A Message to Variable Life Policyowners
After significant increases in the Stock Markets in
1995, the first half of 1996 witnessed increases which
were more in line with long term historical results.
As of this writing, the Dow Jones Industrial Average
increased approximately 5% in value from the beginning
of the year, even after contending with a correction
of about 7% from its high point. The S&P 500 has
increased since the beginning of 1996 by a smaller
amount of approximately 3%.
While the Stock Markets increased by relatively
small amounts, and are struggling to hold on to these
gains, the yield on the 30 year Treasury Bond
increased fairly significantly from 5.9% at the
beginning of the year, to approximately 7%. Short
term rates, as measured by the 3 month Treasury Bill,
are yielding 5.1% now, which is about the same as the
beginning of the year.
The U.S. Gross Domestic Product for the first
quarter of 1996 increased 2.2% and for the second
quarter the increase is expected to be near 4.0%.
Inflation remains low with the Consumer Price Index
running at 2.8% this year after last year's 2.5%.
David H. Roe, President
The Stock Account. At June 30, 1996, the assets were allocated 99%
to 58 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, 1996, this portfolio held 23
different issues of the highest quality commercial paper with maturities
ranging from 2 to 87 days.
The Investment Grade Bond Account. Bonds represented 97% of
investable funds on June 30, with the remainder in a high quality money
market fund. The portfolio was comprised of 21 bond issues, with
maturities ranging from 4 years to 30 years.
The Asset Allocation Account. At June 30, assets were allocated 51%
to common stocks, 46% to bonds with the remainder in a high quality
money market fund. There were 57 different common stock issues in the
portfolio and 46 different bond positions.
The Outlook. For the balance of 1996, we expect solid economic
growth and continuing moderate inflation with interest rates remaining
near current levels. At the time of this report, macroeconomic
indicators are showing mixed signs. While the expansion is slowing,
business profits are expected to continue to improve, albeit at a slower
rate than in 1995.
Name Change. Please note that on July 1, 1996, Bankers Security Life
Insurance Society changed its name to ReliaStar Bankers Security Life
Insurance Company. ReliaStar Bankers Security is part of a group of
companies owned by ReliaStar Financial Corp.
Respectfully,
David H. Roe
President
ReliaStar Bankers Security Life Insurance Company
<PAGE>
<TABLE>
Bankers Security Variable Life Separate Account I
Statement of Assets and Liabilities
June 30, 1996
(Unaudited)
Sub-accounts
Common Money Asset Total
Stock Market Bond Allocation Sub-accounts
----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in USLICO Series
Fund Portfolios (see below) $ 10,346,520 $ 4,962,454 $ 1,132,527 $ 5,029,966 $ 21,471,467
Policy loans 949,785 619,957 5,253 291,511 1,866,506
------------ ------------ ------------ ------------ ------------
Total assets 11,296,305 5,582,411 1,137,780 5,321,477 23,337,973
------------ ------------ ------------ ------------ ------------
Liabilities:
Net accrued for policy related
transactions due to (from) BSL 237,085 260,654 (28,736) 193,453 662,456
Amounts payable to BSL 375,000 125,000 1,000,000 1,000,000 2,500,000
------------ ------------ ------------ ------------ ------------
Total liabilities 612,085 385,654 971,264 1,193,453 3,162,456
------------ ------------ ------------ ------------ ------------
Net assets - for variable life
insurance policies $ 10,684,220 $ 5,196,757 $ 166,516 $ 4,128,024 $ 20,175,517
============ ============ ============ ============ ============
Investments basis data:
Shares Owned 754,846 4,962,454 115,895 420,039
Cost $ 8,053,010 $ 4,962,454 $ 1,167,017 $ 4,512,549
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Bankers Security Variable Life Separate Account I
Statement of Operations and Changes in Net Assets
For the Six Months Ended June 30, 1996
(Unaudited)
Sub-accounts
Common Money Asset Total
Stock Market Bond Allocation Sub-accounts
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 131,432 $ 118,565 $ 41,257 $ 114,033 $ 405,287
Expenses:
Mortality and expense risk charges 25,732 12,451 3,255 13,198 54,636
------------ ------------ ------------ ------------ ------------
Net investment income 105,700 106,114 38,002 100,835 350,651
Net unrealized gains (losses) on investments 738,421 - (74,659) 27,190 690,952
Net realized gains (losses) on investments 112,451 - (2,455) 45,103 155,099
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from operations 956,572 106,114 (39,112) 173,128 1,196,702
From policy related transactions:
Transfers in for net premiums 359,218 318,936 17,877 383,297 1,079,328
Transfers between sub-accounts 12,975 (14,358) 1,629 (246) -
Transfers for withdrawal/surrender (400,989) (165,367) (2,071) (202,620) (771,047)
Transfer of investment and operating
results from (to) Bankers Security (180,783) (129,835) 29,428 (158,541) (439,731)
------------ ------------ ------------ ------------ ------------
Net increase in net assets 746,993 115,490 7,751 195,018 1,065,252
Net assets, beginning of period 9,937,227 5,081,267 158,765 3,933,006 19,110,265
------------ ------------ ------------ ------------ ------------
