LIFE INSURANCE
COMPANY
OF NORTH AMERICA
SEPARATE ACCOUNT A
FINANCIAL STATEMENTS
December 31, 1996
(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 not 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, 1996, 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
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion express above.
Price Waterhouse LLP
Dallas, Texas
February 19, 1997
LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
COMBINED BALANCE SHEET
DECEMBER 31, 1996
ASSETS
Investments at Market Value (Notes 1 and 2):
Seligman Growth Fund, Inc.
1,593,715 qualified shares (cost $10,143,501) $ 9,323,232
226,406 non-qualified shares (cost $ 1,854,109) 1,324,472
Oppenheimer Fund
134,476 qualified shares (cost $1,209,757) 1,612,370
19,726 non-qualified shares (cost $ 187,228) 236,506
Delaware Group Decatur Fund, Inc.
686,595 qualified shares (cost $8,337,592) 12,667,669
194,877 non-qualified shares (cost $2,248,429) 3,595,489
Windsor Fund
806,196 qualified shares (cost $9,766,015) 13,374,791
78,971 non-qualified shares (cost $1,038,705) 1,310,131
Dreyfus Third Century Fund
924,726 qualified shares (cost $4,234,337) 8,156,081
27,928 non-qualified shares (cost $ 153,757) 246,326
Windsor Fund B
236,708 qualified shares (cost $3,997,988) 3,926,992
91,508 non-qualified shares (cost $1,465,635) 1,518,118
CIGNA High Yield Fund, Inc.
83,410 qualified shares (cost $ 865,760) 824,086
135,149 non-qualified shares (cost $1,258,579) 1,335,268
________
Total Assets $59,451,531
========
CONTRACT OWNERS' EQUITY
Contract Owners' Equity (Notes 3 and 7):
Seligman Growth Fund, Inc.
776,867 qualified accumulation units
outstanding ($12.0010664 per unit) $ 9,323,232
135,645 non-qualified accumulation units
outstanding ($ 9.7642492 per unit) 1,324,472
Oppenheimer Fund
240,426 qualified accumulation units
outstanding ($ 6.7063052 per unit) 1,612,370
36,010 non-qualified accumulation units
outstanding ($ 6.5677973 per unit) 236,506
Delaware Group Decatur Fund, Inc.
634,694 qualified accumulation units
outstanding ($19.9587024 per unit) 12,667,669
184,973 non-qualified accumulation units
outstanding ($19.4379109 per unit) 3,595,489
Windsor Fund
843,324 qualified accumulation units
outstanding ($15.8596120 per unit) 13,374,791
93,436 non-qualified accumulation units
outstanding ($14.0216990 per unit) 1,310,131
Dreyfus Third Century Fund
453,612 qualified accumulation units
outstanding ($17.9803023 per unit) 8,156,081
15,547 non-qualified accumulation units
outstanding ($15.8439730 per unit) 246,326
Windsor Fund B
214,502 qualified accumulation units
outstanding ($18.3074832 per unit) 3,926,992
82,259 non-qualified accumulation units
outstanding ($18.4553372 per unit) 1,518,118
CIGNA High Yield Fund, Inc.
129,088 qualified accumulation units
outstanding ($ 6.3839075 per unit) 824,086
206,001 non-qualified accumulation units
outstanding ($ 6.4818501 per unit) 1,335,268
________
Contract Owners' Equity $59,451,531
========
The accompanying notes are an integral part of these financial statements.
LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
INDIVIDUAL STATEMENTS OF OPERATIONS
Year Ended December 31, 1996
Seligman Seligman
Growth Fund, Growth Fund,
Inc. Inc.
