %
- -------- ----------------------- ----------------- ---------------- -------------- ------------------ ------------- ---------------
</TABLE>
14
<PAGE> 18
<TABLE>
<CAPTION>
Growth Stock International
Fund Stock Fund
- ------------ ------------------------ ---------------- ----------------
<S> <C> <C> <C>
(a) Management Fee % %
- ------------ ------------------------ ---------------- ----------------
(b) Other Expenses % %
- ------------ ------------------------ ---------------- ----------------
(c) Total Annual Expenses % %
- ------------ ------------------------ ---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
Examples
CONDITIONS TIME PERIODS
SEPARATE You would pay the following expenses
ACCOUNT on a $1,000 investment assuming 5% annual 1 Year 3 Years 5 Years 10 Years
SERIES return on assets:
- ------------------- ---------------------------------------------- ------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bond Series (a) upon surrender at the end of the stated (a)
time period
(b)
(b) if the Contract WAS NOT surrendered
- ------------------- ---------------------------------------------- ------ ---------- ---------- ---------- ----------
T. Rowe Price SAME (a)
Growth & Income
Series (b)
- ------------------- ---------------------------------------------- ------ ---------- ---------- ---------- ----------
Money Market SAME (a)
Portfolio
(b)
- ------------------- ---------------------------------------------- ------ ---------- ---------- ---------- ----------
Growth Portfolio SAME (a)
(b)
- ------------------- ---------------------------------------------- ------ ---------- ---------- ---------- ----------
Asset Manager SAME (a)
Portfolio
(b)
- ------------------- ---------------------------------------------- ------ ---------- ---------- ---------- ----------
Index 500 SAME (a)
Portfolio
(b)
- ------------------- ---------------------------------------------- ------ ---------- ---------- ---------- ----------
Growth Stock Fund SAME (a)
(b)
- ------------------- ---------------------------------------------- ------ ---------- ---------- ---------- ----------
International SAME (a)
Stock Fund
(b)
</TABLE>
15
<PAGE> 19
EXPLANATION OF FEE TABLE AND EXAMPLES
1. The purpose of these tables and examples is to assist you in understanding
the various costs and expenses that you will bear directly or indirectly. The
table reflects expenses of the Separate Account as well as the underlying Funds.
For additional information see "Contract Charges," beginning on page ____.
2. The investment adviser to the Index 500 Portfolio voluntarily reimbursed
certain expenses of the Portfolio. If there had been no reimbursement, total
expenses would have been ____% (see the Variable Insurance Products Fund II
prospectus for more information).
3. The examples assume that there were no transactions that would result in the
imposition of the Transfer Charge. Premium taxes are not reflected. Presently,
premium taxes ranging from 0% to 2.35% (3.5% in Nevada) may be deducted from
each Purchase Payment, or upon Annuitization.
4. For purposes of the amounts reported in the examples, annual administrative
charges are reflected by dividing the total amount of contract fees collected
during the year by the total average net assets of the Separate Account
respecting the Contracts.
5. NEITHER THE TABLE NOR THE EXAMPLES ARE REPRESENTATIONS OF FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
16
<PAGE> 20
CONDENSED FINANCIAL INFORMATION
This table sets forth condensed financial information on accumulation units
respecting Contracts issued under this prospectus through the Separate Account.
This information is derived from the financial statements of the Separate
Account which have been audited by Deloitte & Touche, the Separate Account's
independent auditors. The information should be read in conjunction with the
financial statements, related notes and other financial information in the
Statement of Additional Information.
<TABLE>
<CAPTION>
Twelve Twelve Twelve Twelve Twelve Five
Months Months Months Months Months Months
Ended Ended Ended Ended Ended Ended
7/31/89 7/31/90 7/31/91 7/31/92 7/31/93 12/31/93
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Separate Account Series
- -----------------------
Series B (Bond Series)
Beg. AUV $.................... 5.21 5.77 5.90 6.27 7.07 7.66
End AUV $.................... 5.77 5.90 6.27 7.07 7.66 7.78
End No. Non-Qualified......... 14,195 35,914 29,408 34,855 45,488 45,035
End No. Qualified AUs......... 60,665 129,756 167,461 165,862 227,551 255,421
Series G (T. Rowe Price
Growth and Income Series)
Beg. AUV $.................... 5.23 6.96 6.26 6.84 7.70 8.27
End AUV $.................... 6.96 6.26 6.84 7.70 8.27 8.70
End No. Non-Qualified AUs..... 122,310 152,193 103,701 121,098 157,339 170,454
End No. Qualified AUs......... 120,735 396,570 598,731 826,262 1,300,789 1,510,826
Series T (T. Rowe Price
Growth Fund)
Beg. AUV $.................... 5.16 6.18 6.65 7.07 7.88 8.54
End AUV $.................... 6.18 6.65 7.07 7.88 8.54 9.52
End No. Qualified AUs......... 176,573 333,949 533,793 785,088 1,105,462 1,241,350
Series I (T. Rowe Price
International Stock Fund)
Beg. AUV $ (5/9/94)...........
End AUV $....................
End No. Qualified AUs.........
Series FA (Asset Manager)
Beg. AUV $ (5/9/94)...........
End AUV $....................
End No. Qualified AUs.........
Series FG (Growth Portfolio)
Beg. AUV $ (5/9/94)...........
End AUV $....................
End No. Qualified AUs.........
Series FI (Index 500)
Beg. AUV $ (5/12/94)...........
End AUV $....................
End No. Qualified AUs.........
Series FM (Money Market)
Beg. AUV $ (5/16/94)...........
End AUV $....................
End No. Qualified AUs.........
Yield.........................
Twelve Twelve Twelve Twelve Twelve
Months Months Months Months Months
Ended Ended Ended Ended Ended
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
--------- --------- --------- --------- ---------
Separate Account Series
- -----------------------
Series B (Bond Series)
Beg. AUV $.................... 7.78 15.77 18.25 18.60
End AUV $.................... 15.77(1) 18.25 18.60 20.11
End No. Non-Qualified......... -- -- -- --
End No. Qualified AUS......... 105,708 119,054 122,848 129,956
Series G (T. Rowe Price
Growth and Income Series)
Beg. AUV $.................... 8.70 27.17 35.31 42.57
End AUV $.................... 27.17(1) 35.31 42.57 53.68
End No. Non-Qualified AUs..... -- -- -- --
End No. Qualified AUs......... 533,346 645,594 766,974 938,183
Series T (T. Rowe Price
Growth Fund)
Beg. AUV $.................... 9.52 23.44 30.44 36.72
End AUV $.................... 23.44(1) 30.44 36.72 46.06
End No. Qualified AUS......... 687,168 824,050 933,145 572,030
Series I (T. Rowe Price
International Stock Fund) 6.67 6.74 7.45 8.57
Beg. AUV $ (5/9/94)........... 6.74 7.45 8.57 8.72
End AUV $.................... 252,365 525,687 790,678 960,495
End No. Qualified AUS.........
Series FA (Asset Manager)
Beg. AUV $ (5/9/94)........... 5.04 5.00 5.79 6.58
End AUV $.................... 5.00 5.79 6.58 7.87
End No. Qualified AUS......... 471,610 919,120 1,258,544 1,498,255
Series FG (Growth Portfolio)
Beg. AUV $ (5/9/94)........... 4.86 5.10 6.84 7.77
End AUV $.................... 5.10 6.84 7.77 9.51
End No. Qualified AUS......... 252,355 905,864 1,815,747 2,235,146
Series FI (Index 500)
Beg. AUV $ (5/12/94)........... 4.80 5.03 6.83 8.32
End AUV $.................... 5.03 6.83 8.32 10.95
End No. Qualified AUS......... 27,277 259,254 645,826 1,239,744
Series FM (Money Market)
Beg. AUV $ (5/16/94)........... 5.00 5.16 5.42 5.66
End AUV $.................... 5.16 5.42 5.66 5.92
End No. Qualified AUS......... 474,216 561,677 587,519 822,667
Yield......................... 4.81% 4.40% 4.36% 4.71%
- ---------------------------------------------------------------------------------------
</TABLE>
AUV--Accumulation Unit Value
AUs--Accumulation Units
(1) During 1994 the mortality and expense risk fees were reduced from 1.25% to
.89%. As a result of this change, unit values and units were converted in
order to provide administrative efficiencies. There was no impact on unit
values as a result of this conversion.
<PAGE> 21
FINANCIAL INFORMATION
Financial Statements of the Separate Account and Security First Life are
contained in the Statement of Additional Information. Please see the first page
of this Prospectus for information on how to obtain a copy of the Statement.
DESCRIPTION OF SECURITY FIRST LIFE INSURANCE COMPANY, THE GENERAL ACCOUNT, THE
SEPARATE ACCOUNT, THE FUNDS AND SERVICE PROVIDERS
18
<PAGE> 22
Security First Life Insurance Company
Security First Life is a stock life insurance company founded in 1960 and
organized under the laws of the State of Delaware. Its principal executive
offices are located at 11365 West Olympic Boulevard, Los Angeles, California
90064. Security First Life is authorized to transact the business of life
insurance, including annuities, and is currently licensed to do business in 49
states and the District of Columbia. Security First Life is a wholly-owned
subsidiary of Security First Group, Inc. ("SFG"). SFG in turn is a wholly-owned
subsidiary of Metropolitan Life Insurance Company ("MetLife"), a New York mutual
life insurance company.
