LIFE INSURANCE
COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
FINANCIAL STATEMENTS
December 31, 1995
(Audited)
This report is submitted for the general information of owners of
Life Insurance Company of North America Separate Account A
contracts. The Separate Account does issue new contracts;
accordingly, this report is not authorized for distribution to
prospective purchasers of variable annuity contracts.
Life Insurance Company of North America
Philadelphia, PA
Report of Independent Accountants
To the Contract Owners of Life Insurance Company
of North America Separate Account A and the Board
of Directors of Life Insurance Company of North America
In our opinion, the accompanying combined balance sheet and the
related individual statements of operations and of changes in
total assets present fairly, in all material respects, the
combined financial position of the subdivisions comprising the
Life Insurance Company of North America Separate Account A (the
Separate Account) at December 31, 1995, the results of each of
their operations for the year then ended and the changes in each
of their total assets for the two years in the period then ended,
in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Separate
Account's management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the over
all financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Dallas, Texas
February 15, 1996
LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
COMBINED BALANCE SHEET
DECEMBER 31, 1995
ASSETS
Investments at Market Value (Notes 1 and 2):
Seligman Growth Fund, Inc.
1,522,350 qualified shares (cost $9,694,985) $7,946,672
242,651 non-qualified shares (cost $1,930,057) 1,266,638
Oppenheimer Fund
141,444 qualified shares (cost $1,258,469) 1,572,854
20,656 non-qualified shares (cost $194,549) 229,692
Delaware Group Decatur Fund, Inc.
679,462 qualified shares (cost $7,787,223) 12,352,606
201,412 non-qualified shares (cost $2,168,820) 3,661,665
Windsor Fund
871,696 qualified shares (cost $10,688,782) 12,665,738
80,831 non-qualified shares (cost $1,051,549) 1,174,469
Dreyfus Third Century Fund
935,967 qualified shares (cost $4,106,633) 7,712,364
24,329 non-qualified shares (cost $122,079) 200,469
Windsor Fund B
216,744 qualified shares (cost $3,661,880) 3,149,286
85,057 non-qualified shares (cost $1,355,781) 1,235,885
CIGNA High Yield Fund, Inc.
88,871 qualified shares (cost $915,925) 838,050
123,467 non-qualified shares (cost $1,147,009) 1,164,298
Total Assets $55,170,686
The accompanying notes are an integral part of these financial statements
CONTRACT OWNERS' EQUITY
Contract Owners' Equity (Notes 3 and 7):
Seligman Growth Fund, Inc.
794,908 qualified accumulation ($9.9969713 per unit) $7,946,672
units outstanding
155,744 non-qualified accumulation ($8.1328216 per unit) 1,266,638
units outstanding
Oppenheimer Fund
277,581 qualified accumulation ($5.6662872 per unit) 1,572,854
units outstanding
41,395 non-qualified accumulation ($5.5487759 per unit) 229,692
units outstanding
Delaware Group Decatur Fund, Inc.
735,388 qualified accumulation ($16.7973999 per unit) 12,352,606
units outstanding
223,021 non-qualified accumulation ($16.4184748 per unit) 3,661,665
units outstanding
Windsor Fund
1,000,233 qualified accumulation ($12.6627873 per unit) 12,665,738
units outstanding
104,906 non-qualified accumulation ($11.1954373 per unit) 1,174,469
units outstanding
Dreyfus Third Century Fund
528,552 qualified accumulation ($14.5914959 per unit) 7,712,364
units outstanding
15,589 non-qualified accumulation ($12.8596224 per unit) 200,469
units outstanding
Windsor Fund B
215,431 qualified accumulation ($14.6185352 per unit) 3,149,286
units outstanding
83,861 non-qualified accumulation ($14.7372993 per unit) 1,235,885
units outstanding
CIGNA High Yield Fund, Inc.