Qualified Non-Qualified
Investment Income:
Dividends $ 139,246 $ 20,301
Expenses:
Mortality risk and expense fees guarantees (Note 3) 78,415 12,051
_________ _________
Investment income-net 60,831 8,250
_________ _________
Net Realized and Unrealized Gain on Investments:
Net realized capital gain distributions 564,389 82,285
_________ _________
Net realized gain (loss) on investments:
Proceeds from sale of shares 307,380 199,733
Cost of shares sold 283,066 178,534
_________ _________
Net realized gain (loss) on investments 24,314 21,199
_________ _________
Net unrealized gain (loss) on investments 928,044 133,782
_________ _________
Net realized and unrealized gain
on investments 1,516,747 237,266
_________ _________
Net Increase in Net Assets
from Investment Operations $ 1,577,578 $ 245,516
========= =========
Oppenheimer Oppenheimer
Fund Fund
Qualified Non-Qualified
Investment Income:
Dividends $ 48,109 $ 7,068
Expenses:
Mortality risk and expense fees guarantees (Note 3) 14,761 2,093
_________ _________
Investment income-net 33,348 4,975
_________ _________
Net Realized and Unrealized Gain on Investments:
Net realized capital gain distributions 106,492 15,646
_________ _________
Net realized gain (loss) on investments:
Proceeds from sale of shares 253,008 34,151
Cost of shares sold 209,877 30,338
_________ _________
Net realized gain (loss) on investments 43,131 3,813
_________ _________
Net unrealized gain (loss) on investments 88,228 14,135
_________ _________
Net realized and unrealized gain
on investments 237,851 33,594
_________ _________
Net Increase in Net Assets
from Investment Operations $ 271,199 $ 38,569
========= =========
Delaware Delaware
Group Group
Decatur Decatur
Fund, Inc. Fund, Inc.
Qualified Non-Qualified
Investment Income:
Dividends $ 855,850 $ 240,216
Expenses:
Mortality risk and expense fees guarantees (Note 3) 110,905 30,943
_________ _________
Investment income-net 744,945 209,273
_________ _________
Net Realized and Unrealized Gain on Investments:
Net realized capital gain distributions 1,349,090 384,462
_________ _________
Net realized gain (loss) on investments:
Proceeds from sale of shares 1,982,895 679,650
Cost of shares sold 1,713,408 545,581
_________ _________
Net realized gain (loss) on investments 269,487 134,069
_________ _________
Net unrealized gain (loss) on investments (235,307) (145,785)
_________ _________
Net realized and unrealized gain
on investments 1,383,270 372,746
_________ _________
Net Increase in Net Assets
from Investment Operations $ 2,128,215 $ 582,019
========= =========
Windsor Windsor
Fund Fund
Qualified Non-Qualified
Investment Income:
Dividends $ 502,850 $ 46,698
Expenses:
Mortality risk and expense fees guarantees (Note 3) 119,025 10,983
_________ _________
Investment income-net 383,825 35,715
_________ _________
Net Realized and Unrealized Gain on Investments:
Net realized capital gain distributions 883,792 80,653
_________ _________
Net realized gain (loss) on investments:
Proceeds from sale of shares 2,748,891 150,398
Cost of shares sold 2,661,319 140,196
_________ _________
Net realized gain (loss) on investments 87,572 10,202
_________ _________
Net unrealized gain (loss) on investments 1,631,820 148,505
_________ _________
Net realized and unrealized gain
on investments 2,603,184 239,360
_________ _________
Net Increase in Net Assets
from Investment Operations $ 2,987,009 $ 275,075
========= =========
Dreyfus Dreyfus
Third Century Third Century
Qualified Non-Qualified
Investment Income:
Dividends $ 435,810 $ 12,881
Expenses:
Mortality risk and expense fees guarantees (Note 3) 72,063 2,016
_________ _________
Investment income-net 363,747 10,865
_________ _________
Net Realized and Unrealized Gain on Investments:
Net realized capital gain distributions 716,847 21,188
_________ _________
Net realized gain (loss) on investments:
Proceeds from sale of shares 1,352,184 2,626
Cost of shares sold 1,093,678 2,391
_________ _________
Net realized gain (loss) on investments 258,506 235
_________ _________
Net unrealized gain (loss) on investments 316,011 14,175
_________ _________
Net realized and unrealized gain
on investments 1,291,364 35,598
_________ _________
Net Increase in Net Assets
from Investment Operations $ 1,655,111 $ 46,463
========= =========
Windsor Windsor
Fund B Fund B
Qualified Non-Qualified
Investment Income:
Dividends $ 134,542 $ 52,558
Expenses:
Mortality risk and expense fees guarantees (Note 3) 31,182 12,203
_________ _________
Investment income-net 103,360 40,355
_________ _________
Net Realized and Unrealized Gain on Investments:
Net realized capital gain distributions 241,771 93,467
_________ _________
Net realized gain (loss) on investments:
Proceeds from sale of shares 225,201 77,148
Cost of shares sold 213,773 75,019
_________ _________
Net realized gain (loss) on investments 11,428 2,129
_________ _________
Net unrealized gain (loss) on investments 441,596 172,379
_________ _________
Net realized and unrealized gain
on investments 694,795 267,975
_________ _________
Net Increase in Net Assets
from Investment Operations $ 798,155 $ 308,330
========= =========
CIGNA High CIGNA High
Yield Fund, Inc. Yield Fund, Inc.
