LIFE INSURANCE COMPANY
OF NORTH AMERICA
SEPARATE ACCOUNT A
FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
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
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LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
COMBINED BALANCE SHEET
As Of June 30, 1999
ASSETS
Investments at Market Value (Notes 1 and 2):
Seligman Growth Fund, Inc.
1,614,297 qualified shares (Cost $10,322,445) $13,156,514
231,541 non-qualified shares (Cost $1,899,662) 1,887,066
Oppenheimer Multiple Strategies Fund
(formerly Oppenheimer Fund)
86,185 qualified shares (Cost $915,772) 1,271,220
15,958 non-qualified shares (Cost $181,322) 235,383
Delaware Group Decatur Fund, Inc.
854,702 qualified shares (Cost $11,510,466) 16,145,322
221,313 non-qualified shares (Cost $2,746,997) 4,180,601
Windsor Fund
563,718 qualified shares (Cost $6,518,204) 10,242,745
101,929 non-qualified shares (Cost $1,420,144) 1,852,046
Dreyfus Third Century Fund
925,083 qualified shares (Cost $4,438,816) 12,692,131
33,542 non-qualified shares (Cost $244,632) 460,213
Windsor Fund B
241,897 qualified shares (Cost $4,035,030) 4,395,270
95,950 non-qualified shares (Cost $1,539,439) 1,743,426
CIGNA High Yield Fund, Inc.
47,817 qualified shares (Cost $508,796) 407,401
123,948 non-qualified shares (Cost $1,176,547) 1,056,035
Total Assets $69,725,373
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CONTRACT OWNERS' EQUITY
Contract Owners' Equity (Notes 3 and 7):
Seligman Growth Fund, Inc.
638,817 qualified accumulation
units outstanding ($20.5951213 Per Unit) $13,156,514
113,478 non-qualified accumulation
units outstanding ($16.6293569 Per Unit) 1,887,066
Oppenheimer Multiple Strategies Fund
(formerly Oppenheimer Fund)
135,061 qualified accumulation
units outstanding ($9.4121907 Per Unit) 1,271,220
25,542 non-qualified accumulation
units outstanding ($9.2155089 Per Unit) 235,383
Delaware Group Decatur Fund, Inc.
555,007 qualified accumulation
units outstanding ($29.0903031 Per Unit) 16,145,322
147,704 non-qualified accumulation
units outstanding ($28.3039085 Per Unit) 4,180,601
Windsor Fund
457,426 qualified accumulation
units outstanding ($22.3921354 Per Unit) 10,242,745
93,494 non-qualified accumulation
units outstanding ($19.8092526 Per Unit) 1,852,046
Dreyfus Third Century Fund
382,987 qualified accumulation
units outstanding ($33.1398471 Per Unit) 12,692,131
15,768 non-qualified accumulation
units outstanding ($29.1865410 Per Unit) 460,213
Windsor Fund B
170,480 qualified accumulation
units outstanding ($25.7817337 Per Unit) 4,395,270
66,904 non-qualified accumulation
units outstanding ($26.0586285 Per Unit) 1,743,426
CIGNA High Yield Fund, Inc.
59,726 qualified accumulation
units outstanding ($6.8211734 Per Unit) 407,401
152,475 non-qualified accumulation
units outstanding ($6.9259545 Per Unit) 1,056,035
Contract Owners' Equity $69,725,373
The accompanying notes are an integral part of these financial statements
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LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
INDIVIDUAL STATEMENTS OF OPERATIONS
Period Ended June 30, 1999
Seligman Seligman
Growth Fund Growth Fund
Inc. Inc.
Qualified Non-Qualified
Investment Income:
Dividends $0 $0
Expenses:
Mortality risk and expense fees
guarantees (Notes 3) 56,878 8,160
Investment income - net (56,878) (8,160)
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 657,163 115,522
Cost of shares sold 575,340 102,997
Net realized gain (loss) on investments 81,823 12,525
Net unrealized gain (loss) on investments 1,124,980 160,452
Net realized and unrealized gain (Loss)
on investments 1,206,803 172,977
Net Increase in Net Assets
from Investment Operations $1,149,925 $164,817
Oppenheimer Oppenheimer
Multiple Multiple
Strategies Strategies
Fund (formerly Fund (formerly
Oppenheimer) Oppenheimer)
Qualified Non-Qualified
Investment Income:
Dividends $22,655 $4,172
Expenses:
Mortality risk and expense fees
guarantees (Notes 3) 5,522 1,021
Investment income - net 17,133 3,151
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 237,335 59,587
Cost of shares sold 193,425 56,385
Net realized gain (loss) on investments 43,910 3,202
Net unrealized gain (loss) on investments 40,970 12,642
Net realized and unrealized gain (Loss)
on investments 84,880 15,844
Net Increase in Net Assets
from Investment Operations $102,013 $18,995
The accompanying notes are an integral part of these financial statements
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Delaware Delaware
Group Group
Decatur Decatur
Fund, Inc. Fund, Inc.