MetLife is one of the world's largest financial services companies and the
second largest life insurance company in the United States in terms of total
assets, with approximately $___ billion worth of assets under management as of
December 31, 1998. As a mutual insurance company, MetLife has no shareholders.
However, MetLife announced in November 1998 its intention to convert to a stock
company. The "demutualization" plan will be subject to approval by the board of
directors, the State of New York Insurance Department and policyholders. As of
April 30, 1999, MetLife does not know the details of the plan or when or if it
will take effect.
The General Account
All of the assets of Security First Life, except for those in the Separate
Account and other segregated asset accounts, make up the assets of the General
Account. Security First Life has sole discretion to invest the assets of the
General Account, subject to applicable law. The General Account provisions of
the Contract are not intended to be offered by this Prospectus. Please see the
terms of the Contract and your actual Certificate for more information.
The Separate Account
Security First Life established the Separate Account on May 29, 1980 in
accordance with the Delaware Insurance Code. The purpose of the Separate Account
is to hold the variable assets that underlie the Security First Next Contracts
and some other variable annuity contracts that Security First Life offers. The
Separate Account is registered with the SEC as a unit investment trust under the
Investment Company Act of 1940.
The assets of the Separate Account are held in Security First Life's name on
behalf of the Separate Account and legally belong to Security First Life.
Although the Separate Account, and each of the Series that make up the Separate
Account, are considered as part of Security First Life's general business, the
Separate Account's
19
<PAGE> 23
assets are solely for the benefit of those who invest in the Separate Account
and no one else, including Security First Life's creditors. All the income,
gains and losses (realized and unrealized) resulting from these assets are
credited to or charged against the Contracts issued from this Separate Account
without regard to Security First Life's other business. Under Delaware law and
the terms of your Contract, the assets of the Separate Account will not be
responsible for liabilities arising out of Security First Life's other business.
Furthermore, Security First Life is obligated to pay all money it owes under the
Contracts even if that amount exceeds the assets in the Separate Account.
However, the amount of these payments is guaranteed only to the extent of the
level amount calculated at the beginning of each annuity year. (Please see
"Annuity Benefits - Level Payments Varying Annually" on page ___ for more
information.)
The Separate Account is divided into a number of investment Series of
Accumulation and Annuity Units. Eight of these Series are available under the
Contracts as investment choices. Each Series invests in the shares of only one
of the Funds.
The Funds
Your investment choices are:
<TABLE>
<CAPTION>
Fund Investment Objective Investment Adviser
- ------------------------------- ------------------------------------------- -------------------------
<S> <C> <C>
SFT Bond Series The Fund seeks to achieve the Security First Investment
highest investment income Management Corporation;
over the long-term consistent Neuberger & Berman, LLC
with the preservation of (subadviser)
principal through investment primarily
in marketable debt instruments. Growth
of principal and income will also be
objectives with respect to up to 10% of
the Bond Series' assets which may be
invested in common and preferred stocks.
- ------------------------------- ------------------------------------------- -------------------------
SFT T. Rowe Price Growth & The Fund seeks capital growth Security First Investment
Income Series and a reasonable level of Management Corporation; T.
current income. While this Rowe Price and Associates,
Series will generally invest Inc. (subadviser)
in common stocks and other equities, it
may, depending on economic conditions,
reduce such investments and substitute
fixed-income instruments.
- ------------------------------- ------------------------------------------- -------------------------
VIP Money Market Portfolio The Fund seeks to obtain as Fidelity Management &
high a level of current Research Company
income as is consistent with
preserving capital and
providing liquidity. The
Portfolio will invest only in
high quality U.S. dollar
denominated money market
securities of domestic and
foreign issuers.
</TABLE>
20
<PAGE> 24
<TABLE>
<S> <C> <C>
- ------------------------------- ------------------------------------------- -------------------------
VIP Growth Portfolio The Fund seeks to achieve Fidelity Management &
capital appreciation normally Research Company
through the purchase of common stocks
(although the portfolio's investments
are not restricted to any one type of
security). Capital appreciation may also
be found in other types of securities,
including bonds and preferred stocks.
- ------------------------------- ------------------------------------------- -------------------------
VIP II Asset Manager Portfolio The Fund seeks high total Fidelity Management &
return with reduced risk over Research Company
the long-term by allocating its assets
among stocks, bonds, and short-term,
fixed income instruments.
- ------------------------------- ------------------------------------------- -------------------------
VIP II Index 500 Portfolio The Fund seeks investment Fidelity Management &
results that correspond to Research Company
the total return (i.e., the
combination of capital
changes and income) of common
stocks publicly traded in the
United States, as represented
by the Standard & Poor's 500
Composite Stock Price Index
while keeping transaction
costs and other expenses low.
- ------------------------------- ------------------------------------------- -------------------------
Growth Stock Fund The Fund seeks long-term T. Rowe Price and
growth of capital through Associates, Inc.
investing primarily in common
stocks of growth companies.
- ------------------------------- ------------------------------------------- -------------------------
International Stock Fund The Fund seeks total return T. Rowe Price - Fleming
on its assets from long-term International, Inc.
growth of capital and income,
principally through
investments in common stocks
of established non-U.S.
companies. Investments may
be made solely for capital
appreciation or solely for
income or any combination of
both for the purpose of
achieving a higher overall
return.
</TABLE>
Each Series buys and sells shares of the corresponding mutual fund. These Funds
invest in stocks, bonds and other investments as indicated above. All dividends
declared by the Funds are earned by the Separate Account and reinvested.
Therefore, no dividends are distributed to you under the Contract. Instead,
dividends generally increase the Accumulation or Annuity Unit Value. You pay no
transaction expenses (i.e., front-end or back-end load sales charges) as a
result of the Separate Account's purchase or sale of these mutual fund shares.
Certain of the Funds listed above are available only by purchasing annuities and
life insurance policies offered by Security First Life or by other insurance
companies and are never sold directly to the public. The shares of each Fund are
purchased, without sales charge, for the corresponding Series at the next net
asset value per share determined by a Fund after your payment is received by
Security First Life. Fund shares will be redeemed by the Series to the extent
necessary for Security First Life to make annuity or other payments under the
Contracts.
21
<PAGE> 25
Each of the Funds is a portfolio or series of an open-end management investment
company registered with the SEC under the Investment Company Act of 1940.
Registration does not involve supervision by the SEC of the investment or
investment policies of the Funds. There can be no guarantee that a Fund will
meet its investment objectives.
The Funds are available to other registered separate accounts offering variable
annuity and variable life products in addition to Security First Life's Separate
Account (except for the T. Rowe Price Growth Stock Fund and T. Rowe Price
International Stock Fund). In the future, a conflict may develop between one or
more separate account invested in the same Fund. The conflict could develop due
to change in the law affecting variable annuity products or from differences in
voting instructions of owners of the different separate accounts. Security First
Life monitors the Series for this type of conflict and will remedy the situation
if such a conflict develops. This may include the withdrawal of amounts invested
in the Funds by you and other Certificate holders.
[Side Bar: While the Series and their comparably named Funds may have names,
investment objectives and management which are identical or similar to publicly
available mutual funds, these are not those mutual funds. The Funds most likely
will not have the same performance experience as any publicly available mutual
fund.]
22
<PAGE> 26
Substitution of Fund shares
Security First Life may substitute shares of another fund for Fund shares
directly purchased and apply future Purchase Payments under the Contracts to the
purchase of these substituted shares if the shares of a Fund are no longer
available or further investment in such shares is determined to be inappropriate
by Security First Life's management in view of the purposes of the Contracts.
However, no substitution is allowed unless a majority of the Owners entitled to
vote (those who have invested in the Series) and the SEC approve the
substitution under the 1940 Act.
[Side Bar: The Funds are more fully described in the Fund prospectuses and their
Statements of Additional Information. The prospectuses are attached to or
accompanied by this Prospectus. The Statements of Additional Information are
available upon your request.]
Principal Underwriter
Security First Financial, Inc., 11365 West Olympic Boulevard, Los Angeles,
California 90064, a broker-dealer registered under the Securities Exchange Act
of 1934 and a member of the National Association of Securities Dealers, Inc., is
the principal underwriter for the Contracts. Security First Financial, Inc. is a
Delaware corporation and a subsidiary of SFG.
Servicing Agent
SFG provides Security First Life with administrative services, including: office
space, supplies, utilities, office equipment, travel expenses and periodic
reports.
Custodian
Security First Life is the custodian of the assets of the Separate Account. The
assets of each Series will be physically segregated by Security First Life and
held separate from the assets of the other Series and of any other firm, person
or corporation. The assets of the Separate Account are further protected by
fidelity bonds which cover all of Security First Life's officers and employees.
23
<PAGE> 27
CONTRACT CHARGES
Security First Life deducts the charges described below. Security First Life
represents that the charges are reasonable for the service and benefits
provided, costs and expenses incurred, and risks assumed under the Contracts.