Qualified Non-Qualified
Investment Income:
Dividends $ 78,521 $ 116,974
Expenses:
Mortality risk and expense fees guarantees (Note 3) 7,544 11,161
_________ _________
Investment income-net 70,977 105,813
_________ _________
Net Realized and Unrealized Gain on Investments:
Net realized capital gain distributions 0 0
_________ _________
Net realized gain (loss) on investments:
Proceeds from sale of shares 147,608 66,915
Cost of shares sold 145,477 67,371
_________ _________
Net realized gain (loss) on investments 2,131 (456)
_________ _________
Net unrealized gain (loss) on investments 36,200 59,400
_________ _________
Net realized and unrealized gain
on investments 38,331 58,944
_________ _________
Net Increase in Net Assets
from Investment Operations $ 109,308 $ 164,757
========= =========
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
Year Ended December 31, 1996
Seligman Seligman
Growth Fund, Growth Fund,
Inc. Inc.
Qualified Non-Qualified
Investment Operations:
Investment income-net $ 60,831 $ 8,250
Realized capital gain distributions 564,389 82,285
Net realized gain (loss) on investments 24,314 21,199
Net unrealized gain (loss) on investments 928,044 133,782
_________ _________
Net increase (decrease) in net assets from
investment operations 1,577,578 245,516
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 10,591 0
Net contract surrenders and transfers out (Note 3) (178,352) (144,360)
Benefit payments to annuitants (33,257) (43,322)
_________ _________
Net Increase (Decrease) from accumulation
unit transactions (201,018) (187,682)
_________ _________
Net Increase (Decrease) in Net Assets 1,376,560 57,834
Net Assets:
Net assets at December 31, 1995 7,946,672 1,266,638
_________ _________
Net assets at December 31, 1996 $ 9,323,232 $1,324,472
========= =========
Oppenheimer Oppenheimer
Fund Fund
Qualified Non-Qualified
Investment Operations:
Investment income-net $ 33,348 $ 4,975
Realized capital gain distributions 106,492 15,646
Net realized gain (loss) on investments 43,131 3,813
Net unrealized gain (loss) on investments 88,228 14,135
_________ _________
Net increase (decrease) in net assets from
investment operations 271,199 38,569
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 5,380 0
Net contract surrenders and transfers out (Note 3) (231,025) (24,713)
Benefit payments to annuitants (6,038) (7,042)
_________ _________
Net Increase (Decrease) from accumulation
unit transactions (231,683) (31,755)
_________ _________
Net Increase (Decrease) in Net Assets 39,516 6,814
Net Assets:
Net assets at December 31, 1995 1,572,854 229,692
_________ _________
Net assets at December 31, 1996 $ 1,612,370 $ 236,506
========= =========
Delaware Delaware
Group Group
Decatur Decatur
Fund, Inc. Fund, Inc.