Qualified Non-Qualified
Investment Income:
Dividends $206,088 $54,254
Expenses:
Mortality risk and expense fees
guarantees (Notes 3) 70,649 18,695
Investment income - net 135,439 35,559
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 1,073,372 320,283
Cost of shares sold 1,033,691 314,352
Net realized gain (loss) on investments 39,681 5,931
Net unrealized gain (loss) on investments 468,973 126,222
Net realized and unrealized gain (Loss)
on investments 508,654 132,153
Net Increase in Net Assets
from Investment Operations $644,093 $167,712
Windsor Windsor
Fund Fund
Qualified Non-Qualified
Investment Income:
Dividends $61,634 $11,152
Expenses:
Mortality risk and expense fees
guarantees (Notes 3) 51,400 7,569
Investment income - net 10,234 3,583
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 4,765,432 7,569
Cost of shares sold 4,092,174 6,545
Net realized gain (loss) on investments 673,258 1,024
Net unrealized gain (loss) on investments 1,033,010 263,537
Net realized and unrealized gain (Loss)
on investments 1,706,268 264,561
Net Increase in Net Assets
from Investment Operations $1,716,502 $268,144
The accompanying notes are an integral part of these financial statements
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Dreyfus Dreyfus
Third Century Third Century
Qualified Non-Qualified
Investment Income:
Dividends $0 $0
Expenses:
Mortality risk and expense fees
guarantees (Notes 3) 53,964 1,719
Investment income - net (53,964) (1,719)
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 516,875 84,352
Cost of shares sold 465,783 78,254
Net realized gain (loss) on investments 51,092 6,098
Net unrealized gain (loss) on investments 1,306,567 33,295
Net realized and unrealized gain (Loss)
on investments 1,357,659 39,393
Net Increase in Net Assets
from Investment Operations $1,303,695 $37,674
Windsor Windsor
Fund B Fund B
Qualified Non-Qualified
Investment Income:
Dividends $26,448 $10,493
Expenses:
Mortality risk and expense fees
guarantees (Notes 3) 18,371 7,494
Investment income - net 8,077 2,999
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 363,732 234,379
Cost of shares sold 352,867 214,961
Net realized gain (loss) on investments 10,865 19,418
Net unrealized gain (loss) on investments 617,449 246,189
Net realized and unrealized gain (Loss)
on investments 628,314 265,607
Net Increase in Net Assets
from Investment Operations $636,391 $268,606
The accompanying notes are an integral part of these financial statements
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CIGNA CIGNA
High Yield High Yield
Fund, In Fund, Inc.
Qualified Non-Qualified
Investment Income:
Dividends $22,269 $56,143
Expenses:
Mortality risk and expense fees
guarantees (Notes 3) 1,961 4,946
Investment income - net 20,308 51,197
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 60,425 158,117
Cost of shares sold 65,017 174,985
Net realized gain (loss) on investments (4,592) (16,868)
Net unrealized gain (loss) on investments (7,160) (15,219)
Net realized and unrealized gain (Loss)
on investments (11,752) (32,087)
Net Increase in Net Assets
from Investment Operations $8,556 $19,110
The accompanying notes are an integral part of these financial statements
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LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
INDIVIDUAL STATEMENTS OF CHANGES IN TOTAL ASSETS
Period Ended June 30, 1999
Seligman Seligman
Growth Fund Growth Fund
Inc. Inc.