Services and benefits Security First Life provides include:
- the ability for you to make withdrawals and
surrenders under the Contracts;
- the death benefit paid at your death;
- the available funding options and related programs;
- administration of the annuity options available under
the Contracts; and
- the distribution of various reports to Participants
and the owners of the Contract.
Costs and expenses incurred by Security First Life include:
- losses associated with various overhead and other
expenses from providing the services and benefits
under the Contracts;
- sales and marketing expenses; and
- other costs of doing business.
Risks assumed by Security First Life include:
- risks that Annuitants may live longer than estimated
when the annuity factors under the Contracts were
established;
- that the amount of the death benefit will be greater
than the Participant's Account; and
- that the costs of providing the services and benefits
under the contracts will exceed the charges deducted.
Security First Life may also deduct a charge for taxes, if applicable.
Unless otherwise specified, charges are deducted proportionately from all
funding options in which you are invested.
24
<PAGE> 28
These charges may not be changed under the Contract, and Security First Life may
profit from these charges in the aggregate.
Premium Taxes
Some states assess premium taxes on the Purchase Payments you make. Generally,
premium taxes range from 0% to 2.35% (3.50% in Nevada), depending on the state.
The Contracts permit Security First Life to deduct any applicable premium taxes
from the Participant's Account at or after the time they are incurred. Security
First Life currently does not deduct for these taxes at the time you make a
Purchase Payment. However, Security First Life will deduct the total amount of
premium taxes, if any, from the Participant's Account when you elect to begin
receiving Annuity payments (Annuitization).
Surrender Charge
No sales charge is deducted from any Purchase Payment. During the accumulation
phase, you can withdraw part or all of the Participant's Account subject to any
withdrawal limitation under the Plan to which the Contract is issued. Full or
partial surrender during the first six Certificate Years will be subject to a
surrender charge equal to 5% of the amount surrendered, plus any transaction
fee. However, no surrender charge will be made in the event of a withdrawal
under a Plan for:
- death
- disability
- retirement
- hardship
In addition, no surrender charge will be made from amounts transferred to
another group annuity contract issued by Security First Life to the Owner in
accordance with the terms of a Plan.
Should you have an existing annuity account with Security First Life under a
group annuity contract issued to the Owner in accordance with the terms of the
Plan and should the date of issuance of a certificate under such other annuity
precede the Certificate Date (the "Alternate Certificate Date), then the
Certificate Date used in the determination of surrender charges under the
Contract will be the Alternate Certificate Date.
In no event will a surrender charge imposed on Accumulation Units be more than
9% of Purchase Payments allocated to the Separate Account.
25
<PAGE> 29
Example of application of surrender charge. Assume your Participant's Account is
$100,000 at the beginning of Certificate Year 2 and you withdraw $30,000. You
would pay a surrender charge of $1,500.
If you make a partial surrender, you will receive a check in the amount
requested. The surrender charge, if any, will be deducted from the Series from
which the partial surrender was taken. If the amount in a particular Series is
completely surrendered, the charge will be taken from the remaining Series in
which you have an interest.
[Side Bar: The surrender charge covers marketing expenses for the sale of
Certificates, such as commissions to sales personnel and other promotion and
acquisition expenses.]
Administrative Fees
At the end of each Certificate Year, Security First Life will deduct an
administrative fee of up to $9.50 plus an amount up to $2.50 for each Series in
which you invest. As a result, these charges can range from $12.00 to $29.50.
The fee will be prorated among Series in your account.
26
<PAGE> 30
Contract administration expenses include:
- the cost of policy issuance
- rent
- stationery and postage
- telephone and travel expenses
- salaries
- legal, administrative, actuarial and accounting fees
- periodic reports
- office equipment, and custodial expenses
Transaction Charges
A transaction charge of up to $10 may be deducted from your account for each
transfer from a Series. (See "Transfers," page ___.) Similarly, in the case of a
surrender, a transaction charge may be deducted from your account in an amount
of the lesser of $10 or 2% of the amount surrendered.
Mortality and Expense Risk Charge
Security First Life charges a fee for bearing certain mortality and expense
risks under the policy. Examples of these risks include a guarantee of annuity
rates, the death benefits, certain Contract expenses, and assuming the risk that
the expense charges and fees are less than actual administrative and operating
expenses. As compensation for assuming these risks, Security First Life will
make a daily deduction from the value of the Separate Account's assets equal to
.89% per year.
If Security First Life has gains from the receipt of the mortality and expense
risk charges over its cost of assuming these risks, it may use the gains as it
sees fit. This may include the reduction of expenses incurred in distributing
the Contracts.
Federal, State and Local Taxes
Security First Life may in the future deduct charges from the Participant's
Account for any taxes it incurs because of the Contracts. However, no deductions
are being made at the present time.
[Side Bar: Please note that deductions are made and expenses paid out of the
underlying Funds' assets, as well. A description of these fees and expenses are
described in each Fund's prospectus.
27
<PAGE> 31
Free Look Period
The Owner may cancel the Contract within a certain time period. This is known as
a "free look." The Free Look Period is the 20-day period (or longer in certain
states) starting when the Owner receives the Contract. Security First Life must
receive the Owner's request to cancel in writing at its administrative office
within the 20-day period. If the Contract is mailed to Security First Life, it
will be considered to be returned on the postmark date. If the Contract is sent
by certified or registered mail, the date of certification or registration will
be considered the date of its return to Security First Life.
The returned Contract will be treated as if Security First Life never issued it,
and Security First Life will refund the Purchase Payments or, if required by
state law, the greater of the Purchase Payments or the Participant's Account.
DESCRIPTION OF THE CONTRACTS
General
The Contract described in this prospectus is designed to provide Variable
Annuity benefits to employers to fund in whole or in part deferred compensation
plans which qualify under the provisions of Section 457 of the Code or to trusts
to fund retirement plans that qualify under Section 401 of the Code (the Plans).
A group contract is issued to an employer or to a trust of a Plan which will be
the Owner, covering all present and future Participants. Each Participant
completes an enrollment form and arranges for Purchase Payments to begin. No
certificates are issued to Participants under a deferred compensation or
qualified retirement plan since all ownership rights in the Contract are held by
the employer or the Plan trust. The Contract may be restricted by the governing
instrument of a Plan as to the exercise by the Participant of his or her rights
under the Contract. Participants and Owners should refer to the Plan for
information concerning these restrictions.
Purchase Payments
You may make a Purchase Payment at any time. Your minimum Purchase Payment is
$20, and minimum Purchase Payments must total $240 in a year.
28
<PAGE> 32
Transfers
Accumulation Units
You may transfer Accumulation Units among the Funds at any time. Your transfer
instructions must be in writing or, if permitted by Security First Life, by
telephone. If Security First Life permits Accumulation Units to be transferred
by telephone, you will be required to complete an authorization on the contract
application or on another form that Security First Life will provide. Security
First Life will employ reasonable procedures to confirm that telephone
instructions are genuine. This will include a requirement that you provide one
or more forms of personal identification when requesting a transfer. Security
First Life will not be liable for following instructions it reasonably believes
to be genuine.
Your Accumulation Units will be transferred on the first valuation after receipt
of written or telephone instructions. Accumulation Unit values are determined at
the close of trade on the New York Stock Exchange, which is currently 4:00 p.m.
Eastern time. If your transfer instructions are received up to that time your
transfer will be effected at the value calculated on that date. If your
instructions are received after the close of trading on a valuation day, your
transfer instructions will be carried out at the value next calculated.
Annuity Units
You may transfer Annuity Units among the Series at any time. Transfers of
Annuity Units may only be requested in writing and will be effective on the
first valuation following receipt of the instructions.
Minimum Transfer
A minimum of $500 must be transferred from any Series. The value of the
Accumulation and Annuity Units transferred will be calculated as of the close of
business on the day that the transfer occurs.
29
<PAGE> 33
Transfers to Another Contract
You may transfer your Participant's Account to another group annuity contract
issued by Security First Life to a Plan. The minimum transfer is the lesser of
$500 or the value of the Participant's interest in the Series from which the
transfer is made. A transaction charge of $10 will be deducted from the amount
transferred.
Modification of the Contracts
Security First Life must make Annuity payments involving life contingencies at
no less than the minimum guaranteed Annuity rates incorporated into the
Contracts, even if actual mortality experience is different.
Security First Life is legally bound under the Contract to maintain these
Annuity purchase rates. Security First Life must also abide by the Contract's
provisions concerning:
- death benefits
- deductions from Purchase Payments
- deductions from Participant's Accounts for administrative and
transaction charges
- deductions from the Separate Account for mortality and expense
risk fees
- guaranteed rates with respect to fixed benefits
Security First Life may change such provisions without your consent to the
extent permitted by the Contract, but only:
- with respect to any Purchase Payments received as a
tax free exchange under the Code after the effective
date of the change;
- with respect to benefits and values provided by
Purchase Payments made after the effective date of
the change to the extent that such Purchase Payments
in any Contract Year exceed the first year's Purchase
Payments; or
- to the extent necessary to conform the Contract to
any Federal or state law, regulation or ruling.
30
<PAGE> 34
The Contract may also be modified by written agreement between Security First
Life and the Owner.
