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. 2-47430) [X]
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2-29358
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 22 (File No. 811-1674) [X]
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IDS Life Variable Annuity Fund B (Individual and Group)
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IDS Tower 10, Minneapolis, Minnesota 55440-0010
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(612) 671-3678
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Mary Ellyn Minenko - IDS Tower 10, Minneapolis 55440-0010
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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, 1998 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.
<PAGE>
IDS Life Variable Annuity Fund B Post-Effective
(Employer and Individual) 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 B (INDIVIDUAL AND GROUP)
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
<PAGE>
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; 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
(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
<PAGE>
IDS Life Variable Annuity Fund B
Individual Variable Annuity Contracts and Group Variable Annuity Contracts
Prospectus/May 1, 1998
IDS Life Variable Annuity Fund B (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 tax-qualified variable annuity
contracts offered by IDS Life: a) three individual variable annuity contracts
for use with plans qualifying under Sections 401, 403, 408 or 408A of the
Internal Revenue Code (the Code), and, b) a group variable annuity contract
designed to provide benefits under annuity purchase plans adopted by public
school systems and certain tax-exempt organizations pursuant to Section 403(b)
of the Code.
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 B
IDS Tower 10
Minneapolis, Minnesota 55440-0010
General Information (612) 671-3733
Annuity Service (612) 671-4738
(800) 437-0602
<PAGE>
IDS Life Variable Annuity Fund B
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440-0010
Prospectus, May 1, 1998
Individual Variable Annuity Contracts and Group Variable Annuity Contracts
<PAGE>
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............................................
Special rules if annuitant dies
before the annuity payment starting date..............................
Special features of the Group Variable Annuity Contract...............
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..................................................
<PAGE>
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 tax-qualified
variable annuity contracts:
o A single payment deferred annuity that can be purchased by making an
initial payment of at least $3,000 (page __).
o A single payment immediate annuity that can be purchased by making an
initial payment of at least $3,000 (page __).
o A flexible installment deferred annuity that may be purchased by making 10
or more annual payments of at least $300 (page __).
Each of the individual variable annuity contracts described above are for use
with plans qualifying under Sections 401, 403, 408 or 408A of the Code.
The annuitant is the owner of the three individual annuity contracts described
above, unless your application states otherwise; and
o A group variable annuity contract designed to provide benefits under
annuity plans adopted by public school systems and certain tax-exempt
organizations pursuant to Section 403(b) of the Code. The contract which is
issued to the
<PAGE>
employer as owner provides benefits to all group contract participants
(participants) in the underlying annuity plan. Generally, IDS Life will not
issue a contract to an employer unless there are at least five employees
who are plan participants or who already own contracts based on the Fund.
The annual contribution a participant elects must be at least equal to the
larger of (1) an amount which, when multiplied by the number of contract
years between the application date and the retirement date, equals $3,000
or (2) $300 a year (page __).
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 (page __).
Charges you pay - IDS Life will deduct a combined sales and administrative
charge from payments made into the Fund.
For the group variable annuity contract the deduction is 5.75% of the first
$10,000 contribution, 4% of the next $40,000, and 2% of all amounts in excess of
$50,000 (page __).
For the other three individual annuity contracts, the deduction is 15% of the
first $1,500, 4% of the next $48,500, and 2% of all amounts in excess of $50,000
(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 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 your 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 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. In addition, 20% income tax withholding may be imposed. The
Tax Reform Act of 1986 restricts your right to receive a distribution from a
Tax-Sheltered Annuity (TSA).
You may lose money if you surrender your contract too soon because the
percentage that is deducted is higher in the earlier years.
A surrender by a participant in a plan or program qualified under Sections 401,
403, 408 or 408A of the Code may result in adverse tax consequences. You should
consult a tax advisor before making a surrender request (page __).
<PAGE>
Federal Tax Information - According to current interpretations of federal income
tax law, generally there is no federal income tax on any increase in your
annuity's value until distributions are made. Under certain circumstances, there
may be a 10% IRS penalty tax on early withdrawal and 20% income tax withholding
imposed on distributions (page __).
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 __.
<PAGE>
<TABLE>
<CAPTION>
Financial highlights from Jan. 1, 1988 to Dec. 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended Dec. 31, 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- --------------------------- --------- ----------- ---------- ---------- --------- -------- --------- --------- --------- ----------
Accumulation unit value at
beginning of year $20.26 $16.55 $12.18 $12.69 $11.60 $10.87 $7.29 $7.14 $5.43 $5.08
- --------------------------- --------- ----------- ---------- ---------- --------- -------- --------- --------- --------- ----------
Income from investment
operations:
Net investment income (.09) (.09) (.03) .03 (.02) (.03) .02 .07 .05 .06
(loss)
Net gains (losses) on
securities, both realized
and unrealized 4.54 3.80 4.40 (.54) 1.11 .76 3.56 .08 1.66 .29
- --------------------------- --------- ----------- ---------- ---------- --------- -------- --------- --------- --------- ----------
Total from investment
operations 4.45 3.71 4.37 (.51) 1.09 .73 3.58 .15 1.71 .35
- --------------------------- --------- ----------- ---------- ---------- --------- -------- --------- --------- --------- ----------
Accumulation unit value at
end of year $24.71 $20.26 $16.55 $12.18 $12.69 $11.60 $10.87 $7.29 $7.14 $5.43
- --------------------------- --------- ----------- ---------- ---------- --------- -------- --------- --------- --------- ----------
Total return* 21.96% 22.42% 35.88% (4.00%) 9.42% 6.72% 49.03% 2.12% 31.46% 6.93%
- --------------------------- --------- ----------- ---------- ---------- --------- -------- --------- --------- --------- ----------
Ratios/Supplemental Data
- --------------------------- --------- ----------- ---------- ---------- --------- -------- --------- --------- --------- ----------
Total contract owner's
equity at end of year (000 $758,172 $673,907 $613,941 $494,520 $534,556 $506,150 $500,877 $355,049 $376,790 $325,271
omitted)
Ratio of operating
expenses to average net 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.41% 1.41% 1.43% 1.40%
assets
Ratio of net investment
income (loss) to average
net assets (.72%) (.50%) (.19%) .25% (.17%) (.28%) .26% .93% .75% 1.04%
Portfolio turnover rate 29% 12% 44% 61% 64% 74% 67% 56% 55% 60%
Average brokerage
commission rate** $.0500 $.0548 -- -- -- -- -- -- -- --
- --------------------------- --------- ----------- ---------- ---------- --------- -------- --------- --------- --------- ----------
</TABLE>
*Total return does not reflect payment of a sales charge.
**Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions are
charged. The comparability of this information may be affected by the fact that
commission rates per share vary significantly among foreign countries.
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 $9.17 as of Dec. 31, 1997,
$7.78 as of Dec. 31, 1996, $6.58 as of Dec. 31, 1995, $5.02 as of Dec. 31, 1994,
$5.41 as of Dec. 31, 1993, $5.11 as of Dec. 31, 1992, $4.96 as of Dec. 31, 1991,
$3.46 as of Dec. 31, 1990, $3.51 as of Dec. 31, 1989 and $2.76 as of Dec. 31,
1988. The value of an annuity unit (assuming a 5% investment rate) was $6.05 as
of Dec. 31, 1997, $5.21 as of Dec. 31, 1996, $4.47 as of Dec. 31, 1995, $3.46 as
of Dec. 31, 1994, $3.78 as of Dec. 31, 1993, $3.63 as of Dec. 31, 1992, $3.57 as
of Dec. 31, 1991, $2.53 as of Dec. 31, 1990, $2.60 as of Dec. 31, 1989 and $2.07
as of Dec. 31, 1988.
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.
<PAGE>
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.
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.
<PAGE>
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.
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 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 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 gain rapid exposure to
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.
<PAGE>
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.
No securities will be bought on margin, nor will the Fund make any short sales
of securities.
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 1997, the Fund's portfolio turnover rate was 29%. For 1996, the Fund's
portfolio turnover rate was 12% and for 1995, the Fund's portfolio turnover rate
was 44%. Portfolio turnover results in brokerage costs and may affect the taxes
the Fund must pay.
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.
<PAGE>
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 will 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 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 A (Fund A) 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 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.
<PAGE>
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.
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:
$353,485 for 1997, $189,380 for 1996 and $724,770 for 1995. 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.
<PAGE>
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.
The contracts
This prospectus describes the following types of tax-qualified variable annuity
contracts:
o Single payment-deferred annuity. You make a single purchase payment.
Annuity payments are deferred until some future date.
o Single payment-immediate annuity. A participant makes a single payment.
Annuity payments will begin within 60 days after IDS Life approves your
application.
o Flexible installment payment-deferred annuity. A participant makes purchase
payments in installments over one or more years. Annuity payments will
begin at some future date after all installments have been paid.
o A group variable annuity contract. This contract is designed to provide
benefits under annuity purchase plans adopted by public school systems and
certain tax-exempt organizations pursuant to Section 403(b) of the Code.
The contract is a master contract issued to the employer as owner and
provides benefits for all annuity plan participants. Generally IDS Life
will not issue a contract to an employer unless there are at least five
employees who are plan participants or who already own contracts based on
the Fund. The annual contribution a participant elects must be at least
equal to the larger of (1) an amount which, when multiplied by the number
of contract years between the application date and the retirement date,
equals $3,000 or (2) $300 a year. A participant may increase the amount of
this annual contribution within the limits provided by the Code. However,
if the annual contribution is more than twice that of the very first annual
contribution, IDS Life may place some further conditions on contributions.
No contribution will be accepted that is not within the employee exclusion
allowance provided by Section 403(b) of the Code. The contract provides
several optional settlement modes that each plan participant may elect,
except that if at the annuity starting date the accumulation value of the
contract is less than $2,000, then the accumulation value may be paid in a
lump sum.
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.
<PAGE>
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 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. We will process your transfer
and/or variable surrender request at the next close of business (when the New
York Stock Exchange (NYSE) closes, normally 3 p.m. Central time) after we
receive it. 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.
<PAGE>
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 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 NYSE. The
Fund's securities also will be valued at the close of NYSE trading 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
<PAGE>
o The Securities and Exchange Commission under the provisions of the 1940 Act
declares a period of emergency to exist.
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
(any normal business day Monday through Friday that the NYSE is open) 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
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.
When we credit your purchase payments
IDS Life credits each purchase payment at the end of the valuation period during
which it received the payment at its corporate office.
<PAGE>
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).
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.
<PAGE>
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
Individual contracts. For deferred contracts paid for in annual installments or
with a single payment, the annuity payment starting date is selected in your
application. You may 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.
You can only wait so long before annuity payments begin. The annuity payment
starting date must come before the annuitant's 75th birthday.
Group contracts. For group contracts, the annuity starting date and the annuity
payment plan are elected by the participant in the Statement of Participation.
The participant may change either election anytime not less than 30 days before
annuity payments start. 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.
Additionally, the annuity payment starting date must be no later than the
certificate anniversary nearest the annuitant's 75th birthday.
For annuities except Roth IRAs, to avoid IRS penalty taxes, the retirement date
generally must be:
o on or after the date the annuitant reaches age 59 1/2; and
o for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
<PAGE>
o for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires;
except that 5% business owners may not select a retirement date that is
later than April 1 of the year following the calendar year when they reach
age 70 1/2.
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:
Plan A - An annuity is paid each month during the lifetime of the annuitant or
payee (group contract). No payments are made after the annuitant's or payee's
death, therefore, it is possible to receive only one annuity payment if the
annuitant dies shortly after annuity payments begin.
<PAGE>
Plan B - An annuity is paid each month during the lifetime of the annuitant or
payee 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 or
payee 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 or payees. When the first annuitant or payee 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.
Restrictions for some qualified plans - If your annuity was purchased under a
Section 401(k) plan, Section 403(b) plan (TSA), or as an IRA, you must select a
payment plan that provides for payments:
o over the life of the annuitant;
o over the joint lives of the annuitant and beneficiary;
o for a period not exceeding the life expectancy of the annuitant; or
o for a period not exceeding the joint life expectancies of the annuitant and
beneficiary.
A beneficiary of a variable annuity contract may ask for one lump-sum payment
under Plan B or Plan C. This payment may be subject to 20% income tax
withholding if made directly to a surviving spouse. 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
<PAGE>
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 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 for single payment contracts and flexible installment
payment contracts. The net amount invested is the total purchase payments minus
the deduction for sales and administrative charges.
<TABLE>
<CAPTION>
Single payment contracts
- --------------------------- -------------------- --------------------- ------------------- --------------------
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
- --------------------------- -------------------- --------------------- ------------------- --------------------
<S> <C> <C> <C> <C>
First $1,500 13.0% 2.0% 15.0% 17.65%
Next $48,500 3.0 1.0 4.0 4.17
Over $50,000 1.5 0.5 2.0 2.04
- --------------------------- -------------------- --------------------- ------------------- --------------------
<PAGE>
Flexible installment payment contracts
- --------------------------- -------------------- --------------------- ------------------- --------------------
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 $1,500 13.0% 2.0% 15.0% 17.65%
Next $48,500 3.0 2.0 4.0 4.17
Over $50,000 0.5 1.5 2.0 2.04
- --------------------------- -------------------- --------------------- ------------------- --------------------
The effect of the deductions shown above is illustrated in the following table:
- --------------------------- -------------------- --------------------- ------------------- --------------------
Sales and admin. Sales and admin.
