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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 60 (File No. 2-29081) X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
Amendment No. 21 (File No. 811-1653) X
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IDS Life Variable Annuity Fund A (Individual and Employer)
IDS Tower 10, Minneapolis, Minnesota 55440-0010
(612) 671-3678
Mary Ellyn Minenko - IDS Tower 10, Minneapolis 55440-0010
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
X on May 1, 1997 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of rule 485
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to section 24-F of the Investment Company
Act of 1940. Registrant's Rule 24f-2 Notice for its most recent fiscal year was
filed on February 19, 1997.
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IDS Life Variable Annuity Fund A Post-Effective
(Individual and Employer) Amendment No. 60
Registration Form N-1
Cross reference sheet showing location in the prospectus of the information
called for by the items enumerated in Part I of Form N-1.
Negative answers omitted from prospectus are so indicated.
IDS LIFE VARIABLE ANNUITY FUND A (INDIVIDUAL AND EMPLOYER)
Section
Item No. In Prospectus
1 Cover
2 Summary of Contents
3 Financial Highlights
4(a) History
(b) Not Applicable
(c) Not Applicable
5(a) Investment Objective
(b) Investments the Fund will not make
(c) Investment objective
(d) Financial Highlights; Investment objective
6(a) Tax charges
(b) Tax charges; What about your taxes?
(c) Not Applicable
(d) Not Applicable
7(a) Brokerage
(b) Brokerage
(c) Brokerage
(d) Not Applicable
8 Not Applicable
9(a) Ownership of IDS Life and American Express
Financial Corporation
(b) Not Applicable
(c) Members of the Board of Managers and Officers of
the Fund
10 Members of the Board of Managers and Officers of
the Fund
11 Not Applicable
12(a) Custodian
(b) Not Applicable
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13(a) Investment agreements; Brokerage; Ownership of
IDS Life and American Express Financial
Corporation
(b) Not Applicable
(c) Not Applicable
(d) Not Applicable
14(a) Voting rights
(b) Not Applicable
15(a) Measuring the value of your contract; Dates we
revalue-Valuation date; The Valuation period;
Valuing Fund assets; The charges you pay
(b) Automated transfers and partial surrenders;
Valuing an annuity unit; Annuity payment starting
date; Table of settlement rates; Annuity payment
plans; Determination of monthly annuity payments
for deferred contracts; Determination of monthly
annuity payments for immediate contracts;
Surrendering your contract; Making withdrawals on
your contract; Special rules if the annuitant
dies before the annuity payment starting date;
Your right to cancel installment contracts
(c) Not Applicable
16(a) Investment agreements; Brokerage; Cover; Annuity
payment plans; The charges you pay; Making
withdrawals on your contract
(b) Directors and officers of IDS Life Insurance
Company; Other affiliations
(c) The charges you pay
(d) Not Applicable
17 Not Applicable
18 Financial statements; IDS Life Financial
Information
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IDS Life Variable Annuity Fund A
Individual Variable Annuity Contracts and Variable Annuity
Contracts for Employer Plans
Prospectus/May 1, 1997
IDS Life Variable Annuity Fund A (the Fund) is a segregated asset account of IDS
Life Insurance Company (IDS Life). The investment objective of the Fund is
long-term capital appreciation. The Fund invests primarily in common stocks of
U.S. corporations. The Fund also may invest in preferred stocks and in corporate
and government bonds.
This prospectus describes the following types of individual
non-tax-qualified, variable annuity contracts offered by IDS Life:
1) an annuity for use in connection with non-qualified retirement
or deferred compensation plans or programs adopted by an employer
that are not intended to qualify under Sections 401, 403, or 408 of
the Internal Revenue Code (the Code); 2) an installment payment
deferred annuity; 3) a single payment deferred annuity; and 4) a
single payment immediate annuity.
New contracts are not currently being offered. This prospectus gives you facts
about the Fund. You should read it and keep it with your investment records for
future reference.
The Fund is responsible only for statements included in this prospectus or in
authorized sales material.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
IDS Life Variable Annuity Fund A
IDS Tower 10
Minneapolis, Minnesota 55440-0010
General Information (612) 671-3733
Annuity Service (612) 671-4738
(800) 437-0602
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IDS Life Variable Annuity Fund A
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440-0010
Prospectus, May 1, 1997
Individual Variable Annuity Contracts and Variable Annuity
Contracts For Employer Plans
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Table of Contents Page
Summary of Contents...........................................
Financial highlights..........................................
The variable annuity..........................................
Investment objective..........................................
Investments the Fund will not make............................
Portfolio manager.............................................
Investment agreements.........................................
Brokerage.....................................................
The contracts.................................................
The fixed account.............................................
Automated transfers and partial surrenders....................
Measuring the value of your contract..........................
Valuing Fund assets...........................................
When we credit your purchase payments.........................
The investment factor.........................................
Valuing an accumulation unit..................................
Valuing an annuity unit.......................................
Annuity payment starting date.................................
Table of settlement rates.....................................
Annuity payment plans.........................................
The charges you pay...........................................
Surrendering your contract....................................
Making withdrawals on your contract...........................
Special rules if annuitant dies before
the annuity payment starting date.............................
Your right to cancel installment contracts....................
What about your taxes?........................................
Voting rights.................................................
Management....................................................
Directors and officers of IDS Life Insurance Company..........
Other Information.............................................
Insurance regulation..........................................
Financial statements..........................................
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Summary of Contents
About the variable annuity - The variable annuities are offered for sale through
the Fund, a diversified open-end management investment company. Variable annuity
contracts guarantee regular payments to contract purchasers. The amount of these
payments is influenced by the performance of the securities in which the Fund
invests (page __).
Financial highlights - This table shows important financial information you will
need to evaluate the Fund's performance (page __).
Investment objective - The Fund's investment objective is long-term capital
appreciation in order to build up values and to make annuity payments. The Fund
invests primarily in common stock and also may invest in preferred stock and in
government and corporate bonds. The Fund may invest in foreign securities,
futures contracts and options. There can be no guarantee the Fund will achieve
its investment objective because any investment involves risk (page __).
Portfolio manager - The Fund is managed by senior portfolio manager Mitzi
Malevich (page __).
Investment agreements - The Fund is a segregated asset account of IDS Life
Insurance Company, a stock life insurance company. The investments of the Fund
are managed by IDS Life pursuant to an Investment Management Agreement. Under
this agreement, IDS Life receives a management fee equal to 0.4% of the Fund's
average daily net assets for each year. Pursuant to a Distribution and Services
Agreement, IDS Life also serves as principal underwriter of the Fund. IDS Life
annually pays 0.25% of the Fund's net assets to American Express Financial
Corporation for investment advice regarding management of the Fund's investments
(page __).
Contracts - This prospectus describes the following types of individual
non-tax-qualified variable annuity contracts:
o An individual variable annuity contract for use in connection
with non-qualified retirement or deferred compensation plans
or programs adopted by an employer. These plans or programs
are not intended to qualify under Sections 401, 403, or 408 of
the Code. Under this contract, you make an annual purchase
payment. This payment must be at least equal to the larger of
an amount which, when multiplied by the number of contract
years between the application date and the retirement date,
equals (1) $3,000 or (2) $300 a year. This contract also
provides several optional settlement plans which may be
elected, except that if at the annuity payment starting date
the accumulation value of the contract is less than $2,000,
the accumulation value may be paid in a lump sum (page __);
o A single payment deferred annuity that can be purchased by
making an initial payment of at least $3,000 (page __);
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o A single payment immediate annuity that can be purchased by
making an initial payment of at least $3,000 (page __); and
o An installment payment deferred annuity that may be purchased by making
10 or more annual payments that total at least $300 (page __).
Who owns the contract? - The annuitant is the owner, unless your application
says otherwise, or if ownership of the contract is later transferred to someone
else.
If the contract described in this prospectus is purchased by an employer in
connection with a deferred compensation plan, the employer becomes the exclusive
owner of all rights under the contract. Any employee referred to in the contract
as an annuitant is called an annuitant solely for purposes of identification.
All funds payable under the contract are paid to and are the exclusive property
of the employer. No certificates are issued by IDS Life to any employee with
whom an employer has entered into a deferred compensation agreement. Any
employee participating in a deferred compensation plan should refer to the
deferred compensation agreement with his employer for information on any
additional charges in connection with the plan.
Transfers between accounts - Before the annuity payment starting date, you may
give IDS Life written or telephone instructions to transfer the contract value
of your investment between the fixed account and the variable account. Transfers
must be at least for $50 and go into effect when recorded by IDS Life at its
corporate office (page __).
Charges you pay - IDS Life will deduct a combined sales and administrative
charge from payments you make into the Fund.
For the individual variable annuity contract intended for use with non-qualified
plans adopted by an employer, the deduction is 5.75% of the first $10,000 paid
into the Fund, 4% of the next $40,000 and 2% of all amounts in excess of $50,000
(page __).
For the other three individual annuity contracts, if you make a single payment,
the deduction is 8% of the first $15,000, 5% of the next $10,000 and 2% of any
further amounts. If you choose to make installment payments, the deductions
average 8.7% over the first 10 years. You may lose money if you surrender your
individual installment contract too soon because the percentage that is deducted
is higher in the earlier years (20% for the first year of an installment payment
contract, 18% for the second and third contract years, 7% for the fourth year
and 4% thereafter) (page __).
Additionally, IDS Life may deduct for premium taxes. Most states don't have
premium taxes but in those that do, IDS Life may make a deduction. State premium
taxes range from 0 to 3.5% of the gross purchase payments. You may receive some
money in excess of the
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PAGE 9
amount requested if, as a result of your surrender, the Fund's state premium tax
liability is reduced (page __).
Surrendering your contract - You can surrender all or part of a deferred annuity
contract any time before the annuity payment starting date by giving IDS Life
written or telephone instructions. IDS Life will cash in the number of
accumulation units or fixed dollar accumulation value required for the amount of
money you request. The accumulation units will be given the accumulation unit
value determined on the date your request is received. However, you can't
surrender part of your contract if the remaining accumulation value is less than
$20. There can be no surrenders of any type after annuity payments have started.
You will pay income tax on the taxable part of your surrender and you may have
to pay an IRS penalty tax on early withdrawal if you surrender part or all of
your contract before reaching age 59-1/2.
A surrender may result in adverse tax consequences. You should consult a tax
advisor before making a surrender request (page __).
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Additional Information
For information about the Fund's history, organization and headquarters as well
as information about IDS Life and American Express Financial Corporation, see
page __.
Financial highlights from Jan 1, 1987 to Dec. 31, 1996
<TABLE>
<CAPTION>
Years ended Dec. 31, 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
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Accumulation unit value at
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of year $13.93 $10.27 $10.70 $ 9.77 $9.13 $6.10 $5.98 $4.58 $4.26 $3.35
Income from investment operations:
Net investment income (loss) (.07) (.02) .03 (.02) (.03) .02 .06 .05 .05 .03
Net gains (losses) on securities,
both realized and unrealized 3.18 3.68 (0.46) 0.95 0.67 3.01 .06 1.35 .27 .88
Total from investment operations 3.11 3.66 (0.43) 0.93 0.64 3.03 .12 1.40 .32 .91
of year $17.04 $13.93 $10.27 $10.70 $9.77 $9.13 $6.10 $5.98 $4.58 $4.26
Total return* 22.33% 35.64% (4.01)% 9.50% 6.97% 49.83% 1.97% 30.60% 7.56% 26.90%
Ratios/Supplemental Data
Total contract owner's equity
at end of year (000 omitted) $327,778 $284,407 $223,317 $241,623 $228,366 $222,205 $155,426 $163,568 $136,141 $140,773
Ratio of operating expenses
to average net assets 1.41% 1.40% 1.40% 1.40% 1.40% 1.41% 1.41% 1.43% 1.40% 1.40%
Ratio of net investment income
(loss) to average net assets (0.43)% (0.19)% 0.27% (0.17)% (0.30)% 0.22% 0.97% 0.99% 1.22% 0.67%
Portfolio turnover rate 13% 46% 63% 64% 74% 68% 56% 55% 66% 87%
Average brokerage commission rate** $.0550 -- -- -- -- -- -- -- -- --
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</TABLE>
*Total return does not reflect payment of a sales charge.
** Effective for 1996, the Fund is required to disclose an average brokerage
commission rate. The rate is calculated by dividing the total brokerage
commissions paid on applicable purchases and sales of portfolio securities for
the period by the total number of related shares purchased and sold.
This table pertains to accumulation units only. When you begin to receive your
annuity payments, accumulation units change to annuity units. The value of an
annuity unit (assuming a 3.5% investment rate) was $6.37 as of Dec. 31, 1996,
$5.39 as of Dec. 31, 1995, $4.11 as of Dec. 31, 1994, $4.44 as of Dec. 31, 1993,
$4.19 as of Dec. 31, 1992, $4.06 as of Dec. 31, 1991, $2.80 as of Dec. 31, 1990,
$2.84 as of Dec. 31, 1989, $2.25 as of Dec. 31, 1988 and $2.17 as of Dec. 31,
1987. The value of an annuity unit (assuming a 5% investment rate) was $4.21 as
of Dec. 31, 1996, $3.61 as of Dec. 31, 1995, $2.80 as of Dec. 31, 1994, $3.06 as
of Dec. 31, 1993, $2.93 as of Dec. 31, 1992, $2.88 as of Dec. 31, 1991, $2.02 as
of Dec. 31, 1990, $2.08 as of Dec. 31, 1989, $1.67 as of Dec. 31, 1988 and $1.63
as of Dec. 31, 1987.
The information in this table has been derived from financial statements of the
Fund that have been audited by Ernst & Young LLP, independent auditors. The
independent auditor's report and additional information about the performance of
the Fund are contained in the Fund's annual report, which if not included with
this prospectus, may be obtained without charge.
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PAGE 11
The variable annuity
An annuity is a contract with a life insurance company that guarantees regular
income to the purchaser. Most people buy annuities to provide income in their
retirement years. When most people think of an annuity, they are thinking of a
fixed dollar annuity. With a fixed dollar annuity, the insurance company bears
the risk of investment gain or loss and guarantees payment of an exact monthly
amount. A variable annuity also guarantees you regular payments. However, the
amount of the payments will fluctuate with the performance of the securities in
which the annuity fund invests. So if the securities go up in value, you may
receive larger annuity payments. If they go down, the amount of the annuity
payments you receive may be reduced.
Investment objective
The Fund's investment objective is long-term capital appreciation so that the
Fund can build up values and increase the size of annuity payments. There can be
no guarantee the Fund will achieve its investment objective because any
investment involves risk. The Fund's investment objective can be changed by IDS
Life without the approval of the Fund's contract holders, but IDS Life has no
intention of doing so.
The Fund invests primarily in U.S. common stocks. The Fund also
may invest in preferred stocks and in corporate and government
bonds. Some bonds issued by agencies of the U.S. government are
not supported by the full faith and credit of the United States.
The Fund may invest up to 30% of its total assets at the time of purchase in
foreign securities. In selecting foreign investments, the Fund generally will
seek to invest in companies that it anticipates will experience economic growth
at least as great as that anticipated in the U.S. companies in which it invests.
The securities that the Fund believes offer attractive opportunities for
investment may change from time to time. Foreign investments may be subject to
additional risks, including future political and economic developments, the
possible imposition of withholding taxes on dividend income, the seizure or
nationalization of companies, the establishment of exchange controls or the
adoption of other restrictions that might adversely affect an investment.
The Fund may invest in the securities of foreign issuers directly or in the form
of American Depository Receipts (ADRs). ADRs are receipts typically issued by an
American bank or trust company that evidence ownership of underlying securities
issued by a foreign corporation. Since investments in foreign securities will
involve currencies of foreign countries, the value of the Fund's assets as
measured in U.S. dollars may be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations. The Fund also may enter into
forward commitments for the purchase or sale of foreign currencies, but only in
connection with the settlement of foreign securities transactions and not for
speculative purposes.
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The Fund may enter into a forward contract to buy or sell foreign
currencies. For example, if the Fund believes the value of the
U.S. dollar will decline in relationship to a foreign currency, the
Fund will buy the foreign currency at today's price in U.S. dollars
agreeing to pay for the currency at a future date. If the U.S.
dollar declines, then the foreign currency can be sold for more
U.S. dollars than it cost and the Fund realizes a profit. The Fund
will not enter into forward contracts in excess of an offsetting
position of cash and investment in U.S. dollars. If the U.S.
dollar does not decline as expected, the Fund will sustain a loss
because of having entered into the forward contract.
The Fund may buy or write (sell) options traded on any U.S. or foreign exchange
or in the over-the-counter market. It may write covered call options on
individual securities. Options in the over-the-counter market will be purchased
only when the investment manager believes a liquid secondary market exists for
the options and only from dealers and institutions the investment manager
believes present a minimal credit risk. Some options are exercisable only on a
specific date. In that case, or if a liquid secondary market does not exist, the
Fund could be required to buy or sell securities at disadvantageous prices,
thereby incurring losses. In covered call options, the seller owns the
underlying security required to be sold upon exercise of the option.
Options can be used to produce incremental earnings, protect gains and
facilitate buying and selling securities. The writer of an option agrees to buy
or sell a security at a fixed price and could forgo a profit or incur a loss
from a change in the market price of the security. The purchaser of an option
pays a premium whether or not the option is exercised. If a liquid secondary
market does not exist at a particular time, it might not be possible to close an
option position when it is desirable to do so. The Fund may buy put and call
options as a trading technique.
For temporary purposes, the Fund may make certain investments. It may buy
short-term U.S. and Canadian government securities. It may invest in bank
obligations including negotiable certificates of deposit, non-negotiable fixed
time deposits, bankers' acceptances and documented discount notes (letters of
credit). The Fund may buy short-term corporate notes and obligations rated in
the top two classifications by Standard and Poor's, Moody's or the equivalent.
The Fund does not look to buy and sell stocks for the short-term, but will do so
if it is appropriate. The Fund may use repurchase agreements with broker-dealers
registered under the Securities Exchange Act of 1934 and commercial banks.
Repurchase agreements involve investments in debt securities where the seller
agrees to repurchase the securities at cost plus an agreed-to interest rate
within a specified time. A risk of a repurchase agreement is that if the seller
seeks the protection of the bankruptcy laws the Fund's ability to liquidate the
security involved could be impaired, and it might subsequently incur a loss if
the value of the securities declines or if the other party to a repurchase
agreement defaults on its obligation.
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PAGE 13
The Fund may enter into stock index futures contracts traded on any U.S. or
foreign exchange. The Fund may buy or write put and call options on these
futures and on stock indexes. These instruments may be considered speculative
and may expose the Fund to greater risk. Stock index futures contracts, options
on futures contracts and options on stock indexes must be used as a hedge. This
means they must be used to offset changes in the value of some or all the Fund's
existing investments in stocks or be offset by the Fund's cash position. The
futures contracts and related options may help the Fund to gain rapid exposure
or protect itself from changes in the market. Successful hedges depend on the
portfolio manager's ability to predict the future direction of stock prices or
interest rates. If the portfolio manager's prediction is incorrect, the Fund
would have been better off if no hedge had been made. Also, skills and
techniques necessary to arrive at such predictions are different from those
needed for predicting changes in individual stocks.
