<PAGE> 1
'33 ACT FILE NO. 333-79625
'40 ACT FILE NO. 811-3365
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES [X]
ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 1 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 120 [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, 2000 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
24-F-2 NOTICE WAS FILED ON FEBRUARY 25, 2000.
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
CROSS REFERENCE SHEET
PART A - PROSPECTUS
<TABLE>
<CAPTION>
Item Number in Form N-4 Caption in Prospectus
- ----------------------- ---------------------
<S> <C>
1. Cover Page Cover Page
2. Definitions Glossary
3. Synopsis of Highlights Summary of the Contract
4. Condensed Financial Information Condensed Financial Information;
Financial and Performance Information
5. General Description of Registrant, Description of Security First Life
Depositor, and Portfolio Companies Insurance Company, The General Account,
The Separate Account, The Funds and
Service Providers; Voting Rights
6. Deductions and Expenses Contract Charges
7. General Description of Variable Annuity Descriptions of the Contracts;
Contracts Accumulation Period; Annuity Benefits
8. Annuity Period Annuity Benefits
9. Death Benefit Death Benefits
10. Purchases and Contract Value Description of the Contracts;
Accumulation Period; Principal
Underwriter
11. Redemptions Accumulation Period
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the Statement of Table of Contents of Statement of
Additional Information Additional Information
</TABLE>
<PAGE>
PART B - STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company; The Separate
Account
18. Services Servicing Agent; Safekeeping of
Securities; Independent Auditors
19. Purchase of Securities Being Offered Purchase of Securities Being Offered
20. Underwriters 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>
[FRONT PAGE] PROSPECTUS
May 1, 2000
SECURITY FIRST FORESIGHT 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 individual flexible
payment fixed and variable annuity contracts issued through Security First Life
Separate Account A by Security First Life Insurance Company (the "Contracts").
Please read it carefully before you invest and keep it for future reference. The
Contracts provide annuity benefits through distributions made from certain
retirement plans that qualify for special Federal income tax treatment
("qualified plans"), as well as from distributions made under retirement plans
that do not qualify for special tax treatment ("non-qualified plans").
You decide how to allocate your money among the available investment choices.
You may choose to allocate your payments to the General Account, which includes
Fixed Accounts I and II (not described in this Prospectus) that offer interest
rates guaranteed by Security First Life Insurance Company ("Security First
Life"), or to Separate Account A (the "Separate Account"). The Separate Account,
in turn, invests in the following underlying funds:
FEDERATED INSURANCE SERIES
Federated Equity Income Fund II
Federated American Leaders Fund II
Federated High Income Bond Fund II
<PAGE>
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Balanced Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Value Fund
AIM V.I. International Equity Fund
OPPENHEIMER VARIABLE ACCOUNTS FUNDS
Oppenheimer Bond Fund/VA
Oppenheimer Strategic Bond Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer Money Fund/VA
MFS VARIABLE INSURANCE TRUST
MFS Research Series
MFS New Discovery Series
MFS Growth with Income Series
VAN KAMPEN LIFE INVESTMENT TRUST
Van Kampen Emerging Growth Portfolio
Van Kampen Enterprise Portfolio
Van Kampen Strategic Stock Portfolio
You can choose any combination of these investment choices. Your Contract Value
will vary daily to reflect the investment experience of the funding options
selected. These funds are described in detail in the fund prospectuses that are
attached to the back of or delivered with this Prospectus. Please read these
prospectuses carefully before you invest. THIS PROSPECTUS IS NOT VALID UNLESS
ATTACHED TO OR DELIVERED WITH THESE FUND PROSPECTUSES.
For more information:
If you would like more information about the Security First Foresight Variable
Annuity Contract, you can obtain a copy of the Statement of Additional
Information ("SAI") dated May 1, 2000. The SAI is legally considered a part of
this Prospectus as though it were included in the Prospectus. The Table of
Contents of the SAI appears on page ____ of the Prospectus. To request a free
copy of the SAI or to ask questions, write or call:
<PAGE>
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 funds are:
- not bank deposits or obligations;
- not federally insured or guaranteed;
- not endorsed by any bank or government agency; and
- not guaranteed to achieve their investment objectives.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
Glossary x
Fee Tables and Examples x
Summary of the Contracts x
Condensed Financial Information x
Financial and Performance Information x
Description of Security First Life Insurance Company, The General Account
The Separate Account, The Funds and Service Providers x
The Insurance Company x
The General Account x
The Separate Account x
The Funds x
Principal Underwriter x
Servicing Agent x
Custodian x
Contract Charges x
Annual Policy Fee x
Premium Taxes x
Surrender Charge x
Administration Fees x
Mortality and Expense Risk Charge x
Federal, State and Local Taxes x
Free Look Period x
Description of the Contracts x
Assignment x
Purchase Payments x
Transfers x
Dollar Cost Averaging x
Reallocation Election x
Modification of the Contracts x
Accumulation Period x
Crediting Accumulation Units in the Separate Account x
Surrender from the Separate Account x
Account Statements x
Annuity Benefits x
Variable Annuity Payments x
Election of Annuity Date and Form of Annuity x
Frequency of Payment x
Level Payments Varying Annually x
Annuity Unit Values x
</TABLE>
<PAGE>
Death Benefits x
Death Before the Annuity Date x
Death After the Annuity Date x
Federal Tax Considerations x
General Taxation of Annuities x
Non-qualified Contracts x
Qualified Contracts x
Withholding x
Voting Rights x
Legal Proceedings x
Additional Information x
Table of Contents of Statement of Additional Information x
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.
<PAGE>
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.
CONTRACT - The agreement between you and Security First Life covering your
rights.
CONTRACT DATE - The date your Contract was issued to you.
CONTRACT VALUE - The sum of your interests in the Separate Account Series and in
the General Account. Your interest in the Separate Account Series is the sum of
the values of the Accumulation Units. Your interest in the General Account is
the accumulated value of the amounts allocated to the General Account plus
credited interest as guaranteed in the Contract, less any prior withdrawals
and/or amounts applied to Annuity options.
CONTRACT YEAR - A 12-month period starting on the Contract Date and on each
anniversary of the Contract Date.
FIXED ANNUITY - An Annuity providing guaranteed level payments. These payments
are not based upon the investment experience of the Separate Account.
<PAGE>
FREE LOOK PERIOD - The 10-day period when you first receive your Contract.
During this time period, you may cancel your Contract for a full refund of all
Purchase Payments (or the greater of Purchase Payments or the Contract Value in
some states).
FREE WITHDRAWAL AMOUNT - The amount that can be withdrawn in a Contract Year
after the first contract year without incurring a surrender charge.
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 date on which Annuity payments begin if you do not
select another date. It is the later of the Contract anniversary nearest the
Annuitant's 100th birthday or the 10th anniversary of the Contract Date.
OWNER - You, the person who has title to the Contract.
PURCHASE PAYMENT - The amounts paid by 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 you 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.
SETTLEMENT DATE - The date the annuity is settled by 1) the start of annuity
income payments to the annuitant, or 2) the payment of the death benefit to the
beneficiary or 3) the payment of the Contract Value in a lump sum.
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.
<PAGE>
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 attached Fund prospectuses for a more complete description of the
various costs and expenses of the Funds.
* Under State law, premium taxes may be deducted from each Purchase Payment or
upon Annuitization. At this time, Security First Life deducts the premium tax
only from amounts annuitized.
The following information assumes that the entire Contract Value is in the
Separate Account:
<PAGE>
FEE TABLES
YOUR EXPENSES
Years Percentage
----- ----------
Surrender Charge (Deferred Sales less than 1 7%
Charge) [as a percentage
of amounts accumulated with
respect to a purchase payment)
(including earnings or losses
credited to the purchase payment]
1 but not 2 7%
2 but not 3 6%
3 but not 4 6%
4 but not 5 5%
5 but not 6 4%
6 but not 7 3%
7 or more 0%
SEPARATE ACCOUNT EXPENSES
(AS A PERCENTAGE OF AVERAGE CONTRACT VALUE.
DEDUCTED DAILY FROM THE SEPARATE ACCOUNT.)
Administration Fee .15% per year
Mortality and Expense Risk Fees 1.25% per year
TOTAL SEPARATE ACCOUNT ANNUAL 1.40% per year
EXPENSES
FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
(NET OF REIMBURSEMENT)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Federated Equity Federated American Federated High
Income Fund II Leaders Fund II Income Bond Fund II
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Management Fee 0.55% 0.75% 0.60%
- -------------------------------------------------------------------------------------------
(b) Other Expenses 0.39% 0.13% 0.19%
- -------------------------------------------------------------------------------------------
(c) Total Annual 0.94% 0.88% 0.79%
Expenses
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
AIM V.I. Capital AIM V.I.
AIM V.I. Appreciation AIM V.I. Value International
Balanced Fund Fund Fund Equity Fund
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(a) Management Fee 0.75% 0.62% 0.61% 0.75%
- ------------------------------------------------------------------------------------------------
(b) Other Expenses 0.56% 0.11% 0.15% 0.22%
- ------------------------------------------------------------------------------------------------
(c) Total Annual Expenses 1.21% 0.73% 0.76% 0.97%
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Oppenheimer
Oppenheimer Main Street
Oppenheimer Bond Strategic Bond Growth & Oppenheimer
Fund/VA Fund/VA Income Fund/VA Money Fund/VA
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(a) Management Fee 0.72% 0.74% 0.73% 0.45%
- ---------------------------------------------------------------------------------------------------
(b) Other Expenses 0.01% 0.04% 0.05% 0.03%
- ---------------------------------------------------------------------------------------------------
(c) Total Annual Expenses 0.73% 0.78% 0.78% 0.48%
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
MFS Research MFS New Discovery MFS Growth with
Series Series Income Series
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Management Fee 0.75% 0.90% 0.75%
- -------------------------------------------------------------------------------------------
(b) Other Expenses 0.11% 0.17% 0.13%
- -------------------------------------------------------------------------------------------
(c) Total Annual Expenses 0.86% 1.07% 0.88%
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Van Kampen Van Kampen Van Kampen
Emerging Growth Enterprise Strategic
Portfolio Portfolio Stock Portfolio
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Management Fee 0.67% 0.48% 0.24%
- -------------------------------------------------------------------------------------
(b) Other Expenses 0.18% 0.12% 0.41%
- -------------------------------------------------------------------------------------
(c) Total Annual Expenses 0.85% 0.60% 0.65%
- -------------------------------------------------------------------------------------
</TABLE>
Had there been no fee waivers or expense reimbursement, expenses would have
been:
<PAGE>
AIM V.I. Balanced Fund:
Total Annual Expenses - 1.31%
MFS New Discovery Series:
Other Expenses - 1.59%
Van Kampen Emerging Growth Portfolio:
Management Fees - 0.70%
Total Annual Expenses - 0.88%
Van Kampen Enterprise Portfolio:
Management Fees - 0.50%
Total Annual Expenses - 0.62%
Van Kampen Strategic Stock:
Management Fees - 0.50%
Total Annual Expenses - 0.91%
With regard to the Federated Equity Income Fund II, American Leaders Fund II,
and High Income Bond Fund II, the management fees have been reduced to reflect
the voluntary waiver of a portion of the management fee. The adviser can
terminate this voluntary waiver at any time at its sole discretion. The maximum
management fee is 0.75%.
<PAGE>
EXAMPLES
<TABLE>
<CAPTION>
CONDITIONS
TIME
PERIODS
SEPARATE ACCOUNT You would pay the following expenses 1 Year 3 Years 5 Years 10 Years
SERIES on a $1,000 investment assuming 5%
annual return on assets:
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federated Equity (a) upon surrender at the end of the (a) $102 $151 209 336
Income Fund II stated time period
(b) 30 94 160 336
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 102 151 160 336
the applicable period
- ---------------------------------------------------------------------------------------------------------
Federated (a) upon surrender at the end of the (a) 102 149 206 330
American Leaders stated time period
Fund II (b) 30 92 157 330
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 102 149 157 330
the applicable period
- ---------------------------------------------------------------------------------------------------------
Federated High (a) upon surrender at the end of the (a) 101 147 202 321
Income Bond Fund stated time period
II (b) 29 89 152 321
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 101 147 152 321
the applicable period
- ---------------------------------------------------------------------------------------------------------
AIM V.I. Balanced (a) upon surrender at the end of the (a) 105 159 222 360
Fund stated time period
(b) 33 102 173 360
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 105 159 173 360
the applicable period
- ---------------------------------------------------------------------------------------------------------
AIM V.I. Capital (a) upon surrender at the end of the (a) 100 145 199 316
Appreciation Fund stated time period
(b) 29 88 149 316
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 100 145 149 316
the applicable period
- ---------------------------------------------------------------------------------------------------------
AIM V.I. Value (a) upon surrender at the end of the (a) 100 146 201 319
Fund stated time period
(b) 29 89 151 319
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 100 146 151 319
the applicable period
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AIM V.I. (a) upon surrender at the end of the (a) 102 152 211 338
International stated time period
Equity Fund (b) 31 95 161 338
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 102 152 161 338
the applicable period
- ---------------------------------------------------------------------------------------------------------
Oppenheimer Bond (a) upon surrender at the end of the (a) 100 145 199 316
Fund/VA stated time period
(b) 29 88 149 316
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 100 145 149 316
the applicable period
- --------------------------------------------------------------------------------------------------------
Oppenheimer (a) upon surrender at the end of the (a) 101 147 202 320
Strategic Bond stated time period
Fund/VA (b) 29 89 152 320
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 101 147 152 320
the applicable period
- ---------------------------------------------------------------------------------------------------------
Oppenheimer Main (a) upon surrender at the end of the (a) 101 147 202 320
Street Growth & stated time period
Income Fund/VA (b) 29 89 152 320
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 101 147 152 320
the applicable period
- ---------------------------------------------------------------------------------------------------------
Oppenheimer Money (a) upon surrender at the end of the (a) 98 138 188 291
Fund/VA stated time period
(b) 26 80 137 291
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 98 138 137 291
the applicable period
- ---------------------------------------------------------------------------------------------------------
MFS Research (a) upon surrender at the end of the (a) 101 149 206 328
Series stated time period
(b) 30 92 156 328
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 101 149 156 328
the applicable period
- ---------------------------------------------------------------------------------------------------------
MFS New Discovery (a) upon surrender at the end of the (a) 103 155 215 348
Series stated time period
(b) 33 98 166 348
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 103 155 166 348
the applicable period
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MFS Growth with (a) upon surrender at the end of the (a) 102 149 206 330
Income Series stated time period
(b) 30 92 157 330
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 102 149 157 330
the applicable period
- ---------------------------------------------------------------------------------------------------------
Van Kampen (a) upon surrender at the end of the (a) 101 149 205 327
Emerging Growth stated time period
Portfolio (b) 30 91 155 327
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 101 149 155 327
the applicable period
- ---------------------------------------------------------------------------------------------------------
Van Kampen (a) upon surrender at the end of the (a) 99 142 193 303
Enterprise stated time period
Portfolio (b) 27 84 143 303
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 99 142 143 303
the applicable period
- ---------------------------------------------------------------------------------------------------------
Van Kampen (a) upon surrender at the end of the (a) 99 143 196 308
Strategic Stock stated time period
Portfolio (b) 28 85 145 306
(b) if the Contract WAS NOT
surrendered
(c) if you annuitize at the end of (c) 99 143 145 306
the applicable period
- ---------------------------------------------------------------------------------------------------------
</TABLE>
THE FEE TABLE AND EXAMPLES DO NOT REPRESENT 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 and 1999 have been audited by Deloitte & Touche LLP, the
Separate Account's independent auditors.
Twelve
Months
Ended
Separate Account Series 12/31/99
- ----------------------- --------
Series AC (Aim Capital)
Beg. AUV $ (9/14/99) 5.00
End. AUV $ 6.75
End. No. Non-Qualified Aus 372
End. No. Qualified Aus 0
Series AV (Aim Value)
Beg. AUV $ (9/10/99) 5.00
End. AUV $ 5.82
End. No. Non-Qualified Aus 7,182
End. No. Qualified Aus 4,508
Series AI (Aim International)
Beg. AUV $ (9/14/99) 5.00
End. AUV $ 7.26
End. No. Non-Qualified Aus 1,157
End. No. Qualified Aus 78
Series OB (Oppenheimer Bond)
Beg. AUV $ (11/30/99) 5.00
End. AUV $ 5.01
End. No. Non-Qualified Aus 1,596
End. No. Qualified Aus 0
Series OG (Oppenheimer Growth)
Beg. AUV $ (9/10/99) 5.00
End. AUV $ 5.33
End. No. Non-Qualified Aus 3,430
End. No. Qualified Aus 501
Series OM (Oppenheimer Money)
Beg. AUV $ (8/20/99) 5.00
End. AUV $ 5.07
End. No. Non-Qualified Aus 24,045
End. No. Qualified Aus 13,634
Yeild 4.49%
Series OS (Oppenheimer Strategic)
Beg. AUV $ (9/14/99) 5.00
End. AUV $ 5.13
End. No. Non-Qualified Aus 327
End. No. Qualified Aus 64
Series MFSG (MFS Growth)
Beg. AUV $ (12/3/99) 5.00
End. AUV $ 5.12
End. No. Non-Qualified Aus 2,040
End. No. Qualified Aus 0
Series MFSR (MFS Research)
Beg. AUV $ (12/3/99) 5.00
End. AUV $ 5.81
End. No. Non-Qualified Aus 2,569
End. No. Qualified Aus 0
Series VKER (Van Kampen Enterprise)
Beg. AUV $ (12/29/99) 5.00
End. AUV $ 5.92
End. No. Non-Qualified Aus 343
End. No. Qualified Aus 0
Series VKEM (Van Kampen Emerging)
Beg. AUV $ (12/29/99) 5.00
End. AUV $ 8.05
End. No. Non-Qualified Aus 711
End. No. Qualified Aus 1,110
Series VKS (Van Kampen Strategic)
Beg. AUV $ (11/30/99) 5.00
End. AUV $ 4.45
End. No. Non-Qualified Aus 670
End. No. Qualified Aus 0
<PAGE>
SUMMARY OF THE CONTRACTS
THE CONTRACTS
The Contracts may be offered to:
- Qualified Plans such as:
- Section 403(b) tax-sheltered annuities;
- Section 457 deferred compensation plans;
- Section 401 pension and profit sharing plans;
- individual retirement annuities;
- traditional Individual Retirement Account ("IRAs"); and
- Roth IRAs.
[SIDE BAR: Please see the section "Qualified Contracts"
on page ____ for more information.]
- Plans that do not qualify for special tax treatment
(Non-qualified Plans)
- Individuals seeking to accumulate money for retirement
PURCHASE PAYMENTS
Purchase Payments under the Contracts are made to the General Account, the
Separate Account, or allocated between them (only initial Purchase Payments may
be directed to Fixed Account II). You cay buy a Contract for $5,000 and add as
little as $500 at any time (for IRAs, the minimum is $2,000 for an initial
Purchase Payment and $500 for each additional payment). There is no initial
sales charge; however, the charges and deductions described under "Contract
Charges" on page ___ will be deducted from the Contract Value. These charges
include a $35 annual policy fee that is deducted from the General and Separate
Accounts on a pro rata basis on the Contract's anniversary each year until
annuitization. The fee is currently waived if the sum of all purchase payments
remaining in the Contract is more than $50,000.
You can transfer amounts allocated to the Separate Account:
- between any of the fund investment choices, at any
time and as many times as you choose
- to Fixed Account I of the General Account at any time
before the amount has been applied to a variable annuity
option
<PAGE>
You can transfer amounts allocated to the General Account to the Separate
Account only if you are applying them to a Variable Annuity option.
[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 seventeen Series, each of which
invests in one of the following seventeen Funds:
-------------------------------------------------------------------------
Funds Advisers/Subadvisers
-------------------------------------------------------------------------
FEDERATED INSURANCE SERIES
-------------------------------------------------------------------------
Federated Equity Income Fund II Federated Advisers
-------------------------------------------------------------------------
Federated American Leaders Fund II Federated Advisers
-------------------------------------------------------------------------
Federated High Income Bond Fund II Federated Advisers
-------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS
-------------------------------------------------------------------------
AIM V.I. Balanced Fund A I M Advisors, Inc.
-------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund A I M Advisors, Inc.
-------------------------------------------------------------------------
AIM V.I. Value Fund A I M Advisors, Inc.
-------------------------------------------------------------------------
AIM V.I. International Equity Fund A I M Advisors, Inc.
-------------------------------------------------------------------------
OPPENHEIMER VARIABLE ACCOUNTS FUNDS
-------------------------------------------------------------------------
Oppenheimer Bond Fund/VA OppenheimerFunds, Inc.
-------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA OppenheimerFunds, Inc.
-------------------------------------------------------------------------
Oppenheimer Main Street Growth & Income OppenheimerFunds, Inc.
Fund/VA
-------------------------------------------------------------------------
Oppenheimer Money Fund/VA OppenheimerFunds, Inc.