Deduction for Charge as a Charge as a
$25 Monthly Total the sales percentage of percentage of
purchase purchase and admin. total purchase aggregate net
payments payments charge payments amount invested
- --------------------------- -------------------- --------------------- ------------------- --------------------
1 Year $ 300 $ 45 15.00% 17.65%
5 Years 1,500 225 15.00 17.65
10 Years 3,000 285 9.50 10.50
15 Years 4,500 345 7.67 8.30
20 Years 6,000 405 6.75 7.24
- --------------------------- -------------------- --------------------- ------------------- --------------------
$100 Monthly
purchase payments
- --------------------------- -------------------- --------------------- ------------------- --------------------
1 Year $ 1,200 $ 180 15.00% 17.65%
5 Years 6,000 405 6.75 7.24
10 Years 12,000 645 5.38 5.68
15 Years 18,000 885 4.92 5.17
20 Years 24,000 1,125 4.69 4.92
- --------------------------- -------------------- --------------------- ------------------- --------------------
The table below shows the deduction from your purchase payments for sales and
administrative charges for group contracts. The net amount invested is the total
purchase payments minus the deduction for sales and administrative charges.
Group contract - Employer plan
- --------------------------- -------------------- --------------------- ------------------- --------------------
Part of Total charge Total deduction
the total Deduction Deduction for as percentage of as percentage of
purchase for sales administrative total purchase net amount
payment charge charge payment invested
- --------------------------- -------------------- --------------------- ------------------- --------------------
1st $10,000 3.75% 2.0% 5.75% 6.10%
Next $40,000 2.0 2.0 4.0 4.17
Excess over $50,000 0.5 1.5 2.0 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 $146,651 for 1997, $167,677 for 1996
and $183,040 for 1995.
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.
<PAGE>
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 $7,467,475 for 1997,
$6,591,985 for 1996 and $5,604,098 for 1995.
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.
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 $2,987,154 for 1997, $2,637,138 for 1996 and $2,241,761 for 1995.
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 deferred annuity contract any time before
the annuity payment starting date. Under certain contracts issued in connection
with optional retirement programs for employers of certain state supported
educational institutions, the contract holder must join in the request. There
can be no surrender in whole or in part after annuity payments have started
unless the remaining payments are not dependent on life contingencies.
Immediate annuity contracts can be surrendered at any time as long as the
remaining payments are not dependent on life contingencies. See annuity payment
plans on page __.
For a discussion of automated partial surrenders, see page __.
<PAGE>
There are special rules for a participant in the Texas Optional Retirement
Program (Texas ORP). The Texas ORP restricts the payment of program benefits to
participating employees prior to termination of employment. Accordingly, no
contract offered by this prospectus will be issued to fund participation in the
Texas ORP unless the purchaser instructs the company not to accept surrender of
the contract prior to termination of employment, retirement, death or total
disability of the participating employee.
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 at the next
close of business after 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.
A surrender by a participant in certain qualified plans or programs may result
in adverse tax consequences. Consult a qualified tax advisor before requesting a
surrender.
Distribution Restrictions. The Code imposes certain restrictions on an owner's
right to receive early distributions attributable to salary reduction
contributions from a contract purchased for a retirement plan qualified under
Section 403(b) of the Code as a TSA.
Distributions attributable to salary reduction contributions may be made from
the TSA contract only if the owner has attained age 59 1/2, has become disabled
as defined in the Code, has separated from the service of the employer that
purchased the contract, or upon the death of the owner. Additionally, if the
Owner should encounter a financial hardship (within the meaning of the Code), he
or she may receive a distribution of all contract values except those arising
from earnings on them. These restrictions apply to amounts credited to the
contract after Dec. 31, 1988. Even though a distribution may be permitted under
these rules (e.g., for hardship or after separation from service), it may
nonetheless be subject to a 10% tax (in addition to income tax) as a premature
distribution and 20% income tax withholding may be imposed (see page __).
This restriction on the right to receive a distribution does not affect the
availability of the amount credited to the contract as of Dec. 31, 1988, and if
the contract has a loan provision, the right to receive a loan continues to
exist. The restrictions do not apply to transfers or exchanges of contract value
within the annuity or to another registered variable annuity contract or
investment vehicle available through the employer.
Special rules if the annuitant dies before the annuity payment starting date
Under a single payment or flexible installment deferred annuity contract, if the
annuitant dies before annuity payments begin, the beneficiary will receive the
greater of:
<PAGE>
o the sum of all purchase payments minus surrenders and unrepaid withdrawals;
or
o the accumulation value of the contract.
Under the group variable contract, if the participant dies before annuity
payments begin, the beneficiary will receive the greater of:
o the sum of all contributions made by the participant less his surrenders;
or
o the accumulation value of the participant's account.
IDS Life will pay this death benefit in a lump sum at the end of the valuation
period during which its death claim requirements are fulfilled, unless an
election has been made to provide an annuity payable to the participant's
beneficiary. Payments made directly to a surviving spouse (instead of being
rolled over into an IRA) may be subject to 20% income tax withholding.
Special Features of the Group Variable Annuity Contract
Modifications. From time to time, IDS Life may modify the group variable annuity
contract in order to conform the contract or give participants the benefit of
any federal or state law or any regulation of the U.S. Treasury Department.
Without the consent of the affected participant, no modification will affect the
amount or terms of an annuity purchased prior to the effective date of the
modification. Without the contract holder's approval, no modification can be
made prior to the fifth contract anniversary.
On or after this anniversary, IDS Life may make modifications to the contract
without the contract holder's consent. The effect of these modifications may
include the deductions from contributions for sales and administrative expense,
periodic deductions for mortality and expense assurances and investment
management, and the annuity settlement date. At least 90 days' notice of this
type of modification will be given to the contract holder. No modification made
after the fifth contract year will affect the rights of any participant who was
a participant prior to the effective date of the modification except for that
portion of the participant's contributions which exceeds twice the amount of his
first annual contribution. The amount in excess of twice the first annual
contribution will receive the benefit of the assurances given new entrants into
the plan in the year the excess is first received by IDS Life. These assurances
will continue so long as the participant continues to make such excess
contributions.
Experience Rating. The group variable annuity contract provides for experience
rating at the discretion of IDS Life. If the charges made by IDS Life for
mortality and expense assurances exceed the expenses incurred, IDS Life may
allocate all, a portion, or none of the excess as an experience rating credit.
No experience rating credits have been paid to date. The experience rating
credit, if any, which accrues to any group variable annuity contract will be
determined annually upon each contract anniversary by IDS Life. Application of
the credit accruing to any group variable annuity contract will be applied in
one of two ways, as determined by IDS Life:
o by a reduction in the amount deducted from subsequent contributions; or
<PAGE>
o by the crediting of a number of additional accumulation units or annuity
units, as applicable, equal in value to the amount of the credit due (such
additional units shall be credited without the deduction imposed on
contributions).
Assignment Prohibited. No benefit or privilege under the contract may be sold,
assigned, transferred, discounted or pledged as collateral for a loan or as
security for the performance of an obligation or for any other purpose to any
person other than IDS Life.
Suspension. IDS Life may suspend a group variable annuity contract upon at least
90 days' written notice to the contract holder if the contract holder has failed
to make any contributions during the contract year immediately preceding such
notice. A contract holder may suspend a contract upon written notice to IDS Life
at least 90 days in advance of the effective date of the suspension. Upon
suspension, IDS Life may refuse to accept further contributions. Suspension will
in no way affect the accumulation units or annuity units previously credited to
any participant.
Termination of Contributions. Upon termination of contributions on behalf of a
participant for any reason prior to the retirement date, the participant may
elect to withdraw the value of, or leave his total account in force under the
contract until its value is withdrawn as a surrender, paid upon the death of the
participant, or used to provide an annuity for the participant. When a
participant's variable account is left in force under the contract, the account
will continue to reflect the net investment experience of the Fund except that
if the value of the participant's total account is less then $1,000, IDS Life
may fulfill its obligations with respect to a participant by payment of such
value in a lump sum.
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.
If you bought this annuity under an Individual Retirement Annuity program and
cancel the contract within seven days after the date of issuance, IDS Life will
refund the greater of the total amount of purchase payments, or the value of the
net amount invested, without reduction in either case for sales and contract
administrative charges and taxes.
What about your taxes?
Group contract. If your plan is sponsored by a public school system or an
organization that is tax exempt pursuant to Section 501(c)(3) of the Code, then
contributions made for the purchase of an annuity contract under Section 403(b)
are excludable from your gross income. Any annual contributions that exceed the
limits on contributions to a 403(b) contract are not excluded from your gross
income.
Once you begin to receive annuity payments, your payments are taxed as provided
in Section 72 of the Code. Ordinarily, this means that your total annual annuity
payments are taxed as ordinary income. If you elect to receive a lump sum
payment rather than annuity payments, the entire amount received may be taxed as
ordinary income.
<PAGE>
Individual contract. Generally, under present law, any increase in the value of
the units credited to your individual annuity contract is not taxed until
received. When payments from a retirement plan or contract begin, they are taxed
under Section 72 of the Code. Ordinarily, this means that your total annual
annuity payments are taxed as ordinary income. The recipient, however, may be in
a lower tax bracket after retirement due to lower income and larger deductions.
If you elect to receive a lump sum payment rather than annuity payments, the
entire amount received may be taxed as ordinary income. Roth IRAs may grow tax
free if you meet certain distribution requirements.
If you surrender part or all of your annuity, you will be taxed on the payment
you receive to the extent that the value of your contract exceeds your
investment in the contract. In general, this means that your surrender payment
will be taxed as ordinary income. In addition, your regular tax may be increased
by 10% of the portion of the distribution includable in income unless the
distribution is:
o after you reach age 59 1/2;
o because of your death (or the death of the primary annuitant if the owner
is not an individual);
o because you are disabled;
o part of a series of substantially equal periodic payments over the life
expectancy of the owner (or joint life expectancies of the owner and
beneficiary); or
o because you separate from service on account of early retirement after
reaching age 55.
These are the major exceptions to the 10% additional tax. Consult your tax
advisor before taking any action.
In general, if you receive all or part of the contract value from a qualified
annuity (but not an IRA or Roth IRA), mandatory 20% income tax withholding will
be imposed at the time the payment is made. In addition, federal income tax and
the 10% IRS penalty tax for early withdrawals may apply to amounts properly
includable in income. This mandatory 20% income tax withholding will not be
imposed if:
o instead of receiving the payment, you elect to have the payment rolled over
directly to an IRA or another eligible plan;
o the payment is one of a series of substantially equal periodic payments
made at least annually, over your life or life expectancy (or joint lives
or life expectancies of you and your designated beneficiary) or made over a
period of 10 years or more; or
o the payment is a minimum distribution required under the Code.
These are the major exceptions to the mandatory 20% income tax withholding.
Payments made to a surviving spouse instead of being directly rolled over into
an IRA also may be subject to 20% income tax withholding. For taxable
distributions that are not subject to the mandatory 20% withholding, federal
income tax and possibly state income tax will be withheld from the taxable part
of your distribution unless you elect otherwise.
<PAGE>
Unlike life insurance proceeds, the death benefit under your annuity contract
(except a Roth IRA) 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
death benefit under a Roth IRA generally is not taxable as ordinary income to
the beneficiary.
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 amendments.
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 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 and group plan participants 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
and group plan participants 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 or group plan participant 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 or group plan participant 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 or group plan participants.
Cumulative voting is not authorized.
U.S. Bank National Association (U.S. Bank) of St. Paul, MN, as custodian for
Keogh Act plans and for the IDS Incentive and Thrift Plan, was owner of record
of 1,937,049 units of the Fund on Dec. 31, 1997, constituting 6.4% of the voting
units. U.S. Bank votes these units in accordance with instructions from the
beneficial owners. If U.S. Bank fails to receive timely instructions from a
beneficial owner, it will vote these units in the same proportion as units voted
according to received instructions.
<PAGE>
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. 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.
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.
<PAGE>
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.
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.
<PAGE>
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.
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 since March 1994; Vice President, American Express Financial
Corporation, since September 1988.
Officers Other Than Directors
Jeffrey S. Horton
Vice president and treasurer since December 1997; vice president and corporate
treasurer, AEFC, since December 1997; controller, American Express Technologies
- - Financial Services, AEFC, from July 1997 to December 1997; controller, Risk
Management Products, AEFC, from May 1994 to July 1997; director of finance and
analysis, Corporate Treasury, AEFC, from June 1990 to May 1994.
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.
<PAGE>
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.
Assets of the Fund
On Dec. 31, 1997, there were 14,782 outstanding contracts. The assets were
$768,915,779.
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 not described in
this prospectus and variable life insurance policies.
<PAGE>
The members of the Fund's Board of Managers also serve on the Board of Managers
of Fund A and on the Board of Directors of IDS Life Series Fund, Inc.
