A MESSAGE TO VARIABLE LIFE POLICYOWNERS
The Stock Markets witnessed significant increases
during 1995, with the S&P 500 achieving a total return of
37.6% for the year, compared to a total return of
1.2% for 1994. At the same time long term interest
rates have significantly declined since the beginning of
the year. At December 31, 1994, the 30 year treasury
bond yielded 7.9%, compared to a yield of 5.9% at
December 31, 1995.
Short term rates are somewhat lower than a year ago,
with the 3 month Treasury Bill ending the year at 5.1%
compared to 5.7% at the beginning of the year.
The U.S. Gross Domestic Product for 1995 increased by
nearly 3%. Inflation remained low with the Consumer
Price Index increasing by approximately 2.6% this year, a
slight reduction from 1994.
THE STOCK ACCOUNT. At December 31, 1995, the assets were
allocated 97% to 70 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 December 31, 1995, this
portfolio held 25 different issues of the highest quality
commercial paper with maturities ranging from 1 to 33
days.
THE INVESTMENT GRADE BOND ACCOUNT. Bonds represented 97%
of investable funds on December 31, with the remainder in
a high quality money market fund. The portfolio was
comprised of 21 bond issues, with maturities ranging from
3 years to 25 years.
THE ASSET ALLOCATION ACCOUNT. At December 31, assets were
allocated 49% to common stocks, 48% to bonds with the
remainder in a high quality money market fund. There were
69 different common stock issues in the portfolio and 44
different bond positions.
THE OUTLOOK. For 1996, we expect moderate economic growth
and continuing low 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.
Beginning on page 8, there appears a report of the USLICO
Series Fund whose portfolios support the separate account
assets. Total return charts for the Fund's Portfolios are
presented at page 8, 9 and 10.
Respectfully,
Thomas Y. Moon
President
Bankers Security Life Insurance Society
<PAGE>
<TABLE>
Bankers Security Variable Life Separate Account I
Statement of Assets and Liabilities
December 31, 1995
Sub-accounts
Common Money Asset Total
Stock Market Bond Allocation Sub-accounts
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
USLICO Series Fund-Common Stock Portfolio
(781,323 shares; cost $8,306,076) $ 9,861,165 $ 9,861,165
USLICO Series Fund-Money Market Portfolio
(4,963,515 shares; cost $4,963,515) $ 4,963,515 4,963,515
USLICO Series Fund-Bond Portfolio
(129,018 shares; cost $1,299,188) $ 1,339,357 1,339,357
USLICO Series Fund-Asset Allocation Portfolio
(442,645 shares; cost $4,741,943) $ 5,232,170 5,232,170
Policy loans 916,987 494,124 3,862 232,632 1,647,605
------------ ------------ ------------ ------------ ------------
Total assets 10,778,152 5,457,639 1,343,219 5,464,802 23,043,812
------------ ------------ ------------ ------------ ------------
Liabilities:
Net accrued for policy related transactions
payable to Bankers Security 465,925 251,372 184,454 531,796 1,433,547
Amounts payable to Bankers Security 375,000 125,000 1,000,000 1,000,000 2,500,000
------------ ------------ ------------ ------------ ------------
Total liabilities 840,925 376,372 1,184,454 1,531,796 3,933,547
------------ ------------ ------------ ------------ ------------
Net assets - for variable life
insurance policies $ 9,937,227 $ 5,081,267 $ 158,765 $ 3,933,006 $ 19,110,265
============ ============ ============ ============ ============
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 Year Ended December 31, 1995
Sub-accounts
Common Money Asset Total
Stock Market Bond Allocation Sub-accounts
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 766,217 $ 265,384 $ 88,556 $ 374,017 $ 1,494,174
Expenses:
Mortality and expense risk charges 43,747 24,562 6,089 23,138 97,536
----------- ----------- ----------- ----------- ------------
Net investment income 722,470 240,822 82,467 350,879 1,396,638
Net unrealized gains on investments 1,606,225 - 113,035 649,668 2,368,928
Net realized gains on investments 21,777 - - 5,314 27,091
----------- ----------- ----------- ----------- ------------
Net increase in net assets resulting
from operations 2,350,472 240,822 195,502 1,005,861 3,792,657
From policy related transactions:
Transfers in for net premiums 806,287 520,818 27,169 859,175 2,213,449
Transfers between sub-accounts 16,931 (2,784) - (14,147) -
Transfers for withdrawal/surrender (569,134) (411,810) (15,701) (364,839) (1,361,484)
Transfer of investment and operating
results to Bankers Security (435,407) (246,086) (179,318) (509,281) (1,370,092)
----------- ----------- ----------- ----------- ------------
Net increase in net assets 2,169,149 100,960 27,652 976,769 3,274,530
Net assets, beginning of year 7,768,078 4,980,307 131,113 2,956,237 15,835,735
----------- ----------- ----------- ----------- ------------
Net assets, end of year 9,937,227 $ 5,081,267 $ 158,765 $ 3,933,006 $ 19,110,265
=========== =========== =========== =========== ============