Qualified Non-Qualified
Investment Operations:
Investment income-net $ 744,945 $ 209,273
Realized capital gain distributions 1,349,090 384,462
Net realized gain (loss) on investments 269,487 134,069
Net unrealized gain (loss) on investments (235,307) (145,785)
_________ _________
Net increase (decrease) in net assets from
investment operations 2,128,215 582,019
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 110,019 1,096
Net contract surrenders and transfers out (Note 3) (1,846,802) (580,616)
Benefit payments to annuitants (76,369) (68,675)
_________ _________
Net Increase (Decrease) from accumulation
unit transactions (1,813,152) (648,195)
_________ _________
Net Increase (Decrease) in Net Assets 315,063 (66,176)
Net Assets:
Net assets at December 31, 1995 12,352,606 3,661,665
_________ _________
Net assets at December 31, 1996 $12,667,669 $ 3,595,489
========= =========
Windsor Windsor
Fund Fund
Qualified Non-Qualified
Investment Operations:
Investment income-net $ 383,825 $ 35,715
Realized capital gain distributions 883,792 80,653
Net realized gain (loss) on investments 87,572 10,202
Net unrealized gain (loss) on investments 1,631,820 148,505
_________ _________
Net increase (decrease) in net assets from
investment operations 2,987,009 275,075
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 285,423 0
Net contract surrenders and transfers out (Note 3) (2,498,437) (139,413)
Benefit payments to annuitants (64,942) 0
_________ _________
Net Increase (Decrease) from accumulation
unit transactions (2,277,956) (139,413)
_________ _________
Net Increase (Decrease) in Net Assets 709,053 135,662
Net Assets:
Net assets at December 31, 1995 12,665,738 1,174,469
_________ _________
Net assets at December 31, 1996 $ 13,374,791 $ 1,310,131
========= =========
Dreyfus Dreyfus
Third Century Third Century
Qualified Non-Qualified
Investment Operations:
Investment income-net $ 363,747 $ 10,865
Realized capital gain distributions 716,847 21,188
Net realized gain (loss) on investments 258,506 235
Net unrealized gain (loss) on investments 316,011 14,175
_________ _________
Net increase (decrease) in net assets from
investment operations 1,655,111 46,463
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 119,719 0
Net contract surrenders and transfers out (Note 3) (1,310,720) 0
Benefit payments to annuitants (20,393) (606)
_________ _________
Net Increase (Decrease) from accumulation
unit transactions (1,211,394) (606)
_________ _________
Net Increase (Decrease) in Net Assets 443,717 45,857
Net Assets:
Net assets at December 31, 1995 7,712,364 200,469
_________ _________
Net assets at December 31, 1996 $ 8,156,081 $ 246,326
========= =========
Windsor Windsor
Fund B Fund B
Qualified Non-Qualified
Investment Operations:
Investment income-net $ 103,360 $ 40,355
Realized capital gain distributions 241,771 93,467
Net realized gain (loss) on investments 11,428 2,129
Net unrealized gain (loss) on investments 441,596 172,379
_________ _________
Net increase (decrease) in net assets from
investment operations 798,155 308,330
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 205,432 0
Net contract surrenders and transfers out (Note 3) (223,691) (24,361)
Benefit payments to annuitants (2,190) (1,736)
_________ _________
Net Increase (Decrease) from accumulation
unit transactions (20,449) (26,097)
_________ _________
Net Increase (Decrease) in Net Assets 777,706 282,233
Net Assets:
Net assets at December 31, 1995 3,149,286 1,235,885
_________ _________
Net assets at December 31, 1996 $ 3,926,992 $ 1,518,118
========= =========
CIGNA CIGNA
High Yield High Yield
Fund, Inc. Fund, Inc.
Qualified Non-Qualified
Investment Operations:
Investment income-net $ 70,977 $ 105,813
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 2,131 (456)
Net unrealized gain (loss) on investments 36,200 59,400
_________ _________
Net increase (decrease) in net assets from
investment operations 109,308 164,757
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 17,033 65,080
Net contract surrenders and transfers out (Note 3) (125,199) (58,867)
Benefit payments to annuitants (15,106) 0
_________ _________
Net Increase (Decrease) from accumulation
unit transactions (123,272) 6,213
_________ _________
Net Increase (Decrease) in Net Assets (13,964) 170,970
Net Assets:
Net assets at December 31, 1995 838,050 1,164,298
_________ _________
Net assets at December 31, 1996 $ 824,086 $ 1,335,268
========= =========
Year Ended December 31, 1995
Seligman Seligman
Growth Fund, Growth Fund,
Inc. Inc.