No more than 5% of the Fund's net assets can be used at any one time for good
faith deposits on futures and premiums for options on futures that do not offset
existing investment positions.
No securities will be bought on margin, nor will the Fund make any short sales
of securities.
The Fund will not invest in securities that are not readily marketable without
registration or the filing of a notification under the Securities Act of 1933
(1933 Act), or the taking of similar action under other securities laws relating
to the sale of securities, if immediately after the making of any such
investment more than 10% of the Fund's net assets (taken at market or other
current value) is invested in these securities. For valuation, see page __ of
this prospectus.
The Fund will not buy securities of any investment trust or investment company,
except by purchase in the open market where no commission or profit to a sponsor
or dealer results from a purchase other than customary broker's commission. The
Fund does not intend to invest in these securities but may do so to the extent
of not more than 15% of the Fund's net assets (taken at market or other current
value). The Fund will not invest in other mutual funds.
Notwithstanding any of the Fund's other investment policies, the Fund may invest
its assets in an open-end management investment company having substantially the
same investment objectives, policies and restrictions as the Fund for the
purpose of having those assets managed as part of a combined pool.
The investment policies described above may be changed by the board of managers.
For 1996, the Fund's portfolio turnover rate was 13%. For 1995, the Fund's
portfolio turnover rate was 46% and for 1994, the Fund's portfolio turnover rate
was 63%. Portfolio turnover results in brokerage costs and may affect the taxes
the Fund must pay.
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PAGE 14
The prices of the securities in which the Fund invests fluctuate daily. This
means that the value of your contract goes up and down. If values go down, your
contract may be worth less than what you paid for it.
Investments the Fund will not make
The Fund observes the following fundamental investment restrictions, that may
not be changed without approval by a vote of the contract holders:
o The Fund will not borrow money or property except as a temporary measure
for extraordinary or emergency purposes, and in an amount not exceeding
one third of the market value of its total assets (including borrowings)
less liabilities (other than borrowings) immediately after the
borrowing.
o The Fund shall not underwrite securities of other issuers.
However, this shall not preclude the purchase of securities
for investment, on original issue or otherwise, and shall not
preclude the acquisition of portfolio securities under
circumstances where the Fund would not be free to sell them
without being deemed an underwriter for purposes of the 1933
Act and without registration of these securities or the filing
of a notification under the 1933 Act, or the taking of similar
action under other securities laws relating to the sale of
securities.
o The Fund does not intend to concentrate investments in any particular
industry, but reserves freedom of action to do so provided that not more
than 25% of its total assets, taken at cost, may be so invested at any
one time.
o The Fund may invest up to 10% of its total assets, taken at cost, in
real properties, but will not do so as a principal activity.
o The Fund will not invest more than 5% of its total assets, at market
value, in securities of any one company, government or political
subdivision thereof, except that the limitation will not apply to
investments in securities issued by the U.S. government, its agencies or
instrumentalities and except that up to 25% of the Fund's total assets
may be invested without regard to this 5% limitation.
o The Fund will not buy securities of any issuer if immediately after, and
as a result of a purchase, the Fund would own more than 10% of the
outstanding voting securities of the issuer.
o The Fund may not make cash loans if the total commitment amount exceeds
5% of the Fund's total assets.
o The Fund will not buy or sell physical commodities unless acquired as a
result of ownership of securities or other instruments, except this
shall not prevent the Fund from
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PAGE 15
buying or selling options and futures contracts or from investing in
securities or other instruments backed by, or whose value is derived
from, physical commodities.
Portfolio manager
Mitzi Malevich joined American Express Financial Corporation in 1983 and serves
as vice president and senior portfolio manager. She was appointed to manage this
fund and IDS Life Variable Annuity Fund B (Fund B) in January 1995, and has
managed IDS Growth Fund since 1992. Prior to that, she was a portfolio manager
of pension fund accounts.
Investment agreements
IDS Life is the Fund's investment manager. Under the Investment Management
Agreement between IDS Life and the Fund, IDS Life charges a fee for managing the
Fund's investments. This amounts to 0.4% of the Fund's average daily net assets
for the year.
IDS Life does not keep all of this fee. IDS Life and American Express Financial
Corporation have an Investment Advisory Agreement that calls for IDS Life to pay
American Express Financial Corporation a fee for serving as investment advisor
for the Fund. The fee is 0.25% of the Fund's average daily net assets for the
year.
In addition to paying its own management fee, the Fund also pays all brokerage
commissions and charges in the purchase and sale of assets. Brokerage charges
are paid to IDS Life for reimbursement of charges incurred in the purchase and
sale of foreign securities.
An Investment Management Agreement and an Advisory Agreement were approved by
the contract holders on Dec. 30, 1983, as a result of the IDS/American Express
Company merger. Both agreements will continue each year as long as they are
approved:
o by a majority of the Board of Managers of the Fund or a
majority of the outstanding votes of the Fund, and
o by a majority of the Board of Managers of the Fund who are not
"interested persons" of IDS Life or American Express Financial
Corporation.
All votes by the Board of Managers must be taken at a meeting called
specifically to approve or disapprove the agreements and all votes must be cast
in person.
IDS Life may cancel either of its agreements without penalty, provided it gives
60 days' notice in writing. American Express Financial Corporation and the Fund
may do the same. If the Fund decides to cancel its management agreement with IDS
Life, it must have the approval of either the Board of Managers or a majority of
the votes of contract holders. If there is any assignment of either agreement it
ends immediately.
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PAGE 16
Brokerage
Under the Investment Management Agreement, IDS Life has responsibility for
making the Fund's investment decisions, for effecting the execution of trades
for the Fund's portfolio and for negotiating any brokerage commissions. IDS Life
intends to direct American Express Financial Corporation to execute trades and
negotiate commissions on its behalf. These services are covered by the
Investment Advisory Agreement between American Express Financial Corporation and
IDS Life. When American Express Financial Corporation acts on IDS Life's behalf
for the Fund, it follows the rules described here for IDS Life. Total brokerage
commissions paid by the Fund for each of the last three years were as follows:
$89,747 for 1996, $225,653 for 1995 and $310,227 for 1994. IDS Life intends to
continue to examine and consider ways available to reduce brokerage costs.
The Investment Management Agreement generally requires IDS Life to use its best
efforts to obtain the best available price and the most favorable execution.
However, brokerage firms may provide some extra services, including economic or
investment research and analysis. Sometimes it may be desirable to compensate a
broker for research or brokerage services by paying a commission that might not
otherwise be charged, or a commission in excess of what another broker might
charge. The Board of Managers has adopted a policy authorizing IDS Life to do so
to the extent authorized by law, if IDS Life determines, in good faith, that the
amount of commission is reasonable in relation to the value of the brokerage or
research services provided by the broker.
In purchases and sales of securities involving transactions not listed on an
exchange or in listed securities that are traded off of the exchange, the Fund
will deal with a market maker as principal, or a broker as agent, depending upon
the method believed to produce the best available price and most favorable
execution as described above. In transactions with a broker who acts as
principal, commissions are generally not stated separately, but are included in
the price of the securities.
American Express Financial Corporation gives investment advice to a number of
investment companies and mutual funds. Where more than one of these companies or
funds are interested in the same securities at the same time, American Express
Financial Corporation carries out the sale or purchase in a way that all agree
in advance is fair.
Sharing in a large transaction may affect the price or volume of shares
acquired. But by these transactions, the Fund hopes to gain an advantage in
execution.
The Fund may pay brokerage commissions to broker-dealer affiliates of IDS Life,
American Express Financial Corporation and American
Express Company.
<PAGE>
PAGE 17
The contracts
This prospectus describes the following types of individual non-tax-qualified
variable annuity contracts:
o An individual variable annuity contract offered for sale in connection
with an employer plan that, as of Dec. 8, 1981, had already purchased
one or more Fund annuity contracts. These plans or programs are not
intended to qualify under Sections 401, 403, or 408 of the Code. Your
purchase payment for this contract is made by a number of annual
payments;
o Installment payment - deferred annuity. You make purchase
payments in installments over a number of years. Annuity
payments will begin at some future date after all installments
have been paid;
o Single payment - deferred annuity. You make a single purchase
payment. Annuity payments are deferred until some future
date; and
o Single payment - immediate annuity. You make a single purchase payment.
Annuity payments will start within 60 days after IDS Life approves your
application.
The fixed account
The fixed account is an additional account to which you may choose to allocate
purchase payments and contract values. It provides guaranteed values and
periodically adjusted interest-crediting rates.
If you have a deferred annuity contract, you can change your mind from time to
time and apply all or part of your future purchase payments to the fixed
account.
Also, the contract provides that once each contract year, you can transfer
accumulation values of at least $250 from the variable account to the fixed
account or from the fixed account to the variable account. This right ends 30
days before annuity payments begin. Presently, IDS Life does not intend to limit
the number of transfers from the variable account to the fixed account; however,
transfers from the fixed account to the variable account are limited to one per
contract year. Just write or telephone IDS Life and indicate the dollar amount,
percentage of, or number of variable accumulation units to transfer from the
Fund or the amount of fixed dollar accumulation value to transfer to the Fund.
Automated transfers and partial surrenders
IDS Life currently allows deferred annuity contract holders to establish: (1)
automated transfers of contract values between the fixed account and variable
account; or (2) automated partial surrenders of contract values. Both services
can be in effect at
<PAGE>
PAGE 18
the same time and may be established through a one-time written or telephone
request to IDS Life.
The minimum transfer amount from any account or partial surrender amount from
the contract is $50 and such transfer or surrender can be made on a monthly,
quarterly, semi-annual or annual basis. You may start or stop this service at
any time but you must give IDS Life 30 days' notice to change any automated
transfer or surrender instructions that are currently in place. Automated
transfers or partial surrenders are subject to all of the other contract
provisions and terms including provisions relating to the transfer of money
between accounts. They are not available for 1969 Series Contracts that were
issued prior to May 1971.
Automated transfers from the fixed account may not exceed an amount that will
deplete the fixed account within 12 months. If you have made any type of
transfer from the fixed account, you may not transfer contract values from the
variable account back to the fixed account until the next contract anniversary.
Automated partial surrenders may be restricted by applicable law in some
contracts. In addition, the payment of additional purchase payments, if allowed
under the contract, while automated partial surrenders are in effect, may not be
appropriate and therefore, is not permitted.
IDS Life has the authority to honor any telephone requests believed to be
authentic and will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. As long as the
procedures are followed, neither IDS Life nor its affiliates will be liable for
any loss resulting from fraudulent requests. If IDS Life receives your transfer
and/or variable surrender request before its close of business (normally 3 p.m.
Central time), it will be processed that day. Calls received after its close of
business will be processed the next business day. At times when the volume of
telephone requests is unusually high, IDS Life will take special measures to
ensure that your call is answered as promptly as possible. A telephone surrender
request will not be allowed within 30 days of a phoned-in address change.
You may request that telephone withdrawals not be authorized from your account
by writing IDS Life.
Automated partial surrenders may result in income taxes and IRS penalty taxes
being applied to all or a portion of the amount surrendered. See the sections on
Tax charges and Surrendering your contract (page __).
Consult your tax advisor if you have any questions about the taxation of your
annuity.
Measuring the value of your contract
Because values are always changing with the performance of the Fund's
investments, it is not easy to measure value with a variable
<PAGE>
PAGE 19
annuity contract. For this reason, we use a technique that involves "units." The
performance of the Fund is measured by changes in the value of a single unit,
rather than the total value of the Fund. There are two kinds of units. As long
as you are paying into the Fund they are called "accumulation units." When you
begin to receive your annuity payments, they change to "annuity units."
o Accumulation units are used to measure the value of deferred annuity
contracts during the period before annuity payments are made.
number of your value of one total
accumulation x accumulation = accumulation
units unit value
When you buy a deferred annuity contract, your purchase payments will be
credited as accumulation units to your contract.
o Annuity units determine the value of each annuity payment. When you buy
an immediate annuity contract, your purchase payment will be credited as
annuity units to your account.
Under a deferred annuity contract, when annuity payments are to start, your
accumulation value will be converted into annuity units. From then on, your
annuity payments are based on the current annuity unit value.
number of your x annuity = value of one
annuity units unit value annuity payment
Dates we revalue units - Valuation date
Your units are valued at least once every seven days. At the present time, your
units are revalued each business day at the close of trading on the New York
Stock Exchange (NYSE). The Fund's securities also will be valued on any business
day there is a sufficient degree of trading in the Fund's portfolio securities
such that the current net asset value of units might be materially affected (if
on that day the Fund is required to sell or redeem securities). The net asset
value per share generally changes each day. During an emergency, the Fund can
suspend redemption. Such emergency situations would occur if:
o The NYSE closes for reasons other than the usual weekend and
holiday closings, or trading on the NYSE is restricted;
o Disposal of the Fund's securities is not reasonably
practicable, or it is not reasonably practicable for the Fund
to determine the fair value of its net assets, or
o The Securities and Exchange Commission under the provisions of
the Investment Company Act of 1940 (1940 Act) declares a
period of emergency to exist.
<PAGE>
PAGE 20
Splitting units
IDS Life can split accumulation or annuity units. It will only do so if it is in
the best interests of the contract holders, the annuitants and IDS Life.
The valuation period
The valuation period starts after the close of business on one valuation date
and ends with the close of business on the next valuation date.
Valuing Fund assets
The net value of the Fund's assets is determined at the start of each valuation
period by taking the total value of the Fund's assets and subtracting
liabilities. The Fund's portfolio securities are valued as follows:
o Securities traded on national securities exchanges are valued at the
last quoted sales price on that day. If a particular security hasn't
been traded on a certain day, we take the average price between the last
bid (offer to buy) and the last asked (offer to sell) price.
o Securities with readily available market quotations but without a
listing on an exchange also are valued at the average between the last
bid and the last asked price.
o Short-term securities maturing more than 60 days from the
valuation date are valued at the market price or approximate
market value based on current interest rates. Short-term
securities maturing in 60 days or less but that originally had
maturities of more than 60 days at the acquisition date are
valued on an amortized cost basis using the market value on
the 61st day before maturity. Short-term securities maturing
in 60 days or less at the acquisition date are valued at
amortized cost. (Amortized cost is an approximation of market
value determined by systematically increasing the carrying
value of a security if acquired at a discount, or
systematically reducing the carrying value if acquired at a
premium, so that the carrying value is equal to maturity value
on the maturity date.)
o Securities and other assets without a ready market price are valued at
fair value. The Board of Managers is responsible for using valuation
methods that they believe give fair value. In cases like this, they may
use an outside organization to value these securities. These
organizations may use methods that take into consideration yields,
trading characteristics and other market data.
<PAGE>
PAGE 21
When we credit your purchase payments
IDS Life credits each purchase payment at the end of the valuation period during
which it received and accepted the payment at its corporate office.
The investment factor
On each valuation date, an investment factor is calculated for the valuation
period. This factor measures the Fund's investment performance during the
period. Here is how the investment factor is determined:
First, the investment income for the period is determined by combining the
Fund's income (interest and any dividends), net realized and unrealized capital
gains or losses on investments and expenses. Then, the net investment rate is
determined by dividing the Fund's net investment income by the net value of the
Fund's assets at the beginning of the valuation period.
Finally, the investment factor for any valuation period is the sum of 1 plus the
net investment rate. If the Fund has a negative investment rate for a period,
the investment factor will be less than 1.
Valuing an accumulation unit
Accumulation units are used to measure the value of your contract during the
period before annuity payments begin. The value of an accumulation unit is
determined by multiplying the accumulation unit value for the last valuation
period by the investment factor for the current period.
Here is an example: Assume the Fund's assets at the start of the day were $1
million and the investment income for the day was $2,000. The total expenses
were $398.35 and the value of an accumulation unit the day before was $1.101000.
Step 1. First, the net investment income is determined. This is
income minus expenses or $1,601.65 ($2,000 - $398.35).
Step 2. Next the investment rate is determined. This is the net investment
income divided by the assets at the start of the day or 0.001602 ($1,601.65
divided by 1,000,000).
Step 3. The investment factor is one plus the investment rate, or 1.001602.
Step 4. Finally, the value of an accumulation unit is determined by multiplying
yesterday's accumulation unit value by the investment factor. The current value
of an accumulation unit comes out to $1.102764 (1.101000 x 1.001602).
<PAGE>
PAGE 22
Valuing an annuity unit
When you are ready to receive annuity payments, your accumulation units are
exchanged for annuity units. Annuity units measure each variable annuity
payment. To determine the value of an annuity unit, the annuity unit value on
the last valuation date is multiplied by the product of (1) the investment
factor for the current period, and (2) the neutralizing factor.
The neutralizing factor removes the assumed investment rate that is built into
the variable annuity tables in your contract. The neutralizing factor for a
one-day valuation period is 0.999866, when the usual 5% assumed investment rate
is used.
Here is a shortcut for calculating the value of an annuity unit: Substitute the
term "annuity unit" for the term "accumulation unit" each time it appears in the
example used for calculating accumulation unit values.
Then take the answer in Step 4 ($1.102764) and multiply it by the neutralizing
factor (0.999866). The answer is the current value of an annuity unit, or
$1.102616.
The assumed investment rate is not always 5%. For example, contracts subject to
Texas law cannot use more than a 3.5% investment rate. You can request a 3.5%
investment rate by sending a written request to IDS Life at its home office. The
current policy of IDS Life is to grant a request received no later than 30 days
before settlement.
Why would you want a lower assumed investment rate? The value of an annuity unit
will rise or fall to the extent that the actual investment rate for the period
is more or less than the assumed investment rate. A lower assumed rate produces
a lower initial annuity payment, but later payments will rise faster if unit
values are going up. Later payments will fall more slowly if unit values are
dropping.
Annuity payment starting date
For individual deferred contracts paid for in annual installments, the annuity
payment starting date selected must be at least 10 years after the date of your
application. You can change the payment date at any time not less than 30 days
before annuity payments are to start.
For single payment deferred contracts, the annuity payment starting date must be
at least 60 days after the application date.
For immediate contracts, the annuity payment starting date must be no later than
60 days after the application date.
For employer plans, the annuity starting date must be at least so many years
after the application date that the number of years multiplied by the annual
purchase payment equals or exceeds $3,000.
<PAGE>
PAGE 23
For all contracts the annuity payment starting date must come before (whichever
one is later):
o the contract anniversary nearest the annuitant's 75th
birthday, or
o the 30th contract anniversary.
Table of settlement rates
Settlement rates are based on the Progressive Annuity Table assuming all births
in 1900. To determine the rate applicable at settlement, we look at the
annuitant's birthday nearest the settlement date and subtract an adjustment
according to the following chart.
Calendar year of Adjustment for
annuitant's birth Male Female
- ------------------------------------------------------
Prior to 1920...................... 0 4
1920 through 1939.................. 1 5
1940 through 1954.................. 2 6
1955 through 1969.................. 3 7
After 1969......................... 4 8
- ------------------------------------------------------
In Arizona Governing Committee for Tax Deferred Annuity and Deferred
Compensation Plans, etc. et al. v. Nathalie Norris, etc., the United States
Supreme Court decided that Title VII of the Civil Rights Act of 1964 prohibits
an employer from offering its employees the option of receiving retirement
benefits from one of several companies selected by the employer, all of which
pay a woman lower monthly retirement benefits than a similarly situated man. The
Court ordered that all retirement benefits derived from contributions made on
and after Aug. 1, 1983, must be calculated without regard to the sex of the
annuitant.