IDS Life manages Fund B, Fund A 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 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
Avenue, Minneapolis, MN 55402-2307.
The custodian has entered into a sub-custodian arrangement with Morgan Stanley
Trust Company (Morgan Stanley), 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 1997 Annual Report to IDS Life Variable Annuity Fund B 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.
<PAGE>
Year 2000
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Fund. The Fund has
no computer systems of its own but is dependent upon the systems maintained by
AEFC and certain other third parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999.
The Year 2000 readiness of other third parties whose system failures could have
an impact on the Fund's operations is currently being evaluated. The potential
materiality of any such impact is not known at this time.
Legal Proceedings
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and its subsidiaries do business involving
insurers' sales practices, alleged agent misconduct, failure to properly
supervise agents, and other matters. In December 1996, an action of this type
was brought against IDS Life and its parent, AEFC. A second action was filed in
March, 1997. The plaintiffs purport to represent a class consisting of all
persons who replaced existing IDS Life policies with new IDS Life policies from
and after January 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties and
alleged violations of consumer fraud statutes. Plaintiffs seek damages in an
unspecified amount and seek to establish a claims resolution facility for the
determination of individual issues.
IDS Life believes it has meritorious defenses to these and other actions arising
in connection with the conduct of its business activities and intends to defend
them vigorously. IDS Life believes that it is not 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>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying consolidated balance sheets of IDS Life
Insurance Company (a wholly owned subsidiary of American Express Financial
Corporation) as of December 31, 1997 and 1996 and the related consolidated
statements of income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of IDS Life Insurance
Company at December 31, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
IDS Life Financial Information
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
ASSETS 1997 1996
(thousands)
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1997, $9,743,410; 1996, $10,521,650) $9,315,450 $10,236,379
Available for sale, at fair value (Amortized cost:
1997, $12,515,030; 199, $11,008,622) 12,876,694 11,146,845
Mortgage loans on real estate 3,618,647 3,493,364
Policy loans 498,874 459,902
Other investments 318,591 251,465
Total investments 26,628,256 25,587,955
Cash and cash equivalents 19,686 224,603
Amounts recoverable from reinsurers 205,716 157,722
Amounts due from brokers 8,400 11,047
Other accounts receivable 37,895 44,089
Accrued investment income 357,390 343,313
Deferred policy acquisition costs 2,479,577 2,330,805
Deferred income taxes, net -- 33,923
Other assets 22,700 37,364
Separate account assets 23,214,504 18,535,160
Total assets $52,974,124 $47,305,981
========= =========
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (continued)
Dec. 31, Dec. 31
LIABILITIES AND STOCKHOLDER'S EQUITY 1997 1996
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities $22,009,747 $21,838,008
Universal life-type insurance 3,280,489 3,177,149
Traditional life insurance 213,676 209,685
Disability income and long-term care insurance 533,124 424,200
Policy claims and other policyholders' funds 68,345 83,634
Deferred income taxes, net 61,582 --
Amounts due to brokers 381,458 261,987
Other liabilities 345,383 332,078
Separate account liabilities 23,214,504 18,535,160
Total liabilities 50,108,308 44,861,901
Stockholder's equity:
Capital stock, $30 par value per share;
100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 290,847 283,615
Net unrealized gain on investments 226,359 86,102
Retained earnings 2,345,610 2,071,363
Total stockholder's equity 2,865,816 2,444,080
Total liabilities and stockholder's equity $52,974,124 $47,305,981
========= =========
See accompanying notes.
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 52,473 $ 51,403 $ 50,193
Disability income and long-term care insurance 154,021 131,518 111,337
Total premiums 206,494 182,921 161,530
Policyholder and contractholder charges 341,726 302,999 256,454
Management and other fees 340,892 271,342 215,581
Net investment income 1,988,389 1,965,362 1,907,309
Net realized gain (loss) on investments 860 (159) (4,898)
Total revenues 2,878,361 2,722,465 2,535,976
Benefits and expenses:
Death and other benefits:
Traditional life insurance 28,951 26,919 29,528
Universal life-type insurance
and investment contracts 92,814 85,017 71,691
Disability income and
long-term care insurance 22,333 19,185 16,259
Increase (decrease) in liabilities for
future policy benefits:
Traditional life insurance 3,946 1,859 (1,315)
Disability income and
long-term care insurance 63,631 57,230 51,279
Interest credited on universal life-type
insurance and investment contracts 1,386,448 1,370,468 1,315,989
Amortization of deferred policy acquisition costs 322,731 278,605 280,121
Other insurance and operating expenses 276,596 261,468 211,642
Total benefits and expenses 2,197,450 2,100,751 1,975,194
Income before income taxes 680,911 621,714 560,782
Income taxes 206,664 207,138 195,842
Net income $ 474,247 $ 414,576 $ 364,940
======== ======== =======
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended Dec. 31, 1997
(thousands)
<TABLE>
<CAPTION>
Additional Net Unrealized
Capital Paid-In Gain (Loss) on Retained
Stock Capital on Investments Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, Dec. 31, 1994 3,000 222,000 (275,708) 1,639,399 1,588,691
Net income -- -- -- 364,940 364,940
Change in net unrealized
gain (loss) on investments -- -- 505,837 -- 505,837
Capital contribution from parent -- 56,814 -- -- 56,814
Loss on reinsurance transaction
with affiliate -- -- -- (4,574) (4,574)
Cash dividends -- -- -- (180,000) (180,000)
Balance, Dec. 31, 1995 3,000 278,814 230,129 1,819,765 2,331,708
Net income -- -- -- 414,576 414,576
Change in net unrealized
gain (loss) on investments -- -- (144,027) -- (144,027)
Capital contribution from parent -- 4,801 -- -- 4,801
Other changes -- -- -- 2,022 2,022
Cash dividends -- -- -- (165,000) (165,000)
Balance, Dec. 31, 1996 $3,000 $283,615 $ 86,102 $2,071,363 $2,444,080
Net income -- -- -- 474,247 474,247
Change in net unrealized
gain (loss) on investments -- -- 140,257 -- 140,257
Capital contribution from parent -- 7,232 -- -- 7,232
Cash dividends -- -- -- (200,000) (200,000)
Balance, Dec. 31, 1997 $3,000 $290,847 $226,359 $2,345,610 $2,865,816
===== ======= ======= ========= ========
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 474,247 $ 414,576 $ 364,940
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Policy loan issuance, excluding universal
life-type insurance (54,665) (49,314) (46,011)
Policy loan repayment, excluding universal
life-type insurance 46,015 41,179 36,416
Change in amounts recoverable from reinsurers (47,994) (43,335) (34,083)
Change in other accounts receivable 6,194 (4,981) 12,231
Change in accrued investment income (14,077) 4,695 (30,498)
Change in deferred policy acquisition
costs, net (156,486) (294,755) (196,963)
Change in liabilities for future policy
benefits for traditional life,
disability income and
long-term care insurance 112,915 97,479 85,575
Change in policy claims and other
policyholders' funds (15,289) 27,311 6,255
Change in deferred income tax provision (benefit) 19,982 (65,609) (33,810)
Change in other liabilities 13,305 46,724 (6,548)
(Accretion of discount)
amortization of premium, net (5,649) (23,032) (22,528)
Net realized (gain) loss on investments (860) 159 4,898
Policyholder and contractholder
charges, non-cash (160,885) (154,286) (140,506)
Other, net 7,161 (10,816) 3,849
Net cash provided by (used in) operating
activities $ 223,914 $ (14,005) $ 3,217
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ (1,996) $ (43,751) $ (1,007,208)
Maturities, sinking fund payments and calls 686,503 759,248 538,219
Sales 236,761 279,506 332,154
Fixed maturities available for sale:
Purchases (3,160,133) (2,299,198) (2,452,181)
Maturities, sinking fund payments and calls 1,206,213 1,270,240 861,545
Sales 457,585 238,905 136,825
Other investments, excluding policy loans:
Purchases (524,521) (904,536) (823,131)
Sales 335,765 236,912 160,521
Change in amounts due from brokers 2,647 (11,047) 7,933
Change in amounts due to brokers 119,471 140,369 (105,119)
Net cash used in investing activities (641,705) (333,352) (2,350,442)
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 2,785,758 3,567,586 4,189,525
Surrenders and death benefits (3,736,242) (4,250,294) (3,141,404)
Interest credited to account balances 1,386,448 1,370,468 1,315,989
Universal life-type insurance policy loans:
Issuance (84,835) (86,501) (84,700)
Repayment 54,513 58,753 52,188
Capital contribution from parent 7,232 4,801 --
Dividends paid (200,000) (165,000) (180,000)
Net cash provided by financing activities 212,874 499,813 2,151,598
Net (decrease) increase in cash and
cash equivalents (204,917) 152,456 (195,627)
Cash and cash equivalents at
beginning of year 224,603 72,147 267,774
Cash and cash equivalents at
end of year $ 19,686 $ 224,603 $ 72,147
======= ======== ========
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
($ thousands)
1. Summary of significant accounting policies
------------------------------------------
Nature of business
IDS Life Insurance Company (the Company) is a stock life insurance
company organized under the laws of the State of Minnesota. The
Company is a wholly owned subsidiary of American Express Financial
Corporation (AEFC), which is a wholly owned subsidiary of American
Express Company. The Company serves residents of all states except New
York. IDS Life Insurance Company of New York is a wholly owned
subsidiary of the Company and serves New York State residents. The
Company also wholly owns American Enterprise Life Insurance Company,
American Centurion Life Assurance Company (ACLAC), American Partners
Life Insurance Company and American Express Corporation.
The Company's principal products are deferred annuities and universal
life insurance, which are issued primarily to individuals. It offers
single premium and flexible premium deferred annuities on both a fixed
and variable dollar basis. Immediate annuities are offered as well.
The Company's insurance products include universal life (fixed and
variable), whole life, single premium life and term products (including
waiver of premium and accidental death benefits). The Company also
markets disability income and long-term care insurance.
Basis of presentation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles which vary
in certain respects from reporting practices prescribed or permitted by
state insurance regulatory authorities (see Note 4).
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and
carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale and
carried at fair value. Unrealized gains and losses on securities
classified as available for sale are reported as a separate component
of stockholder's equity, net of deferred taxes.
<PAGE>
Realized investment gain or loss is determined on an identified cost
basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to
recognize interest income. Prepayment estimates are based on
information received from brokers who deal in mortgage-backed
securities.
Mortgage loans on real estate are carried at amortized cost less
reserves for mortgage loan losses. The estimated fair value of the
mortgage loans is determined by a discounted cash flow analysis using
mortgage interest rates currently offered for mortgages of similar
maturities.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Impairment of mortgage loans is measured as the excess of the loan's
recorded investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate, or
the fair value of collateral. The amount of the impairment is recorded
in a reserve for mortgage loan losses. The reserve for mortgage loans
losses is maintained at a level that management believes is adequate to
absorb estimated losses in the portfolio. The level of the reserve
account is determined based on several factors, including historical
experience, expected future principal and interest payments, estimated
collateral values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the reserve
for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for
which interest payments are delinquent more than three months. Based
on management's judgment as to the ultimate collectibility of
principal, interest payments received are either recognized as income
or applied to the recorded investment in the loan.
The cost of interest rate caps and floors is amortized to investment
income over the life of the contracts and payments received as a result
of these agreements are recorded as investment income when realized.
The amortized cost of interest rate caps and floors is included in
other investments. Amounts paid or received under interest rate swap
agreements are recognized as an adjustment to investment income.
During 1997, 1996 and 1995, the Company purchased and wrote index
options to protect against significant declines in fee income as a
result of a decrease in the market value of its managed assets. These
options were marked-to-market through the income statement.
During 1997, the Company purchased and wrote index options to hedge
1998 management fee and other income from separate accounts and the
underlying mutual funds. These index options are carried at market
value and are included in other investments. Gains or losses on these
instruments are deferred and recognized in management and other fees in
the same period as the hedged fee income.
Policy loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related policies.
When evidence indicates a decline, which is other than temporary, in
the underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost, which
approximates fair value.
<PAGE>
Supplementary information to the consolidated statements of cash flows
for the years ended December 31 is summarized as
follows:
1997 1996 1995
---- ---- ----
Cash paid during the year for:
Income taxes $174,472 $317,283 $191,011
Interest on borrowings 8,213 4,119 5,524
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Recognition of profits on annuity contracts and insurance policies
Profits on fixed deferred annuities are recognized by the Company over
the lives of the contracts, using primarily the interest method.
Profits represent the excess of investment income earned from
investment of contract considerations over interest credited to
contract owners and other expenses.
The retrospective deposit method is used in accounting for universal
life-type insurance. Under this method, profits are recognized over
the lives of the policies in proportion to the estimated gross profits
expected to be realized.
Premiums on traditional life, disability income and long-term care
insurance policies are recognized as revenue when due, and related
benefits and expenses are associated with premium revenue in a manner
that results in recognition of profits over the lives of the insurance
policies. This association is accomplished by means of the provision
for future policy benefits and the deferral and subsequent amortization
of policy acquisition costs.