-------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
-------------------------------------------------------------------------
MFS Research Series Massachusetts Financial
Services Company
-------------------------------------------------------------------------
MFS New Discovery Series Massachusetts Financial
Services Company
-------------------------------------------------------------------------
MFS Growth with Income Series Massachusetts Financial
Services Company
-------------------------------------------------------------------------
VAN KAMPEN LIFE INVESTMENT TRUST
-------------------------------------------------------------------------
Van Kampen Emerging Growth Portfolio Van Kampen Asset Management
Inc.
-------------------------------------------------------------------------
Van Kampen Enterprise Portfolio Van Kampen Asset Management
Inc.
-------------------------------------------------------------------------
Van Kampen Strategic Stock Portfolio Van Kampen Asset Management
Inc.
-------------------------------------------------------------------------
[SIDE BAR: Please see "The Separate Account" on page ____ and "The Funds" on
page ____ for more information.]
<PAGE>
CHARGES AND DEDUCTIONS
The following fees and expenses apply to your Contract:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Fee or expense Amount of fee
-------------- -------------
<S> <C>
- -----------------------------------------------------------------------------------------------
DAILY DEDUCTIONS
- -----------------------------------------------------------------------------------------------
- Administration fee (deducted from your .000411%
interest in the Separate Account) (.15% per year)
- -----------------------------------------------------------------------------------------------
- Mortality and Expense risks .003425%
(1.25% per year)
- -----------------------------------------------------------------------------------------------
SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE)
- -----------------------------------------------------------------------------------------------
- Deducted if you request a full or partial 7% of the current value of each
withdrawal of Purchase Payments from the Separate Account Purchase Payment (including
within seven years after the Purchase Payment is made. earnings or losses credited to
the Purchase Payment). This
charge decreases in subsequent
years after the Purchase
Payment is made.
- -----------------------------------------------------------------------------------------------
</TABLE>
As described later in this Prospectus, this charge will not apply to:
- withdrawals of up to 10% of your interest in the Separate
Account or General Account for the first withdrawal of each
year after the first Contract Year;
- withdrawals made if you are confined to a hospital for at
least 30 consecutive days or to a skilled nursing home for
at least 90 consecutive days; or
- one withdrawal after the first Contract Year of up to 50% of
your interest in the Separate Account if your age at the
Contract Date was less than 75 years old and a licensed
medical doctor certifies in writing that you suffer from a
terminal illness and that your life expectancy is six months
or less.
<PAGE>
- --------------------------------------------------------------------------------
Fee or expense Amount of fee
- --------------------------------------------------------------------------------
ANNUAL POLICY FEE $35 per year
- --------------------------------------------------------------------------------
- Deducted from the Fixed Account I
and
Separate Account on a pro rata basis on your Contract's
anniversary each year until Annuitization.
- --------------------------------------------------------------------------------
PREMIUM TAXES
- Payable to a state or government agency 0% - 2.35%
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
You may cancel your Contract within 10 days after you receive it (or longer
depending on state law) for a full refund of all Purchase Payments (or the
greater of Purchase Payments or the Contract Value in some states). Purchase
Payments allocated to the Separate Account will be initially allocated to the
Money Fund during the Free Look Period.
[SIDE BAR: Please see "Free Look Period" on page ____ for more information.]
<PAGE>
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 Contract Value
is invested.
If your monthly payments from a particular Series are less than $100, Security
First Life may change the frequency of your payments so that each payment will
be at least $100 from that Series.
SURRENDER
You may surrender all or part of your Contract Value before the Annuity Date.
You may not make a partial withdrawal if it would cause your interest in any
Series or the General Account to be less than $2,000. However, if you are
withdrawing the entire amount allocated to a Series, this restriction does not
apply.
You may be assessed a surrender charge. In addition, any earnings surrendered
will be taxed as ordinary income and may be subject to a penalty tax under the
Internal Revenue Code. Certain restrictions apply for Qualified Contracts, as
defined under "Federal Tax Considerations."
[SIDE BAR: Please see "Surrender Charge" on page ___ and "Federal Tax
Considerations" on page ___ for more information.]
<PAGE>
DEATH BENEFIT
One of the insurance guarantees we provide you under your Contract is that your
Beneficiary(ies) will be protected against market downturns. You name your
Beneficiary(ies). If you die before the Annuity Date, your Beneficiary(ies) will
receive a death benefit that is the greatest of:
- the total of all Purchase Payments less any partial
withdrawals;
- the Contract Value at the Contract's settlement date; or
- if the Contract is issued before you reach the age of 70,
the greater of the above two choices or the minimum
guaranteed death benefit, which is discussed in detail on
page ___.
Your Beneficiary(ies) may choose to receive this benefit in a lump sum, to
continue the Contract with a settlement date equal to the fifth anniversary of
your death, or to apply it to certain of the available annuity forms contained
in this Contract.
[SIDE BAR: Please see "Death Benefits" on page ____ for more information.]
<PAGE>
FINANCIAL AND PERFORMANCE INFORMATION
PERFORMANCE INFORMATION
>From time to time, Security First Life may advertise the performance of a
Series. This performance information may include:
- the YIELD and EFFECTIVE YIELD of Series invested in the
Money Fund of the Separate Account
- AVERAGE ANNUAL TOTAL RETURNS for the other Series of the
Separate Account
YIELD is the net income generated by an investment in the Money Fund for a
specific seven-day period, expressed as a percentage of the value of the Series'
Accumulation Units. Yield is an annualized figure, which means that Security
First Life assumes that the Series will generate the same level of net income
over a one-year period and compounds that income on a semi-annual basis. Because
of the assumed compounding, the Money Funds' effective yield will be slightly
higher than its yield. The computation of yield reflects all recurring changes
under the Contract to all Owner accounts, including the mortality and expense
risk charge and the administrative expense charge. Yield does not reflect the
possible imposition of early withdrawal charges. Early withdrawal charges would
reduce your performance experience. ANNUAL RETURN measures the net income of a
Series and any realized or unrealized gains or losses of the underlying
investments in the Series, over the period stated. AVERAGE ANNUAL TOTAL RETURN
figures are annualized and, therefore, represent the average annual percentage
change in the value of an investment in a Series over the period stated. Average
annual total returns are expressed for at least one, five and ten year periods
(or from a Series' inception if the Series has been in existence for less than
ten years).
The computation of average annual total returns reflects all recurring charges
and applicable fees under the Contract to all Owner accounts, including the
following:
- the mortality and expense risk charge;
- the administrative expense charge;
- the applicable early surrender charge that may be charged at
the end of the period in question; and
- the annual policy fee.
[SIDE BAR: All performance numbers are based upon historical earnings. These
numbers are not intended to indicate future results. Yields and average annual
total returns are determined in accordance with the computation methods required
by the Securities and Exchange Commission (the "SEC") in the Form N-4
Registration Statement. These methods are described in detail in the Statement
of Additional Information.]
<PAGE>
FINANCIAL INFORMATION
Financial Statements of 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 life
insurance company.
MetLife, a wholly owned subsidiary of MetLife, Inc., a publicly traded company,
is a leading provider of insurance and financial services to a broad spectrum of
individual and group customers. With approximately $420 billion worth of assets
under management as of December 31, 1999, MetLife provides individual insurance
and investment products to approximately 9 million households in the United
States.
<PAGE>
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. You may allocate amounts to Fixed Account I or Fixed Account II of the
General Account when you purchase your Contract or you may transfer amounts from
the Separate Account to Fixed Account I at a later date. Amounts allocated to
the General Account are credited with interest at an interest rate that is
guaranteed by Security First Life for a specified period that depends upon the
Fixed Account to which you allocate purchase payments. Instead of you bearing
the risk of fluctuations in the value of the assets as is the case for amounts
invested in the Separate Account, Security First Life bears the full investment
risk for amounts in 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 your actual Contract for more
information.
THE SEPARATE ACCOUNT
Security First Life established the Separate Account on May 29, 1980 in
accordance with the Delaware Insurance Code. The purpose of the Separate Account
is to hold the variable assets that underlie the Security First ForeSight
Variable Annuity Contracts and some other variable annuity contracts that
Security First Life offers. The Separate Account is registered with the SEC as a
unit investment trust under the Investment Company Act of 1940.
The assets of the Separate Account are held in Security First Life's name on
behalf of the Separate Account and legally belong to Security First Life.
Although the Separate Account, and each of the Series that make up the Separate
Account, are considered as part of Security First Life's general business, the
Separate Account's 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
state 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 variable annuity payments is
guaranteed only to the extent of the level amount calculated at the beginning of
each annuity year (see Annuity Benefits - Level Payments Varying Annually, page
____).
<PAGE>
The Separate Account is divided into a number of investment Series of
Accumulation and Annuity Units. Seventeen 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>
Federated Equity Income Fund II The investment objective of Federated Advisers
the Fund is to provide above average income
and capital appreciation. The Fund attempts to
achieve its objectives by investing at least
65% of its assets in income-producing equity
securities.
- -------------------------------------------------------------------------------------------------------
Federated American Leaders Fund The primary investment Federated Advisers
II objective of the Fund is to
achieve long-term growth of
capital. The Fund's
secondary objective is to
provide income.
- -------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund The investment objective of Federated Advisers
II the Fund is to seek high
current income. The Fund endeavors to achieve
its objective by investing primarily in a
professionally managed, diversified portfolio
of fixed income securities. The fixed income
securities in which the Fund intends to invest
are lower-rated corporate debt obligations,
which are commonly referred to as "junk
bonds." Some of these fixed income securities
may involve
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
equity features. Capital growth will be
considered, but only when consistent with the
investment objective of high current income.
- -------------------------------------------------------------------------------------------------------
AIM V.I. Balanced Fund The Fund's objective is to A I M Advisors, Inc.
achieve as high a total return to investors as
possible, consistent with preservation of
capital. The Fund seeks to achieve its
objective by investing in a broadly
diversified portfolio of high-yielding
securities, including common stocks, preferred
stocks, convertible stocks and bonds. Although
equity securities will be purchased primarily
for capital appreciation and fixed income
securities will be purchased primarily for
income purposes, income and capital
appreciation potential will be considered in
connection with all investments.
- -------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation The Fund's investment A I M Advisors, Inc.
Fund objective is to seek capital
appreciation through investments in common
stocks, with emphasis on medium-sized and
smaller emerging growth companies. The
investment adviser to the Fund will be
particularly interested in companies that are
likely to benefit from new or innovative
products, services or
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
processes that should enhance such
companies' prospects for future growth in
earnings.
- -------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund The Fund's investment objective is to achieve A I M Advisors, Inc.
long-term growth of capital by investing
primarily in equity securities judged by the
Fund's investment adviser to be undervalued
relative to the current or projected earnings
of the companies issuing the securities, or
relative to current market values of assets
owned by the companies issuing the securities
or relative to the equity market generally.
Income is a secondary objective and would be
satisfied principally from the income
(interest and dividends) generated by the
common stocks, convertible bonds and
convertible preferred stocks that make up the
Fund's portfolio.
- -------------------------------------------------------------------------------------------------------
AIM V.I. International Equity The Fund's investment objective is to seek to A I M Advisors, Inc.
Fund provide long-term growth of capital by
investing in a diversified portfolio of
international equity securities the issuers of
which are considered by the Fund's investment
adviser to have strong earnings momentum. Any
income realized by the Fund will be incidental
and will not be an important
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
criteria in the selection of portfolio
securities.
- -------------------------------------------------------------------------------------------------------
Oppenheimer Bond Fund/VA The Fund's primary objective Oppenheimer Funds, Inc.
is to earn a high level of
current income. As a
secondary objective, the Bond
Fund seeks capital growth
when consistent with its
primary objective. It seeks to
achieve its objective by investing
primarily in debt securities.
- -------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond The investment objective of Oppenheimer Funds, Inc.
Fund/VA the Fund is to seek a high
level of current income principally derived
from interest on debt securities and to
enhance such income by writing covered call
options on debt securities. Although the
premiums received by the Fund from writing
covered calls are a form of capital gain, the
Fund generally will not make investments in
securities with the objective of seeking
capital appreciation.
- -------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth The objective of Growth & Income Fund Oppenheimer Funds, Inc.
Growth & Income is to seek a high total return, which includes
Fund/VA growth in the value of its shares as well as
current income from equity and debt
securities. In seeking that objective, Growth &
Income may
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
invest in equity and debt securities.
- -------------------------------------------------------------------------------------------------------
Oppenheimer Money Fund/VA The objective of Money Fund Oppenheimer Funds, Inc.
is to seek the maximum current income from
investments in "money market" securities
consistent with low capital risk and the
maintenance of liquidity. The Money Fund
primarily invests in "money market"
securities.
- -------------------------------------------------------------------------------------------------------
MFS Research Series The Research Series' investment objective is Massachusetts Financial
to provide long-term growth of Services Company
capital and future income. The Research
Series' policy is to invest a substantial
portion of its assets in equity securities of
companies believed to possess better than
average prospects for long-term growth. A
smaller proportion of the assets may be
invested in bonds, short-term obligations,
preferred stocks or common stocks whose
principal characteristic is income production
rather than growth. Such securities may also
offer opportunities for growth of capital as
well as income.
- -------------------------------------------------------------------------------------------------------
MFS New Discovery Series The New Discovery Series' investment Massachusetts Financial
objective is to seek capital appreciation. Services Company
The Fund seeks to achieve its objective by
investing,
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
under normal market conditions, at least 65%
of its total assets in companies that the
Fund's investment adviser believes offer
superior prospects for growth. Such
securities may either be listed on securities
exchanges or traded in the over-the-counter
markets and may be U.S. or foreign companies.
While companies in which the Fund invests may
be of any size, such as companies in a
relatively early stage of development that
offer the potential for accelerated earnings
or revenue growth (emerging growth
companies), or larger or more established
companies whose rates of earnings growth are
expected to accelerate because of special
factors, such as rejuvenated management, new
products, or structural changes in the
economy, the Fund will generally invest in
companies with small market capitalizations
relative to companies included in the
Standard & Poor's 500 Stock Index.
- -------------------------------------------------------------------------------------------------------
MFS Growth with Income Series The Growth with Income Series' investment Massachusetts Financial
Financial objectives are to provide Services Company
reasonable current income and long-term
growth of capital and income. Under normal
market conditions, the Growth with Income
Series will invest at least 65% of its assets
in equity securities of companies that are
believed to have long-term prospects for
growth and income.
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Van Kampen Emerging Growth The Emerging Growth Portfolio is a mutual Van Kampen Asset
Portfolio fund with an investment objective to seek Management Inc.
capital appreciation by investing in a
portfolio of securities consisting principally
of common stocks of small and medium sized
companies considered by the Portfolio's
management to be emerging growth companies.
- -------------------------------------------------------------------------------------------------------
Van Kampen Enterprise Portfolio The Enterprise Portfolio is a fund Van Kampen Asset
with an investment objective to seek capital Management Inc.
appreciation through investments in
securities believed by the Fund's investment
adviser to have above average potential for
capital appreciation. Under normal market
conditions, the Fund's management seeks to
achieve the investment objective by investing
in a portfolio of securities consisting
primarily of common stocks of "growth"
companies focusing on those securities
believed to offer a combination of strong
business fundamentals at an attractive price.
- -------------------------------------------------------------------------------------------------------
Van Kampen Strategic Stock The investment objective of the Strategic Van Kampen Asset
Portfolio Stock Portfolio is to seek to provide Management Inc.
investors with an above average total return
through a combination of potential capital
appreciation and dividend income consistent
with the preservation of invested capital.
Under normal market conditions, the Fund's
investment adviser seeks to achieve the
investment objective by investing in a
portfolio of high dividend yielding equity
securities of companies included in the Dow
Jones Industrial Average or in the MSCI USA
Index.
- -------------------------------------------------------------------------------------------------------
</TABLE>
Each Series buys and sells shares of the corresponding fund. These Funds invest
in stocks, bonds and other investments as indicated above. All dividends
declared by the Funds are earned by the Separate Account and reinvested.
Therefore, no dividends are distributed to you under the Contract. Instead,
dividends generally increase the Accumulation or Annuity Unit Value. You pay no
transaction expenses (i.e., front-end or back-end load sales charges) as a
result of the Separate Account's purchase or sale of these fund shares. 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.
<PAGE>
Each of the Funds is a portfolio or series of an open-end management investment
company registered with the SEC under the Investment Company Act of 1940.
Registration does not involve supervision by the SEC of the investment or
investment policies of the Funds. There can be no guarantee that a Fund will
meet its investment objectives.
The Funds are available to other registered separate accounts offering variable
annuity and variable life products in addition to Security First Life's Separate
Account. In the future, a conflict may develop between one or more separate
accounts invested in the same Fund. The conflict could develop due to changes 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 Contract Owners.
[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 funds, these are not those 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 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 the SEC approves the substitution.
[Side Bar: The Funds are more fully described in the Fund prospectuses and
their Statements of Additional Information. The prospectuses are
attached to or accompany this Prospectus. The Statements of
Additional Information are available upon your request.]
<PAGE>
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 services and benefits
provided, costs and expenses incurred, and risks assumed under the Contracts.
SERVICES AND BENEFITS SECURITY FIRST LIFE PROVIDES INCLUDE:
- the ability for you to make withdrawals and surrenders
under the Contracts;
- the death benefit paid at your death, the Annuitant's
death, or the death of the first of joint Contract
owners;
- the available funding options and related programs
(including dollar-cost averaging, portfolio rebalancing,
and systematic withdrawal programs);
- administration of the annuity options available under
the Contracts; and
- the distribution of various reports to Contract owners.
<PAGE>
COSTS AND EXPENSES INCURRED BY SECURITY FIRST LIFE INCLUDE:
- losses associated with various overhead and other
expenses from providing the services and benefits under
the Contracts;
- sales and marketing expenses; and
- other costs of doing business.
RISKS ASSUMED BY SECURITY FIRST LIFE INCLUDE:
- risks that Annuitants may live longer than estimated
when the annuity factors under the Contracts were
established;
- that the amount of the death benefit will be greater
than the Contract value or the maximum of all step-up
values for the Enhanced Death Benefit; 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.
ANNUAL POLICY FEE
A $35 annual policy fee is deducted from Fixed Account I and the Separate
Account on a pro rata basis on your Contract's anniversary each year until
Annuitization. This fee is currently waived if the total of all of your Purchase
Payments is more than $50,000.
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 Contract Value at or after the time they are incurred. Security First
Life currently does not deduct for these taxes at the time you make a Purchase
Payment. However, Security First Life will deduct the total amount of premium
taxes, if any, from the Contract Value when you elect to begin receiving Annuity
payments (Annuitization).
<PAGE>
SURRENDER CHARGE
No sales charge is deducted from any Purchase Payment. During the accumulation
phase, you can withdraw part or all of the Contract Value. After the first
Contract Year, you can withdraw up to 10% of your Contract Value in Fixed
Account I and Fixed Account II and 10% of your Contract Value in the Separate
Account in your first withdrawal of each year free of surrender charges. If you
withdraw money in excess of 10% of your Contract Value, you might have to pay a
surrender charge on the excess amount.
The following schedule shows the surrender charges that apply during the seven
years following each Purchase Payment:
-------------------------------------------
Number of Years
Since Purchase Payment Surrender
Date Charge
-------------------------------------------
Less than 1 year 7%
-------------------------------------------
1 year but less than 2 7%
-------------------------------------------
2 years but less than 3 6%
-------------------------------------------
3 years but less than 4 6%
-------------------------------------------
4 years but less than 5 5%
-------------------------------------------
5 years but less than 6 4%
-------------------------------------------
6 years but less than 7 3%
-------------------------------------------
7 years or more 0%
-------------------------------------------
The surrender charge is calculated by subtracting from the Series or General
Account from which you are withdrawing a Purchase Payment an amount determined
as follows:
the surrender amount
----------------------------------------------------------
1 - the percentage surrender charge expressed as a decimal
Security First Life tracks the Accumulation Units related to each Purchase
Payment and Purchase Payments are canceled on a first-in, first-out basis. The
amount credited to your Contract Value with respect to each Purchase Payment
will be subject to the surrender charge on a first-in, first-out basis. In no
event will a surrender charge imposed on Accumulation Units be more than 9% of
Purchase Payments allocated to the Separate Account. The effect of this varying
schedule of percentage charges is that amounts that you leave in the Separate
Account for longer periods of time are subject to a lower charge than amounts
immediately surrendered.
<PAGE>
Example of application of surrender charge. Assume your Contract Value is
$100,000 at the beginning of Contract Year 2 and you want to receive $30,000.
Because that amount is more than your 10% free surrender amount, you would pay a
surrender charge of $1,505 on the remaining $20,000 [($30,000 - $10,000) divided
by .93].
Keep in mind that withdrawals may be taxable, and if made before age 59 1/2, may
be subject to a 10% Federal penalty tax described on page ___. For tax purposes,
withdrawals are considered to come from earnings first.
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
Contracts, such as commissions to sales personnel and other
promotion and acquisition expenses.]