149,774 qualified accumulation ($5.5954326 per unit) 838,050
units outstanding
204,880 non-qualified accumulation ($5.6828299 per unit) 1,164,298
units outstanding
Contract Owners' Equity $55,170,686
The accompanying notes are an integral part of these financial statements
LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
INDIVIDUAL STATEMENTS OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 1995
Seligman
Seligman Growth
Growth Fund Inc.
Fund Inc. Non-
Qualified Qualified
Investment Income:
Dividends $ 46,410 $ 7,387
Expenses:
Mortality risk and expense 66,184 10,280
fees guarantees (Notes 1 and 3)
Investment income - net (19,774) (2,893)
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 783,518 124,702
Net realized gain (loss) on investments:
Proceeds from sale of shares 757,579 60,842
Cost of shares sold 646,775 50,705
Net realized gain (loss) on investments 110,804 10,137
Net unrealized gain (loss) on investments 925,855 147,963
Net realized and unrealized gain (loss) 1,820,177 282,802
on investments
Net Increase (Decrease) in Net Assets $1,800,403 $ 279,909
from Investment Operations
Oppenheimer
Oppenheimer Fund
Fund Non-
Qualified Qualified
Investment Income:
Dividends $ 24,835 $ 3,646
Expenses:
Mortality risk and expense 13,475 1,917
fees guarantees (Notes 1 and 3)
Investment income - net 11,360 1,729
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 115,443 16,950
Net realized gain (loss) on investments:
Proceeds from sale of shares 120,011 7,388
Cost of shares sold 104,676 6,671
Net realized gain (loss) on investments 15,335 717
Net unrealized gain (loss) on investments 166,101 24,414
Net realized and unrealized gain (loss) 296,879 42,081
on investments
Net Increase (Decrease) in Net Assets $ 308,239 $ 43,810
from Investment Operations
Delaware
Delaware Group
Group Decatur
Decatur Fund, Inc.
Fund, Inc. Non-
Qualified Qualified
Investment Income:
Dividends $ 850,831 $ 247,184
Expenses:
Mortality risk and expense 106,628 30,395
fees guarantees (Notes 1 and 3)
Investment income - net 744,203 216,789
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 475,112 140,983
Net realized gain (loss) on investments:
Proceeds from sale of shares 2,095,402 387,012
Cost of shares sold 1,947,669 363,522
Net realized gain (loss) on investments 147,733 23,490
Net unrealized gain (loss) on investments 1,900,949 552,214
Net realized and unrealized gain (loss) 2,523,794 716,687
on investments
Net Increase (Decrease) in Net Assets $3,267,997 $ 933,476
from Investment Operations
Windsor
Windsor Fund
Fund Non-
Qualified Qualified
Investment Income:
Dividends $ 502,450 $ 47,985
Expenses:
Mortality risk and expense 109,997 10,874
fees guarantees (Notes 1 and 3)
Investment income - net 392,453 37,111
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 952,209 87,948
Net realized gain (loss) on investments:
Proceeds from sale of shares 2,050,353 220,927
Cost of shares sold 1,895,945 188,811
Net realized gain (loss) on investments 154,408 32,116
Net unrealized gain (loss) on investments 1,552,460 149,862
Net realized and unrealized gain (loss) 2,659,077 269,926
on investments
Net Increase (Decrease) in Net Assets $3,051,530 $ 307,037
from Investment Operations
Dreyfus
Dreyfus Third
Third Century
Century Non-
Qualified Qualified
Investment Income:
Dividends $ 357,148 $ 9,280
Expenses:
Mortality risk and expense 63,813 1,643
fees guarantees (Notes 1 and 3)
Investment income - net 293,335 7,637
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 182,930 4,753
Net realized gain (loss) on investments:
