<PAGE> 1
'33 ACT FILE NO. 33-47984
'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. 14 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
AMENDMENT NO. 112 [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
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
[X] ON MAY 1, 1999 PURSUANT TO PARAGRAPH (b) OF RULE 485
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a) OF RULE 485
[ ] ON [DATE] 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 MARCH 3, 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> <C>
1. Cover Page Cover Page
2. Definitions Glossary
3. Synopsis of Highlights Summary of the Contract
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 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 Contract 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
</TABLE>
<PAGE> 3
PART B - STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C> <C>
14. Table of Contents of the Statement Table of Contents of the Statement of
of Additional Information Additional Information
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company; The Separate
Account; The Trust and the Funds
18. Services Servicing Agent; Safekeeping of
Securities; Independent Auditors
19. Purchase of Securities Being Purchase of Securities Being Offered
Offered
20. Underwriters Distribution of the Contracts
21. Calculation of Performance Data Calculation of Performance Data
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 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 Security First Life 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
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND
Money Market Portfolio
Growth Portfolio
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCT FUND II
Asset Manager Portfolio
Index 500 Portfolio
Contrafund Portfolio
T. ROWE PRICE GROWTH STOCK FUND
T. ROWE PRICE INTERNATIONAL STOCK FUND
NEUBERGER BERMAN GENESIS TRUST
NEUBERGER BERMAN PARTNERS TRUST
JANUS ASPEN SERIES
Worldwide Growth Portfolio
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
2
<PAGE> 6
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.
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
Premium Taxes
Surrender Charges
Mortality and Expense Risk Charge
Federal, State and Local Taxes
Free Look Period
Description of the Contracts
General
Purchase Payments
Transfers
Modification of the Contracts
Assignments
Accumulation Period
Crediting Accumulation Units in the Separate Account
Surrender from the Separate Account
Systematic Withdrawal Option
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 Owner 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 total 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 - The 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 Contracts may be offered to:
- Section 457 deferred compensation 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
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 administration fee of $12 per year. 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 twelve Series, each of which
invests in one of the following twelve Funds:
<TABLE>
<CAPTION>
Funds Advisers/Subadvisers
<S> <C>
SECURITY FIRST TRUST
Bond Series Security First Investment
Management Corporation; Neuberger
Berman, LLC (subadviser)
</TABLE>
9
<PAGE> 13
<TABLE>
<S> <C>
T. Rowe Price Growth & Income Series Security First Investment
Management Corporation;
Price Associates, Inc.
(subadviser)
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND
Money Market Portfolio Fidelity Management & Research
Company ("FMR")
Growth Portfolio FMR
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio FMR
Index 500 Portfolio FMR
Contrafund Portfolio FMR
T. ROWE PRICE GROWTH STOCK FUND Price Associates, Inc.
T. ROWE PRICE INTERNATIONAL STOCK FUND T. Rowe Price - Fleming
International, Inc.
NEUBERGER BERMAN GENESIS TRUST Neuberger Berman Management
Corporation; ("NB") (subadviser)
NEUBERGER BERMAN PARTNERS TRUST NB (subadviser)
JANUS ASPEN SERIES
Janus Capital Corporation ("Janus
Worldwide Growth Portfolio Capital")
</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 fees .002438%
(.89% per year)
10
<PAGE> 14
Surrender charge (contingent deferred sales charge)
- Deducted if you request a full or 7% in 1st Certificate
partial withdrawal of Purchase year; declining 1% each
Payments from the Certificate Year and 0%
Separate Account within the first after the 5th Certificate
five Certificate Years. No charge year.
will be deducted for surrenders as
a result of the following under a Plan:
- death
- disability
- retirement
- hardship
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 total of the Participant's Accounts 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.
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, if you die at age 65 or over, 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. We reserve our right to deduct the premium taxes; but at
present, we are absorbing these charges.
13
<PAGE> 17
FEE TABLES
Your Transaction Expenses
Years since Percentage
Purchase
Payment was
received
Surrender Charge (Deferred Sales 1st 7%
Charge) (as a percentage Certificate
of amounts accumulated with respect to Year
a purchase payment)
2nd 6%
Certificate
Year
3rd 5%
Certificate
Year
4th 4%
Certificate
Year
5th 3%
Certificate
Year
6th 0%
Certificate
Year and later
Administration fees $12 per year
14
<PAGE> 18
Separate Account Expenses
(As a percentage of average Account Value.
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 Money Asset
Bond Growth & Market Growth Manager Contrafund Index 500
Series Income Series Portfolio Portfolio Portfolio Portfolio Portfolio
- ---- ---------------------- --------- ---------------- -------------- ------------ ------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(a) Management Fee .50% .50% .21% .59% .54% .59% .24%
- ---- ---------------------- --------- ---------------- -------------- ------------ ------------- --------------- ------------
(b) Other Expenses .23% .07% .10% .07% .10% .07% .04%
- ---- ---------------------- --------- ---------------- -------------- ------------ ------------- --------------- ------------
(c) Total Annual Expenses .73% .57% .31% .66% .64% .66% .28%
- ---- ---------------------- --------- ---------------- -------------- ------------ ------------- --------------- ------------
</TABLE>
<TABLE>
<CAPTION>
T. Rowe Price T. Rowe Price Worldwide
Growth Stock International Genesis Partners Growth
Fund Stock Fund Trust Trust Portfolio
- -------- ---------------------------- ---------------- ---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
(a) Management Fee .57% .67% 1.11% .85% .66%
- -------- ---------------------------- ---------------- ---------------- --------------- ---------------- ---------------
(b) Other Expenses .17% .17% .08% .06% .08%
- -------- ---------------------------- ---------------- ---------------- --------------- ---------------- ---------------
(c) Total Annual Expenses .74% .84% 1.19% .91% .74%
- -------- ---------------------------- ---------------- ---------------- --------------- ---------------- ---------------
</TABLE>
15
<PAGE> 19
<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 Year 5 Year 10 Year
SERIES return on assets:
- ------------------- ---------------------------------------------- ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Bond Series (a) upon surrender at the end of the stated (a) $82 $101 $120 $192
time period (b) 16 51 88 192
(b) if the Contract WAS NOT surrendered
- ------------------- ---------------------------------------------- ------ ------- ------ ------ --------
T. Rowe Price SAME (a) 80 96 112 175
Growth & Income (b) 15 46 80 175
Series
- ------------------- ---------------------------------------------- ------ ------- ------ ------ --------
Money Market SAME (a) 78 88 99 145
Portfolio (b) 12 38 66 145
- ------------------- ---------------------------------------------- ------ ------- ------ ------ --------
Growth Portfolio SAME (a) 81 99 117 187
(b) 16 50 86 187
- ------------------- ---------------------------------------------- ------ ------- ------ ------ --------
Asset Manager SAME (a) 81 98 115 182
Portfolio (b) 16 48 83 182
- ------------------- ---------------------------------------------- ------ -------- ----- ------ -------
Index 500 SAME (a) 77 88 97 142
Portfolio (b) 12 37 64 142
- ------------------- ---------------------------------------------- ------ -------- ----- ------ -------
Growth Stock Fund SAME (a) 82 101 121 193
(b) 17 51 89 193
- ------------------- ---------------------------------------------- ------ ------- ------ ------ -------
Contrafund SAME (a) 81 100 118 189
Portfolio (b) 16 50 87 189
- ------------------- ---------------------------------------------- ------ -------- ----- ------ -------
International SAME (a) 83 104 126 204
Stock Fund (b) 18 54 94 204
- ------------------- ---------------------------------------------- ------ -------- ----- ------ -------
NEUBERGER SAME (a) 86 114 143 241
BERMAN GENESIS (b) 21 65 112 241
TRUST
- ------------------- ---------------------------------------------- ------ -------- ----- ------ -------
NEUBERGER SAME (a) 83 106 129 212
BERMAN PARTNERS (b) 18 57 97 212
TRUST
- ------------------- ---------------------------------------------- ------ -------- ----- ------ -------
Janus-Aspen Series SAME
Worldwide Growth (a) 82 101 121 193
Portfolio (b) 17 51 89 193
- ------------------- ---------------------------------------------- ------ -------- ----- ------ -------
</TABLE>
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 .35% (see the Variable
Insurance Products Fund II prospectus for more information).
16
<PAGE> 20
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. THE EXAMPLES ARE NOT REPRESENTATIONS OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
CONDENSED FINANCIAL INFORMATION
The following table sets forth condensed financial information on
accumulation units with respect to Contracts issued under this prospectus
through the Separate Account. This information is derived from the financial
statements of the Separate Account. The financial statements for the year ended
December 31, 1998 have been audited by Deloitte & Touche LLP, the Separate
Account's independent auditors. The financial statements for each of the years
or periods ended December 31, 1997 have been audited by Ernst & Young LLP
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>
From Twelve Five Twelve Twelve Twelve Twelve Twelve
Inception Months Months Months Months Months Months Months
to Ended Ended Ended Ended Ended Ended Ended
Separate Account Series 7/31/92 7/31/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------------------- --------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series B (Bond Series)
Beg. AUV (7/1/92)................. 14.55 14.91 16.20 16.48 15.77 18.25 18.60 20.11
End. AUV.......................... 14.91 16.20 16.48 15.77 18.25 18.60 20.11 21.42
End. No. Qualified AUs............ 2.79 4,302 5,563 8,014 12,416 11,642 39,681 63,568
Series G (T. Rowe Price Growth and
Income Series)
Beg. AUV (7/1/92)................. 23.02 23.45 25.27 26.64 27.17 35.31 42.57 53.68
End. AUV.......................... 23.45 25.27 26.64 27.17 35.31 42.57 53.68 58.61
End. No. Qualified AUs............ 4,450 55,454 77,399 154,223 192,251 246,547 504,233 508,159
Series P (T. Rowe Price Prime Re-
serve Fund)
Beg. AUV (7/1/92)................. 11.75 11.77 11.98 12.07 12.40 12.97 13.49 14.05
End. AUV.......................... 11.77 11.98 12.07 12.40 12.97 13.49 14.05 14.64
End. No. Qualified AUs............ 478 6,383 3,478 5,823 8,447 4,008 6,866 1,757
Yield............................. 2.09% 1.60% 1.75% 4.50% 4.11% 4.01% 4.07% 3.88%
Series T (T. Rowe Price Growth Stock
Fund)
Beg. AUV (7/1/92)................. 18.91 19.30 20.98 23.45 23.44 30.44 36.72 46.06
End. AUV.......................... 19.30 20.98 23.45 23.44 30.44 36.72 46.06 58.18
End. No. Qualified AUs............ 3,783 43,092 57,382 134,441 177,235 236,072 572,680 592,525
Series I (T. Rowe Price
International Stock Fund)
Beg. AUV (7/24/92)................ 5.00 5.09 5.73 6.85 6.74 7.45 8.57 8.72
End. AUV.......................... 5.09 5.73 6.85 6.74 7.45 8.57 8.72 10.04
End. No. Qualified AUs............ 139 55,890 95,649 330,647 461,265 642,883 865,412 741,539
Series FA (Asset Manager)
Beg. AUV (9/15/93)................ 5.00 5.37 5.00 5.79 6.58 7.87
End. AUV.......................... 5.37 5.00 5.79 6.58 7.87 8.97
End. No. Qualified AUs............ 39,393 353,650 556,478 681,763 831,316 955,179
Series FG (Growth Portfolio)
Beg. AUV (9/16/93)................ 5.00 5.14 5.10 6.84 7.77 9.51
End. AUV.......................... 5.14 5.10 6.84 7.77 9.51 13.16
End. No. Qualified AUs............ 31,169 182,029 480,578 735,622 903,383 1,084,117
Series FI (Index 500)
Beg. AUV (10/1/93)................ 5.00 5.02 5.03 6.83 8.32 10.95
End. AUV.......................... 5.02 5.03 6.83 8.32 10.95 13.92
End. No. Qualified AUs............ 383 11,568 65,944 189,079 430.635 811,520
Series NG (Genesis Trust)
Beg. AUV (1/9/98)................. 5.00
End AUV........................... 4.61
End No. Qualified AUs............. 246,315
Series NP (Partners Trust)
Beg. AUV (1/9/98)................. 5.00
End AUV........................... 5.26
End No. Qualified AUs............. 272,328
Series JW (Worldwide Growth)
Beg. AUV (1/8/98)................. 5.00
End AUV........................... 6.39
End No. Qualified AUs............. 261,044
Series FM (Money Market)
Beg. AUV $ (12/29/97).............. 5.66 5.92
End. AUV $......................... 6.92 6.19
End No. Qualified AUs.............. 221,521 177,616
Yield.............................. 4.18%
Series FC (Contra)
Beg. AUV $ (1/15/98)............... 5.00
End. AUV $......................... 6.44
End No. Qualified AUs.............. 151,176
</TABLE>
- ---------------
AUV -- Accumulation Unit Value
AUs -- Accumulation Units
17
<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
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.
18
<PAGE> 22
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 $215.30 billion worth of total assets 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
May 1, 1999, MetLife does not know the complete 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 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 1940 Act.
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 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.)
19
<PAGE> 23
The Separate Account is divided into a number of investment Series of
Accumulation and Annuity Units. Twelve 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;
current income. While this Price Associates, Inc.
Series will generally invest (subadviser)
in common stocks and other equities, it
may, depending on economic conditions,
reduce such investments and substitute
fixed-income instruments.
Fidelity Investments The Fund seeks to obtain as Fidelity Management &
VIP Fund Money Market high a level of current Research Company
Portfolio 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.
VIP Fund 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 Fund II Asset Manager The Fund seeks high total Fidelity Management &
Portfolio return with reduced risk over Research Company
the long-term by allocating its assets
among stocks, bonds, and short-term,
fixed income instruments.
</TABLE>
20
<PAGE> 24
<TABLE>
<S> <C> <C>
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.
Contrafund Portfolio The Fund seeks capital Fidelity Management &
appreciation by investing in Research Company
companies that the investment
adviser believes to be
undervalued due to an overly
pessimistic appraisal by the
public.
T. Rowe Price Growth The Fund seeks long-term Price Associates, Inc.
Stock Fund growth of capital through
investing primarily in common
stocks of growth companies.
T. Rowe Price International The Fund seeks total return T. Rowe Price - Fleming
Stock Fund 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.
Neuberger Berman Genesis The Fund seeks capital Neuberger Berman
Trust appreciation. The portfolio Management Corporation;
invests primarily in common Neuberger Berman, LLC
stocks of companies with (subadviser)
small market capitalizations ("small-cap
companies"), using the value-oriented
investment approach.
Neuberger Berman Partners The Fund seeks capital Neuberger Berman
Trust growth. The portfolio Management Corporation;
invests principally in common Neuberger Berman, LLC
stocks of medium and large (subadviser)
capitalization established
companies, using the
value-oriented investment
approach.
Janus Aspen Worldwide The Fund seeks long-term Janus Capital Corporation
Growth Portfolio growth of capital in a manner
consistent with preservation of capital.
The portfolio pursues this objective
primarily through investments in common
stocks of foreign and domestic issuers
(normally in issuers of at least five
different countries, including the
United States).
</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.
21
<PAGE> 25
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.