If you have any questions about any of the provisions of your Contract, you may
write or call:
Security First Life Insurance Company
P.O. Box 92193
Los Angeles, California 90009
1 (800) 284-4536
Assignments
The Contract permits you to assign your rights under it. However, deferred
compensation plans which conform to the requirements under Section 457 of the
Code do not permit Participants to have any direct rights in the Contract, and
the Code provides that interests in a qualified retirement plans under Section
401 (excluding government plans) must be non-transferable and non-assignable.
ACCUMULATION PERIOD
Crediting Accumulation Units in the Separate Account
Security First Life will credit Accumulation Units to a Series upon receipt
of your Purchase Payment or transfer. Security First Life determines the number
of Accumulation Units to be credited to a Series by dividing the net amount
allocated to a Series out of your Purchase Payment by the value of an
Accumulation Unit in the Series next computed following receipt of the Purchase
Payment or transfer.
Separate Account Accumulation Unit current values
The current value of Accumulation Units of a particular Series depends upon the
investment experience of the Fund in which the Series invests its assets. The
value of Accumulation Units is determined each business day at the close of
trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time ). The
value is calculated by multiplying the value of an Accumulation Unit in the
Series on the immediately preceding valuation date by the net investment factor
for the period since that day. You bear the risk that the aggregate current
value invested in the Series may at any time be less than, equal to or more than
the amount that you originally allocated to the Series.
31
<PAGE> 35
[Side Bar: The net investment factor is an index of the percentage change
(adjusted for distributions by the Fund and the deduction of the administration
fee, mortality and expense risk fee) in the net asset value of the Fund in which
a Series is invested, since the preceding Valuation Date. The net investment
factor may be greater or less than 1 depending upon the Fund's investment
performance.
Surrender from the Separate Account
You may surrender all or a portion of the cash value of your Contract at any
time prior to the Annuity Date. A surrender may result in adverse federal income
tax consequences to you including current taxation on the distribution and a
penalty tax on the early withdrawal. These consequences are discussed in more
detail under "Federal Tax Considerations" on page ___. You should consult your
tax adviser before making a withdrawal.
The cash value of your interest in the Separate Account prior to the Annuity
Date is determined by multiplying the number of Accumulation Units for each
Series credited to your Contract by the current value of an Accumulation Unit in
the Series and subtracting any applicable surrender charges and transaction
charges. Security First Life will determine the value of the number of
Accumulation Units withdrawn at the next computed Accumulation Unit value.
If you request a partial surrender from more than one Series you must specify
the allocation of the partial surrender among the Series. You may not make a
partial surrender if a withdrawal would cause your interest in any Series to
have an after surrender value of less than $500. However, if you are withdrawing
the entire amount allocated to a Series, this restriction does not apply.
Payment of Surrender Amount
Payment of any amount surrendered from a Series will be made to you within seven
days of the date that Security First Life receives your written request.
Security First Life may suspend surrenders when:
- The SEC restricts trading on the New York Stock
Exchange or the Exchange is closed for other than
weekends or holidays.
- The SEC permits the suspension of withdrawals.
32
<PAGE> 36
- The SEC determines that an emergency exists that
makes disposal of portfolio securities or valuation
of assets of the Funds not reasonably practicable.
Account Statements
You will receive a written account statement each calendar quarter in which a
transaction occurs before to the Annuity Date. Even if you do not engage in any
transactions you will receive at least one written account statement per year.
The statement shows:
- all transactions for the period being reported
- the number of Accumulation Units that are credited to
your Contract in each Series
- the current Accumulation Unit value for each Series
- your Participant's Account as of the end of the
reporting period
Security First Life is careful to ensure the accuracy of calculations and
transfers to and within the Separate Account. However, errors may still occur.
You should review your statements and confirmations of transactions carefully
and promptly advise Security First Life of any discrepancy. Allocations and
transfers reflected in a statement will be considered final at the end of 60
days from the date of the statement.
ANNUITY BENEFITS
Variable Annuity Payments
Your interest in the Series may be applied to provide you with a Variable
Annuity. The dollar amount of the Variable Annuity payments that you receive
will reflect the investment experience of the Series but will not be affected by
adverse mortality experience which may exceed the mortality risk charge
established under the Contract.
33
<PAGE> 37
Assumed Investment Return
Unless you elect otherwise, the Assumed Investment Return is 4.25% per year. If
the laws and regulations of your State allow, you may elect an Assumed
Investment Return of 3.50%, 5% or 6%. The Assumed Investment Return does not
bear any relationship to the actual net investment experience of the Series.
Your choice of Assumed Investment Return affects the pattern of your Annuity
payments. Your Annuity payments will vary from the Assumed Investment Return
depending on whether the investment experience of the Series in which you have
an interest is better or worse than the Assumed Investment Return. The higher
your Assumed Investment Return, the higher your first Annuity payment will be.
Your next payments will only increase in proportion to the amount the investment
experience of your chosen Series exceeds the Assumed Investment Return and
Separate Account charges. Likewise, your payments will decrease if the
investment experience of your chosen Series is less than the Assumed Investment
Return and Separate Account charges. A lower Assumed Investment Return will
result in a lower initial Annuity payment, but subsequent Annuity payments will
increase more rapidly or decline more slowly as changes occur in the investment
experience of the Series. Conversely, a higher Assumed Investment Return would
result in a higher initial payment than a lower Assumed Investment Return, but
later payments will rise more slowly or fall more rapidly.
Election of Annuity Date and Form of Annuity
You choose the Annuity Date and the form of Annuity payment.
Election of Annuity Date
If you do not choose an Annuity Date at least thirty-one days before
Annuitization, your Normal Annuity Date automatically will be the first day of
the month on or immediately before the earlier of:
- the month in which you attain age 85; or
- the date you are required to take a distribution
under the terms of the Plan to which the Contract is
issued.
You may select an optional Annuity Date that is earlier than the Normal Annuity
Date described above. This Annuity Date may be the first day of any month before
the Normal Annuity Date.
34
<PAGE> 38
Please note that the Qualified Contracts may require a different Normal Annuity
Date and may prohibit the selection of certain optional Annuity Dates.
Form of Annuity
[Side Bar: There are two people who are involved in payments under your Annuity:
- you, the Participant and Annuitant
- the Beneficiary
Currently, Security First Life provides you with five forms of Annuity payments.
Each Annuity payment option, except Option 5, is available on both a Fixed and
Variable Annuity basis. Option 5 is available on a Fixed basis only.
Option 1 - Life Annuity
You receive Annuity payments monthly during your lifetime. These payments stop
with the last payment due before your death. Because Security First Life does
not guarantee a minimum number of payments under this arrangement, this option
offers the maximum level of monthly payments.
Option 2 - Life Annuity with 120, 180, or 240 Monthly Payments Certain
You receive a guaranteed minimum number of monthly Annuity payments during your
lifetime. In addition, Security First Life guarantees that your Beneficiary will
receive monthly payments for the remainder of the period certain, if you die
during that period.
Option 3 - Installment Refund Life Annuity
An Annuity payable monthly during the lifetime of an individual. You receive a
guaranteed minimum number of monthly payments which are equal to the amount of
your Participant's Account allocated to this option divided by the first monthly
payment. If you die before receiving the minimum number of payments, the
remaining payments will be made to your Beneficiary.
35
<PAGE> 39
Option 4 - Joint and Last Survivor Life Annuity
You receive Annuity payments monthly during the lifetime of you and another
payee (the joint payee) and during the lifetime of the survivor of the two of
you. Security First Life stops making payments with the last payment before the
death of the last surviving payee. Security First Life does not guarantee a
minimum number of payments under this arrangement. For example, you or other
payee might receive only one Annuity payment if both of you die before the
second Annuity payment. The election of this option is ineffective if either of
you dies before Annuitization. In that case, the survivor becomes the sole
payee, and Security First Life does not pay death proceeds because of the death
of the other payee.
Option 5 - Payments for a Designated Period (Fixed Annuity Only)
Security First Life makes Annuity payments monthly to you or to the Beneficiary
at your death, for a selected number of years ranging from five to thirty. The
amount of each payment will be based on an interest rate determined by Security
First Life that will not be less than 3.50% per year. You may not commute Fixed
Annuity payments to a lump sum under this option.
If you do not choose a form of Annuity payment, Option 2, a life annuity with a
guaranteed minimum of 120 monthly payments, will automatically be applied to
your Contract. You may make changes to an optional form of Annuity payment at
any time until 31 days before the Annuity date.
The first year's Annuity payment described in Options 1 - 4 are calculated on
the basis of:
- the mortality table specified in the Contract
- the age and where permitted the sex of the Annuitant
- the type of Annuity payment option selected, and
- the assumed investment return selected.
The fixed Annuity payments described in Option 5 are calculated on the basis of:
- the number of years in the payment period, and
- the interest rate guaranteed with respect to the
option.
Fixed Annuities are funded through the General Account of Security First Life.
36
<PAGE> 40
Frequency of Payment
Your payments under all options will be made on a monthly basis unless you and
Security First Life have agreed to a different arrangement.
Payments from each Series must be at least $50 each. If a payment from a Series
will be less than $50, Security First Life has the right to decrease the
frequency of payments so that each payment from a Series will be at least $50.