Proceeds from sale of shares 1,139,938 32,040
Cost of shares sold 939,090 26,846
Net realized gain (loss) on investments 200,848 5,194
Net unrealized gain (loss) on investments 1,437,770 36,711
Net realized and unrealized gain (loss) 1,821,548 46,658
on investments
Net Increase (Decrease) in Net Assets $2,114,833 $ 54,295
from Investment Operations
Windsor
Windsor Fund B
Fund B Non-
Qualified Qualified
Investment Income:
Dividends $ 121,909 $ 48,067
Expenses:
Mortality risk and expense 25,906 10,195
fees guarantees (Notes 1 and 3)
Investment income - net 96,003 37,872
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 235,922 92,557
Net realized gain (loss) on investments:
Proceeds from sale of shares 264,628 59,503
Cost of shares sold 249,291 56,202
Net realized gain (loss) on investments 15,337 3,301
Net unrealized gain (loss) on investments 363,668 146,704
Net realized and unrealized gain (loss) 614,927 242,562
on investments
Net Increase (Decrease) in Net Assets $ 710,930 $ 280,434
from Investment Operations
CIGNA High CIGNA High
Yield Fund, Yield Fund,
Inc. Inc. Non-
Qualified Qualified
Investment Income:
Dividends $ 78,601 $ 102,102
Expenses:
Mortality risk and expense 6,862 8,748
fees guarantees (Notes 1 and 3)
Investment income - net 71,739 93,354
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions
0 0
Net realized gain (loss) on investments:
Proceeds from sale of shares 40,380 247,872
Cost of shares sold 40,638 244,871
Net realized gain (loss) on investments (258) 3,001
Net unrealized gain (loss) on investments 41,427 44,548
Net realized and unrealized gain (loss) 41,169 47,549
on investments
Net Increase (Decrease) in Net Assets $ 112,908 $ 140,903
from Investment Operations
The accompanying notes are an integral part of these financial statements
LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
INDIVIDUAL STATEMENTS OF CHANGES IN TOTAL ASSETS
TWELVE MONTHS ENDED DECEMBER 31, 1995
Seligman
Seligman Growth
Growth Fund Inc.
Fund Inc. Non-
Qualified Qualified
Investment Operations:
Investment income-net $ (19,774) $ (2,893)
Realized capital gain distributions 783,518 124,702
Net realized gain (loss) on investments 110,804 10,137
Net unrealized gain (loss) on investments 925,855 147,963
Net increase (decrease) in net 1,800,403 279,909
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 25,476 0
in (Note 3)
Net contract surrenders and transfers (610,678) (36,775)
out (Note 3)
Benefit payments to annuitants (26,590) (13,787)
Net Increase (Decrease) from accumulation (611,792) (50,562)
unit transactions
Net Increase (Decrease) in Net Assets 1,188,611 229,347
Net Assets:
Net assets at December 31, 1994 6,758,061 1,037,291
Net assets at December 31, 1995 $7,946,672 $1,266,638
Oppenheimer
Oppenheimer Fund
Fund Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 11,360 $ 1,729
Realized capital gain distributions 115,443 16,950
Net realized gain (loss) on investments 15,335 717
Net unrealized gain (loss) on investments 166,101 24,414
Net increase (decrease) in net 308,239 43,810
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 5,440 0
in (Note 3)
Net contract surrenders and transfers (91,120) 0
out (Note 3)
Benefit payments to annuitants (20,856) (5,471)
Net Increase (Decrease) from accumulation (106,536) (5,471)
unit transactions
Net Increase (Decrease) in Net Assets 201,703 38,339
Net Assets:
Net assets at December 31, 1994 1,371,151 191,353
Net assets at December 31, 1995 $1,572,854 $ 229,692
Delaware
Delaware Group
Group Decatur
Decatur Fund, Inc.