Each of the Funds is a portfolio or series of an open-end management investment
company registered with the SEC under the 1940 Act. 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, T. Rowe Price
International Stock Fund, Neuberger Berman Genesis Trust, Neuberger Berman
Partners Trust, and Janus Aspen Worldwide Growth Portfolio). In the future, a
conflict may develop between one or more separate accounts 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.]
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
22
<PAGE> 26
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.
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.
23
<PAGE> 27
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:
- costs 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.
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
24
<PAGE> 28
Purchase Payment. However, Security First Life reserves our right to 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 five Certificate Years will be subject to a
surrender charge equal to the following percentage of the amount surrendered:
- 7% in 1st Certificate Year
- 6% in 2nd Certificate Year
- 5% in 3rd Certificate Year
- 4% in 4th Certificate Year
- 3% in 5th Certificate Year
- 0% after the 5th Certificate Year
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.
Surrenders of a Participant's account for transfer to other investment providers
to the Plan will be permitted at the Participant's Account value until the sum
of all Participant transfers at the Participant's Account Value to other
investment providers from the Contract and any of the other group annuity
contracts issued by Security First Life to the Plan exceeds in any calendar year
an amount equal to 15% of the total of the Participant's Account value in
Security First Life's group annuity contracts issued to the Plan as of the prior
December 31. Once this 15% limit has been reached, all subsequent surrenders of
Participants' Accounts for transfer to such other investment providers during
the remainder of the calendar year will be made at the cash values of
Participant's Account.
25
<PAGE> 29
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.
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 $1,800.
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.]
26
<PAGE> 30
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, 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.
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 total of the
Participants' Accounts.
27
<PAGE> 31
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.
A group contract is issued to an employer 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 plan since all ownership rights in
the Contract are held by the employer. 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.
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.
28
<PAGE> 32
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 the 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.
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 Participants' 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.
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.
[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
31
<PAGE> 35
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. 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 you 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.
- The SEC determines that an emergency exists that
makes disposal of portfolio securities or valuation
of assets of the Funds not reasonably practicable.
32
<PAGE> 36
Systematic Withdrawal Option
When you are eligible to receive payments under the Plan, you may select a
systematic withdrawal option. Under this option, you select:
- payment beginning date;
- the frequency of payment; and
- the time over which payments will be made.
Your entire Participant's Account (and any other accounts you have with Security
First Life under the Plan) must be included in this election. Initial payments
will be determined using the value of your Participant's Account and an assumed
earning rate set by Security First Life. Payments will be redetermined
periodically so that the value of your account will be paid over the time period
you selected. If you select this option, you can continue to transfer account
values among Fund options. Any pay out must meet distribution requirements under
the Code and the Plan.
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.
33
<PAGE> 37
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.
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 an 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.
34
<PAGE> 38
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.
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 involving a life contingency.
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.
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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.
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 3.00% 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.
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Frequency of Payment
Your payments under all options will be made on a monthly basis unless you
request quarterly, semi-annual, or annual payment in accordance with the Plan.
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.
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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.
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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 (15 years if
the Beneficiary is not your spouse).
- 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:
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- 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.
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 you die on or after the Annuity Date, the amounts payable to the
Beneficiary(ies)will consist of any continuing payments 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. 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.
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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
The Contracts are only offered to 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 457 plan (except for a
return of non-deductible employee contributions) is included in your gross
income and is taxed at ordinary income rates unless the distribution is
transferred to an eligible rollover account or Contract.
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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 year it is paid or when it is made available, depending upon
whether certain Code requirements are met.
Mandatory minimum distributions
If you are a participant in a 457 plan, you generally must begin receiving
withdrawals from your Participant's Account or Annuity payments by April 1
of the calendar year following the later of:
- the year you turn 70 1/2
- the year you retire
Annuity Payments can be for a period not greater than your life expectancy or
that of you and a beneficiary. Distributions from a 457 Plan cannot be made
available to your 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 457 Plan Another Section 457 Plan
- -------------------------------------- -----------------------------------
- -------------------------------------- -----------------------------------
Taxation of death benefits
Any distributions under Section 457 must meet minimum incidental death benefit
requirements under the Code for the tax years beginning after December 31, 1988.
However, if your spouse is your designated beneficiary, these death benefit
requirements do not apply.
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Withholding
Amounts distributed under Section 457 plans are considered compensation and are
subject to the employer's withholding and reporting requirements.
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.
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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.
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'33 Act File No. 33-47984
STATEMENT OF
ADDITIONAL INFORMATION
SECURITY FIRST LIFE SEPARATE ACCOUNT A
- --------------------------------------------------------------------------------
GROUP FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
SECURITY FIRST LIFE INSURANCE COMPANY
MAY 1, 1999
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 (800)
992-9785.
SF 236FL
<PAGE> 49
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
The Insurance Company 3
The Separate Account 3
Surrender Charges 3
Net Investment Factor 4
Annuity Payments 4
Additional Federal Income Tax Information 6
Underwriters, Distribution of the Contracts 7
Voting Rights 7
Safekeeping of Securities 7
Servicing Agent 7
Independent Auditors 8
Legal Matters 8
State Regulation of Security First Life 8
Financial Statements 8
</TABLE>
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THE INSURANCE COMPANY
Security First Life Insurance Company ("Security First Life") is a wholly-owned
subsidiary of Security First Group, Inc. ("SFG"). 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
$215.30 billion at December 31, 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 New York State
Insurance Department and policyholders. As of May 1, 1999, MetLife does not know
the complete 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
twelve Funds: the Money Market Portfolio and the Growth Portfolio of the
Variable Insurance Products Fund; the Asset Manager Portfolio and Index 500
Portfolio and the Contrafund Portfolio of the Variable Insurance Products Fund
II; the Bond Series and the T. Rowe Price Growth and Income Series of the
Security First Trust, and the T. Rowe Price Growth Stock Fund, and the T. Rowe
Price International Stock Fund, the Neuberger & Berman Genesis Trust, the
Neuberger & Berman Partners Trust and the Worldwide Growth Portfolio of the
Janus Aspen Series. The Separate Account is divided into Series which correspond
to these twelve Funds.
SURRENDER CHARGES
Subject to the Plan qualifying under Section 457 of the Internal Revenue Code
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 before the fifth anniversary of the
Certificate Date, the portion of the Participant's Account surrendered will be
subject to a surrender charge equal to varying percentages of the amount
surrendered. Any surrender on or after the fifth anniversary of the Certificate
Date will not be subject to a surrender charge. In no event 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 of
the Contract 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
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under the Certificate shall be deemed to be the date of such first Purchase
Payment under the prior 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 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 a 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 0.002438 for each
calendar day between the preceding Business Day and the end of the current
Business Day.
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 Adjusted
of Birth 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>
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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's Account 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 payments due.
The number of Annuity Units for a Series remains fixed during the Annuity period
unless Annuity Units are converted to or from another Series.
Determination of Amount of Monthly Variable Annuity Payments for Second and
Subsequent Years
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
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<PAGE> 53
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 was originally set at $5 for each Series
for the first Valuation Period during 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 by the value of an
Accumulation Unit at the end of the preceding 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 anytime,
and therefore 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 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
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<PAGE> 54
will be withheld at a flat 10% rate.
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 Contract will be sold in
the State of Florida.
VOTING RIGHTS
Unless otherwise restricted by the Plan under which the 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 Fund's shares held by the
Separate Account declines during the time the Annuitant is receiving a Variable
Annuity based on the investment performance of 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.
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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 and the related financial statement
schedules of Security First Life Insurance Company and subsidiary at December
31, 1998 and the financial statements and the related financial statement
schedules of Security First Life Separate Account A at December 31, 1998
included elsewhere in the registration statement have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports appearing elsewhere
in the registration statement, and are included in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing. The
consolidated financial statements and the related financial statement schedules
of Security First Life Insurance Company and subsidiary at December 31, 1997 and
1996 and the statements of changes in net assets of Security First Life Separate
Account A for the year ended December 31, 1997 included elsewhere in the
registration statement have been audited by Ernst & Young LLP, independent
auditors, as stated in their reports appearing elsewhere in the registration
statement, and are included in reliance upon the reports of such firm given upon
their authority 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 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
8
<PAGE> 56
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.
SF236FL
9
<PAGE> 57
SECURITY FIRST LIFE INSURANCE
COMPANY AND SUBSIDIARY
(A WHOLLY OWNED SUBSIDIARY OF
METROPOLITAN LIFE INSURANCE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1998 AND 1997 AND FOR
THE YEARS ENDED DECEMBER 31, 1998,
1997 AND 1996 AND INDEPENDENT
AUDITORS' REPORTS
<PAGE> 58
[DELOITTE & TOUCHE LLP LETTERHEAD]
Report of Independent Auditors
Board of Directors
Security First Life Insurance Company
We have audited the accompanying consolidated balance sheet of Security First
Life Insurance Company and subsidiary (the Company) as of December 31, 1998, and
the related consolidated statements of income, stockholder's equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit. The consolidated financial
statements of the Company for the years ended December 31, 1997 and 1996, were
audited by other auditors whose report, dated February 11, 1998, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Security First
Life Insurance Company and subsidiary at December 31, 1998, and the consolidated
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
February 10, 1999
<PAGE> 59
[ERNST & YOUNG, LLP LETTERHEAD]
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Security First Life Insurance Company
We have audited the accompanying consolidated balance sheets of Security First
Life Insurance Company and subsidiaries as of December 31, 1997 and 1996, and
the related consolidated statements of income, stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Security First
Life Insurance Company and subsidiaries at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young, LLP
February 11, 1998
<PAGE> 60
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1998 1997
---------- ----------
(In thousands)
<S> <C> <C>
ASSETS
INVESTMENTS
Fixed maturities $2,092,183 $2,353,087
Mortgage loans 165,167
Policy loans 28,715 24,209
Short-term investments 50,520 22,385
Other investments 1,152 1,089
---------- ----------
2,337,737 2,400,770
CASH AND CASH EQUIVALENTS 36,931 11,044
ACCRUED INVESTMENT INCOME 36,486 33,730
DEFERRED POLICY ACQUISITION COSTS 104,658 96,297
OTHER ASSETS
Assets held in separate accounts 1,492,885 1,022,850
Property under capital lease 8,940 9,496
Other 1,657 1,329
---------- -----------
1,503,482 1,033,675
---------- -----------
$4,019,294 $3,575,516
========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE> 61
<TABLE>
<CAPTION>
December 31,
1998 1997
----------- ----------
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Policyholder liabilities $2,202,198 $2,243,441
Liabilities related to separate accounts 1,492,885 1,022,850
Obligation under capital lease 15,130 15,443
Notes payable to parent 35,000 35,000
Federal income taxes 38,800 44,998
Other 7,499 60
---------- ----------
3,791,512 3,361,792
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
Preferred stock, $1 par value
Authorized, issued and outstanding -- 200,000 shares 200 200
Common stock, $200 par value
Authorized -- 15,000 shares
Issued and outstanding -- 11,000 shares 2,200 2,200
Additional paid-in capital 48,147 48,147
Retained earnings 149,305 128,347
Accumulated other comprehensive income 27,930 34,830
---------- ----------
227,782 213,724
---------- ----------
$4,019,294 $3,575,516
========== ==========
</TABLE>
3
<PAGE> 62
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997 1996
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
REVENUES
Net investment income $165,749 $171,066 $164,115
Annuity product income 22,125 19,533 10,006
Net realized investment gains (losses) 25,010 2,708 (2,179)
Gain on sale of subsidiary 3,879
Other 187 709
-------- -------- --------
TOTAL REVENUES 212,884 193,494 176,530
BENEFITS AND EXPENSES
Interest credited to policyholders 112,834 112,832 106,347
Benefits in excess of policyholder liabilities 4,876 1,953 4,960
Amortization of deferred policy acquisition
costs 35,609 20,080 13,542
Operating expenses 29,116 26,434 25,721
--------- -------- --------
TOTAL BENEFITS AND EXPENSES 182,435 161,299 150,570
--------- -------- --------
INCOME BEFORE INCOME TAX EXPENSE 30,449 32,195 25,960
Income tax expense (benefit)
Current 12,584 7,580 3,596
Deferred (3,093) 3,308 5,885
-------- -------- --------
9,491 10,888 9,481
--------- -------- --------
NET INCOME $ 20,958 $ 21,307 $ 16,479
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE> 63
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Preferred Common Paid-in Comprehensive Retained Comprehensive Stockholder's
Stock Stock Capital Income (Loss) Earnings Income (Loss) Equity
--------- ------ ---------- ------------- -------- ------------- -------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $200 $2,200 $48,147 $ 90,561 $ 38,972 $180,080
Comprehensive income (loss):
Net income $ 16,479 16,479 16,479
Other comprehensive income (loss):
Unrealized investment gains, net of
related adjustments and income taxes (22,023) (22,023) (22,023)
--------
$ (5,544)
---- ------ ------- ======== -------- -------- --------
Balance at December 31, 1996 200 2,200 48,147 107,040 16,949 174,536
Comprehensive income:
Net income $ 21,307 21,307 21,307
Other comprehensive income:
Unrealized investment gains, net of
related adjustments and income taxes 17,881 17,881 17,881
--------
$ 39,188
---- ------ ------- ======== -------- -------- --------
Balance at December 31, 1997 200 2,200 48,147 128,347 34,830 213,724
Comprehensive income (loss):
Net income $ 20,958 20,958 20,958
Other comprehensive income (loss):
Unrealized investment gains, net of
related adjustments and income taxes (6,900) (6,900) (6,900)
--------
$ 14,058
---- ------ ------- ======== -------- -------- --------
Balance at December 31, 1998 $200 $2,200 $48,147 $149,305 $ 27,930 $227,782
==== ====== ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE> 64
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997 1996
---------- ---------- -----------
(In thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 20,958 $ 21,307 $ 16,479
Adjustments to reconcile net income to net cash
provided by operations:
Net realized investment losses (gains) (25,010) (2,708) 2,179
Depreciation and amortization 175 876 1,772
Accretion of discount and amortization of
premium on investments (155) 906 1,988
Gain on sale of subsidiary (3,879)
Changes in operating assets and liabilities:
Accrued investment income (2,756) (933) (2,338)
Deferred policy acquisition costs 2,814 (21,891) (24,655)
Other assets (592) 25,156 (19,008)
Other liabilities 4,888 (3,718) 9,889
---------- ---------- -----------
NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES 322 18,995 (17,573)
INVESTING ACTIVITIES
Fixed maturity securities
Purchases (675,821) (695,092) (1,065,166)
Sales and maturities 940,671 652,723 934,171
Net sale (purchase) of other investments 79 1,959 (314)
Net sale (purchase) of short-term investments (28,135) 2,222 (17,583)
Issuance (repayment) of mortgage loans (165,167) 945
Issuance of policy loans, net (4,506) (2,776) (3,580)
Purchase of equipment (440) (320)
---------- ---------- -----------
NET CASH PROVIDED BY
(USED IN) INVESTING ACTIVITIES 67,121 (40,459) (152,792)
FINANCING ACTIVITIES
Receipts credited to policyholder accounts 689,536 729,696 693,095
Amounts returned to policyholders (730,779) (708,383) (518,002)
Repayment of note payable (1,000)
Reduction of capital lease obligation (313) (277) (246)
---------- ---------- -----------
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES (41,556) 21,036 173,847
---------- ---------- -----------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 25,887 (428) 3,482
Cash and cash equivalents at beginning of year 11,044 11,472 7,990
---------- ---------- -----------
CASH AND CASH
EQUIVALENTS AT END OF YEAR $ 36,931 $ 11,044 $ 11,472
========= ========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE> 65
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION -- Security First Life Insurance Company (Security First
Life) and subsidiary (collectively, the Company) is a wholly-owned subsidiary of
Security First Group, Inc. (SFG). Effective October 31, 1997, SFG became a
wholly-owned subsidiary of Metropolitan Life Insurance Company. Prior to that
date, SFG was a wholly-owned subsidiary of London Insurance Group, Inc. The
Company sells a broad range of fixed and variable annuity contracts.