IDS Life has been administering contributions received since Aug. 1, 1983, on
the company's in-force annuity contracts to provide retirement benefits without
regard to the sex of the annuitant in those markets which are affected by the
Norris decision. Annuity contract amendments also have been developed for new
contracts in order to assure continued compliance by employers with the
obligations imposed on them by the Norris decision.
Annuity payment plans
You may select on the application how you want annuity payments made and when
the payments are to begin. If you have a deferred annuity contract you may
change your payment plan at any time at least 30 days before the annuity payment
starting date.
Here are the plans available for all annuity contracts as described in this
prospectus:
<PAGE>
PAGE 24
Plan A - An annuity is paid each month during the lifetime of the annuitant. No
payments are made after the annuitant's death, therefore, it is possible to
receive only one annuity payment if the annuitant dies shortly after annuity
payments begin.
Plan B - An annuity is paid each month during the lifetime of the annuitant with
the additional guarantee that payments will be made for at least five, 10, or 15
years as you select.
Plan C - An annuity is paid each month during the lifetime of the annuitant with
the additional guarantee that payments will be made for a period not less than
the number of months determined by dividing the amount applied to Plan C by the
amount of the first monthly annuity payment.
Plan D - An annuity is paid each month during the lifetimes of two named
annuitants. When the first annuitant dies, payments continue for the lifetime of
the survivor. No payments are made after the survivor's death unless you ask for
the Plan D option. This provides payments for a guaranteed period as in Plan B
or Plan C. A beneficiary of a variable annuity contract may ask for a lump-sum
payment under Plan B or Plan C. IDS Life will not grant the request if you asked
us not to.
If no plan has been selected by the annuity payment starting date, Plan B with
120 guaranteed monthly payments will be used.
If the value of the contract is less than $2,000 on the annuity payment starting
date, the accumulation value may be paid in a lump-sum.
Determination of monthly annuity payments for deferred contracts
When annuity payments are to begin, the first monthly variable annuity payment
is computed on the valuation date on or right before the seventh day before the
annuity payment starting date.
The computations are made using the table of settlement rates in your contract
unless an optional table is agreed upon. A different table is used if you have
elected a 3.5% assumed investment rate. The amount of the first payment is
divided by the annuity unit value to give the number of annuity units for your
contract.
Each monthly payment after the first one will be determined by multiplying the
number of annuity units by the current annuity unit value. Payouts made by check
will be computed on the valuation date on or right before the fifth day before
the annuity payment date. Payouts made by a transfer to another IDS fund account
will be computed on the valuation date on or right before the annuity payment
date.
Here is an example: Assume the variable accumulation value on the valuation date
seven days before the annuity payment starting date was $30,000 and the plan you
selected produces an initial payment
<PAGE>
PAGE 25
of $6 for each $1,000 of accumulation value. Ignoring premium
taxes, if any, the first payment would be $180 (30 x $6 = $180).
Now assume the annuity unit value on the valuation date seven days before the
annuity payment starting date is $1.800000. The number of annuity units for your
contract is 100 ($180 divided by $1.800000 = 100). Ordinarily, the value of the
same number of annuity units will be paid each month.
Determination of monthly annuity payments for immediate contracts
The number of your annuity units is multiplied by the value of one unit. The
value of one unit is determined on the valuation date on or right before the
seventh day before the annuity payment is due. The following example shows how
the number of your annuity units is determined: Assume the net purchase payment
is $30,000 and the conversion factor, based on actuarial tables and the contract
you selected, is $5.50.
Assume the value of one annuity unit on the valuation date is $1.500000.
First divide the net purchase payments by $1,000: $30,000 divided
by $1,000 = $30. Next, multiply the answer by the conversion
factor: $30 x $5.50 = $165.
Divide the answer by the value of one unit. This gives the number
of annuity units paid out each month: $165 divided by $1.500000 =
110 units.
The charges you pay
1) Sales and administrative charges
The tables below show the deductions from your purchase payments for sales and
administrative charges. The net amount invested is the total purchase payments
minus the deduction for sales and administrative charges.
<TABLE>
<CAPTION>
Single payment contracts
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total charge Total deduction
Part of the Deduction Deduction for as percentage of as percentage of
total purchase for sales administrative total purchase net amount
payment charge charge payment invested
----------------------------------------------------------------------------------------------------
First $15,000 6% 2% 8% 8.70%
Next $10,000 4 1 5 5.26
Over $25,000 1.5 0.5 2 2.04
----------------------------------------------------------------------------------------------------
Installment payment contracts (other than employer plan contracts)
----------------------------------------------------------------------------------------------------
Total charge Total deduction
Deduction Deduction for as percentage of as percentage of
for sales administrative total purchase net amount
Contract year charge charge payments invested
----------------------------------------------------------------------------------------------------
1st 18% 2% 20% 25.00%
2nd & 3rd 16 2 18 21.95
4th 5 2 7 7.53
<PAGE>
PAGE 26
5th and after 2 2 4 4.17
If kept through 10 years 6.7 2 8.7 9.53
----------------------------------------------------------------------------------------------------
Employer plan -- annual purchase contracts
----------------------------------------------------------------------------------------------------
Part of Deduction Deduction Total Total
the total for for charge as deduction as
purchase sales administrative percentage of total percentage of net
payment charge charge purchase payments amount invested
----------------------------------------------------------------------------------------------------
First $10,000 3.75% 2% 5.75% 6.10%
Next $40,000 2 2 4 4.17
Excess over $50,000 0.5 1.5 2 2.04
----------------------------------------------------------------------------------------------------
</TABLE>
Pursuant to a Distribution and Services Agreement with the Fund, IDS Life is the
principal underwriter and performs all sales and administrative duties. It pays
salaries, sales commissions, legal, accounting, auditing or actuarial fees and
death benefits under deferred variable annuity contracts. The deductions for
sales and administrative charges came to $83,478 for 1996, $91,903 for 1995 and
$91,643 for 1994.
The sales and administrative charge may be reduced or eliminated, but only to
the extent IDS Life anticipates that it will incur lower sales and
administrative expenses or perform fewer services due to economies arising from
the size of the particular group, the average contribution per participant and
the utilization of mass enrollment procedures. Generally, this will occur with
programs established by an employer for all employees or for all employees in a
class, wherein employees do not individually elect to participate in the
program.
2) Premium taxes
Some states may charge a premium tax in an amount of up to 3.5%. If a state
requires payment of a premium tax on your contract, a deduction will be made
from your purchase payments or from your contract's accumulation value.
3) Increases in life expectancy and administrative expenses
IDS Life will bear any expenses that occur because of an increase in
administrative expenses, or because of an increase in the life expectancy of
people receiving variable annuity payments. But, it is not responsible for
increases in brokers' fees and transfer taxes on the purchase and sale of
assets.
For bearing this risk, IDS Life charges the Fund a fee equal to 1% of the Fund's
average daily net assets for the year. This came to $3,105,070 for 1996,
$2,556,131 for 1995 and $2,323,727 for 1994.
If the fee is more than enough to cover the increases, IDS Life will keep the
difference. If the fee is not enough, IDS Life bears the loss.
<PAGE>
PAGE 27
4) Charge for investment management
For acting as investment manager, IDS Life charges the Fund a fee equal to 0.4%
of the Fund's average net assets for the year, less any brokerage credits. This
came to $1,242,190 for 1996, $1,022,508 for 1995 and $929,540 for 1994.
5) Tax charges
IDS Life is taxed as a life insurance company under Subchapter L of the Code.
The Fund is treated as part of IDS Life for federal income tax purposes. IDS
Life must pay all taxes that come about because of the Fund. For this reason,
IDS Life can charge the Fund for tax charges. Under current federal income tax
law, no taxes are payable with respect to any income of the Fund.
Investment results credited to a contract are not taxed until annuity benefits
are received.
Surrendering your contract
You can surrender all or part of your annuity contract any time before the
annuity payment starting date. There can be no surrender in whole or in part
after annuity payments have started.
For a discussion of automated partial surrenders, see page __.
Make your request to IDS Life in writing. IDS Life will cash in the number of
accumulation units for the amount you request. The units are valued on the day
your request is received in our Minneapolis home office. You cannot surrender
part of your contract if the remaining accumulation value will be less than $20,
and you cannot repay any amount you surrender. A check usually will be mailed to
you within seven days after we process your request. However, IDS Life can delay
sending your check until we are sure we have received good payment for the
accumulation units you want to surrender.
You may receive extra money if the Fund's state premium tax liability is reduced
as a result of your surrender. If it is, you will receive either the amount of
the reduction or the amount already deducted from your purchase payments for
premium taxes, whichever is less.
Your surrender may result in adverse tax consequences. Consult a qualified tax
advisor before requesting a surrender.
Making withdrawals on your contract
You can make a temporary withdrawal on your contract any time before the annuity
payment starting date. The least you can withdraw, including charges, is $250.
The most you can withdraw is the sum of your purchase payments less any amounts
you previously surrendered. There may be no more than one temporary withdrawal
<PAGE>
PAGE 28
outstanding at any one time. A charge of 2% of your withdrawal will be made at
the time of withdrawal in order to cover the administrative costs of IDS Life.
You must pay your withdrawal back within two years. Your repayment will be used
to buy accumulation units at their current price. However, you cannot make a
repayment after the annuity payment starting date. There are no sales charges.
If you do not pay your withdrawal back within two years, IDS Life will regard it
as if you surrendered that part of your contract.
How do you repay your withdrawal? Inform IDS Life in writing. Otherwise your
regular purchase payments will be used toward repayment. What is left after you
fully repay your withdrawal will go toward your regular purchase payments. Any
amount of your purchase payment left over after repayment must be at least $10.
o Example: You make a withdrawal of $295 and your next purchase payment is $300.
Instead of applying $295 toward the withdrawal and $5 toward the purchase
payment, we will apply $290 toward the withdrawal and $10 toward the purchase
payment. Now you owe $5 on your withdrawal. This amount will be taken out next
time.
Keep track of all your withdrawals and surrenders. If your accumulation value
falls to zero, your account will be closed.
Special rules if the annuitant dies before the annuity payment
starting date
Under a deferred annuity contract, if the annuitant dies before annuity payments
begin, the beneficiary will receive the greater of:
o the sum of all purchase payments minus surrenders and unrepaid
withdrawals; or
o the accumulation value of the contract.
If the annuitant dies on or after the contract anniversary date nearest his or
her 75th birthday, only the accumulation value will be paid to the beneficiary.
Your right to cancel installment contracts
You will receive a Statement of Charges and a Notice of Cancellation Rights
within 60 days after the contract is sent to you. You will have 45 days from the
time this notice was sent to you to cancel your installment contract. You will
receive the current accumulation value of your account plus any amounts deducted
for taxes and charges.
What about your taxes?
Part of the annuity payment you receive is taxed as ordinary income
<PAGE>
PAGE 29
and part is excluded from income as your investment in the contract under
Section 72 of the Code.
The income earned on an annuity contract held by such entities as corporations,
partnerships or trusts generally will be treated as ordinary income received
during that year. This provision is effective for annuity contract purchase
payments made after Feb.
28, 1986.
If you surrender all or part of the contract before your annuity payment
starting date, the federal income tax consequences will depend on when you made
your purchase payments. For amounts allocable to purchase payments made after
Aug. 13, 1982, the amount of any partial surrender will be taxed as ordinary
income to the extent that contract value exceeds the owner's investment in the
contract. In addition, a 10% penalty tax will be imposed on the amount of any
surrender proceeds that is includable in the owner's income. However, the
penalty tax would not affect any surrender occurring after (1) the owner reaches
age 59-1/2, (2) death of the owner (or the death of the primary annuitant if the
owner is not an individual), (3) the owner's disability, or (4) if the
distribution is part of a series of substantially equal periodic payments over
the life or life expectancy of the owner (or joint lives or life expectancy of
the owner and beneficiary).
Any amount received as a withdrawal and the value of any part of an annuity
contract pledged or assigned as collateral is taxed as a cash withdrawal to the
extent allocable to investment in annuity contracts after Aug. 13, 1982.
Amounts allocable to earlier purchase payments will be taxed as ordinary income
to the extent the amount surrendered exceeds the owner's investment in the
contract and will not be subject to the 10% penalty tax.
Unlike life insurance proceeds, the death benefit under an annuity contract is
not tax exempt. The gain, if any, is taxable as ordinary income to the
beneficiary in the year(s) he or she receives the payments.
The contract is intended to qualify as an annuity for federal income tax
purposes. To that end, the provisions of the contract are to be interpreted to
ensure or maintain such tax qualification, notwithstanding any other provisions
of the contract. We reserve the right to amend the contract to reflect any
clarifications that may be needed or are appropriate to maintain such
qualification or to conform the contract to any applicable changes in the tax
qualification requirements. We will send you a copy of any such amendment.
Important: This discussion of federal tax laws is based upon IDS
Life's understanding of these laws as they are currently
interpreted. Federal tax laws or current interpretations of them
may change. For this reason and because tax consequences are
<PAGE>
PAGE 30
complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
Voting rights
Voting rights of contract holders are granted and defined by the regulations of
the Fund. To the extent permitted under the 1940 Act, these voting rights may be
modified by IDS Life without submission to a vote of a majority of the
outstanding voting units.
Variable contract holders can vote on:
o any changes in fundamental investment restrictions;
o the approval of and any changes to the investment management and
advisory agreements;
o the election of the Board of Managers; and
o the acceptance of the Fund's independent auditors.
A variable contract holder with accumulation units has a number of votes equal
to the number of accumulation units owned. Under a contract where annuity
payments have started, the number of votes is determined by dividing the present
value of all future annuity payments by the value of one accumulation unit on
the record date. So there may be a gradual decline in the number of votes to
which a contract holder is entitled as annuity payments continue to be made
under the contract. The record date will be set by the Board of Managers not
more than 60 days before the regular meeting or any special meeting of variable
contract holders. Cumulative voting is not authorized.
Management
Members of the Board of Managers and officers of the Fund
Richard W. Kling*
Chairman of the Board of Managers and President
IDS Tower 10
Minneapolis, MN
Director of IDS Life Insurance Company since February 1984; President since
March 1994. Executive Vice President, Marketing and Products from January 1988
to March 1994. Senior Vice President, American Express Financial Corporation,
since 1994.
Director of IDS Life Series Fund, Inc.
Edward Landes
Member of the Board of Managers
30 South 9th Street
Minneapolis, MN
Development consultant. Director of Endowment Development, YMCA of Metropolitan
Minneapolis since 1996. Vice President for Financial Development, YMCA of
Metropolitan Minneapolis from 1985 to 1995.
<PAGE>
PAGE 31
Former sales manager - Supplies Division and district manager Data Processing
Division of IBM Corporation. Retired 1983.
Carl N. Platou
Member of the Board of Managers
312 South 6th Street
Minneapolis, MN
President Emeritus and Chief Executive Officer, Fairview Hospital
and Healthcare Services. Director, St. Thomas University since
1990.
Gordon H. Ritz
Member of the Board of Managers
404 WCCO Radio Building
Minneapolis, MN
Director, Mid-America Publishing and Atrix International, Inc.
Former president, Com Rad Broadcasting Corp. Former director,
Sunstar Foods.
Morris Goodwin Jr.*
Vice President and Treasurer
IDS Tower 10
Minneapolis, MN
Vice President and Treasurer, IDS Life, since March 1994. Vice
President and Corporate Treasurer, American Express Financial
Corporation, since July 1989.
Lorraine R. Hart*
Vice President, Investments
IDS Tower 10
Minneapolis, MN
Vice President - Insurance investments of American Express
Financial Corporation since 1989. Vice President - Investments of
IDS Life since 1992.
Jeffrey S. Horton*
Vice President and Controller
IDS Tower 10
Minneapolis, MN
Vice President and Controller since July 1996.
Timothy S. Meehan*
Secretary
IDS Tower 10
Minneapolis, MN
Secretary of American Express Financial Corporation, American
Express Financial Advisors Inc. and IDS Life Series Fund, Inc.
since October 1995. Senior counsel to American Express Financial
Corporation since 1995. Counsel from 1990 to 1995.
<PAGE>
PAGE 32
William A. Stoltzmann*
General Counsel and Assistant Secretary
IDS Tower
Minneapolis, MN
Vice President and Assistant General Counsel, American Express Financial
Corporation, since November 1985 and Vice President, General Counsel and
Secretary, IDS Life, since December 1989.
*Interested person of the Fund by reason of being an employee of IDS Life or
American Express Financial Corporation.
You vote at each regular meeting for the Fund's Board of Managers. Members who
are not salaried employees of IDS Life or one of its affiliates receive up to
$4,000 annually for serving on the Board.
All officers of the Fund are salaried employees of IDS Life or American Express
Financial Corporation and receive no remuneration from the Fund. The officers
and managers of the Fund aggregately hold less than 1% of the outstanding voting
units.
Directors and officers of IDS Life Insurance Company*
The Directors:
David R. Hubers
Director since September 1989; President and Chief Executive Officer, American
Express Financial Corporation, since August 1993 and Director, American Express
Financial Corporation, since January 1984. Senior Vice President, Finance, and
Chief Financial Officer, American Express Financial Corporation, from January
1984 to August 1993.
Richard W. Kling
Director since February 1984; President since March 1994; Executive Vice
President, Marketing and Products from January 1988 to March 1994. Senior Vice
President, American Express Financial Corporation, since May 1994, Vice
President from 1988 to 1994. Director of IDS Life Series Fund, Inc. and Chairman
of the Board of Managers and President of IDS Life Variable Annuity Funds A & B.
Paul F. Kolkman
Director since May 1984; Executive Vice President since March 1994; Vice
President, Finance from May 1984 to March 1994; Vice President, American Express
Financial Corporation, since January 1987. Vice President and Chief Actuary of
IDS Life Series Fund, Inc.
James A. Mitchell
Chairman of the Board since March 1994; Director since July 1984; Chief
Executive Officer since November 1986; President from July 1984 to March 1994;
Executive Vice President, American Express Financial Corporation, since March
1994; Director, American Express Financial Corporation, since July 1984. Senior
Vice President, American Express Financial Corporation, from July 1984 to March
1994.
<PAGE>
PAGE 33
Barry J. Murphy
Director and Executive Vice President, Client Service since March 1994; Senior
Vice President, American Express Financial Corporation since May 1994. Senior
Vice President, Operations, Travel Related Services (TRS), a subsidiary of
American Express Company, from July 1992 to April 1994; Vice President, TRS,
from November 1989 to July 1992.
Stuart A. Sedlacek
Director and Executive Vice President, Assured Assets since March
1994; Vice President, American Express Financial Corporation, since
September 1988.
Melinda S. Urion
Director and Controller since September 1991; Executive Vice President since
March 1994; Vice President and Treasurer from September 1991 to March 1994;
Director, Senior Vice President and Chief Financial Officer, American Express
Financial Corporation, since November 1995; Corporate Controller from April 1994
to November 1995; Vice President from September 1991 to November 1995; Chief
Accounting Officer from July 1988 to September 1991.
Officers Other Than Directors
Morris Goodwin Jr.