Fund, Inc. Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 744,203 $ 216,789
Realized capital gain distributions 475,112 140,983
Net realized gain (loss) on investments 147,733 23,490
Net unrealized gain (loss) on investments 1,900,949 552,214
Net increase (decrease) in net 3,267,997 933,476
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 201,326 0
in (Note 3)
Net contract surrenders and transfers (1,990,869) (267,678)
out (Note 3)
Benefit payments to annuitants (116,148) (88,762)
Net Increase (Decrease) from accumulation (1,905,691) (356,440)
unit transactions
Net Increase (Decrease) in Net Assets 1,362,306 577,036
Net Assets:
Net assets at December 31, 1994 10,990,300 3,084,629
Net assets at December 31, 1995 $12,352,606 $ 3,661,665
Windsor
Windsor Fund
Fund Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 392,453 $ 37,111
Realized capital gain distributions 952,209 87,948
Net realized gain (loss) on investments 154,408 32,116
Net unrealized gain (loss) on investments 1,552,460 149,862
Net increase (decrease) in net 3,051,530 307,037
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 252,459 0
in (Note 3)
Net contract surrenders and transfers (1,629,691) (210,054)
out (Note 3)
Benefit payments to annuitants (57,981) 0
Net Increase (Decrease) from accumulation (1,435,213) (210,054)
unit transactions
Net Increase (Decrease) in Net Assets 1,616,317 96,983
Net Assets:
Net assets at December 31, 1994 11,049,421 1,077,486
Net assets at December 31, 1995 $12,665,738 $ 1,174,469
Dreyfus
Dreyfus Third
Third Century
Century Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 293,335 $ 7,637
Realized capital gain distributions 182,930 4,753
Net realized gain (loss) on investments 200,848 5,194
Net unrealized gain (loss) on investments 1,437,770 36,711
Net increase (decrease) in net 2,114,883 54,295
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 41,821 0
in (Note 3)
Net contract surrenders and transfers (1,108,894) (29,853)
out (Note 3)
Benefit payments to annuitants (2,821) (543)
Net Increase (Decrease) from accumulation (1,069,894) (30,396)
unit transactions
Net Increase (Decrease) in Net Assets 1,044,989 23,899
Net Assets:
Net assets at December 31, 1994 6,667,375 176,570
Net assets at December 31, 1995 $7,712,364 $ 200,469
Windsor
Windsor Fund B
Fund B Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 96,003 $ 37,872
Realized capital gain distributions 235,922 92,557
Net realized gain (loss) on investments 15,337 3,301
Net unrealized gain (loss) on investments 363,668 146,704
Net increase (decrease) in net 710,930 280,434
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 106,794 0
in (Note 3)
Net contract surrenders and transfers (113,136) (39,403)
out (Note 3)
Benefit payments to annuitants (82,392) (1,518)
Net Increase (Decrease) from accumulation (88,734) (40,921)
unit transactions
Net Increase (Decrease) in Net Assets 622,196 239,513
Net Assets:
Net assets at December 31, 1994 2,527,090 996,372
Net assets at December 31, 1995 $3,149,286 $1,235,885
CIGNA High CIGNA High
Yield Fund, Yield Fund,
Inc. Inc. Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 71,739 $ 93,354
Realized capital gain distributions 0 0
Net realized gain (loss) on investments (258) 3,001
Net unrealized gain (loss) on investments 44,548
Net increase (decrease) in net 112,908 140,903
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 31,633 557,383
in (Note 3)
Net contract surrenders and transfers (32,213) (234,842)
out (Note 3)
Benefit payments to annuitants (1,219) 0
Net Increase (Decrease) from accumulation (1,799) 322,541
unit transactions
Net Increase (Decrease) in Net Assets 111,109 463,444
Net Assets:
Net assets at December 31, 1994 726,941 700,854
Net assets at December 31, 1995 $ 838,050 $1,164,298
The accompanying notes are an integral part of these financial statements
LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
INDIVIDUAL STATEMENTS OF CHANGES IN TOTAL ASSETS
TWELVE MONTHS ENDED DECEMBER 31, 1994
Seligman
Seligman Growth
Growth Fund Inc.