Policyholder and contractholder charges include the monthly cost of
insurance charges and issue and administrative fees. These charges
also include the minimum death benefit guarantee fees received from the
variable life insurance separate accounts. Management and other fees
include investment management fees and mortality and expense risk fees
received from the variable annuity and variable life insurance separate
accounts and underlying mutual funds.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation,
policy issue costs, underwriting and certain sales expenses, have been
deferred on insurance and annuity contracts.The deferred acquisition costs
for most single premium deferred annuities and installment annuities are
amortized in relation to accumulation values and surrender charge revenue.
The costs for universal life-type insurance and certain installment
annuities are amortized as a percentage of the estimated gross profits
expected to be realized on the policies. For traditional life, disability
income and long-term care insurance policies, the costs are amortized over
an appropriate period in proportion to premium revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance and deferred annuities
are accumulation values.
Liabilities for fixed annuities in a benefit status are based on
established industry mortality tables and interest rates ranging from
5% to 9.5%, depending on year of issue.
<PAGE>
Liabilities for future benefits on traditional life insurance are based
on the net level premium method, using anticipated mortality, policy
persistency and interest earning rates. Anticipated mortality rates
are based on established industry mortality tables. Anticipated policy
persistency rates vary by policy form, issue age and policy duration
with persistency on cash value plans generally anticipated to be better
than persistency on term insurance plans. Anticipated interest rates
range from 4% to 10%, depending on policy form, issue year and policy
duration.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Liabilities for future disability income and long-term care policy
benefits include both policy reserves and claim reserves. Policy
reserves are based on the net level premium method, using anticipated
morbidity, mortality, policy persistency and interest earning rates.
Anticipated morbidity and mortality rates are based on established
industry morbidity and mortality tables. Anticipated policy
persistency rates vary by policy form, issue age, policy duration and,
for disability income policies, occupation class. Anticipated interest
rates for disability income and long-term care policy reserves are 3%
to 9.5% at policy issue and grade to ultimate rates of 5% to 10% over 5
to 10 years.
Claim reserves are calculated based on claim continuance tables and
anticipated interest earnings. Anticipated claim continuance rates are
based on a national survey. Anticipated interest rates for claim
reserves for both disability income and long-term care range from 6% to
8%.
Reinsurance
The maximum amount of life insurance risk retained by the Company on
any one life is $750 of life and waiver of premium benefits plus $50 of
accidental death benefits. The maximum amount of disability income
risk retained by the Company on any one life is $6 of monthly benefit
for benefit periods longer than three years. The excesses are
reinsured with other life insurance companies on a yearly renewable
term basis. Graded premium whole life and long-term care policies are
primarily reinsured on a coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated federal
income tax return of American Express Company. The Company provides
for income taxes on a separate return basis, except that, under an
agreement between AEFC and American Express Company, tax benefit is
recognized for losses to the extent they can be used on the
consolidated tax return. It is the policy of AEFC and its subsidiaries
that AEFC will reimburse subsidiaries for all tax benefits.
Included in other liabilities at December 31, 1997 and 1996 are $12,061
and $33,358, respectively, receivable from American Express Financial
Corporation for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for
the exclusive benefit of the variable annuity and variable life
insurance contract owners. The Company receives investment
management fees from the proprietary mutual funds used as investment
options for variable annuities and variable life insurance. The
Company receives mortality and expense risk fees from the separate
accounts.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the separate accounts
will not be affected by future variations in the actual life expectancy
experience of the annuitants and the beneficiaries from the mortality
assumptions implicit in the annuity contracts. The Company makes
periodic fund transfers to, or withdrawals from, the separate accounts
for such actuarial adjustments for variable annuities that are in the
benefit payment period. For variable life insurance, the Company
guarantees that the rates at which insurance charges and administrative
fees are deducted from contract funds will not exceed contractual
maximums. The Company also guarantees that the death benefit will
continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.
Reclassification
Certain 1996 and 1995 amounts have been reclassified to conform to the
1997 presentation.
2. Investments
-----------
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available.
Estimated values are determined by established procedures involving,
among other things, review of market indices, price levels of current
offerings of comparable issues, price estimates and market data from
independent brokers and financial files.
The amortized cost, gross unrealized gains and losses and fair values
of investments in fixed maturities and equity securities at December
31, 1997 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $41,932 $ 2,950 $ -- $ 44,881
State and municipal obligations 9,684 568 -- 10,252
Corporate bonds and obligations 7,280,646 415,700 9,322 7,687,024
Mortgage-backed securities 1,983,188 25,976 7,911 2,001,253
--------- ------ ----- ---------
$9,315,450 $445,194 $17,233 $9,743,410
========= ======= ====== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 65,291 $ 4,154 $ -- $69,445
State and municipal obligations 11,045 1,348 -- 12,393
Corporate bonds and obligations 5,308,129 232,761 30,198 5,510,692
Mortgage-backed securities 7,130,565 160,478 6,879 7,284,164
--------- ------- ----- ---------
Total fixed maturities 12,515,030 398,741 37,077 12,876,694
Equity securities 3,000 361 -- 3,361
---------- ------- ------ ----------
$12,518,030 $399,102 $37,077 $12,880,055
========== ======= ====== ==========
</TABLE>
<PAGE>
2. Investments (continued)
-----------
The amortized cost, gross unrealized gains and losses and fair values
of investments in fixed maturities and equity securities at December
31, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- ---------- ---------- ------
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 44,002 $ 933 $ 1,276 $ 43,659
State and municipal obligations 9,685 412 -- 10,097
Corporate bonds and obligations 8,057,997 356,687 47,639 8,367,045
Mortgage-backed securities 2,124,695 21,577 45,423 2,100,849
---------- ------- ------ ----------
$10,236,379 $379,609 $94,338 $10,521,650
========== ======= ====== ==========
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ ---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 77,944 $ 2,607 $ 96 $ 80,455
State and municipal obligations 11,032 1,336 -- 12,368
Corporate bonds and obligations 3,701,604 122,559 24,788 3,799,375
Mortgage-backed securities 7,218,042 104,808 68,203 7,254,647
--------- ------- ------ ---------
Total fixed maturities 11,008,622 231,310 93,087 11,146,845
Equity securities 3,000 308 -- 3,308
---------- ------- ------ ----------
$11,011,622 $231,618 $93,087 $11,150,153
========== ======= ====== ==========
</TABLE>
The amortized cost and fair value of investments in fixed maturities at
December 31, 1997 by contractual maturity are shown below. Expected
maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call
or prepayment penalties.
<PAGE>
Amortized Fair
Held to maturity Cost Value
---------------- --------- --------
Due in one year or less $ 356,597 $360,956
Due from one to five years 1,536,239 1,619,875
Due from five to ten years 4,337,547 4,577,552
Due in more than ten years 1,101,879 1,183,774
Mortgage-backed securities 1,983,188 2,001,253
--------- ---------
$9,315,450 $9,743,410
========= =========
Amortized Fair
Available for sale Cost Value
--------- -----
Due in one year or less $ 162,663 $ 164,012
Due from one to five years 633,339 679,561
Due from five to ten years 2,418,162 2,517,098
Due in more than ten years 2,170,301 2,231,859
Mortgage-backed securities 7,130,565 7,284,164
---------- ----------
$12,515,030 $12,876,694
========== ==========
<PAGE>
2. Investments (continued)
-----------
During the years ended December 31, 1997, 1996 and 1995, fixed
maturities classified as held to maturity were sold with amortized cost
of $229,848, $277,527 and $333,508, respectively. Net gains and losses
on these sales were not significant. The sale of these fixed
maturities was due to significant deterioration in the issuers' credit
worthiness.
Fixed maturities available for sale were sold during 1997 with proceeds
of $457,585 and gross realized gains and losses of $6,639 and $7,518,
respectively. Fixed maturities available for sale were sold during
1996 with proceeds of $238,905 and gross realized gains and losses of
$571 and $16,084, respectively. Fixed maturities available for sale
were sold during 1995 with proceeds of $136,825 and gross realized
gains and losses of $nil and $5,781, respectively.
At December 31, 1997, bonds carried at $14,351 were on deposit with
various states as required by law.
At December 31, 1997, investments in fixed maturities comprised 83
percent of the Company's total invested assets. These securities are
rated by Moody's and Standard & Poor's (S&P), except for securities
carried at approximately $2.7 billion which are rated by American
Express Financial Corporation internal analysts using criteria similar
to Moody's and S&P. A summary of investments in fixed maturities, at
amortized cost, by rating on December 31 is as follows:
Rating 1997 1996
--------- --------- ---------
Aaa/AAA $ 9,195,619 $ 9,460,134
Aaa/AA -- 2,870
Aa/AA 232,451 241,914
Aa/A 246,792 192,631
A/A 2,787,936 2,949,895
A/BBB 1,200,345 1,034,661
Baa/BBB 5,226,616 4,531,515
Baa/BB 475,084 768,285
Below investment grade 2,465,637 2,063,096
--------- ---------
$21,830,480 $21,245,001
========== ==========
At December 31, 1997, 95 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of any
other issuer are greater than one percent of the Company's total
investments in fixed maturities.
At December 31, 1997, approximately 14 percent of the Company's
invested assets were mortgage loans on real estate. Summaries of
mortgage loans by region of the United States and by type of real
estate are as follows:
<PAGE>
December 31, 1997 December 31, 1996
------------------------ -----------------------
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
------------- ---------- ------------ ---------- -----------
East North Central $ 748,372 $ 32,462 $ 777,960 $ 19,358
West North Central 456,934 14,340 389,285 29,620
South Atlantic 922,172 14,619 891,852 35,007
Middle Atlantic 545,601 15,507 553,869 17,959
New England 316,250 2,136 310,177 14,042
Pacific 184,917 3,204 190,770 4,997
West South Central 125,227 -- 105,173 11,246
East South Central 60,274 -- 75,176 --
Mountain 297,545 28,717 236,597 11,401
--------- ------- --------- -------
3,657,292 110,985 3,530,859 143,630
Less allowance for
losses 38,645 -- 37,495 --
--------- ------- --------- -------
$3,618,647 $110,985 $3,493,364 $143,630
========= ======= ========= =======
<PAGE>
2. Investments (continued)
-----------
December 31, 1997 December 31, 1996
------------------------ -------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
--------------- ---------- ----------- ---------- -----------
Department/retail
stores $1,189,203 $ 27,314 $1,154,179 $ 68,032
Apartments 1,089,127 16,576 1,119,352 23,246
Office buildings 716,729 34,546 611,395 27,653
Industrial buildings 295,889 21,200 296,944 6,716
Hotels/motels 101,052 -- 97,870 6,257
Medical buildings 99,979 9,748 67,178 8,289
Nursing/retirement
homes 72,359 -- 88,226 1,877
Mixed Use 71,007 -- 73,120 --
Other 21,947 1,601 22,595 1,560
--------- ------- --------- ------
3,657,292 110,985 3,530,859 143,630
Less allowance for
losses 38,645 -- 37,495 --
--------- ------- --------- -------
$3,618,647 $110,985 $3,493,364 $143,630
========= ======= ========= =======
Mortgage loan fundings are restricted by state insurance regulatory
authorities to 80 percent or less of the market value of the real
estate at the time of origination of the loan. The Company holds the
mortgage document, which gives it the right to take possession of the
property if the borrower fails to perform according to the terms of the
agreement. The fair value of the mortgage loans is determined by a
discounted cash flow analysis using mortgage interest rates currently
offered for mortgages of similar maturities. Commitments to purchase
mortgages are made in the ordinary course of business. The fair value
of the mortgage commitments is $nil.
At December 31, 1997 and 1996, the Company's recorded investment in
impaired loans was $45,714 and $79,441, respectively, with allowances
of $9,812 and $16,162, respectively. During 1997 and 1996, the average
recorded investment in impaired loans was $61,870 and $74,338,
respectively.
The Company recognized $2,981, $4,889 and $5,014 of interest income
related to impaired loans for the years ended December 31, 1997, 1996
and 1995 respectively.
<PAGE>
The following table presents changes in the allowance for investment
losses related to all loans:
1997 1996 1995
------ ------ ------
Balance, January 1 $37,495 $37,340 $35,252
Provision for investment losses 8,801 10,005 15,900
Loan payoffs (3,851) (4,700) (11,900)
Foreclosures (3,800) (5,150) (1,350)
Other -- -- (562)
------ ------ -------
Balance, December 31 $38,645 $37,495 $37,340
====== ====== ======
At December 31, 1997, the Company had commitments to purchase
investments other than mortgage loans for $234,485. Commitments to
purchase investments are made in the ordinary course of business. The
fair value of these commitments is $nil.