The Company's consolidated financial statements are prepared in conformity with
generally accepted accounting principles (GAAP) which differ in some respects
from statutory accounting practices prescribed or permitted by regulatory
authorities (statutory basis) and include the accounts of its wholly-owned
subsidiary, Security First Life Insurance Company of Arizona (SFL-Arizona).
Prior to December 31, 1996, the financial statements also included the accounts
of Fidelity Standard Life Insurance Company (Fidelity Standard Life), which was
sold as of that date. (See Note 8.) All significant intercompany transactions
and accounts are eliminated in consolidation.
INVESTMENTS -- Investments are reported on the following bases:
Fixed Maturities -- at fair value, which differs from the amortized cost of
such investments. Unrealized gains and losses on these investments (net of
related adjustments for deferred policy acquisition costs and applicable
deferred income taxes) are credited or charged to stockholder's equity and,
accordingly, have no effect on net income.
For those fixed maturities which are mortgage-backed, the Company
recognizes income using a constant effective yield based on anticipated
prepayments and the estimated economic life of the securities. When actual
prepayments differ significantly from anticipated prepayments, the
effective yield is recalculated to reflect actual payments to date and
anticipated future payments. The net investment in the security is adjusted
to the amount that would have existed had the new effective yield been
applied since the acquisition of the security. Such adjustment is included
in net investment income.
The Company classifies its fixed maturities as available-for-sale. The
Company does not maintain a trading portfolio.
Mortgage loans -- at amortized cost, net of valuation allowances, if any,
which approximates fair value.
Policy loans -- at unpaid balances, which approximate fair value.
Short-term investments -- at cost, which approximates fair value.
Other investments -- at fair value.
7
<PAGE> 66
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Realized gains and losses on disposal of investments are determined on a
specific identification basis.
CASH AND CASH EQUIVALENTS -- Cash equivalents consist of investments in money
market funds. The carrying amount of cash equivalents approximates fair value.
DEFERRED POLICY ACQUISITION COSTS -- Deferred policy acquisition costs consist
of commissions and other costs of acquiring annuities that vary with and are
primarily related to the acquisition of such business. Deferred policy
acquisition costs are being amortized in proportion to the present value of
estimated future gross margins which includes the impact of realized investment
gains and losses.
POLICYHOLDER LIABILITIES -- Policyholder liabilities for two-tier annuities are
the lower tier account values. Policyholder liabilities for the Company's
single-tier fixed annuity products are the account values. The fair value of
policyholder liabilities is estimated assuming all policyholders surrender their
policies. The carrying amounts and estimated fair values are as follows (in
thousands):
<TABLE>
<CAPTION>
Carrying Amount Estimated Fair Value
--------------- --------------------
<S> <C> <C>
December 31, 1998 $2,202,198 $2,141,415
December 31, 1997 2,243,441 2,172,159
</TABLE>
NOTES PAYABLE -- Notes payable are carried at their unpaid balances which
approximate fair value because the interest rates on these notes approximate
market rates.
INCOME TAXES -- Through October 30, 1997, the Company filed consolidated federal
income tax returns with SFG. After that date, the Company's return is not
consolidated with SFG. Income taxes for all periods are provided on the basis as
if the Company filed separately.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Such differences are related principally to the deferral of policy
acquisition costs, the valuation of fixed maturities and the provision for
policyholder liabilities. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
8
<PAGE> 67
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
SEPARATE ACCOUNTS -- The assets held in separate accounts represent funds that
are separately administered by the Company pursuant to variable annuity
contracts. The liabilities related to separate accounts consist of policyholder
liabilities for variable annuities. The separate account assets and liabilities
are reported at fair value. The Company receives a fee for administrative
services provided to the separate accounts. Investment risks associated with
fair value changes are borne by the contract holders.
ANNUITY REVENUES AND BENEFITS -- Annuity product income represents fees earned
from policyholders of annuity contracts, including surrender charges,
annuitization charges and administration fees. Benefits in excess of
policyholder liabilities consists of the difference between the policyholder
account values annuitized during the period and the related policyholder
liability balances.
ESTIMATES -- Certain amounts reported in the accompanying consolidated financial
statements are based on management's best estimates and judgments. Actual
results could differ from those estimates.
NEW ACCOUNTING STANDARDS -- Effective January 1, 1998, the Company adopted
Statement of Financial Accounting Standards No. 130 Reporting Comprehensive
Income (SFAS 130). SFAS 130 establishes standards for reporting and displaying
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements. Adoption of
SFAS 130 had no effect on the Company's consolidated financial condition or
results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (SFAS 133). SFAS 133 requires, among other things, that
all derivatives be recognized in the consolidated balance sheets as either
assets or liabilities and measured at fair value. The corresponding derivative
gains and losses should be reported based upon the hedge relationship, if such a
relationship exists. Changes in the fair value of derivatives that are not
designated as hedges or that do not meet the hedge accounting criteria in SFAS
133 are required to be reported in operations. The Company is required to adopt
SFAS 133 as of January 1, 2000. The Company does not anticipate any impact on
its consolidated financial condition or results of operations from the adoption
of SFAS 133.
9
<PAGE> 68
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 2 -- STATUTORY CAPITAL AND RESTRICTIONS
Security First Life is required to file annual statements with various state
insurance regulatory authorities on a statutory basis. Prior to December 31,
1998, SFL-Arizona was also subject to this requirement.
The statutory-basis capital and surplus at December 31, 1998, 1997 and 1996, and
statutory-basis net income for those years are as follows (in thousands):
<TABLE>
<CAPTION>
Capital Net
and Surplus Income
----------- ------
<S> <C> <C>
December 31, 1998
-----------------
Security First Life Insurance Company $128,508 $ 7,662
December 31, 1997
-----------------
Security First Life Insurance Company $117,623 $12,917
Security First Life Insurance Company of Arizona 14,107 257
December 31, 1996
-----------------
Security First Life Insurance Company $107,501 $13,449
Security First Life Insurance Company of Arizona 13,823 1,187
</TABLE>
Security First Life is incorporated and domiciled in Delaware. The payment of
dividends is subject to statutory limitations which are based on statutory-basis
net income and surplus levels. At December 31, 1998, the maximum amount of
dividends Security First Life could pay SFG without prior approval from state
insurance regulatory authorities is $12,612,000.
NOTE 3 -- INVESTMENTS
Unrealized investment gains reported in the accompanying financial statements
are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1998 1997
-------- --------
<S> <C> <C>
Unrealized investment gains $ 84,001 $105,251
Less: Adjustment for deferred policy
acquisition costs 41,491 52,500
Deferred income taxes 14,580 17,921
-------- --------
Net unrealized investment gains $ 27,930 $ 34,830
======== ========
</TABLE>
10
<PAGE> 69
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 -- INVESTMENTS (continued)
Net realized investment gains (losses) reported in the accompanying financial
statements are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Fixed maturities
Gross gains $ 30,982 $ 8,338 $ 8,923
Gross losses (6,046) (5,691) (8,075)
-------- -------- --------
24,936 2,647 848
Other investments
Gross gains 133 197
Gross losses (59) (136) (3,027)
-------- -------- --------
74 61 (3,027)
-------- -------- --------
Net realized investment gains (losses) $ 25,010 $ 2,708 $ (2,179)
======== ======== ========
</TABLE>
Proceeds from sales of fixed maturities are $940,671,000, $648,338,000 and
$911,529,000 in 1998, 1997 and 1996, respectively.
The amortized cost and fair value of fixed maturities as of December 31, 1998
and 1997 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1998
- -----------------
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 68,487 $ 4,499 $ (330) $ 72,656
Debt securities issued by foreign
governments 34,740 1,436 (1,188) 34,988
Corporate securities 1,266,178 68,987 (11,737) 1,323,428
Mortgage-backed securities 638,873 23,056 (818) 661,111
---------- ------- -------- ----------
$2,008,278 $ 97,978 $(14,073) $2,092,183
========== ======== ======== ==========
December 31, 1997
- -----------------
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 93,546 $ 9,275 $ (22) $ 102,799
Debt securities issued by foreign
governments 31,110 2,997 34,107
Corporate securities 1,297,937 67,350 (564) 1,364,723
Mortgage-backed securities 825,284 27,484 (1,310) 851,458
---------- -------- -------- ----------
$2,247,877 $107,106 $ (1,896) $2,353,087
========== ======== ======== ==========
</TABLE>
11
<PAGE> 70
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 -- INVESTMENTS (continued)
The amortized cost and fair value of fixed maturities by contractual maturity at
December 31, 1998, are summarized below. Actual maturities will differ from
contractual maturities because certain borrowers have the right to call or
prepay obligations.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
--------- -------
(In thousands)
<S> <C> <C>
Due in one year or less $ 32,695 $ 33,230
Due after one year through five years 378,576 390,934
Due after five years through ten years 559,646 576,041
Due after ten years 398,488 430,867
Mortgage-backed securities 638,873 661,111
---------- ----------
$2,008,278 $2,092,183
========== ==========
</TABLE>
The Company has recorded valuation reserves for impairment in the value of
investments of $5,000,000 at both December 31, 1998 and 1997.
Concentrations of credit risk with respect to fixed maturities are limited due
to the large number of issues owned and their dispersion across many different
industries and geographic areas. Accordingly, at December 31, 1998, the Company
had no significant concentration of credit risk.
The fair values for fixed maturities are primarily based on values obtained from
independent pricing services.
Mortgage loans are collateralized by properties located throughout the United
States. At December 31, 1998, approximately 17% and 16% of the mortgages were
collateralized by properties located in New York and California, respectively.
All of the mortgage loans at December 31, 1998, are in good standing, and the
Company was not holding any valuation allowances related to such loans. Mortgage
loans outstanding at December 31, 1998, are summarized as follows (in
thousands):
<TABLE>
<S> <C> <C>
Commercial $145,525 88%
Agricultural 19,642 12%
-------- ---
$165,167 100%
======== ===
</TABLE>
The carrying amount of policy loans approximates fair value because the interest
rates on these loans approximate market rates.
12
<PAGE> 71
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 -- INVESTMENTS (continued)
On February 5, 1998, the Company entered into an interest-rate swap agreement
with a large broker/dealer for the purpose of minimizing exposures to
fluctuations in interest rates in its policyholder liabilities. An interest-rate
swap is an agreement in which two parties agree to exchange, at specific
intervals, interest payment streams calculated on an agreed-upon notional
principal amount with at least one stream based on a specific floating-rate
index. Under the interest-rate swap agreement, the broker/dealer agrees to pay
the Company, on a quarterly basis, an amount by which the 30-day Treasury
Constant Maturity Rate exceeds the interest-rate cap of 7.9% applied to the
notional amount of $250,000,000. The 30-day Treasury Constant Maturity rate was
4.54% as of December 31, 1998; hence, the fair value of the interest-rate swap
as of December 31, 1998 approximated zero. The interest-rate swap agreement
expires February 9, 2001.
Any income or expense from the interest-rate swap is recorded on an accrual
basis as an adjustment to the yield of the related interest-bearing liabilities
in the periods covered by the contract.
The Company is exposed to a potential loss in the event of non-performance by
the broker/dealer, although such non-performance is not anticipated.
The Company places its temporary cash investments with high-credit quality
financial institutions and, by corporate policy, limits the amount of credit
exposure to any one financial institution.
At December 31, 1998, investment securities having an amortized cost of
$6,037,000 were on deposit with various states in accordance with state
insurance department requirements.
Investment income by major category of investment is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Fixed maturities $ 162,836 $ 173,015 $ 165,997
Mortgage loans 3,288
Policy loans 1,294 1,325 1,283
Short-term investments 3,795 1,897 1,718
Other investments 443 858 553
Cash and cash equivalents 269 486
--------- --------- ---------
171,656 177,364 170,037
Investment expenses (5,907) (6,298) (5,922)
--------- --------- ---------
Net investment income $ 165,749 $ 171,066 $ 164,115
========= ========= =========
</TABLE>
The Company has no significant amounts of non-income producing investments.
13
<PAGE> 72
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 4 -- NOTES PAYABLE
Notes payable consist of the following as of December 31, 1998 and 1997 (in
thousands):
<TABLE>
<S> <C>
5% Surplus note due to SFG, interest payable monthly,
principal payable upon regulatory approval $25,000
8% Surplus note due to SFG, interest payable monthly,
principal payable upon regulatory approval 10,000
-------
$35,000
=======
</TABLE>
There are no principal payments due on the notes payable during the next five
years.
Interest paid by the Company totaled $2,150,000 in 1998, $2,083,000 in 1997 and
$2,133,000 in 1996.
NOTE 5 -- INCOME TAXES
The liability for federal income taxes includes deferred taxes of $36,772,000
and $43,154,000 at December 31, 1998 and 1997, respectively. Significant
components of these deferred taxes are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Deferred tax liabilities:
Deferred policy acquisition costs $ 48,952 $ 30,459
Fixed maturities 16,788 37,922
Other assets 3,441 3,532
-------- --------
Total deferred tax liabilities 69,181 71,913
Deferred tax assets:
Policyholder liabilities 10,095 11,787
Liabilities for separate accounts 16,778 11,445
Other liabilities 5,296 5,251
Other, net 240 276
-------- --------
Total deferred tax assets 32,409 28,759
-------- --------
Net deferred tax liabilities $ 36,772 $ 43,154
======== ========
</TABLE>
Income taxes paid by the Company were $12,401,000 in 1998, $6,480,000 in 1997
and $1,972,000 in 1996.
14
<PAGE> 73
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 5 -- INCOME TAXES (continued)
The following is a reconciliation of the federal income tax at the statutory
rate of 35% with the income tax provision as shown in the accompanying financial
statements (in thousands):
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Federal income tax at 35% $ 10,657 $ 11,268
Dividends received deduction (905) (356)
True up of prior year taxes (261) 298
Other (322)
-------- --------
Provision for income tax expense $ 9,491 $ 10,888
======== ========
</TABLE>
NOTE 6 -- CAPITAL LEASE
Security First Life has a lease for office space that expires in 2014. This
lease is treated as a capital lease for financial reporting purposes.
The Company subleases space on an annual basis to SFG to use as its home office.