Qualified Non-Qualified
Investment Operations:
Investment income-net $ (19,774) $ (2,893)
Realized capital gain distributions 783,518 124,702
Net realized gain (loss) on investment 110,804 10,137
Net unrealized gain on investments 925,855 147,963
_________ _________
Net increase in net assets from
investment operations 1,800,403 279,909
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 25,476 0
Net contract surrenders and transfers out (Note 3) (610,678) (36,775)
Benefit payments to annuitants (26,590) (13,787)
_________ _________
Net increase (decrease) from accumulation
unit transactions (611,792) (50,562)
_________ _________
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
Qualified Non-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 on investments 166,101 24,414
_________ _________
Net increase in net assets from
investment operations 308,239 43,810
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 5,440 0
Net contract surrenders and transfers out (Note 3) (91,120) 0
Benefit payments to annuitants (20,856) (5,471)
_________ _________
Net increase (decrease) from accumulation
unit transactions (106,536) (5,471)
_________ _________
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.
Qualified Non-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 on investments 1,900,949 552,214
_________ _________
Net increase in net assets from
investment operations 3,267,997 933,476
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 201,326 0
Net contract surrenders and transfers out (Note 3) (1,990,869) (267,678)
Benefit payments to annuitants (116,148) (88,762)
_________ _________
Net increase (decrease) from accumulation
unit transactions (1,905,691) (356,440)
_________ _________
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
Qualified Non-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 on investments 1,552,460 149,862
_________ _________
Net increase in net assets from
investment operations 3,051,530 307,037
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 252,459 0
Net contract surrenders and transfers out (Note 3) (1,629,691) (210,054)
Benefit payments to annuitants (57,981) 0
_________ _________
Net increase (decrease) from accumulation
unit transactions (1,435,213) (210,054)
_________ _________
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 Century Third Century
Qualified Non-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 on investments 1,437,770 36,711
_________ _________
Net increase in net assets from
investment operations 2,114,883 54,295
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 41,821 0
Net contract surrenders and transfers out (Note 3) (1,108,894) (29,853)
Benefit payments to annuitants (2,821) (543)
_________ _________
Net increase (decrease) from accumulation
unit transactions (1,069,894) (30,396)
_________ _________
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
Qualified Non-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 on investments 363,668 146,704
_________ _________
Net increase (decrease) in net assets from
investment operations 710,930 280,434
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 106,794 0
Net contract surrenders and transfers out (Note 3) (113,136) (39,403)
Benefit payments to annuitants (82,392) (1,518)
_________ _________
Net increase (decrease) from accumulation
unit transactions (88,734) (40,921)
_________ _________
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
High Yield High Yield
Fund, Inc. Fund, Inc.
Qualified Non-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 on investments 41,427 44,548
_________ _________
Net increase in net assets from
investment operations 112,908 140,903
_________ _________
Accumulation Unit Transactions:
Net contract considerations and transfers in (Note 3) 31,633 557,383
Net contract surrenders and transfers out (Note 3) (32,213) (234,842)
Benefit payments to annuitants (1,219) 0
_________ _________
Net increase (decrease) from accumulation
unit transactions (1,799) 322,541
_________ _________
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
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
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, 1996; (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, 1996 were
$276,211 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, 1996 were as follows:
Transfers between Separate
Account A subdivisions $110,709
Transfers from the general
accumulation account $327,752
Transfers to the general
accumulation account $278,684
LINA charges a fee to each Separate Account subdivision for
assuming the mortality risk and expense fees 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
ending December 31, 1996, 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
1997, 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 1996, and units outstanding at December 31,
1996 were as follows:
Seligman Seligman
Growth Fund, Growth Fund,
Inc. Inc.