Qualified Non-Qualified
Investment Operations:
Investment income-net ($56,878) ($8,160)
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 81,823 12,525
Net unrealized gain (loss) on investments 1,124,980 160,452
Net Increase (Decrease) in net assets
from investment operations 1,149,925 164,817
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 6,329 0
Net contract surrenders and
transfers out (Note 3) (506,399) (94,423)
Benefit payments to annuitants (91,429) (12,940)
Net Increase (Decrease) from
accumulation unit transactions (591,499) (107,363)
Net Increase (Decrease) in Net Assets 558,426 57,454
Net Assets:
Net assets at December 31, 1998 $12,598,088 $1,829,612
Net assets at June 30, 1999 $13,156,514 $1,887,066
Oppenheimer Oppenheimer
Multiple Multiple
Strategies Strategies
Fund Fund
(formerly (formerly
Oppenheimer ) Oppenheimer )
Fund Fund
Qualified Non-Qualified
Investment Operations:
Investment income-net $17,133 $3,151
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 43,910 3,202
Net unrealized gain (loss) on investments 40,970 12,642
Net Increase (Decrease) in net assets
from investment operations 102,013 18,995
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 750 0
Net contract surrenders and
transfers out (Note 3) (218,813) (55,464)
Benefit payments to annuitants (13,748) (3,103)
Net Increase (Decrease) from
accumulation unit transactions (231,811) (58,567)
Net Increase (Decrease) in Net Assets 129,798 (39,572)
Net Assets:
Net assets at December 31, 1998 $1,401,018 $274,955
Net assets at June 30, 1999 $1,271,220 $235,383
The accompanying notes are an integral part of these financial statements
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Delaware Delaware
Group Group
Decatur Decatur
Fund, Inc. Fund, Inc.
Qualified Non-Qualified
Investment Operations:
Investment income-net $135,439 $35,559
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 39,681 5,931
Net unrealized gain (loss) on investments 468,973 126,222
Net Increase (Decrease) in net assets
from investment operations 644,093 167,712
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 637,813 0
Net contract surrenders and
transfers out (Note 3) (533,556) (267,703)
Benefit payments to annuitants (39,561) (33,885)
Net Increase (Decrease) from
accumulation unit transactions 64,696 (301,588)
Net Increase (Decrease) in Net Assets 708,789 (133,876)
Net Assets:
Net assets at December 31, 1998 $15,436,533 $4,314,477
Net assets at June 30, 1999 $16,145,322 $4,180,601
Windsor Windsor
Fund Fund
Qualified Non-Qualified
Investment Operations:
Investment income-net $10,234 $3,583
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 673,258 1,024
Net unrealized gain (loss) on investments 1,033,010 263,537
Net Increase (Decrease) in net assets
from investment operations 1,716,502 268,144
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 23,058 0
Net contract surrenders and
transfers out (Note 3) (3,817,420) 0
Benefit payments to annuitants (48,412) 0
Net Increase (Decrease) from
accumulation unit transactions (3,842,774) 0
Net Increase (Decrease) in Net Assets (2,126,272) 268,144
Net Assets:
Net assets at December 31, 1998 $12,369,017 $1,583,902
Net assets at June 30, 1999 $10,242,745 $1,852,046
The accompanying notes are an integral part of these financial statements
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Dreyfus Dreyfus
Third Century Third Century
Qualified Non-Qualified
Investment Operations:
Investment income-net ($53,964) ($1,719)
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 51,092 6,098
Net unrealized gain (loss) on investments 1,306,567 33,295
Net Increase (Decrease) in net assets
from investment operations 1,303,695 37,674
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 185,906 165,392
Net contract surrenders and
transfers out (Note 3) (503,442) (94,322)
Benefit payments to annuitants (12,476) (499)
Net Increase (Decrease) from
accumulation unit transactions (330,012) 70,571
Net Increase (Decrease) in Net Assets 973,683 108,245
Net Assets:
Net assets at December 31, 1998 $11,718,448 $351,968
Net assets at June 30, 1999 $12,692,131 $460,213
Windsor Windsor
Fund B Fund B
Qualified Non-Qualified
Investment Operations:
Investment income-net $8,077 $2,999
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 10,865 19,418
Net unrealized gain (loss) on investments 617,449 246,189
Net Increase (Decrease) in net assets
from investment operations 636,391 268,606
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 105,409 0
Net contract surrenders and
transfers out (Note 3) (282,961) (225,735)
Benefit payments to annuitants (1,371) (1,149)
Net Increase (Decrease) from
accumulation unit transactions (178,923) (226,884)
Net Increase (Decrease) in Net Assets 457,468 41,722
Net Assets:
Net assets at December 31, 1998 $3,937,802 $1,701,704
Net assets at June 30, 1999 $4,395,270 $1,743,426
The accompanying notes are an integral part of these financial statements
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CIGNA CIGNA
High Yield High Yield
Fund, Inc. Fund, Inc.