Related income offset against the lease costs was $1,660,000, $1,650,000 and
$1,656,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
Future payments under the lease are as follows (in thousands):
<TABLE>
<S> <C>
1999 $ 2,166
2000 2,166
2001 2,166
2002 2,166
2003 2,166
Thereafter 22,553
--------
Total minimum rental payments 33,383
Amount representing interest 18,253
--------
Present value of minimum rental payments $ 15,130
========
</TABLE>
The property under capital lease is net of accumulated amortization of
$8,481,000 in 1998 and $7,901,000 in 1997. Lease amortization expense was
$580,000 in 1998, 1997 and 1996.
15
<PAGE> 74
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 7 -- RELATED PARTY TRANSACTIONS
The Company has marketing and administrative agreements with SFG under which SFG
provides all of the Company's marketing and policyholder administration
services. Amounts incurred under these agreements were $51,658,000, $58,199,000,
and $52,102,000 for 1998, 1997 and 1996, respectively. A substantial portion of
these amounts are commissions and are deferred as policy acquisition costs.
The Company has management agreements with SFG under which the latter provides
certain personnel, administrative services and office space. Amounts incurred
under these agreements were $3,883,000 in 1998 and 1997 and $4,308,000 in 1996.
The Company has investment advisory agreements with Security First Investment
Management Corporation, a subsidiary of SFG. Fees of $5,772,000, $5,711,000 and
$5,360,000 were paid in 1998, 1997 and 1996, respectively, pursuant to these
agreements.
NOTE 8 -- OTHER SIGNIFICANT EVENTS
Effective December 31, 1996, the Company sold all of the common stock of its
former subsidiary, Fidelity Standard Life. As a result of this transaction, the
Company recognized a gain in 1996 of $3,879,000.
Prior to the sale of Fidelity Standard Life, the Company assumed all of the
policyholder liabilities through several reinsurance agreements. No gain or loss
was recognized on this transaction.
NOTE 9 -- IMPACT OF YEAR 2000 (unaudited)
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the Year 2000 issue and has
developed and implemented a plan to resolve the issue. The Company currently
believes that, with modifications to existing software and converting to new
software and hardware, the Year 2000 issue will not pose significant operational
problems for the Company's computer systems. However, if such modifications and
conversions are not completed on a timely basis, the Year 2000 issue may have a
material impact on the operations of the Company. Furthermore, even if the
Company completes such modifications and conversions on a timely basis, there
can be no assurance that the failure by vendors or other third parties to solve
the Year 2000 issue will not have a material impact on the operations of the
Company.
16
<PAGE> 75
SECURITY FIRST LIFE SEPARATE
ACCOUNT A
STATEMENTS OF ADDITIONAL INFORMATION AS OF
DECEMBER 31, 1998 AND FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997 AND
INDEPENDENT AUDITORS' REPORTS
<PAGE> 76
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Board of Directors
Security First Life Insurance Company
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Security First Life Separate
Account A ("Separate Account") Series B, G, T, P, I, FA, FG, FI, FO, FM, SU,
SV, AS, SI, FC, FE, NG, NP and JW, as of December 31, 1998 and the related
statements of operations for the year then ended (as to Series NG, NP and JW,
for the period from commencement of operations through December 31, 1998) and
statements of changes in net assets for the period then ended. These financial
statements are the responsibility of the Separate Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements of the Separate Account Series for the
year ended December 31, 1997 were audited by other auditors whose report, dated
April 17, 1998, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective Series
constituting the Security First Life Separate Account A as of December 31, 1998
and the results of their operations for the year then ended (as to Series NG,
NP and JW, for the period from commencement of operations through December 31,
1998) and the changes in their net assets for the year or period then ended, in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
April 15, 1999
<PAGE> 77
[ERNST & YOUNG LLP LETTERHEAD]
Report of Independent Auditors
To the Board of Directors
Security First Life Insurance Company
and Contract Owners
Security First Life Separate Account A
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Security First Life Separate Account A
(comprised of Series B, G, T, P, I, FA, FG, FI, FO, FM, SU, SV, AS, SI, FC and
FE) as of December 31, 1997, and the related statements of operations for the
year then ended and changes in net assets for each of the two years in the
period then ended. These financial statements are the responsibility of the
Separate Account's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1997, by correspondence
with the respective mutual fund managers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Security First Life Separate
Account A (comprised of the above referenced Series) at December 31, 1997, the
results of their operations for the year then ended, and the changes in their
net assets for each of the two years in the period then ended, in conformity
with generally accepted accounting principles.
/s/ ERNST & YOUNG, LLP
Los Angeles, California
April 17, 1998
<PAGE> 78
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
Security First Trust Bond Series (5,767,337
shares at net asset value of $4.03 per share;
cost $23,040,859) $ 23,261,494
Security First Trust T. Rowe Price Growth and
Income Series (19,611,017 shares at net asset
value of $15.81 per share; cost $277,296,637) $310,102,373
T. Rowe Price Growth Stock Fund, Inc.
(3,271,789 shares at net asset value of $32.07
per share; cost $84,761,937) $104,926,269
T. Rowe Price Prime Reserve Fund, Inc.
(806,242 shares at net asset value of $1.00
per share; cost $806,242) $ 806,242
T. Rowe Price International Stock Fund, Inc.
(1,173,570 shares at net asset value of $14.99
per share; cost $16,094,210) $ 17,591,819
Receivable from Security First Life Insurance
Company for purchases 46,757 252,199 58,700 20,238
Other assets 30,982 13,753 753
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS 23,308,251 310,385,554 104,998,722 806,242 17,612,810
</TABLE>
1
<PAGE> 79
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIABILITIES Series B Series G Series T Series P Series I
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Payable to Security First Life Insurance
Company for mortality and expense risk $ 23,598 $ 301,526 $ 75,787 $ 663 $ 12,917
Payable to Security First Life Insurance
Company for redemptions 4,384 101,296 7,589 127 65
Payable to Mutual Funds 46,136 192,547
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES 74,118 595,369 83,376 790 12,982
NET ASSETS
Cost to Investors
Series B Accumulation Units 23,013,498
Series G Accumulation Units 276,984,449
Series T Accumulation Units 84,751,014
Series P Accumulation Units 805,452
Series I Accumulation Units 16,102,219
Accumulated undistributed income
Net unrealized appreciation 220,635 32,805,736 20,164,332 1,497,609
------------ ------------ ------------ ------------ ------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 23,234,133 $309,790,185 $104,915,346 $ 805,452 $ 17,599,828
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 80
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 1,169,497 $ 23,342,098 $ 12,864,453 $ 52,915 $ 647,378
Other investment income (expense) (1,116) (416,478) 53,270 426 7,771
------------ ------------ ------------ ------------ ------------
1,168,381 22,925,620 12,917,723 53,341 655,149
EXPENSES
Charges for mortality and expense risk 209,011 3,191,451 808,538 9,455 150,790
------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME 959,370 19,734,169 12,109,185 43,886 504,359
INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) (19,304) 7,584,807 3,061,047 843,474
Change in unrealized appreciation
(depreciation) on investments
during the year 84,731 (4,879,643) 6,257,690 990,607
------------ ------------ ------------ ------------
NET INVESTMENT GAINS 65,427 2,705,164 9,318,737 1,834,081
------------ ------------ ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 1,024,797 $ 22,439,333 $ 21,427,922 $ 43,886 $ 2,338,440
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 81
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Operations
Net investment income $ 959,370 $ 19,734,169 $ 12,109,185 $ 43,886 $ 504,359
Realized investment gains (losses) (19,304) 7,584,807 3,061,047 843,474
Change in unrealized appreciation (depreciation)
on investments during the year 84,731 (4,879,643) 6,257,690 990,607
------------- ------------- ------------- ------------- -------------
Increase in net assets resulting from
operations 1,024,797 22,439,333 21,427,922 43,886 2,338,440
Increase (decrease) in net assets resulting from
capital unit transactions 9,496,806 51,531,944 4,047,047 (394,702) (664,319)
------------- ------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,521,603 73,971,277 25,474,969 (350,816) 1,674,121
NET ASSETS AT BEGINNING OF YEAR 12,712,530 235,818,908 79,440,377 1,156,268 15,925,707
------------- ------------- ------------- ------------- -------------
NET ASSETS AT END OF YEAR $ 23,234,133 $ 309,790,185 $ 104,915,346 $ 805,452 $ 17,599,828
============= ============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 82
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Operations
Net investment income $ 532,821 $ 16,043,895 $ 9,157,584 $ 101,066 $ 708,759
Realized investment gains (losses) (124,988) 8,889,548 1,815,089 268,968
Change in unrealized appreciation (depreciation)
on investments during the year 410,594 16,749,933 4,506,669 (809,176)
------------ ------------ ------------ ------------ ------------
Increase in net assets resulting from
operations 818,427 41,683,376 15,479,342 101,066 168,551
Increase (decrease) in net assets resulting from
capital unit transactions 2,280,710 56,560,484 5,877,267 (1,463,226) 2,309,033
------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,099,137 98,243,860 21,356,609 (1,362,160) 2,477,584
NET ASSETS AT BEGINNING OF YEAR 9,613,393 137,575,048 58,083,768 2,518,428 13,448,123
------------ ------------ ------------ ------------ ------------
NET ASSETS AT END OF YEAR $ 12,712,530 $235,818,908 $ 79,440,377 $ 1,156,268 $ 15,925,707
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 83
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Carrying
Value Unrealized Cost
Series Name of Issue Shares (Note A) Appreciation (Note B)
- --------- -------------------------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
B Security First Trust Bond Series -- capital shares 5,767,337 $ 23,261,494 $ 220,635 $ 23,040,859
G Security First Trust T. Rowe Price Growth and Income
Series -- capital shares 19,611,017 $310,102,373 $ 32,805,736 $277,296,637
T T. Rowe Price Growth Stock Fund, Inc. -- capital shares 3,271,789 $104,926,269 $ 20,164,332 $ 84,761,937
P T. Rowe Price Prime Reserve Fund, Inc. -- capital shares 806,242 $ 806,242 $ 806,242
I T. Rowe Price International Stock Fund, Inc. -- capital shares 1,173,570 $ 17,591,819 $ 1,497,609 $ 16,094,210
</TABLE>
Note A The carrying value of the investments is the reported net asset value
of the investment company's capital shares.
Note B Cost is determined by using the first-in, first-out cost method.
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 84
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS Series FA Series FG Series FI Series FO Series FM
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investments
Fidelity Investments - VIP Asset Manager
Portfolio (10,119,630 shares at net
asset value of $18.16 per share;
cost $162,758,546) $183,772,485
Fidelity Investments - VIP Growth
Portfolio (6,292,589 shares at net
asset value of $44.87 per share;
cost $204,064,249) $282,348,490
Fidelity Investments - VIP Index 500
Portfolio (1,354,520 shares at net
asset value of $141.25 per share;
cost $145,916,900) $191,325,881
Fidelity Investments - VIP Overseas
Portfolio (889,127 shares at net
asset value of $20.05 per share;
cost $16,116,130) $ 17,826,989
Fidelity Investments - VIP Money Market
Portfolio (29,025,420 shares at net
asset value of $1.00 per share;
cost $29,025,420) $ 29,025,420
Receivable from Security First Life
Insurance Company for purchases 189,667 148,473 290,858 2,158 584,391
Other assets 12,815 46,465 40,749 6,628
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS 183,974,967 282,543,428 191,657,488 17,835,775 29,609,811
</TABLE>
7
<PAGE> 85
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (continued)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIABILITIES Series FA Series FG Series FI Series FO Series FM
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Payable to Security First Life Insurance
Company for mortality and expense risk $ 196,372 $ 286,875 $ 197,149 $ 18,650 $ 30,047
Payable to Security First Life Insurance
Company for redemptions 57,288 109,636 46,951 1,590 1,850
Payable to Mutual Funds 157,020 73,417 273,872 5,845 546,432
Other liabilities 41,724
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES 410,680 469,928 517,972 26,085 620,053
NET ASSETS
Cost to Investors
Series FA Accumulation Units 162,550,348
Series FG Accumulation Units 203,789,259
Series FI Accumulation Units 145,730,535
Series FO Accumulation Units 16,098,831
Series FM Accumulation Units 28,989,758
Accumulated undistributed income
Net unrealized appreciation 21,013,939 78,284,241 45,408,981 1,710,859
------------ ------------ ------------ ------------ ------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $183,564,287 $282,073,500 $191,139,516 $ 17,809,690 $ 28,989,758
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 86
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $17,362,918 $25,472,345 $ 3,945,680 $ 1,194,757 $ 1,313,600
Other investment income (expense) 71,466 155,214 175,112 8,947 (3,615)
----------- ----------- ----------- ----------- -----------
17,434,384 25,627,559 4,120,792 1,203,704 1,309,985
EXPENSES
Charges for mortality and expense risk 2,043,882 2,781,547 1,775,438 212,799 318,055
----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME 15,390,502 22,846,012 2,345,354 990,905 991,930
INVESTMENT GAINS
Realized investment gains 1,136,760 3,658,231 1,872,638 274,752
Change in unrealized appreciation on
investments during the year 3,869,393 47,453,828 29,570,696 487,659
----------- ----------- ----------- -----------
NET INVESTMENT GAINS 5,006,153 51,112,059 31,443,334 762,411
----------- ----------- ----------- ----------- -----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $20,396,655 $73,958,071 $33,788,688 $ 1,753,316 $ 991,930
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 87
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Operations
Net investment income $ 15,390,502 $ 22,846,012 $ 2,345,354 $ 990,905 $ 991,930
Realized investment gains 1,136,760 3,658,231 1,872,638 274,752
Change in unrealized appreciation on
investments during the year 3,869,393 47,453,828 29,570,696 487,659
------------ ------------ ------------ ------------ ------------
Increase in net assets resulting from
operations 20,396,655 73,958,071 33,788,688 1,753,316 991,930
Increase in net assets resulting from capital
unit transactions 29,077,086 27,405,819 63,395,211 819,382 5,318,459
------------ ------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS 49,473,741 101,363,890 97,183,899 2,572,698 6,310,389
NET ASSETS AT BEGINNING OF YEAR 134,090,546 180,709,610 93,955,617 15,236,992 22,679,369
------------ ------------ ------------ ------------ ------------
NET ASSETS AT END OF YEAR $183,564,287 $282,073,500 $191,139,516 $ 17,809,690 $ 28,989,758
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 88
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Operations
Net investment income $ 9,969,347 $ 2,575,955 $ 634,702 $ 794,340 $ 883,272
Realized investment gains 1,354,839 6,816,420 2,142,914 183,119
Change in unrealized appreciation on
investments during the year 8,000,602 19,046,439 12,199,875 153,795
------------ ------------ ------------ ------------ ------------
Increase in net assets resulting from
operations 19,324,788 28,438,814 14,977,491 1,131,254 883,272
Increase in net assets resulting from capital
unit transactions 23,348,022 39,688,474 47,598,152 3,587,791 4,463,628
------------ ------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS 42,672,810 68,127,288 62,575,643 4,719,045 5,346,900
NET ASSETS AT BEGINNING OF YEAR 91,417,736 112,582,322 31,379,974 10,517,947 17,332,469
------------ ------------ ------------ ------------ ------------
NET ASSETS AT END OF YEAR $134,090,546 $180,709,610 $ 93,955,617 $ 15,236,992 $ 22,679,369
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 89
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Carrying
Value Unrealized Cost
Series Name of Issue Shares (Note A) Appreciation (Note B)
-------- ------------------------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
FA Fidelity Investments - VIP Asset Manager Portfolio --
capital shares 10,119,630 $183,772,485 $ 21,013,939 $162,758,546
FG Fidelity Investments - VIP Growth Portfolio -- capital
shares 6,292,589 $282,348,490 $ 78,284,241 $204,064,249
FI Fidelity Investments - VIP Index 500 Portfolio --
capital shares 1,354,520 $191,325,881 $ 45,408,981 $145,916,900
FO Fidelity Investments - VIP Overseas Portfolio --
capital shares 889,127 $ 17,826,989 $ 1,710,859 $ 16,116,130
FM Fidelity Investments - VIP Money Market Portfolio --
capital shares 29,025,420 $ 29,025,420 $ 29,025,420
</TABLE>
Note A The carrying value of the investments is the reported net asset value
of the investment company's capital shares.
