INVESTORS
LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Herein called Investors Life)
SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
December 31, 1997
(Audited)
This report is submitted for the general information of owners of
Investors Life Insurance Company of North America Separate
Account I variable annuity contracts. This report is not
authorized for distribution to prospective purchasers of such
contracts unless it is accompanied by a current prospectus.
Investors Life Insurance
Company of North America
Administrative Offices: Austin, TX
Report of Independent Accountants
To the Contract Owners of Investors Life Insurance Company of
North America
Separate Account I and the Board of Directors of Investors 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
Investors Life Insurance Company of North America Separate
Account I (the Separate Account) at December 31, 1997, 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 expressed above.
Price Waterhouse LLP
Dallas, Texas
February 20, 1998 INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
COMBINED BALANCE SHEET
DECEMBER 31, 1997
ASSETS
Investments at Market Value
(Notes 1 and 2):
Portfolios of Putnam Variable Trust:
Putnam Variable Trust Money Market
1,471,113 qualified shares (cost $1,471,113) $1,471,113
2,271,946 non-qualified shares (cost $2,271,946) 2,271,946
Putnam Variable Trust U.S. Government
and High Quality Bond
233,584 qualified shares (cost $3,092,161) 3,134,697
496,958 non-qualified shares (cost $6,479,860) 6,669,237
Putnam Varialbe Trust Growth and Income
689,602 qualified shares (cost $14,430,607) 19,529,543
68,725 shares owned by (cost $1,438,147) 1,946,305
Investors Life
335,230 non-qualified shares (cost $6,885,724) 9,493,714
68,776 shares owned by (cost $1,412,683) 1,947,739
Investors Life
Putnam Variable Trust Voyager
19,081 qualified shares (cost $486,638) 745,672
39,937 shares owned by (cost $1,018,574) 1,560,755
Investors Life
12,216 non-qualified shares (cost $305,452) 477,417
39,867 shares owned by (cost $996,814) 1,558,007
Investors Life
Total Assets $50,806,145
CONTRACT OWNERS' EQUITY
Contract Owners' Equity (Notes 3 and 7):
Putnam Variable Trust Money Market
684,786 qualified accumulation ($2.1482813 per unit) $1,471,113
units outstanding
1,065,062 non-qualified accumulation ($2.1331583 per unit) 2,271,946
units outstanding
Putnam Variable Trust U.S. Government
and High Quality Bond
920,186 qualified accumulation ($3.4065902 per unit) 3,134,697
units outstanding
1,981,587 non-qualified accumulation ($3.3656038 per unit) 6,669,237
units outstanding
Putnam Variable Trust Growth and Income
2,563,498 qualified accumulation ($7.6183179 per unit) 19,529,543
units outstanding
255,477 Investors Life equity ($7.6183179 per unit) 1,946,305
1,454,634 non-qualified accumulation ($6.5265312 per unit) 9,493,714
units outstanding
298,434 Investors Life equity ($6.5265312 per unit) 1,947,739
Putnam Variable Trust Voyager
238,882 qualified accumulation ($3.1215093 per unit) 745,672
units outstanding
500,000 Investors Life equity ($3.1215093 per unit) 1,560,755
153,214 non-qualified accumulation ($3.1160148 per unit) 477,417
units outstanding
500,000 Investors Life equity ($3.1160148 per unit) 1,558,007
Contract Owners' Equity $50,806,145
The accompanying notes are an integral part of these financial statements.
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
INDIVIDUAL STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
Putnam Putnam
Variable Trust Variable Trust
Money Market Money Market
Qualified Non-Qualified
Investment Income:
Dividends $81,333 $125,172
Expenses:
Mortality risk and expense 19,056 29,310
fees guarantees (Notes 1 and 3)
Investment income-net 62,277 95,862
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 0 0
Net realized gain (loss) on investments:
Proceeds from sale of shares 487,751 531,139
Cost of shares sold 487,751 531,139
Net realized gain on investments 0 0
Net unrealized gain on investments 0 0
Net realized and unrealized gain 0 0
on investments
Net Increase in Net Assets $62,277 $95,862
from Investment Operations
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Putnam Variable Putnam Variable
Trust U.S. Trust U.S.