EXCEPTIONS TO SURRENDER CHARGE
In some cases, Security First Life will not charge you the surrender charge when
you make a withdrawal. You do not pay the surrender charge:
- On transfers made within your Contract;
- On withdrawals of Purchase Payments you made over seven
years ago;
- If you die before Annuitization, your Beneficiary(ies) may
make partial or full withdrawals under the Contract
pursuant to the Beneficiary Continuation provision without
deduction of the surrender charge;
- If you withdraw no more than 10% of your account balance in
any Contract Year after the first Contract Year (applies to
your first withdrawal of that year only);
<PAGE>
- If you annuitize purchase payments you made over five
(5) years ago;
- If you are confined to a hospital for at least 30
consecutive days or a skilled nursing home for at least 90
consecutive days. The withdrawal must be in a lump sum and
must be requested within 60 days after termination of
confinement;
- When you are an officer, director or full time employee of
Security First Life or its affiliates. In this case, the
purchase of the Contract is for personal investment
purposes only; or
- After the first Contract Year, if you were younger than age
75 at the Contract Date, 50% of the accumulation value may
be withdrawn without a surrender charge, if a licensed
medical doctor certifies in writing that you suffer from a
terminal illness and your life expectancy is six months or
less.
ADMINISTRATION FEES
An administration fee of .000411% (.15% per year) is deducted from your interest
in the Separate Account on a daily basis.
Contract administration expenses include:
- the cost of policy insurance;
- rent;
- stationery and postage;
- telephone and travel expenses;
- salaries;
- legal, administrative, actuarial and accounting fees;
- periodic reports; and
- office equipment, and custodial expenses.
<PAGE>
MORTALITY AND EXPENSE RISK CHARGE
Security First Life charges a fee for bearing certain mortality and expense
risks under the policy. Examples of these risks include a guarantee of annuity
rates, the death benefits, certain Contract expenses, and assuming the risk that
the expense charges and fees are less than actual administrative and operating
expenses. As compensation for assuming these risks, Security First Life will
make a daily deduction from the value of the Separate Account's assets equal to
1.25% 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.
Security First Life may voluntarily waive a portion of the mortality and
administrative expense risk charges. Any waiver of these expenses may be
terminated at any time.
FEDERAL, STATE AND LOCAL TAXES
Security First Life may in the future deduct charges from the Contract Value 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 which follows
this Prospectus.]
FREE LOOK PERIOD
You may cancel your Contract within a certain time period. This is known as a
"free look." Your Free Look Period is the 10-day period (or longer in certain
states) starting when you receive your Contract. If you decide to cancel your
Contract, Security First Life must receive your request to cancel in writing at
its administrative office within the 10-day period. If the Contract is mailed to
Security First Life, it will be considered to be received 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 your Purchase Payments or, if required by
state law, the greater of the Purchase Payments or the Contract Value. Purchase
Payments that you make to the Separate Account will be allocated to the Money
Market Portfolio for the number of days of the Free Look Period required by the
state in which you live. At the end of the Free Look Period, the account value
in the Money Market Portfolio will be reallocated to the Series of the Separate
Account that you selected in your Contract application.
<PAGE>
DESCRIPTION OF THE CONTRACTS
ASSIGNMENT
Your Contract provides that you may freely assign your rights under it. However,
if you hold your Contract in connection with a Section 401 or 403 plan, a Roth
IRA, or a traditional IRA, you cannot assign or transfer the Contract.
PURCHASE PAYMENTS
You may make a Purchase Payment at any time. Your minimum initial Purchase
Payment must be $5,000. Each additional Purchase Payment must at least $500. For
IRAs, the initial Purchase Payment is $2,000 and each additional payment is
$500. You will receive a confirmation of each Purchase Payment received.
TRANSFERS
ACCUMULATION UNITS
You may transfer Accumulation Units among the Series or to Fixed Account I of
the General Account at any time. You may not make a transfer from the General
Account to Accumulation Units, unless you make a reallocation election or
participate in the enhanced dollar cost averaging program.
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.
The value of your Accumulation Units will be determined at the value next
calculated after receipt of written or telephone instructions. Accumulation Unit
values are determined at the close of trading 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
at that time. If your instructions are received after 4:00 p.m. Eastern time,
your transfer instructions will be carried out at the value next calculated.
<PAGE>
ANNUITY UNITS
You may transfer Annuity Units among the Series at any time with no charge. You
may not transfer Annuity Units to the General Account. However, any amounts that
you have in the General Account that have not been applied to a fixed annuity
income option may be transferred to Annuity Units in one or more Series for
application to a variable annuity income option. 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 or from the General
Account, except as permitted under a reallocation election or dollar cost
averaging program. 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.
DOLLAR COST AVERAGING
Dollar cost averaging (or "automated transfers") allows you to transfer a set
dollar amount to other funding options on a monthly, quarterly, semi-annual or
annual basis so that more accumulation units are purchased in a funding option
if the cost per unit is low and less accumulation units are purchased if the
cost per unit is high. Therefore, a lower-than-average cost per unit may be
achieved over the long run. There is no additional charge to participate in
dollar cost averaging.
You may participate in this program if your Contract Value is $5,000 or more.
Under the program, your Accumulation Units from the Series invested in the Money
Market Series will be periodically transferred to another Series that you
select. The program allows you to invest in non-money market Series over any
time period that you choose instead of investing in these other Series all at
once.
You choose whether the transfer will be made monthly, quarterly, semi-annually
or annually. The minimum transfer amount is $100. You may terminate the program
at any time by sending a written notice to Security First Life. (Security First
Life reserves the right to limit the number of Series to which transfers can be
made.)
<PAGE>
SECURITY FIRST LIFE'S ENHANCED DOLLAR COST AVERAGING PROGRAM (THE
"EDCA PROGRAM")
From time to time, Security First Life may credit increased interest rates to
you under programs established at no additional charge at Security First Life's
discretion. If you are a new Contract owner, you may enroll in Security First
Life's EDCA Program, a special pre-authorized transfer program. Under this
program, you may allocate a minimum $10,000 Purchase Payment into the General
Account and pre-authorize transfers from the General Account to any of the
Series of the Separate Account under either a 6-month or 12-month transfer
program. Under either program, the initial Purchase Payment and accrued interest
must be transferred to the selected Series in substantially equal monthly
installments over the 6-month or 12-month period.
REALLOCATION ELECTION
If your Contract Value is $5,000 or more, you may elect to systematically
reallocate values invested in Accumulation Units among the Series and in the
Fixed Account I in order to achieve an allocation ratio that you establish. Your
request must be made in writing on a form provided by Security First Life. (The
reallocation election is not available under either the dollar cost averaging
program or the EDCA Program.)
Transfers will occur quarterly. All transfers will be made on the third business
day of the month in which the annual or quarterly anniversary of your Contract
occurs. No transfer from the General Account shall exceed 20% of your interest
invested in the General Account in any year. You may change the allocation
ratios once each Contract Year.
Any transfer among the Series outside of the reallocation election will cause
the election to terminate.
MODIFICATION OF THE CONTRACTS
Security First Life must make Annuity payments involving life contingencies at
no less than the minimum guaranteed Annuity rate incorporated into the
Contract, 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 (including annual policy
fee);
- deductions from Contract Values for transaction charges;
- deductions from the Separate Account for mortality and
expense risk and administrative expense fees; and
- guaranteed rates with respect to fixed benefits.
<PAGE>
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.
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
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.
<PAGE>
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
value of the Fund in which a Series is invested, since the preceding
Valuation Date. The net investment factor may be greater or less
than 1 depending upon the Fund's investment performance.
SURRENDER FROM THE SEPARATE ACCOUNT
You may surrender all or a portion of the cash value of your Contract at any
time prior to the Annuity Date. A surrender may result in adverse federal income
tax consequences to you including current taxation on the distribution and a
penalty tax on the early withdrawal. These consequences are discussed in more
detail under "Federal Tax Considerations" on page ___. You should consult your
tax adviser before making a withdrawal.
The cash value of your interest in the Separate Account prior to the Annuity
Date is determined by multiplying the number of Accumulation Units for each
Series credited to your Contract by the current value of an Accumulation Unit in
the Series and subtracting any applicable surrender charges or fees. 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 or the
General Account to have an after surrender value of less than $2,000. However,
if you are withdrawing the entire amount allocated to a Series this restrictions
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; or
- The SEC determines that an emergency exists that makes
disposal of portfolio securities or valuation of assets of
the Funds not reasonably practicable.
<PAGE>
ACCOUNT STATEMENTS
You will receive a written account statement each calendar quarter in which a
transaction occurs before 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 Contract Value 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.
<PAGE>
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 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 later of:
- the Contract anniversary nearest to the Annuitant's 100th
birthday, or
- the tenth anniversary of the Contract Date.
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.
<PAGE>
FORM OF ANNUITY
[SIDE BAR: There are three people who are involved in payments under your
Annuity:
- you, the Owner
- the Annuitant
- the Beneficiary
The Owner and the Annuitant may be the same person.]
Currently, Security First Life provides you with a wide variety of income
payments to suit a range of personal preferences. 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 the lifetime of the Annuitant. These
payments stop with the last payment due before the death of the Annuitant.
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 the
lifetime of the Annuitant. In addition, Security First Life guarantees that you,
(or your Beneficiary, if you are the Annuitant) will receive monthly payments
for the remainder of the period certain, if the Annuitant dies during that
period.
OPTION 3 - INSTALLMENT REFUND LIFE ANNUITY
An Annuity payable monthly during the lifetime of an individual. You receive a
guaranteed minimum number of monthly payments which are equal to the amount of
your Contract Value 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 your
joint 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.
<PAGE>
OPTION 5 - PAYMENTS FOR A DESIGNATED PERIOD (FIXED ANNUITY ONLY)
Security First Life makes Annuity payments monthly to you or another
properly-designated payee, or to the Beneficiary at you or another payee's
death, for a selected number of years ranging from five to thirty. 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 currently paid with respect to the
option.
Fixed Annuities are funded through the General Account of Security First Life.
FREQUENCY OF PAYMENT
Your payments under all options will be made on a monthly basis unless you and
Security First Life have agreed to a different arrangement.
Payments from each Series must be at least $100 each. If a payment from a Series
will be less than $100, Security First Life has the right to decrease the
frequency of payments so that each payment from a Series will be at least $100.
<PAGE>
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.
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.
<PAGE>
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 daily equivalent of your
Assumed Investment Return.
- Finally, the previous Annuity Unit Value is multiplied by this
result.
<PAGE>
DEATH BENEFITS
DEATH BEFORE THE ANNUITY DATE
Death benefits are payable to the Beneficiary if Security First Life receives
due proof of death, prior to Annuitization, of: (1) you, the Contract Owner or
(2) the first Contract Owner to die, in the case of a Contract with joint
owners. (In situation #2 above, the death benefits will be paid to the surviving
Contract Owner.)
[SIDE BAR: 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.]
The Contract's death benefits at any time are the greater of (1) the current
Contract Value; (2) the amount of purchase payments received under the contract
reduced by amounts already applied to produce annuity income payments or for any
prior partial surrenders; or (3) if you are eligible, the minimum guaranteed
death benefit. For this purpose, the current Contract Value is the value next
determined after the later of the date when Security First Life receives:(1) due
proof of death; or (2) an election of continuation of the Contract or of payment
either in one sum or under an Annuity payment option. In certain states, death
benefits will be reduced by the amount of any applicable premium tax charge.
They will not be reduced by any surrender charges.
CALCULATION OF MINIMUM GUARANTEED DEATH BENEFIT
You are eligible for the minimum guaranteed death benefit if you or the oldest
of joint owners are under age 70 when the contract is purchased.
At the inception of the Contract, the minimum guaranteed death benefit is equal
to your initial Purchase Payment. Thereafter, the minimum guaranteed death
benefit will be increased by any purchase payment made and decreased by the
percentage of any Contract Value surrendered.
On the anniversary of the first Contract Year and every anniversary thereafter
until you or the oldest of joint Owners reaches age 70, the minimum guaranteed
death benefit under the Contract is recalculated to determine whether a higher
(but never a lower) guarantee will apply. The purpose of the recalculation is to
give you the benefit of any positive investment experience under your Contract.
Your Contract's previous investment experience can cause the minimum guaranteed
death benefit to increase on the recalculation date, but it cannot cause it to
decrease. The minimum guaranteed death benefit determined on a recalculation
date is the larger of:
- the minimum guaranteed death benefit that applied to your Contract
just before the recalculation
- the Contract Value on the date of recalculation
The new minimum guaranteed death benefit applies to your Contract until the next
recalculation date, or until you make a Purchase Payment or surrender. In that
case, the same adjustment will be made to the minimum guaranteed death benefit
as is made during the first Contract Year.
<PAGE>
BENEFICIARY CONTINUATION
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.
Pursuant to the Internal Revenue Code's general requirement that death benefits
must be distributed within five years after the death of the Contract Owner (or,
if applicable, the Annuitant), the Beneficiary Continuation provision permits a
Beneficiary to hold his or her share of the death benefit in the Contract and to
continue the Contract for a period ending no later than five years after the
date of death, provided that the Beneficiary's share of the death benefit meets
Security First Life's published minimum (currently $5,000 for non-Qualified
Contracts and $2,000 for Qualified Contracts). The Contract cannot be continued
for any Beneficiary whose share of the death benefit does not meet the minimum.
The Beneficiary has 90 days after the date that Security First Life receives due
proof of death to make an election with respect to his or her share of the death
benefit. The Beneficiary may elect either: (1) payment of the death benefit in a
single sum; (2) application of the death benefit to a permitted Annuity payment
option with payments to begin within one year of the date of death; or (3)
Beneficiary Continuation, provided that the Beneficiary's share of the death
benefit meets the published minimum. If the Beneficiary does not make an
election within 90 days after Security First Life receives proof of death, the
Contract will be continued under the Beneficiary Continuation provision for a
period ending five years after the date of death. If Beneficiary Continuation is
not available because the Beneficiary's share of the death benefit does not meet
Security First Life's published minimum, however, the death benefit will be paid
in a single sum unless the Beneficiary elects an Annuity payment option within
90 days after Security First Life receives due proof of death.
If the Contract is continued under the Beneficiary Continuation provision, the
death benefit becomes the Contract Value on the date the continuation is
effected, and will be allocated among the accounts in the same proportion as
they had been prior to the continuation. In addition, the Beneficiary will have
the right to make transfers and fully or partially surrender his or her portion
of the Contract Value, but may not make further Purchase Payments or exercise
the dollar cost averaging feature. (In the event of multiple Beneficiaries, no
transfers or partial surrenders will be permitted, but any Beneficiary may
surrender 100% of his or her share of the Contract proceeds prior to the
settlement date.) No surrender charge will apply to withdrawals. No later than
five years from the date of death of the Contract Owner (or, if applicable, the
Annuitant), Security First Life will pay the Beneficiary's Contract Value to the
Beneficiary in a lump sum. If the Beneficiary dies during that five year period,
the Beneficiary's death benefit will be the Beneficiary's Contract Value on the
date when Security First Life receives due proof of the Beneficiary's death.
<PAGE>
SPOUSAL CONTINUATION
The Contract may be continued after your death prior to Annuitization in certain
spousal arrangements. First, if a Contract has spousal joint owners, then upon
the death of one Contract Owner, the other may elect to continue the Contract
under the Spousal Continuation provision rather than receive the death benefit.
In addition, if only you are the Contract Owner (or, if applicable, the
Annuitant) and your spouse is the only primary Beneficiary, he or she can elect
to continue the Contract in the event of death. In either of these situations,
your surviving spouse may elect one of the following three options within 90
days after Security First Life receives due proof of your death (or if
applicable, the Annuitant's death). Your surviving spouse may elect: (1) to
receive the death benefit either in one lump sum or under a permitted payment
option; (2) to continue the Contract under the Beneficiary Continuation
provision; or (3) to continue the Contract under the Spousal Continuation
provision with your surviving spouse as the Contract Owner (and Annuitant, if
applicable). If the surviving spouse does not make an election within 90 days
after Security First Life receives proof of death, the Contract will
automatically be continued under the Spousal Continuation provision, with the
result that your surviving spouse will forego the right to receive the death
benefit at that time. If the Contract is continued under the Spousal
Continuation provision, the Contract Value may be less than the death benefit
the surviving spouse would have been entitled to if a lump sum payment had been
elected or Beneficiary Continuation were elected. Under Spousal Continuation,
the minimum guaranteed death benefit provisions of the Contract will apply to
the surviving Contract Owner. Withdrawals from the Contract will be subject to
the surrender charge provisions of the Contract.
If you outlive all of your Beneficiaries, the death benefit will be paid to your
estate in a lump sum. No Beneficiary shall have the right to assign or transfer
any future payments under the Options, except as provided in the election or by
law.
You will also be considered to have outlived your Beneficiary(ies) in the
following situations:
- Your Beneficiary(ies) and you die at the same time.
- Your Beneficiary(ies) dies within 15 days of your death and
before the date due proof of your death is received by
Security First Life.
DEATH AFTER THE ANNUITY DATE
If the Annuitant dies on or after the Annuity Date, the amounts payable to the
Beneficiary(ies) or other properly designated payees will be distributed
according to the Annuity Payment option in effect. The Beneficiary(ies) will:
- have all the remaining rights and powers under a Contract, and
- be subject to all the terms and conditions of the Contract.
Unless otherwise restricted, a Beneficiary receiving Annuity payments under
Option 2 or 3 after the Annuitant's death may elect to receive the present value
of the remaining Annuity payments certain in a single payment. This single
payment is calculated on the basis of the assumed investment return periodically
selected. This election is not available to a Beneficiary receiving Fixed
Annuity payments.
If none of your Beneficiaries survive the Annuitant, the value of any remaining
payments certain on the death of Annuitant, calculated on the basis of the
assumed investment return that you previously chose, will be paid in a lump sum
to the Annuitant's estate unless other provisions have been made and approved by
Security First Life. This value is calculated on the next day of payment
following receipt of due proof of death.
Unless otherwise restricted, a Beneficiary receiving variable payments under
Option Two or Three may elect at any time to receive the present value of the
remaining number of Annuity payments certain in a lump sum payment after the
death of an Annuitant. The present value of the remaining Annuity payments will
be calculated on the basis of the assumed investment return previously selected.
This lump sum payment election is not available to a Beneficiary receiving Fixed
Annuity payments.
<PAGE>
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. Additional tax information is
included in the SAI. (Neither this Prospectus nor the SAI addresses state, local
or foreign tax matters.)
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 for certain
types of tax-advantaged retirement plans (previously defined as
"qualified plans"). The dollars in a qualified plan are tax
deferred. Contracts purchased for use with a Qualified Plan provide
no additional tax deferral.]
<PAGE>
For purposes of this Prospectus, qualified plans include:
- SECTION 401 PLANS (pension and profit-sharing plans,
including plans for the self-employed)
- SECTION 403(b) PLANS (tax-deferred annuities)
- SECTION 457 PLANS (deferred compensation plans)
- TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNTS AND ANNUITIES
("IRAS")
- ROTH IRAS
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.]
[SIDE BAR: Please note that the terms of your particular plan, IRA or Roth
IRA may limit your rights otherwise available under the Contract.]
NON-QUALIFIED CONTRACTS
If you are the owner of a Non-qualified Contract, you do not receive any tax
benefit (deduction or deferral of income) on Purchase Payments (for example,
there is no deduction available for Purchase Payments), but you will not be
taxed on increases in the value of your Contract until a distribution occurs --
either as a withdrawal (that is, a distribution made prior to Annuitization) or
as Annuity payments.
Any direct or indirect borrowing against the value of the Contract or pledging
of the Contract as security for a loan will be treated as a cash distribution
under the tax law. A lump sum taken in lieu of remaining Annuity payments will
be treated as a withdrawal for tax purposes.
If a Non-qualified Contract is owned by someone other than an individual (for
example, by a corporation), the Contract will generally not be treated as an
annuity for tax purposes. For these entities, any increases in the value of the
Contract attributable to Purchase Payments made after February 28, 1986 are
includible in the Owner's annual income.
WITHDRAWALS
If you make a partial withdrawal, for tax purposes, the amount withdrawn will
generally be treated as first coming from earnings and then from your Purchase
Payments. These withdrawn earnings are includible in your gross income and are
taxed at ordinary income rates.
[SIDE BAR: Earnings are the income that your Contract generates.
<PAGE>
There is income in the Contract to the extent the Contract Value exceeds your
investment in the Contract. The investment in the Contract equals the total
Purchase Payments you paid less any amount received previously which was
excludible from gross income.]
ANNUITY DISTRIBUTIONS
When you receive an Annuity payment, part of each payment is considered a return
of your Purchase Payments and will not be taxed. The remaining portion of the
Annuity payment (that is, any earnings) is included in your gross income and
will be considered ordinary income for tax purposes.
How the Annuity payment is divided between taxable and non-taxable portions
depends upon the period over which the Annuity payments are expected to be made.