Note B Cost is determined by using the first-in, first-out cost method.
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 90
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS Series SU Series SV Series AS Series SI Series FC Series FE
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investments
Security First Trust U.S.
Government Income Series
(6,505,978 shares at net
asset value of $5.25 per
share; cost $34,149,621) $ 34,158,509
Security First Trust Equity
Series (7,194,788 shares
at net asset value of
$7.89 per share; cost
$49,760,028) $ 56,749,430
Alger American Small
Capitalization Portfolio
(1,283,189 shares at net
asset value of $43.97 per
share; cost $51,365,937) $ 56,421,683
Scudder International
Portfolio (648,919 shares
at net asset value of
$14.56 per share; cost
$8,965,425) $ 9,448,260
Fidelity Investments - VIP
Contrafund Portfolio
(5,690,506 shares at net
asset value of $24.44 per
share; cost $103,402,077) $139,075,960
Fidelity Investments - VIP
Equity-Income Portfolio
(1,170,008 shares at net
asset value of $25.42 per
share; cost $26,278,976) $ 29,741,593
Receivable from Security First
Life Insurance Company for
purchases 2,943 8,888 51,729 14,090 171,247 3,550
Receivable from Mutual Funds 3,888
Other assets 122 8,109 12,411 63,032 2,723
------------ ------------ ------------ ------------ ------------ ------------
TOTAL ASSETS 34,161,574 56,766,427 56,485,823 9,462,350 139,314,127 29,747,866
</TABLE>
13
<PAGE> 91
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (continued)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIABILITIES Series SU Series SV Series AS Series SI Series FC Series FE
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Payable to Security First Life
Insurance Company for
mortality and expense risk $ 36,724 $ 57,865 $ 59,975 $ 10,596 $ 148,811 $ 34,105
Payable to Security First Life
Insurance Company for
redemptions 685 4,341 17,513 2,836 26,477 2,256
Payable to Mutual Funds 4,124 16,996 33,100 11,500 179,881 4,953
Other liabilities 4,234 7,205 187
------------ ------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES 41,533 83,436 117,793 25,119 355,169 41,314
NET ASSETS
Cost to Investors
Series SU Accumulation Units 34,111,153
Series SV Accumulation Units 49,693,589
Series AS Accumulation Units 51,312,284
Series SI Accumulation Units 8,954,396
Series FC Accumulation Units 103,285,075
Series FE Accumulation Units 26,243,935
Accumulated undistributed income
Net unrealized appreciation 8,888 6,989,402 5,055,746 482,835 35,673,883 3,462,617
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS APPLICABLE TO
OUTSTANDING UNITS OF CAPITAL $ 34,120,041 $ 56,682,991 $ 56,368,030 $ 9,437,231 $138,958,958 $ 29,706,552
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 92
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Series SU Series SV Series AS Series SI Series FC Series FE
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 2,444,286 $ 9,117,291 $ 6,140,966 $ 913,895 $ 4,586,516 $ 1,164,772
Other investment income (expense) (3,709) (2,458) 37,798 (2,336) 123,830 15,662
------------ ------------ ------------ ------------ ------------ ------------
2,440,577 9,114,833 6,178,764 911,559 4,710,346 1,180,434
EXPENSES
Charges for mortality and expense risk 434,116 665,007 636,807 109,888 1,380,593 336,349
------------ ------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME 2,006,461 8,449,826 5,541,957 801,671 3,329,753 844,085
INVESTMENT GAINS (LOSSES)
Realized investment gains 470,994 2,605,216 102,996 64,102 366,723 138,866
Change in unrealized appreciation
(depreciation) on investments during
the year (431,106) (368,196) 1,125,962 276,761 23,673,455 1,165,945
------------ ------------ ------------ ------------ ------------ ------------
NET INVESTMENT GAINS 39,888 2,237,020 1,228,958 340,863 24,040,178 1,304,811
------------ ------------ ------------ ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 2,046,349 $ 10,686,846 $ 6,770,915 $ 1,142,534 $ 27,369,931 $ 2,148,896
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 93
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Series SU Series SV Series AS Series SI Series FC Series FE
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income $ 2,006,461 $ 8,449,826 $ 5,541,957 $ 801,671 $ 3,329,753 $ 844,085
Realized investment gains 470,994 2,605,216 102,996 64,102 366,723 138,866
Change in unrealized appreciation
(depreciation) on
investments during the year (431,106) (368,196) 1,125,962 276,761 23,673,455 1,165,945
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets
resulting from operations 2,046,349 10,686,846 6,770,915 1,142,534 27,369,931 2,148,896
Increase (decrease) in net
assets resulting from capital
unit transactions (2,489,172) (7,205,804) 8,370,663 1,953,836 36,638,201 10,085,157
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS (442,823) 3,481,042 15,141,578 3,096,370 64,008,132 12,234,053
NET ASSETS AT BEGINNING OF YEAR 34,562,864 53,201,949 41,226,452 6,340,861 74,950,826 17,472,499
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS AT END OF YEAR $ 34,120,041 $ 56,682,991 $ 56,368,030 $ 9,437,231 $138,958,958 $ 29,706,552
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 94
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Series SU Series SV Series AS Series SI Series FC Series FE
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income $ 1,169,968 $ 4,098,447 $ 702,124 $ 10,050 $ 448,558 $ 542,116
Realized investment gains (losses) 68,543 866,363 (1,107,270) 73,324 1,353,917 80,187
Change in unrealized appreciation on
investments during the year 346,517 4,977,323 3,933,637 74,470 8,445,340 1,848,038
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets
resulting from operations 1,585,028 9,942,133 3,528,491 157,844 10,247,815 2,470,341
Increase in net assets
resulting from capital unit
transactions 14,141,455 14,984,359 17,346,956 4,143,499 34,652,276 9,173,378
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS 15,726,483 24,926,492 20,875,447 4,301,343 44,900,091 11,643,719
NET ASSETS AT BEGINNING OF YEAR 18,836,381 28,275,457 20,351,005 2,039,518 30,050,735 5,828,780
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS AT END OF YEAR $ 34,562,864 $ 53,201,949 $ 41,226,452 $ 6,340,861 $ 74,950,826 $ 17,472,499
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 95
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
Carrying
Value Unrealized Cost
Series Name of Issue Shares (Note A) Appreciation (Note B)
------ ------------- ------ -------- ------------ --------
<S> <C> <C> <C> <C> <C>
SU Security First Trust U.S.
Government Income Series --
capital shares 6,505,978 $ 34,158,509 $ 8,888 $ 34,149,621
SV Security First Trust
Equity Series -- capital
shares 7,194,788 $ 56,749,430 $ 6,989,402 $ 49,760,028
AS Alger American Small
Capitalization Portfolio --
capital shares 1,283,189 $ 56,421,683 $ 5,055,746 $ 51,365,937
SI Scudder International
Portfolio -- capital shares 648,919 $ 9,448,260 $ 482,835 $ 8,965,425
FC Fidelity Investments - VIP
Contrafund Portfolio --
capital shares 5,690,506 $ 139,075,960 $35,673,883 $ 103,402,077
FE Fidelity Investments - VIP
Equity-Income Portfolio --
capital shares 1,170,008 $ 29,741,593 $ 3,462,617 $ 26,278,976
</TABLE>
Note A The carrying value of the investments is the reported net asset
value of the investment company's capital shares.
Note B Cost is determined by using the first-in, first-out cost method.
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 96
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
Series NG(*) Series NP(*) Series JW(*)
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Investments
Neuberger Berman Genesis Trust
(54,496 shares at net asset value of
$20.34 per share; cost $1,183,080) $1,108,451
Neuberger Berman Partners Trust
(79,123 shares at net asset value of
$18.07 per share; cost $1,470,122) $1,429,758
Janus Aspen Worldwide Growth Portfolio
(57,337 shares at net asset value of
$29.09 per share; cost $1,591,615) $1,667,938
Receivable from Security First Life Insurance
Company for purchases 27,040 5,886 6,744
Other assets 920 703 408
--------- --------- ---------
TOTAL ASSETS 1,136,411 1,436,347 1,675,090
</TABLE>
(*)Series NG and NP commenced operations on January 9, 1998; Series JW commenced
operations on January 8, 1998.
19
<PAGE> 97
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (continued)
December 31, 1998
<TABLE>
<CAPTION>
Series NG(*) Series NP(*) Series JW(*)
------------ ------------ ------------
<S> <C> <C> <C>
LIABILITIES
Payable to Security First Life
Insurance Company
for mortality and
expense risk $ 790 $ 1,053 $ 1,188
Payable to Mutual Funds 6,744
----------- ----------- -----------
TOTAL LIABILITIES 790 1,053 7,932
NET ASSETS
Cost to Investors
Series NG Accumulation Units 1,210,250
Series NP Accumulation Units 1,475,658
Series JW Accumulation Units 1,590,835
Accumulated undistributed income
Net unrealized appreciation (depreciation) (74,629) (40,364) 76,323
----------- ----------- -----------
NET ASSETS APPLICABLE TO
OUTSTANDING UNITS OF CAPITAL $ 1,135,621 $ 1,435,294 $ 1,667,158
=========== =========== ===========
</TABLE>
(*)Series NG and NP commenced operations on January 9, 1998; Series JW commenced
operations January 8, 1998.
The accompanying notes are an integral part of these financial statements.
20
<PAGE> 98
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
Period Ended December 31, 1998
<TABLE>
<CAPTION>
Series NG(*) Series NP(*) Series JW(*)
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 17,139 $ 35,353 $ 34,838
Other investment income 4,673 8,060 56
--------- --------- ---------
21,812 43,413 34,894
EXPENSES
Charges for mortality and expense risk 7,275 8,957 7,846
--------- --------- ---------
NET INVESTMENT INCOME 14,537 34,456 27,048
INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) (7,460) 9,874 (908)
Change in unrealized appreciation (depreciation)
on investments during the period (74,629) (40,364) 76,323
--------- --------- ---------
NET INVESTMENT GAINS (LOSSES) (82,089) (30,490) 75,415
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (67,552) $ 3,966 $ 102,463
========= ========= =========
</TABLE>
(*)Series NG and NP commenced operations on January 9, 1998; Series JW commenced
operations on January 8, 1998.
The accompanying notes are an integral part of these financial statements.
21
<PAGE> 99
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
Period Ended December 31, 1998
<TABLE>
<CAPTION>
Series NG(*) Series NP(*) Series JW(*)
------------ ------------ ------------
<S> <C> <C> <C>
Operations
Net investment income $ 14,537 $ 34,456 $ 27,048
Realized investment gains (losses) (7,460) 9,874 (908)
Change in unrealized appreciation (depreciation)
on investments during the year (74,629) (40,364) 76,323
----------- ----------- -----------
Increase (decrease) in net assets resulting
from operations (67,552) 3,966 102,463
Increase in net assets resulting from capital
unit transactions 1,203,173 1,431,328 1,564,695
----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS 1,135,621 1,435,294 1,667,158
NET ASSETS AT BEGINNING OF PERIOD 0 0 0
----------- ----------- -----------
NET ASSETS AT END OF PERIOD $ 1,135,621 $ 1,435,294 $ 1,667,158
=========== =========== ===========
</TABLE>
(*)Series NG and NP commenced operations on January 9, 1998; Series JW commenced
operations on January 8, 1998.
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 100
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
Carrying Unrealized
Value Appreciation Cost
Series Name of Issue Shares (Note A) (Depreciation) (Note B)
- ------ --------------------------------- ------ -------- -------------- --------
<S> <C> <C> <C> <C> <C>
NG Neuberger & Berman
Genesis Trust -- capital shares 54,496 $ 1,108,451 $ (74,629) $ 1,183,080
NP Neuberger & Berman
Partners Trust -- capital shares 79,123 $ 1,429,758 $ (40,364) $ 1,470,122
JW Janus Aspen Worldwide
Growth Portfolio -- capital shares 57,337 $ 1,667,938 $ 76,323 $ 1,591,615
</TABLE>
Note A The carrying value of the investments is the reported net asset
value of the investment company's capital shares.
Note B Cost is determined by using the first-in, first-out cost method.
23
<PAGE> 101
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 -- BASIS OF PRESENTATION
Security First Life Separate Account A (the Separate Account) was established on
May 29, 1980, as a separate account of Security First Life Insurance Company
(Security Life), the sponsor company, and is registered under the Investment
Company Act of 1940 as a unit investment trust. The Separate Account is designed
to provide annuity benefits pursuant to certain variable annuity contracts (the
Contracts) issued by Security Life.
In accordance with the terms of the Contracts, all payments allocated to the
Separate Account by the contract owners must be allocated to purchase shares of
any or all of four series of Security First Trust (the Trust), a Massachusetts
business trust, and fifteen mutual funds (the investment companies). The series
of the Trust are Bond Series, T. Rowe Price Growth and Income Series, Equity
Series, and U.S. Government Income Series and the mutual funds are T. Rowe Price
Growth Stock Fund, Inc., T. Rowe Price Prime Reserve Fund, Inc., T. Rowe Price
International Stock Fund, Inc., Alger American Small Capitalization Portfolio,
Scudder International Portfolio, Fidelity Investments: VIP Asset Manager
Portfolio, VIP Growth Portfolio, VIP Index 500 Portfolio, VIP Overseas
Portfolio, VIP Contrafund Portfolio, VIP Equity-Income Portfolio, VIP Money
Market Portfolio; Neuberger & Berman Partners Trust, Neuberger & Berman Genesis
Trust, and Janus Aspen Worldwide Growth Portfolio. The Trust and the investment
companies are registered as diversified, open-end management investment
companies under the Investment Company Act of 1940. The Separate Account is
correspondingly divided into nineteen series of Accumulation Units, Series B, G,
SV, SU, T, P, I, AS, SI, FA, FG, FI, FO, FC, FE, FM, NP, NG and JW, relating to
investments in each of the investment companies, respectively.
All series of the Trust receive administrative services for a fee from Security
First Investment Management Corporation (Security Management). Security First
Financial, Inc. (Security Financial) is the principal underwriter for the
Contracts. Security Life, Security Management, and Security Financial are wholly
owned subsidiaries of Security First Group, Inc. (the Company) which became a
wholly owned subsidiary of Metropolitan Life Insurance Company on October 31,
1997. Investment advice is provided to the Security First Trust T. Rowe Price
Growth and Income Series by T. Rowe Price Associates, Inc., to the Security
First Trust Bond Series by Neuberger & Berman, and to the Security First Trust
Equity Series and to the Security First Trust U.S. Government Income Series by
Blackrock, Inc.