Qualified Non-Qualified
Investment Operations:
Investment income-net $20,308 $51,197
Realized capital gain distributions 0 0
Net realized gain (loss) on investments (4,592) (16,868)
Net unrealized gain (loss) on investments (7,160) (15,219)
Net Increase (Decrease) in net assets
from investment operations 8,556 19,110
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 0 0
Net contract surrenders and
transfers out (Note 3) (58,465) (153,172)
Benefit payments to annuitants 0 0
Net Increase (Decrease) from
accumulation unit transactions (58,465) (153,172)
Net Increase (Decrease) in Net Assets (49,909) (134,062)
Net Assets:
Net assets at December 31, 1998 $457,310 $1,190,097
Net assets at June 30, 1999 $407,401 $1,056,035
The accompanying notes are an integral part of these financial statements
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LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
INDIVIDUAL STATEMENTS OF CHANGES IN TOTAL ASSETS
Year Ended December 31, 1998
Seligman Seligman
Growth Fund Growth Fund
Inc. Inc.
Qualified Non-Qualified
Investment Operations:
Investment income-net ($83,813) ($12,047)
Realized capital gain distributions 1,143,452 162,787
Net realized gain (loss) on investments 121,557 15,208
Net unrealized gain (loss) on investments 2,153,909 309,018
Net Increase (Decrease) in net assets
from investment operations 3,335,105 474,966
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 11,090 0
Net contract surrenders and
transfers out (Note 3) (745,799) (78,113)
Benefit payments to annuitants (125,945) (20,593)
Net Increase (Decrease) from
accumulation unit transactions (860,654) (98,706)
Net Increase (Decrease) in Net Assets 2,474,451 376,260
Net Assets:
Net assets at December 31, 1997 10,123,637 1,453,352
Net assets at December 31, 1998 $12,598,088 $1,829,612
Oppenheimer Oppenheimer
Multiple Multiple
Strategies Strategies
Fund Fund
(formerly (formerly
Oppenheimer ) Oppenheimer )
Fund Fund
Qualified Non-Qualified
Investment Operations:
Investment income-net $37,061 $7,069
Realized capital gain distributions 112,996 22,153
Net realized gain (loss) on investments 824 1,302
Net unrealized gain (loss) on investments (68,182) (13,547)
Net Increase (Decrease) in net assets
from investment operations 82,699 16,977
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 1,330 0
Net contract surrenders and
transfers out (Note 3) (149,210) (185)
Benefit payments to annuitants (7,195) (22,371)
Net Increase (Decrease) from
accumulation unit transactions (155,075) (22,556)
Net Increase (Decrease) in Net Assets (72,376) (5,579)
Net Assets:
Net assets at December 31, 1997 1,473,394 280,534
Net assets at December 31, 1998 $1,401,018 $274,955
The accompanying notes are an integral part of these financial statements
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Delaware Delaware
Group Group
Decatur Decatur
Fund, Inc. Fund, Inc.