Net assets, end of period 10,684,220 $ 5,196,757 $ 166,516 $ 4,128,024 $ 20,175,517
============ ============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<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 Total
Stock Market Bond Allocation Sub-accounts
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 130,991 $ 139,772 $ 39,701 $ 109,672 $ 420,136
Expenses:
Mortality and expense risk charges 20,601 12,415 2,880 10,851 46,747
------------ ------------ ------------ ------------ ------------
Net investment income 110,390 127,357 36,821 98,821 373,389
Net unrealized gains on investments 1,146,583 - 86,737 474,231 1,707,551
Net realized gains on investments 21,777 - - 5,314 27,091
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations 1,278,750 127,357 123,558 578,366 2,108,031
From policy related transactions:
Transfers in for net premiums 404,382 295,025 17,925 431,469 1,148,801
Transfers between sub-accounts 16,614 (2,467) - (14,147) -
Transfers for withdrawal/surrender (304,209) (285,875) (4,565) (216,853) (811,502)
Transfer of investment and operating
results to Bankers Security (221,284) (118,647) (112,337) (282,679) (734,947)
------------ ------------ ------------ ------------ ------------
Net increase in net assets 1,174,253 15,393 24,581 496,156 1,710,383
Net assets, beginning of period 7,768,078 4,980,307 131,113 2,956,237 15,835,735
------------ ------------ ------------ ------------ ------------
Net assets, end of period $ 8,942,331 $ 4,995,700 $ 155,694 $ 3,452,393 $ 17,546,118
============ ============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<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 Total
Stock Market Bond Allocation Sub-accounts
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 113,081 $ 66,784 $ 37,431 $ 88,208 $ 305,504
Expenses:
Mortality and expense risk charges 19,066 11,459 2,957 9,120 42,602
------------ ------------ ------------ ------------ ------------
Net investment income 94,015 55,325 34,474 79,088 262,902
Net unrealized losses on investments (213,317) - (75,925) (191,927) (481,169)
Net realized gains on investments 14,506 - - - 14,506
------------ ------------ ------------ ------------ ------------
Net increase(decrease) in net assets resulting
from operations (104,796) 55,325 (41,451) (112,839) (203,761)
From policy related transactions:
Transfers in for net premiums 439,021 411,867 16,929 475,500 1,343,317
Transfers between sub-accounts 23,009 (39,062) 131 15,922 -
Transfers for withdrawal/surrender (382,092) (176,726) (5,205) (118,629) (682,652)
Transfer of investment and operating
results from(to) Bankers Security (103,891) (149,599) 31,034 (118,524) (340,980)
------------ ------------ ------------ ------------ ------------
Net increase(decrease) in net assets (128,749) 101,805 1,438 141,430 115,924
Net assets, beginning of period 7,698,003 4,766,909 128,611 2,644,532 15,238,055
------------ ------------ ------------ ------------ ------------
Net assets, end of period $ 7,569,254 $ 4,868,714 $ 130,049 $ 2,785,962 $ 15,353,979
============ ============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Bankers Security Variable Life Separate Account I - Notes to Financial
Statements - June 30, 1996
(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.
Prior to that time Bankers Security was an indirect wholly-owned subsidiary
of USLICO Corporation. 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, 1996, were:
Cost of Shares Proceeds from
Sub-account Acquired Shares Sold
----------- -------------- -------------
Common Stock $ 131,432 $ 496,949
Money Market 118,565 119,626
Bond 41,257 170,973
Asset Allocation 114,033 388,530
------- ---------
Total $ 405,287 $ 1,176,078
(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 from(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. When investment and operating results are insufficient to
meet reserve requirements, Bankers Security transfers to the sub-accounts
amounts sufficient to fund the deficiency. Also included in this transfer are
cost of insurance charges totaling $411,600 for all sub-accounts for the six
months ended June 30, 1996.
(3) Administration and Related Party Transactions - A daily charge is made by
Bankers Security against each sub-account's investments 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.
ReliaStar Financial Marketing Corporation, a direct wholly-owned ReliaStar
subsidiary, previously known as USLICO Securities Corporation, acts as
principal underwriter (as defined in the Investment Company Act of 1940) of
Separate Account I's policies. Washington Square Advisers, Inc., previously
known as Washington Square Capital, Inc., also a direct wholly-owned ReliaStar
subsidiary, serves as investment adviser to the Series Fund with respect to
short-term and fixed maturity securities. Newbold's Asset Management, Inc.
serves as investment sub-adviser to the Series Fund with respect to equity
securities.
Certain officers and directors of ReliaStar and Bankers Security are also
officers and directors of ReliaStar Financial Marketing Corporation, the
Series Fund and Washington Square Advisers, Inc.
(4) Subsequent Event - The New York Insurance Department has approved a name
change for Bankers Security, effective July 1, 1996, to ReliaStar Bankers
Security Life Insurance Company. Policyowner notifications will be mailed
once other states approvals are obtained.