24
<PAGE> 102
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 1 -- BASIS OF PRESENTATION (continued)
The Separate Account and each series therein are administered and accounted for
as part of the business of Security Life. The investment income and capital
gains and losses of each Separate Account series are identified with the assets
held for that series in accordance with the terms of the Contracts, without
regard to investment income and capital gains and losses arising out of any
other business Security Life may conduct.
The Separate Account incurs no liability for remuneration to directors, advisory
boards, officers or such other persons who may from time to time perform
services for the Separate Account.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from these estimates.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS -- Investments are carried at fair value, which is
determined by multiplying the investment companies' shares owned by the Separate
Account by the reported net asset value per share of each respective investment
company. Realized investment gains and losses are determined on the first-in,
first-out cost basis.
EXPENSES AND CHARGES -- The Separate Account accrues charges incurred for the
mortality and expense risk assumed by Security Life. The charges are calculated
daily by multiplying the value of the assets of the Separate Account by the
daily mortality and expense risk rate. Security Life has the option of calling
for payment of such charges at any time. The following table illustrates the
rates for the respective contracts:
<TABLE>
<CAPTION>
Contract Type Annual Rate Daily Rate
------------- ----------- ----------
<S> <C> <C>
SF 135R2V; SF 224FL; SF 89; SF 234;
SF 236FL; SF 1700 Contracts .89% .0000244
SF 228DC Contracts 1.25% .0000342
SF 135R2S Contracts 1.15% .0000315
SF 230; SF 224R1; SF 226R1 Contracts 1.35% .0000370
SF 135R2C Contracts 1.40% .0000384
</TABLE>
25
<PAGE> 103
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (continued)
The following charges are deducted from a contract holder's account by Security
Life as a capital transaction by reducing the separate account units held, and
such charges are not an expense of the Separate Account. An administration
charge (contract charge) is deducted from each contract and paid to Security
Life at the end of each contract year prior to the annuity date, and when the
entire contract value is withdrawn on any date other than a contract
anniversary. In the event that a participant withdraws all or a portion of the
participant's account, a contingent deferred sales charge (CDSC) may be applied
to the amount of the contract value withdrawn to cover certain expenses relating
to the sale of contracts. The following table illustrates contract charges and
CDSC with respect to the various types of contracts:
<TABLE>
<CAPTION>
Maximum Contract
Contract Type Charge Per Year CDSC
- --------------- ------------------- ------------------------------------------------------------------------
<S> <C> <C>
SF 236FL - Based on elapsed time since premium received. Disappears on or after
5th anniversary.
SF 224FL $40.00 Based on elapsed time since premium received. Disappears on or after
6th anniversary.
SF 1700 $40.00 Based on elapsed time since premium received. Disappears on or after
6th anniversary.
SF 224R1, SF 230 * Based on elapsed time since premium received.
Disappears on or after 5th anniversary.
Group Form $49.00*** Seven percent of premium received. Disappears
226R1 after 5th anniversary.
SF 234 $29.50 Five percent of premium received. Disappears after 6th anniversary.
All other groups $19.50 Five percent of premium received. Disappears after 6th anniversary.
SF 135R2V ** None
SF 135R2S, SF 135R2C ** Based on elapsed time since premium received. Disappears on or after
7th anniversay.
</TABLE>
* $52.50 (currently being waived); annual administration fee of .10%
calculated on average account value (currently included in mortality and
risk expense).
** Annual administration fee of .15% calculated on average account value
(currently included in mortality and risk expense).
*** Annual distribution fee of .10% calculated on average account value
(currently included in mortality and risk expense).
26
<PAGE> 104
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (continued)
In addition, transaction charges of $10 are incurred for each surrender or
annuitization. Upon conversion of either accumulation or annuity units from one
series to another, a $10 conversion charge is incurred. The amount deducted for
contract charges and CDSC was $1,507,924 for the year ended December 31, 1998,
and $1,061,306 for the year ended December 31, 1997.
INCOME RECOGNITION AND REINVESTMENT -- Income is recognized as declared payable
by the investment companies. All distributions received are reinvested in the
investment companies.
NOTE 3 -- FEDERAL INCOME TAXES
The operations of the Separate Account form a part of, and are taxed with, the
operations of Security Life, which is taxed as a "life insurance company" under
the Internal Revenue Code, and as such, Security Life is liable for income
taxes, if any, which become payable with respect to the Separate Account's
operations.
Separate accounts are generally required to meet certain diversification
requirements for their assets. However, separate accounts which solely provide
benefits for "pension plan contracts" are exempt from the diversification
requirements. Pension plan contracts include: (i) tax qualified plans; (ii)
employee annuities; (iii) plans for employees of life insurance companies; (iv)
tax sheltered annuities of exempt organizations; (v) individual retirement
accounts or annuities, and (vi) deferred compensation plans of certain
governmental or tax-exempt organizations. The Contracts issued by Security Life
are offered in connection with both pension plan contracts and non-qualified
contracts, therefore the Separate Account is subject to the diversification
requirements. Management believes that the Separate Account has met the
diversification requirements.
27
<PAGE> 105
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4 -- CAPITAL TRANSACTIONS
Additions and deductions to units of capital consisting of the effect of capital
unit transactions were as follows:
<TABLE>
<CAPTION>
Year ended December 31, 1998
(Period ended for Series NG, Additions to Capital Deductions from Capital
NP and JW): $ Units $ Units
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
SF 135R2C Contracts
Series B Accumulation Units 5,661,870 586,339 667,501 69,008
Series G Accumulation Units 18,587,275 1,028,586 3,261,930 183,491
Series FA Accumulation Units 12,640,621 1,475,140 2,744,662 322,529
Series FG Accumulation Units 7,939,511 709,561 4,745,913 425,808
Series FI Accumulation Units 16,587,093 1,328,050 2,528,382 202,282
Series FO Accumulation Units 1,820,892 222,444 606,856 74,118
Series FC Accumulation Units 8,834,454 870,830 2,112,211 208,731
Series FE Accumulation Units 11,666,102 1,262,113 1,580,945 175,697
Series FM Accumulation Units 74,497,555 12,516,888 72,551,400 12,196,311
Series SU Accumulation Units 1,773,861 293,960 3,468,890 576,401
Series SV Accumulation Units 549,778 73,591 4,248,198 550,379
Series AS Accumulation Units 2,938,629 385,967 2,594,226 340,284
Series SI Accumulation Units 34,054 4,354 399,306 50,363
SF 226R1; SF 228DC Contracts
Series B Accumulation Units 3,767,408 388,255 852,396 87,554
Series G Accumulation Units 37,098,561 2,020,606 5,212,041 290,088
Series FA Accumulation Units 19,908,766 2,321,746 5,619,560 654,644
Series FG Accumulation Units 24,131,767 2,143,757 6,894,858 618,046
Series FI Accumulation Units 37,483,454 3,003,376 5,386,701 430,376
Series FO Accumulation Units 149,136 18,320 42,972 4,974
Series FC Accumulation Units 31,516,136 3,114,402 4,839,268 477,640
Series FM Accumulation Units 7,774,626 1,302,972 4,799,882 804,893
Series AS Accumulation Units 11,665,418 1,548,161 4,037,065 535,714
Series SI Accumulation Units 2,855,424 358,196 752,264 96,335
SF 135R2V; SF 224FL; SF 234;
SF 236FL; SF 1700 Contracts
Series B Accumulation Units 2,580,211 123,343 1,305,423 62,689
Series G Accumulation Units 20,527,385 368,212 18,526,043 331,199
Series T Accumulation Units 17,373,764 343,212 13,326,717 264,645
Series P Accumulation Units 532,070 37,083 926,772 64,322
Series I Accumulation Units 4,430,482 469,729 5,094,801 542,972
Series FA Accumulation Units 6,829,737 825,486 3,796,814 457,686
Series FG Accumulation Units 12,369,795 1,151,843 6,914,156 643,533
Series FI Accumulation Units 17,647,925 1,452,345 5,152,510 424,392
Series FC Accumulation Units 987,646 177,994 147,089 26,818
</TABLE>
28
<PAGE> 106
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4 -- CAPITAL TRANSACTIONS (continued)
<TABLE>
<CAPTION>
Additions to Capital Deductions from Capital
$ Units $ Units
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Series FM Accumulation Units 3,382,358 557,315 3,514,480 579,854
Series NP Accumulation Units 1,751,780 334,968 320,452 62,140
Series NG Accumulation Units 1,404,420 290,387 201,247 44,072
Series JW Accumulation Units 1,797,327 303,304 232,632 42,260
SF 135R2S Contracts
Series FG Accumulation Units 514,546 47,572 2,685,226 243,801
Series FO Accumulation Units 495,222 71,896 996,040 143,417
Series FM Accumulation Units 956,436 157,359 1,093,591 180,631
Series SU Accumulation Units 1,434,144 237,762 2,278,227 375,735
Series SV Accumulation Units 615,172 64,592 4,122,556 423,862
SF 224R1; SF 230 Contracts
Series B Accumulation Units 623,686 66,864 311,049 33,553
Series G Accumulation Units 7,318,820 385,701 5,000,083 264,139
Series FA Accumulation Units 6,100,724 720,058 4,241,726 502,287
Series FG Accumulation Units 7,123,036 637,735 3,432,683 304,495
Series FI Accumulation Units 6,682,275 535,470 1,937,943 157,096
Series FC Accumulation Units 2,551,049 249,677 152,516 14,979
Series FM Accumulation Units 1,478,642 246,343 811,805 135,293
Series SU Accumulation Units 61,666 10,101 11,726 1,958
Series AS Accumulation Units 446,604 58,580 48,697 5,955
Series SI Accumulation Units 230,451 28,841 14,523 1,678
Year ended December 31, 1997:
SF 135R2C Contracts
Series B Accumulation Units 3,489,097 391,482 208,955 23,190
Series G Accumulation Units 27,974,005 1,827,071 1,007,953 61,587
Series FA Accumulation Units 22,037,238 3,083,772 1,118,816 145,718
Series FG Accumulation Units 29,266,279 3,456,848 2,096,800 221,099
Series FI Accumulation Units 21,704,130 2,243,395 880,069 84,619
Series FO Accumulation Units 5,206,390 713,113 321,230 41,040
Series FC Accumulation Units 16,309,026 2,064,971 617,179 70,030
Series FE Accumulation Units 9,709,051 1,220,079 535,673 66,368
Series FM Accumulation Units 91,417,945 15,908,209 80,431,227 13,960,948
Series SU Accumulation Units 16,459,936 2,907,217 1,379,636 241,387
Series SV Accumulation Units 14,910,993 2,340,582 1,268,768 189,923
Series AS Accumulation Units 14,561,015 2,303,839 1,072,603 152,394
Series SI Accumulation Units 1,406,153 199,513 59,297 8,138
</TABLE>
29
<PAGE> 107
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4 -- CAPITAL TRANSACTIONS (continued)
<TABLE>
<CAPTION>
Additions to Capital Deductions from Capital
$ Units $ Units
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
SF 226R1; SF 228DC Contracts
Series B Accumulation Units 1,454,857 161,968 2,222,593 255,587
Series G Accumulation Units 31,042,330 2,023,469 18,299,082 1,273,695
Series FA Accumulation Units 16,861,300 2,260,447 20,550,274 2,914,536
Series FG Accumulation Units 24,047,220 2,718,139 23,181,360 2,836,909
Series FI Accumulation Units 25,839,798 2,590,459 11,992,236 1,323,107
Series FO Accumulation Units 676,805 96,009 3,024,539 431,009
Series FC Accumulation Units 30,792,175 3,684,098 11,831,746 1,551,824
Series FM Accumulation Units 34,039,726 6,010,978 41,104,341 7,257,641
Series SU Accumulation Units 4,245,733 762,198 6,638,272 1,191,234
Series AS Accumulation Units 15,651,587 2,307,183 11,793,043 1,911,752
Series SI Accumulation Units 3,720,604 524,236 923,961 133,817
SF 135R2V; SF 224FL;
SF 234; SF 236FL; SF 1700 Contracts
Series B Accumulation Units 1,251,814 66,317 1,258,763 66,260
Series G Accumulation Units 22,168,547 464,927 10,162,988 208,324
Series T Accumulation Units 13,912,418 337,577 8,035,151 194,789
Series P Accumulation Units 1,356,696 98,277 2,819,922 202,716
Series I Accumulation Units 5,494,020 613,377 3,184,987 356,665
Series FA Accumulation Units 5,261,860 725,367 2,416,199 336,103
Series FG Accumulation Units 10,795,331 1,233,017 5,486,217 645,857
Series FI Accumulation Units 9,999,482 1,019,149 1,804,657 183,675
Series FM Accumulation Units 3,155,789 540,467 1,884,995 325,446
SF 135R2S Contracts
Series FG Accumulation Units 3,427,275 399,201 1,490,263 165,593
Series FO Accumulation Units 1,726,903 274,657 676,538 105,526
Series FM Accumulation Units 7,288,893 1,266,880 7,902,058 1,372,807
Series SU Accumulation Units 2,886,460 512,287 1,432,766 253,595
Series SV Accumulation Units 4,591,111 589,309 3,248,977 402,282
SF 224R1; SF 230 Contracts
Series B Accumulation Units 509,920 59,735 734,667 85,140
Series G Accumulation Units 8,895,697 547,437 4,050,072 249,469
Series FA Accumulation Units 6,970,487 948,458 3,697,574 504,142
Series FG Accumulation Units 7,792,635 871,059 3,385,626 379,160
Series FI Accumulation Units 5,441,074 544,189 709,370 68,289
Series FM Accumulation Units 455,713 79,801 571,817 71,385
</TABLE>
30
<PAGE> 108
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 5 -- UNITS OF CAPITAL
The following are the units outstanding and corresponding unit values as of
December 31, 1998:
<TABLE>
<CAPTION>
Units
Description Outstanding Unit Value
----------- ----------- ----------
<S> <C> <C>
SF 135R2C Contracts
Series B Accumulation Units 885,623 $ 9.91
Series G Accumulation Units 2,610,579 18.77
Series FA Accumulation Units 4,090,665 9.21
Series FG Accumulation Units 3,519,502 13.54
Series FI Accumulation Units 3,284,544 14.16
Series FO Accumulation Units 820,399 8.40
Series FC Accumulation Units 2,657,040 11.84
Series FE Accumulation Units 3,081,496 9.64
Series FM Accumulation Units 2,267,838 6.08
Series SU Accumulation Units 2,383,389 6.22
Series SV Accumulation Units 1,956,057 8.67
Series AS Accumulation Units 2,197,128 8.43
Series SI Accumulation Units 145,366 8.32
SF 226R1; SF228DC Contracts
Series B Accumulation Units 516,448 9.92
Series G Accumulation Units 4,623,935 18.79
Series FA Accumulation Units 8,505,603 9.21
Series FG Accumulation Units 8,140,376 13.55
Series FI Accumulation Units 6,150,094 14.17
Series FO Accumulation Units 48,352 8.41
Series FC Accumulation Units 8,532,096 11.85
Series FM Accumulation Units 1,150,279 6.08
Series AS Accumulation Units 4,365,889 8.44
Series SI Accumulation Units 914,883 8.33
SF 135R2V; SF 224FL; SF 234;
SF 236FL; SF 1700 Contracts
Series B Accumulation Units 330,437 21.42
Series G Accumulation Units 2,089,549 58.61
Series T Accumulation Units 1,803,252 58.18
Series P Accumulation Units 55,001 14.64
Series I Accumulation Units 1,752,665 10.04
Series FA Accumulation Units 2,697,371 8.97
Series FG Accumulation Units 3,646,839 13.16
Series FI Accumulation Units 2,698,332 13.92
Series FC Accumulation Units 151,176 6.44
Series FM Accumulation Units 863,998 6.19
Series NP Accumulation Units 272,828 5.26
Series NG Accumulation Units 246,315 4.61
Series JW Accumulation Units 261,044 6.39
</TABLE>
31
<PAGE> 109
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 5 -- UNITS OF CAPITAL (continued)
<TABLE>
<CAPTION>
Units
Description Outstanding Unit Value
----------- ----------- ----------
<S> <C> <C>
SF 135R2S Contracts
Series FG Accumulation Units 2,089,891 $13.36
Series FO Accumulation Units 1,457,239 7.21
Series FM Accumulation Units 226,877 6.16
Series SU Accumulation Units 3,090,590 6.22
Series SV Accumulation Units 3,635,365 10.93
SF 224R1; SF 230 Contracts
Series B Accumulation Units 236,557 9.54
Series G Accumulation Units 2,599,757 19.78
Series FA Accumulation Units 4,752,720 9.11
Series FG Accumulation Units 3,568,314 13.50
Series FI Accumulation Units 1,402,594 14.22
Series FC Accumulation Units 457,776 11.85
Series FM Accumulation Units 240,836 6.10
Series SU Accumulation Units 12,973 6.23
Series AS Accumulation Units 116,999 8.44
Series SI Accumulation Units 72,670 8.33
</TABLE>
NOTE 6 -- IMPACT OF YEAR 2000 (unaudited)
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the Year 2000 issue and has
developed and implemented a plan to resolve the issue. The Company currently
believes that, with modifications to existing software and converting to new
software and hardware, the Year 2000 issue will not pose significant operational
problems for the Company's computer systems. However, if such modifications and
conversions are not completed on a timely basis, the Year 2000 issue may have a
material impact on the operations of the Company. Furthermore, even if the
Company completes such modifications and conversions on a timely basis, there
can be no assurance that the failure by vendors or other third parties to solve
the Year 2000 issue will not have a material impact on the operations of the
Company.