Annuity payments received after you have received all of your premium payments
are fully includible in income.
EARLY SURRENDER PENALTY
The Code also provides that income distributed as an Annuity or lump sum
withdrawal from a Non-qualified Contract may be subject to a penalty. The amount
of the penalty is equal to 10% percent of the amount that is includible in
income. Some withdrawals will be exempt from the penalty. They include any
amounts:
- paid on or after the date you reach age 59 1/2;
- paid to your Beneficiary(ies) after you die;
- paid if you become totally disabled (as that term is
defined in the Code);
- paid in a series of substantially equal payments made
annually (or more frequently) under a life or joint life
expectancy Annuity;
- paid under an immediate Annuity; or
- which come from Purchase Payments made prior to August
14, 1982.
(Other exceptions to the penalty may be available, and if you are not yet age 59
1/2, you should consult your tax advisor to determine whether you have met all
of the requirements for any particular exception.)
<PAGE>
The penalty also will be imposed if you elect to receive payments in
substantially equal installments as a life or life expectancy Annuity prior to
age 59 1/2 and then change the method of distribution before you reach the age
of 59 1/2. You will be assessed the penalty even after age 59 1/2 if payments
have not continued for five years.
If you are issued multiple annuity contracts within a calendar year by one
company or its affiliates, the tax law may treat these contracts as one annuity
contract for purposes of determining your tax on any distribution. This
treatment may result in adverse tax consequences for you.
QUALIFIED CONTRACTS
The full amount of all distributions received from a Section 401, 403(b), 457
plan or IRA (except for a return of non-deductible employee or IRA
contributions) are generally included in your gross income and are taxed at
ordinary income rates unless the distribution is transferred in an eligible
rollover to the Contract. In certain cases, distributions received from a Roth
IRA are also included in gross income.
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. In very limited situations, a lump
sum distribution from a Section 401 plan may qualify for special tax treatment,
including special forward income averaging, special long term capital gain
treatment or deferral with respect to net unrealized appreciation.
MANDATORY MINIMUM DISTRIBUTIONS
If you are a participant in a Section 401, 403(b) or 457 plan or an IRA, you
generally must begin receiving withdrawals from your Contract Value or Annuity
payments for life or a period not exceeding the life expectancy of you or you
and a beneficiary by April 1 of the calendar year following the year you turn 70
1/2 (or, in some cases, the year you retire, if later).
In addition, distributions under Section 401, 403(b) and 457 plans and IRAs must
satisfy the minimum incidental death benefit requirements of the Code, which
impose additional minimum distribution requirements during life. However, if the
distributions described in the preceding paragraph are made to you over your
life expectancy or the joint life expectancy of you and your spouse, the minimum
incidental death benefit requirements are treated as satisfied.
If you are the owner of a Roth IRA, distributions are not required during your
lifetime.
<PAGE>
EARLY SURRENDER PENALTY
If you receive a taxable distribution from a Section 401 plan, Section 403(b)
plan or IRA under your Contract before you reach age 59 1/2, this amount may be
subject to a 10% penalty tax in addition to ordinary income tax.
[As indicated in the chart below, some distributions prior to age 59 1/2 are
exempt from the penalty. Some of these exceptions include any amounts received:
Type of Plan
----------------------------------------------------------------------
401 403(b) IRA
----------------------------------------------------------------------
After you die X X X
(paid to your Beneficiary(ies))
----------------------------------------------------------------------
After you become totally disabled X X X
(as defined in the Code)
----------------------------------------------------------------------
If you separate from service after X X
you reach age 55
----------------------------------------------------------------------
In a series of substantially equal X X X
payments made annually (or more (after (after
frequently) under a life or joint separation separation
life expectancy Annuity from service) from service)
----------------------------------------------------------------------
Pursuant to a domestic relations X X
order
----------------------------------------------------------------------
(Other exceptions to the penalty may be available, and if you are not yet age 59
1/2, you should consult your tax advisor to determine whether you have met all
of the requirements for any particular exception.)
The penalty also will be imposed if you elect to receive payments in
substantially equal installments as a life or joint life expectancy Annuity
prior to age 59 1/2 and then change the method of distribution before you reach
the age of 59 1/2. You will be assessed the penalty even after age 59 1/2 if
payments have not continued for five years.
Distributions before age 59 1/2 generally are not permitted under Section 457
plans. You may not receive distributions until you reach the age of 70 1/2
unless you separate from service or are faced with an unforeseeable emergency.
Distributions from Section 457 plans are not subject to the penalty tax for
early withdrawals.
<PAGE>
ROLLOVERS OF PLAN CONVERSIONS
You may roll over distributions (other than certain distributions, such as
required distributions) from one plan or arrangement to another plan or
arrangement without incurring any Federal income tax under some circumstances.
These circumstances are as follows:
Distribution from: May be Rolled into:
------------------ -------------------
------------------------------------------------------------
- Section 401 plan another Section 401 plan;
or an IRA
------------------------------------------------------------
- Section 403(b) plan another Section 403(b) plan;
or an IRA
------------------------------------------------------------
- IRA another IRA;
a Roth IRA (under certain
conditions); or
a Section 401 or 403(b) plan
if the IRA contains only
permissible rollover amounts
------------------------------------------------------------
DEDUCTIONS FOR PLAN CONTRIBUTIONS
You may deduct your contributions to Section 401 plans and Section 403(b) plans
in the year when made up to the limits specified in the Code. These plans may
also permit non-deductible employee contributions. Any non-deductible employee
contribution that you make will be received tax free as a portion of each
Annuity payment.
<PAGE>
WITHHOLDING
MANDATORY 20% WITHHOLDING FOR "ELIGIBLE ROLLOVER DISTRIBUTIONS"
If you are participating in a Section 401 plan or a Section 403(b) plan,
Security First Life is required to withhold 20% of the taxable portion of your
withdrawal that constitutes an "eligible rollover distribution" for Federal
income tax purposes.
Generally, an "eligible rollover distribution" is any taxable amount that you
receive from a Qualified Contract, except for distributions that are:
- paid over your life or the joint life expectancy of you
and your Beneficiary(ies);
- paid over a period of 10 years or more;
- necessary to satisfy the minimum distribution
requirements; or
- certain Hardship Contributions from Section 401 and
Section 403(b) plans.
The requirements discussed below under "Other tax withholding" will apply to any
distribution that is not an eligible rollover distribution.
You may not elect out of the 20% withholding requirement. However, Security
First Life is not required to withhold the money if an eligible rollover
distribution is rolled over into an IRA or other eligible retirement plan, or is
directly transferred in a trustee-to-trustee transfer to either arrangement.
OTHER TAX WITHHOLDING
Different withholding rules apply to taxable withdrawals such as Annuity
payments and partial withdrawals that are not eligible rollover distributions.
The withholding rules are determined at the time of payment. You may elect out
of these withholding requirements at any time. You also may revoke a
non-withholding election made with respect to Annuity payments at any time and
tax withholding will begin again at that time. Security First Life will notify
you at least annually of your right to revoke or reinstate tax withholding.
TAXPAYER IDENTIFICATION NUMBER ("TIN")
You are required by law to provide Security First Life (as payor) with your
correct TIN. If you are an individual, the TIN is your social security number.
<PAGE>
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, you have voting interests under your Contract concerning Fund
shares and are entitled to vote on Fund proposals at all regular and special
shareholders meetings. Therefore, you are entitled to give us instructions for
the number of shares which are deemed attributable to your Contract.
Security First Life will vote all shares of the underlying Funds as directed by
you and other Contract Owners who have voting interests in the Funds. Security
First Life will send you and other 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 your voting instructions, it will vote your 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.
When Annuity payments begin, the Annuitant will have all voting rights in regard
to Fund shares.
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 each person having the right to vote 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 or Annuitants on the record date may vote.
The number of shares to which you are entitled to vote is calculated by dividing
the portion of your Contract Value allocated to that Fund on the record date by
the net asset value of a Fund share on the same date.
<PAGE>
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, 2000, 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.
<PAGE>
'33 Act File No. 333-79625
STATEMENT OF
ADDITIONAL INFORMATION
SECURITY FIRST LIFE SEPARATE ACCOUNT A
----------------------------------------------------------
SECURITY FIRST FORESIGHT VARIABLE ANNUITY CONTRACTS
----------------------------------------------------------
SECURITY FIRST LIFE INSURANCE COMPANY
May 1, 2000
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, 2000,
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)
284-4536.
<PAGE>
TABLE OF CONTENTS
Page
- -------------------------------------------------------------
The Insurance Company 3
The Separate Account 3
Net Investment Factor 3
Annuity Payments 4
Additional Federal Income Tax Information 6
Obtaining Tax Advice 7
Underwriters, Distribution of the Contracts 7
Calculation of Performance Data 7
Voting Rights 9
Safekeeping of Securities 9
Servicing Agent 9
Independent Auditors 10
Legal Matters 10
State Regulation of Security First Life 10
Financial Statements 10
<PAGE>
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 life insurance company. MetLife is a wholly owned
subsidiary of MetLife, Inc., a publicly traded company, with assets under
management of $420 billion at December 31, 1999.
THE SEPARATE ACCOUNT
The Security First Life Separate Account A ("Separate Account") presently funds
the Contracts described in this Prospectus and group variable annuity contracts
on Forms SF 1700, SF 135 R2C, SF 135PB2, SF 224FL, SF 226R1, SF 230, SF 234 and
SF 236. These group variable annuity contracts are described in other
prospectuses. The individual combination fixed and variable annuity contracts
("Contracts") described in this Statement of Additional Information and related
prospectuses are distinct contracts from the above described group variable
annuity contracts.
The Separate Account is divided into a number of Series of Accumulation and
Annuity Units, seventeen of which are offered under the Contracts: (i) the
Federated Equity Income Fund II, Federated American Leaders Fund II, and
Federated High Income Bond Fund II of the Federated Insurance Series; (ii) AIM
V.I. Balanced Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Value Fund, and
AIM V.I. International Equity fund of the AIM Variable Insurance Funds; (iii)
Oppenheimer Bond Fund/VA, Oppenheimer Strategic Bond Fund/VA, Oppenheimer Main
Street Growth & Income Fund/VA, and Oppenheimer Money Fund/VA of the Oppenheimer
Variable Accounts Funds; (iv) MFS Research Series, MFS New Discovery Series, and
MFS Growth wit Income Series of the MFS Variable Insurance Trust; and (v) Van
Kampen Emerging Growth Portfolio, Van Kampen Enterprise Portfolio, and Van
Kampen Strategic Stock Portfolio of the Van Kampen Life Investment Trust.
Amounts allocated to the Separate Account under the Contracts are invested in
the securities of these funds.
NET INVESTMENT FACTOR
The Separate Account net investment factor is an index of the percentage change
(adjusted for distributions by the Fund and the deduction of the actuarial risk
fee) 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 business on such day, plus the per share amount of any
distributions made by such Fund 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 the result the daily factors for
administration fees, mortality and expense risks (.003836%) for each calendar
day between the preceding Business Day and the end of the current Business Day.
<PAGE>
ANNUITY PAYMENTS
Basis of Variable Benefits
The Variable Annuity benefits rates used in determining Annuity Payments under
the Contracts are based on actuarial assumptions, reflected in tables in the
Contracts, as to the expected mortality and adjusted age and the form of Annuity
selected. The mortality basis for these tables is Annuity 2000 Mortality Table,
projected to the year 2020 on Projection Scale G, 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:
- ----------------------------------------------------------------------
YEAR OF BIRTH AGE ADJUSTMENT
BEFORE 1945 ACTUAL AGE
1946- 1965 AGE MINUS 1 YEAR
1966 - 1985 AGE MINUS 2 YEARS
1986 - 2005 AGE MINUS 3 YEARS
- ----------------------------------------------------------------------
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 Contract Owner on the last day of
the second calendar week before the Annuity Date. The Contracts contain 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 the General Account and level monthly Annuity Payments for
the year are made out of the General Account for that year. That amount to be
transferred is determined by multiplying the Annuity premium rate per $1,000 set
forth in Contract tables by the number of thousands of dollars of Separate
Account value credited to a Contract Owner. 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.
<PAGE>
At the time the first year's monthly payments are determined, a number of
Annuity Units for each Separate Account Series is also established for the
Annuitant by dividing the monthly payment derived from that Series for the first
year by the Separate Account Annuity Unit values for the Series on the last
Business Day of the second calendar week before the first Annuity Payment is
due. The number of Annuity Units remains fixed during the Annuity period unless
Annuity Units are converted to another Series.
Determination of Amount of Monthly Variable Annuity Payments for Second and
Subsequent Years
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 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 seven days after the last day of
the Valuation Period upon which they are based or the monthly anniversary
thereof.
The objective of a Variable Annuity contract is to provide level payments during
periods when the economy is relatively stable and to reflect as increased
payments only the excess of investment results flowing from inflation or an
increase in productivity. The achievement of this objective will depend in part
upon the validity of the assumption that the net investment return of the
Separate Account equals the Assumed Investment Return during periods of stable
prices. Subsequent years' payments will be smaller than, equal to or greater
than the first year's payments depending on whether the actual net investment
return for the Separate Account is smaller than equal to or greater than the
Assumed Investment Return.
Annuity Unit Value
The initial value of an Annuity Unit is $5 for each Series for the first
Valuation Period as of which the first Variable Annuity Payment from such Series
is made. The value of an Annuity Unit for each Series on any later date is
determined by multiplying the value of an Annuity Unit at the end of the
preceding Valuation Period by the "Annuity change factor" for the second
preceding Valuation Period. The Annuity change factor is an adjusted measurement
of the investment performance of the Fund 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 Fund. 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.
<PAGE>
ADDITIONAL FEDERAL INCOME TAX INFORMATION
Security First Life is required to withhold federal income tax on Contract
distributions (such as Annuity Payments, lump sum distributions or partial
surrenders). However, recipients of Contract distributions are allowed to make
an election not to have federal income tax withheld. After such election is made
with respect to Annuity Payments, an Annuitant may revoke the election at any
time, and thereafter commence withholding. In such a case, Security First Life
will notify the payee at least annually of his or her right to change such
election.
The withholding rate followed by Security First Life will be applied only
against the taxable portion of 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 will
be withheld at a flat 10% rate. In the case of a plan qualified under Sections
401(a) or 403(a) of the Code, if the balance to the credit of a participant in a
plan is distributed within one taxable year to the recipient ("total
distribution"), the amount of withholding will approximate the federal income
tax on a lump sum distribution. If a total distribution is made from such a plan
or a tax-sheltered annuity on account of the participant's death, the amount of
withholding will reflect the exclusion from federal income tax for
employer-provided death benefits.
Security First Life is required to withhold 20% of certain taxable amounts
constituting "eligible rollover distributions" to participants (including lump
sum distributions) in retirement plans under Code Section 401 and tax deferred
annuities under Code Section 403(b). This withholding requirement does not apply
to distributions from such plans and annuities in the form of a life and life
expectancy annuity (individual or joint), an annuity with a designated period of
10 years or more, or any distribution required by the minimum distribution
requirements of Code Section 401(a)(9). Withholding on these latter types of
distribution will continue to be made under the rules described in the prior
paragraph. A participant cannot elect out of the 20% withholding requirement.
However, if an eligible rollover distribution is rolled over into an eligible
retirement plan or IRA in the case of a 401 plan or to another eligible contract
in the case of a 403(b) plan in a direct trustee-to-trustee transfer, no
withholding will be required.
Payees are required by law to provide Security First Life (as payor) with their
correct taxpayer identification number ("TIN"). If the payee is an individual,
the TIN is the same as his or her social security number. If the payee elects
not to have federal income tax withheld on an Annuity Payment or a nonperiodic
distribution and a correct TIN has not been provided, such election is
ineffective, and such payment will be subject to withholding as noted above.
<PAGE>
OBTAINING TAX ADVICE
It should be recognized that the federal income tax information in the
Prospectus and this Statement of Additional Information is not exhaustive and is
for information purposes only. The discussions do not purport to cover all
situations involving the purchase of an annuity or the election of an option
under the Contract. Tax results may vary depending upon individual situations
and special rules may apply in certain cases. State and local tax results may
also vary. For these reasons a qualified tax adviser should be consulted.
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 8.5%.] Agents are paid from the General Account of
Security First Life. Such commissions bear no direct relationship to any of the
charges under the Contracts. It is expected that the Contracts will be sold in
49 states and the District of Columbia. No direct underwriting commissions are
paid to Security First Financial, Inc.
CALCULATION OF PERFORMANCE DATA
a. Money Fund. The yield of the Money Fund of the Separate Account for the
seven-day period ended December 31, 1999, was [2.29%]. This yield was computed
by determining the net change, exclusive of capital changes and income other
than investment income, in the value of a hypothetical pre-existing account
having a balance of one Accumulation Unit of the Series at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from account
values, and dividing the difference by the value of the account at the beginning
of the base period to obtain the base period return, and multiplying the base
period return by (365/7) with the resulting yield figure carried to a least the
nearest hundredth of one percent.
<PAGE>
The effective yield of the Money Fund of the Separate Account for the seven-day
period ended December 31, 1997 was [2.32%]. This effective yield was computed by
determining the net change, exclusive of capital changes and income other than
investment income, in the value of a hypothetical pre-existing account having a
balance of one Accumulation Unit of the Series at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from account values, and
dividing the difference by the value of the account at the beginning of the base
period to obtain the base period return, and then compounding the base period
return by adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result, according to the following formula:
365/7
EFFECTIVE YIELD = (BASE PERIOD RETURN + 1) - 1.
b. Other Series. The average annual total return as of December 31, 1999 of the
other Series in the Separate Account that fund the Contracts are as follows:
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
1 year 3 years 5 years Inception Date
------ ------- ------- --------- --------
<S> <C> <C> <C> <C> <C>
AIM V.I. Capital 43.21% 23.71% 24.19 20.93% 5/5/93
Appreciation Fund
- ----------------------------------------------------------------------------------------------
AIM V.I. 17.91 N/A N/A 18.22 5/1/98
Balance Fund
- ----------------------------------------------------------------------------------------------
AIM V.I. Value 28.50 27.21 25.83 21.67 5/5/93
Fund
- ----------------------------------------------------------------------------------------------
AIM V.I. 53.64 22.78 20.53 17.42 5/5/93
International
Equity Fund
- ----------------------------------------------------------------------------------------------
Federated Equity 16.99 N/A N/A 16.83 5/1/95
Income Fund II
- ----------------------------------------------------------------------------------------------
Federated High 0.91 4.75 9.08 6.82 3/1/94
Income Bond
Fund II
- ----------------------------------------------------------------------------------------------
Federated 5.27 17.01 20.57 16.82 2/1/94
American
Leaders Fund II
- ----------------------------------------------------------------------------------------------
Oppenheimer -5.92 3.34 5.70 7.46 4/3/85
Bond Fund/VA
- ----------------------------------------------------------------------------------------------
Oppenheimer 20.31 17.67 N/A 24.40 7/5/95
Main Street
Growth &
Income Fund/VA
- ----------------------------------------------------------------------------------------------
Oppenheimer 3.56 3.78 3.86 4.42 4/3/85
Money Fund/VA
- ----------------------------------------------------------------------------------------------
Oppenheimer 1.43% 3.37% 6.85% 4.78% 5/3/93
Strategic Bond
Fund/VA
- ----------------------------------------------------------------------------------------------
MFS Growth 5.29 17.80 N/A 19.72 10/9/95
with Income
Series
- ----------------------------------------------------------------------------------------------
MFS Research 22.65 21.15 N/A 21.46 7/26/95
Series
- ----------------------------------------------------------------------------------------------
MFS New 72.01 N/A N/A 39.51 5/1/98
Discovery Series
- ----------------------------------------------------------------------------------------------
Van Kampen 102.98 48.76 N/A 39.18 7/3/95
Emerging
Growth Portfolio
- ----------------------------------------------------------------------------------------------
Van Kampen 24.45 25.74 27.17 13.07 4/7/86
Enterprise
Portfolio
- ----------------------------------------------------------------------------------------------
Van Kampen -1.87 N/A N/A 6.93 11/3/97
Strategic Stock
Portfolio
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Average annual total return was computed by finding the average annual
compounded rates of return over the 1, 3, 5, and 10 year periods that would
equate the initial amount invested to the ending redeemable value, according to
the formula:
P(1+T)(n) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
made at the beginning of the 1, 5, or 10 year periods (or
fractional portion thereof).
The computation of average annual total returns takes into consideration
recurring charges assessed against all contracts. It does not include
non-recurring charges applicable to a Contract which is surrendered in full at
the end of the stated holding period. Several Fund advisors have agreements to
waive a portion of their fees or to reimburse the series for certain operating
expenses. See the Fund Prospectuses and Statements of Additional Information for
specific details. Reimbursement of expenses to a series increases average annual
total returns, and repayment of such reimbursements reduces these returns.