Fund Inc. Non-
Qualified Qualified
Investment Operations:
Investment income-net $ (53,056) $ (7,895)
Realized capital gain distributions 675,091 103,694
Net realized gain (loss) on investments (9,421) (5,708)
Net unrealized gain (loss) on investments (975,533) (146,339)
Net increase (decrease) in net (362,919) (56,248)
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 32,306 0
in (Note 3)
Net contract surrenders and transfers (839,882) (87,067)
out (Note 3)
Benefit payments to annuitants (319,079) (13,540)
Net Increase (Decrease) from accumulation (1,126,655) (100,607)
unit transactions
Net Increase (Decrease) in Net Assets (1,489,574) (156,855)
Net Assets:
Total assets at December 31, 1993 8,247,635 1,194,146
Total assets at December 31, 1994 $6,758,061 $1,037,291
Oppenheimer
Oppenheimer Fund
Fund Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 57 $ (209)
Realized capital gain distributions 125,170 18,226
Net realized gain (loss) on investments 19,659 15,070
Net unrealized gain (loss) on investments (153,059) (35,268)
Net increase (decrease) in net (8,173) (2,181)
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 23,470 0
in (Note 3)
Net contract surrenders and transfers (165,591) (129,854)
out (Note 3)
Benefit payments to annuitants (8,223) (5,114)
Net Increase (Decrease) from accumulation (150,344) (134,968)
unit transactions
Net Increase (Decrease) in Net Assets (158,517) (137,149)
Net Assets:
Total assets at December 31, 1993 1,529,668 328,502
Total assets at December 31, 1994 $1,371,151 $ 191,353
Delaware
Delaware Group
Group Decatur
Decatur Fund, Inc.
Fund, Inc. Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 395,328 $ 108,508
Realized capital gain distributions 286,545 80,471
Net realized gain (loss) on investments (42,769) (15,043)
Net unrealized gain (loss) on investments (844,957) (238,695)
Net increase (decrease) in net (205,853) (64,759)
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 140,458 85,712
in (Note 3)
Net contract surrenders and transfers (1,684,379) (745,319)
out (Note 3)
Benefit payments to annuitants (52,020) (40,101)
Net Increase (Decrease) from accumulation
unit transactions (1,595,941) (699,708)
Net Increase (Decrease) in Net Assets
Net Assets: (1,801,794) (764,467)
Total assets at December 31, 1993 12,792,094 3,849,096
Total assets at December 31, 1994 $10,990,300 $ 3,084,629
Windsor
Windsor Fund
Fund Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 312,000 $ 29,906
Realized capital gain distributions 638,667 62,199
Net realized gain (loss) on investments 28,550 297
Net unrealized gain (loss) on investments (1,067,015) (105,023)
Net increase (decrease) in net (87,798) (12,621)
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 248,626 57,320
in (Note 3)
Net contract surrenders and transfers (1,207,202) 0
out (Note 3)
Benefit payments to annuitants (52,849) 0
Net Increase (Decrease) from accumulation (1,011,425) 57,320
unit transactions
Net Increase (Decrease) in Net Assets (1,099,223) 44,699
Net Assets:
Total assets at December 31, 1993 12,148,644 1,032,787
Total assets at December 31, 1994 $11,049,421 $ 1,077,486
Dreyfus
Dreyfus Third
Third Century
Century Non-
Qualified Qualified
Investment Operations:
Investment income-net $ (12,547) $ (496)
Realized capital gain distributions 908,425 23,235
Net realized gain (loss) on investments 243,508 25,506
Net unrealized gain (loss) on investments (1,847,060) (66,830)
Net increase (decrease) in net (707,674) (18,585)
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 73,178 2,953
in (Note 3)
Net contract surrenders and transfers (1,838,681) (61,603)
out (Note 3)
Benefit payments to annuitants (1,734) (474)
Net Increase (Decrease) from accumulation (1,767,237) (59,124)
unit transactions
Net Increase (Decrease) in Net Assets (2,474,911) (77,709)
Net Assets:
Total assets at December 31, 1993 9,142,286 254,279
Total assets at December 31, 1994 $6,667,375 $ 176,570
Windsor
Windsor Fund B
Fund B Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 71,367 $ 27,536
Realized capital gain distributions 145,975 57,513