Level Payments Varying Annually
Your variable Annuity payments are determined yearly rather than monthly. As a
result, you will receive a uniform monthly Annuity payment for each Annuity
year. The level of payments for each year is based on the investment performance
of the Series up to the Valuation Date as of which the payments are determined
for the year. As a result, the amounts of the Annuity payments will vary with
the investment performance of the Series from year to year rather than from
month to month. Your monthly variable Annuity payments for the first year will
be calculated on the last Valuation Date of the second calendar week before the
Annuity date. The amount of your monthly variable Annuity payments will be
calculated using a formula described in the Contract. On each anniversary of the
Annuity date, Security First Life will determine the total monthly payments for
the year then beginning. These payments will be determined by multiplying the
number of Annuity units in each Series from which payments are to be made by the
annuity unit value of that Series for the valuation period in which the first
payment for that period is due.
After calculating the amount due to you, Security First Life transfers the
amount of the year's Variable Annuity payments to a General Account at the
beginning of the year. Although the amount in the Separate Account is credited
to you and transferred to the General Account, you do not have any property
rights in this amount. You do have a contractual right to receive your Annuity
payments.
The monthly Annuity payments for the year are made from the General Account with
interest using the standard assumed investment return of 4.25% or the Assumed
Investment Return that you selected. As a result, Security First Life will
experience profits or losses on the amounts placed in the General Account in
providing level monthly payments to you during the year that meet the Assumed
Investment Return that you selected. For example, if the net investment income
and gains in the General Account are lower than the Assumed Investment Return
selected, Security First Life will experience a loss.
37
<PAGE> 41
You will not benefit from any increases or be disadvantaged from any decreases
in any Annuity Unit Values during the year because the Annuity payments for that
year are set at the beginning of the year. These increases and decreases will be
reflected in the calculation of Annuity payments for the following year.
Annuity Unit Values
This is how Security First Life calculates the Annuity Unit Value for each
Series:
- First, Security First Life determines the change in
investment experience (including any
investment-related charge) for the underlying Fund
from the previous valuation date to the current
valuation date.
- Next, it subtracts the daily equivalent of your
insurance-related charge (general administrative
expense and mortality and expense risk charges) for
each day since the last day the Annuity Unit Value
was calculated.
- Then, it divides the result by the quantity of one
plus the weekly equivalent of your Assumed Investment
Return.
- Finally, the previous Annuity Unit Value is
multiplied by this result.
DEATH BENEFITS
Death Before the Annuity Date
If you die before the Annuity Date your Beneficiary(ies) will receive a death
benefit equal to the Participant's Account.
If you are younger than age 65 at the time of your death, your Beneficiaries
will be entitled to receive a lump sum settlement equal to the greater of:
- your Purchase Payments less partial withdrawals or amounts
already applied to Annuity payments; or
- your Participant's Account.
38
<PAGE> 42
Your Beneficiary(ies) receive the death benefit as either:
1) A lump sum that must be made within five (5) years of
your death; or
2) Annuity income under Annuity Income Options One, Two
or Five.
If your Beneficiary(ies) chooses one of the Annuity income options:
- Payments must begin within one year of your
death (However, your spouse may delay
commencement of payments to the date that
you would have reached 70 1/2.)
- The guaranteed period under Option Two or
the designated period under Option Five may
not be longer than the Beneficiary's life
expectancy under applicable tables specified
by the Internal Revenue Service.
- The Participant's Account on the date of the
first Annuity payment will be used to
determine the amount of the death benefit.
If your spouse is your sole Beneficiary, he or she may choose to succeed to your
rights as the Participant rather than to take the death benefit. If you have
more than one Beneficiary living at the time of your death, each will share the
proceeds of the death benefit equally unless you elect otherwise.
If you outlive all of your Beneficiaries, the death benefit will be paid to your
estate in a lump sum. No Beneficiary shall have the right to assign or transfer
any future payments under the Options, except as provided in the election or by
law.
You will also be considered to have outlived your Beneficiary(ies) in the
following situations:
- Your Beneficiary(ies) and you die at the same time.
- Your Beneficiary(ies) dies within 15 days of your
death and proof of your death is received by Security
First Life before the date due.
39
<PAGE> 43
Proof of death includes a certified death certificate, or attending physician's
statement, a decree of a court of competent jurisdiction as to the finding of
death, or other documents that Security First Life agrees to accept as proof of
death.
Death After the Annuity Date
If the Annuitant dies on or after the Annuity Date, the amounts payable to the
Beneficiary(ies) or other properly designated payees or any continuing payment
under the Annuity Payment option in effect. In this case, the Beneficiary will:
- have all the remaining rights and powers under a
Certificate, and
- be subject to all the terms and conditions of the
Certificate.
If none of your Beneficiaries survive your death, the value of any remaining
payments certain, calculated on the basis of the assumed investment return that
you previously chose, will be paid in a lump sum to your estate unless other
provisions have been made and approved by Security First Life. This value is
calculated on the next day of payment following receipt of due proof of death.
Unless otherwise restricted, a Beneficiary receiving variable payments under
Option Two or Three may elect at any time to receive the present value of the
remaining number of Annuity payments certain in a lump sum payment after the
death of an Annuitant. The present value of the remaining Annuity payments will
be calculated on the basis of the assumed investment return previously selected.
This lump sum payment election is not available to a Beneficiary receiving Fixed
Annuity payments.
FEDERAL TAX CONSIDERATIONS
The following general discussion of the federal income tax consequences under
this Contract is not intended to cover all situations, and is not meant to
provide tax advice. Because of the complexity of the law and the fact that the
tax results will vary depending on many factors, you should consult your tax
adviser regarding your personal situation. For your information, a more detailed
tax discussion is contained in the SAI.
40
<PAGE> 44
General Taxation of Annuities
Congress has recognized the value of saving for retirement by providing certain
tax benefits, in the form of tax deferral, for money put into an annuity. The
Internal Revenue Code (the Code) governs how this money is ultimately taxed.
There are different rules for qualified and non-qualified Contracts and
depending on how the money is distributed, as briefly described below.
You generally will not be taxed on increases in the value of your Contract until
a distribution occurs -- either as a withdrawal or as an Annuity payment. This
concept is known as tax deferral. In addition, Security First Life will not be
taxed on the investment income and capital gains of the Separate Account.
[Side Bar: A qualified Contract is a Contract that is purchased under certain
types of tax-advantaged retirement plans.
Qualified plans include:
- Section 401 plans (self-employed and corporate
pension and profit-sharing plans)
- Section 403 plans (tax-deferred annuities)
- Section 457 plans (deferred compensation plans)
- traditional IRAs
- Roth IRAs
The Contracts are only offered to Section 401 and 457 Plans.
A non-qualified Contract is a Contract that is purchased on an individual basis
with after-tax dollars and not under one of the programs listed above in the
description of a qualified Contract. The Contracts are not offered on a
non-qualified basis.
[Side Bar: Please note that the terms of a particular Plan may limit your rights
otherwise available under the Contract.]
Qualified Contracts
The full amount of all distributions received from a Section 401 or 457 plan
(except for a return of non-deductible employee contributions) are included in
your gross income and are taxed at ordinary income rates unless the distribution
is transferred to an eligible rollover account or Contract.
Generally, distributions are included in your income in the year in which they
are paid. However, in the case of a Section 457 plan, a distribution is
includible in the
41
<PAGE> 45
year it is paid or when it is made available, depending upon whether certain
Code requirements are met. In very limited situations, a lump sum distribution
from a Section 401 plan may qualify for special forward income averaging or may
qualify for special long term capital gain treatment.
Mandatory minimum distributions
If you are a participant in a Section 401 or 457 plan, you generally must begin
receiving withdrawals from your Participant's Account or Annuity payments for
life or a period not exceeding the life expectancy of you or you and a
beneficiary by April 1 of the calendar year following the later of:
- the year you turn 70 1/2
- the year you retire
Withdrawals before age 59 1/2
If you receive a taxable distribution from your Contract before you reach age 59
1/2, this amount may be subject to a 10% penalty tax in addition to ordinary
income taxes. Section 457 plans are not subject to this 10% penalty tax.
42
<PAGE> 46
As indicated in the chart below, some distributions prior to age 59 1/2 are
exempt from the penalty. Some of these exceptions include any amounts received:
<TABLE>
<CAPTION>
Type of Plan
---------------------------------------------- ----------------------
<S> <C> <C>
401
---------------------------------------------- ----------
After you die X
---------------------------------------------- ----------
After you become totally disabled (as
defined in the Code) X
---------------------------------------------- ----------
</TABLE>
Distributions from a 457 Plan cannot be made available to you before the
earlier of age 70 1/2, separation from service, or an unforseeable emergency.
Rollovers of plan conversions
You may roll over distributions (other than required distributions) from one
plan to another plan without incurring any Federal income tax under some
circumstances. These circumstances are as follows:
Distribution Issued from: May be Rolled into:
-------------------------------------- -----------------------------------
- Section 401 plan Another Section 401 plan;
or
an IRA
-------------------------------------- -----------------------------------
- Section 457 Plan Another Section 457 Plan
-------------------------------------- -----------------------------------
-------------------------------------- -----------------------------------
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<PAGE> 47
Deductions for plan contributions
You may deduct your contributions to Section 401 plans in the year when made up
to the limits specified in the Code. These plans may also permit non-deductible
employee contributions. Any non-deductible employee contribution that you make
will be received tax free as a portion of each Annuity payment.