EFFECT OF THE ANNUAL POLICY FEE ON PERFORMANCE DATA
The Contracts provide for a $35 annual policy fee to be deducted annually on the
Contract anniversary, on a pro-rata basis from any Series of the Separate
Account or the General Account in which a Contract is invested. This fee is
waived if the total of all of a Contract holder's Purchase Payments is more than
$50,000. The annual policy fee has not been included in the Average Annual Total
Returns reflected above.
<PAGE>
VOTING RIGHTS
Unless otherwise restricted by the plan under which a Contract is issued each
Owner will have the right to instruct Security First Life with respect to voting
the Fund Shares which are the assets underlying the Owner's interest in the
Separate Account, at all regular and special shareholders meetings. An
Annuitant's voting power with respect to Fund 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
Custody of all assets of the Separate Account are held by Security First Life.
The assets of each Separate Account Series will be kept physically segregated by
Security First Life and held separate from the assets of any other firm, person,
or corporation. Additional protection for the assets of the Separate Account is
afforded by fidelity bonds covering all of Security First Life's officers and
employees.
SERVICING AGENT
An administrative services agreement has been entered into between Security
First Life and SFG under which the latter has agreed to perform certain of the
administrative services relating to the Contracts and for the Separate Account.
SFG performs substantially all of the recordkeeping and administrative services
for the Separate Account. Security First Life has not paid fees to SFG for these
services.
<PAGE>
INDEPENDENT AUDITORS
The financial statements and the related financial statement schedules of
Security First Life Insurance Company at December 31, 1998 and 1999 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.
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
examined as of DECEMBER 31, 1997. 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 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 Annuity Contracts
and as custodian as described elsewhere herein and in the Prospectus. The
financial statements of the Separate Account are also included in this Statement
of Additional Information.
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF
METROPOLITAN LIFE INSURANCE COMPANY)
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998 AND
INDEPENDENT AUDITORS' REPORT
<PAGE>
Report of Independent Auditors
Board of Directors
Security First Life Insurance Company
We have audited the accompanying balance sheets of Security First Life Insurance
Company (the Company) as of December 31, 1999 and 1998, and the related
statements of income, stockholder's equity, and cash flows for the years 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 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 financial position of Security First Life Insurance
Company at December 31, 1999 and 1998, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
/S/ Deloitte & Touche, LLP
Los Angeles, California
February 4, 2000
<PAGE>
<TABLE>
SECURITY FIRST LIFE INSURANCE COMPANY
BALANCE SHEETS
<CAPTION>
December 31,
1999 1998
-------------- --------------
(In thousands)
ASSETS
<S> <C> <C>
INVESTMENTS
Fixed maturities $ 1,838,339 $ 2,092,183
Mortgage loans 352,760 165,167
Policy loans 32,280 28,715
Short-term investments 66,380 50,520
Other investments 1,452 1,152
-------------- --------------
2,291,211 2,337,737
CASH AND CASH EQUIVALENTS 2,557 36,931
Accrued investment income 33,423 36,486
DEFERRED POLICY ACQUISITION COSTS 182,734 104,658
OTHER ASSETS
Assets held in separate accounts 2,049,335 1,492,885
Property under capital lease 8,360 8,940
Other 4,297 1,657
-------------- --------------
2,061,992 1,503,482
-------------- --------------
$ 4,571,917 $ 4,019,294
============== ==============
</TABLE>
2
<PAGE>
<TABLE>
SECURITY FIRST LIFE INSURANCE COMPANY
BALANCE SHEETS (Continued)
<CAPTION>
December 31,
1999 1998
-------------- --------------
(In thousands)
LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C>
LIABILITIES
Policyholder liabilities $ 2,247,045 $ 2,202,198
Liabilities related to separate accounts 2,049,335 1,492,885
Obligation under capital lease 14,777 15,130
Notes payable to parent 35,000 35,000
Federal income taxes 21,280 38,800
Other 5,075 7,499
-------------- --------------
4,372,512 3,791,512
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 2,300 2,200
Additional paid-in capital 48,047 48,147
Retained earnings 161,266 149,305
Accumulated other comprehensive income (loss) (12,408) 27,930
-------------- --------------
199,405 227,782
-------------- --------------
$ 4,571,917 $ 4,019,294
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
SECURITY FIRST LIFE INSURANCE COMPANY
STATEMENTS OF INCOME
<CAPTION>
Year Ended December 31,
1999 1998
-------------- --------------
(In thousands)
<S> <C> <C>
REVENUES
Net investment income $ 166,907 $ 165,749
Annuity product income 30,282 22,125
Net realized investment gains 2,875 25,010
-------------- --------------
TOTAL REVENUES 200,064 212,884
BENEFITS AND EXPENSES
Interest credited to policyholders 109,568 112,834
Benefits in excess of policyholder liabilities 5,451 4,876
Amortization of deferred policy acquisition costs 23,948 35,609
Operating expenses 30,169 29,116
-------------- --------------
TOTAL BENEFITS AND EXPENSES 169,136 182,435
-------------- --------------
Income before income tax expense 30,928 30,449
Income tax expense (benefit)
Current 5,706 12,584
Deferred 3,261 (3,093)
-------------- --------------
8,967 9,491
-------------- --------------
NET INCOME $ 21,961 $ 20,958
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
SECURITY FIRST LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
<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, 1998 200 2,200 48,147 128,347 34,830 213,724
Comprehensive income (loss):
Net income $ 20,958 20,958 20,958
Other comprehensive loss:
Unrealized investment losses, net of
related adjustments and income taxes (6,900) (6,900) (6,900)
------------
Total comprehensive income $ 14,058
------------ ------------ ------------ ============ ------------ ------------ ------------
Balance at December 31, 1998 200 2,200 48,147 149,305 27,930 227,782
Recapitalization 100 (100)
Dividend to parent (10,000) (10,000)
Comprehensive income (loss):
Net income $ 21,961 21,961 21,961
Other comprehensive loss:
Unrealized investment losses, net of
related adjustments and income taxes (40,338) (40,338) (40,338)
------------
Total comprehensive loss $ (18,377)
------------ ------------ ------------ ============ ------------ ------------ ------------
Balance at December 31, 1999 $ 200 $ 2,300 $ 48,047 $ 161,266 $ (12,408) $ 199,405
=========== ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
SECURITY FIRST LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended December 31,
1999 1998
-------------- --------------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 21,961 $ 20,958
Adjustments to reconcile net income to net cash
provided by operations:
Net realized investment gains (2,875) (25,010)
Depreciation and amortization 73 175
Accretion of discount and amortization of
premium on investments (1,402) (155)
Changes in operating assets and liabilities:
Accrued investment income 3,063 (2,756)
Deferred policy acquisition costs (12,664) 2,814
Other assets (2,800) (592)
Other liabilities 1,431 4,888
-------------- --------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 6,787 322
INVESTING ACTIVITIES
Fixed maturity securities
Purchases (428,007) (675,821)
Sales and maturities 559,455 940,671
Net sale (purchase) of other investments (84) 79
Net purchase of short-term investments (15,860) (28,135)
Issuance of mortgage loans (194,759) (165,167)
Repayment of mortgage loans 7,166
Issuance of policy loans, net (3,565) (4,506)
-------------- --------------
NET CASH PROVIDED BY
(USED IN) INVESTING ACTIVITIES (75,654) 67,121
FINANCING ACTIVITIES
Receipts credited to policyholder accounts 764,303 689,536
Amounts returned to policyholders (719,456) (730,779)
Reduction of capital lease obligation (354) (313)
Dividend paid to parent (10,000)
-------------- --------------
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES 34,493 (41,556)
-------------- --------------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (34,374) 25,887
Cash and cash equivalents at beginning of year 36,931 11,044
-------------- --------------
CASH AND CASH
EQUIVALENTS AT END OF YEAR $ 2,557 $ 36,931
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION -- Security First Life Insurance Company (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 (MetLife). 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 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).
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.
Realized gains and losses on disposal of investments are determined on a
specific identification basis.
7
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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):
Carrying Amount Estimated Fair Value
--------------- --------------------
December 31, 1999 $ 2,247,045 $ 2,188,033
December 31, 1998 2,202,198 2,141,415
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 -- 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.
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.
8
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 -- In June 1999, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards No. 137,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - DEFERRAL OF THE
EFFECTIVE DATE OF FASB STATEMENT NO. 133 (SFAS 137). SFAS 137 defers the
provisions of Statement of Financial Accounting Standards No. 133, ACCOUNTING
FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (SFAS 133) until January 1,
2001. SFAS 133 requires, among other things, that all derivatives be recognized
in the 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 in the process of quantifying the impact of SFAS 133 on its
financial statements.
In December 1997, the American Institute of Certified Public Accountants issued
Statement of Position 97-3, ACCOUNTING FOR INSURANCE AND OTHER ENTERPRISES FOR
INSURANCE RELATED ASSESSMENTS (SOP 97-3). SOP 97-3 provides guidance on
accounting by insurance and other enterprises for assessments related to
insurance activities including recognition, measurement and disclosure of
guaranty fund and other insurance related assessments. The Company adopted SOP
97-3 effective January 1, 1999. Adoption of SOP 97-3 did not have a material
effect on the Company's financial statements.
NOTE 2 -- STATUTORY CAPITAL AND RESTRICTIONS
The Company is required to file annual statements with various state insurance
regulatory authorities on a statutory basis. The statutory-basis capital and
surplus at December 31, 1999 and 1998 and statutory-basis net income for those
years are as follows (in thousands):
Capital Net
and Surplus Income
----------- ------
December 31, 1999
-----------------
Security First Life Insurance Company $ 129,796 $ 17,066
December 31, 1998
-----------------
Security First Life Insurance Company $ 128,520 $ 7,674
The Company 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, 1999, the maximum amount of dividends
the Company could pay SFG without prior approval from state insurance regulatory
authorities is $16,682,000.
9
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- STATUTORY CAPITAL AND RESTRICTIONS (CONTINUED)
In December 1999, the Company transferred $100,000 of paid-in-capital to common
stock to comply with state insurance department requirements. As a result of
this transfer the total value of the common stock differs from the par value
times the number of shares. This had no impact on the Company's financial
position or results of operations.
NOTE 3 -- INVESTMENTS
Unrealized investment gains (losses) reported in the accompanying financial
statements are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1999 1998
-------------- --------------
<S> <C> <C>
Unrealized investment gains (losses) $ (43,010) $ 84,001
Less: Adjustment for deferred policy acquisition costs (23,921) 41,491
Deferred income taxes (6,681) 14,580
-------------- --------------
Net unrealized investment gains (losses) $ (12,408) $ 27,930
============== ==============
</TABLE>
Net realized investment gains reported in the accompanying financial statements
are as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
Fixed maturities
Gross gains $ 8,885 $ 30,982
Gross losses (6,018) (6,046)
-------------- --------------
2,867 24,936
Other investments
Gross gains 8 133
Gross losses (59)
-------------- --------------
8 74
-------------- --------------
Net realized investment gains $ 2,875 $ 25,010
============== ==============
</TABLE>
Proceeds from sales of fixed maturities are $559,455,000 and $940,671,000 in
1999 and 1998, respectively.
The amortized cost and fair value of fixed maturities as of December 31, 1999
and 1998 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------------- -------------- -------------- --------------
December 31, 1999
-----------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 23,646 $ 622 $ (613) $ 23,655
Debt securities issued by foreign
governments 31,525 2,748 (177) 34,096
Corporate securities 1,435,111 11,363 (56,600) 1,389,874
Mortgage-backed securities 391,392 6,878 (7,556) 390,714
--------------- -------------- -------------- --------------
$ 1,881,674 $ 21,611 $ (64,946) $ 1,838,339
=============== ============== ============== ==============
</TABLE>
10
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------------- -------------- -------------- --------------
December 31, 1998
-----------------
<S> <C> <C> <C> <C>
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
=============== ============== ============== =============
</TABLE>
The amortized cost and fair value of fixed maturities by contractual maturity at
December 31, 1999, 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 $ 27,363 $ 27,400
Due after one year through five years 462,618 457,796
Due after five years through ten years 564,124 536,419
Due after ten years 436,177 426,010
Mortgage-backed securities 391,392 390,714
-------------- --------------
$ 1,881,674 $ 1,838,339
============== ==============
</TABLE>
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, 1999, 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. Such independent values are not available for
private placement securities. The carrying amount of the Company's private
placement securities, which is the Company's estimate of fair value, was
$275,600,000 and $254,400,000 at December 31, 1999 and 1998, respectively. In
order to determine the carrying value of private placement securities, the
Company uses market values of public securities of similar credit quality,
yields, coupon rate, maturity, type of issue, and other market data.
11
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- INVESTMENTS (CONTINUED)
Mortgage loans are collateralized by properties located throughout the United
States. At December 31, 1999, approximately 12% and 18% of the mortgages were
collateralized by properties located in New York and California, respectively.
All of the mortgage loans at December 31, 1999, are in good standing, and the
Company was not holding any valuation allowances related to such loans. Mortgage
loans outstanding at December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
------------------------- ------------------------
<S> <C> <C> <C> <C>
Commercial $ 306,264 87% $ 145,525 88%
Agricultural 46,496 13% 19,642 12%
-------------- -------- -------------- --------
$ 352,760 100% $ 165,167 100%
============== ======== ============== ========
</TABLE>
The carrying amount of policy loans and mortgage loans approximates fair value
because the interest rates on these loans approximate market rates.
The Company's short-term balances are invested in the Metropolitan Money Market
Pool (the Pool) which is managed by MetLife for the benefit of its subsidiaries.
The Pool invests solely in instruments having a maturity of one year or less. At
December 31, 1999, the interest rate on the Pool was 5.8%.
On February 5, 1998, the Company entered into an interest-rate cap agreement
with a large counterparty for the purpose of minimizing exposure to fluctuations
in interest rates in its policyholders liabilities. An interest-rate cap is a
contract whereby one party agrees to pay a premium at the inception of the
contract in exchange for the assumption of risk that the market interest rate
will exceed the cap rate. Under the interest-rate cap agreement, the
counterparty agrees to pay the Company, on a quarterly basis, an amount by which
the 5-year Constant Maturity Treasury Rate exceeds the interest-rate cap of
7.90% applied to the notional amount of $250,000,000. The 5-year Constant
Maturity Treasury Rate was 6.33% as of December 31, 1999, and the fair value of
the interest-rate cap as of that date was $114,000. The interest-rate cap
agreement expires February 9, 2001.
Any income or expense from the interest-rate cap 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 counterparty, 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, 1999, investment securities having an amortized cost of
$5,568,000 were on deposit with various states in accordance with state
insurance department requirements.
12
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - INVESTMENTS (CONTINUED)
Investment income by major category of investment is summarized as follows (in
thousands):
1999 1998
------------ ------------
Fixed maturities $ 148,693 $ 162,836
Mortgage loans 19,332 3,288
Policy loans 1,806 1,294
Short-term investments 2,413 3,795
Other investments 303 443
------------ ------------
172,547 171,656
Investment expenses (5,640) (5,907)
------------ ------------
Net investment income $ 166,907 $ 165,749
============ ============
The Company has no significant amounts of non-income producing investments.
NOTE 4 -- NOTES PAYABLE
Notes payable consist of the following as of December 31, 1999 and 1998 (in
thousands):
Surplus note due to SFG, 5% annual interest payable
monthly, principal payable upon regulatory approval $ 25,000
Surplus note due to SFG, interest based on LIBOR plus
.75%, interest payable monthly, principal payable upon
regulatory approval (6.57% at December 31, 1999) 10,000
----------
$ 35,000
==========
There are no principal payments due on the notes payable during the next five
years.
Interest paid by the Company totaled $1,063,000 in 1999 and $2,150,000 in 1998.
13
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- INCOME TAXES
The liability for federal income taxes includes deferred taxes of $18,771,000
and $36,772,000 at December 31, 1999 and 1998, respectively. Significant
components of these deferred taxes are as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Deferred tax liabilities:
Deferred policy acquisition costs $ 53,995 $ 48,952
Fixed maturities 16,788
Other assets 3,167 3,441
------------ ------------
Total deferred tax liabilities 57,162 69,181
Deferred tax assets:
Policyholder liabilities 11,557 10,095
Liabilities for separate accounts 17,259 16,778
Fixed maturities 4,111
Other liabilities 5,172 5,296
Other, net 292 240
------------ ------------
Total deferred tax assets 38,391 32,409
------------ ------------
Net deferred tax liabilities $ 18,771 $ 36,772
============ ============
</TABLE>
Income taxes paid by the Company were $5,225,000 in 1999 and $12,401,000 in
1998.
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):
1999 1998
------------ ------------
Federal income tax at 35% $ 10,825 $ 10,657
Dividends received deduction (1,444) (905)
Other (414) (261)
------------ ------------
Provision for income tax expense $ 8,967 $ 9,491
============ ============
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 property under capital lease is net of accumulated amortization of
$9,061,000 in 1999 and $8,481,000 in 1998. Lease amortization expense was
$580,000 in 1999 and 1998.
14
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- CAPITAL LEASE (CONTINUED)
The Company subleases space on an annual basis to SFG to use as its home office.
Related income offset against the lease costs was $1,694,000 and $1,660,000 for
the years ended December 31, 1999 and 1998, respectively. Future payments under
the lease are as follows (in thousands):
2000 $ 2,166
2001 2,166
2002 2,166
2003 2,166
2004 2,166
Thereafter 20,387
-----------
Total minimum rental payments 31,217
Amount representing interest (16,440)
-----------
Present value of minimum rental payments $ 14,777
===========
NOTE 7 -- RELATED PARTY TRANSACTIONS
The Company has marketing and administrative agreements with SFG under which SFG
provides most of the Company's marketing and policyholder administration
services. Amounts incurred under these agreements were $58,595,000 and
$51,658,000 for 1999 and 1998, 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 $3,823,000 in 1999 and $3,883,000 in 1998.
The Company has marketing and administrative agreements with MetLife under which
the latter provides certain marketing and policyholder administration services.
Amounts incurred under these agreements were $7,405,000 in 1999 and $716,000 in
1998.
The Company has investment advisory agreements with Security First Investment
Management Corporation, a subsidiary of SFG. Fees of $5,681,000 and $5,772,000
were paid in 1999 and 1998, respectively, pursuant to these agreements.
In June 1999, the Company paid a dividend of $10,000,000 to its parent.
15
<PAGE>
SECURITY FIRST LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 - OTHER COMPREHENSIVE INCOME (LOSS)
The following table sets forth the reclassification adjustments required to
avoid double-counting in other comprehensive income (loss) items that are
included as part of net income for the current year that have been reported as a
part of other comprehensive income (loss) in the current or prior year:
1999 1998
------------ ------------
Holding gains (losses) on investments
arising during the year $ (59,183) $ 14,394
Income tax effect of holding losses (gains) 20,714 (5,038)
Reclassification adjustments:
Realized gains on investments
included in net income (2,875) (25,010)
Income tax effect of realized gains 1,006 8,754
------------ ------------
Net unrealized investment losses $ (40,338) $ (6,900)
============ ============
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
implemented a plan to resolve the issue. The Company believes that, with the
modifications made to existing software and conversions to new software and
hardware, the Year 2000 will not pose significant operational problems for the
Company's computer systems. However, there can be no assurances that the Year
2000 plan of the Company or that of its vendors or third parties have resolved
all Year 2000 issues.
16
<PAGE>
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 (the
"Separate Account") Series B, G, T, P, I, FA, FG, FI, FO, FM, SU, SV, AS, SI,
FC, FE, NG, NP, JW, MFSG, MFSR, MFND, AC, AB, AV, AI, FDE, FDH, FDA, FDG, OB,
OG, OM, OS, OSM, VKEM, VKER, and VKS, as of December 31, 1999, and the related
statements of operations for the year then ended (as to Series MFSG, MFSR, MFND,
AC, AB, AV, AI, FDE, FDH, FDA, FDG, OB, OG, OM, OS, OSM, VKEM, VKER, and VKS,
for the period from commencement of operations through December 31, 1999) and
statements of changes in net assets for the periods ended December 31, 1999 and
1998. 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. 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, such financial statements 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, 1999, and the
results of their operations for the year then ended (as to Series MFSG, MFSR,
MFND, AC, AB, AV, AI, FDE, FDH, FDA, FDG, OB, OG, OM, OS, OSM, VKEM, VKER, and
VKS, for the period of commencement of operations through December 31, 1999) and
the changes in their net assets for the periods ended December 31, 1999 and
1998, in conformity with generally accepted accounting principles.