Vice President and Treasurer since March 1994; Vice President and Corporate
Treasurer, American Express Financial Corporation, since July 1989; Vice
President and Treasurer of IDS Life Series Fund, Inc. and IDS Life Variable
Annuity Funds A & B.
William A. Stoltzmann
Vice President, General Counsel and Secretary since 1989; Vice President and
Assistant General Counsel, American Express Financial Corporation, since
November 1985. Vice President, General Counsel and Secretary, American
Enterprise Life Insurance Company, American Partners Life Insurance Company.
*The address for all of the directors and principal officers is:
IDS Tower 10, Minneapolis, MN 55440-0010.
Other Information
History
The Fund is an open-end diversified investment company as defined under the 1940
Act. It was organized as a segregated asset account by IDS Life under Minnesota
law on May 10, 1968.
IDS Life is a stock life insurance company organized under Minnesota law on Aug.
7, 1957. It conducts a conventional life insurance business in addition to its
variable annuity business.
IDS Life Insurance Company is not a bank, and the securities it offers are not
backed or guaranteed by any bank nor are they insured by the FDIC.
<PAGE>
PAGE 34
Assets of the Fund
On Dec. 31, 1996, there were 11,101 outstanding contracts. The
assets were $327,981,049.
The assets of the Fund are held solely for the variable contract holders. The
assets are not used to pay liabilities of any other business of IDS Life.
Headquarters
The corporate office of IDS Life is located in the IDS Tower in Minneapolis,
Minnesota.
Ownership of IDS Life and American Express Financial Corporation
All of the capital stock of IDS Life is owned by American Express Financial
Corporation. On Jan. 12, 1984, Investors Diversified Services, Inc., of which
IDS Life was a wholly owned subsidiary, was merged into a wholly owned
subsidiary of American Express Company to form IDS Financial Services Inc. On
Jan. 1, 1995, IDS Financial Corporation's name was changed to American Express
Financial Corporation, and IDS Financial Services Inc.'s name was changed to
American Express Financial Advisors Inc. American Express Financial Corporation
serves as investment advisor for the Fund. American Express Financial
Corporation is an investment advisor for a number of open-end investment
companies and for its subsidiaries. The headquarters of American Express
Financial Corporation is IDS Tower, Minneapolis, Minnesota.
Other affiliations
IDS Life also distributes different variable annuity contracts including: Fund
B, IDS Life Variable Retirement Annuity, IDS Life Combination Retirement
Annuity, IDS Life Flexible Annuity, IDS Life Flexible Portfolio Annuity, IDS
Life Real Estate Variable Annuity, IDS Life Group Variable Annuity Contract and
IDS Life Employee Benefit Annuity.
The members of the Fund's Board of Managers also serve on the Board of Managers
of Fund B and on the Board of Directors of IDS Life Series Fund, Inc.
IDS Life manages Fund A, Fund B and nine mutual funds existing within the IDS
MUTUAL FUND GROUP advised by American Express Financial Corporation. These nine
mutual funds are available for purchase only through variable annuity contracts
which are distributed by IDS Life and its subsidiaries, IDS Life Insurance
Company of New York, American Enterprise Life Insurance Company, American
Partners Life Insurance Company and American Centurion Life Assurance Company.
The names of these funds are: IDS Life Capital Resource Fund, IDS Life
Aggressive Growth Fund, IDS Life International Equity Fund, IDS Life Special
Income Fund, IDS Life Managed Fund, IDS Life Moneyshare Fund, IDS Life Growth
Dimensions Fund, IDS Life Global Yield Fund and IDS Life Income Advantage
<PAGE>
PAGE 35
Fund. IDS Life also manages IDS Life Series Fund, Inc., which is available for
purchase only through policies distributed by IDS Life and IDS Life Insurance
Company of New York.
Custodian
Pursuant to a custodian agreement, the Fund's securities and cash are held by
American Express Trust Company, 1200 Northstar Center West, 625 Marquette Ave.,
Minneapolis, MN 55402-2307.
The custodian has entered into a sub-custodian arrangement with Morgan Stanley
Trust Company, One Pierrepont Plaza, Brooklyn, NY 11201. As part of this
arrangement, portfolio securities purchased outside the United States may be
held in custody and deposit accounts that have been established by Morgan
Stanley with one or more domestic or foreign banks, or through the facilities of
one or more clearing agencies or central securities depositories as may be
permitted by law and by the Fund's sub-custodian agreement.
Insurance regulation
IDS Life is regulated by the Department of Commerce of the State of Minnesota.
From time to time, the department examines the company's liabilities and
reserves and certifies their correctness. IDS Life also is subject to insurance
laws and regulations of other states where it is licensed to do business.
Financial statements
The Report of Independent Auditors and the Financial Statements, including Notes
to Financial Statements and the schedule of investments in securities, contained
in the 1996 Annual Report to IDS Life Variable Annuity Fund A contract holders,
pursuant to Section 30(d) of the 1940 Act, are hereby incorporated in this
Prospectus by reference. No other portion of the Annual Report, however, is
incorporated by reference.
Legal proceedings
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life does business involving insurers' sales
practices, alleged agent misconduct, failure to properly supervise agents, and
other matters. IDS Life, like other life and health insurers, from time to time
is involved in such litigation. On December 13, 1996, an action of this nature
was commenced in Minnesota state court. The plaintiffs purport to represent a
class consisting of all persons who replaced existing IDS Life policies with new
IDS Life policies from and after January 1, 1985. Plaintiffs seek damages in an
unspecified amount and also seek to establish a claims resolution facility for
the determination of individual issues. IDS life filed an answer to the
Complaint on February 18, 1997. A similar action involving the replacement of
existing IDS Life and annuity contracts was filed in the same court on March 21,
1997.
<PAGE>
PAGE 36
IDS Life believes it has meritorious defenses to these and other actions arising
in connection with the conduct of its business activities and intends to defend
them vigorously. IDS Life believes that it is not a party to, nor are any of its
properties the subject of, any pending legal proceedings which would have a
material adverse effect on its consolidated financial condition.
<PAGE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
ASSETS 1996 1995
- ------ ---- ---------
(thousands)
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1996, $10,521,650; 1995, $11,878,377) .............. $10,236,379 $11,257,591
Available for sale, at fair value (Amortized cost:
1996, $11,008,622; 1995, $10,146,136) .............. 11,146,845 10,516,212
Mortgage loans on real estate ...................... 3,493,364 2,945,495
Policy loans ....................................... 459,902 424,019
Other investments .................................. 251,465 146,894
Total investments .................................. 25,587,955 25,290,211
Cash and cash equivalents .......................... 224,603 72,147
Amounts recoverable from reinsurers ................ 157,722 114,387
Amounts due from brokers ........................... 11,047 --
Other accounts receivable .......................... 44,089 39,108
Accrued investment income .......................... 343,313 348,008
Deferred policy acquisition costs .................. 2,330,805 2,025,725
Deferred income taxes .............................. 33,923 --
Other assets ....................................... 37,364 36,410
Separate account assets ............................ 18,535,160 14,974,082
Total assets ....................................... $47,305,981 $42,900,078
=========== ===========
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (continued)
Dec. 31, Dec. 31
LIABILITIES AND STOCKHOLDER'S EQUITY 1996 1995
- ------------------------------------ ---- ----
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities .................................... $21,838,008 $21,404,836
Universal life-type insurance ...................... 3,177,149 3,076,847
Traditional life insurance ......................... 209,685 209,249
Disability income and long-term care insurance ..... 424,200 327,157
Policy claims and other
policyholders' funds ............................... 83,634 56,323
Deferred income taxes .............................. -- 112,904
Amounts due to brokers ............................. 261,987 121,618
Other liabilities .................................. 332,078 285,354
Separate account liabilities ....................... 18,535,160 14,974,082
Total liabilities .................................. 44,861,901 40,568,370
Stockholder's equity:
Capital stock, $30 par value per share;
100,000 shares authorized, issued and outstanding .. 3,000 3,000
Additional paid-in capital ......................... 283,615 278,814
Net unrealized gain on investments ................. 86,102 230,129
Retained earnings .................................. 2,071,363 1,819,765
Total stockholder's equity ......................... 2,444,080 2,331,708
Total liabilities and stockholder's equity ......... $47,305,981 $42,900,078
=========== ===========
Commitments and contingencies (Note 6)
See accompanying notes to consolidated financial statements.
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended Dec. 31,
1996 1995 1994
---- ---- ----
(thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 51,403 $ 50,193 $ 48,184
Disability income and long-term care insurance 131,518 111,337 96,456
Total premiums 182,921 161,530 144,640
Policyholder and contractholder charges 302,999 256,454 219,936
Management and other fees 271,342 215,581 164,169
Net investment income 1,965,362 1,907,309 1,781,873
Net realized loss on investments (159) (4,898) (4,282)
Total revenues 2,722,465 2,535,976 2,306,336
Benefits and expenses:
Death and other benefits:
Traditional life insurance 26,919 29,528 28,263
Universal life-type insurance
and investment contracts 85,017 71,691 52,027
Disability income and
long-term care insurance 19,185 16,259 13,393
Increase (decrease) in liabilities for future policy benefits:
Traditional life insurance 1,859 (1,315) (3,229)
Disability income and
long-term care insurance 57,230 51,279 37,912
Interest credited on universal life-type
insurance and investment contracts 1,370,468 1,315,989 1,174,985
Amortization of deferred policy acquisition costs 278,605 280,121 280,372
Other insurance and operating expenses 261,468 211,642 210,101
Total benefits and expenses 2,100,751 1,975,194 1,793,824
Income before income taxes 621,714 560,782 512,512
Income taxes 207,138 195,842 176,343
Net income $ 414,576 $ 364,940 $ 336,169
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended Dec. 31, 1996
(thousands)
Additional Net Unrealized
Capital Paid-In Gain (Loss) on Retained
Stock Capital Investments Earnings Total
----- ------- ----------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance, Dec. 31, 1993 $3,000 $ 222,000 $ 114 $1,468,230 $1,693,344
Initial adoption of SFAS No. 115 -- -- 181,269 -- 181,269
Net income -- -- -- 336,169 336,169
Change in net unrealized
gain (loss) on investments -- -- (457,091) -- (457,091)
Cash dividends -- -- -- (165,000) (165,000)
Balance, Dec. 31, 1994 3,000 222,000 (275,708) 1,639,399 1,588,691
Net income -- -- -- 364,940 364,940
Change in net unrealized
gain (loss) on investments -- -- 505,837 -- 505,837
Capital contribution from parent -- 56,814 -- -- 56,814
Loss on reinsurance transaction
with affiliate -- -- -- (4,574) (4,574)
Cash dividends -- -- -- (180,000) (180,000)
Balance, Dec. 31, 1995 3,000 278,814 230,129 1,819,765 2,331,708
Net income -- -- -- 414,576 414,576
Change in net unrealized
gain (loss) on investments -- -- (144,027) -- (144,027)
Capital contribution from parent -- 4,801 -- -- 4,801
Other changes -- -- -- 2,022 2,022
Cash dividends -- -- -- (165,000) (165,000)
Balance, Dec. 31, 1996 $3,000 $283,615 $ 86,102 $2,071,363 $2,444,080
===== ======= ====== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended Dec. 31,
1996 1995 1994
---- ---- ----
(thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 414,576 $ 364,940 $ 336,169
Adjustments to reconcile net income to
net cash (used in) provided by operating activities:
Policy loan issuance, excluding universal
life-type insurance (49,314) (46,011) (37,110)
Policy loan repayment, excluding universal
life-type insurance 41,179 36,416 33,384
Change in amounts recoverable from reinsurers (43,335) (34,083) (25,006)
Change in other accounts receivable (4,981) 12,231 (28,551)
Change in accrued investment income 4,695 (30,498) (10,333)
Change in deferred policy acquisition
costs, net (294,755) (196,963) (192,768)
Change in liabilities for future policy
benefits for traditional life,
disability income and
long-term care insurance 97,479 85,575 55,354
Change in policy claims and other
policyholders' funds 27,311 6,255 5,552
Change in deferred income taxes (65,609) (33,810) (19,176)
Change in other liabilities 46,724 (6,548) (122)
(Accretion of discount)
amortization of premium, net (23,032) (22,528) 30,921
Net realized loss on investments 159 4,898 4,282
Policyholder and contractholder
charges, non-cash (154,286) (140,506) (126,918)
Other, net (10,816) 3,849 (8,709)
Net cash (used in) provided by operating
activities $ (14,005) $ 3,217 $ 16,969
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended Dec. 31,
1996 1995 1994
(thousands)
<S> <C> <C> <C>
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ (43,751) $ (1,007,208) $ (879,740)
Maturities, sinking fund payments and calls 759,248 538,219 1,651,762
Sales 279,506 332,154 58,001
Fixed maturities available for sale:
Purchases (2,299,198) (2,452,181) (2,763,278)
Maturities, sinking fund payments and calls 1,270,240 861,545 1,234,401
Sales 238,905 136,825 374,564
Other investments, excluding policy loans:
Purchases (904,536) (823,131) (634,807)
Sales 236,912 160,521 243,862
Change in amounts due from brokers (11,047) 7,933 (2,214)
Change in amounts due to brokers 140,369 (105,119) (124,749)
Net cash used in investing activities (333,352) (2,350,442) (842,198)
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 3,567,586 4,189,525 3,566,814
Surrenders and death benefits (4,250,294) (3,141,404) (3,602,392)
Interest credited to account balances 1,370,468 1,315,989 1,174,985
Universal life-type insurance policy loans:
Issuance (86,501) (84,700) (78,239)
Repayment 58,753 52,188 50,554
Capital contribution from parent 4,801 -- --
Cash dividends to parent (165,000) (180,000) (165,000)
Net cash provided by financing activities 499,813 2,151,598 946,722
Net increase (decrease) in cash and
cash equivalents 152,456 (195,627) 121,493
Cash and cash equivalents at
beginning of year 72,147 267,774 146,281
Cash and cash equivalents at
end of year $ 224,603 $ 72,147 $ 267,774
========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ thousands)
1. Summary of significant accounting policies
Nature of business
IDS Life Insurance Company (the Company) is a stock life insurance company
organized under the laws of the State of Minnesota. The Company is a wholly
owned subsidiary of American Express Financial Corporation, which is a wholly
owned subsidiary of American Express Company. The Company serves residents of
all states except New York. IDS Life Insurance Company of New York is a
wholly owned subsidiary of the Company and serves New York State residents.
The Company also wholly owns American Enterprise Life Insurance Company,
American Centurion Life Assurance Company (ACLAC) and American Partners Life
Insurance Company.
The Company's principal products are deferred annuities and universal life
insurance, which are issued primarily to individuals. It offers single
premium and flexible premium deferred annuities on both a fixed and variable
dollar basis. Immediate annuities are offered as well. The Company's
insurance products include universal life (fixed and variable), whole life,
single premium life and term products (including waiver of premium and
accidental death benefits). The Company also markets disability income and
long-term care insurance.
Basis of presentation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All material intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles which vary in
certain respects from reporting practices prescribed or permitted by state
insurance regulatory authorities.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and carried at
amortized cost. All other fixed maturities and all marketable equity
securities are classified as available for sale and carried at fair value.
Unrealized gains and losses on securities classified as available for sale
are carried as a separate component of stockholder's equity, net of deferred
taxes.
Realized investment gain or loss is determined on an identified cost basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to recognize
interest income. Prepayment estimates are based on information received from
brokers who deal in mortgage-backed securities.
Mortgage loans on real estate are carried at amortized cost less reserves for
mortgage loan losses. The estimated fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities.
Impairment of mortgage loans is measured as the excess of the loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate, or the fair value of
collateral. The amount of the impairment is recorded in a reserve for
mortgage loan losses. The reserve for mortgage loans losses is maintained at
a level that management believes is adequate to absorb estimated losses in
the portfolio. The level of the reserve account is determined based on
several factors, including historical experience, expected future principal
and interest payments, estimated collateral values, and current and
anticipated economic and political conditions. Management regularly evaluates
the adequacy of the reserve for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on
management's judgement as to the ultimate collectibility of principal,
interest payments received are either recognized as income or applied to the
recorded investment in the loan.
The cost of interest rate caps and floors is amortized to investment income
over the life of the contracts and payments received as a result of these
agreements are recorded as investment income when realized. The amortized
cost of interest rate caps and floors is included in other investments.
Amounts paid or received under interest rate swap agreements are recognized
as an adjustment to investment income.
Policy loans are carried at the aggregate of the unpaid loan balances which
do not exceed the cash surrender values of the related policies.
When evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such investments
are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These securities
are carried principally at amortized cost which approximates fair value.
Supplementary information to the consolidated statements of cash flows
for the years ended Dec. 31 is summarized as follows:
1996 1995 1994
--------- -------- -----
Cash paid during the year for:
Income taxes $317,283 $191,011 $226,365
Interest on borrowings 4,119 5,524 1,553
Recognition of profits on annuity contracts and insurance policies
Profits on fixed deferred annuities are recognized by the Company over the
lives of the contracts, using primarily the interest method. Profits
represent the excess of investment income earned from investment of contract
considerations over interest credited to contract owners and other expenses.
The retrospective deposit method is used in accounting for universal
life-type insurance. This method recognizes profits over the lives of the
policies in proportion to the estimated gross profits expected to be
realized.
Premiums on traditional life, disability income and long-term care insurance
policies are recognized as revenue when due, and related benefits and
expenses are associated with premium revenue in a manner that results in
recognition of profits over the lives of the insurance policies. This
association is accomplished by means of the provision for future policy
benefits and the deferral and subsequent amortization of policy acquisition
costs.
Policyholder and contractholder charges include the monthly cost of insurance
charges and issue and administrative fees. These charges also include the
minimum death benefit guarantee fees received from the variable life
insurance separate accounts. Management and other fees include investment
management fees and mortality and expense risk fees from the variable annuity
and variable life insurance separate accounts and underlying funds.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation, policy
issue costs, underwriting and certain sales expenses, have been deferred on
insurance and annuity contracts. The deferred acquisition costs for most
single premium deferred annuities and installment annuities are amortized in
relation to surrender charge revenue and a portion of the excess of
investment income earned from investment of the contract considerations over
the interest credited to contract owners. The costs for universal life-type
insurance and certain installment annuities are amortized as a percentage of
the estimated gross profits expected to be realized on the policies. For
traditional life, disability income and long-term care insurance policies,
the costs are amortized over an appropriate period in proportion to premium
revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance, single premium deferred
annuities and installment annuities are accumulation values.
Liabilities for fixed annuities in a benefit status are based on the
Progressive Annuity Table with interest at 5 percent, the 1971 Individual
Annuity Table with interest at 7 percent or 8.25 percent, or the 1983a Table
with various interest rates ranging from 5.5 percent to 9.5 percent,
depending on year of issue.
Liabilities for future benefits on traditional life insurance are based on
the net level premium method and anticipated rates of mortality, policy
persistency and interest earnings. Anticipated mortality rates generally
approximate the 1955-1960 Select and Ultimate Basic Table for policies issued
prior to 1980, the 1965-1970 Select and Ultimate Basic Table for policies
issued from 1981-1984 and the 1975-1980 Select and Ultimate Basic Table for
policies issued after 1984. Anticipated policy persistency rates vary by
policy form, issue age and policy duration with persistency on cash value
plans generally anticipated to be better than persistency on term insurance
plans. Anticipated interest rates are 4% for policies issued before 1974,
5.25% for policies issued from 1974-1980, and range from 10% to 6% depending
on policy form, issue year and policy duration for policies issued after
1980.