<PAGE>
2. Investments (continued)
-----------
Net investment income for the years ended December 31 is summarized as
follows:
1997 1996 1995
--------- --------- ---------
Interest on fixed maturities $1,692,481 $1,666,929 $1,656,136
Interest on mortgage loans 305,742 283,830 232,827
Other investment income 25,089 43,283 35,936
Interest on cash equivalents 5,914 5,754 5,363
--------- --------- ---------
2,029,226 1,999,796 1,930,262
Less investment expenses 40,837 34,434 22,953
--------- --------- ---------
$1,988,389 $1,965,362 $1,907,309
========= ========= =========
Net realized gain (loss) on investments for the years ended December 31
is summarized as follows:
1997 1996 1995
------ ----- -----
Fixed maturities $ 16,115 $ 8,736 $ 9,973
Mortgage loans (6,424) (8,745) (13,259)
Other investments (8,831) (150) (1,612)
------- ----- -------
$ 860 $ (159) $ (4,898)
======= ====== ======
Changes in net unrealized appreciation (depreciation) of investments
for the years ended December 31 are summarized as follows:
1997 1996 1995
------- ------- -------
Fixed maturities available
for sale $223,441 $(231,853) $811,649
Equity securities 53 (52) 3,118
3. Income taxes
------------
The Company qualifies as a life insurance company for federal income
tax purposes. As such, the Company is subject to the Internal Revenue
Code provisions applicable to life insurance companies.
The income tax expense consists of the following:
1997 1996 1995
Federal income taxes:
Current $176,879 $260,357 $218,040
Deferred 19,982 (65,609) (33,810)
------- -------- -------
196,861 194,748 184,230
State income taxes-current 9,803 12,390 11,612
------- ------- -------
Income tax expense $206,664 $207,138 $195,842
======= ======= =======
<PAGE>
3. Income taxes (continued)
------------
Increases (decreases) to the federal tax provision applicable to pretax
income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1997 1996 1995
---------------- --------------- ---------------
Provision Rate Provision Rate Provision Rate
--------- ---- --------- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Federal income
taxes based on
the statutory rate $238,319 35.0% $217,600 35.0% $196,274 35.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (10,294) (1.5) (9,636) (1.5) (8,524) (1.5)
State Taxes, net of federal
benefit 6,372 0.9 8,053 1.3 7,548 1.3
Low income housing
credits (20,705) (3.0) (5,090) (0.8) (861) (0.2)
Other, net (7,028) (1.0) (3,789) (0.7) 1,405 0.3
------- ----- ------- ---- ------- ----
Federal income taxes $206,664 30.4% $207,138 33.3% $195,842 34.9%
======= ==== ======= ==== ======= ====
</TABLE>
A portion of life insurance company income earned prior to 1984 was not
subject to current taxation but was accumulated, for tax purposes, in a
policyholders' surplus account. At December 31, 1997, the Company had
a policyholders' surplus account balance of $20,114. The
policyholders' surplus account is only taxable if dividends to the
stockholder exceed the stockholder's surplus account or if the Company
is liquidated. Deferred income taxes of $7,040 have not been
established because no distributions of such amounts are contemplated.
Significant components of the Company's deferred tax assets and
liabilities as of December 31 are as follows:
1997 1996
---- ----
Deferred tax assets:
Policy reserves $748,204 $724,412
Life insurance guarantee
fund assessment reserve 20,101 29,854
Other 9,589 2,763
------- -------
Total deferred tax assets 777,894 757,029
------- -------
<PAGE>
Deferred tax
liabilities:
Deferred policy acquisition costs 700,032 665,685
Unrealized gain on investments 121,885 48,486
Investments, other 17,559 8,935
------- -------
Total deferred tax liabilities 839,476 723,106
------- -------
Net deferred tax (liabilities) assets $(61,582) $ 33,923
====== ======
The Company is required to establish a valuation allowance for any
portion of the deferred tax assets that management believes will not be
realized. In the opinion of management, it is more likely than not
that the Company will realize the benefit of the deferred tax assets
and, therefore, no such valuation allowance has been established.
<PAGE>
4. Stockholder's equity
--------------------
Retained earnings available for distribution as dividends to the parent
are limited to the Company's surplus as determined in accordance with
accounting practices prescribed by state insurance regulatory
authorities. Statutory unassigned surplus aggregated $1,468,677 as of
December 31, 1997 and $1,261,592 as of December 31, 1996 (see Note 3
with respect to the income tax effect of certain distributions). In
addition, any dividend distributions in 1998 in excess of approximately
$331,480 would require approval of the Department of Commerce of the
State of Minnesota.
Statutory net income for the years ended December 31 and capital and
surplus as of December 31 are summarized as follows:
1997 1996 1995
---------- ---------- ----------
Statutory net income $ 379,615 $ 365,585 $ 326,799
Statutory capital and surplus 1,765,290 1,565,082 1,398,649
surplus
5. Related party transactions
--------------------------
The Company loans funds to American Express Financial Corporation under
a collateral loan agreement. The balance of the loan was $nil and
$11,800 at December 31, 1997 and 1996, respectively. This loan can be
increased to a maximum of $75,000 and pays interest at a rate equal to
the preceding month's effective new money rate for the Company's
permanent investments. Interest income on related party loans totaled
$103, $780 and $1,371 in 1997, 1996 and 1995, respectively.
The Company purchased a five year secured note from an affiliated
company which was redeemed in 1996. The interest rate on the note was
8.42 percent. Interest income on the above note totaled $1,637 and
$1,937 in 1996 and 1995, respectively.
The Company participates in the American Express Company Retirement
Plan which covers all permanent employees age 21 and over who have met
certain employment requirements. Employer contributions to the plan
are based on participants' age, years of service and total compensation
for the year. Funding of retirement costs for this plan complies with
the applicable minimum funding requirements specified by ERISA. The
Company's share of the total net periodic pension cost was $201, $174
and $155 in 1997, 1996 and 1995, respectively.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a
percent of either each employee's eligible compensation or basic
contributions. Costs of these plans charged to operations in 1997,
1996 and 1995 were $1,245, $990 and $815, respectively.
<PAGE>
The Company participates in defined benefit health care plans of AEFC
that provide health care and life insurance benefits to retired
employees and retired financial advisors. The plans include
participant contributions and service related eligibility
requirements. Upon retirement, such employees are considered to have
been employees of AEFC. AEFC expenses these benefits and allocates the
expenses to its subsidiaries. Accordingly, costs of such benefits to
the Company are included in employee compensation and benefits and
cannot be identified on a separate company basis.
<PAGE>
5. Related party transactions (continued)
--------------------------
Charges by AEFC for use of joint facilities, marketing services and
other services aggregated $414,155, $397,362 and $377,139 for 1997,
1996 and 1995, respectively. Certain of these costs are included in
deferred policy acquisition costs. In addition, the Company rents its
home office space from AEFC on an annual renewable basis.
6. Commitments and contingencies
-----------------------------
At December 31, 1997 and 1996, traditional life insurance and universal
life-type insurance in force aggregated $74,730,720 and $67,274,354,
respectively, of which $4,351,904 and $3,875,921 were reinsured at the
respective year ends. The Company also reinsures a portion of the
risks assumed under disability income and long-term care policies.
Under all reinsurance agreements, premiums ceded to reinsurers amounted
to $60,495, $48,250 and $39,399 and reinsurance recovered from
reinsurers amounted to $19,042, $15,612, and $14,088 for the years
ended December 31, 1997, 1996 and 1995, respectively. Reinsurance
contracts do not relieve the Company from its primary obligation to
policyholders.
A number of lawsuits have been filed against life and health insurers
in jurisdictions in which the Company and its subsidiaries do business
involving insurers' sales practices, alleged agent misconduct, failure
to properly supervise agents, and other matters. In December 1996, an
action of this type was brought against the Company and its parent,
AEFC. A second action was filed in March, 1997. The plaintiffs
purport to represent a class consisting of all persons who replaced
existing Company policies with new Company policies from and after
January 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties
and alleged violations of consumer fraud statutes. Plaintiffs seek
damages in an unspecified amount and seek to establish a claims
resolution facility for the determination of individual issues. The
Company and its parent believe they have meritorious defenses to the
claims raised in the lawsuit. The outcome of any litigation cannot be
predicted with certainty. In the opinion of management, however, the
ultimate resolution of the above lawsuit and others filed against the
Company should not have a material adverse effect on the Company's
consolidated financial position.
The IRS routinely examines the Company's federal income tax returns,
and is currently auditing the Company's returns for the 1990 through
1992 tax years. Management does not believe there will be a material
adverse effect on the Company's consolidated financial position as a
result of this audit.
7. Lines of credit
---------------
The Company has an available line of credit with its parent aggregating
$100,000. The rate for the line of credit is the parent's cost of
funds, ranging from 20 to 45 basis points over the established index.
Borrowings outstanding under this agreement were $nil at
December 31, 1997 and 1996.
<PAGE>
8. Derivative financial instruments
--------------------------------
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk and equity
market risk, including hedging specific transactions. The Company does
not hold derivative instruments for trading purposes. The Company
manages risks associated with these instruments as described below.
<PAGE>
8. Derivative financial instruments (continued)
--------------------------------
Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor from
which the instrument derives its value, primarily an interest rate or
equity market index. The Company is not impacted by market risk
related to derivatives held for non-trading purposes beyond that
inherent in cash market transactions. Derivatives held for purposes
other than trading are largely used to manage risk and, therefore, the
cash flow and income effects of the derivatives are inverse to the
effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not fulfill
the terms of the contract. The Company monitors credit risk related to
derivative financial instruments through established approval
procedures, including setting concentration limits by counterparty, and
requiring collateral, where appropriate. A vast majority of the
Company's counterparties are rated A or better by Moody's and Standard
& Poor's.
Credit risk related to interest rate caps and floors and index options
is measured by the replacement cost of the contracts. The replacement
cost represents the fair value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid
over the life of the agreement. Notional amounts are not recorded on
the balance sheet. Notional amounts far exceed the related credit risk.
The Company's holdings of derivative financial instruments are as
follows:
Notional Carrying Fair Total Credit
December 31, 1997 Amount Amount Value Exposure
----------------- -------- -------- ----- ------------
Assets:
Interest rate caps $ 4,600,000 $ 24,963 $ 15,665 $ 15,665
Interest rate floors 1,000,000 1,561 4,551 4,551
Put index options 221,984 11,120 11,120 11,120
Liabilities:
Call index options 221,984 (8,273) (8,273) --
Off balance sheet:
Interest rate swaps 1,267,000 -- (45,799) --
--------- ------ ------ ------
$29,371 $(22,736) $31,336
====== ====== ======
Notional Carrying Fair Total Credit
December 31, 1996 Amount Amount Value Exposure
Assets:
Interest rate caps $4,000,000 $ 16,227 $ 7,439 $ 7,439
Interest rate floors 1,000,000 2,041 4,341 4,341
Off balance sheet:
Interest rate swaps 1,000,000 -- (24,715) --
--------- ------ -------- ------
$18,268 $(12,935) $11,780
====== ====== ======
<PAGE>
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate caps and
floors expire on various dates from 1998 to 2003. The interest rate
swaps expire on various dates from 2000 to 2003. All put and call
options expire in 1998.
Interest rate caps, swaps and floors are used principally to manage the
Company's interest rate risk. These instruments are used to protect
the margin between interest rates earned on investments and the
interest rates credited to related annuity contract holders.
<PAGE>
8. Derivative financial instruments (continued)
--------------------------------
Index options are used to manage the equity market risk related to the
fee income that the Company receives from its separate accounts and the
underlying mutual funds. The amount of the fee income received is
based upon the daily market value of the separate account and mutual
fund assets. As a result, the Company's fee income could be impacted
significantly by changing economic conditions in the equity market.
The Company entered into index option collars (combination of puts and
calls) to hedge anticipated fee income for 1998 related to separate
accounts and mutual funds which invest in equity securities. Testing
has demonstrated the impact of these instruments on the income
statement closely correlates with the amount of fee income the Company
realizes. In the event that testing demonstrates that this correlation
no longer exists, or in the event the Company disposes of the index
options collars, the instruments will be marked-to-market through the
income statement. At December 31, 1997, deferred gains on purchased
put index options were $11,120 and deferred losses on written call
index options were $8,273.
9. Fair values of financial instruments
------------------------------------
The Company discloses fair value information for most on- and
off-balance sheet financial instruments for which it is practicable to
estimate that value. Fair values of life insurance obligations and all
non-financial instruments, such as deferred acquisition costs are
excluded. Off-balance sheet intangible assets, such as the value of
the field force, are also excluded. Management believes the value of
excluded assets and liabilities is significant. The fair value of the
Company, therefore, cannot be estimated by aggregating the amounts
presented.
<TABLE>
<CAPTION>
1997 1996
------------------ ---------------------
Carrying Fair Carrying Fair
Financial Assets Amount Value Amount Value
---------------- -------- ------ ------- -----
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $9,315,450 $9,743,410 $10,236,379 $10,521,650
Available for sale 12,876,694 12,876,694 11,146,845 11,146,845
Mortgage loans on
real estate (Note 2) 3,618,647 3,808,570 3,493,364 3,606,077
Other:
Equity securities (Note 2) 3,361 3,361 3,308 3,308
Derivative financial
instruments (Note 8) 37,644 31,336 18,268 11,780
Other 82,347 85,383 63,993 66,242
Cash and
cash equivalents (Note 1) 19,686 19,686 224,603 224,603
Separate account assets
(Note 1) 23,214,504 23,214,504 18,535,160 18,535,160
<PAGE>
Financial Liabilities
Future policy benefits
for fixed annuities 20,731,052 19,882,302 20,641,986 19,721,968
Derivative financial
instruments (Note 8) (8,273) (54,072) -- (24,715)
Separate account liabilities 21,488,282 20,707,620 17,358,087 16,688,519
</TABLE>
<PAGE>
9. Fair values of financial instruments (continued)
------------------------------------
At December 31, 1997 and 1996, the carrying amount and fair value of
future policy benefits for fixed annuities exclude life
insurance-related contracts carried at $1,185,155 and $1,112,155,
respectively, and policy loans of $93,540 and $83,867, respectively.