Taxation of death benefits
Any distributions under Section 401 must meet minimum incidental death benefit
requirements under the Code. However, if your spouse is your designated
beneficiary, these death benefit requirements do not apply. Similar requirements
apply to Section 457 plans for the tax years beginning after December 31, 1988.
Withholding
Amounts distributed under Section 457 plans are considered compensation and are
subject to the employer's withholding and reporting requirements. Distribution
from a Section 401 plan are subject to withholding and reporting by the trustee
of the Plan.
Mandatory 20% withholding for "eligible rollover distributions"
If you are participating in a Section 401 retirement plan (including lump sum
distributions), Security First Life is required to withhold 20% of the taxable
portion of your withdrawal that constitutes an "eligible rollover distribution"
for Federal income tax purposes.
An "eligible rollover distribution" is any taxable amount that you receive from
your Contract, except for taxable distributions that are:
- a life or life expectancy annuity (individual or
joint)
- an annuity with a designated period of 10 years or
more
- withdrawals to satisfy minimum distribution
requirements
44
<PAGE> 48
Other exceptions to the definition of eligible rollover distribution exist. The
requirements discussed below under "Other Withholding" will apply to any
distribution that is not an eligible rollover distribution.
You may not elect out of the 20% withholding requirement. However, Security
First Life is not required to withhold the money if an eligible rollover
distribution is rolled over into a traditional IRA or other eligible retirement
plan in a direct trustee-to-trustee transfer.
45
<PAGE> 49
VOTING RIGHTS
As the owner of the Separate Account, Security First Life is the legal owner of
the shares of the funding options. Based upon Security First Life's current view
of applicable law, the Owner has voting interests under the Contract concerning
Fund shares and is entitled to vote on Fund proposals at all regular and special
shareholders meetings. Therefore, the Owner is entitled to give us instructions
for the number of shares which are deemed attributable to the Contract.
Security First Life will vote all shares of the underlying Funds as directed by
Contract Owners who have voting interests in the Funds. Security First Life will
send Contract Owners, at a last known address, all periodic reports, proxy
materials and written requests for instructions on how to vote those shares.
When Security First Life receives these instructions, it will vote all of the
shares in proportion to the instructions. If Security First Life does not
receive the Owner's voting instructions, it will vote the Owner's interest in
the same proportion as represented by the votes it receives from the other
Owners. If Security First Life determines that it is permitted to vote the
shares in its own right due to changes in the law or in the interpretation of
the law it may do so.
Security First Life is under no duty to inquire into voting instructions or into
the authority of the person issuing such instructions. All instructions will be
valid unless Security First Life has actual knowledge that they are not.
There are certain circumstances under which Security First Life may disregard
voting instructions. However, in this event, a summary of our action and the
reasons for such action will appear in the next semiannual report.
The number of votes that the Owner receives is determined on a record date that
is set no more than 90 days before the meeting. Voting instructions will be
requested at least 10 days before the meeting. Only Owners on the record date
may vote.
The number of shares to which the Owner is entitled to vote is calculated by
dividing the portion of all of the Participant's Accounts allocated to that Fund
on the record date by the net asset value of a Fund share on the same date.
46
<PAGE> 50
YEAR 2000 ISSUE
Security First Life and its service providers, including the underlying Fund
options, depend on the smooth operation of their computer systems. Many computer
and software systems in use today cannot recognize the Year 2000, but revert to
1900 or some other date, due to the manner in which dates were encoded and
calculated. That failure could have a negative impact on Security First Life and
the Separate Account, including the calculation of your interest in the Series,
on the Funds' handling of securities trades, pricing and account services, as
well as on the companies in which the Funds will invest. Security First Life is
monitoring the efforts of the service providers to prepare their systems for the
Year 2000 and expects that each Series service providers will be adapted before
that date. There can be no guarantee, however, that Security First Life or its
service providers will be successful or that the steps taken by Security First
Life will be sufficient to avoid any adverse impact on the Separate Account and
each of its Series.
LEGAL PROCEEDINGS
There are no present or pending material legal proceedings affecting the
Separate Account. Security First Life, in the ordinary course of its business,
is engaged in litigation of various kinds which in its judgment is not of
material importance in relation to its total assets.
ADDITIONAL INFORMATION
You may contact Security First Life at the address and phone number on the cover
of this Prospectus for further information. A copy of the Statement of
Additional Information, dated May 1, 1999, which provides more detailed
information about the contracts, may also be obtained. The table of contents for
the Statement of Additional Information is attached at page ____.
A Registration Statement has been filed with the SEC under the Securities Act of
1933 for the Contracts offered by this Prospectus. This Prospectus does not
contain all of the information in the Registration Statement. Please refer to
this Registration Statement for further information about the Separate Account,
Security First Life and the Contracts. Any statements in this Prospectus about
the contents of the Contracts and other legal instruments are only summaries.
Please see the filed versions of these documents for a complete statement of any
terms.
47
<PAGE> 51
'33 ACT FILE NO. 2-75533
STATEMENT OF
ADDITIONAL INFORMATION
SECURITY FIRST LIFE SEPARATE ACCOUNT A
-----------------------------------------------------------------
GROUP FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACTS
-----------------------------------------------------------------
SECURITY FIRST LIFE INSURANCE COMPANY
MAY 1, 1998
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus. A copy of the prospectus, dated May 1, 1999
may be obtained without charge by writing to Security First Life Insurance
Company, P.O. Box 92193, Los Angeles, California 90009 or by telephoning 1 (310)
312-6100 (in California) or 1 (800) 992-9785 (outside California).
SF 234
<PAGE> 52
TABLE OF CONTENTS
Page
----
The Insurance Company 3
The Separate Account 3
Surrender Charges 3
Net Investment Factor 3
Annuity Payments 4
Additional Federal Income Tax Information 5
Underwriters, Distribution of the Contracts 6
Voting Rights 6
Safekeeping of Securities 6
Servicing Agent 7
Independent Auditors 7
Legal Matters 7
State Regulation of Security First Life 7
Financial Statements 7
<PAGE> 53
THE INSURANCE COMPANY
Security First Life Insurance Company ("Security First Life") is a wholly-owned
subsidiary of Security First Group, Inc. ("SFG"). Security First Group, Inc.
("SFG"), the parent of Security First Life, is a wholly-owned subsidiary of
Metropolitan Life Insurance Company ("MetLife"), a New York mutual life
insurance company. MetLife, with assets of $_____ billion at June 30, 1998, is
the second largest life insurance company in the United States in terms of total
assets. As a mutual life insurance company, MetLife has no shareholders.
However, MetLife announced in November 1998 its intention to convert to a stock
company. The "demutualization" plan will be subject to approval of the board of
Directors, the state of New York Insurance Department and policyholders. As of
May 1, 1999, MetLife does not know the details of the plan or when or if it will
take place.
THE SEPARATE ACCOUNT
Amounts allocated to the Separate Account are invested in the securities of
eight Funds: the Bond Series and the T. Rowe Price Growth and Income Series of
the Security First Trust; the Money Market Portfolio and Growth Portfolio of the
Variable Insurance Products Fund; the Asset Manager Portfolio and Index 500
Portfolio of the Variable Insurance Products Fund II; the T. Rowe Price Growth
Stock Fund; and the T. Rowe Price International Stock Fund. The Separate Account
is divided into Series which correspond to these eight Funds.
SURRENDER CHARGES
Subject to the Plan with respect to which the Contract has been issued, all or a
portion of the Participant's Account may be surrendered at any time prior to the
Annuity Date. In the event of a partial or full surrender on or before the sixth
anniversary of the Certificate Date, the portion of the Participant's Account
surrendered will be subject to a surrender charge equal to 5% of the amount
surrendered. Any surrender after the sixth anniversary of the Certificate Date
will not be subject to a surrender charge. In no event, however, will surrender
charges imposed exceed 9% of the Purchase Payments received. No surrender charge
will be deducted from any amount surrendered and reinvested by the Participant
in another group annuity contract issued by Security First Life to the Owner
under the Plan with respect to which the Contract is issued.
Notwithstanding the above, should a Participant have an existing annuity account
with Security First Life under a group annuity contract issued to the Owner in
accordance with the terms of the Plan with respect to which the Contract was
issued and should the date of the Participant's first Purchase Payment to this
group annuity contract precede the Certificate Date, then the Certificate Date
used in the determination of surrender charges under the Certificate shall be
deemed to be the date of such first Purchase Payment under the group annuity
contract.
NET INVESTMENT FACTOR
The Separate Account net investment factor is an index of the percentage change
(adjusted for distributions by the Series and the deduction of the mortality and
administrative expense risk fees) in the net asset value of each Fund in which
the Series is invested, since the preceding Business Day. The Separate Account
net investment factor for each Series of Accumulation Units is determined for
any Business Day by dividing (i) the net asset value of a share of the Fund
which is represented by
<PAGE> 54
such Series at the close of the business on such day, plus the per share amount
of any distributions made by such Series on such day by (ii) the net asset value
of share of such Fund determined as of the close of business on the preceding
Business Day and then subtracting from this result the mortality and
administrative expense risk fees factor of 0.003425 for each calendar day
between the preceding Business Day and the end of the current Business Day.