Liabilities for future disability income policy benefits include both policy
reserves and claim reserves. Policy reserves are based on the net level
premium method and anticipated rates of morbidity, mortality, policy
persistency and interest earnings. Anticipated morbidity rates are based on
the 1964 Commissioners Disability Table for policies issued before 1996 and
the 1985 CIDA table for policies issued in 1996. Anticipated mortality rates
are based on the 1958 Commissioners Standard Ordinary Table for policies
issued before 1996 and the 1975-1980 Basic Table for policies issued in 1996.
Anticipated policy persistency rates vary by policy form, occupation class,
issue age and policy duration. Anticipated interest rates are 3% for policies
issued before 1996 and grade from 7.5% to 5% over five years for policies
issued in 1996. Claim reserves are calculated on the basis of anticipated
rates of claim continuance and interest earnings. Anticipated claim
continuance rates are based on the 1964 Commissioners Disability Table for
claims incurred before 1993 and the 1985 CIDA Table for claims incurred after
1992. Anticipated interest rates are 8% for claims incurred prior to 1992, 7%
for claims incurred in 1992 and 6% for claims incurred after 1992.
Liabilities for future long-term care policy benefits include both policy
reserves and claim reserves. Policy reserves are based on the net level
premium method and anticipated rates of morbidity, mortality, policy
persistency and interest earnings. Anticipated morbidity rates are based on
the 1985 National Nursing Home Survey. Anticipated mortality rates are based
on the 1983a Table. Anticipated policy persistency rates vary by policy form,
issue age and policy duration. Anticipated interest rates are 9.5% grading to
7% over 10 years for policies issued from 1989-1992 and 7.75% grading to 7%
over 4 years for policies issued after 1992. Claim reserves are calculated on
the basis of anticipated rates of claim continuance and interest earnings.
Anticipated claim continuance rates are based on the 1985 National Nursing
Home Survey. Anticipated interest rates are 8% for claims incurred prior to
1992, 7% claims incurred in 1992 and 6% for claims incurred after 1992.
Reinsurance
The maximum amount of life insurance risk retained by the Company on any one
life is $750 of life and waiver of premium benefits plus $50 of accidental
death benefits. The maximum amount of disability income risk retained by the
Company on any one life is $6 of monthly benefit for benefit periods longer
than three years. The excesses are reinsured with other life insurance
companies on a yearly renewable term basis. Graded premium whole life and
long-term care policies are primarily reinsured on a coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated federal income
tax return of American Express Company. The Company provides for income taxes
on a separate return basis, except that, under an agreement between American
Express Financial Corporation and American Express Company, tax benefit is
recognized for losses to the extent they can be used on the consolidated tax
return. It is the policy of American Express Financial Corporation to
reimburse subsidiaries for all tax benefits.
Included in other liabilities at Dec. 31, 1996 and 1995 are $33,358 and
($13,415), respectively, receivable from/(payable to) American Express
Financial Corporation for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity and variable life insurance
contract owners.
The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of the
annuitants and the beneficiaries from the mortality assumptions implicit in
the annuity contracts. The Company makes periodic fund transfers to, or
withdrawals from, the separate accounts for such actuarial adjustments for
variable annuities that are in the benefit payment period. For variable life
insurance, the Company guarantees that the rates at which insurance charges
and administrative fees are deducted from contract funds will not exceed
contractual maximums. The Company also guarantees that the death benefit will
continue payable at the initial level regardless of investment performance so
long as minimum premium payments are made.
Accounting changes
The Financial Accounting Standards Board's (FASB) Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," was effective
Jan. 1, 1996. The new rule did not have a material impact on the Company's
results of operations or financial condition. The Company adopted SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities." The
effect of adopting the new rule was to increase stockholder's equity by
$181,269, net of tax, as of Jan. 1, 1994, but the adoption had no impact on
the Company's net income.
Reclassification
Certain 1995 and 1994 amounts have been reclassified to conform to the 1996
presentation.
2. Investments
Fair values of investments in fixed maturities represent quoted market prices
and estimated values when quoted prices are not available. Estimated values
are determined by established procedures involving, among other things,
review of market indices, price levels of current offerings of comparable
issues, price estimates and market data from independent brokers and
financial files.
Net realized gain (loss) on investments for the years ended Dec. 31 is
summarized as follows:
1996 1995 1994
-------- -------- --------
Fixed maturities ............ $ 8,736 $ 9,973 $ (1,575)
Mortgage loans .............. (8,745) (13,259) (3,013)
Other investments ........... (150) (1,612) 306
-------- -------- --------
$ (159) $ (4,898) $ (4,282)
======== ======== ========
<PAGE>
Changes in net unrealized appreciation (depreciation) of investments for the
years ended Dec. 31 are summarized as follows:
1996 1995 1994
---------- ------------ -----------
Fixed maturities:
Held to maturity ....... $ (335,515) $ 1,195,847 $(1,329,740)
Available for sale ..... (231,853) 811,649 (720,449)
Equity securities ......... (52) 3,118 (2,917)
The amortized cost, gross unrealized gains and losses and fair values of
investments in fixed maturities and equity securities at Dec. 31, 1996 are as
follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- ---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 44,002 $ 933 $ 1,276 $ 43,659
State and municipal obligations 9,685 412 -- 10,097
Corporate bonds and obligations 8,057,997 356,687 47,639 8,367,045
Mortgage-backed securities 2,124,695 21,577 45,423 2,100,849
------------ --------- ------- ------------
$10,236,379 $379,609 $94,338 $10,521,650
=========== ======== ======= ===========
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ ---- ----- ------ -----
U.S. Government agency obligations $ 77,944 $ 2,607 $ 96 $ 80,455
State and municipal obligations 11,032 1,336 -- 12,368
Corporate bonds and obligations 3,701,604 122,559 24,788 3,799,375
Mortgage-backed securities 7,218,042 104,808 68,203 7,254,647
---------- -------- ------ -----------
Total fixed maturities 11,008,622 231,310 93,087 11,146,845
Equity securities 3,000 308 -- 3,308
----------- -------- ------- -----------
$11,011,622 $231,618 $93,087 $11,150,153
=========== ======== ======= ===========
</TABLE>
The amortized cost, gross unrealized gains and losses and fair values of
investments in fixed maturities and equity securities at Dec. 31, 1995 are as
follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 64,523 $ 3,919 $ -- $ 68,442
State and municipal obligations 11,936 362 32 12,266
Corporate bonds and obligations 8,921,431 620,327 36,786 9,504,972
Mortgage-backed securities 2,259,701 42,684 9,688 2,292,697
----------- --------- ------- -----------
$11,257,591 $667,292 $46,506 $11,878,377
=========== ======== ======= ===========
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
U.S. Government agency obligations $ 84,082 $ 3,248 $ 50 $ 87,280
State and municipal obligations 11,020 1,476 -- 12,496
Corporate bonds and obligations 2,514,308 186,596 3,451 2,697,453
Mortgage-backed securities 7,536,726 206,288 24,031 7,718,983
---------- -------- ------- ----------
Total fixed maturities 10,146,136 397,608 27,532 10,516,212
Equity securities 3,156 361 -- 3,517
---------- -------- ------- ----------
$10,149,292 $397,969 $27,532 $10,519,729
=========== ======== ======= ===========
</TABLE>
<PAGE>
The amortized cost and fair value of investments in fixed maturities at Dec.
31, 1996 by contractual maturity are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
Amortized Fair
Held to maturity Cost Value
Due in one year or less $ 197,711 $ 200,134
Due from one to five years 2,183,374 2,294,335
Due from five to ten years 4,606,775 4,779,690
Due in more than ten years 1,123,824 1,146,642
Mortgage-backed securities 2,124,695 2,100,849
------------ ------------
$10,236,379 $10,521,650
Amortized Fair
Available for sale Cost Value
Due in one year or less $ 227,051 $ 229,650
Due from one to five years 851,428 899,098
Due from five to ten years 2,140,579 2,182,079
Due in more than ten years 571,522 581,371
Mortgage-backed securities 7,218,042 7,254,647
------------ ------------
$11,008,622 $11,146,845
During the years ended Dec. 31, 1996, 1995 and 1994, fixed maturities
classified as held to maturity were sold with amortized cost of $277,527,
$333,508 and $61,290, respectively. Net gains and losses on these sales were
not significant. The sale of these fixed maturities was due to significant
deterioration in the issuers' creditworthiness.
As a result of adopting the FASB Special Report, "A Guide to Implementation
of Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities," the Company reclassified securities with a book value of $91,760
and net unrealized gains of $881 from held to maturity to available for sale
in December 1995.
In addition, fixed maturities available for sale were sold during 1996 with
proceeds of $238,905 and gross realized gains and losses of $571 and $16,084,
respectively. Fixed maturities available for sale were sold during 1995 with
proceeds of $136,825 and gross realized gains and losses of $nil and $5,781,
respectively. Fixed maturities available for sale were sold during 1994 with
proceeds of $374,564 and gross realized gains and losses of $1,861 and
$7,602, respectively.
At Dec. 31, 1996, bonds carried at $13,571 were on deposit with various
states as required by law.
<PAGE>
Net investment income for the years ended Dec. 31 is summarized as follows:
1996 1995 1994
--------- ------- -----
Interest on fixed maturities $1,666,929 $1,656,136 $1,556,756
Interest on mortgage loans 283,830 232,827 196,521
Other investment income 43,283 35,936 38,366
Interest on cash equivalents 5,754 5,363 6,872
------------- ------- -----------
1,999,796 1,930,262 1,798,515
Less investment expenses 34,434 22,953 16,642
------------ --------- ----------
$1,965,362 $1,907,309 $1,781,873
========== ========== ==========
At Dec. 31, 1996, investments in fixed maturities comprised 84 percent of the
Company's total invested assets. These securities are rated by Moody's and
Standard & Poor's (S&P), except for securities carried at approximately $1.9
billion which are rated by American Express Financial Corporation internal
analysts using criteria similar to Moody's and S&P. A summary of investments
in fixed maturities, at amortized cost, by rating on Dec. 31 is as follows:
Rating 1996 1995
------ ----------- -----------
Aaa/AAA ....................... $ 9,460,134 $ 9,907,664
Aaa/AA ........................ 2,870 3,112
Aa/AA ......................... 241,914 279,403
Aa/A .......................... 192,631 154,846
A/A ........................... 2,949,895 3,104,122
A/BBB ......................... 1,034,661 871,782
Baa/BBB ....................... 4,531,515 4,417,654
Baa/BB ........................ 768,285 657,633
Below investment grade ........ 2,063,096 2,007,511
----------- -----------
$21,245,001 $21,403,727
At Dec. 31, 1996, 95 percent of the securities rated Aaa/AAA are GNMA, FNMA
and FHLMC mortgage-backed securities. No holdings of any other issuer are
greater than 1 percent of the Company's total investments in fixed
maturities.
<PAGE>
At Dec. 31, 1996, approximately 13.7 percent of the Company's invested assets
were mortgage loans on real estate. Summaries of mortgage loans by region of
the United States and by type of real estate are as follows:
Dec. 31, 1996 Dec. 31, 1995
------------------------- ------------------------
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
------------------ ----------- ----------- ----------- ----------
East North Central $ 777,960 $ 19,358 $ 720,185 $ 67,206
West North Central 389,285 29,620 303,113 34,411
South Atlantic 891,852 35,007 732,529 111,967
Middle Atlantic 553,869 17,959 508,634 37,079
New England 310,177 14,042 244,816 40,452
Pacific 190,770 4,997 168,272 23,161
West South Central 105,173 11,246 61,860 27,978
East South Central 75,176 -- 58,462 10,122
Mountain 236,597 11,401 184,964 16,774
---------- -------- -------- ------
3,530,859 143,630 2,982,835 369,150
Less allowance for losses 37,495 -- 37,340 --
---------- -------- ------- ---
$3,493,364 $143,630 $2,945,495 $369,150
========== ======== ========== ========
Dec. 31, 1996 Dec. 31, 1995
------------------------- ------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
- ----------------------- --------- --------- ----------- -----------
Department/retail stores $1,154,179 $ 68,032 $ 985,660 $ 134,538
Apartments 1,119,352 23,246 1,038,446 84,978
Office buildings 611,395 27,653 464,381 62,664
Industrial buildings 296,944 6,716 255,469 22,721
Hotels/motels 97,870 6,257 31,335 48,816
Nursing/retirement homes 88,226 1,877 80,864 4,378
Mixed Use 73,120 -- 53,169 --
Medical buildings 67,178 8,289 57,772 2,495
Other 22,595 1,560 15,739 8,560
------------ ---------- --------- --------
3,530,859 143,630 2,982,835 369,150
Less allowance for losses 37,495 -- 37,340 --
------------ ------ --------- ------
$3,493,364 $143,630 $2,945,495 $369,150
========== ======== ========== ========
<PAGE>
Mortgage loan fundings are restricted by state insurance regulatory authorities
to 80 percent or less of the market value of the real estate at the time of
origination of the loan. The Company holds the mortgage document, which gives
the right to take possession of the property if the borrower fails to perform
according to the terms of the agreement. The fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities. Commitments to purchase
mortgages are made in the ordinary course of business. The fair value of the
mortgage commitments is $nil.
At Dec. 31, 1996 and 1995, the Company's recorded investment in impaired loans
was $79,441 and $83,874 with a reserve of $16,162 and $19,307, respectively.
During 1996 and 1995, the average recorded investment in impaired loans was
$74,338 and $74,567, respectively.
The Company recognized $4,889 and $5,014 of interest income related to impaired
loans for the year ended Dec. 31, 1996 and 1995, respectively.
The following table presents changes in the reserve for investment losses
related to all loans:
1996 1995
--------- --------
Balance, Jan. 1 .................... $ 37,340 $ 35,252
Provision for investment losses .... 10,005 15,900
Loan payoffs ....................... (4,700) (11,900)
Foreclosures ....................... (5,150) (1,350)
Other .............................. -- (562)
-------- --------
Balance, Dec. 31 ................... $ 37,495 $ 37,340
======== ========
At Dec. 31, 1996, the Company had commitments to purchase affordable housing
limited partnership investments of $28,476, which is recorded as a liability in
the accompanying balance sheets. The total amounts committed in 1997 and 1998
are $25,234 and $3,242, respectively. The Company also had commitments to
purchase real estate investments for $35,425. Commitments to purchase real
estate investments are made in the ordinary course of business. The fair value
of these commitments is $nil.
<PAGE>
3. Income taxes
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the Internal Revenue Code
provisions applicable to life insurance companies.
Income tax expense consists of the following:
1996 1995 1994
------ -------- -------
Federal income taxes:
Current $260,357 $218,040 $186,508
Deferred (65,609) (33,810) (19,175)
-------- -------- --------
194,748 184,230 167,333
State income taxes-current 12,390 11,612 9,010
--------- ------- ------
Income tax expense $207,138 $195,842 $176,343
======== ======== ========
Increases (decreases) to the federal tax provision applicable to pretax
income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
Provision Rate Provision Rate Provision Rate
<S> <C> <C> <C> <C> <C> <C>
Federal income
taxes based on
the statutory rate $217,600 35.0% $196,274 35.0% $179,379 35.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (9,636) (1.6) (8,524) (1.5) (9,939) (2.0)
Other, net (13,216) (2.1) (3,520) (0.6) (2,107) (0.4)
--------- ----- -------- ---- -------- ----
Federal income taxes $194,748 31.3% $184,230 32.9% $167,333 32.6%
======== ===== ======== ==== ======== ====
</TABLE>
A portion of life insurance company income earned prior to 1984 was not
subject to current taxation but was accumulated, for tax purposes, in a
policyholders' surplus account. At Dec. 31, 1996, the Company had a
policyholders' surplus account balance of $20,114. The policyholders' surplus
account is only taxable if dividends to the stockholder exceed the
stockholder's surplus account or if the Company is liquidated. Deferred
income taxes of $7,040 have not been established because no distributions of
such amounts are contemplated.
<PAGE>
Significant components of the Company's deferred tax assets and liabilities
as of Dec. 31 are as follows:
1996 1995
------- -----
Deferred tax assets:
Policy reserves $724,412 $600,176
Life insurance guarantee
fund assessment reserve 29,854 26,785
Other 2,763 --
--------- -------
Total deferred tax assets 757,029 626,961
--------- -------
Deferred tax liabilities:
Deferred policy acquisition costs 665,685 590,762
Unrealized gain on investments 48,486 129,653
Investments, other 8,935 17,152
Other -- 2,298
-------- -------
Total deferred tax liabilities 723,106 739,865
-------- -------
Net deferred tax assets (liabilities)$ 33,923 $(112,904)
========= =========
The Company is required to establish a "valuation allowance" for any portion
of the deferred tax assets that management believes will not be realized. In
the opinion of management, it is more likely than not that the Company will
realize the benefit of the deferred tax assets and, therefore, no such
valuation allowance has been established.
4. Stockholder's equity
During 1996, the Company received a $4,801 capital contribution from its
parent, American Express Financial Corporation. During 1995, the Company
received a $39,700 capital contribution from its parent in the form of
investments in fixed maturities and mortgage loans. In addition, effective
Jan. 1, 1995, the Company began consolidating the financial results of ACLAC.
This change reflected the transfer of ownership of ACLAC from Amex Life
Assurance Company (Amex Life), a former affiliate, to the Company prior to
the sale of Amex Life to an unaffiliated third party on Oct. 2, 1995. This
transfer of ownership to the Company has been reflected as a capital
contribution of $17,114 in the accompanying financial statements. The effect
of this change in reporting entity was not significant and prior periods have
not been restated.
As discussed in Note 5, the Company entered into a reinsurance agreement with
Amex Life during 1995. As a result of this transaction, a loss of $4,574 was
realized and reported as a direct charge to retained earnings.
Other changes in the statements of stockholder's equity are primarily related
to reinsurance transactions with affiliates.
Retained earnings available for distribution as dividends to the parent are
limited to the Company's surplus as determined in accordance with accounting
practices prescribed by state insurance regulatory authorities. Statutory
unassigned surplus aggregated $1,261,592 as of Dec. 31, 1996 and $1,103,993
as of Dec. 31, 1995 (see Note 3 with respect to the income tax effect of
certain distributions). In addition, any dividend distributions in 1997 in
excess of approximately $351,306 would require approval of the Department of
Commerce of the State of Minnesota.
Statutory net income for the years ended Dec. 31 and capital and surplus as
of Dec. 31 are summarized as follows:
1996 1995 1994
------ ------ ------
Statutory net income $ 365,585 $ 326,799 $ 294,699
Statutory capital and surplus 1,565,082 1,398,649 1,261,958
Dividends paid to American Express Financial Corporation were $165,000 in
1996, $180,000 in 1995, and $165,000 in 1994.