/S/ Deloitte & Touche, LLP
Los Angeles, California
March 29, 2000
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<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 (6,786,583
shares at net asset value of $3.71 per share;
cost $27,106,455) $ 25,191,031
Security First Trust - T. Rowe Price Growth and
Income Series (22,317,788 shares at net asset
value of $16.15 per share; cost $334,640,818) $ 360,352,119
T. Rowe Price Growth Stock Fund, Inc. (3,788,676
shares at net asset value of $33.27 per share;
cost $105,815,581) $ 126,049,240
T. Rowe Price Prime Reserve Fund, Inc. (1,108,929
shares at net asset value of $1.00 per share;
cost $1,108,929) $ 1,108,929
T. Rowe Price International Stock Fund, Inc.
(1,229,297 shares at net asset value of $19.03
per share; cost $17,797,679) $ 23,393,520
Receivable from Security First Life Insurance
Company for purchases 6,922 132,359 123,242 255 58,609
Receivable from Mutual Funds 1,844 19,406
Other assets 3,941 12,521
-------------- -------------- -------------- -------------- --------------
TOTAL ASSETS 25,203,738 360,516,405 126,172,482 1,109,184 23,452,129
The accompanying notes are an integral part of these financial statements.
</TABLE>
1
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
Payable to Security First Life Insurance Company
for mortality and expense risk $ 26,945 $ 359,849 $ 91,652 $ 794 $ 16,513
Payable to Security First Life Insurance Company
for redemptions 11,917 47,957 30,481 17 44,810
Payable to Mutual Funds 6,787 144,335
-------------- -------------- -------------- -------------- --------------
TOTAL LIABILITIES 45,649 552,141 122,133 811 61,323
NET ASSETS
Cost to Investors
Series B Accumulation Units 27,073,513
Series G Accumulation Units 334,252,963
Series T Accumulation Units 105,816,690
Series P Accumulation Units 1,108,373
Series I Accumulation Units 17,794,965
-------------- -------------- -------------- -------------- --------------
Accumulated undistributed income (loss)
Net unrealized appreciation (depreciation) (1,915,424) 25,711,301 20,233,659 5,595,841
-------------- -------------- -------------- -------------- --------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 25,158,089 $ 359,964,264 $ 126,050,349 $ 1,108,373 $ 23,390,806
============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
2
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 1,403,470 $ 22,170,067 $ 17,837,321 $ 45,456 $ 1,206,085
Other investment income 332 25,546 1,991 40 9,136
-------------- -------------- -------------- -------------- --------------
1,403,802 22,195,613 17,839,312 45,496 1,215,221
EXPENSES
Charges for mortality and expense risk 304,241 4,128,378 983,398 8,764 165,545
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME 1,099,561 18,067,235 16,855,914 36,732 1,049,676
INVESTMENT GAINS (LOSSES)
Realized investment gains 109,245 12,235,449 5,120,118 710,854
Change in unrealized appreciation (depreciation)
on investments during the year (2,136,059) (7,094,433) 69,326 4,098,232
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT GAINS (LOSSES) (2,026,814) 5,141,016 5,189,444 4,809,086
-------------- -------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (927,253) $ 23,208,251 $ 22,045,358 $ 36,732 $ 5,858,762
============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 1,099,561 $ 18,067,235 $ 16,855,914 $ 36,732 $ 1,049,676
Realized investment gains 109,245 12,235,449 5,120,118 710,854
Change in unrealized appreciation (depreciation)
on investments during the year (2,136,059) (7,094,433) 69,326 4,098,232
-------------- -------------- -------------- -------------- --------------
Increase (decrease) in net assets resulting
from operations (927,253) 23,208,251 22,045,358 36,732 5,858,762
Increase (decrease) in net assets resulting from
capital unit transactions 2,851,209 26,965,828 (910,355) 266,189 (67,784)
-------------- -------------- -------------- -------------- --------------
TOTAL INCREASE IN NET ASSETS 1,923,956 50,174,079 21,135,003 302,921 5,790,978
NET ASSETS AT BEGINNING OF YEAR 23,234,133 309,790,185 104,915,346 805,452 17,599,828
-------------- -------------- -------------- -------------- --------------
NET ASSETS AT END OF YEAR $ 25,158,089 $ 359,964,264 $ 126,050,349 $ 1,108,373 $ 23,390,806
============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
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
============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Carrying Unrealized
Value Appreciation Cost
Series Name of Issue Shares (Note A) (Depreciation) (Note B)
- ------ -------------------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
B Security First Trust Bond Series -- capital shares 6,786,583 $ 25,191,031 $ (1,915,424) $ 27,106,455
G Security First Trust T. Rowe Price Growth and Income
Series -- capital shares 22,317,788 $ 360,352,119 $ 25,711,301 $ 334,640,818
T T. Rowe Price Growth Stock Fund, Inc. -- capital
shares 3,788,676 $ 126,049,240 $ 20,233,659 $ 105,815,581
P T. Rowe Price Prime Reserve Fund, Inc. -- capital
shares 1,108,929 $ 1,108,929 $ 1,108,929
I T. Rowe Price International Stock Fund, Inc. --
capital shares 1,229,297 $ 23,393,520 $ 5,595,841 $ 17,797,679
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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
Fidelity Investments - VIP Asset Manager Portfolio
(11,983,713 shares at net asset value of $18.67
per share; cost $196,691,865) $ 223,735,920
Fidelity Investments - VIP Growth Portfolio
(8,205,473 shares at net asset value of $54.93
per share; cost $294,648,053) $ 450,726,640
Fidelity Investments - VIP Index 500 Portfolio
(1,821,921 shares at net asset value of $167.41
per share; cost $220,681,467) $ 305,007,745
Fidelity Investments - VIP Overseas Portfolio
(947,964 shares at net asset value of $27.44 per
share; cost $17,553,032) $ 26,012,138
Fidelity Investments - VIP Money Market Portfolio
(38,203,078 shares at net asset value of $1.00 per
share; cost $38,203,078) $ 38,203,078
Receivable from Security First Life Insurance Company
for purchases 66,418 200,407 175,697 2,300 207,900
Receivable from Mutual Funds 5,775 15,876 43,752 2,610 122,960
Other assets 13,758 6,472 5,058 384,094
-------------- -------------- -------------- -------------- --------------
TOTAL ASSETS 223,808,113 450,956,681 305,233,666 26,022,106 38,918,032
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
Payable to Security First Life Insurance Company
for mortality and expense risk $ 240,925 $ 457,117 $ 319,041 $ 25,853 $ 40,922
Payable to Security First Life Insurance Company
for redemptions 61,044 76,993 114,211 9,080 14,372
Payable to Mutual Funds 33,076 153,684 423,027 3,232 144,229
Other liabilities 13,336
-------------- -------------- -------------- -------------- --------------
TOTAL LIABILITIES 348,381 687,794 856,279 38,165 199,523
NET ASSETS
Cost to Investors
Series FA Accumulation Units 196,415,677
Series FG Accumulation Units 294,190,300
Series FI Accumulation Units 220,051,109
Series FO Accumulation Units 17,524,835
Series FM Accumulation Units 38,718,509
Accumulated undistributed income
Net unrealized appreciation 27,044,055 156,078,587 84,326,278 8,459,106
-------------- -------------- -------------- -------------- --------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 223,459,732 $ 450,268,887 $ 304,377,387 $ 25,983,941 $ 38,718,509
============== ============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 13,910,155 $ 32,814,425 $ 3,290,355 $ 720,428 $ 1,597,752
Other investment income (expense) 14,271 162,995 63,438 2,044 (9,555)
-------------- -------------- -------------- -------------- --------------
13,924,426 32,977,420 3,353,793 722,472 1,588,197
EXPENSES
Charges for mortality and expense risk 2,609,688 4,386,807 3,103,986 251,694 413,482
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME 11,314,738 28,590,613 249,807 470,778 1,174,715
INVESTMENT GAINS
Realized investment gains 1,839,949 6,545,755 4,894,662 291,342
Change in unrealized appreciation on investments
during the year 6,030,115 77,794,347 38,917,297 6,748,247
-------------- -------------- -------------- --------------
NET INVESTMENT GAINS 7,870,064 84,340,102 43,811,959 7,039,589
-------------- -------------- -------------- -------------- --------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 19,184,802 $ 112,930,715 $ 44,061,766 $ 7,510,367 $ 1,174,715
============== ============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 11,314,738 $ 28,590,613 $ 249,807 $ 470,778 $ 1,174,715
Realized investment gains 1,839,949 6,545,755 4,894,662 291,342
Change in unrealized appreciation on investments
during the year 6,030,115 77,794,347 38,917,297 6,748,247
-------------- -------------- -------------- -------------- --------------
Increase in net assets resulting from operations 19,184,802 112,930,715 44,061,766 7,510,367 1,174,715
Increase in net assets resulting from capital unit
transactions 20,710,643 55,264,672 69,176,105 663,884 8,554,036
-------------- -------------- -------------- -------------- --------------
TOTAL INCREASE IN NET ASSETS 39,895,445 168,195,387 113,237,871 8,174,251 9,728,751
NET ASSETS AT BEGINNING OF YEAR 183,564,287 282,073,500 191,139,516 17,809,690 28,989,758
-------------- -------------- -------------- -------------- --------------
NET ASSETS AT END OF YEAR $ 223,459,732 $ 450,268,887 $ 304,377,387 $ 25,983,941 $ 38,718,509
============== ============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
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.
11
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
DECEMBER 31, 1999
<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 11,983,713 $ 223,735,920 $ 27,044,055 $ 196,691,865
FG Fidelity Investments - VIP Growth Portfolio --
capital shares 8,205,473 $ 450,726,640 $ 156,078,587 $ 294,648,053
FI Fidelity Investments - VIP Index 500 Portfolio --
capital shares 1,821,921 $ 305,007,745 $ 84,326,278 $ 220,681,467
FO Fidelity Investments - VIP Overseas Portfolio --
capital shares 947,964 $ 26,012,138 $ 8,459,106 $ 17,553,032
FM Fidelity Investments - VIP Money Market Portfolio
-- capital shares 38,203,078 $ 38,203,078 $ 38,203,078
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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series SU Series SV Series AS Series SI Series FC Series FE
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Security First Trust - U.S. Government
Income Series (6,683,726 shares at
net asset value of $4.82 per share;
cost $34,990,320) $ 32,228,326
Security First Trust - Equity Series
(6,856,873 shares at net asset value
of $9.21 per share; cost $49,019,414) $ 63,145,367
Alger American Small Capitalization
Portfolio (1,583,775 shares at net
asset value of $55.15 per share;
cost $64,184,217) $ 87,345,018
Scudder International Portfolio (933,038
shares at net asset value of $20.34
per share; cost $13,538,450) $ 18,977,998
Fidelity Investments - VIP Contrafund Portfolio
(7,543,733 shares at net asset value of $29.15
per share; cost $151,078,515) $ 219,899,818
Fidelity Investments - VIP Equity Income Portfolio
(1,422,609 shares at net asset value of $25.71
per share; cost $33,137,890) $ 36,575,287
Receivable from Security First Life
Insurance Company for purchases 430 74,938 32,675 164,742
Receivable from mutual funds 7,046 12,567 979 287 16,040
Other assets 3,941 351 5,548 221,871 26,216
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL ASSETS 32,239,313 63,158,715 87,426,483 19,232,831 220,090,776 36,591,327
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series SU Series SV Series AS Series SI Series FC Series FE
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES
Payable to Security First Life
Insurance Company for mortality and
expense risk $ 34,683 $ 64,047 $ 120,987 $ 21,325 $ 239,292 $ 42,963
Payable to Security First Life
Insurance Company for redemptions 12,954 15,337 18,546 1,439 52,512 22,254
Payable to Mutual Funds 19,541 119,156 149,201
Other liabilities 71 13,667
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL LIABILITIES 47,708 79,384 159,074 141,920 441,005 78,884
NET ASSETS
Cost to Investors
Series SU Accumulation Units 34,953,599
Series SV Accumulation Units 48,953,378
Series AS Accumulation Units 64,106,608
Series SI Accumulation Units 13,651,363
Series FC Accumulation Units 150,828,468
Series FE Accumulation Units 33,075,046
Accumulated undistributed income (loss)
Net unrealized appreciation
(depreciation) (2,761,994) 14,125,953 23,160,801 5,439,548 68,821,303 3,437,397
-------------- -------------- -------------- -------------- -------------- --------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 32,191,605 $ 63,079,331 $ 87,267,409 $ 19,090,911 $ 219,649,771 $ 36,512,443
============== ============== ============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series SU Series SV Series AS Series SI Series FC Series FE
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 1,835,812 $ 2,074,076 $ 7,425,518 $ 1,048,038 $ 5,840,616 $ 1,457,862
Other investment income (expense) 2,878 (9,816) 41,563 28,489 46,296 5,211
-------------- -------------- -------------- -------------- -------------- --------------
1,838,690 2,064,260 7,467,081 1,076,527 5,886,912 1,463,073
EXPENSES
Charges for mortality and expense risk 415,652 720,902 866,065 164,346 2,336,657 479,910
-------------- -------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME 1,423,038 1,343,358 6,601,016 912,181 3,550,255 983,163
INVESTMENT GAINS (LOSSES)
Realized investment gains 54,787 2,002,168 454,345 142,518 916,728 456,712
Change in unrealized appreciation
(depreciation) on investments during
the year (2,770,882) 7,136,550 18,105,055 4,956,713 33,147,421 (25,221)
-------------- -------------- -------------- -------------- -------------- --------------
NET INVESTMENT GAINS (LOSSES) (2,716,095) 9,138,718 18,559,400 5,099,231 34,064,149 431,491
-------------- -------------- -------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (1,293,057) $ 10,482,076 $ 25,160,416 $ 6,011,412 $ 37,614,404 $ 1,414,654
============== ============== ============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1999
<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 $ 1,423,038 $ 1,343,358 $ 6,601,016 $ 912,181 $ 3,550,255 $ 983,163
Realized investment gains 54,787 2,002,168 454,345 142,518 916,728 456,712
Change in unrealized appreciation
(depreciation) on investments during
the year (2,770,882) 7,136,550 18,105,055 4,956,713 33,147,421 (25,221)
-------------- -------------- -------------- -------------- -------------- --------------
Increase (decrease) in net assets
resulting from operations (1,293,057) 10,482,076 25,160,416 6,011,412 37,614,404 1,414,654
Increase (decrease) in net assets
resulting from capital unit transactions (635,379) (4,085,736) 5,738,963 3,642,268 43,076,409 5,391,237
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,928,436) 6,396,340 30,899,379 9,653,680 80,690,813 6,805,891
NET ASSETS AT BEGINNING OF YEAR 34,120,041 56,682,991 56,368,030 9,437,231 138,958,958 29,706,552
-------------- -------------- -------------- -------------- -------------- --------------
NET ASSETS AT END OF YEAR $ 32,191,605 $ 63,079,331 $ 87,267,409 $ 19,090,911 $ 219,649,771 $ 36,512,443
============== ============== ============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
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.
17
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Carrying Unrealized
Value Appreciation Cost
Series Name of Issue Shares (Note A) (Depreciation) (Note B)
- ------ -------------------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
SU Security First Trust U.S. Government Income Series
-- capital shares 6,683,726 $ 32,228,326 $ (2,761,994) $ 34,990,320
SV Security First Trust Equity Series -- capital shares 6,856,873 $ 63,145,367 $ 14,125,953 $ 49,019,414
AS Alger American Small Capitalization Portfolio --
capital shares 1,583,775 $ 87,345,018 $ 23,160,801 $ 64,184,217
SI Scudder International Portfolio -- capital shares 933,038 $ 18,977,998 $ 5,439,548 $ 13,538,450
FC Fidelity Investments - VIP Contrafund Portfolio --
capital shares 7,543,733 $ 219,899,818 $ 68,821,303 $ 151,078,515
FE Fidelity Investments - VIP Equity Income Portfolio
-- capital shares 1,422,609 $ 36,575,287 $ 3,437,397 $ 33,137,890
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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series NG Series NP Series JW Series MFSG* Series MFSR*
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
Neuberger & Berman Genesis Trust
(53,022 shares at net asset value of $21.04
per share; cost $1,119,103) $ 1,115,589
Neuberger & Berman Partner's Trust
(96,619 shares at net asset value of $17.98
per share; cost $1,796,480) $ 1,737,205
Janus Aspen Worldwide Growth Portfolio
(113,519 shares at net asset value of $47.75
per share; cost $3,575,840) $ 5,420,546
MFS Growth with Income Series (491 shares at net
asset value of $21.31 per share; cost $10,041) $ 10,463
MFS Research Series (637 shares at net asset
value of $23.34 per share; cost $14,304) $ 14,879
Receivable from Security First Life Insurance
Company for purchases 4,483 56
Other assets 4,010
-------------- -------------- -------------- -------------- --------------
TOTAL ASSETS 1,115,589 1,737,205 5,425,029 10,463 18,945
</TABLE>
*Series MFSG and MFSR commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series NG Series NP Series JW Series MFSG* Series MFSR*
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
Payable to Security First Life Insurance Company
for mortality and expense risk $ 816 $ 1,293 $ 3,600 $ 11 $ 12
Payable to Mutual Funds 110 459 2,879 4,010
-------------- -------------- -------------- -------------- --------------
TOTAL LIABILITIES 926 1,752 6,479 11 4,022
NET ASSETS
Cost to Investors
Series NG Accumulation Units 1,118,177
Series NP Accumulation Units 1,794,728
Series JW Accumulation Units 3,573,844
Series MFSG Accumulation Units 10,030
Series MFSR Accumulation Units 14,348
Accumulated undistributed income (loss)
Net unrealized appreciation (depreciation) (3,514) (59,275) 1,844,706 422 575
-------------- -------------- -------------- -------------- --------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 1,114,663 $ 1,735,453 $ 5,418,550 $ 10,452 $ 14,923
============== ============== ============== ============== ==============
</TABLE>
*Series MFSG and MFSR commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series NG Series NP Series JW Series MFSG* Series MFSR*
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 5,824 $ 129,575 $ 5,329
Other investment income (expense) (792) (3,179) (4,041) 1 55
-------------- -------------- -------------- -------------- --------------
5,032 126,396 1,288 1 55
EXPENSES
Charges for mortality and expense risk 9,116 14,335 26,189 12 12
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) (4,084) 112,061 (24,901) (11) 43
INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) (43,186) 6,155 68,675 253
Change in unrealized appreciation (depreciation)
on investments during the period 71,114 (18,909) 1,768,384 422 575
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT GAINS (LOSSES) 27,928 (12,754) 1,837,059 422 828
-------------- -------------- -------------- -------------- --------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 23,844 $ 99,307 $ 1,812,158 $ 411 $ 871
============== ============== ============== ============== ==============
</TABLE>
*Series MFSG and MFSR commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series NG Series NP Series JW Series MFSG* Series MFSR*
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss) $ (4,084) $ 112,061 $ (24,901) $ (11) $ 43
Realized investment gains (losses) (43,186) 6,155 68,675 253
Change in unrealized appreciation (depreciation)
on investments during the period 71,114 (18,909) 1,768,384 422 575
-------------- -------------- -------------- -------------- --------------
Increase in net assets resulting from operations 23,844 99,307 1,812,158 411 871
Increase (decrease) in net assets resulting from
capital unit transactions (44,802) 200,852 1,939,234 10,041 14,052
-------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (20,958) 300,159 3,751,392 10,452 14,923
NET ASSETS AT BEGINNING OF PERIOD 1,135,621 1,435,294 1,667,158
-------------- -------------- -------------- -------------- --------------
NET ASSETS AT END OF PERIOD $ 1,114,663 $ 1,735,453 $ 5,418,550 $ 10,452 $ 14,923
============== ============== ============== ============== ==============
</TABLE>
*Series MFSG and MFSR commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
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 period (74,629) (40,364) 76,323
-------------- -------------- --------------
Increase (decrease) in net assets results 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
-------------- -------------- --------------
NET ASSETS AT END OF PERIOD $ 1,135,621 $ 1,435,294 $ 1,667,158
============== ============== ==============
*Series NG and NP commenced operations on January 9, 1998; Series JW commenced
operations on January 8, 1998.
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
DECEMBER 31, 1999
<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 53,022 $ 1,115,589 $ (3,514) $ 1,119,103
NP Neuberger & Berman Partners Trust -- capital shares 96,619 $ 1,737,205 $ (59,275) $ 1,796,480
JW Janus Aspen Worldwide Growth Portfolio -- capital
shares 113,519 $ 5,420,546 $ 1,844,706 $ 3,575,840
MFSG MFS Growth with Income Series -- capital shares 491 $ 10,463 $ 422 $ 10,041
MFSR MFS Research Series -- capital shares 637 $ 14,879 $ 575 $ 14,304
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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series AC* Series AB* Series AV* Series AI*
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Investments
AIM VI Capital Appreciation Fund
(630 shares at net asset value of $35.58
per share; cost $20,091) $ 22,398
AIM VI Balanced Fund
(8,678 shares at net asset value of $13.04
per share; cost $103,903) $ 113,162
AIM VI Value Fund
(6,629 shares at net asset value of $33.50
per share; cost $213,485) $ 222,069
AIM VI International Equity Fund
(1,186 shares at net asset value of $29.29
per share; cost $31,910) $ 34,732
Receivable from Security First Life Insurance
Company for purchases 350 2,211 350
Other assets 8,521 6,516
-------------- -------------- -------------- --------------
TOTAL ASSETS 22,748 113,162 232,801 41,598
</TABLE>
*Series AC, AB, AV and AI commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series AC* Series AB* Series AV* Series AI*
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
LIABILITIES
Payable to Security First Life Insurance Company
for mortality and expense risk $ 15 $ 120 $ 150 $ 29
Payable to Security First Life Insurance Company 14
Payable to Mutual Funds 8,507 6,516
-------------- -------------- -------------- --------------
TOTAL LIABILITIES 15 120 8,671 6,545
NET ASSETS
Cost to Investors
Series AC Accumulation Units 20,426
Series AB Accumulation Units 103,783
Series AV Accumulation Units 215,546
Series AI Accumulation Units 32,231
Accumulated undistributed income
Net unrealized appreciation 2,307 9,259 8,584 2,822
-------------- -------------- -------------- --------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 22,733 $ 113,042 $ 224,130 $ 35,053
============== ============== ============== ==============
*Series AC, AB, AV and AI commenced operations during 1999.