<PAGE> 55
ANNUITY PAYMENTS
Basis of Variable Annuity Benefits
The Variable Annuity benefit rates used in determining Annuity Payments under
the Contract are based on actuarial assumptions, reflected in tables in the
Contract, as to the expected mortality and adjusted age and the form of Annuity
selected. The mortality basis for these tables is Security First Life's Modified
Select Annuity Mortality Table, projected to the year 2000 on Projection Scale
C, with interest at 4.25% for all functions involving life contingencies and the
portion of any period certain beyond 10 years, and 3.25% for the first 10 years
of any certain period. Adjusted age in those tables means actual age to the
nearest birthday at the time the first payment is due, adjusted according to the
following table:
<TABLE>
<CAPTION>
Calendar Year of Birth Adjusted Age Is
---------------------- ---------------
<S> <C>
Before 1916 Actual Age
1916 - 1935 Actual Age Minus 1
1936 - 1955 Actual Age Minus 2
1956 - 1975 Actual Age Minus 3
1976 - 1995 Actual Age Minus 4
</TABLE>
Determination of Amount of Monthly Variable Annuity Payments for First Year
The Separate Account value used to establish the monthly Variable Annuity
Payment for the first year consists of the value of Accumulation Units of each
Series of the Separate Account credited to a Participant on the last day of the
second calendar week before the Annuity Date. The Contract contains tables
showing monthly payment factors and Annuity premium rates per $1,000 of Separate
Account value to be applied under Options 1 through 4.
At the beginning of the first payment year, an amount is transferred from the
Separate Account to Security First Life's General Account and level monthly
Annuity Payments for the year are made out of the General Account. The amount to
be transferred is determined by multiplying the Annuity premium rate per $1,000
set forth in the Contract tables by the number of thousands of dollars of
Separate Account Value credited to a Participant. The level monthly payment for
the first payment year is then determined by multiplying the amount transferred
(the "Annuity Premium") by the monthly payment factor in the same table. In the
event the Contract involved has Separate Account Accumulation Units in more than
one Series, the total monthly Annuity payment for the first year is the sum of
the monthly Annuity payments, determined in the same manner as above, for each
Series.
At the time the first year's monthly payments are determined, a number of
Annuity Units for each Separate Account Series is also established for the
Annuitant by dividing the monthly payment derived from that Series for the first
year by the Separate Account Annuity Unit values for the Series on the last
Business Day of the second calendar week before the first Annuity payment is
due. The number of Annuity Units remains fixed during the Annuity period unless
Annuity Units are converted to another Series.
Determination of Amount of Monthly Variable Annuity Payments for Second and
Subsequent Years
<PAGE> 56
As of each anniversary of the Annuity Date, Security First Life will determine
the amount of the monthly Variable Annuity Payments for the year then beginning.
Separate determinations will be made for each Separate Account Series in which
the Annuitant has Annuity Units, with the total Annuity Payment being the sum of
the payments derived from the Series. The amount of monthly payments for any
Separate Account Series for any year after the first will be determined by
multiplying the number of Annuity Units for that Series by the Annuity Unit
value for that Series for the Valuation Period in which the first payment for
the year is due. It will be Security First Life's practice to mail Variable
Annuity payments no later than 7 days after the last day of the Valuation Period
upon which they are based or the monthly anniversary thereof.
The objective of a Variable Annuity contract is to provide level payments during
periods when the economy is relatively stable and to reflect as increased
payments only the excess of investment results flowing from inflation or an
increase in productivity. The achievement of this objective will depend, in
part, upon the validity of the assumption that the net investment return of the
Separate Account equals the Assumed Investment Return during periods of stable
prices. Subsequent years' payments will be smaller than, equal to or greater
than the first year's payments depending on whether the actual net investment
return for the Separate Account is smaller than, equal to or greater than the
Assumed Investment Return.
Annuity Unit Values
The initial value of an Annuity Unit is $5 for each Series for the first
Valuation Period as of which the first Variable Annuity Payment from such Series
is made. The value of an Annuity Unit for each Series on any later date is
determined by multiplying the value of an Annuity Unit at the end of the
preceding Valuation Period by the "Annuity Change Factor" for the second
preceding Valuation Period. The Annuity Change Factor is an adjusted measurement
of the investment performance of the Series since the end of the preceding
Valuation Period. The Annuity Change Factor is determined by dividing the value
of an Accumulation Unit at the end of the Valuation Period and multiplying the
result by a neutralization factor.
Variable Annuity payments for each year after the first reflect variations in
the investment performance of the Separate Account above and below an Assumed
Investment Return. This assumed investment rate is included for purposes of
actuarial computations and does not relate to the actual investment performance
of the underlying Series. Therefore, the Assumed Investment Return must be
"neutralized" in computing the Annuity Change Factor. For weekly Valuation
Periods and a 4.25% Assumed Investment Return, the neutralization factor is
0.9991999.
ADDITIONAL FEDERAL INCOME TAX INFORMATION
Security First Life is required to withhold federal income tax on any Contract
distributions to Participants (such as Annuity Payments, lump sum distributions
or partial surrenders). However, Participants are allowed to make an election
not to have federal income tax withheld. After such election is made with
respect to Annuity Payments, an Annuitant may revoke the election at any time,
and thereafter commence withholding. In such a case, Security First Life will
notify the payee at least annually of his or her right to change such election.
The withholding rate followed by Security First Life will be applied only
against the taxable portion of the Contract distributions. Federal tax will be
withheld from Annuity
<PAGE> 57
Payments pursuant to the recipient's withholding certificate. If no withholding
certificate is filed with Security First Life, federal tax will be withheld from
Annuity Payments on the basis that the payee is married with three withholding
exemptions. Federal tax on the taxable portion of a partial or total surrender
(i.e., non-periodic distribution) generally will be withheld at a flat 10% rate.
In the case of a plan qualified under Sections 401(a) or 403(a) of the Code, if
the balance to the credit of a participant in a plan is distributed within one
taxable year to the recipient ("total distribution"), the amount of withholding
will approximate the federal income tax on a lump sum distribution. If a total
distribution is made from such a plan or a tax-sheltered annuity on account of
the Participant's death, the amount of withholding will reflect the exclusion
from federal income tax for employer-provided death benefits.
The trustee is required to withhold 20% of certain taxable amounts constituting
"eligible rollover distributions" to participants (including lump sum
distributions) in retirement plans under Code Section 401. This withholding
requirement does not apply to distributions from such plans and annuities in the
form of a life and life expectancy annuity (individual or joint), an annuity
with a designated period of 10 years or more, or any distribution required by
the minimum distribution requirement of Code Section 401(a)(9). Withholding on
these latter types of distribution will continue to be made under the rules
described in the prior paragraph. A participant cannot elect out of the 20%
withholding requirement. However, if an eligible rollover distribution is rolled
over into an eligible retirement plan or IRA in a direct trustee-to-trustee
transfer, no withholding will be required.
Payees are required by law to provide Security First Life (as payor) with their
correct taxpayer identification number ("TIN"). If the payee is an individual,
the TIN is the same as his or her Social Security number. If the payee elects
not to have federal income tax withheld on an Annuity payment or a non-periodic
distribution and a correct TIN has not been provided, such election is
ineffective, and such payment will be subject to withholding as noted above.
UNDERWRITERS, DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold as a continuous offering by individuals who are
appropriately licensed as insurance agents of Security First Life for the sale
of life insurance and variable annuity contracts in the state where the sale is
made. In addition, these individuals will be registered representatives of the
principal underwriter, Security First Financial, Inc., or of other
broker-dealers registered under the Securities Exchange Act of 1934 whose
registered representatives are authorized by applicable law to sell variable
annuity contracts issued by Security First Life. Commissions on sales of
contracts range from 0% to 7.5%. Agents are paid from the General Account of
Security First Life. Such commissions bear no direct relationship to any of the
charges under the Contracts. It is expected that the Contracts will be sold in
all states where Security First Life is qualified to sell insurance. No direct
underwriting commissions are paid to Security First Financial, Inc.
VOTING RIGHTS
Unless otherwise restricted by the Plan under which a Contract is issued, each
Participant will have the right to instruct Security First Life with respect to
voting the Funds' shares which are the assets underlying the Participant's
interest in the Separate Account, at all regular and special shareholder
meetings. An Annuitant's voting power with respect to Funds' shares held by the
Separate Account declines during the time the Annuitant is receiving a Variable
Annuity based on the investment performance of
<PAGE> 58
the Separate Account, because amounts attributable to the Annuitant's interest
are being transferred annually to the General Account to provide the variable
payments.
SAFEKEEPING OF SECURITIES
All assets of the Separate Account are held in the custody of Security First
Life. The assets of each Separate Account Series will be kept physically
segregated by Security First Life and held separate from the assets of any other
firm, person or corporation. Additional protection for the assets of the
Separate Account is afforded by fidelity bonds covering all of Security First
Life's officers and employees.
SERVICING AGENT
An Administrative Services Agreement has been entered into between Security
First Life and SFG under which the latter has agreed to perform certain of the
administrative services relating to the Contracts and for the Separate Account.