Qualified Non-Qualified
Units outstanding at December 31, 1995 794,908 155,744
Units purchased and transfers in 3,808 0
Benefits, surrenders and transfers out (21,849) (20,099)
_________ _________
Units outstanding at December 31, 1996 776,867 135,645
========= =========
Oppenheimer Oppenheimer
Fund Fund
Qualified Non-Qualified
Units outstanding at December 31, 1995 277,581 41,395
Units purchased and transfers in 1,899 0
Benefits, surrenders and transfers out (39,054) (5,385)
_________ _________
Units outstanding at December 31, 1996 240,426 36,010
========= =========
Delaware Delaware
Group Group
Decatur Decatur
Fund, Inc. Fund, Inc.
Qualified Non-Qualified
Units outstanding at December 31, 1995 735,388 223,021
Units purchased and transfers in 14,510 63
Benefits, surrenders and transfers out (115,204) (38,111)
_________ _________
Units outstanding at December 31, 1996 634,694 184,973
========= =========
Windsor Windsor
Fund Fund
Qualified Non-Qualified
Units outstanding at December 31, 1995 1,000,233 104,906
Units purchased and transfers in 31,404 0
Benefits, surrenders and transfers out (188,313) (11,470)
_________ _________
Units outstanding at December 31, 1996 843,324 93,436
========= =========
Dreyfus Dreyfus
Third Century Third Century
Qualified Non-Qualified
Units outstanding at December 31, 1995 528,552 15,589
Units purchased and transfers in 875 0
Benefits, surrenders and transfers out (75,815) (42)
_________ _________
Units outstanding at December 31, 1996 453,612 15,547
========= =========
Windsor Windsor
Fund B Fund B
Qualified Non-Qualified
Units outstanding at December 31, 1995 215,431 83,861
Units purchased and transfers in 12,764 0
Benefits, surrenders and transfers out (13,693) (1,602)
_________ _________
Units outstanding at December 31, 1996 214,502 82,259
========= =========
CIGNA High CIGNA High
Yield Fund, Inc. Yield Fund, Inc.
Qualified Non-Qualified
Units outstanding at December 31, 1995 149,774 204,880
Units purchased and transfers in 2,996 11,153
Benefits, surrenders and transfers out (23,682) (10,032)
_________ _________
Units outstanding at December 31, 1996 129,088 206,001
========= =========
The accumulation units for eleven of the subdivisions include units
applicable to contract owners who are "on benefit annuitants." At
December 31, 1996, 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 31,629 $379,582
Seligman Growth Fund, Inc. Non-Qualified 12,337 $120,462
Oppenheimer Fund Qualified 6,487 $ 43,504
Oppenheimer Fund Non-Qualified 13,902 $ 91,306
Delaware Group Decatur Fund, Inc. Qualified 31,809 $634,846
Delaware Group Decatur Fund, Inc. Non-Qualified 37,262 $724,295
Windsor Fund Qualified 48,615 $771,015
Dreyfus Third Century Qualified 6,440 $115,793
Dreyfus Third Century Non-Qualified 518 $ 8,207
Windsor Fund B Qualified 1,630 $ 29,841
Windsor Fund B Non-Qualified 1,639 $ 30,248
Monthly Annuity
Annuity Units Unit Value
Seligman Growth Fund, Inc. Qualified 980 4.8800110
Seligman Growth Fund, Inc. Non-Qualified 969 3.9712691
Oppenheimer Fund Qualified 245 2.7393820
Oppenheimer Fund Non-Qualified 266 2.6836814
Delaware Group Decatur Fund, Inc. Qualified 840 8.1802788
Delaware Group Decatur Fund, Inc. Non-Qualified 699 7.9134666
Windsor Fund Qualified 1,181 6.4803182
Dreyfus Third Century Qualified 252 3.8726077
Dreyfus Third Century Non-Qualified 19 3.8278236
Windsor Fund B Qualified 108 2.6165611
Windsor Fund B Non-Qualified 103 1.6571353