The fair value of these benefits is based on the status of the
annuities at December 31, 1997 and 1996. The fair value of deferred
annuities is estimated as the carrying amount less any applicable
surrender charges and related loans. The fair value for annuities in
non-life contingent payout status is estimated as the present value of
projected benefit payments at rates appropriate for contracts issued in
1997 and 1996.
At December 31, 1997 and 1996, the fair value of liabilities related to
separate accounts is estimated as the carrying amount less any
applicable surrender charges and less variable insurance contracts
carried at $1,726,222 and $1,177,073, respectively.
10. Segment information
-------------------
The Company's operations consist of two business segments; first,
individual and group life insurance, disability income and long-term
care insurance, and second, annuity products designed for individuals,
pension plans, small businesses and employer-sponsored groups. The
consolidated condensed statements of income for the years ended
December 31, 1997, 1996 and 1995 and total assets at December 31, 1997,
1996 and 1995 by segment are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net investment income:
Life, disability income
and long-term care insurance $ 269,874 $ 262,998 $ 256,242
Annuities 1,718,515 1,702,364 1,651,067
--------- --------- ---------
$ 1,988,389 $ 1,965,362 $ 1,907,309
========= ========= =========
Premiums, charges and fees:
Life, disability income
and long-term care insurance $ 514,838 $ 448,389 $ 384,008
Annuities 374,274 308,873 249,557
------- ------- -------
$ 889,112 $ 757,262 $ 633,565
======= ======= =======
Income before income taxes:
Life, disability income
and long-term care insurance $ 178,717 $ 161,115 $ 125,402
Annuities 501,334 460,758 440,278
Net gain (loss) on investments 860 (159) (4,898)
------- ------- -------
$ 680,911 $ 621,714 $ 560,782
======= ======= =======
<PAGE>
Total assets:
Life, disability income
and long-term care insurance $ 8,193,796 $ 7,028,906 $ 6,195,870
Annuities 44,780,328 40,277,075 36,704,208
---------- ---------- ----------
$52,974,124 $47,305,981 $42,900,078
========== ========== ==========
</TABLE>
<PAGE>
Allocations of net investment income and certain general expenses are
based on various assumptions and estimates.
Assets are not individually identifiable by segment and have been
allocated principally based on the amount of future policy benefits by
segment.
Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
11. Year 2000 Issue (unaudited)
---------------
The Year 2000 issue is the result of computer programs having been
written using two digits rather than four to define a year. Any
programs that have time-sensitive software may recognize a date using "00"
as the year 1900 rather than 2000. This could result in the failure of
major systems or miscalculations, which could have a material impact on
the operations of the Company. All of the systems used by the Company are
maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. The Company's business is heavily dependent
upon AEFC's computer systems and has significant interactions with
systems of third parties.
A comprehensive review of AEFC's computer systems and business
processes, including those specific to the Company, has been conducted to
identify the major systems that could be affected by the Year 2000
issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis.
AEFC's goal is to complete internal remediation and testing of each
system by the end of 1998 and to continue compliance efforts through
1999.
AEFC is evaluating the Year 2000 readiness of advisors and other third
parties whose system failures could have an impact on the Company's
operations. The potential materiality of any such impact is not known at
this time.
<PAGE>
PART 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, 1997, and December 31, 1996.
Consolidated Statements of Income for the years ended December 31, 1997,
1996, and 1995.
Consolidated Statements of Stockholder's Equity for the years ended
December 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996, and 1995.
Notes to Consolidated Financial Statements.
Report of Independent Auditors dated February 5, 1998.
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. 2-29358 filed
on June 14, 1968, and refiled electronically April 27, 1994 as Exhibit 1
with Post-Effective Amendment No. 55, is incorporated herein by reference.
2. Amended and Restated Regulations of IDS Life Variable Annuity Fund B, dated
June 22, 1979, filed as Exhibit 2 to Registrant's Post-Effective Amendment
No. 32 to Registration Statement No. 2-29358 filed on December 27, 1979,
and refiled electronically on 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. 2-29358 filed on December 27, 1979, are
incorporated herein by reference.
<PAGE>
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. 43, and refiled electronically
April 27, 1994 as Exhibit 5(a) with Post-Effective Amendment No. 55, is
incorporated herein by reference.
5(b) Investment Management and Advisory Agreement between IDS Life Insurance
Company and IDS Life Variable Annuity Fund B dated January 12, 1984, filed
as Exhibit 5(b) to Registrant's Post-Effective Amendment No. 43, and
refiled electronically April 27, 1994 as Exhibit 5(b) with Post-Effective
Amendment No. 55, 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. 43, and refiled electronically
April 27, 1994 as Exhibit 6 with Post-Effective Amendment No. 55, is
incorporated herein by reference.
7. None.
8(a) Custodian Agreement between Registrant, IDS Life Insurance Company and
American Express Trust Company, dated July 12, 1990, filed as Exhibit 8(a)
to Registrant's Post-Effective Amendment No. 52 to this Registration
Statement, filed April 15, 1991, and refiled electronically April 27, 1994
as Exhibit 8(a) with Post-Effective Amendment No. 55, is incorporated
herein by reference.
8(b) Custody Agreement between Morgan Stanley Trust Company and IDS Bank & Trust
Company, dated May 1993, filed electronically on April 11, 1995 as Exhibit
No. 8(b) to Post-Effective Amendment No. 57 is incorporated herein by
reference.
9. Not applicable.
10. Opinion of counsel and consent to its use as to the legality of the
securities registered, filed electronically herewith.
11. Consent of Independent Auditors, filed electronically herewith.
<PAGE>
12. Financial Statements Schedules omitted from Item 18 of Part I:
Schedule I - Consolidated Summary of Investments Other than
Investments in Related Parties
Schedule III - Supplementary Insurance Information
Schedule IV - Reinsurance
Schedule V - Valuation and Qualifying Accounts
Report of Independent Auditors, dated February 5, 1998, on IDS Life
Insurance Company Financial Statements Schedule.
13 through 15 not applicable.
16. Financial Data Schedules, filed electronically herewith.
17(a)IDS Life Insurance Company Power of Attorney to sign Amendments to this
Registration Statement dated August 19, 1997, filed electronically herewith
as Exhibit 17(a).
17(b)IDS Life Variable Annuity Fund B Board of Managers Power of Attorney to
sign Amendments to this Registration Statement dated March 25, 1997, filed
electronically as Exhibit 17(b) to Registrant's Post-Effective Amendment
No. 59 is incorporated by reference.
17(c)IDS Life Insurance Company Power of Attorney to sign Amendments to this
Registration Statement dated April 9, 1998 is filed electronically herewith
as Exhibit 17(c).
Item 2. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Both the Registrant and IDS Life Variable Annuity Fund A are separate
accounts of IDS Life. Consequently, the securities and funds of the Registrant
and Fund A 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 Trust Company. 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 Feb. 28, 1998
Variable Annuities 14,411
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
<PAGE>
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,
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 [sic ____. 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
[sic ____. 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 [sic ____. 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>
<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> <S> <C>
American Express Financial Advisors IDS Tower 10 Vice President - Service Quality
Minneapolis, MN 55440 and Reengineering
Douglas A. Alger, Senior Vice President--Human Resources
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President - Human
Minneapolis, MN 55440 Resources
Peter J. Anderson, Director and Senior Vice President--Investment Operations
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President -
Minneapolis, MN 55440 Investment Operations
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
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Ward D. Armstrong, Vice President--American Express Retirement Services
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - American Express
Minneapolis, MN 55440 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 Senior Vice President
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Joseph M. Barsky III, Vice President--Senior Portfolio Manager
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President-Senior Portfolio
Minneapolis, MN 55440 Manager
Robert C. Basten, Vice President--Tax and Business Services
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Tax and Business
Minneapolis, MN 55440 Services
American Express Tax & Business Services Inc. Director, President and Chief
Executive Officer
Timothy V. Bechtold, Vice President--Risk Management Products
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Risk Management
Minneapolis, MN 55440 Products
IDS Life Insurance Company Executive Vice President - Risk
Management Products
Alan F. Bignall, Vice President--Technology and Development
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Technology and
Minneapolis, MN 55440 Development
John C. Boeder, Vice President--Mature Market Group
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Mature Market
Minneapolis, MN 55440 Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205
Douglas W. Brewers, Vice President--Sales Support
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Sales Support
Minneapolis, MN 55440
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Karl J. Breyer, Director, Senior Vice President--Law and Corporate Affairs
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President - Law and
Minneapolis, MN 55440 Corporate Affairs
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 Support
Minneapolis, MN 55440
Cynthia M. Carlson, Vice President--American Express Securities Services
- -----------------------------------------------------------------------------------------------------------------------------
American Enterprise Investment Services Inc. IDS Tower 10 Director, President and Chief
Minneapolis, MN 55440 Executive Officer
American Express Financial Advisors Vice President - American Express
Securities Services
Mark W. Carter, Senior Vice President and Chief Marketing Officer
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President and Chief
Minneapolis, MN 55440 Marketing Officer
IDS Life Insurance Company Executive Vice President -
Marketing
James E. Choat, Senior Vice President--Institutional Products Group
- -------------------------------------------------------------------------------------------------------------------------------
American Enterprise Life Insurance Company IDS Tower 10 Director and Chief Executive Officer
Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President -
Institutional Products Group
American Express Insurance Agency of Nevada Inc. Vice President - North Central
Region
IDS Insurance Agency of Alabama Inc. Vice President - North Central
Region
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
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 Company IDS Tower 10 Director and President
Minneapolis, MN 55440
American Express Financial Advisors Vice President and General
Manager - IDS Property
Casualty
IDS Property Casualty Insurance Company I WEG Blvd. Director and President
DePere, WI 54115
Colleen Curran, Vice President and Assistant General Counsel
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President and Assistant
Minneapolis, MN 55440 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 - Systems Services
Minneapolis, MN 55440
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Luz Maria Davis, Vice President--Communications
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Communications
Minneapolis, MN 55440
Gordon L. Eid, Director, Senior Vice President, Deputy General Counsel and Chief Compliance Officer
- ----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President, General
Minneapolis, MN 55440 Counsel and Chief Compliance
Officer
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 - Government
Minneapolis, MN 55440 Relations
IDS Life Insurance Company Vice President
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Mark A. Ernst, Senior Vice President--Third Party Distribution
- -------------------------------------------------------------------------------------------------------------------------------
American Enterprise Investment Services Inc. IDS Tower 10 Director, Senior Vice President
Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President - Third Party
Distribution
American Express Financial Corporation Senior Vice President - Third Party
Distribution
American Express Tax & Business Services Inc. Director and Chairman of the Board
Gordon M. Fines, Vice President--Mutual Fund Equity Investments
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Mutual Fund
Minneapolis, MN 55440 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 - Institutional
Minneapolis, MN 55440 Products Group
Jeffrey P. Fox, Vice President and Corporate Controller
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President and Corporate
Minneapolis, MN 55440 Controller
John J. Golden, Vice President--Human Resources Planning and Field Support
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President-Human Resources
Minneapolis, MN 55440 Planning and Field Support
Harvey Golub, Director
- -------------------------------------------------------------------------------------------------------------------------------
American Express Company American Express Tower Chairman and Chief Executive Officer
World Financial Center
New York, NY 10285
American Express Travel Related Services Company, Chairman and Chief Executive Officer
Inc.