5. Related party transactions
The Company has loaned funds to American Express Financial Corporation under
a collateral loan agreement. The balance of the loan was $11,800 and $25,800
at Dec. 31, 1996 and 1995, respectively. This loan can be increased to a
maximum of $75,000 and pays interest at a rate equal to the preceding month's
effective new money rate for the Company's permanent investments. It is
collateralized by equity securities valued at $116,543 at Dec. 31, 1996.
Interest income on related party loans totaled $780, $1,371 and $2,894 in
1996, 1995 and 1994, respectively.
The Company purchased a five year secured note from an affiliated company
which had an outstanding balance of $nil and $19,444 at Dec. 31, 1996 and
1995, respectively. The note bears a fixed rate of 8.42 percent. Interest
income on the above note totaled $1,637, $1,937 and $2,278 in 1996, 1995 and
1994, respectively.
The Company has a reinsurance agreement whereby it assumed 100 percent of a
block of single premium life insurance business from Amex Life Assurance
Company (Amex Life), a former affiliate. The accompanying consolidated
balance sheets at Dec. 31, 1996 and 1995 include $758,812 and $764,663,
respectively, of future policy benefits related to this agreement.
The Company has a reinsurance agreement to cede 50 percent of its long-term
care insurance business to Amex Life. The accompanying consolidated balance
sheets at Dec. 31, 1996 and 1995 include $134,121 and $95,484, respectively,
of reinsurance receivables related to this agreement. Premiums ceded amounted
to $32,917, $25,553 and $20,360 and reinsurance recovered from reinsurers
amounted to $5,135, $4,998 and $3,022 for the years ended Dec. 31, 1996, 1995
and 1994, respectively.
The Company has a reinsurance agreement to assume deferred annuity contracts
from Amex Life. At Oct. 1, 1995, a $803,618 block of deferred annuities and
$28,327 of deferred policy acquisition costs were transferred to the Company.
The accompanying consolidated balance sheet at Dec. 31, 1996 includes
$828,298 of future policy benefits related to this agreement. Contracts with
future policy benefits totaling $50,400 were still reinsured with the former
affiliate at Dec. 31, 1996. The remaining contracts had been novated to
Company contracts.
Until July 1, 1995, the Company participated in the IDS Retirement Plan of
American Express Financial Corporation which covered all permanent employees
age 21 and over who had met certain employment requirements. Effective July
1, 1995, the IDS Retirement Plan was merged with American Express Company's
American Express Retirement Plan, which simultaneously was amended to include
a cash balance formula and a lump sum distribution option. Employer
contributions to the plan are based on participants' age, years of service
and total compensation for the year. Funding of retirement costs for this
plan complies with the applicable minimum funding requirements specified by
ERISA. The Company's share of the total net periodic pension cost was $174,
$155 and $156 in 1996, 1995 and 1994, respectively.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a percent of
either each employee's eligible compensation or basic contributions. Costs of
these plans charged to operations in 1996, 1995 and 1994 were $990, $815 and
$957, respectively.
The Company participates in defined benefit health care plans of American
Express Financial Corporation that provide health care and life insurance
benefits to retired employees and retired financial advisors. The plans
include participant contributions and service related eligibility
requirements. Upon retirement, such employees are considered to have been
employees of American Express Financial Corporation. American Express
Financial Corporation expenses these benefits and allocates the expenses to
its subsidiaries. Accordingly, costs of such benefits to the Company are
included in employee compensation and benefits and cannot be identified on a
separate company basis.
Charges by American Express Financial Corporation for use of joint
facilities, marketing services and other services aggregated $397,362,
$377,139, and $335,183 for 1996, 1995 and 1994, respectively. Certain of
these costs are included in deferred policy acquisition costs. In addition,
the Company rents its home office space from American Express Financial
Corporation on an annual renewable basis.
6. Commitments and contingencies
At Dec. 31, 1996 and 1995, traditional life insurance and universal life-type
insurance in force aggregated $67,274,354 and $59,683,532, respectively, of
which $3,875,921 and $3,771,204 were reinsured at the respective year ends.
The Company also reinsures a portion of the risks assumed under disability
income and long-term care policies. Under all reinsurance agreements,
premiums ceded to reinsurers amounted to $48,250, $39,399 and $31,016 and
reinsurance recovered from reinsurers amounted to $15,612, $14,088, and
$10,778 for the years ended Dec. 31, 1996, 1995 and 1994. Reinsurance
contracts do not relieve the Company from its primary obligation to
policyholders.
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which the Company and its subsidiaries do business involving
insurers' sales practices, alleged agent misconduct, failure to properly
supervise agents, and other matters. In December 1996, an action of this type
was brought against the Company and its parent, American Express Financial
Corporation. The plaintiffs purport to represent a class consisting of all
persons who replaced existing Company policies with new Company policies from
and after Jan. 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties and
alleged violations of consumer fraud statutes. Plaintiffs seek damages in an
unspecified amount and seek to establish a claims resolution facility for the
determination of individual issues. The Company and its parent believe they
have meritorious defenses to the claims raised in the lawsuit. The outcome of
any litigation cannot be predicted with certainty, particularly in the early
stages of an action. In the opinion of management, however, the ultimate
resolution of the above lawsuit and others filed against the Company should
not have a material adverse effect on the Company's consolidated financial
position.
During 1996, the Company settled the federal tax audit for 1987 through 1989
tax years. There was no material impact as a result of that audit. Also, the
IRS is currently auditing the Company's 1990 through 1992 tax years.
Management does not believe there will be a material impact as a result of
this audit.
7. Lines of credit
The Company has available lines of credit with two banks and its parent
aggregating $175,000, of which $100,000 is with its parent. The lines of
credit are at 40 to 80 basis points over the lenders' cost of funds or equal
to the prime rate, depending on which line of credit agreement is used. The
$25,000 line of credit with one bank expired on Dec. 31, 1996 and the Company
did not seek renewal. The $50,000 line of credit with the other bank expires
on June 30, 1997 and the Company expects to seek renewal. Borrowings
outstanding under these agreements were $nil at Dec. 31, 1996 and 1995.
8. Derivative financial instruments
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk, including hedging
specific transactions. The Company does not hold derivative instruments for
trading purposes. The Company manages risks associated with these instruments
as described below.
Market risk is the possibility that the value of the derivative financial
instruments will change due to fluctuations in a factor from which the
instrument derives its value, primarily an interest rate. The Company is not
impacted by market risk related to derivatives held for non-trading purposes
beyond that inherent in cash market transactions. Derivatives held for
purposes other than trading are largely used to manage risk and, therefore,
the cash flow and income effects of the derivatives are inverse to the
effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not fulfill the
terms of the contract. The Company monitors credit exposure related to
derivative financial instruments through established approval procedures,
including setting concentration limits by counterparty and industry, and
requiring collateral, where appropriate. A vast majority of the Company's
counterparties are rated A or better by Moody's and Standard & Poor's.
Credit exposure related to interest rate caps and floors is measured by the
replacement cost of the contracts. The replacement cost represents the fair
value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid over the
life of the agreement. Notional amounts are not recorded on the balance
sheet. Notional amounts far exceed the related credit exposure.
<PAGE>
The Company's holdings of derivative financial instruments are as follows:
Notional Carrying Fair Total Credit
Dec. 31, 1996 Amount Value Value Exposure
------------- --------- ------- -------- ------------
Assets:
Interest rate caps $ 4,000,000 $16,227 $ 7,439 $ 7,439
Interest rate floors 1,000,000 2,041 4,341 4,341
Interest rate swaps 1,000,000 -- (24,715) --
---------- ------- -------- -------
$6,000,000 $18,268 $(12,935) $11,780
========== ======= ======== =======
Dec. 31, 1995
Assets:
Interest rate caps $5,100,000 $26,680 $ 8,366 $ 8,366
========== ======= ======== =======
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate caps and floors
expire on various dates from 1996 to 2001. The interest rate swaps are in
effect through 2001.
Interest rate caps, swaps and floors are used principally to manage the
Company's interest rate risk. These instruments are used to protect the
margin between interest rates earned on investments and the interest rates
credited to related annuity contract holders.
9. Fair values of financial instruments
The Company discloses fair value information for most on- and off-balance
sheet financial instruments for which it is practicable to estimate that
value. Fair values of life insurance obligations and all non-financial
instruments, such as deferred acquisition costs are excluded. Off-balance
sheet intangible assets, such as the value of the field force, are also
excluded. Management believes the value of excluded assets is significant.
The fair value of the Company, therefore, cannot be estimated by aggregating
the amounts presented.
1996 1995
------ -----
<TABLE>
<CAPTION>
Carrying Fair Carrying Fair
Financial Assets Value Value Value Value
---------------- ----- ----- ----- -----
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $10,236,379 $10,521,650 $11,257,591 $11,878,377
Available for sale 11,146,845 11,146,845 10,516,212 10,516,212
Mortgage loans on
real estate (Note 2) 3,493,364 3,606,077 2,945,495 3,184,666
Other:
Equity securities (Note 2) 3,308 3,308 3,517 3,517
Derivative financial
instruments (Note 8) 18,268 (12,935) 26,680 8,366
Other 63,993 66,242 52,182 52,182
Cash and
cash equivalents (Note 1) 224,603 224,603 72,147 72,147
Separate account assets
(Note 1) 18,535,160 18,535,160 14,974,082 14,974,082
Financial Liabilities
Future policy benefits
for fixed annuities 20,641,986 19,721,968 20,259,265 19,603,114
Separate account
liabilities 17,358,087 16,688,519 14,208,619 13,665,636
</TABLE>
<PAGE>
At Dec. 31, 1996 and 1995, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related contracts
carried at $1,112,155 and $1,070,598, respectively, and policy loans of
$83,867 and $74,973, respectively. The fair value of these benefits is based
on the status of the annuities at Dec. 31, 1996 and 1995. The fair value of
deferred annuities is estimated as the carrying amount less any applicable
surrender charges and related loans. The fair value for annuities in non-life
contingent payout status is estimated as the present value of projected
benefit payments at rates appropriate for contracts issued in 1996 and 1995.
At Dec. 31, 1996 and 1995, the fair value of liabilities related to separate
accounts is estimated as the carrying amount less any applicable surrender
charges and less variable insurance contracts carried at $1,177,073 and
$765,463, respectively.
10.Segment information
The Company's operations consist of two business segments; first, individual
and group life insurance, disability income and long-term care insurance, and
second, annuity products designed for individuals, pension plans, small
businesses and employer-sponsored groups. The consolidated condensed
statements of income for the years ended Dec. 31, 1996, 1995 and 1994 and
total assets at Dec. 31, 1996, 1995 and 1994 by segment are summarized as
follows:
1996 1995 1994
------ ------ -----
Net investment income:
Life, disability income
and long-term care insurance $ 262,998 $ 256,242 $ 247,047
Annuities 1,702,364 1,651,067 1,534,826
----------- ----------- ------------
$ 1,965,362 $ 1,907,309 $ 1,781,873
=========== =========== ============
Premiums, charges and fees:
Life, disability income
and long-term care insurance $ 448,389 $ 384,008 $ 335,375
Annuities 308,873 249,557 193,370
------------ ------------ -------------
$ 757,262 $ 633,565 $ 528,745
============ ============ =============
Income before income taxes:
Life, disability income
and long-term care insurance $ 161,115 $ 125,402 $ 122,677
Annuities 460,758 440,278 394,117
Net loss on investments (159) (4,898) (4,282)
------------- ------------- --------------
$ 621,714 $ 560,782 $ 512,512
============ ============ =============
Total assets:
Life, disability income
and long-term care insurance $ 7,028,906 $ 6,195,870 $ 5,269,188
Annuities 40,277,075 36,704,208 30,478,355
----------- ----------- -----------
$47,305,981 $42,900,078 $35,747,543
=========== =========== ===========
Allocations of net investment income and certain general expenses are based
on various assumptions and estimates.
Assets are not individually identifiable by segment and have been allocated
principally based on the amount of future policy benefits by segment.
Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying consolidated balance sheets of IDS Life
Insurance Company (a wholly owned subsidiary of American Express Financial
Corporation) as of December 31, 1996 and 1995, and the related consolidated
statements of income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of IDS Life Insurance
Company at December 31, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for certain investments in debt and equity
securities in 1994.
Ernst & Young LLP
February 7, 1997
Minneapolis, Minnesota
<PAGE>
PAGE 37
PART II. OTHER INFORMATION
Item 1. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
List of financial statements filed as part of this Post-Effective
Amendment to the Registration Statement.
Financial statements included in the prospectus, Part I:
IDS Life Insurance Company:
Consolidated Balance Sheets as of December 31, 1996, and December
31, 1995.
Consolidated Statements of Income for the years ended December
31, 1996, 1995 and 1994.
Consolidated Statements of Stockholder's Equity for the years ended
December 31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements.
Report of Independent Auditors dated February 7, 1997.
Exhibits to Financial Statements included in Part II:
IDS Life Insurance Company Schedules I, III, IV and V as required by
Regulation S-X.
(b) Exhibits
(1) Resolution of the Executive Committee of the Board of
Directors of Investors Syndicate Life Insurance and Annuity
Company dated May 10, 1968, filed as Exhibit 1 to Registrant's
Registration Statement No. 2-29081 filed on May 16, 1968, and
refiled electronically April 27, 1994 as Exhibit 1 with Post-
effective Amendment No. 56, is incorporated herein by
reference.
(2) Regulations of IDS Life Variable Annuity Fund A as Amended and Restated,
dated June 22, 1979, filed as Exhibit 2 to Registrant's Post-Effective
Amendment No. 32 to Registration Statement No. 2-29081 filed on December
10, 1979, and refiled electronically on or about April 11, 1995 are
incorporated herein by reference.
(3) Not applicable.
(4) Contracts filed as Exhibit 4 to Registrant's Post-Effective
Amendment No. 32 to Registration Statement No. 2-29081 filed
on December 10, 1979, are incorporated herein by reference.
<PAGE>
PAGE 38
(5) (a) Investment Advisory Agreement between IDS Life
Insurance Company and IDS/American Express dated
January 12, 1984, filed as Exhibit 5(a) to Registrant's
Post-Effective Amendment No. 44, and refiled
electronically April 27, 1994 as Exhibit 5(a) with
Post-Effective Amendment No. 56, is incorporated herein
by reference.
(b) Investment Management and Advisory Agreements between IDS Life
Insurance Company and IDS Life Variable Annuity Fund A dated
January 12, 1984, filed as Exhibit 5(b) to Registrant's
Post-Effective Amendment No. 44, and refiled electronically April
27, 1994 as Exhibit 5(b) with Post- Effective Amendment No. 56,
are incorporated herein by reference.
(6) Distribution and Services Agreement between Registrant and IDS
Life Insurance Company, dated January 12, 1984, filed as
Exhibit 6 to Registrant's Post-Effective Amendment No. 44, and
refiled electronically April 27, 1994 as Exhibit 6 with Post
Effective Amendment No. 56, is incorporated herein by
reference.
(7) None.
(8) (a) Custodian Agreement between Registrant, IDS Life
Insurance Company, and American Express Bank & Trust,
dated July 12, 1990, filed as Exhibit 8(a) to
Registrant's Post-Effective Amendment No. 53 to this
Registration Statement, filed April 15, 1991, and refiled
electronically April 27, 1994 as Exhibit 8(a) with Post-
Effective Amendment No. 56, is incorporated herein by
reference.
(8) (b) Custody Agreement between Morgan Stanley Trust Company
and IDS Bank & Trust dated May, 1993 filed electronically
on or about April 11, 1995 as Exhibit No. 8(b) to Post-
Effective Amendment No. 58 is incorporated herein by
reference.
(9) Not applicable.
(10) Opinion and Consent of Counsel as to the legality of the securities
registered was filed with Registrant's 24f-2 Notice.
(11) Consent of Independent Auditors is filed electronically
herewith.
(12) Financial statement schedules omitted from Item 17 of Part I:
Schedule I - Consolidated Summary of Investments Other
than Investments in Related Parties
Schedule III - Supplementary Insurance Information
Schedule IV - Reinsurance
<PAGE>
PAGE 39
Schedule V - Valuation and Qualifying Accounts
Report of Independent Auditors, dated February 7, 1997, on IDS Life
Insurance Company financial statement schedules.
(13) through (15) not applicable.
(16) Financial Data Schedule is filed electronically herewith.
(17)(a) IDS Life Insurance Company Power of Attorney to sign Amendments
to this Registration Statement dated March 12, 1997 is filed
electronically herewith as Exhibit 17(a).
(17)(b) Board of Managers Power of Attorney to sign Amendments to this
Registration Statement dated March 25, 1997 is filed
electronically herewith as Exhibit 17(b).
Item 2. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
Both the Registrant and IDS Life Variable Annuity Fund B are separate
accounts of IDS Life. Consequently, the securities and funds of the Registrant
and Fund B are technically those of IDS Life, even though the securities and
funds of the two Funds are maintained as separate accounts under Minnesota Law
pursuant to a safekeeping agreement with American Express Bank & Trust. As
separate Accounts, Minnesota Law provides that the assets of the Funds are not
chargeable with liabilities arising out of any other business of IDS Life and
are held for the exclusive benefit of owners of variable annuity contracts based
on the Funds.
Item 3. NUMBER OF HOLDERS OF SECURITIES
Number of Record Holders
Title of Class as of March 31, 1997
Variable Annuities 11,024
Item 4. INDEMNIFICATION
The Regulations of the Registrant provide that each member of the Board
of Managers and each Officer of the Fund shall be indemnified by IDS Life, of
which the Fund is a separate account, for reasonable costs and expenses actually
and necessarily incurred in defense of any action, suit or proceedings where the
defendant is a party by reason of being a Manager or Officer. No indemnification
will be forthcoming in the event of an adjudication of willful misfeasance, bad
faith, gross negligence or reckless disregard by the Officer or Manager of the
duties of his office. In the absence of an adjudication expressly absolving the
Office or Manager of the afore-detailed wrongful conduct, indemnification may
still be advanced should 2/3 of the members of the Board of Directors of IDS
Life who were not involved in the processing resolve there was no instance of
such wrongful conduct. In the instance of such a resolution, the indemnification
claim still must be found to be reasonable in amount and proper in presentation
by independent counsel of IDS Life. Should any proceeding be settled,
<PAGE>
PAGE 40
indemnification shall not exceed the costs, fees and expenses which would have
been incurred had the proceeding been litigated. The payment of indemnification
by IDS Life will not prevent a variable contract holder from challenging the
payment by appropriate legal action on the basis that the payment was improper
because of willful misfeasance, bad faith, gross negligence or reckless
disregard by an Officer or Manager of his duties.
The By-Laws of the Registrant's investment management underwriter, IDS
Life, also contains an indemnification clause. The clause provides that IDS Life
shall indemnify any person who was or is a party or is threatened to be made a
party, by reason of the fact that he is or was a Manager of Variable Annuity
Funds A and B, director, officer, employee or agent of IDS Life, or is or was
serving at the direction of IDS Life as a Manager of Variable Annuity Funds A
and B, Director, Officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, to any threatened, pending or
completed action, suit or proceeding, wherever brought, to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or hereafter
amended, provided that this Article shall not indemnify or protect any such
Manager of Variable Annuity Funds A and B, Director, Officer, employee or agent
against any liability to IDS Life or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence, in the performance of his duties or by reason of his reckless
disregard of his obligations and duties.