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 Year Ended December 31, 1994
Sub-accounts
Common Money Asset Total
Stock Market Bond Allocation Sub-accounts
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 751,944 $ 167,844 $ 79,455 $ 326,897 $ 1,326,140
Expenses:
Mortality and expense risk charges 38,943 23,541 5,721 19,168 87,373
------------ ------------ ------------ ------------ ------------
Net investment income 713,001 144,303 73,734 307,729 1,238,767
Net unrealized losses on investments (645,732) - (123,218) (399,781) (1,168,731)
Net realized gains(losses) on investments 14,527 - (2,933) - 11,594
------------ ------------ ------------ ------------ ------------
Net increase(decrease) in net assets resulting
from operations 81,796 144,303 (52,417) (92,052) 81,630
From policy related transactions:
Transfers in for net premiums 862,124 683,395 28,067 919,831 2,493,417
Transfers between sub-accounts 21,000 (39,241) 131 18,110 -
Transfers for withdrawal/surrender (633,567) (301,779) (8,746) (270,052) (1,214,144)
Transfer of investment and operating
results from(to) Bankers Security (261,278) (273,280) 35,467 (264,132) (763,223)
------------ ------------ ------------ ------------ ------------
70,075 213,398 2,502 311,705 597,680
Net assets, beginning of year 7,698,003 4,766,909 128,611 2,644,532 15,238,055
------------ ------------ ------------ ------------ ------------
Net assets, end of year $ 7,768,078 $ 4,980,307 $ 131,113 $ 2,956,237 $ 15,835,735
============ ============ ============ ============ ============
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 Year Ended December 31, 1993
Sub-accounts
Common Money Asset Total
Stock Market Bond Allocation Sub-accounts
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 217,947 $ 112,099 $ 90,478 $ 191,564 $ 612,088
Expenses:
Mortality and expense risk charges 37,336 22,963 6,113 17,882 84,294
------------ ------------ ------------ ------------ ------------
Net investment income 180,611 89,136 84,365 173,682 527,794
Net unrealized gains on investments 515,564 - 25,093 164,632 705,289
Net realized gains on investments 23,575 - 7,466 8,256 39,297
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting from 719,750 89,136 116,924 346,570 1,272,380
operations
From policy related transactions:
Transfers in for net premiums 997,146 743,780 22,730 778,741 2,542,397
Transfers between sub-accounts (3,201) 6,097 (2,627) (269) -
Transfers for withdrawal/surrender (676,204) (353,615) (15,401) (321,145) (1,366,365)
Transfer of investment and operating
results to Bankers Security (561,257) (317,483) (111,043) (390,231) (1,380,014)
------------ ------------ ------------ ------------ ------------
Net increase in net assets 476,234 167,915 10,583 413,666 1,068,398
Net assets, beginning of year 7,221,769 4,598,994 118,028 2,230,866 14,169,657
------------ ------------ ------------ ------------ ------------
Net assets, end of year $ 7,698,003 $ 4,766,909 $ 128,611 $ 2,644,532 $ 15,238,055
============ ============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
BANKERS SECURITY VARIABLE LIFE SEPARATE ACCOUNT I - NOTES TO FINANCIAL
STATEMENTS - DECEMBER 31, 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. 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 year ended December 31,
1995, were:
Cost of Shares Proceeds from
Sub-account Acquired Shares Sold
Common Stock $ 766,217 $ 177,977
Money Market 301,632 294,167
Bond 131,297 -
Asset Allocation 562,251 65,599
----------- ----------
Total $ 1,761,397 $ 537,743
(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. Also included in this transfer are cost of
insurance charges totalling $805,900 for all sub-accounts for 1995.
(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.
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-equity
holdings 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.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To Bankers Security Life Insurance Society
and Bankers Security Variable Life Separate Account I Policyowners:
We have audited the accompanying statement of assets and liabilities of
Bankers Security Variable Life Separate Account I as of December 31,
1995, and the related statement of operations and changes in net assets
for the year then ended. These financial statements are the
responsibility of the management of Bankers Security Life Insurance
Society. Our responsibility is to express an opinion on these financial
statements based on our audits. The statements of operations and
changes in net assets for the years ended December 31, 1994 and 1993
were audited by other auditors whose report dated February 2, 1995
expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Bankers
Security Variable Life Separate Account I as of December 31, 1995, and
the results of its operations and changes in net assets for the year
then ended, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Minneapolis, MN
January 26, 1996
