A MESSAGE TO VARIABLE LIFE POLICYONWERS
The Stock Markets witnessed significant
increases during the first half of 1995, with
the S&P 500 achieving a total return of 20.1%
for the first six months compared to a total
return of 1.2% for the entire 1994 year. At
the same time long term interest rates have
trended down since the beginning of the year.
At December 31, 1994, the 30 year treasury
bond yielded 7.87%, compared to a yield of
6.62% at June 30, 1995. As interest rates
decreased, there has been an increase in the
value of fixed income holdings like those in
the Bond Portfolio and bond fund in the Asset
Allocation Portfolio.
Short term rates rose during the first
part of the year but recently have trended
somewhat downward as the Federal Reserve
adopted a more accommodating policy by just
reducing short term rates by .25%.
The U.S. Gross Domestic Product for the
first quarter of 1995 increased 2.7% and for
the second quarter the increase was 0.5%.
Inflation remains low with the Consumer Price
Index running at 3.2% this year after last
year's 2.7%.
(Picture)
THOMAS Y. MOON, PRESIDENT
THE STOCK ACCOUNT. At June 30, 1995, the assets were allocated 96% to
60 different stock positions with the remainder in a high quality money
market fund. Our emphasis within the stock portfolio continues to be in
issues which we believe will perform well in the current environment and
tend to hold their values during market weakness.
THE MONEY MARKET ACCOUNT. On June 30, 1995, this portfolio held 24
different issues of the highest quality commercial paper with maturities
ranging from 2 to 32 days.
THE INVESTMENT GRADE BOND ACCOUNT. Bonds represented 89% of investable
funds on June 30, with the remainder in a high quality money market fund.
The portfolio was comprised of 26 bond issues, with maturities ranging from
3 years to 12 years.
THE ASSET ALLOCATION ACCOUNT. At June 30, assets were allocated 46% to
common stocks, 50% to bonds with the remainder in a high quality money
market fund. There were 60 different common stock issues in the portfolio
and 54 different bond positions.
THE OUTLOOK. For the balance of 1995, we expect somewhat moderating
economic growth and continued low inflation with interest rates remaining
in the range established so far this year. At the time of this report,
macroeconomics indicators are showing mixed signs. While expansion is
slowing, business profits are stronger than expected and the dollar's
relatively low value provides companies selling goods and services outside
the U.S. with a competitive environment.
RESPECTFULLY,
THOMAS Y. MOON
Thomas Y. Moon
President
Bankers Security Life Insurance Society
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<TABLE>
Bankers Security Variable Life Separate Account I
Statement of Assets and Liabilities
June 30, 1995
(Unaudited)
Sub-accounts
Common Money Asset
Stock Market Bond Allocation
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Assets:
Investments:
USLICO Series Fund-Common Stock Portfolio
(733,403 shares; cost $7,670,849) $ 8,766,296
USLICO Series Fund-Money Market Portfolio
(4,801,655 shares; cost $4,801,655) $ 4,801,655
USLICO Series Fund-Bond Portfolio
(124,355 shares; cost $1,250,333) $ 1,264,204
USLICO Series Fund-Asset Allocation Portfolio
(404,838 shares; cost $4,289,364) $ 4,604,154
Policy loans 883,951 451,668 4,590 169,931
----------- ----------- ----------- -----------
Total assets 9,650,247 5,253,323 1,268,794 4,774,085
----------- ----------- ----------- -----------
Liabilities:
Net accrued for policy related transactions 332,916 132,623 113,100 321,692
Amounts payable to Bankers Security 375,000 125,000 1,000,000 1,000,000
----------- ----------- ----------- -----------
Total liabilities 707,916 257,623 1,113,100 1,321,692
----------- ----------- ----------- -----------
Net assets - for variable life
insurance policies $ 8,942,331 $ 4,995,700 $ 155,694 $ 3,452,393
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
Bankers Security Variable Life Separate Account I
Statement of Operations and Changes in Net Assets
For the Six Months Ended June 30, 1995
(Unaudited)
Sub-accounts
Common Money Asset
Stock Market Bond Allocation
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 130,991 $ 139,772 $ 39,701 $ 109,672