32
<PAGE> 110
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) Consents of Independent Auditors
(13) Organizational Chart
<PAGE>
ORGANIZATIONAL STRUCTURE OF METROPOLITAN AND SUBSIDIARIES
AS OF DECEMBER 31, 1998
The following is a list of subsidiaries of Metropolitan Life Insurance Company
("Metropolitan") as of December 31, 1998. Those entities which are listed at
the left margin (labelled with capital letters) are direct subsidiaries of
Metropolitan. Unless otherwise indicated, each entity which is indented under
another entity is a subsidiary of such indented entity and, therefore, an
indirect subsidiary of Metropolitan. Certain inactive subsidiaries have been
omitted from the Metropolitan Organizational listing. The voting securities
(excluding directors' qualifying shares, if any) of the subsidiaries listed are
100% owned by their respective parent corporations, unless otherwise indicated.
The jurisdiction of domicile of each subsidiary listed is set forth in the
parenthetical following such subsidiary.
A. Metropolitan Tower Corp. (Delaware)
1. Metropolitan Property and Casualty Insurance Company (Rhode Island)
a. Metropolitan Group Property and Casualty Insurance Company
(Rhode Island)
i. Metropolitan Reinsurance Company (U.K.) Limited (Great
Britain)
b. Metropolitan Casualty Insurance Company (Rhode Island)
c. Metropolitan General Insurance Company (Rhode Island)
d. Metropolitan Direct Property and Casualty Insurance Company
(Georgia)
e. Metropolitan P&C Insurance Services, Inc. (California)
f. Metropolitan Lloyds, Inc. (Texas)
g. Met P&C Managing General Agency, Inc. (Texas)
2. Metropolitan Insurance and Annuity Company (Delaware)
a. MetLife Europe I, Inc. (Delaware)
b. MetLife Europe II, Inc. (Delaware)
c. MetLife Europe III, Inc. (Delaware)
d. MetLife Europe IV, Inc. (Delaware)
e. MetLife Europe V, Inc. (Delaware)
3. MetLife General Insurance Agency, Inc. (Delaware)
a. MetLife General Insurance Agency of Alabama, Inc. (Alabama)
b. MetLife General Insurance Agency of Kentucky, Inc. (Kentucky)
c. MetLife General Insurance Agency of Mississippi, Inc.
(Mississippi)
d. MetLife General Insurance Agency of Texas, Inc. (Texas)
e. MetLife General Insurance Agency of North Carolina, Inc. (North
Carolina)
f. MetLife General Insurance Agency of Massachusetts, Inc.
(Massachusetts)
<PAGE>
4. Metropolitan Asset Management Corporation (Delaware)
(a.) MetLife Capital, Limited Partnership (Delaware).
Partnership interests in MetLife Capital, Limited
Partnership are held by Metropolitan (90%) and
Metropolitan Asset Management Corporation (10%).
(i.) MetLife Capital Credit L.P. (Delaware).
Partnership interests in MetLife Capital Credit
L.P. are held by Metropolitan (90%) and
Metropolitan Asset Management Corporation (10%).
(1) MetLife Capital CFLI Holdings, LLC (DE)
(a.) MetLife Capital CFLI Leasing, LLC
(DE)
b. MetLife Financial Acceptance Corporation (Delaware).
MetLife Capital Holdings, Inc. holds 100% of the voting
preferred stock of MetLife Financial Acceptance Corporation.
Metropolitan Property and Casualty Insurance Company holds
100% of the common stock of MetLife Financial Acceptance
Corporation.
c. MetLife Investments Limited (United Kingdom). 23rd Street
Investments, Inc. holds one share of MetLife Investments
Limited.
d. MetLife Investments Asia Limited (Hong Kong). One share of
MetLife Investments Asia Limited is held by W&C Services, Inc.,
a nominee of Metropolitan Asset Management Corporation.
5. SSRM Holdings, Inc. (Delaware)
a. GFM Investments Limited (Delaware)
b. State Street Research & Management Company (Delaware). Is a
sub-investment manager for the Growth, Income, Diversified
and Aggressive Growth Portfolios of Metropolitan Series
Fund, Inc.
i. State Street Research Investment Services, Inc.
(Massachusetts)
<PAGE>
c. SSR Realty Advisors, Inc. (Delaware)
i. Metric Management Inc. (Delaware)
ii. Metric Property Management, Inc. (Delaware)
(1) Metric Realty (Delaware). SSR Realty Advisors, Inc.
and Metric Property Management, Inc. each hold 50% of
the common stock of Metric Realty.
(a) Metric Institutional Apartment Fund II, L.P.
(California). Metric Realty holds a 1% interest
as general partner and Metropolitan holds an
approximately 14.6% limited partnership interest
in Metric Institutional Apartment Fund II, L.P.
(2) Metric Colorado, Inc. (Colorado). Metric Property
Management, Inc. holds 80% of the common stock of
Metric Colorado, Inc.
iii. Metric Capital Corporation (California)
iv. Metric Assignor, Inc. (California)
v. SSR AV, Inc. (Delaware)
6. MetLife Holdings, Inc. (Delaware)
a. MetLife Funding, Inc. (Delaware)
b. MetLife Credit Corp. (Delaware)
7. Metropolitan Tower Realty Company, Inc. (Delaware)
8. Met Life Real Estate Advisors, Inc. (California)
9. Security First Group, Inc. (DE)
a. Security First Life Insurance Company (DE)
b. Security First Insurance Agency, Inc. (MA)
c. Security First Insurance Agency, Inc. (NV)
d. Security First Group of Ohio, Inc. (OH)
e. Security First Financial, Inc. (DE)
f. Security First Investment Management Corporation (DE)
g. Security First Management Corporation (DE)
h. Security First Real Estate, Inc. (DE)
i. Security First Financial Agency, Inc. (TX)
10. Natiloportem Holdings, Inc. (Delaware)
B. Metropolitan Tower Life Insurance Company (Delaware)
C. MetLife Security Insurance Company of Louisiana (Louisiana)
<PAGE>
D. MetLife Texas Holdings, Inc. (Delaware)
1. Texas Life Insurance Company (Texas)
a. Texas Life Agency Services, Inc. (Texas)
b. Texas Life Agency Services of Kansas, Inc. (Kansas)
E. MetLife Securities, Inc. (Delaware)
F. 23rd Street Investments, Inc. (Delaware)
G. Services La Metropolitaine Quebec, Inc. (Quebec, Canada)
H. Santander Met, S.A. (Spain). Shares of Santander Met, S.A. are held by
Metropolitan (50%) and by an entity (50%) unaffiliated with Metropolitan.
1. Seguros Genesis, S.A. (Spain)
2. Genesis Seguros Generales, Sociedad Anomina de Seguros y Reaseguros
(Spain)
I. MetLife Saengmyoung Insurance Company Ltd. (Korea).
J. Metropolitan Life Seguros de Vida S.A. (Argentina)
K. Metropolitan Life Seguros de Retiro S.A. (Argentina).
L. Met Life Holdings Luxembourg (Luxembourg)
M. Metropolitan Life Holdings, Netherlands BV (Netherlands)
N. MetLife International Holdings, Inc. (Delaware)
O. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)
P. Metropolitan Marine Way Investments Limited (Canada)
Q. P.T. MetLife Sejahtera (Indonesia) Shares of P.T. MetLife Sejahtera are
held by Metropolitan (80%) and by an entity (20%) unaffiliated with
Metropolitan.
R. Seguros Genesis S.A. (Mexico) Metropolitan holds 85.49%, Metropolitan Tower
Corp. holds 7.31% and Metropolitan Asset Management Corporation holds 7.20%
of the common stock of Seguros Genesis S.A.
S. Metropolitan Life Seguros de Vida S.A. (Uruguay). One share of Metropolitan
Life Seguros de Vida S.A. is held by Alejandro Miller Artola, a nominee of
Metropolitan Life Insurance Company.
T. Metropolitan Life Seguros E Previdencia Privada S.A. (Brazil)
<PAGE>
U. Hyatt Legal Plans, Inc. (Delaware)
1. Hyatt Legal Plans of Florida, Inc. (Fl)
V. One Madison Merchandising L.L.C. (Connecticut) Ownership of membership
interests in One Madison Merchandising L.L.C. is as follows: Metropolitan
owns 99% and Metropolitan Tower Corp. owns 1%.
W. Metropolitan Realty Management, Inc. (Delaware)
1. Edison Supply and Distribution, Inc. (Delaware)
2. Cross & Brown Company (New York)
a. CBNJ, Inc. (New Jersey)
X. MetPark Funding, Inc. (Delaware)
Y. 2154 Trading Corporation (New York)
Z. Transmountain Land & Livestock Company (Montana)
AA. Farmers National Company (Nebraska)
1. Farmers National Commodities, Inc. (Nebraska)
2. Farmers National Marketing Group, LLC (Iowa) Ownership of membership
interests in Farmers National Marketing Group, LLC is as follows:
Farmers National Company (50%) and an entity unaffiliated with
Metropolitan (50%).
A.B. MetLife Trust Company, National Association. (United States)
A.C. Benefit Services Corporation (Georgia)
A.D. G.A. Holding Corporation (MA)
A.E. TNE-Y, Inc. (DE)
A.F. CRH., Inc. (MA)
A.G. NELRECO Troy, Inc. (MA)
A.H. TNE Funding Corporation (DE)
A.I. L/C Development Corporation (CA)
A.J. Boylston Capital Advisors, Inc. (MA)
1. New England Portfolio Advisors, Inc. (MA)
A.K. CRB Co., Inc. (MA) AEW Real Estate Advisors, Inc. holds 49,000 preferred
non-voting shares of CRB Co., Inc. AEW Advisors, Inc. holds 1,000
preferred non-voting shares of CRB Co., Inc.
A.L. New England Life Mortgage Funding Corporation (MA)
A.M. Mercadian Capital L.P. (DE). Metropolitan holds a 95% limited partner
interest and an unaffiliated third party holds 5% of Mercadian Capital
L.P.
A.N. Mercadian Funding L.P. (DE). Metropolitan holds a 95% limited partner
interest and an unaffiliated third party holds 5% of Mercadian
Funding L.P.
A.O. Tower Resources Group, Inc. (DE)
<PAGE>
A.P. MetLife New England Holdings, Inc. (DE)
1. Fulcrum Financial Advisors, Inc. (MA)
2. New England Life Insurance Company (MA)
a. New England Life Holdings, Inc. (DE)
i. New England Securities Corporation (MA)
(1) Hereford Insurance Agency, Inc. (MA)
(2) Hereford Insurance Agency of Alabama, Inc. (AL)
(3) Hereford Insurance Agency of Minnesota, Inc. (MN)
(4) Hereford Insurance Agency of Ohio, Inc. (OH)
(5) Hereford Insurance Agency of New Mexico, Inc. (NM)
ii. TNE Advisers, Inc. (MA)
iii. TNE Information Services, Inc. (MA)
(1) First Connect Insurance Network, Inc. (DE)
(2) Interative Financial Solutions, Inc. (MA)
iv. N.L. Holding Corp. (Del)(NY)
(1) Nathan & Lewis Securities, Inc. (NY)
(2) Nathan & Lewis Associates, Inc. (NY)
(a) Nathan and Lewis Insurance Agency of Massachusetts,
Inc. (MA)
(b) Nathan and Lewis Associates of Texas, Inc. (TX)
(3) Nathan & Lewis Associates--Arizona, Inc. (AZ)
(4) Nathan & Lewis of Nevada, Inc. (NV)
(5) Nathan and Lewis Associates Ohio, Incorporated (OH)
b. Exeter Reassurance Company, Ltd. (MA)
c. Omega Reinsurance Corporation (AZ)
d. New England Pension and Annuity Company (DE)
e. Newbury Insurance Company, Limited (Bermuda)
3. Nvest Corporation (MA)
a. Nvest, L.P. (DE) Nvest Corporation holds a 1.69% general partnership
interest and MetLife New England Holdings, Inc. 3.19% general
partnership interest in Nvest, L.P.
b. Nvest Companies, L.P. (DE) Nvest Corporation holds a 0.0002% general
partnerhship interest in Nvest Companies, L.P. Nvest, L.P. holds a
14.64% general partnership interest in Nvest Companies, L.P.
Metropolitan holds a 46.23% limited partnership interest in Nvest
Companies, L.P.
i. Nvest Holdings, Inc. (DE)
(1) Back Bay Advisors, Inc. (MA)
(a) Back Bay Advisors, L.P. (DE)
Back Bay Advisors, Inc.
holds a 1% general partner
interest and NEIC
Holdings, Inc. holds a 99%
limited partner interest
in Back Bay Advisors, L.P.