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series AC* Series AB* Series AV* Series AI*
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 215 $ 1,778 $ 1,594 $ 841
Other investment income 350 347 2,261 618
-------------- -------------- -------------- --------------
565 2,125 3,855 1,459
EXPENSES
Charges for mortality and expense risk 25 321 319 47
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME 540 1,804 3,536 1,412
INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) (153) 4,557 1,530
Change in unrealized appreciation on investments
during the period 2,307 9,259 8,584 2,822
-------------- -------------- -------------- --------------
NET INVESTMENT GAINS 2,307 9,106 13,141 4,352
-------------- -------------- -------------- --------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,847 $ 10,910 $ 16,677 $ 5,764
============== ============== ============== ==============
*Series AC, AB, AV and AI commenced operations during 1999.
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series AC* Series AB* Series AV* Series AI*
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 540 $ 1,804 $ 3,536 $ 1,412
Realized investment gains (losses) (153) 4,557 1,530
Change in unrealized appreciation on investments
during the period 2,307 9,259 8,584 2,822
-------------- -------------- -------------- --------------
Increase in net assets resulting from operations 2,847 10,910 16,677 5,764
Increase in net assets resulting from capital unit
transactions 19,886 102,132 207,453 29,289
-------------- -------------- -------------- --------------
TOTAL INCREASE IN NET ASSETS 22,733 113,042 224,130 35,053
NET ASSETS AT BEGINNING OF PERIOD
-------------- -------------- -------------- --------------
NET ASSETS AT END OF PERIOD $ 22,733 $ 113,042 $ 224,130 $ 35,053
============== ============== ============== ==============
*Series AC, AB, AV and AI commenced operations during 1999.
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Carrying
Value Unrealized Cost
Series Name of Issue Shares (Note A) Appreciation (Note B)
- ------ -------------------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
AC AIM VI Capital Appreciation Fund -- capital shares 630 $ 22,398 $ 2,307 $ 20,091
AB AIM VI Balanced Fund -- capital shares 8,678 $ 113,162 $ 9,259 $ 103,903
AV AIM VI Value Fund -- capital shares 6,629 $ 222,069 $ 8,584 $ 213,485
AI AIM VI International Equity Fund -- capital shares 1,186 $ 34,732 $ 2,822 $ 31,910
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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series FDE* Series FDH* Series FDA* Series FDG*
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Investments
Federated Equity Income Fund II
(2,082 shares at net asset value of $16.28
per share; cost $31,348) $ 33,901
Federated High Income Bond Fund II
(7,350 shares at net asset value of $10.24
per share; cost $74,968) $ 75,269
Federated American Leaders Fund II
(2,942 shares at net asset value of $20.82
per share; cost $59,186) $ 61,254
Federated Growth Strategy Fund II
(5,316 shares at net asset value of $30.88
per share; cost $130,036) $ 164,150
Receivable from Security First Life Insurance
Company for purchases 228
Other assets 189
-------------- -------------- -------------- --------------
TOTAL ASSETS 33,901 75,686 61,254 164,150
</TABLE>
*Series FDE, FDH, FDA and FDG commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series FDE* Series FDH* Series FDA* Series FDG*
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
LIABILITIES
Payable to Security First Life Insurance Company
for mortality and expense risk $ 36 $ 69 $ 56 $ 160
Payable to Security First Life Insurance Company 189 13 16
-------------- -------------- -------------- --------------
TOTAL LIABILITIES 36 258 69 176
NET ASSETS
Cost to Investors
Series FDE Accumulation Units 31,312
Series FDH Accumulation Units 75,127
Series FDA Accumulation Units 59,117
Series FDG Accumulation Units 129,860
Accumulated undistributed income
Net unrealized appreciation 2,553 301 2,068 34,114
-------------- -------------- -------------- --------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 33,865 $ 75,428 $ 61,185 $ 163,974
============== ============== ============== ==============
</TABLE>
*Series FDE, FDH, FDA and FDG commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series FDE* Series FDH* Series FDA* Series FDG*
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Other investment income $ 71 $ 242 $ 357
-------------- -------------- --------------
71 242 357
EXPENSES
Charges for mortality and expense risk 120 132 $ 113 386
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) (49) 110 (113) (29)
INVESTMENT GAINS
Realized investment gains 215
Change in unrealized appreciation on investments
during the period 2,553 301 2,068 34,114
-------------- -------------- -------------- --------------
NET INVESTMENT GAINS 2,553 516 2,068 34,114
-------------- -------------- -------------- --------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,504 $ 626 $ 1,955 $ 34,085
============== ============== ============== ==============
*Series FDE, FDH, FDA and FDG commenced operations during 1999.
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series FDE* Series FDH* Series FDA* Series FDG*
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss) $ (49) $ 110 $ (113) $ (29)
Realized investment gains 215
Change in unrealized appreciation on
investments during the period 2,553 301 2,068 34,114
-------------- -------------- -------------- --------------
Increase in net assets resulting from
operations 2,504 626 1,955 34,085
Increase in net assets resulting from capital
unit transactions 31,361 74,802 59,230 129,889
-------------- -------------- -------------- --------------
TOTAL INCREASE IN NET ASSETS 33,865 75,428 61,185 163,974
NET ASSETS AT BEGINNING OF PERIOD
-------------- -------------- -------------- --------------
NET ASSETS AT END OF PERIOD $ 33,865 $ 75,428 $ 61,185 $ 163,974
============== ============== ============== ==============
*Series FDE, FDH, FDA and FDG commenced operations during 1999.
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Carrying
Value Unrealized Cost
Series Name of Issue Shares (Note A) Appreciation (Note B)
- ------ -------------------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
FDE Federated Equity Income Fund II -- capital shares 2,082 $ 33,901 $ 2,553 $ 31,348
FDH Federated High Income Bond Fund II -- capital shares 7,350 $ 75,269 $ 301 $ 74,968
FDA Federated American Leaders Fund II -- capital shares 2,942 $ 61,254 $ 2,068 $ 59,186
FDG Federated Growth Strategy Fund II -- capital shares 5,316 $ 164,150 $ 34,114 $ 130,036
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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series OB* Series OG* Series OM* Series OS* Series OSM*
-------------- -------------- -------------- -------------- --------------
ASSETS
<S> <C> <C> <C> <C> <C>
Investments
Oppenheimer Bond Fund (694 shares at net asset
value of $11.52 per share; cost $8,009) $ 8,001
Oppenheimer Main Street Growth and Income Fund
(5,945 shares at net asset value of $24.63 per
share; cost $138,157) $ 146,424
Oppenheimer Money Fund (365,850 shares at net
asset value of $1.00 per share; cost $365,850) $ 365,850
Oppenheimer Strategic Bond Fund (2,565 shares
at net asset value of $4.97 per share; cost
$12,721) $ 12,749
Oppenheimer Small Capital Growth Fund (3,426
shares at net asset value of $14.07 per share;
cost $39,950) $ 48,200
Dividends receivable 2,833
Receivable from Security First Life Insurance Company
for purchases 88 1,006
Other assets 3,007 6,015 35,086 2,006
-------------- -------------- -------------- -------------- --------------
TOTAL ASSETS 11,008 152,527 403,769 14,755 49,206
*Series OB, OG, OM, OS and OSM commenced operations during 1999.
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series OB* Series OG* Series OM* Series OS* Series OSM*
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
Payable to Security First Life Insurance Company
for mortality and expense risk $ 6 $ 125 $ 574 $ 11 $ 49
Payable to Security First Life Insurance
Company for redemptions 14 69
Payable to Mutual Funds 3,006 6,015 35,086 2,006
Other liabilities 17
-------------- -------------- -------------- -------------- --------------
TOTAL LIABILITIES 3,012 6,154 35,677 2,017 118
NET ASSETS
Cost to Investors
Series OB Accumulation Units 8,004
Series OG Accumulation Units 138,106
Series OM Accumulation Units 368,092
Series OS Accumulation Units 12,710
Series OSM Accumulation Units 40,838
Accumulated undistributed income (loss)
Net unrealized appreciation (depreciation) (8) 8,267 28 8,250
-------------- -------------- -------------- -------------- --------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 7,996 $ 146,373 $ 368,092 $ 12,738 $ 49,088
============== ============== ============== ============== ==============
*Series OB, OG, OM, OS and OSM commenced operations during 1999.
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series OB* Series OG* Series OM* Series OS* Series OSM*
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 4,865
Other investment income $ 1 $ 175 607 $ 70 $ 2,608
-------------- -------------- -------------- -------------- --------------
1 175 5,472 70 2,608
EXPENSES
Charges for mortality and expense risk 6 290 1,374 22 87
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) (5) (115) 4,098 48 2,521
INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) (13) 317 57 1,183
Change in unrealized appreciation (depreciation)
on investments during the period (8) 8,267 28 8,250
-------------- -------------- -------------- --------------
NET INVESTMENT GAINS (LOSSES) (21) 8,584 85 9,433
-------------- -------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ (26) $ 8,469 $ 4,098 $ 133 $ 11,954
============== ============== ============== ============== ==============
*Series OB, OG, OM, OS and OSM commenced operations during 1999.
</TABLE>
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series OB* Series OG* Series OM* Series OS* Series OSM*
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss) $ (5) $ (115) $ 4,098 48 2,521
Realized investment gains (losses) (13) 317 57 1,183
Change in unrealized appreciation (depreciation)
on investments during the period (8) 8,267 28 8,250
-------------- -------------- -------------- -------------- --------------
Increase (decrease) in net assets resulting
from operations (26) 8,469 4,098 133 11,954
Increase in net assets resulting from capital
unit transactions 8,022 137,904 363,994 12,605 37,134
-------------- -------------- -------------- -------------- --------------
TOTAL INCREASE IN NET ASSETS 7,996 146,373 368,092 12,738 49,088
NET ASSETS AT BEGINNING OF PERIOD
-------------- -------------- -------------- -------------- --------------
NET ASSETS AT END OF PERIOD $ 7,996 $ 146,373 $ 368,092 $ 12,738 $ 49,088
============== ============== ============== ============== ==============
*Series OB, OG, OM, OS and OSM commenced operations during 1999.
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Carrying Unrealized
Value Appreciation Cost
Series Name of Issue Shares (Note A) (Depreciation) (Note B)
- ------ -------------------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
OB Oppenheimer Bond Fund -- capital shares 694 $ 8,001 $ (8) $ 8,009
OG Oppenheimer Main Street Growth & Income --
capital shares 5,945 $ 146,424 $ 8,267 $ 138,157
OM Oppenheimer Money Fund -- capital shares 365,850 $ 365,850 $ 365,850
OS Oppenheimer Strategic Bond Fund -- capital shares 2,565 $ 12,749 $ 28 $ 12,721
OSM Oppenheimer Small Capital Growth Fund -- capital
shares 3,426 $ 48,200 $ 8,250 $ 39,950
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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series VKEM* Series VKER* Series VKS*
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Investments
Van Kampen Emerging Growth Portfolio
(408 shares at net asset value of $46.23
per share; cost $17,630) $ 18,860
Van Kampen Enterprise Portfolio
(78 shares at net asset value of $26.11
per share; cost $2,025) $ 2,025
Van Kampen Strategic Stock Portfolio
(255 shares at net asset value of $11.73
per share; cost $3,009) $ 2,986
Receivable from Security First Life Insurance
Company for purchases 131 11
Other assets 2,004
-------------- -------------- --------------
TOTAL ASSETS 18,991 4,040 2,986
</TABLE>
*Series VKEM, VKER, and VKS commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series VKEM* Series VKER* Series VKS*
-------------- -------------- --------------
<S> <C> <C> <C>
LIABILITIES
Payable to Security First Life Insurance
Company for mortality and expense risk $ 7 $ 4
Payable to Mutual Funds 3,006 $ 2,005
Other liabilities 1,316
-------------- -------------- --------------
TOTAL LIABILITIES 4,329 2,005 4
NET ASSETS
Cost to Investors
Series VKEM Accumulation Units 13,432
Series VKER Accumulation Units 2,035
Series VKS Accumulation Units 3,005
Accumulated undistributed income (loss)
Net unrealized appreciation (depreciation) 1,230 (23)
-------------- -------------- --------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 14,662 $ 2,035 $ 2,982
============== ============== ==============
</TABLE>
*Series VKEM, VKER, and VKS commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series VKEM* Series VKER* Series VKS*
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Other investment income $ 131 $ 11
-------------- --------------
131 11
EXPENSES
Charges for mortality and expense risk 6 $ 4
-------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) 125 11 (4)
INVESTMENT GAINS (LOSSES)
Realized investment gains 20
Change in unrealized appreciation (depreciation)
on investments during the period 1,230 (23)
-------------- -------------- --------------
NET INVESTMENT GAINS (LOSSES) 1,230 20 (23)
-------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 1,355 $ 31 $ (27)
============== ============== ==============
</TABLE>
*Series VKEM, VKER, and VKS commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Series VKEM* Series VKER* Series VKS*
-------------- -------------- --------------
<S> <C> <C> <C>
OPERATIONS
Net investment income (loss) $ 125 $ 11 $ (4)
Realized investment gains 20
Change in unrealized appreciation (depreciation)
on investments during the period 1,230 (23)
-------------- -------------- --------------
Increase (decrease) in net assets resulting
from operations 1,355 31 (27)
Increase in net assets resulting from capital unit
transactions 13,307 2,004 3,009
-------------- -------------- --------------
TOTAL INCREASE IN NET ASSETS 14,662 2,035 2,982
NET ASSETS AT BEGINNING OF PERIOD
-------------- -------------- --------------
NET ASSETS AT END OF PERIOD $ 14,662 $ 2,035 $ 2,982
============== ============== ==============
</TABLE>
*Series VKEM, VKER, and VKS commenced operations during 1999.
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
<TABLE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
SCHEDULES OF INVESTMENTS
DECEMBER 31, 1999
<CAPTION>
Carrying Unrealized
Value Appreciation Cost
Series Name of Issue Shares (Note A) (Depreciation) (Note B)
- ------ -------------------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
VKEM Van Kampen Emerging Growth Portfolio -- capital
shares 408 $ 18,860 $ 1,230 $ 17,630
VKER Van Kampen Enterprise Portfolio -- capital shares 78 $ 2,025 $ 2,025
VKS Van Kampen Strategic Stock Portfolio -- capital
shares 255 $ 2,986 $ (23) $ 3,009
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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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 thirty-four 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 and Berman Partner's Trust, Neuberger and Berman
Genesis Trust, Janus Aspen Worldwide Growth Portfolio; Federated: Equity Income
Fund II, American Leaders Fund II, High Income Bond Fund II, Growth Strategy
Fund II; AIM: V.I. Balanced Fund, V.I. Capital Appreciation Fund, V.I. Value
Fund, V.I. International Equity Fund; Oppenheimer: Bond Fund, Strategic Bond
Fund, Main Street Growth and Income Fund, Money Fund, Small Capital Growth Fund;
MFS: Research Series, New Discovery Series, Growth with Income Series; Van
Kampen: Emerging Growth Portfolio, Enterprise Portfolio, Strategic Stock
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 thirty-eight series
of Accumulation Units, Series B, G, SU, SV, T, P, I, AS, SI, FA, FG, FI, FO, FC,
FE, FM, NP, NG, JW, FDE, FDA, FDH, FDG, AB, AC, AV, AI, OB, OS, OG, OM, OSM,
MFSR, MFND, MFSG, VKEM, VKER and VKS, 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. 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
45
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- BASIS OF PRESENTATION (CONTINUED)
Growth and Income Series by T. Rowe Price Associates, Inc., to the Security
First Trust Bond Series by Neuberger and Berman, and to the Security First Trust
Equity Series and to the Security First Trust U.S. Government Income Series by
Blackrock, Inc.
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.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
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:
Contract Type Annual Rate Daily Rate
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; SF 137; SF 135PB2 Contracts 1.40% .0000384
46
<PAGE>
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, if applicable, 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 $12.00 Based on elapsed time since premium received.
Terminates on or after 5th anniversary.
SF 224FL, SF1700 $40.00 Based on elapsed time since premium received.
SF137 Terminates on or after 6th anniversary.
SF 224R1, SF 230 * Based on elapsed time since premium received.
Terminates on or after 5th anniversary.
Group Form 226R1 $49.00*** Seven percent of premium received. Terminates
after 5th anniversary.
SF 234 $29.50 Five percent of premium received. Terminates after
6th anniversary.
SF 89, SF 228DC $19.50 Five percent of premium received. Terminates after
6th anniversary.
SF 135R2V ** None
SF135R2S, SF 135R2C, ** Based on elapsed time since premium received. SF 135PB2
Terminates on or after 7th anniversary.
</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).
47
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In addition, transaction charges of $10 are charged to the contract by Security
Life for each surrender or annuitization. Upon conversion of either accumulation
or annuity units from one series to another, a $10 conversion charge is charged
to the contract. The amount deducted for contract charges and CDSC was
$1,889,180 for the year ended December 31, 1999, and $1,507,924 for the year
ended December 31, 1998.
INCOME RECOGNITION AND REINVESTMENT -- Income is recognized as declared payable
by the investment companies. All distributions received are reinvested in the
investment companies.
ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principals 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 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.