Net realized gain (loss) on investments 15,486 5,296
Net unrealized gain (loss) on investments (251,110) (98,499)
Net increase (decrease) in net (18,282) (8,154)
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 237,072 71,875
in (Note 3)
Net contract surrenders and transfers (573,047) (116,155)
out (Note 3)
Benefit payments to annuitants (17,777) (1,370)
Net Increase (Decrease) from accumulation (353,752) (45,650)
unit transactions
Net Increase (Decrease) in Net Assets (372,034) (53,804)
Net Assets:
Total assets at December 31, 1993 2,899,124 1,050,176
Total assets at December 31, 1994 $2,527,090 $ 996,372
CIGNA High CIGNA High
Yield Fund, Yield Fund,
Inc. Inc. Non-
Qualified Qualified
Investment Operations:
Investment income-net $ 80,500 $ 67,215
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 300 (51,921)
Net unrealized gain (loss) on investments (84,786) (14,642)
Net increase (decrease) in net (3,986) 652
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfers 0 301,175
in (Note 3)
Net contract surrenders and transfers (13,082) (205,600)
out (Note 3)
Benefit payments to annuitants (1,182) 0
Net Increase (Decrease) from accumulation (14,264) 95,575
unit transactions
Net Increase (Decrease) in Net Assets (18,250) 96,227
Net Assets:
Total assets at December 31, 1993 745,191 604,627
Total assets at December 31, 1994 $ 726,941 $ 700,854
The accompanying notes are an integral part of these financial statements
LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
Note 1. Organization
Life Insurance Company of North America - Separate Account A (the
"Separate Account"), a separate account of Life Insurance Company
of North America ("LINA"), is registered under the Investment
Company Act of 1940, as amended, as a unit investment trust. The
Separate Account consists of seven divisions, corresponding to
the specific mutual fund shares underlying the values of such
division. Variable annuity contract payments allocated to the
Separate Account, except as modified by Note 5, are invested by
LINA in shares of a designated mutual fund for allocation to the
corresponding Separate Account division. The current divisions
of the Separate Account are designated as follows: Delaware Group
Decatur Fund, Inc., Seligman Growth Fund, Inc., Oppenheimer Fund,
Windsor Fund, Windsor Fund B, Dreyfus Third Century Fund, and
CIGNA High Yield Fund, Inc. (the "Funds").
The Windsor Fund has, with certain exceptions, ceased offering
shares to investors; however, the Separate Account has obtained
confirmation from the fund that it will continue to provide its
shares for use as an underlying investment medium for eligible
variable annuity contract holders.
Each of the seven mutual fund divisions contains two
subdivisions, one for the tax-qualified and one for the
allocation of non-tax qualified variable annuity contract values.
The contract owners' equity is affected by the investment results
of the appropriate mutual fund designated for the subdivision and
the mortality risk and expense fees guarantees assessed on
Separate Account assets (See Note 3).
Note 2. Significant Accounting Policies
The accompanying financial statements include only the contract
owners' payments pertaining to the variable portion of their
contracts, and exclude any payments for fixed dollar benefits,
the latter being included in the general account of LINA.
Following is a summary of the significant accounting policies of
the Separate Account : (a) the market value investments is based
on closing bid prices (net asset value) at December 31, 1995; (b)
investment transactions are accounted for on the trade date and
income is recorded on the ex-dividend date; (c) the cost of the
investments sold is determined on the specific identification
method. See Notes 4 through 6 with respect to income taxes.
Note 3. Contract Owner Transactions
Net contract considerations represent gross contributions
allocated to the Separate Account by the contract owners less a
deduction by LINA for sales and administrative expenses, death
benefits for group contracts and any applicable premium taxes.