Qualified Non-Qualified
Investment Operations:
Investment income-net $662,201 $184,897
Realized capital gain distributions 1,888,067 527,749
Net realized gain (loss) on investments 30,422 16,313
Net unrealized gain (loss) on investments (1,286,547) (361,338)
Net Increase (Decrease) in net assets
from investment operations 1,294,143 367,621
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 47,625 0
Net contract surrenders and
transfers out (Note 3) (833,765) (278,898)
Benefit payments to annuitants (80,335) (66,814)
Net Increase (Decrease) from
accumulation unit transactions (866,475) (345,712)
Net Increase (Decrease) in Net Assets 427,668 21,909
Net Assets:
Net assets at December 31, 1997 15,008,865 4,292,568
Net assets at December 31, 1998 $15,436,533 $4,314,477
Windsor Windsor
Fund Fund
Qualified Non-Qualified
Investment Operations:
Investment income-net $62,877 $8,772
Realized capital gain distributions 895,070 114,633
Net realized gain (loss) on investments 65,708 (246)
Net unrealized gain (loss) on investments (937,201) (124,591)
Net Increase (Decrease) in net assets
from investment operations 86,454 (1,432)
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 322,791 0
Net contract surrenders and
transfers out (Note 3) (2,238,922) 0
Benefit payments to annuitants (132,202) 0
Net Increase (Decrease) from
accumulation unit transactions (2,048,333) 0
Net Increase (Decrease) in Net Assets (1,961,879) (1,432)
Net Assets:
Net assets at December 31, 1997 14,330,896 1,585,334
Net assets at December 31, 1998 $12,369,017 $1,583,902
The accompanying notes are an integral part of these financial statements
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Dreyfus Dreyfus
Third Century Third Century
Qualified Non-Qualified
Investment Operations:
Investment income-net $91,171 $2,446
Realized capital gain distributions 973,251 28,945
Net realized gain (loss) on investments 54,645 4,427
Net unrealized gain (loss) on investments 1,595,026 47,456
Net Increase (Decrease) in net assets
from investment operations 2,714,093 83,274
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 10,603 0
Net contract surrenders and
transfers out (Note 3) (755,943) (23,878)
Benefit payments to annuitants (21,124) (849)
Net Increase (Decrease) from
accumulation unit transactions (766,464) (24,727)
Net Increase (Decrease) in Net Assets 1,947,629 58,547
Net Assets:
Net assets at December 31, 1997 9,770,819 293,421
Net assets at December 31, 1998 $11,718,448 $351,968
Windsor Windsor
Fund B Fund B
Qualified Non-Qualified
Investment Operations:
Investment income-net ($13,278) $9,280
Realized capital gain distributions 285,754 123,118
Net realized gain (loss) on investments 41,782 5,191
Net unrealized gain (loss) on investments (280,242) (134,279)
Net Increase (Decrease) in net assets
from investment operations 34,016 3,310
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 75,498 0
Net contract surrenders and
transfers out (Note 3) (555,599) (40,166)
Benefit payments to annuitants (2,715) (2,225)
Net Increase (Decrease) from
accumulation unit transactions (482,816) (42,391)
Net Increase (Decrease) in Net Assets (448,800) (39,081)
Net Assets:
Net assets at December 31, 1997 4,386,602 1,740,785
Net assets at December 31, 1998 $3,937,802 $1,701,704
The accompanying notes are an integral part of these financial statements
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CIGNA High CIGNA High
Yield Fund, Inc. Yield Fund, Inc.
Qualified Non-Qualified
Investment Operations:
Investment income-net $41,095 $101,689
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 585 (149)
Net unrealized gain (loss) on investments (70,193) (185,939)
Net Increase (Decrease) in net assets
from investment operations (28,513) (84,399)
Accumulation Unit Transactions:
Net contract considerations and
transfers in (Note 3) 0 323,340
Net contract surrenders and
transfers out (Note 3) (32,757) (1,092)
Benefit payments to annuitants 0 0
Net Increase (Decrease) from
accumulation unit transactions (35,757) 322,248
Net Increase (Decrease) in Net Assets (61,270) 237,849
Net Assets:
Net assets at December 31, 1997 518,580 952,248
Net assets at December 31, 1998 $457,310 $1,190,097
The accompanying notes are an integral part of these financial statements
<PAGE>
LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
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 Multiple
Strategies Fund (formerly Oppenheimer Fund), Windsor Fund, Windsor Fund B,
Dreyfus Third Century Fund, and CIGNA High Yield Fund, Inc. (the "Funds").
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).
Under the current provisions of the Internal Revenue Code (the "Code"),
transfers of contract values from one division of the Separate Account to
another division of the Separate Account, or from the Separate Account to the
General account, are not subject to current taxation. There can be no assurance
that future changes in the Code will not subject such transfers to current
taxation.
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 June 30, 1999; (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.
<PAGE>
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 period
ended June 30, 1999 were $ 69,940 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 Account of LINA. Contract
owners affected by Revenue Ruling 81-225 have limited rights to transfer certain
contract values to the General Account of LINA to lessen the impact of the
Ruling (See Note 5). The amounts of all transfers for the period ended June 30,
1999 were as follows:
Transfers between Separate
Account A subdivisions $1,044,755
Transfers from the General
Account $ 10,930
Transfers to the General
Account $ 229,286
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 period ended June 30,
1999, 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 1999, 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.
<PAGE>
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.