48
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- CAPITAL TRANSACTIONS
<TABLE>
Additions and deductions to units of capital consisting of the effect of capital
unit transactions were as follows:
<CAPTION>
Additions to Capital Deductions From Capital
Period ended December 31, 1999: $ Units $ Units
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
SF 135R2C Contracts
-------------------
Series B Accumulation Units 3,879,029 399,289 1,585,715 163,843
Series G Accumulation Units 12,441,049 618,218 5,406,268 268,650
Series FA Accumulation Units 9,823,853 1,039,438 3,600,547 379,593
Series FG Accumulation Units 13,473,848 894,265 5,232,744 343,925
Series FI Accumulation Units 19,143,932 1,258,093 4,441,270 287,988
Series FO Accumulation Units 1,480,737 161,515 751,710 82,596
Series FC Accumulation Units 9,716,629 767,106 2,872,054 224,635
Series FE Accumulation Units 8,675,466 855,982 3,284,229 325,767
Series FM Accumulation Units 52,982,222 8,590,117 52,900,132 8,583,878
Series SU Accumulation Units 1,788,192 295,180 2,284,710 375,547
Series SV Accumulation Units 1,572,966 168,225 2,919,113 311,965
Series AS Accumulation Units 2,240,131 249,539 2,406,702 266,551
Series SI Accumulation Units 22,407 2,512 231,912 24,944
SF 226R1; SF 228DC Contracts
----------------------------
Series B Accumulation Units 2,923,431 300,938 1,549,441 159,625
Series G Accumulation Units 33,841,436 1,673,965 9,794,270 489,339
Series FA Accumulation Units 19,796,627 2,090,112 7,139,184 752,840
Series FG Accumulation Units 40,757,122 2,682,362 9,263,010 610,476
Series FI Accumulation Units 47,159,909 3,099,999 7,574,931 495,426
Series FO Accumulation Units 153,249 16,488 28,125 3,087
Series FC Accumulation Units 39,446,379 2,742,289 7,218,447 209,333
Series FM Accumulation Units 15,652,202 2,519,092 8,992,449 1,447,514
Series AS Accumulation Units 10,228,968 985,125 4,657,435 378,287
Series SI Accumulation Units 5,325,654 374,060 1,796,934 12,789
SF 135R2V; SF 224FL; SF 234;
----------------------------
SF 236FL; SF 1700 Contracts
---------------------------
Series B Accumulation Units 1,390,582 66,162 2,065,942 97,959
Series G Accumulation Units 18,197,048 287,571 20,791,421 331,437
Series T Accumulation Units 15,196,288 249,527 16,106,643 263,678
Series P Accumulation Units 639,600 42,834 373,411 24,908
Series I Accumulation Units 4,012,394 378,745 4,080,178 385,497
Series FA Accumulation Units 6,477,222 701,781 4,572,921 495,786
Series FG Accumulation Units 21,806,968 1,489,062 7,898,788 535,205
Series FI Accumulation Units 20,545,287 1,373,367 9,748,715 645,282
Series FC Accumulation Units 1,489,583 215,929 251,554 36,043
Series FM Accumulation Units 5,221,313 824,773 4,118,032 651,395
Series NP Accumulation Units 527,401 96,062 326,549 59,882
Series NG Accumulation Units 327,116 72,595 371,918 84,365
Series JW Accumulation Units 2,357,041 317,601 417,807 57,275
</TABLE>
49
<PAGE>
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 135R2S Contracts
-------------------
Series FG Accumulation Units 388,358 26,032 3,705,733 250,339
Series FO Accumulation Units 619,049 82,227 809,316 102,123
Series FM Accumulation Units 233,264 37,074 303,533 48,350
Series SU Accumulation Units 1,520,684 250,248 1,786,012 293,616
Series SV Accumulation Units 486,520 41,774 3,296,787 281,549
SF 224R1; SF 230 Contracts
--------------------------
Series B Accumulation Units 252,701 27,069 393,436 41,952
Series G Accumulation Units 5,929,107 278,576 7,450,853 349,422
Series FA Accumulation Units 4,969,669 532,470 5,044,076 537,353
Series FG Accumulation Units 9,949,143 660,122 5,105,474 333,783
Series FI Accumulation Units 7,365,528 482,527 3,350,516 216,338
Series FC Accumulation Units 3,118,505 246,490 352,632 28,519
Series FM Accumulation Units 3,479,589 558,639 2,700,408 433,379
Series SU Accumulation Units 61,844 9,991 7,946 1,311
Series AS Accumulation Units 383,568 41,717 49,567 5,213
Series SI Accumulation Units 394,838 38,591 71,785 7,556
SF 137; SF 135PB2 Contracts
---------------------------
Series AC Accumulation Units 19,886 3,366 0 0
Series AB Accumulation Units 102,132 19,732 0 0
Series AV Accumulation Units 254,072 46,870 46,619 8,406
Series AI Accumulation Units 36,471 5,839 7,182 1,012
Series FDE Accumulation Units 31,361 6,209 0 0
Series FDH Accumulation Units 99,972 20,053 25,170 5,052
Series FDA Accumulation Units 59,243 12,545 13 3
Series FDG Accumulation Units 129,905 23,320 16 2
Series OB Accumulation Units 11,029 2,197 3,007 601
Series OG Accumulation Units 143,933 28,584 6,029 1,146
Series OM Accumulation Units 1,511,091 299,928 1,147,097 227,369
Series OS Accumulation Units 14,611 2,874 2,006 391
Series OSM Accumulation Units 44,528 7,316 7,394 1,107
Series MFSG Accumulation Units 10,041 2,040 0 0
Series MFSR Accumulation Units 18,062 3,276 4,010 707
Series VKEM Accumulation Units 20,637 2,836 7,330 1,015
Series VKER Accumulation Units 4,009 687 2,005 344
Series VKS Accumulation Units 3,009 670 0 0
Series FG Accumulation Units 94,982 6,745 0 0
Series FI Accumulation Units 76,881 4,706 0 0
Series SU Accumulations Units 72,569 11,945 0 0
Series SV Accumulations Units 70,678 7,541 0 0
</TABLE>
50
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- CAPITAL TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
Additions to Capital Deductions From Capital
Year ended December 31, 1998: $ 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
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
</TABLE>
51
<PAGE>
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 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
</TABLE>
52
<PAGE>
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, 1999:
Units
Description Outstanding Unit Value
- -------------------------------------- ----------- ----------
SF 135R2C Contracts
-------------------
Series B Accumulation Units 1,121,069 $ 9.52
Series G Accumulation Units 2,960,147 20.15
Series FA Accumulation Units 4,750,510 10.09
Series FG Accumulation Units 4,069,842 18.36
Series FI Accumulation Units 4,254,649 16.83
Series FO Accumulation Units 899,318 11.82
Series FC Accumulation Units 3,199,511 14.51
Series FE Accumulation Units 3,611,711 10.11
Series FM Accumulation Units 2,274,077 6.29
Series SU Accumulation Units 2,303,022 5.97
Series SV Accumulation Units 1,812,317 10.32
Series AS Accumulation Units 2,180,116 11.93
Series SI Accumulation Units 122,934 12.69
SF 226R1; SF 228DC Contracts
Series B Accumulation Units 657,761 9.54
Series G Accumulation Units 5,808,561 20.18
Series FA Accumulation Units 9,842,875 10.10
Series FG Accumulation Units 10,212,262 18.39
Series FI Accumulation Units 8,754,667 16.85
Series FO Accumulation Units 61,753 11.83
Series FC Accumulation Units 11,065,052 14.53
Series FM Accumulation Units 2,221,857 6.31
Series AS Accumulation Units 4,972,727 11.95
Series SI Accumulation Units 1,276,154 12.71
SF 135R2V; SF 224FL; SF 234;
----------------------------
SF 236FL; SF 1700 Contracts
---------------------------
Series B Accumulation Units 298,640 20.69
Series G Accumulation Units 2,045,683 63.24
Series T Accumulation Units 1,789,101 70.45
Series P Accumulation Units 72,927 15.19
Series I Accumulation Units 1,745,913 13.40
Series FA Accumulation Units 2,903,366 9.88
Series FG Accumulation Units 4,600,696 17.92
Series FI Accumulation Units 3,426,417 16.63
Series FC Accumulation Units 331,062 7.94
Series FM Accumulation Units 1,037,376 6.45
Series NP Accumulation Units 309,008 5.62
Series NG Accumulation Units 234,545 4.75
Series JW Accumulation Units 521,370 10.39
53
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- UNITS OF CAPITAL (CONTINUED)
Units
Description Outstanding Unit Value
- -------------------------------------- ----------- ----------
SF 135R2S Contracts
-------------------
Series FG Accumulation Units 1,865,584 $ 18.16
Series FO Accumulation Units 1,437,343 10.18
Series FM Accumulation Units 215,601 6.41
Series SU Accumulation Units 3,047,222 5.98
Series SV Accumulation Units 3,395,590 13.04
SF 224R1; SF 230 Contracts
--------------------------
Series B Accumulation Units 221,674 9.17
Series G Accumulation Units 2,528,911 21.24
Series FA Accumulation Units 4,747,837 9.99
Series FG Accumulation Units 3,894,653 18.31
Series FI Accumulation Units 1,668,783 16.91
Series FC Accumulation Units 675,747 14.53
Series FM Accumulation Units 366,096 6.33
Series SU Accumulation Units 21,653 5.98
Series AS Accumulation Units 153,503 11.95
Series SI Accumulation Units 103,705 12.71
SF 137; SF 135PB2 Contracts
---------------------------
Series AC Accumulation Units 3,366 6.75
Series AB Accumulation Units 19,732 5.73
Series AV Accumulation Units 38,464 5.82
Series AI Accumulation Units 4,827 7.26
Series FDE Accumulation Units 6,209 5.45
Series FDH Accumulation Units 15,001 5.03
Series FDA Accumulation Units 12,542 4.88
Series FDG Accumulation Units 23,318 7.03
Series OB Accumulation Units 1,596 5.01
Series OG Accumulation Units 27,438 5.33
Series OM Accumulation Units 72,559 5.07
Series OS Accumulation Units 2,483 5.13
Series OSM Accumulation Units 6,209 7.91
Series MFSG Accumulation Units 2,040 5.12
Series MFSR Accumulation Units 2,569 5.81
Series VKEM Accumulation Units 1,821 8.05
Series VKER Accumulation Units 343 5.92
Series VKS Accumulation Units 670 4.45
Series FG Accumulation Units 6,745 18.36
Series FI Accumulations Units 4,706 16.83
Series SU Accumulation Units 11,945 5.97
Series SV Accumulation Units 7,541 10.32
54
<PAGE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
implemented a plan to resolve the issue. The Company believes that, with the
modifications made to existing software and conversions to new software and
hardware, the Year 2000 will not pose significant operational problems for the
Company's computer systems. However, there can be no assurances that the Year
2000 plan of the Company or that of its vendors or third parties have resolved
all Year 2000 issues.
55
<PAGE>
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 APRIL 3, 2000
The following is a list of subsidiaries of Metropolitan Life Insurance Company
("Metropolitan"). It is expected that Metropolitan will become a wholly-owned
subsidiary of MetLife, Inc. on or about April 7, 2000. MetLife, Inc. will become
a publicly-traded company at that time. 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)
h. Economy Fire & Casualty Company
i. Economy Preferred Insurance Company
j. Economy Premier Assurance Company
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.
e. MetLife Investment, S.A. 23rd Street Investment, Inc. holds one
share of MetLife Investments Limited and MetLife Investments,
S.A.
5. SSRM Holdings, Inc. (Delaware)
a. 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>
b. 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.
(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. 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 Financial Agency, Inc. (TX)
9. Natiloportem Holdings, Inc. (Delaware)
a. Services Administrativos Gen, S.A. de CV One Share of Servicos
Administrativos Gen. S.A. de C.V. is held by a nominee of
Natiloportem Holdings, Inc.
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. 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. MetLife (India) Ltd.
V. Hyatt Legal Plans, Inc. (Delaware)
1. Hyatt Legal Plans of Florida, Inc. (Fl)
W. 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%.
X. Metropolitan Realty Management, Inc. (Delaware)
1. Edison Supply and Distribution, Inc. (Delaware)
2. Cross & Brown Company (New York)
a. CBNJ, Inc. (New Jersey)
Y. MetPark Funding, Inc. (Delaware)
Z. Transmountain Land & Livestock Company (Montana)
AA. Farmers National Company (Nebraska)
1. Farmers National Commodities, Inc. (Nebraska)
A.B. MetLife Trust Company, National Association. (United States)
A.C. Benefit Services Corporation (Georgia)
A.D. G.A. Holding Corporation (MA)
A.E. MetLife, Inc.
A.F. CRH., Co, Inc. (MA)
A.G. 334 Madison Euro Investments, Inc.
A.H. Park Twenty Three Investments Company 1% Voting Control of Park Twenty
Three Investment Company is held by St. James Fleet Investments Two
Limited
a. Convent Stution Euro Investments Four Company 1% voting control of
Convert Stution Euro Investments Four Company is held by 334 Madison
Euro Investments, Inc. as nominee for Park Twenty Three Investments
Company.
A.I. L/C Development Corporation (CA)
A.J. One Madison Investments (Cayco) Limited 1% Voting Control of One Madison
Investment (Cayco) Limited is held by Convent Station Euro Investments
Four Company.
A.K. New England Portfolio Advisors, Inc. (MA)
A.L. 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.M. New England Life Mortgage Funding Corporation (MA)
A.N. 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.O. 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.P. St. James Fleet Investments two Limited.
<PAGE>
A.Q. 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)
(6) Hereford Insurance Agency of Wyoming, Inc.
(7) Hereford Insurance Agency of Oklahoma, Inc.
ii. TNE Information Services, Inc. (MA)
(1) First Connect Insurance Network, Inc. (DE)
(2) Interative Financial Solutions, Inc. (MA)
iii. 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)
iv. New England Securities Corporation
v. New England Investment Management Inc.
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)
A.R. General American Life
1. General American Life Insurance Company
a. GenAm Benefits Life Insurance Company
b. Paragon Life Insurance Company
c. Security Equity Life Insurance Company
d. Cova Corporation
i. Cova Financial Services Life Insurance Company
(1) Cova Financial Life Insurance Company
(2) First Cova Life Insurance Company
ii. Cova Investment Advisory Corporation
(1) Cova Investment Advisory Corporation
(2) Cova Investment Allocution Corporation
(3) Cova Life Sales Company
(4) Cova Life Administration Services Company
e. General Life Insurance Company
i. General Life Insurance Company of America
f. Equity Intermediary Company
i. Reinsurance Group of America, Incorporated
1. Reinsurance Company of Missouri Incorporated
a. RGA Reinsurance Company
b. Fairfield Management Group, Inc.
i. Reinsurance Partners, Inc.
ii. Great Rivers Reinsurance Management, Inc.
iii. RGA (U.K.) Underwriting Agency Limited
2. Triad Re, Ltd
3. RGA Americas Reinsurance Company, Ltd.
4. RGA Reinsurance Company (Barbados) Ltd.
(a) RGA/Swiss Financial Group, L.L.C.
5. RGA International Ltd.
(a) RGA Financial Products Limited
(b) RGA Canada Management Company, Ltd.
(i) RGA Life Reinsurance Company of Canada
6. Benefit Resource Life Insurance Company (Bermuda) Ltd.
<PAGE>
7. RGA Holdings Limited
(a) RGA Managing Agency Limited
(b) RGA Capital Limited
8. RGA South African Holdings (Pty) Ltd.
(a) RGA Reinsurance Company of South Africa Limited
9. RGA Australian Holdings Pty Limited
(a) RGA Reinsurance Company of Australia Limited
10. General American Argentina Seguros
11. RGA Argentina, S.A.
12. RGA Sudamerica, S.A.
(a) RGA Reinsurance
(b) BHIF American Seguros de Vida, S.A.
g. GenAm Holding Company
i. NaviSys Incorporated
ii. NaviSys Illustration Solutions, Inc.
iii. NaviSys Asia Pacifica Limited
iv. NaviSys de Mexico S.A. de C.V.
99% of the shares of NaviSys de Mexico S.A. de C.V. are held
by NaviSys Incorporated and 1% is held by General American
Life Insurance Company.
v. NaviSys Enterprise Solutions, Inc.
vi. Red Oak Realty Company
vii. White Oak Royalty Company
viii. GenMark Incorporated
(a) Stan Mintz Associates, Inc.
(b) GenMark Insurance Agency of Alabama, Inc.
(c) GenMark Insurance Agency of Massachusetts, Inc.
(d) GenMark Insurance Agency of Ohio, Inc.
(e) GenMark Insurance Agency of Texas, Inc.
ix. Conning Corporation
(a) Conning, Inc.
(i) Conning & Company
(1) Conning Asset Management Company
2. Collaborative Strategies, Inc.
3. Virtual Finances.Com, Inc.
4. Missouri Reinsurance (Barbados) Inc.
5. GenAmerican Capital I
6. GenAmerican Management
7. Walnut Street Securities, Inc.
a. WSS Insurance Agency of Alabama, Inc.
b. WSS Insurance Agency of Massachusetts, Inc.
c. WSS Insurance Agency of Ohio, Inc.
d. WSS Insurance Agency of Texas, Inc.
e. Walnut Street Advisers, Inc.
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) Reich & Tang Asset Management
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.
A.R. General American Life
1. General American Life Insurance Company
a. GenAm Benefits Life Insurance Company
b. Paragon Life Insurance Company
c. Security Equity Life Insurance Company
d. Cova Corporation
i. Cova Financial Services Life Insurance Company
(1) Cova Financial Life Insurance Company
(2) First Cova Life Insurance Company
ii. Cova Investment Advisory Corporation
(1) Cova Investment Advisory Corporation
(2) Cova Investment Allocution Corporation
(3) Cova Life Sales Company
(4) Cova Life Administration Services Company
e. General Life Insurance Company
i. General Life Insurance Company of America
f. Equity Intermediary Company
i. Reinsurance Group of America, Incorporated
1. Reinsurance Company of Missouri Incorporated
a. RGA Reinsurance Company
b. Fairfield Management Group, Inc.
i. Reinsurance Partners, Inc.
ii. Great Rivers Reinsurance Management, Inc.
iii. RGA (U.K.) Underwriting Agency Limited
2. Triad Re, Ltd
3. RGA Americas Reinsurance Company, Ltd.
4. RGA Reinsurance Company (Barbados) Ltd.
(a) RGA/Swiss Financial Group, L.L.C.
5. RGA International Ltd.
(a) RGA Financial Products Limited
(b) RGA Canada Management Company, Ltd.
(i) RGA Life Reinsurance Company of Canada
6. Benefit Resource Life Insurance Company (Bermuda) Ltd.
7. RGA Holdings Limited
(a) RGA Managing Agency Limited
(b) RGA Capital Limited
8. RGA South African Holdings (Pty) Ltd.
(a) RGA Reinsurance Company of South Africa Limited
9. RGA Australian Holdings Pty Limited
(a) RGA Reinsurance Company of Australia Limited
10. General American Argentina Seguros
11. RGA Argentina, S.A.
12. RGA Sudamerica, S.A.
(a) RGA Reinsurance
(b) BHIF American Seguros de Vida, S.A.
<PAGE>
g. GenAm Holding Company
i. NaviSys Incorporated
ii. NaviSys Illustration Solutions, Inc.
iii. NaviSys Asia Pacifica Limited
iv. NaviSys de Mexico S.A. de C.V.
99% of the shares of NaviSys de Mexico S.A. de C.V. are held
by NaviSys Incorporated and 1% is held by General American
Life Insurance Company.
v. NaviSys Enterprise Solutions, Inc.
vi. Red Oak Realty Company
vii. White Oak Royalty Company
viii. GenMark Incorporated
(a) Stan Mintz Associates, Inc.
(b) GenMark Insurance Agency of Alabama, Inc.
(c) GenMark Insurance Agency of Massachusetts, Inc.
(d) GenMark Insurance Agency of Ohio, Inc.
(e) GenMark Insurance Agency of Texas, Inc.
ix. Conning Corporation
(a) Conning, Inc.
(i) Conning & Company
(1) Conning Asset Management Company
2. Collaborative Strategies, Inc.
3. Virtual Finances.Com, Inc.
4. Missouri Reinsurance (Barbados) Inc.
5. GenAmerican Capital I
6. GenAmerican Management
7. Walnut Street Securities, Inc.
a. WSS Insurance Agency of Alabama, Inc.
b. WSS Insurance Agency of Massachusetts, Inc.
c. WSS Insurance Agency of Ohio, Inc.
d. WSS Insurance Agency of Texas, Inc.
e. Walnut Street Advisers, Inc.
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>
Mary Ann Brown Chairman of the Board and Director
John K. Bruins Director
Daniel J. Cavanagh Director
Margaret C. Fechtmann Director
David Y. Rogers Director
Anthony J. Williamson Director
Joseph W. Jordan 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 and 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
Roberta G. Isaeff Vice President
Ronald Plafkin Vice President
William G. Spangler Vice President
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 and Actuary
Ataollah Azarshahi Assistant Vice President and Actuary
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 March 31, 2000, there were 77 owners of the Contracts which are the
subject of this post-effective amendment.
Item 28. Indemnification
None
<PAGE>
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, Chairman, 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 C. Turner Vice President and Assistant Secretary
Cheryl J. Finney Vice President and Assistant Secretary
*Gary A. Virnick Vice President and Supervisor of Compliance
* not an officer
</TABLE>
Net
Name of Underwriting Compensation on
Principal Discount and Redemption or Brokerage
Underwriter Commissions* Annuitization Commission Compensation
- ----------- ------------ ------------- ---------- ------------
Security First None None None None
Financial, Inc.
*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 of 1940 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 recordkeeping
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>
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 28 day of April, 2000.
SECURITY FIRST LIFE SEPARATE ACCOUNT A
(Registrant)
By SECURITY FIRST LIFE INSURANCE COMPANY
(Sponsor)
By /S/ Richard C. Pearson
-----------------------------
Richard C. Pearson, President
As required by the Securities Act of 1933, this amended Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated:
Signature Title Date
- --------- ----- ----
/S/ Richard C. Pearson President, Chief Executive April 28, 2000
- ----------------------------- Officer, & Director
Richard C. Pearson
/S/ Jane F. Eagle Senior Vice President & April 28, 2000
- ---------------------------- Chief Financial Officer
Jane F. Eagle
/S/ Mary Ann Brown* Chairman of the Board & April 28, 2000
- ---------------------------- Director
Mary Ann Brown
/S/ John K. Bruins* Director April 28, 2000
- ----------------------------
John K. Bruins
/S/ Daniel J. Cavanagh* Director April 28, 2000
- ----------------------------
Daniel J. Cavanagh
/S/ Margaret C. Fechtmann* Director April 28, 2000
- ----------------------------
Margaret C. Fechtmann
Director ________, 2000
- ----------------------------
Joseph W. Jordan
Director ________, 2000
- ----------------------------
David Y. Rogers
/S/ Anthony J. Williamson * Director April 28, 2000
- ----------------------------
Anthony J. Williamson
/S/ Richard C. Pearson
- ----------------------------
*(Richard C. Pearson as
Attorney-in-Fact for each
of the persons indicated)
INDEPENDENT AUDITORS' CONSENT
Security First Life Separate Account A of
Security First Life Insurance Company:
We consent to (a) the use in this Post-Effective Amendment No. 1 to Registration
Statement No. 333-79625 under the Securities Act of 1933 on Form N-4 and in this
Amendment No. 120 to Registration Statement No. 811-3365 under the Investment
Company Act of 1940 of our report dated February 4, 2000 regarding Security
First Life Insurance Company and our report dated March 29, 2000 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 Statement, (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 Statement.
/s/ Deloitte & Touche LLP
Los Angeles, California
April 27, 2000