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
David A. Hammer, Vice President and Marketing Controller
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President and Marketing
Minneapolis, MN 55440 Controller
IDS Plan Services of California, Inc. Director and Vice President
Lorraine R. Hart, Vice President--Insurance Investments
- -------------------------------------------------------------------------------------------------------------------------------
American Enterprise Life Insurance Company IDS Tower 10 Vice President - Investments
Minneapolis, MN 55440
American Express Financial Advisors Vice President - Insurance Investments
American Partners Life Insurance Company Director and Vice President -
Investments
AMEX Assurance Company 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
Scott A. Hawkinson, Vice President--Assured Assets Product Development and Management
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Assured Assets
Minneapolis, MN 55440 Product Development and
Management
Janis K. Heaney, Vice President--Incentive Compensation
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Incentive
Minneapolis, MN 55440 Compensation
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
James G. Hirsh, Vice President and Assistant General Counsel
- ------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President and Assistant
Minneapolis, MN 55440 General Counsel
Darryl G. Horsman, Vice President--Product Development and Technology, American Express Retirement Services
- -----------------------------------------------------------------------------------------------------------------------------
American Express Trust Company IDS Tower 10 Director and President
Minneapolis, MN 55440
Jeffrey S. Horton, Vice President and Corporate Treasurer
- -----------------------------------------------------------------------------------------------------------------------------
American Centurion Life Assurance Company IDS Tower 10 Vice President and Treasurer
Minneapolis, MN 55440
American Enterprise Investment Services Inc. Vice President and Treasurer
American Enterprise Life Insurance Company Vice President and Treasurer
American Express Financial Advisors Vice President and Treasurer
American Express Insurance Agency of Nevada Inc. Vice President and Treasurer
American Express Minnesota Foundation Vice President and Treasurer
American Express Tax and Business Services Inc. Vice President and Treasurer
IDS Aircraft Services Corporation Vice President and Treasurer
IDS Capital Holdings Inc. Vice President, Treasurer and
Assistant Secretary
IDS Certificate Company Vice President and Treasurer
IDS Insurance Agency of Alabama Inc. Vice President and Treasurer
IDS Insurance Agency of Arkansas Inc. Vice President and Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and Treasurer
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
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 Life Insurance Company Vice President, Treasurer and
Assistant Secretary
IDS Plan Services of California, Inc. Vice President and Treasurer
IDS Property Casualty Insurance Company Vice President, Treasurer and
Assistant Secretary
IDS Real Estate Services, Inc. Vice President and Treasurer
IDS Securities Corporation Vice President and Treasurer
Investors Syndicate Development Corp. Vice President and Treasurer
David R. Hubers, Director, President and Chief Executive Officer
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Chairman, President and Chief
Minneapolis, MN 55440 Executive Officer
American Express Service Corporation Director and President
AMEX Assurance Company 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 Company Director
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Martin G. Hurwitz, Vice President--Senior Portfolio Manager
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Senior Portfolio
Minneapolis, MN 55440 Manager
James M. Jensen, Vice President--Insurance Product Development and Management
- ------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Insurance Product
Minneapolis, MN 55440 Development and Management
IDS Life Insurance Company Vice President - Insurance Product
Development
Marietta L. Johns, Director and Senior Vice President--Field Management
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President - Field
Minneapolis, MN 55440 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 - Market
Minneapolis, MN 55440 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--Distribution Services
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President -
Minneapolis, MN 55440 Distribution Services
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Brian Kleinberg, Executive Vice President--Financial Direct
American Express Financial Advisors IDS Tower 10 Executive Vice President -
Minneapolis, MN 55440 Financial Direct
Richard W. Kling, Director and Senior Vice President--Products
- -------------------------------------------------------------------------------------------------------------------------------
----------------------------------- -------------------------------------
American Centurion Life Assurance Company IDS Tower 10 Director
Minneapolis, MN 55440
American Enterprise Life Insurance Company Director and Chairman of the Board
American Express Financial Advisors Senior Vice President - Products
American Express Insurance Agency of Nevada Inc. Director and President
American Express Service Corporation Vice President
American Partners Life Insurance Company Director and Chairman of the Board
AMEX Assurance Company Director
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
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A and B Manager, Chairman of the Board and
President
IDS Property Casualty Insurance Company Director
IDS Life Insurance Company of New York P.O. Box 5144 Director, Chairman of the Board and
Albany, NY 12205 President
Paul F. Kolkman, Vice President--Actuarial Finance
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Actuarial Finance
Minneapolis, MN 55440
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 - Service Quality
Minneapolis, MN 55440
Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Director and Senior Vice President
Minneapolis, MN 55440 - Field Management and
Business Systems
Edward Labenski, Jr., Vice President--Senior Portfolio Manager
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Senior Portfolio
Minneapolis, MN 55440 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 - Senior Portfolio
Minneapolis, MN 55440 Manager
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Lori J. Larson, Vice President--Variable Assets Product Development
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Variable Assets
Minneapolis, MN 55440 Product Development
IDS Cable Corporation Director and President
IDS Cable II Corporation Director and President
IDS Futures Brokerage Group Assistant Vice President - General
Manager and Director
IDS Futures Corporation Director and President
IDS Futures III Corporation Director and Vice President
IDS Management Corporation Director and President
IDS Partnership Services Corporation Director and President
IDS Realty Corporation Director and President
Ryan R. Larson, Vice President--IPG Product Development
- -------------------------------------------------------------------------------------------------------------------------------
American Centurion Life Assurance Company IDS Tower 10 Director and Vice President -
Minneapolis, MN 55440 Product Development
American Express Financial Advisors Vice President - IPG Product
Development
IDS Life Insurance Company Vice President
Daniel E. Laufenberg, Vice President and Chief U.S. Economist
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President and Chief U.S.
Minneapolis, MN 55440 Economist
Richard J. Lazarchic, Vice President--Senior Portfolio Manager
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Senior Portfolio
Minneapolis, MN 55440 Manager
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Peter A. Lefferts, Director and Senior Vice President--Corporate Strategy and Development
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President - Corporate
Minneapolis, MN 55440 Strategy and Development
American Express Trust Company Director
IDS Plan Services of California, Inc. Director
Douglas A. Lennick, Director and Executive Vice President--Private Client Group
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Director and Executive Vice
Minneapolis, MN 55440 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 - Senior Portfolio
Minneapolis, MN 55440 Manager
Fred A. Mandell, Vice President--Field Marketing Readiness
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Field Marketing
Minneapolis, MN 55440 Readiness
Thomas W. Medcalf, Vice President--Senior Portfolio Manager
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Senior Portfolio
Minneapolis, MN 55440 Manager
William C. Melton, Vice President--International Research and Chief International Economist
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - International
Minneapolis, MN 55440 Research and Chief
International Economist
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
William P. Miller, Vice President and Senior Portfolio Manager
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President and Senior Portfolio
Minneapolis, MN 55440 Manager
James A. Mitchell, Director and Executive Vice President--Marketing and Products
- -------------------------------------------------------------------------------------------------------------------------------
American Enterprise Investment Services Inc. IDS Tower 10 Director
Minneapolis, MN 55440
American Express Financial Advisors Executive Vice President -
Marketing and Products
American Express Service Corporation Director and Senior Vice President
American Express Tax and Business Services Inc. Director
AMEX Assurance Company 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 Company Director
Pamela J. Moret, Vice President--Variable Assets
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Variable Assets
Minneapolis, MN 55440
American Express Trust Company Vice President
IDS Life Insurance Company Executive Vice President - Variable
Assets
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Barry J. Murphy, Director and Senior Vice President--Client Service
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President - Client
Minneapolis, MN 55440 Service
IDS Life Insurance Company Director and Executive Vice
President - Client Service
Mary Owens Neal, Vice President--Mature Market Segment
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Mature Market
Minneapolis, MN 55440 Segment
Robert J. Neis, Vice President--Technology Services
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Technology Services
Minneapolis, MN 55440
James R. Palmer, Vice President--Taxes
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Taxes
Minneapolis, MN 55440
IDS Aircraft Services Corporation Vice President
IDS Life Insurance Company Vice President - Taxes
Carla P. Pavone, Vice President--Compensation and Field Administration
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Compensation and
Minneapolis, MN 55440 Field Administration
Susan B. Plimpton, Vice President--Marketing Services
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Marketing
Minneapolis, MN 55440 Services
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Ronald W. Powell, Vice President and Assistant General Counsel
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President and Assistant
Minneapolis, MN 55440 General Counsel
IDS Cable Corporation Vice President and Assistant
Secretary
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--Special Projects
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Special Projects
Minneapolis, MN 55440
Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments
- -----------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Taxable Mutual
Minneapolis, MN 55440 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, Senior Vice President--Field Management and Financial Advisory Service
- ------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President - Field
Minneapolis, MN 55440 Management and Financial
Advisory Service
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Stephen W. Roszell, Senior Vice President--Institutional
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President -
Minneapolis, MN 55440 Institutional
IDS Advisory Group Inc. Director
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 Auditor
Minneapolis, MN 55440
Erven A. Samsel, Director and Senior Vice President--Field Management
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President - Field
Minneapolis, MN 55440 Management
American Express Insurance Agency of Nevada Inc. Vice President - New England Region
IDS Insurance Agency of Alabama Inc. Vice President - New England Region
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
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Stuart A. Sedlacek, Vice President--Assured Assets
- -------------------------------------------------------------------------------------------------------------------------------
American Centurion Life Assurance Company IDS Tower 10 Director, Chairman and President
Minneapolis, MN 55440
American Enterprise Life Insurance Company Director and Executive Vice
President, Assured Assets
American Express Financial Advisors Vice President - Assured Assets
American Partners Life Insurance Company 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, Chairman of the Board
and President
Donald K. Shanks, Vice President--Property Casualty
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Property Casualty
Minneapolis, MN 55440
IDS Property Casualty Insurance Company Senior Vice President
F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments
- -------------------------------------------------------------------------------------------------------------------------------
American Enterprise Life Insurance Company IDS Tower 10 Vice President - Real Estate Loan
Minneapolis, MN 55440 Management
American Express Financial Advisors Vice President - Senior Portfolio
Manager, Insurance Investments
American Partners Life Insurance Company Vice President - Real Estate Loan
Management
AMEX Assurance Company Vice President
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
IDS Certificate Company Vice President - Real Estate Loan
Management
IDS Life Insurance Company Vice President - Real Estate Loan
Management and Assistant Treasurer
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 Assistant
Albany, NY 12205 Treasurer
Judy P. Skoglund, Vice President--Human Resources and Organization Development
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Human Resources
Minneapolis, MN 55440 and Organization Development
Ben C. Smith, Vice President--Workplace Marketing
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Workplace
Minneapolis, MN 55440 Marketing
William A. Smith, Vice President and Controller--Private Client Group
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President and Controller -
Minneapolis, MN 55440 Private Client Group
Bridget Sperl, Vice President--Geographic Service Teams
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Geographic
Minneapolis, MN 55440 Service Teams
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
William A. Stoltzmann, Vice President and Assistant General Counsel
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President and Assistant General
Minneapolis, MN 55440 Counsel
American Partners Life Insurance Company Director, Vice President, General
Counsel and Secretary
IDS Life Insurance Company Vice President, General Counsel and
Secretary
American Enterprise Life Insurance Company Director, Vice President, General
Counsel and Secretary
James J. Strauss, Vice President--Corporate Planning and Analysis
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Corporate Planning
Minneapolis, MN 55440 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
Wesley W. Wadman, Vice President--Senior Portfolio Manager
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Senior Portfolio
Minneapolis, MN 55440 Manager
IDS Advisory Group Inc. Executive Vice President
IDS Fund Management Limited Director and Vice Chairman
IDS International, Inc. Senior Vice President
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Norman Weaver Jr., Director and Senior Vice President--Field Management
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President - Field
Minneapolis, MN 55440 Management
American Express Insurance Agency of Nevada Inc. Vice President - Pacific 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 and
Minneapolis, MN 55440 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
IDS Futures III Corporation Vice President, Treasurer and
Secretary
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
Lawrence J. Welte, Vice President--Investment Administration
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Investment
Minneapolis, MN 55440 Administration
Jeffry F. Welter, Vice President--Equity and Fixed Income Trading
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Equity and Fixed
Minneapolis, MN 55440 Income Trading
Edwin M. Wistrand, Vice President and Assistant General Counsel
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President and Assistant
Minneapolis, MN 55440 General Counsel
Michael D. Wolf, Vice President--Senior Portfolio Manager
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Vice President - Senior Portfolio
Minneapolis, MN 55440 Manager
IDS Advisory Group Inc. Executive Vice President
Michael R. Woodward, Director and Senior Vice President--Field Management
- -------------------------------------------------------------------------------------------------------------------------------
American Express Financial Advisors IDS Tower 10 Senior Vice President - Field
Minneapolis, MN 55440 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
<PAGE>
Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation) (cont'd)
IDS Insurance Agency of Ohio Inc. Vice President - North Region
IDS Insurance Agency of Wyoming Inc. Vice President - North Region
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205
</TABLE>
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)
<TABLE>
<CAPTION>
Name and Principal Business Address Position and Offices with Underwriter Positions and Offices with
Registrant
- ------------------------------------ ---------------------------------------- ------------------------------
<S> <C> <C>
Timothy V. Bechtold Executive Vice President-Risk None
IDS Tower 10 Management Products
Minneapolis, MN 55440
David J. Berry Vice President None
IDS Tower 10
Minneapolis, MN 55440
Mark W. Carter Executive Vice President- Marketing None
IDS Tower 10
Minneapolis, MN 55440
Robert M. Elconin Vice President None
IDS Tower 10
Minneapolis, MN 55440
Lorraine R. Hart Vice President-Investments Vice President, Investments
IDS Tower 10
Minneapolis, MN 55440
David R. Hubers Director None
IDS Tower 10
Minneapolis, MN 55440
<PAGE>
Item 6(b). Principal Underwriter (IDS Life Insurance Company) (cont'd)
Name and Principal Business Address Position and Offices with Underwriter Positions and Offices with
Registrant
- ------------------------------------ ---------------------------------------- ------------------------------
James M. Jensen Vice President-Insurance Product None
IDS Tower 10 Development
Minneapolis, MN 55440
Richard W. Kling Director and President Chairman of the Board of
IDS Tower 10 Managers and President
Minneapolis, MN 55440
Paul F. Kolkman Director and Executive Vice President None
IDS Tower 10
Minneapolis, MN 55440
Ryan R. Larson Vice President None
IDS Tower 10
Minneapolis, MN 55440
James A. Mitchell Director, Chairman of the Board and None
IDS Tower 10 Chief Executive Officer
Minneapolis, MN 55440
Pamela J. Moret Executive Vice President- Variable None
IDS Tower 10 Assets
Minneapolis, MN 55440
Barry J. Murphy Director and Executive Vice None
IDS Tower 10 President-Client Service
Minneapolis, MN 55440
James R. Palmer Vice President-Taxes None
IDS Tower 10
Minneapolis, MN 55440
Stuart A. Sedlacek Director and Executive Vice None
IDS Tower 10 President-Assured Assets
Minneapolis, MN 55440
F. Dale Simmons Vice President-Real Estate Loan None
IDS Tower 10 Management and Assistant Treasurer
Minneapolis, MN 55440
William A. Stoltzmann Vice President, General Counsel and General Counsel and
IDS Tower 10 Secretary Assistant Secretary
Minneapolis, MN 55440
</TABLE>
<PAGE>
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>
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 B, certifies
that it meets all 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 15th day of April, 1998.