At the time of the filing of the Registration Statement of the Registrant, IDS
Life included the following undertaking with regard to the foregoing
indemnification procedures:
"Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provision, or
otherwise ISL [si__. IDS Life] has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment of ISL [si__. IDS Life] of expenses incurred or
paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, ISL [si__. IDS Life] will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such
issue."
<PAGE>
PAGE 41
<TABLE><CAPTION>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)
Directors and officers of American Express Financial Corporation who are
directors and/or officers of one or more other companies:
Ronald G. Abrahamson, Vice President--Service Quality and Reengineering
<S> <C> <C>
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
and Reengineering
Douglas A. Alger, Vice President--Field Compensation and Administration
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Compensation and
Administration
Peter J. Anderson, Director and Senior Vice President--Investments
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Investments
IDS Advisory Group Inc. Director and Chairman
of the Board
IDS Capital Holdings Inc. Director and President
IDS Futures Corporation Director
IDS Futures III Corporation Director
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Securities Corporation Executive Vice President-
Investments
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Ward D. Armstrong, Vice President- American Express Institutional Services
American Express Financial Advisors IDS Tower 10 Vice President-Sales and
Minneapolis, MN 55440 Marketing, American
Express Institutional
Retirement Services
John M. Baker, Vice President--Plan Sponsor Services
American Express Financial Advisors IDS Tower 10 Vice President-Plan Sponsor
Minneapolis, MN 55440 Services
American Express Trust Company IDS Tower 10 Senior Vice President
Minneapolis, MN 55440
Joseph M. Barsky III, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
<PAGE>
PAGE 42
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Robert C. Basten, Vice President--Tax and Business Services
American Express Financial Advisors IDS Tower 10 Vice President-Tax
Minneapolis, MN 55440 and Business Services
American Express Tax & Business Director, President and
Services Inc. Chief Executive Officer
Timothy V. Bechtold, Vice President--Risk Management Products
American Express Financial Advisors IDS Tower 10 Vice President-Risk
Minneapolis, MN 55440 Management Products
IDS Life Insurance Company Vice President-Risk
Management Products
Alan F. Bignall, Vice President--Technology and Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Technology and
Development
John C. Boeder, Vice President--Mature Market Group
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205
Karl J. Breyer, Director, Senior Vice President--Corporate Affairs and General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Affairs and
Special Counsel
American Express Minnesota Foundation Director
IDS Aircraft Services Corporation Director and President
Daniel J. Candura, Vice President--Marketing Support
American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Support
Cynthia M. Carlson, Vice President--American Express Securities Services
American Enterprise Investment IDS Tower 10 Director, President and
Services Inc. Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Advisors Vice President-American
Express Securities Services
Orison Y. Chaffee III, Vice President--Field Real Estate
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Real Estate
<PAGE>
PAGE 43
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
James E. Choat, Director and Senior Vice President--Field Management
American Enterprise Life Insurance IDS Tower 10 Director, President
Company Minneapolis, MN 55440
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President--North
Central Region
American Express Minnesota Foundation Director
IDS Insurance Agency of Alabama Inc. Vice President--North
Central Region
IDS Insurance Agency of Arkansas Inc. Vice President--North
Central Region
IDS Insurance Agency of Massachusetts Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Inc. Vice President--North
Central Region
IDS Insurance Agency of North Carolina Inc. Vice President--North
Central Region
IDS Insurance Agency of Ohio Inc. Vice President--North
Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-- North
Central Region
Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty
AMEX Assurance Co. Director and President
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Manager-IDS Property
Casualty
IDS Property Casualty Insurance Co. I WEG Blvd. Director and President
DePere, Wisconsin 54115
Colleen Curran, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Express Service Corporation Vice President and Chief
Legal Counsel
Regenia David, Vice President--Systems Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
Luz Maria Davis, Vice President--Communications
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Communications
<PAGE>
PAGE 44
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
William H. Dudley, Director and Executive Vice President--Investment Operations
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-
Investment Operations
IDS Advisory Group Inc. Director
IDS Capital Holdings Inc. Director
IDS International, Inc. Director
IDS Securities Corporation Director, Chairman of the
Board, President and
Chief Executive Officer
Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 General Counsel
American Express Insurance Agency of Nevada Inc. Director and Vice President
IDS Insurance Agency of Alabama Inc. Director and Vice President
IDS Insurance Agency of Arkansas Inc. Director and Vice President
IDS Insurance Agency of Massachusetts Inc. Director and Vice President
IDS Insurance Agency of New Mexico Inc. Director and Vice President
IDS Insurance Agency of North Carolina Inc. Director and Vice President
IDS Insurance Agency of Ohio Inc. Director and Vice President
IDS Insurance Agency of Wyoming Inc. Director and Vice President
IDS Real Estate Services, Inc. Vice President
Investors Syndicate Development Corp. Director
Robert M. Elconin, Vice President--Government Relations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Government Relations
IDS Life Insurance Company Vice President
Mark A. Ernst, Vice President--Retail Services
American Enterprise Investment IDS Tower 10 Director, Senior Vice
Services Inc. Minneapolis, MN 55440 President
American Express Financial Advisors Vice President-
Retail Services
American Express Tax & Business Director and Chairman of
Services Inc. the Board
Gordon M. Fines, Vice President--Mutual Fund Equity Investments
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mutual Fund Equity
Investments
IDS Advisory Group Inc. Executive Vice President
Douglas L. Forsberg, Vice President--Institutional Products Group
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Institutional Products
Group
<PAGE>
PAGE 45
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Jeffrey P. Fox, Vice President and Corporate Controller
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Corporate Controller
John J. Golden, Vice President--Human Resources Planning and Field Support
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Planning and
Field Support
Harvey Golub, Director
American Express Company American Express Tower Chairman and Chief
World Financial Center Executive Officer
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer
Morris Goodwin Jr., Vice President and Corporate Treasurer
American Centurion Life Assurance Co. Vice President and
Treasurer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Treasurer
American Enterprise Life Insurance Vice President and
Company Treasurer
American Express Financial Advisors Vice President and
Corporate Treasurer
American Express Insurance Agency of Nevada Inc. Vice President and
Treasurer
American Express Minnesota Foundation Vice President and
Treasurer
American Express Tax & Business Vice President and
Services Inc. Treasurer
American Partners Life Insurance Co. Vice President and
Treasurer
AMEX Assurance Co. Vice President and
Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Cable Corporation Director, Vice President
and Treasurer
IDS Cable II Corporation Director, Vice President
and Treasurer
IDS Capital Holdings Inc. Vice President and
Treasurer
IDS Certificate Company Vice President and
Treasurer
IDS Deposit Corp. Director, President
and Treasurer
IDS Futures Corp. Director
IDS Futures III Corp. Director
IDS Insurance Agency of Alabama Inc. Vice President and
Treasurer
<PAGE>
PAGE 46
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Insurance Agency of Arkansas Inc. Vice President and
Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and
Treasurer
IDS Insurance Agency of New Mexico Inc. Vice President and
Treasurer
IDS Insurance Agency of North Carolina Inc. Vice President and
Treasurer
IDS Insurance Agency of Ohio Inc. Vice President and
Treasurer
IDS Insurance Agency of Wyoming Inc. Vice President and
Treasurer
IDS International, Inc. Vice President and
Treasurer
IDS Life Insurance Company Vice President and
Treasurer
IDS Life Series Fund, Inc. Vice President and
Treasurer
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Director, Vice President
and Treasurer
IDS Partnership Services Corporation Director, Vice President
and Treasurer
IDS Plan Services of California, Inc. Vice President and
Treasurer
IDS Property Casualty Insurance Co. Vice President and
Treasurer
IDS Real Estate Services, Inc Vice President and
Treasurer
IDS Realty Corporation Director, Vice President
and Treasurer
IDS Sales Support Inc. Director, Vice President
and Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
National Computer Systems, Inc. 11000 Prairie Lakes Drive Director
Minneapolis, MN 55440
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Sloan Financial Group, Inc. Director
David A. Hammer, Vice President and Marketing Controller
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Marketing Controller
IDS Plan Services of California, Inc. Director and Vice President
<PAGE>
PAGE 47
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Lorraine R. Hart, Vice President--Insurance Investments
American Enterprise Life IDS Tower 10 Vice President-Investments
Insurance Company Minneapolis, MN 55440
American Express Financial Advisors Vice President-Insurance
Investments
American Partners Life Insurance Co. Director and Vice
President-Investments
AMEX Assurance Co. Vice President-Investments
IDS Certificate Company Vice President-Investments
IDS Life Insurance Company Vice President-Investments
IDS Life Series Fund, Inc. Vice President-Investments
IDS Life Variable Annuity Funds A and B Vice President-Investments
IDS Property Casualty Insurance Company Vice President-Investment
Officer
Investors Syndicate Development Corp. Director and Vice
President-Investments
Janis K. Heaney, Vice President--Incentive Compensation
American Express Financial Advisors IDS Tower 10 Vice President-Incentive
Minneapolis, MN 55440 Compensation
Scott A. Hawkinson, Vice President--Assured Assets Product Development and Management
American Express Financial Advisors IDS Tower 10 Vice President-Assured
Minneapolis, MN 55440 Assets Product
Development & Management
James G. Hirsh, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Securities Corporation Director, Vice President
and General Counsel
Darryl G. Horsman, Vice President--Product Development and Technology, American Express
Institutional Retirement Services
American Express Trust Company IDS Tower 10 Director and President
Minneapolis, MN 55440
Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer
American Enterprise Investment IDS Tower 10 Vice President and Chief
Services Inc. Minneapolis, MN 55440 Compliance Officer
American Express Financial Advisors Vice President-
Government and
Customer Relations and
Chief Compliance Officer
<PAGE>
PAGE 48
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
American Express Service Corporation Vice President and Chief
Compliance Officer
IDS Securities Corporation Vice President and Chief
Compliance Officer
David R. Hubers, Director, President and Chief Executive Officer
American Express Financial Advisors IDS Tower 10 Chairman, Chief Executive
Minneapolis, MN 55440 Officer and President
American Express Service Corporation Director and Executive Vice
President
AMEX Assurance Co. Director
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Life Insurance Company Director
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director
James M. Jensen, Vice President--Life Products
American Express Financial Advisors IDS Tower 10 Vice President-Life
Minneapolis, MN 55440 Products
Marietta L. Johns, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
James E. Kaarre, Vice President--Marketing Promotions
American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Promotions
Matthew N. Karstetter, Vice President--Investment Accounting
American Express Financial Advisors IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Accounting
Linda B. Keene, Vice President--Market Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Market Development
G. Michael Kennedy, Vice President--Investment Services and Investment Research
American Express Financial Advisors IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Services and Investment
Research
Susan D. Kinder, Director and Senior Vice President--Human Resources
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Human Resources
American Express Minnesota Foundation Director
<PAGE>
PAGE 49
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Richard W. Kling, Director and Senior Vice President--Products
American Centurion Life Assurance Co. Director
American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of
Minneapolis, MN 55440 the Board
American Express Financial Advisors Senior Vice President-
Risk Management Products
American Express Insurance Agency of Nevada Inc. Director and President
American Express Service Corporation Vice President
American Partners Life Insurance Co. Director and Chairman of
the Board
AMEX Assurance Co. Director and Chairman of
the Board
IDS Certificate Company Director and Chairman of
the Board
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Inc. Director and President
IDS Insurance Agency of New Mexico Inc. Director and President
IDS Insurance Agency of North Carolina Inc. Director and President
IDS Insurance Agency of Ohio Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A and B Director and Chairman of
the Board and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President
Paul F. Kolkman, Vice President--Actuarial Finance
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Actuarial Finance
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
IDS Property Casualty Insurance Company Director
Claire Kolmodin, Vice President--Service Quality
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems
American Express Financial Advisors IDS Tower 10 Director and Senior Vice
Minneapolis, MN 55440 President-Field
Management and Business
Systems
<PAGE>
PAGE 50
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Edward Labenski, Jr., Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS Advisory Group Inc. Senior Vice President
Kurt A. Larson, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
Lori J. Larson, Vice President--Variable Assets Product Development
American Express Financial Advisors IDS Tower 10 Vice President-Variable
Minneapolis, MN 55440 Assets Product
Development
IDS Cable Corporation Director and Vice President
IDS Cable II Corporation Director and Vice President
IDS Futures Brokerage Group Assistant Vice President-
General Manager/Director
IDS Futures Corporation Director and Vice President
IDS Futures III Corporation Director and Vice President
IDS Management Corporation Director and Vice President
IDS Partnership Services Corporation Director and Vice President
IDS Realty Corporation Director and Vice President
Ryan R. Larson, Vice President--IPG Product Development
American Centurion Life Assurance Co. Director and
Vice President-Product
Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 IPG Product Development
IDS Life Insurance Company Vice President-
Annuity Product
Development
Daniel E. Laufenberg, Vice President and Chief U.S. Economist
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief U.S. Economist
Richard J. Lazarchic, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
Peter A. Lefferts, Director and Senior Vice President--Corporate Strategy and Development
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Strategy and
Development
American Express Trust Company Director
IDS Plan Services of California, Inc. Director
Investors Syndicate Development Corp. Director
<PAGE>
PAGE 51
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Douglas A. Lennick, Director and Executive Vice President--Private Client Group
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-Private
Client Group
Jonathan S. Linen, Director
Mary J. Malevich, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
Fred A. Mandell, Vice President--Field Marketing Readiness
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Marketing Readiness
William J. McKinney, Vice President--Field Management Support
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Support
Thomas W. Medcalf, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
William C. Melton, Vice President-International Research and Chief International Economist
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 International Research
and Chief International
Economist
James A. Mitchell, Director and Executive Vice President--Marketing and Products
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Executive Vice President-
Marketing and Products
American Express Service Corporation Senior Vice President
American Express Tax and Business Director
Services Inc.
AMEX Assurance Co. Director
IDS Certificate Company Director
IDS Life Insurance Company Director, Chairman of
the Board and Chief
Executive Officer
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director
<PAGE>
PAGE 52
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
William Miller, Vice President and Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President and Senior
Minneapolis, MN 55440 Portfolio Manager
Pamela J. Moret, Vice President--Retail Services
American Express Financial Advisors IDS Tower 10 Vice President-Retail
Minneapolis, MN 55440 Services
American Express Trust Company IDS Tower 10 Vice President
Minnepolis, MN 55440
Barry J. Murphy, Director and Senior Vice President--Client Service
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Client Service
IDS Life Insurance Company Director and Executive
Vice President-Client
Service
Mary Owens Neal, Vice President--Mature Market Segment
American Express Financial Advisors Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Segment
Robert J. Neis, Vice President--Technology Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Technology Services
James R. Palmer, Vice President--Taxes
American Express Financial Advisors IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
IDS Aircraft Services Corp. Vice President
IDS Life Insurance Company Vice President-Taxes
Carla P. Pavone, Vice President--Specialty Service Teams and Emerging Business
American Express Financial Advisors IDS Tower 10 Vice President-Specialty
Minneapolis, MN 55440 Service Teams and
Emerging Business
Susan B. Plimpton, Vice President--Segmentation Development and Support
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Segmentation Development
and Support
Ronald W. Powell, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
<PAGE>
PAGE 53
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Corporation Vice President and
Assistant Secretary
IDS Plan Services of California, Inc. Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
James M. Punch, Vice President--Geographical Service Teams
American Express Financial Advisors IDS Tower 10 Vice President-Geographical
Minneapolis, MN 55440 Service Teams
Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Taxable Mutual Fund
Investments
IDS Advisory Group Inc. Vice President
Debra J. Rabe, Vice President--Financial Planning
American Express Financial Advisors IDS Tower 10 Vice President-Financial
Minneapolis, MN 55440 Planning
ReBecca K. Roloff, Vice President--Private Client Group
American Express Financial Advisors IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group
Stephen W. Roszell, Vice President--Advisory Institutional Marketing
American Express Financial Advisors IDS Tower 10 Vice President-Advisory
Minneapolis, MN 55440 Institutional Marketing
IDS Advisory Group Inc. President and Chief
Executive Officer
IDS International, Inc. Director
IDS Fund Management Limited Director
John P. Ryan, Vice President and General Auditor
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Auditor
Erven A. Samsel, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President-
New England Region
IDS Insurance Agency of Alabama Inc. Vice President-
New England Region
<PAGE>
PAGE 54
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Insurance Agency of Arkansas Inc. Vice President-
New England Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
New England Region
IDS Insurance Agency of New Mexico Inc. Vice President-
New England Region
IDS Insurance Agency of North Carolina Inc. Vice President-
New England Region
IDS Insurance Agency of Ohio Inc. Vice President-
New England Region
IDS Insurance Agency of Wyoming Inc. Vice President-
New England Region
Stuart A. Sedlacek, Vice President--Assured Assets
American Centurion Life Assurance Co. Director and Chairman
and President
American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President, Assured
Assets
American Express Financial Advisors Vice President-
Assured Assets
American Partners Life Insurance Co. Director and President
IDS Certificate Company Director and President
IDS Life Insurance Company Director and Executive
Vice President, Assured
Assets
Investors Syndicate Development Corp. Director and Chairman of
the Board and President
Donald K. Shanks, Vice President--Property Casualty
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President
F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments
American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real
Minneapolis, MN 55440 Estate Loan Management
American Express Financial Advisors Vice President-Senior
Portfolio Manager,
Insurance Investments
American Partners Life Insurance Co. Vice President-Real
Estate Loan Management
AMEX Assurance Co. Vice President
IDS Certificate Company Vice President-Real
Estate Loan Management
IDS Life Insurance Company Vice President-Real
Estate Loan Management
IDS Partnership Services Corporation Vice President
IDS Real Estate Services Inc. Director and Vice President
IDS Realty Corporation Vice President
IDS Life Insurance Company of New York Box 5144 Vice President and
Albany, NY 12205 Assistant Treasurer
<PAGE>
PAGE 55
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Judy P. Skoglund, Vice President--Human Resources and Organization Development
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources and
Organization Development
Ben C. Smith, Vice President--Workplace Marketing
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Workplace Marketing
William A. Smith, Vice President and Controller--Private Client Group
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Private
Client Group
Bridget Sperl, Vice President--Human Resources Management Services
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Management
Services
William A. Stoltzmann, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Partners Life Insurance Co. Director, Vice President,
General Counsel and
Secretary
IDS Life Insurance Company Vice President, General
Counsel and Secretary
American Enterprise Life Insurance P.O. Box 534 Director, Vice President,
Company Minneapolis, MN 55440 General Counsel
and Secretary
James J. Strauss, Vice President--Corporate Planning and Analysis
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Planning and
Analysis
Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD
American Express Financial Advisors IDS Tower 10 Vice President-Information
Minneapolis, MN 55440 Resource Management/ISD
Barbara Stroup Stewart, Vice President--Corporate Reengineering
American Express Financial Advisors IDS Tower 10 Vice President-Corporate
Minneapolis, MN 55440 Reengineering
<PAGE>
PAGE 56
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
John R. Thomas, Director and Senior Vice President--Information and Technology
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information and
Technology
Melinda S. Urion, Director, Senior Vice President and Chief Financial Officer
American Enterprise Life IDS Tower 10 Vice President and
Insurance Company Minneapolis, MN 55440 Controller
American Express Financial Advisors Senior Vice President and
Chief Financial Officer
American Express Trust Company Director
American Partners Life Insurance Co. Director and Vice President
IDS Life Insurance Company Director, Executive Vice
President and Controller
Wesley W. Wadman, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
IDS Fund Management Limited Director and Vice Chairman
IDS International, Inc. Senior Vice President
Norman Weaver Jr., Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President--
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President-Southeast
Region
IDS Insurance Agency of Alabama Inc. Vice President-Pacific
Region
IDS Insurance Agency of Arkansas Inc. Vice President-Pacific
Region
IDS Insurance Agency of Massachusetts Inc. Vice President-Pacific
Region
IDS Insurance Agency of New Mexico Inc. Vice President-Pacific
Region
IDS Insurance Agency of North Carolina Inc. Vice President-Pacific
Region
IDS Insurance Agency of Ohio Inc. Vice President-Pacific
Region
IDS Insurance Agency of Wyoming Inc. Vice President-Pacific
Region
Michael L. Weiner, Vice President--Tax Research and Audit
American Express Financial Advisors IDS Tower 10 Vice President-Tax Research
Minneapolis, MN 55440 and Audit
American Express Service Corporation Assistant Treasurer
IDS Capital Holdings Inc. Vice President
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
<PAGE>
PAGE 57
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Futures III Corporation Vice President, Treasurer
and Secretary
Lawrence J. Welte, Vice President--Investment Administration
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Administration
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer
Jeffry F. Welter, Vice President--Equity and Fixed Income Trading
American Express Financial Advisors IDS Tower 10 Vice President-Equity
Minneapolis, MN 55440 and Fixed Income Trading
William N. Westhoff, Director, Senior Vice President--Global Investments
American Enterprise Life Insurance IDS Tower 10 Director
Company Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Global Chief Investment
Officer
IDS Fund Management Limited Director
IDS International, Inc. Director
IDS Partnership Services Corporation Director and Vice President
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Investors Syndicate Development Corp. Director
Edwin M. Wistrand, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
Michael R. Woodward, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President-
North Region
IDS Insurance Agency of Alabama Inc. Vice President-
North Region
IDS Insurance Agency of Arkansas Inc. Vice President-
North Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
North Region
IDS Insurance Agency of New Mexico Inc. Vice President-
North Region
IDS Insurance Agency of North Carolina Inc. Vice President-
North Region
IDS Insurance Agency of Ohio Inc. Vice President-
North Region
<PAGE>
PAGE 58
Item 5. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Insurance Agency of Wyoming Inc. Vice President-
North Region
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
</TABLE>
<PAGE>
PAGE 59
PART II. OTHER INFORMATION (Continued)
Item 6. PRINCIPAL UNDERWRITERS
(a) IDS Life is the Principal underwriter for IDS Life Variable
Annuity Fund A, IDS Life Variable Annuity Fund B, IDS Life
Accounts F, IZ, JZ, G, H, N, KZ, LZ, AND MZ, IDS Life Account
RE, IDS Life Account MGA and IDS Life Account SBS, IDS Life
Variable Account 10, IDS Life Variable Life Separate Account and
IDS Life Variable Account for Smith Barney.