Expenses:
Mortality and expense risk charges 20,601 12,415 2,880 10,851
----------- ----------- ----------- -----------
Net investment income 110,390 127,357 36,821 98,821
Net unrealized gains on investments 1,146,583 - 86,737 474,231
Net realized gains on investments 21,777 - - 5,314
----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations 1,278,750 127,357 123,558 578,366
From policy related transactions:
Transfers in for net premiums 404,382 295,025 17,925 431,469
Transfers between sub-accounts 16,614 (2,467) - (14,147)
Transfers for withdrawal/surrender (304,209) (285,875) (4,565) (216,853)
Transfer of investment and operating
results to Bankers Security (221,284) (118,647) (112,337) (282,679)
----------- ----------- ----------- -----------
Net increase in net assets 1,174,253 15,393 24,581 496,156
Net assets, beginning of period 7,768,078 4,980,307 131,113 2,956,237
----------- ----------- ----------- -----------
Net assets, end of period $ 8,942,331 $ 4,995,700 $ 155,694 $ 3,452,393
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
Bankers Security Variable Life Separate Account I
Statement of Operations and Changes in Net Assets
For the Six Months Ended June 30, 1994
(Unaudited)
Sub-accounts
Common Money Asset
Stock Market Bond Allocation
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 113,081 $ 66,784 $ 37,431 $ 88,208
Expenses:
Mortality and expense risk charges 19,066 11,459 2,957 9,120
----------- ----------- ----------- -----------
Net investment income 94,015 55,325 34,474 79,088
Net unrealized losses on investments (213,317) - (75,925) (191,927)
Net realized gains on investments 14,506 - - -
----------- ----------- ----------- -----------
Net increase(decrease) in net assets resulting
from operations (104,796) 55,325 (41,451) (112,839)
From policy related transactions:
Transfers in for net premiums 439,021 411,867 16,929 475,500
Transfers between sub-accounts 23,009 (39,062) 131 15,922
Transfers for withdrawal/surrender (382,092) (176,726) (5,205) (118,629)
Transfer of investment and operating
results from(to) Bankers Security (103,891) (149,599) 31,034 (118,524)
----------- ----------- ----------- -----------
Net increase(decrease) in net assets (128,749) 101,805 1,438 141,430
Net assets, beginning of period 7,698,003 4,766,909 128,611 2,644,532
----------- ----------- ----------- -----------
Net assets, end of period $ 7,569,254 $ 4,868,714 $ 130,049 $ 2,785,962
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
Bankers Security Variable Life Separate Account I
Statement of Operations and Changes in Net Assets
For The Six Months Ended June 30, 1993
(Unaudited)
Sub-accounts
Common Money Asset
Stock Market Bond Allocation
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 42,074 $ 55,966 $ 13,230 $ 30,764
Expenses:
Mortality and expense risk charge 18,402 11,469 3,062 8,701
----------- ----------- ----------- -----------
Net investment income 23,672 44,497 10,168 22,063
Net unrealized gains on investments 298,232 - 67,965 196,982
Net realized gains on investments 23,575 - 7,466 8,256
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations 345,479 44,497 85,599 227,301
From policy related transactions:
Transfers in for net premiums 479,533 416,110 8,845 331,703
Transfers between sub-accounts (3,090) 5,986 (2,627) (269)
Transfers for withdrawal/surrender (431,548) (202,411) (12,602) (146,033)
Transfer of investment and operating
results to Bankers Security (369,706) (174,407) (78,126) (210,699)
----------- ----------- ----------- -----------
Net increase in net assets 20,668 89,775 1,089 202,003
Net assets, beginning of period 7,221,769 4,598,994 118,028 2,230,866
----------- ----------- ----------- -----------
Net assets, end of period $ 7,242,437 $ 4,688,769 $ 119,117 $ 2,432,869
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
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BANKERS SECURITY VARIABLE LIFE SEPARATE ACCOUNT I - NOTES TO FINANCIAL
STATEMENTS - JUNE 30, 1995
(1) ORGANIZATION - Bankers Security Variable Life Separate Account I
("Separate Account I") was established by Bankers Security Life Insurance
Society ("Bankers Security") in 1986 under New York insurance laws.