SFG performs substantially all of the record keeping and administrative services
for the Separate Account. Security First Life has not paid fees to SFG for these
services.
INDEPENDENT AUDITORS
The consolidated financial statements of Security First Life Insurance Company
at December 31, 1998 and the financial statements of Security First Life
Separate Account A were audited by Deloitte & Touche, independent auditors, as
set forth in their reports thereon appearing elsewhere herein, and are included
in reliance upon such reports given on their authority of such firm as experts
in accounts and auditing. The consolidated financial statements of Security
First Life Insurance Company at December 31, 1997 and 1996 and the 1997 and 1996
financial statements of Security First Life Separate Account A were audited by
Ernst & Young, LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein, and are included in reliance upon such reports given
on their authority of such firm as experts in accounts and auditing.
LEGAL MATTERS
Legal matters concerning federal securities laws applicable to the issue and
sale of the Contracts have been passed upon by Sullivan & Worcester LLP, 1025
Connecticut Avenue, N.W., Washington D.C. 20036. Prior to January 31, 1998, such
legal matters were passed upon by Routier and Johnson, P.C., 1700 K Street,
N.W., Suite 1003, Washington, D.C. 20006.
STATE REGULATION OF SECURITY FIRST LIFE
Security First Life is subject to the laws of the State of Delaware governing
insurance
<PAGE> 59
companies and to regulation by the Delaware Commissioner of Insurance. An annual
statement, in a prescribed form, is filed with the Commissioner on or before
March 1 each year covering the operations of Security First Life for the
preceding year and its financial condition on December 31 of such year. Security
First Life's books and assets are subject to review or examination by the
Commissioner or his agents at all times, and a full examination of its
operations is usually conducted by the National Association of Insurance
Commissioners at least once in every three years. Security First Life was last
examined as of December 31, 1993. While Delaware insurance law prescribes
permissible investments for Security First Life, it does not prescribe
permissible investments for the Separate Account, nor does it involve
supervision of the investment management or policy of Security First Life.
In addition, Security First Life is subject to the insurance laws and
regulations of other jurisdictions in which it is licensed to operate. State
insurance laws generally provide regulations for the licensing of insurers and
their agents, govern the financial affairs of insurers, require approval of
policy forms, impose reserve requirements and require filing of an annual
statement. Generally, the insurance departments of these other jurisdictions
apply the laws of Delaware in determining permissible investments for Security
First Life.
FINANCIAL STATEMENTS
The financial statements of Security First Life and subsidiaries contained
herein should be considered only for the purposes of informing investors as to
its ability to carry out the contractual obligations as depositor under the
Contracts and custodian as described elsewhere herein and in the prospectus. The
financial statements of the Separate Account are also included in this Statement
of Additional Information.
<PAGE> 60
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements contained herein
(1) Security First Life Separate Account A
Part A - Condensed Financial Information
Part B - Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets,
Statement of Investments
(2) Security First Life Insurance Company
Part B - Depositor's financial statements with notes
(b) Exhibits
(10) Consent of Independent Auditors
(13) Organizational Chart
All previously filed Exhibits to Security First Life Separate Account A
registration statement and all post-effective amendments thereto are
specifically incorporated herein by reference.
Item 25. Directors and Officers of the Depositor
The officers and directors of Security First Life Insurance Company are listed
below. Their principal business address is 11365 West Olympic Boulevard, Los
Angeles, California 90064.
<TABLE>
<CAPTION>
Name Position and Offices with Depositor
- ---- -----------------------------------
<S> <C>
David A. Levene Chairman of the Board and Director
John K. Bruins Director
Steven T. Cates Director
Terence Lennon Director
Gail A. Praslick Director
Joseph A. Reali Director
Anthony J. Williamson Director
Richard C. Pearson Director, President and General Counsel
Howard H. Kayton Executive Vice President and Chief
Actuary
Brian J. Finneran Senior Vice President
Jane F. Eagle Senior Vice President and Chief
Financial Officer
Peter R. Jones Senior Vice President
Cheryl M. MacGregor Senior Vice President
Alex H. Masson Senior Vice President
Anthony J. Williamson Senior Vice President, Chief Investment
Officer
</TABLE>
<PAGE> 61
<TABLE>
<S> <C>
George R. Bateman Vice President
James C. Turner Vice President
Leo Brown Assistant Vice President
Steven J. Brash Assistant Vice President
Ronald Mare Assistant Vice President
Cheryl J. Finney Associate General Counsel, Vice
President, and Assistant Secretary
Patrizia DiMolfetta Controller
James Bossert Assistant Controller
George J. Olah Treasurer
Louis Ragusa Secretary
Richard G. Mandel Assistant Secretary
Eugene A. Capobianco Assistant Vice President
Joseph A. Zdeb Assistant Vice President
Thomas V. Reedy Assistant Vice President
Ataollah Azarshahi Assistant Vice President
Harold B. Leff Assistant Vice President
Robert E. Dehais Assistant Vice President
</TABLE>
Item 26. Persons Controlled by or under Common Control with Depositor of
Registrant
The Registrant is a Separate Account of Security First Life Insurance Company
("depositor"). For a complete listing and diagram of all persons directly or
indirectly controlled by or under common control with the depositor, see Exhibit
13.
Item 27. Number of Contract owners
As of ____________, 1999 there were ________ owners of the Contracts which are
the subject of this post-effective amendment.
Item 28. Indemnification
None
Item 29. Principal Underwriters
Security First Financial, Inc. is the principal underwriter for Security First
Life Separate Account A.
The following are the directors and officers of Security First Financial, Inc.
Their principal business address is 11365 West Olympic Boulevard, Los Angeles,
California 90064.
<TABLE>
<CAPTION>
Name Position with Underwriter
- ---- -------------------------
<S> <C>
Richard C. Pearson Director, President, General Counsel and
Secretary
Jane Frances Eagle Director, Senior Vice President,
Treasurer, and Chief Financial Officer
Brian J. Finneran Senior Vice President
Peter R. Jones Senior Vice President
Howard H. Kayton Senior Vice President and Chief Actuary
</TABLE>
<PAGE> 62
<TABLE>
<S> <C>
James C. Turner Vice President and Assistant Secretary
Cheryl J. Finney Vice President and Assistant Secretary
*Gary A. Virnick Supervisor of Compliance
* not an officer
</TABLE>
<TABLE>
<CAPTION>
Net Underwriting Compensation on
Name of Principal Discount and Redemption or Brokerage
Underwriter Commissions* Annuitization Commission Compensation
- ----------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Security First None None None None
Financial, Inc.
</TABLE>
*Fee paid by Security First Life Insurance Company for serving as underwriter.
Item 30. Location of Accounts and Records
Security First Financial, Inc., underwriter for the registrant, is located at
11365 West Olympic Boulevard, Los Angeles, California 90064. It maintains those
accounts and records required to be maintained by it pursuant to Section 31(a)
of the Investment Company Act of 1940 and the rules promulgated thereunder.
Security First Life Insurance Company, the depositor for the registrant, is
located at 11365 West Olympic Boulevard, Los Angeles, California 90064. It
maintains those accounts and records required to be maintained by it pursuant to
Section 31(a) of the Investment Company Act and the rules promulgated thereunder
and as custodian of the Registrant.
Security First Group, Inc. is located at 11365 West Olympic Boulevard, Los
Angeles, California 90064. It performs substantially all of the record keeping
and administrative services in connection with the Registrant.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Registrant makes the following undertaking:
Security First Life represents that the fees and charges deducted under the
Contracts described herein this registration statement are, in the aggregate,
reasonable in relation to the services rendered, the expenses expected to be
incurred and the risks assumed by Security First Life
<PAGE> 63
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it has duly caused this amended
Registration Statement to be signed on its behalf in the City of Los Angeles
and State of California on this 1st day of March, 1999.
SECURITY FIRST LIFE SEPARATE ACCOUNT A
(Registrant)
By SECURITY FIRST LIFE INSURANCE COMPANY
(Sponsor)
By /s/ Richard C. Pearson
--------------------------------------
Richard C. Pearson, President
As required by the Securities Act of 1933, this amended Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Richard C. Pearson President, General Counsel, March 1, 1999
- ------------------------------ & Director
Richard C. Pearson, President
/s/ Jane F. Eagle Senior Vice President & March 1, 1999
- ------------------------------ Chief Financial Officer
Jane F. Eagle
David F. Levene* Director and March 1, 1999
- ------------------------------ Chairman of the Board
David F. Levene
John K. Bruins* Director March 1, 1999
- ------------------------------
John K. Bruins
Steven T. Cates* Director March 1, 1999
- ------------------------------
Steven T. Cates
Director _______, 1999
- ------------------------------
Joseph J. Jordan
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Terence I. Lennon* Director March 1, 1999
- ------------------------------
Terence I. Lennon
Gail A. Praslick* Director March 1, 1999
- ------------------------------
Gail A. Praslick
Joseph A. Reali* Director March 1, 1999
- ------------------------------
Joseph A. Reali
Anthony J. Williamson* Director March 1, 1999
- ------------------------------
Anthony J. Williamson
/s/ Richard C. Pearson
- ------------------------------
*(Richard C. Pearson as
Attorney-in-Fact for each
of the persons indicated)
</TABLE>