(2) R & T Asset Management, Inc. (MA)
(a) Reich & Tang Distributors, Inc. (DE)
(b) R & T Asset Management L.P.
R & T Asset Management, Inc.
holds a 0.5% general partner interest and
NEIC Holdings, Inc. hold a 99.5% limited
partner interest in &
Asset Management, L.P.
(c) Reich & Tang Services, Inc. (DE)
<PAGE>
(3) Loomis, Sayles & Company, Inc. (MA)
(a) Loomis Sayles & Company, L.P. (DE)
Loomis Sayles & Company, Inc.
holds a 1% general partner interest and
R & T Asset Management, Inc. holds a 99%
limited partner interest in Loomis Sayles &
Company, L.P.
(4) Westpeak Investment Advisors, Inc. (MA)
(a) Westpeak Investment Advisors, L.P. (DE)
Westpeak Investment Advisors, Inc.
holds a 1% general partner interest and
Reich & Tang holds a 99% limited
partner interest in Westpeak Investment
Advisors, L.P.
(i) Westpeak Investment Advisors Australia
Limited Pty.
(5) Vaughan, Nelson Scarborough & McCullough (DE)
(a) Vaughan, Nelson Scarborough & McCullough, L.P. (DE)
VNSM, Inc. holds a 1% general partner interest and
Reich & Tang Asset Management, Inc. holds a 99%
limited partner interest in Vaughan, Nelson
Scarborough & McCullough, L.P.
(i) VNSM Trust Company
(6) MC Management, Inc. (MA)
(a) MC Management, L.P. (DE)
MC Management, Inc. holds a 1% general partner
interest and R & T Asset Management, Inc.
holds a 99% limited partner interest in MC
Management, L.P.
(7) Harris Associates, Inc. (DE)
(a) Harris Associates Securities L.P. (DE)
Harris Associates, Inc. holds a 1% general partner
interest and Harris Associates L.P. holds a
99% limited partner interest in Harris Associates
Securities, L.P.
(b) Harris Associates L.P. (DE)
Harris Associates, Inc. holds a 0.33% general
partner interest and NEIC Operating Partnership,
L.P. holds a 99.67% limited partner interest in
Harris Associates L.P.
(i) Harris Partners, Inc. (DE)
(ii) Harris Partners L.L.C. (DE)
Harris Partners, Inc. holds a 1%
membership interest and
Harris Associates L.P. holds a 99%
membership interest in Harris Partners L.L.C.
(1) Aurora Limited Partnership (DE)
Harris Partners L.L.C. holds a 1% general
partner interest
<PAGE>
(2) Perseus Partners L.P. (DE) Harris Partners
L.L.C. holds a 1% general partner interest
(3) Pleiades Partners L.P. (DE) Harris
Partners L.L.C. holds a 1% general partner
interest
(4) Stellar Partners L.P. (DE)
Harris Partners L.L.C. holds a 1% general
partner interest
(5) SPA Partners L.P. (DE) Harris Partners
L.L.C. holds a 1% general partner interest
(8) Graystone Partners, Inc. (MA)
(a) Graystone Partners, L.P. (DE)
Graystone Partners, Inc. holds a 1%
general partner interest and New England
NEIC Operating Partnership, L.P.
holds a 99% limited partner interest in
Graystone Partners, L.P.
(9) NEF Corporation (MA)
(a) New England Funds, L.P. (DE) NEF Corporation holds a
1% general partner interest and NEIC Operating
Partnership, L.P. holds a 99% limited
partner interest in New England Funds, L.P.
(b) New England Funds Management, L.P. (DE) NEF
Corporation holds a 1% general partner interest and
NEIC Operating Partnership, L.P. holds a 99%
limited partner interest in New England Funds
Management, L.P.
(10) New England Funds Service Corporation
(11) AEW Capital Management, Inc. (DE)
(a) AEW Securities, L.P. (DE) AEW Capital Management, Inc. holds
a 1% general partnership and AEW Capital Management, L.P.
holds a 99% limited partnership interest in AEW Securities,
L.P.
ii. Nvest Associates, Inc.
iii. Snyder Capital Management, Inc.
(1) Snyder Capital Management, L.P. NEIC Operating
Partnership holds a 99.5% limited partnership
interest and Snyder Capital Management Inc. holds a
0.5% general partnership interest.
iv. Jurika & Voyles, Inc.
(1) Jurika & Voyles, L.P NEIC Operating Partnership,
L.P. holds a 99% limited partnership interest and
Jurika & Voyles, Inc. holds a 1% general partnership
interest.
v. Capital Growth Management, L.P. (DE)
NEIC Operating Partnership, L.P. holds a 50% limited partner
interest in Capital Growth Management, L.P.
vi. Nvest Partnerships, LLC ( )
<PAGE>
vii. AEW Capital Management L.P. (DE)
New England Investment Companies, L.P. holds a 99% limited partner
interest and AEW Capital Management, Inc. holds a 1% general
partner interest in AEW Capital Management, L.P.
(1) AEW II Corporation ( )
(2) AEW Partners III, Inc. ( )
(3) AEW TSF, Inc. ( )
(4) AEW Exchange Management, LLC
(5) AEWPN, LLC ( )
(6) AEW Investment Group, Inc. (MA)
(a) Copley Public Partnership Holding, L.P. (MA)
AEW Investment Group, Inc. holds a 25% general partnership
interest and AEW Capital Management, L.P. holds a 75%
limited partnership interest in Copley Public Partnership
Holding, L.P.
(b) AEW Management and Advisors L.P. (MA)
AEW Investment Group, Inc. holds a 25% general partnership
interest and AEW Capital Management, L.P. holds a 75% limited
partnership interest in AEW Management and Advisors L.P.
ii. AEW Real Estate Advisors, Inc. (MA)
1. AEW Advisors, Inc. (MA)
2. Copley Properties Company, Inc. (MA)
3. Copley Properties Company II, Inc. (MA)
4. Copley Properties Company III, Inc. (MA)
5. Fourth Copley Corp. (MA)
6. Fifth Copley Corp. (MA)
7. Sixth Copley Corp. (MA)
8. Seventh Copley Corp. (MA).
9. Eighth Copley Corp. (MA).
10. First Income Corp. (MA).
11. Second Income Corp. (MA).
12. Third Income Corp. (MA).
13. Fourth Income Corp. (MA).
14. Third Singleton Corp. (MA).
15. Fourth Singleton Corp. (MA)
16. Fifth Singleton Corp. (MA)
17. Sixth Singleton Corp. (MA).
18. BCOP Associates L.P. (MA)
AEW Real Estate Advisors, Inc. holds a 1% general
partner interest in BCOP Associates L.P.
ii. CREA Western Investors I, Inc. (MA)
1. CREA Western Investors I, L.P. (DE)
CREA Western Investors I, Inc. holds a 24.28% general
partnership interest and Copley Public Partnership Holding,
L.P. holds a 57.62% limited partnership interest in CREA
Western Investors I, L.P.
iii. CREA Investors Santa Fe Springs, Inc. (MA)
(7) Copley Public Partnership Holding, L.P. (DE)
AEW Capital Management, L.P. holds a 75% limited partner interest and
AEW Investment Group, Inc. holds a 25% general partner interest and
CREA Western Investors I, L.P holds a 57.62% Limited Partnership
interest.
<PAGE>
(8) AEW Real Estate Advisors, Limited Partnership (MA)
AEW Real Estate Advisors, Inc. holds a 25% general partnership interest
and AEW Capital Management, L.P. holds a 75% limited partnership
interest in AEW Real Estate Advisors, Limited Partnership.
(9) AEW Hotel Investment Corporation (MA)
(a.) AEW Hotel Investment, Limited Partnership (MA)
AEW Hotel Investment Corporation holds a 1% general
partnership interest and AEW Capital Management, L.P. holds a
99% limited partnership interest in AEW Hotel Investment,
Limited Partnership.
(10) Aldrich Eastman Global Investment Strategies, LLC (DE)
AEW Capital Management, L.P. holds a 25% membership interest and an
unaffiliated third party holds a 75% membership interest in Aldrich
Eastman Global Investment Strategies, LLC.
In addition to the entities listed above, Metropolitan (or where indicated an
affiliate) also owns an interest in the following entities, among others:
1) CP&S Communications, Inc., a New York corporation, holds federal radio
communications licenses for equipment used in Metropolitan owned facilities and
airplanes. It is not engaged in any business.
2) Quadreal Corp., a New York corporation, is the fee holder of a parcel of
real property subject to a 999 year prepaid lease. It is wholly owned by
Metropolitan, having been acquired by a wholly owned subsidiary of Metropolitan
in 1973 in connection with a real estate investment and transferred to
Metropolitan in 1988.
3) Met Life International Real Estate Equity Shares, Inc., a Delaware
corporation, is a real estate investment trust. Metropolitan owns approximately
18.4% of the outstanding common stock of this company and has the right to
designate 2 of the 5 members of its Board of Directors.
4) Metropolitan Structures is a general partnership in which Metropolitan owns
a 50% interest.
5) Metropolitan owns, via its subsidiary, AFORE Genesis Metropolitan S.A. de
C.V., approximately 61.7% of SIEFORE Genesis S.A. de C.V., a mutual fund.
6) Metropolitan owns varying interests in certain mutual funds distributed by
its affiliates. These ownership interests are generally expected to decrease as
shares of the funds are purchased by unaffiliated investors.
7) Metropolitan Lloyds Insurance Company of Texas, an affiliated association,
provides homeowner and related insurance for the Texas market. It is an
association of individuals designated as underwriters. Metropolitan Lloyds,
Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company ("MET
P&C"), serves as the attorney-in-fact and manages the association.
8) Metropolitan directly owns 100% of the non-voting preferred stock of Nathan
and Lewis Associates Ohio, Incorporated, an insurance agency. 100% of the voting
common stock of this company is held by an individual who has agreed to vote
such shares at the direction of N.L. Holding Corp. (DEL), an indirect wholly
owned subsidiary of Metropolitan.
<PAGE>
9) 100% of the capital stock of Hereford Insurance Agency of Oklahoma, Inc.
(OK) is owned by an officer. New England Life Insurance Company controls the
issuance of additional stock and has certain rights to purchase such officer's
shares.
10) 100% of the capital stock of Fairfield Insurance Agency of Texas, Inc. (TX)
is owned by an officer. New England Life Insurance Company controls the
issuance of additional stock and has certain rights to purchase such officer's
shares.
11) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited
partnerships, are investment vehicles through which investments in certain
entities are held. A wholly owned subsidiary of Metropolitan serves as the
general partner of the limited partnerships and Metropolitan directly owns a 99%
limited partnership interest in each MILP. The MILPs have various's ownership
interests in certain companies. The various MILPs own, directly or indirectly,
100% of the voting stock of the following company: Coating Technologies
International, Inc.
NOTE: THE METROPOLITAN LIFE ORGANIZATIONAL CHART DOES NOT INCLUDE REAL ESTATE
JOINT VENTURES AND PARTNERSHIPS OF WHICH METROPOLITAN LIFE AND/OR ITS
SUBSIDIARIES IS AN INVESTMENT PARTNER. IN ADDITION, CERTAIN INACTIVE
SUBSIDIARIES HAVE ALSO BEEN OMITTED.
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
Joseph W. Jordan Director
Terence I. Lennon Director
Gail A. Praslick Director
Joseph A. Reali Director
Anthony J. Williamson Director
Richard C. Pearson Director and President
Howard H Kayton Executive Vice President and Chief Actuary
Brian J. Finneran Senior Vice President
Jane F. Eagle Senior Vice President, Chief Financial Officer
Peter R. Jones Senior Vice President
Cheryl M. MacGregor Senior Vice President
Alexander H. Masson Senior Vice President
Anthony J. Williamson Senior Vice President, Chief Investment Officer
George R. Bateman Vice President
</TABLE>
<PAGE> 111
<TABLE>
<S> <C>
James C. Turner Vice President, Assistant Secretary
Leo Brown Assistant Vice President
Steven J. Brash 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 April 27, 1999, there were 11,818 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 and President
Jane F. 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
James Cyrus Turner Vice President and Assistant Secretary
</TABLE>
<PAGE> 112
<TABLE>
<S> <C>
Cheryl J. Finney Vice President and Assistant Secretary
*Gary A. Virnick Supervisor of Compliance
</TABLE>
* not an officer
<PAGE> 113
<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 for 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> 114
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Registration Statement and 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 26th day of April, 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 Post-Effective amendment to its
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, Chief Executive April 26, 1999
- ------------------------------ Officer, & Director
Richard C. Pearson, President
/s/ Jane F. Eagle Senior Vice President & April 26, 1999
- ------------------------------ Chief Financial Officer
Jane F. Eagle
David F. Levene* Director and April 26, 1999
- ------------------------------ Chairman of the Board
David F. Levene
John K. Bruins* Director April 26, 1999
- ------------------------------
John K. Bruins
Steven T. Cates* Director April 26, 1999
- ------------------------------
Steven T. Cates
Director _______, 1999
- ------------------------------
Joseph J. Jordan
</TABLE>
<PAGE> 115
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Terence I. Lennon* Director April 26, 1999
- ----------------------------
Terence I. Lennon
Gail A. Praslick* Director April 26, 1999
- ----------------------------
Gail A. Praslick
Joseph A. Reali* Director April 26, 1999
- ----------------------------
Joseph A. Reali
Anthony J. Williamson* Director April 26, 1999
- ----------------------------
Anthony J. Williamson
/s/ Richard C. Pearson
- ----------------------------
*(Richard C. Pearson as
Attorney-in-Fact for each
of the persons indicated)
</TABLE>
<PAGE> 1
[DELOITTE & TOUCHE LLP LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
Security First Life Separate Account A of
Security First Life Insurance Company
We consent to (a) the use in this Post-Effective Amendment No. 14 to
Registration Statement No. 33-47984 under the Securities Act of 1933 and in this
Amendment No. 112 to Registration Statement No. 811-3365 under the Investment
Company Act of 1940 on Form N-4 of our report dated February 10, 1999 regarding
Security First Life Insurance Company and subsidiary and our report dated April
15, 1999 regarding Security First Life Separate Account A appearing in the
Financial Statements, which are included in Part B, the Statement of Additional
Information of such Registration Statements, (b) the reference to us under the
heading "Independent Auditors" in such Statement of Additional Information and
(c) the reference to us under the heading "Condensed Financial Information" in
the Prospectus, which is a part of such Registration Statements.
/s/ Deloitte & Touche LLP
April 26, 1999
<PAGE> 2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed Financial
Information" and "Independent Auditors" and to the use of our report on
Security First Life Insurance Company and Subsidiaries dated February 11, 1998
and Security First Life Separate Account A dated April 17, 1998 in the
Registration Statement (Form N-4, Post-Effective Amendment No. 14 under the
Securities Act of 1933 and No. 112 under the Investment Company Act of 1940)
and related Prospectus and Statement of Additional Information of Security
First Life Separate Account A.
Ernst & Young LLP
Los Angeles, California
April 26, 1999