Separate Account I operates as a unit investment trust under the Investment
Company Act of 1940 and is used to fund certain benefits for variable life
insurance policies issued by Bankers Security. The assets of Separate
Account I and its sub-accounts are the property of Bankers Security. The
portion of Separate Account I assets applicable to the variable life
policies will not be charged with liabilities arising out of any other
business Bankers Security may conduct. The net assets maintained in the
sub-accounts provide the basis for the periodic determination of the amount
of increased or decreased benefits under the policies. The net assets may
not be less than the amount required under the state insurance law to
provide for death benefits (without regard to the minimum death benefit
guarantee) and other policy benefits. Additional assets are held in
Bankers Security's general account to cover the contingency that the
guaranteed minimum death benefit might exceed the death benefit which would
have been payable in the absence of such guarantee. On January 17, 1995,
Bankers Security became an indirect wholly-owned subsidiary of ReliaStar
Financial Corp. ("ReliaStar"), previously The NWNL Companies, Inc., an
insurance holding company based in Minneapolis, Minnesota.
USLICO Series Fund ("Series Fund") is an open-end diversified management
investment company whose shares are sold only to Bankers Security and other
affiliates separate accounts.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Valuation of Investments - Investments in shares of the Series Fund
are valued at the reported net asset value of the respective portfolios.
The aggregate cost of the investments acquired and the aggregate proceeds
of investments sold, for the six months ended June 30, 1995, were:
Cost of Shares Proceeds from
Sub-account Acquired Shares Sold
Common Stock $ 130,990 $177,977
Money Market 139,772 294,167
Bond 82,442 -
Asset Allocation 109,672 65,599
(b) Security Transactions - Purchases and sales are recorded on the
trade date.
(c) Federal Income Taxes - Bankers Security is taxed as a life insurance
company under the Internal Revenue Code of 1986, as amended (the "Code").
Since the sub-accounts are not separate entities from Bankers Security, and
their operations form a part of Bankers Security, they will not be taxed
separately as a "regulated investment company" under Sub-chapter M of the
Code. Under existing Federal income tax law, investment income of the sub-
accounts, to the extent that it is applied to increase reserves under a
contract, is not taxed and may be compounded for reinvestment without
additional tax to Bankers Security.
(d) Charges Deducted from Premiums - Transfers to the sub-accounts of
Separate Account I for net premiums represent gross premiums payable for
a policy year, less deductions for sales loads, administrative expenses,
premium taxes, risk charges and additional premiums, if any, for optional
insurance benefits.
(e) Amounts Payable to Bankers Security - The amounts payable to Bankers
Security in each sub-account arises from the amount allocated from Bankers
Security to facilitate commencement of operations.
(f) Dividends - Dividends received on the shares held by the sub-
accounts of Separate Account I are reinvested to purchase additional shares
of the applicable portfolio of the Series Fund.
(g) Transfer of Investment and Operating Results to Bankers Security -
The sub-accounts transfer their investment and operating results in excess
of amounts required to meet policyholder reserve and liability amounts to
Bankers Security.
(3) ADMINISTRATION AND RELATED PARTY TRANSACTIONS - A daily charge is made
by Bankers Security against each sub-account's net assets for mortality and
expense risks at an effective annual rate of .50%. The mortality risk
assumed is that insureds may live for a shorter period of time than
estimated and, therefore, a greater amount of death benefits than expected
will be payable in relation to the amount of premiums received. The
expense risk assumed is that expenses incurred in issuing and administering
the policies will be greater than estimated. Other costs of administering
Separate Account I are absorbed by Bankers Security.
USLICO Securities Corporation ("USLICO Securities") acts as principal
underwriter (as defined in the Investment Company Act of 1940) of Separate
Account I's policies. In conjunction with the merger noted above, USLICO
Securities became a wholly-owned subsidiary of Washington Square
Securities, Inc. which is wholly-owned by ReliaStar. On April 1, 1995,
Bankers Centennial Management Corp. ("BCMC") was replaced as investment
advisor to the Series Fund by Washington Square Capital, Inc., an indirect
wholly-owned ReliaStar subsidiary. Newbold's Asset Management, Inc.
continues to serve as investment advisor to the Series Fund in the same
capacity as before the merger.
Certain officers and directors of ReliaStar and Bankers Security are also
officers and directors of USLICO Securities, the Series Fund and Washington
Square Capital, Inc.
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