IDS LIFE VARIABLE ANNUITY FUND B
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 15th day of April, 1998.
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
/s/ Lorraine R. Hart Vice President, Investments
Lorraine R. Hart
/s/ Jeffrey S. Horton** Vice President and
Jeffrey S. Horton Controller
/s/ Timothy S. Meehan Secretary
Timothy S. Meehan
<PAGE>
Signature Title
/s/ William A. Stoltzmann** General Counsel and
William A. Stoltzmann Assistant Secretary
**Signed pursuant to IDS Life Variable Annuity Fund B Board of Managers Power of
Attorney dated March 25, 1997 filed electronically as Exhibit 17(b) to
Registrant's Post-Effective Amendment No. 59 to this Registration Statement:
by __________________________
Mary Ellyn Minenko
<PAGE>
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 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 15th day of April, 1998.
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 15th day of April, 1998.
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/ Jeffrey S. Horton** Vice President and Treasurer
Jeffrey S. Horton
/s/ David R. Hubers* Director
David R. Hubers
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
/s/ Stuart A. Sedlacek* Director and Executive Vice
Stuart A. Sedlacek President, Assured Assets
/s/ Philip C. Wentzel** Vice President and Controller
Philip C. Wentzel
<PAGE>
*Signed pursuant to Power of Attorney, dated August 19, 1997 filed
electronically herewith as Exhibit 17(a) for IDS Life Variable Annuity Fund B.
**Signed pursuant to Power of Attorney dated April 9, 1998, filed electronically
herewith as Exhibit 17(b) for IDS Life Variable Annuity Fund B.
by _________________________
Mary Ellyn Minenko
<PAGE>
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 60
TO REGISTRATION STATEMENT NO. 2-47430; 2-29358
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.
Exhibit Index
IDS LIFE VARIABLE ANNUITY FUND B (INDIVIDUAL AND GROUP)
Registration No. 2-47430; 2-29358/811-1674
Exhibit Description
10 Opinion of Counsel
11 Consent of Independent Auditors
12 Financial Statement Schedules and Report
16 Financial Data Schedule
17(a) Power of Attorney, dated August 19, 1997
17(b) Power of Attorney, dated April 9, 1998
April 15, 1998
IDS Life Variable Annuity Fund B
(Individual and Group)
IDS Tower 10
Minneapolis, Minnesota 55440-0010
Re: Registration Statement on Form N-1
File No: 2-47430 and 2-29358
Ladies and Gentlemen:
I am familiar with the establishment of IDS Life Variable Annuity Fund B
("Account") which is a separate account of IDS Life Insurance Company
("Company") established by the Company's Board of Directors according to
applicable insurance law. I also am familiar with the above-referenced
Registration Statement filed on behalf of the Account with the Securities and
Exchange Commission.
I have made such examination of law and examined such documents and records as
in my judgment are necessary and appropriate to enable me to give the following
option:
1. The Account is a validly created and existing separate account of the
Company and is duly authorized to issue the securities registered.
2. The contracts issued by the Company during the past fiscal year, when
offered and sold in accordance with the prospectus contained in the
Registration Statement and in compliance with applicable law, were
legally issued and represent binding obligations of the Company in
accordance with their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
Mary Ellyn Minenko
Attorney at Law
(612) 671-3678
MEM/NL/dm
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our reports dated February 5, 1998 on the consolidated
financial statements and schedules of IDS Life Insurance company and the
incorporation by reference of our report dated February 5, 1998 on the financial
statements of IDS Life Variable Annuity Fund B in Post-Effective Amendment No.
60 to the Registration Statement (Form N-1, No. 2-47430) and related Prospectus
for the registration of IDS Life Variable Account Fund B interests to be offered
by IDS Life Insurance Company.
ERNST & YOUNG LLP
Minneapolis, Minnesota
April 15, 1998
<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, 1997 and 1996, and for each of the three years in the
period ended December 31, 1997, and have issued our report thereon dated
February 5, 1998 (included elsewhere in this Registration Statement). Our audits
also included the financial statement schedules listed in the index to financial
statement schedules of this Registration Statement. These schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 1,829,112 $ 1,846,833 $ 1,829,112
States, municipalities and
political subdivisions 9,684 10,252 9,684
All other corporate bonds (b) 7,476,654 7,886,325 7,476,654
------------ ---------- ----------
Total held to maturity 9,315,450 9,743,410 9,315,450
Available for sale:
United States Government and
government agencies and
authorities (c) 6,798,425 6,944,942 6,944,942
States, municipalities and
political subdivisions 11,045 12,393 12,393
All other corporate bonds (d) 5,705,560 5,919,359 5,919,359
------------ ---------- ----------
Total available for sale 12,515,030 12,876,694 12,876,694
Mortgage loans on real estate 3,618,647 XXXXXXXXX 3,618,647
Policy loans 498,874 XXXXXXXXX 498,874
Other investments 318,591 XXXXXXXXX 318,591
------------ ----------
Total investments $ 26,266,592 $ XXXXXXXXX $ 26,628,256
============ ========== ==========
(a) - Includes mortgage-backed securities with a cost and market value of $1,787,180 and $1,801,952,
respectively.
(b) - Includes mortgage-backed securities with a cost and market value of $196,008 and $199,301,
respectively.
(c) - Includes mortgage-backed securities with a cost and market value of $6,733,134 and $6,875,498,
respectively.
(d) - Includes mortgage-backed securities with a cost and market value of $397,431 and $408,667,
respectively.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($
thousands)
FOR THE YEAR ENDED DECEMBER 31, 1997
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other 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>
Annuities $ 1,453,441 $ 22,009,747 $ - $ 35,007 $ - $1,718,515 $ 1,720 $229,729 $262,680 N/A
Life, DI, and
Long-term Care
Insurance 1,026,136 4,027,289 - 33,338 206,494 269,874 209,955 93,002 13,916 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Total $ 2,479,577 $ 26,037,036 $ - $ 68,345 $ 206,494 $ 1,988,389 $ 211,675 $322,731 $276,596 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1996
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other 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>
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
- ------------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1995
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other 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>
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
- ------------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
Life insurance in force $ 73,119,122 $ 4,351,904 $ 1,611,596 $ 70,378,814 2.29%
- -------------------------------------------------------------------------------------------
Premiums:
Life insurance $ 55,094 $ 3,124 $ 503 $ 52,473 0.96%
DI & LTC insurance 196,799 42,778 -- 154,021 0.00%
- -------------------------------------------------------------------------------------------
Total premiums $ 251,893 $ 45,902 $ 503 $ 206,494 0.24%
- -------------------------------------------------------------------------------------------
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%
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- ------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
---------
Balance at Charged to
Description Beginning Charged to Other Accounts- Deductions- Balance at End
of Period Costs & Expenses Describe Describe * of Period
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
- ----------------------------
Reserve for Mortgage Loans $37,495 $8,801 $0 $7,651 $38,645
Reserve for Other Investments $3,963 $2,100 $0 $0 $6,063
For the year ended
December 31, 1996
- ----------------------------
Reserve for Mortgage Loans $37,340 $10,005 $0 $9,850 $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 $15,900 $0 $13,812 $37,340
Reserve for Other Investments $7,515 ($2,802) $0 $0 $4,713
* 1997, 1996 and 1995 amounts represent $7,651, $9,850, and $13,812, respectively, for loan
payoffs and foreclosures.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 12876694
<DEBT-CARRYING-VALUE> 9315450
<DEBT-MARKET-VALUE> 9743410
<EQUITIES> 3361
<MORTGAGE> 3618647
<REAL-ESTATE> 102433
<TOTAL-INVEST> 26628256
<CASH> 19686
<RECOVER-REINSURE> 989
<DEFERRED-ACQUISITION> 2479577
<TOTAL-ASSETS> 52974124
<POLICY-LOSSES> 26037036
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 68345
<NOTES-PAYABLE> 0
<COMMON> 3000
0
0
<OTHER-SE> 2862816
<TOTAL-LIABILITY-AND-EQUITY> 52974124
206494
<INVESTMENT-INCOME> 1988389
<INVESTMENT-GAINS> 860
<OTHER-INCOME> 682618
<BENEFITS> 1598123
<UNDERWRITING-AMORTIZATION> 322731
<UNDERWRITING-OTHER> 276596
<INCOME-PRETAX> 680911
<INCOME-TAX> 206664
<INCOME-CONTINUING> 474247
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 474247
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 26387
<PROVISION-CURRENT> 144098
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 143237
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 27248
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as directors of IDS Life Insurance Company on
behalf of the below listed registrants that previously have filed registration
statements and amendments thereto pursuant to the requirements of the Securities
Act of 1933 and the Investment Company Act of 1940 with the Securities and
Exchange Commission:
<TABLE>
<CAPTION>
1933 Act 1940 Act
Reg. Number Reg. Number
<S> <C> <C>
IDS Life Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract (Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity 33-50968 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
Flexible Premium Survivorship Variable Life
Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
</TABLE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko,
Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster, Bruce Kohn and Timothy S.
Meehan or any one of them, as her or his attorney-in-fact and agent, to sign for
her or him in her or his name, place and stead any and all filings, applications
(including applications for exemptive relief), periodic reports, registration
statements for existing or future products of existing separate accounts (with
all exhibits and other documents required or desirable in connection therewith),
other documents, and amendments thereto and to file such filings, applications,
periodic reports, registration statements, other documents, and amendments
thereto with the Securities and Exchange Commission, and any necessary states,
and grants to any or all of them the full power and authority to do and perform
each and every act required or necessary in connection therewith.
<PAGE>
Dated the 19th day of August, 1997.
/s/ David R. Hubers August 15, 1997
- ------------------------------------
David R. Hubers
Director
/s/ Richard W. Kling August 18, 1997
-----------------------------------
Richard W. Kling
Director and President
/s/ Paul F. Kolkman August 19, 1997
- ------------------------------------
Paul F. Kolkman
Director and Executive Vice
President
/s/ James A. Mitchell August 15, 1997
- ------------------------------------
James A. Mitchell
Director, Chairman of the
Board and Chief Executive Officer
/s/ Barry J. Murphy August 14, 1997
- ------------------------------------
Barry J. Murphy
Director and Executive Vice
President, Client Service
/s/ Stuart A. Sedlacek August 19, 1997
- ------------------------------------
Stuart A. Sedlacek
Director and Executive Vice
President, Assured Assets
/s/ Melinda S. Urion August 14, 1997
- ------------------------------------
Melinda S. Urion
Director, Executive Vice
President and Controller
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as principal financial officer and controller,
respectively, of IDS Life Insurance Company on behalf of the below listed
registrants that previously have filed registration statements and amendments
thereto pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 with the Securities and Exchange Commission:
<TABLE>
<CAPTION>
1933 Act 1940 Act
Reg. Number Reg. Number
<S> <C> <C>
IDS Life Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract (Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity 33-50968 N/A
IDS Life Insurance Company
Portfolio Guaranteed Term Annuity 333-42793 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
Flexible Premium Survivorship Variable Life
Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
</TABLE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko,
Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster, Bruce Kohn and Timothy S.
Meehan or any one of them, as his attorney-in-fact and agent, to sign for him in
his name, place and stead any and all filings, applications (including
applications for exemptive relief), periodic reports, registration statements
for existing or future products of existing separate accounts (with all exhibits
and other documents required or desirable in connection therewith), other
documents, and amendments thereto and to file such filings, applications,
periodic reports, registration statements, other documents, and amendments
thereto with the Securities and Exchange Commission, and any necessary states,
and grants to any or all of them the full power and authority to do and perform
each and every act required or necessary in connection therewith.
<PAGE>
Dated the 9th day of April, 1998.
/s/ Jeffrey S. Horton April 8, 1998
- ------------------------------------
Jeffrey S. Horton
Vice President, Treasurer
and Assistant Secretary
/s/ Philip C. Wentzel April 9, 1998
- ------------------------------------
Philip C. Wentzel
Vice President and Controller