Item 6(b). Principal Underwriter (IDS Life Insurance Company)
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
Timothy V. Bechtold Vice President-Risk None
IDS Tower 10 Management Products
Minneapolis, MN 55440
David J. Berry Vice President None
IDS Tower 10
Minneapolis, MN 55440
Robert M. Elconin Vice President None
IDS Tower 10
Minneapolis, MN 55440
Morris Goodwin Jr. Vice President and Treasurer Vice President and
IDS Tower 10 Treasurer
Minneapolis, MN 55440
Lorraine R. Hart Vice President-Investments Vice President,
IDS Tower 10 Investments
Minneapolis, MN 55440
David R. Hubers Director None
IDS Tower 10
Minneapolis, MN 55440
James M. Jensen Vice President-Insurance None
IDS Tower 10 Product Development
Minneapolis, MN 55440
Richard W. Kling Director and President Chairman of the
IDS Tower 10 Board of Managers
Minneapolis, MN 55440 and President
Paul F. Kolkman Director and Executive None
IDS Tower 10 Vice President
Minneapolis, MN 55440
Ryan R. Larson Vice President None
IDS Tower 10
Minneapolis, MN 55440
<PAGE>
Item 6(b). Principal Underwriter (IDS Life Insurance Company)(cont'd)
James A. Mitchell Director, Chairman of None
IDS Tower 10 the Board and Chief
Minneapolis, MN 55440 Executive Officer
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
Barry J. Murphy Director and Executive None
IDS Tower 10 Vice President-
Minneapolis, MN 55440 Client Service
James R. Palmer Vice President-Taxes None
IDS Tower 10
Minneapolis, MN 55440
Stuart A. Sedlacek Director and Executive None
IDS Tower 10 Vice President-Assured
Minneapolis, MN 55440 Assets
F. Dale Simmons Vice President- None
IDS Tower 10 Real Estate
Minneapolis, MN 55440 Loan Management
William A. Stoltzmann Vice President, General General Counsel and
IDS Tower 10 Counsel and Secretary Assistant Secretary
Minneapolis, MN 55440
Melinda S. Urion Director, Executive None
IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller
Item 7. LOCATION OF ACCOUNTS AND RECORDS
IDS Life Insurance Company
IDS Tower
Minneapolis, Minnesota
Item 8. MANAGEMENT SERVICES
Not Applicable.
Item 9. DISTRIBUTION EXPENSES
Not Applicable.
Item 10. UNDERTAKINGS
(a) and (b) These undertakings were filed in Registrant's
initial Registration Statement.
(c) The sponsoring insurance company represents that the fees and
charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the insurance
company.
<PAGE>
PAGE 61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant IDS Life Variable Annuity Fund A, certifies
that it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned thereunto duly authorized, in the city of Minneapolis, and
State of Minnesota on the 18th day of April, 1997.
IDS LIFE VARIABLE ANNUITY FUND A
By: /s/ Richard W. Kling**
Richard W. Kling**
Chairman of the Board
of Managers
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities indicated on the 18th day of April, 1997.
Signature Title
/s/ Edward Landes** Member, Board of Managers
Edward Landes
/s/ Carl N. Platou** Member, Board of Managers
Carl N. Platou
/s/ Gordon H. Ritz** Member, Board of Managers
Gordon H. Ritz
/s/ Richard W. Kling** Chairman of the Board
Richard W. Kling of Managers and President
/s/ Lorraine R. Hart Vice President, Investments
Lorraine R. Hart
/s/ Jeffery S. Horton** Vice President and
Jeffery S. Horton Controller
/s/ Timothy S. Meehan Secretary
Timothy S. Meehan
/s/ Morris Goodwin Jr.** Vice President and Treasurer
Morris Goodwin Jr.
/s/ William A. Stoltzmann** General Counsel and
William A. Stoltzmann Assistant Secretary
<PAGE>
PAGE 62
** Signed pursuant to IDS Life Variable Annuity Fund A Board of Managers Power
of Attorney dated March 25, 1997 filed electronically herewith as Exhibit 17(b)
to this Registration Statement:
by
Mary Ellyn Minenko
<PAGE>
PAGE 63
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, IDS Life Insurance Company, on behalf of the Registrant,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the city of Minneapolis, and State of Minnesota on the 18th day
of April, 1997.
IDS LIFE INSURANCE COMPANY
By: /s/ Richard W. Kling*
Richard W. Kling
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities indicated on the 18th day of April, 1997.
Signature Title
/s/ James A. Mitchell* Chairman of the Board
James A. Mitchell and Chief Executive
Officer
/s/ Richard W. Kling* Director and President
Richard W. Kling
/s/ David R. Hubers* Director
David R. Hubers
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
/s/ Stuart A. Sedlacek* Director and Executive Vice
Stuart A. Sedlacek President, Assured Assets
/s/ Melinda S. Urion* Director, Executive Vice
Melinda S. Urion President and Controller
* Signed pursuant to Power of Attorney, dated March 12, 1997, filed
electronically herewith as Exhibit 17(a).
by
Mary Ellyn Minenko
<PAGE>
PAGE 64
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 60
TO REGISTRATION STATEMENT NO. 2-29081
This Post-Effective Amendment comprises the following papers and documents.
The facing sheet.
Part I.
Cross Reference Sheet.
Prospectus.
Financial Statements.
Part II.
Other Information.
Signatures.
<PAGE>
PAGE 1
EXHIBIT INDEX
IDS Life Variable Annuity Fund A
Registration No. 2-29081/811-1653
Exhibit 11: Consent of Independent Auditors.
Exhibit 12: Financial Statement Schedules and Report.
Exhibit 16: Financial Data Schedule.
Exhibit 17(a): IDS Life Insurance Company POA.
Exhibit 17(b): Board of Managers POA.
<PAGE>
PAGE 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our reports dated February 7, 1997 on the consolidated
financial statements and schedules of IDS Life Insurance Company and the
incorporation by reference of our report dated February 3, 1997 on the financial
statements of IDS Life Variable Annuity Fund A in Post-Effective Amendment No.
60 to the Registration Statement (Form N-1, No. 2-29081) and related Prospectus
for the registration of IDS Life Variable Account Fund A interests to be offered
by IDS Life Insurance Company.
ERNST & YOUNG LLP
Minneapolis, Minnesota
April 18, 1997
<PAGE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 2,085,280 $ 2,060,778 $ 2,085,280
States, municipalities and
political subdivisions 9,685 10,097 9,685
All other corporate bonds 8,141,414 8,450,775 8,141,414
------------- --------------- -----------------
Total held to maturity 10,236,379 10,521,650 10,236,379
Available for sale:
United States Government and
government agencies and
authorities (b) 6,925,876 6,960,002 6,960,002
States, municipalities and
political subdivisions 11,032 12,368 12,368
All other corporate bonds 4,071,714 4,174,475 4,174,475
------------- --------------- -----------------
Total available for sale 11,008,622 11,146,845 11,146,845
Mortgage loans on real estate 3,493,364 XXXXXXXXX 3,493,364
Policy loans 459,902 XXXXXXXXX 459,902
Other investments 251,465 XXXXXXXXX 251,465
------------- -----------------
Total investments $ 25,449,732 $ XXXXXXXXX $ 25,587,955
============= =================
(a) - Includes mortgage-backed securities with a cost and market value of $2,041,278 and $2,017,119,
respectively.
(b) - Includes mortgage-backed securities with a cost and market value of $6,847,932 and $6,879,547,
respectively.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,398,025 $ 21,838,008 $ - $ 50,137 $ - $1,702,364 $ 2,724 $ 189,645 $ 180,942 N/A
Life, DI, and
Long-term
Care Insurance 932,780 3,811,034 - 33,497 182,921 262,998 187,486 88,960 80,526 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,330,805 $ 25,649,042 $ - $ 83,634 $ 182,921 $1,965,362 $ 190,210 $ 278,605 $ 261,468 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,227,169 $ 21,404,836 $ - $ 28,191 $ - $1,651,067 $ 2,693 $ 189,626 $ 166,191 N/A
Life, DI,
and Long-term
Care Insurance 798,556 3,613,253 - 28,132 161,530 256,242 164,749 90,495 45,451 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,025,725 $ 25,018,089 $ - $ 56,323 $ 161,530 $1,907,309 $ 167,442 $ 280,121 $ 211,642 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,150,585 $ 19,361,979 $ - $ 23,888 $ - $1,534,826 $ (5,762) $ 194,060 $ 131,515 N/A
Life, DI, and
Long-term Care
Insurance 714,739 3,346,931 - 26,180 144,640 247,047 134,128 86,312 78,586 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 1,865,324 $ 22,708,910 $ - $ 50,068 $ 144,640 $1,781,873 $ 128,366 $ 280,372 $ 210,101 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Life insurance in force $ 65,571,173 $ 3,875,921 $ 1,703,181 $63,398,433 2.69%
===================================================================================================
Premiums:
Life insurance $ 54,111 $ 3,253 $ 545 $ 51,403 1.06%
DI & LTC insurance 164,561 33,043 -- 131,518 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 218,672 $ 36,296 $ 545 $ 182,921 0.30%
===================================================================================================
For the year ended
December 31, 1995
Life insurance in force $ 57,895,180 $ 3,771,204 $ 1,788,352 $55,912,328 3.20%
===================================================================================================
Premiums:
Life insurance $ 53,089 $ 2,648 $ (248) $ 50,193 -0.49%
DI & LTC insurance 137,016 25,679 -- 111,337 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 190,105 $ 28,327 $ (248) $ 161,530 -0.15%
===================================================================================================
For the year ended
December 31, 1994
Life insurance in force $ 50,814,651 $ 3,246,608 $ 1,851,916 $49,419,959 3.75%
===================================================================================================
Premiums:
Life insurance $ 51,219 $ 3,354 $ 319 $ 48,184 0.66%
DI & LTC insurance 114,049 17,593 -- 96,456 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 165,268 $ 20,947 $ 319 $ 144,640 0.22%
===================================================================================================
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------
Balance at Charged to
Description Beginning Charged to Other Accounts- Deductions- Balance at End
of Period Costs & Expenses Describe Describe * of Period
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
- ------------------------------
Reserve for Mortgage Loans $37,340 $155 $0 $0 $37,495
Reserve for Other Investments $4,713 ($750) $0 $0 $3,963
For the year ended
December 31, 1995
- ------------------------------
Reserve for Mortgage Loans $35,252 $1,088 $0 ($1,000) $37,340
Reserve for Other Investments $7,515 ($2,802) $0 $0 $4,713
For the year ended
December 31, 1994
- ------------------------------
Reserve for Mortgage Loans $35,020 $232 $0 $0 $35,252
Reserve for Fixed Maturities $22,777 ($16,777) $0 $6,000 $0
Reserve for Other Investments $10,700 ($3,185) $0 $0 $7,515
* 1995 amount represents a reserve on mortgage loans which were transferred from an affiliate.
1994 amount represents a direct writedown of the related investments in fixed maturities.
</TABLE>
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the consolidated financial statements of IDS Life Insurance
Company as of December 31, 1996 and 1995, and for each of the three years in the
period ended December 31, 1996, and have issued our report thereon dated
February 7, 1997 (included elsewhere in this Registration Statement). Our audits
also included the financial statement schedules listed in Item 1(b)12 of this
Registration Statement. These schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
Minneapolis, Minnesota
February 7, 1997
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 0000049706
<NAME> IDS Life Insurance Company
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 11146845
<DEBT-CARRYING-VALUE> 10236379
<DEBT-MARKET-VALUE> 10521650
<EQUITIES> 3308
<MORTGAGE> 3493364
<REAL-ESTATE> 70290
<TOTAL-INVEST> 25587955
<CASH> 224603
<RECOVER-REINSURE> 1803
<DEFERRED-ACQUISITION> 2330805
<TOTAL-ASSETS> 47305981
<POLICY-LOSSES> 25649042
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 83634
<NOTES-PAYABLE> 0
<COMMON> 3000
0
0
<OTHER-SE> 2144080
<TOTAL-LIABILITY-AND-EQUITY> 47305981
182921
<INVESTMENT-INCOME> 1965362
<INVESTMENT-GAINS> (159)
<OTHER-INCOME> 574341
<BENEFITS> 1560678
<UNDERWRITING-AMORTIZATION> 278605
<UNDERWRITING-OTHER> 261468
<INCOME-PRETAX> 621714
<INCOME-TAX> 207138
<INCOME-CONTINUING> 414576
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 414576
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 24192
<PROVISION-CURRENT> 88549
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 86354
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 26387
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<PAGE>
PAGE 1
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as directors of IDS Life Insurance Company on
behalf of the below listed registrants that previously have filed registration
statements and amendments thereto pursuant to the requirements of the Securities
Act of 1933 and the Investment Company Act of 1940 with the Securities and
Exchange Commission:
1933 Act 1940 Act
Reg. Number Reg. Number
IDS Life Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract
(Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity 33-50968 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
Flexible Premium Survivorship Variable
Life Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life
Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
IDS Life Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn
Minenko, Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster,
Bruce Kohn and Timothy S. Meehan or any one of them, as her or his
attorney-in-fact and agent, to sign for her or him in her or his
name, place and stead any and all filings, applications (including
<PAGE>
PAGE 2
applications for exemptive relief), periodic reports, registration statements
(with all exhibits and other documents required or desirable in connection
therewith), other documents, and amendments thereto and to file such filings,
applications, periodic reports, registration statements, other documents, and
amendments thereto with the Securities and Exchange Commission, and any
necessary states, and grants to any or all of them the full power and authority
to do and perform each and every act required or necessary in connection
therewith.
Dated the 12th day of March, 1997.
/s/ David R. Hubers March 10, 1997
- ---------------------------------
David R. Hubers
Director
/s/ Richard W. Kling March 12, 1997
- ---------------------------------
Richard W. Kling
Director and President
/s/ Paul F. Kolkman March 11, 1997
- ---------------------------------
Paul F. Kolkman
Director and Executive Vice
President
/s/ James A. Mitchell March 10, 1997
- ---------------------------------
James A. Mitchell
Director, Chairman of the
Board and Chief Executive Officer
/s/ Barry J. Murphy March 10, 1997
- ---------------------------------
Barry J. Murphy
Director and Executive Vice
President, Client Service
/s/ Stuart A. Sedlacek March 7, 1997
- ---------------------------------
Stuart A. Sedlacek
Director and Executive Vice
President, Assured Assets
/s/ Melinda S. Urion March 10, 1997
- ---------------------------------
Melinda S. Urion
Director, Executive Vice
President and Controller
<PAGE>
PAGE 1
IDS LIFE VARIABLE ANNUITY FUND A
IDS LIFE VARIABLE ANNUITY FUND B
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as a member of the Board of Managers or officer of IDS
Life Variable Annuity Funds A & B, which are open-end, diversified investment
companies organized as segregated asset accounts of IDS Life Insurance Company
that previously have filed registration statements and amendments thereto
pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 with the Securities and Exchange Commission, File Numbers
2-29081 and 811-1653 and 2-47430, 2-29358 and 811- 1674, respectively, hereby
constitute and appoint William A. Stoltzmann, Mary Ellyn Minenko, Sherilyn K.
Beck, Colin Lancaster and Timothy S. Meehan or any one of them, as his/her
attorney-in-fact and agent, to sign for him/her in his/her name, place and stead
any and all further filings, applications (including applications for exemptive
relief), periodic reports, registration statements (with all exhibits and other
documents required or desirable in connection therewith), other documents, an
amendments thereto and to such filings, applications, periodic reports,
registration statements, other documents, and amendments thereto with the
Securities and Exchange Commission, and any necessary states, and grants to any
or all of them the full power and authority to do and perform each and every act
required or necessary in connection therewith.
Dated the 25th day of March, 1997.
/s/ Richard W. Kling /s/ Jeffrey S. Horton
Richard W. Kling Jeffrey S. Horton
/s/ Edward Landes /s/ Morris Goodwin Jr.
Edward Landes Morris Goodwin Jr.
/s/ Lorraine R. Hart /s/ William A. Stoltzmann
Lorraine R. Hart William A. Stoltzmann
/s/ Carl N. Platou /s/ Timothy S. Meehan
Carl N. Platou Timothy S. Meehan
/s/ Gordon H. Ritz
Gordon H. Ritz