<PAGE>
LIFE INSURANCE COMPANY OF NORTH AMERICA
Note 7. Accumulation unit transactions
Period Ended 6/30/99
The changes in the number of accumulation units (the measure of ownership in the
Separate Account) during the period ended June 30, 1999 and units outstanding at
at June 30, 1999 were as follows:
Seligman Seligman
Growth Fund Growth Fund
Inc. Inc.
Qualified Non-Qualified
Units outstanding at December 31, 1998 668,941 120,334
Units purchased and transfers in 305 0
Benefits, surrenders and transfers out (30,429) (6,856)
Units outstanding at June, 30 1999 638,817 113,478
Oppenheimer Oppenheimer
Multiple Multiple
Strategies Strategies
Fund (formerly Fund (formerly
Oppenheimer Oppenheimer
Fund) Fund)
Qualified Non-Qualified
Units outstanding at December 31, 1998 161,220 32,314
Units purchased and transfers in 79 0
Benefits, surrenders and transfers out (26,238) (6,772)
Units outstanding at June, 30 1999 135,061 25,542
Delaware Delaware
Group Group
Decatur Decatur
Fund, Inc. Fund, Inc.
Qualified Non-Qualified
Units outstanding at December 31, 1998 552,419 158,694
Units purchased and transfers in 23,201 0
Benefits, surrenders and transfers out (20,613) (10,990)
Units outstanding at June, 30 1999 555,007 147,704
Windsor Windsor
Fund Fund
Qualified Non-Qualified
Units outstanding at December 31, 1998 645,749 93,494
Units purchased and transfers in 1,048 0
Benefits, surrenders and transfers out (189,371) 0
Units outstanding at June, 30 1999 457,426 93,494
Dreyfus Dreyfus
Third Century Third Century
Qualified Non-Qualified
Units outstanding at December 31, 1998 393,324 13,414
Units purchased and transfers in 6,012 5,974
Benefits, surrenders and transfers out (16,349) (3,620)
Units outstanding at June, 30 1999 382,987 15,768
Windsor Windsor
Fund B Fund B
Qualified Non-Qualified
Units outstanding at December 31, 1998 178,420 76,345
Units purchased and transfers in 4,160 0
Benefits, surrenders and transfers out (12,100) (9,441)
Units outstanding at June, 30 1999 170,480 66,904
CIGNA High CIGNA High
Yield Fund, Inc. Yield Fund, Inc.
Qualified Non-Qualified
Units outstanding at December 31, 1998 68,220 174,846
Units purchased and transfers in 0 0
Benefits, surrenders and transfers out (8,494) (22,371)
Units outstanding at June, 30 1999 59,726 152,475
The accumulation units for eleven of the subdivisions include units applicable
to contract owners who are "on benefit annuitants." At June 30, 1999 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 26,889 $553,782
Seligman Growth Fund, Inc. Non-Qualified 13,757 $228,770
Oppenheimer Multiple Strategies Fund
(formerly Oppenheimer Fund) Qualified 3,214 $30,251
Oppenheimer Multiple Strategies Fund
(formerly Oppenheimer Fund) Non-Qualified 9,873 $90,985
Delaware Group Decatur Fund, Inc. Qualified 30,771 $895,138
Delaware Group Decatur Fund, Inc. Non-Qualified 30,942 $875,780
Windsor Fund Qualified 46,467 $1,040,495
Dreyfus Third Century Qualified 9,599 $318,109
Dreyfus Third Century Non-Qualified 422 $12,317
Windsor Fund B Qualified 1,325 $34,161
Windsor Fund B Non-Qualified 1,390 $36,221
Monthly Annuity
Annuity Units Unit Value
Seligman Growth Fund, Inc. Qualified 1,256 $7.6851654
Seligman Growth Fund, Inc. Non-Qualified 969 $6.2066064
Oppenheimer Multiple Strategies Fund
(formerly Oppenheimer Fund) Qualified 192 $3.5281567
Oppenheimer Multiple Strategies Fund
(formerly Oppenheimer Fund) Non-Qualified 198 $3.4555575
Delaware Group Decatur Fund, Inc. Qualified 941 $10.9413967
Delaware Group Decatur Fund, Inc. Non-Qualified 700 $10.5743327
Windsor Fund Qualified 1,300 $8.3962979
Dreyfus Third Century Qualified 458 $6.5500554
Dreyfus Third Century Non-Qualified 19 $6.4707950
Windsor Fund B Qualified 108 $3.3714504
Windsor Fund B Non-Qualified 103 $2.1472153