These deductions, exclusive of premium taxes, are charged against
the gross contributions and vary as follows: group contracts from
1% to 6%; individual contracts from 4% to 8.5%. Net contract
considerations for the year ended December 31, 1995 were $506,577
after deductions for sales and administrative expenses. Contract
owners unaffected by Revenue Ruling 81-225 (See Note 5) have
limited rights to transfer their investment between the Separate
Account subdivisions and to transfer from and to the general
accumulation account of LINA. Contract owners affected by Revenue
Ruling 81-225 have limited rights to transfer certain contract
values to the general accumulation account of LINA to lessen the
impact of the Ruling (See Note 5). The amounts of all transfers
for the year ended December 31, 1995 were as follows:
Transfers between Separate
Account A subdivisions $99,405
Transfers from the general
accumulation account $744,135
Transfers to the general
accumulation account $693,720
LINA charges a fee to each Separate Account subdivision for
assuming the mortality risk and expense fee guarantees. The
daily equivalent of the annual charge of 0.90% is made against
the average net asset value of the Separate Account.
Note 4. Income Taxes
The Separate Account is taxed as part of LINA. For the year
ended December 31, 1995, LINA was taxed as a casualty insurance
company as part of the consolidated group of CIGNA Corporation,
its ultimate parent. LINA anticipates that, for calendar year
1996, it will be taxed as a casualty insurance company as part of
CIGNA Corporation's consolidated group. Although LINA may be
taxed as a casualty insurance company, it treats the operations
of the Separate Account as if it were part of a life insurance
company. Under the current provisions of the Internal Revenue
Code, no Federal income taxes are payable by a company taxed as a
life insurance company with respect to investment income and
capital gains of the assets of a separate account when used to
determine contract values. LINA reserves the right to make
adjustments for taxes to the assets of the Separate Account should
future changes in the Internal Revenue Code applicable to life
insurance companies so warrant.
Note 5. Effect of Revenue Ruling 81-225
Revenue Ruling 81-225 was issued by the Internal Revenue Service
on September 25, 1981. The Ruling pertains to variable
annuities, where the insurance company, through a separate
account, holds mutual funds shares which are also sold to the
public independent of the variable annuity contracts. The Ruling
also questioned the tax treatment of variable annuity contracts
where the underlying mutual funds are not managed by the issuing
insurance company or an affiliate, and where the policyholder may
initially allocate and subsequently reallocate his contract
values among several underlying funds.
The Ruling adversely affected the tax status of the Separate
Account variable annuity contracts issued on a non-tax qualified
basis after December 31, 1980, and those issued after September
25, 1981 which were intended to qualify under Internal Revenue
Code Sections 403(a), 403(b) or 408(b).
In order to comply with the IRS opinions expressed in Revenue
Ruling 81-225, allocations to the Separate Account resulting from
new purchases were terminated except as noted below. In
addition, LINA suspended new contract sales which permitted
allocations to the Separate Account in both the non-tax qualified
and tax qualified markets described above.
Payments on behalf of individuals who were participants under
contracts before September 25, 1981 may continue to be allocated
to the Separate Account where such contracts were issued to
qualify pursuant to Code Sections 403(a), 403(b) or 408(b), or
where the contract owner is not subject to federal income tax.
Note 6. Diversification Requirements
Under the provisions of Section 817(h) of the Internal Revenue
Code, a variable annuity contract, other than a contract issued
in connection with certain types of employee benefit plans, will
not be treated as an annuity contract for federal tax purposes
for any period for which the investments of the segregated asset
account on which the contract is based are not adequately
diversified. The Code provides that the "adequately diversified"
requirement may be met if the underlying investments satisfy
either a statutory safe harbor test or diversification
requirements set forth in regulations issued by the Secretary of
Treasury.
The Internal Revenue Service has issued regulations under section
817(h) of the Code. LINA believes that the Separate Account
satisfies the current requirements of the regulations, and it
intends that the Separate Account will continue to meet such
requirements.
Note 7. Accumulation Unit Transactions
The changes in the number of accumulation units
(the measure of ownership in the Separate Account)
during the twelve months of 1995 and units
outstanding at December 31, 1995 were as follows:
Seligman
Seligman Growth
Growth Fund Inc.
Fund Inc. Non-
Qualified Qualified
Units outstanding at December 31, 1994 860,740 162,441
Units purchased and transfers in 6,155 0
Benefits, surrenders and transfers out (71,987) (6,697)
Units outstanding at December 31, 1995 794,908 155,744
Oppenheimer
Oppenheimer Fund
Fund Non-
Qualified Qualified
Units outstanding at December 31, 1994 297,953 42,469
Units purchased and transfers in 984 0
Benefits, surrenders and transfers out (21,356) (1,074)
Units outstanding at December 31, 1995 277,581 41,395
Delaware
Delaware Group
Group Decatur
Decatur Fund, Inc.
Fund, Inc. Non-
Qualified Qualified
Units outstanding at December 31, 1994 861,937 247,423
Units purchased and transfers in 7,707 0
Benefits, surrenders and transfers out (134,256) (24,402)
Units outstanding at December 31, 1995 735,388 223,021
Windsor
Windsor Fund
Fund Non-
Qualified Qualified
Units outstanding at December 31, 1994 1,125,072 124,149
Units purchased and transfers in 20,743 0
Benefits, surrenders and transfers out (145,582) (19,243)
Units outstanding at December 31, 1995 1,000,233 104,906
Dreyfus
Dreyfus Third
Third Century
Century Non-
Qualified Qualified
Units outstanding at December 31, 1994 615,049 18,485
Units purchased and transfers in 3,298 0
Benefits, surrenders and transfers out (89,795) (2,896)
Units outstanding at December 31, 1995 528,552 15,589
Windsor
Windsor Fund B
Fund B Non-
Qualified Qualified
Units outstanding at December 31, 1994 222,969 87,428
Units purchased and transfers in 7,700 0
Benefits, surrenders and transfers out (15,238) (3,567)
Units outstanding at December 31, 1995 215,431 83,861
CIGNA High CIGNA High
Yield Fund, Yield Fund,
Inc. Inc. Non-
Qualified Qualified
Units outstanding at December 31, 1994 150,508 142,960
Units purchased and transfers in 5,774 109,496
Benefits, surrenders and transfers out (6,508) (47,576)
Units outstanding at December 31, 1995 149,774 204,880
The accumulation units for twelve of the subdivisions include
units applicable to contract owners who are "on benefit annuitants." At
December 31, 1995 the number of accumulation units, the aggregate
value of the'subdivisions' equity and the number of monthly annuity
units and value per unit of "on benefit annuitants" are as follows:
Accumulation Aggregate
Units Value
Seligman Growth Fund, Inc. Qualified 34,658 $346,475
Seligman Growth Fund, Inc. Non-Qualified 16,915 $137,567
Oppenheimer Fund Qualified 7,472 $ 42,338
Oppenheimer Fund Non-Qualified 15,074 $ 83,642
Delaware Group Decatur Fund, 36,094 $585,029
Inc. Qualified
Delaware Group Decatur Fund, 41,157 $652,019
Inc. Non-Qualified
Windsor Fund Qualified 53,299 $674,914
Dreyfus Third Century Qualified 1,122 $ 16,372
Dreyfus Third Century Non-Qualified 561 $ 7,214
Windsor Fund B Qualified 1,765 $ 25,802
Windsor Fund B Non-Qualified 1,746 $ 25,731
CIGNA High Yield Fund, Inc. Qualified 2,645 $ 14,800
Monthly Annuity
Annuity Units Unit Value
Seligman Growth Fund, Inc. Qualified 980 4.2086357
Seligman Growth Fund, Inc. Non-Qualified 926 3.4245534
Oppenheimer Fund Qualified 245 2.3962961
Oppenheimer Fund Non-Qualified 266 2.3473670
Delaware Group Decatur Fund, 1,090 6.8778135
Inc. Qualified
Delaware Group Decatur Fund, 731 6.6773803
Inc. Non-Qualified
Windsor Fund Qualified 1,181 5.3567941
Dreyfus Third Century Qualified 155 3.2537079
Dreyfus Third Century Non-Qualified 19 3.2165349
Windsor Fund B Qualified 108 2.1631062
Windsor Fund B Non-Qualified 103 1.3700160
CIGNA High Yield Fund, Inc. Qualified 48 3.4718483
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