Government and Government and
High Quality Bond High Quality Bo
Qualified Non-Qualified
Investment Income:
Dividends $259,201 $475,537
Expenses:
Mortality risk and expense 44,292 84,947
fees guarantees (Notes 1 and 3)
Investment income-net 214,909 390,590
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 0 0
Net realized gain (loss) on investments:
Proceeds from sale of shares 1,387,315 1,578,240
Cost of shares sold 1,292,289 1,474,441
Net realized gain on investments 95,026 103,799
Net unrealized gain on investments (50,657) 1,802
Net realized and unrealized gain 44,369 105,601
on investments
Net Increase in Net Assets $259,278 $496,191
from Investment Operations
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Putnam Putnam
Variable Trust Variable Trust
Growth and Growth and
Income Income
Qualified* Non-Qualified*
Investment Income:
Dividends $615,207 $324,584
Expenses:
Mortality risk and expense 257,416 135,100
fees guarantees (Notes 1 and 3)
Investment income-net 357,791 189,484
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 820,977 433,146
Net realized gain (loss) on investments:
Proceeds from sale of shares 4,219,884 1,683,730
Cost of shares sold 2,733,428 1,094,688
Net realized gain on investments 1,486,456 589,042
Net unrealized gain on investments 1,749,996 1,104,254
Net realized and unrealized gain 4,057,429 2,126,442
on investments
Net Increase in Net Assets $4,415,220 $2,315,926
from Investment Operations
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Putnam Putnam
Variable Trust Variable Trust
Voyager Voyager
Qualified * Non-Qualified
Investment Income:
Dividends $6,515 $5,350
Expenses:
Mortality risk and expense 25,355 21,563
fees guarantees (Notes 1 and 3)
Investment income-net (18,840) (16,213)
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 87,856 71,570
Net realized gain (loss) on investments:
Proceeds from sale of shares 155,281 80,987
Cost of shares sold 95,419 50,587
Net realized gain on investments 59,862 30,400
Net unrealized gain on investments 355,156 323,702
Net realized and unrealized gain 502,874 425,672
on investments
Net Increase in Net Assets $484,034 $409,459
from Investment Operations
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
INDIVIDUAL STATEMENTS OF CHANGES IN TOTAL ASSETS
YEAR ENDED DECEMBER 31, 1997
Putnam Putnam
Variable Trust Variable Trust
Money Market Money Market
Qualified Non-Qualified
Investment Operations:
Investment income-net $62,277 $95,862
Realized capital gain distributions 0 0
Net realized gain on investments 0 0
Net unrealized gain (loss) on investment 0 0
Net increase in net assets from 62,277 95,862
investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 100,446 34,793
in (Note 3)
Net contract surrenders and transfers (440,229) (465,907)
out (Note 3)
Benefit payments to annuitants (2,159) (36,608)
Net decrease from accumulation (341,942) (467,722)
unit transactions
Net (Decrease) Increase in Net Assets (279,665) (371,860)
Net Assets:
Net assets at December 31, 1996 1,750,778 2,643,806
Net assets at December 31, 1997 $1,471,113 $2,271,946
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Putnam Variable Putnam Variable
Trust U.S. Trust U.S.
Government and Government and
High Quality Bond High Quality Bo
Qualified Non-Qualified
Investment Operations:
Investment income-net $214,909 $390,590
Realized capital gain distributions 0 0
Net realized gain on investments 95,026 103,799
Net unrealized gain (loss) on investment (50,657) 1,802
Net increase in net assets from 259,278 496,191
investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 23,639 145,621
in (Note 3)
Net contract surrenders and transfers (1,310,074) (1,422,542)
out (Note 3)
Benefit payments to annuitants (5,189) (55,995)
Net decrease from accumulation (1,291,624) (1,332,916)
unit transactions
Net (Decrease) Increase in Net Assets (1,032,346) (836,725)
Net Assets:
Net assets at December 31, 1996 4,167,043 7,505,962
Net assets at December 31, 1997 $3,134,697 $6,669,237
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Putnam Putnam
Variable Trust Variable Trust
Growth and Growth and
Income Income
Qualified* Non-Qualified*
Investment Operations:
Investment income-net $357,791 $189,484
Realized capital gain distributions 820,977 433,146
Net realized gain on investments 1,486,456 589,042
Net unrealized gain (loss) on investment 1,749,996 1,104,254
Net increase in net assets from 4,415,220 2,315,926
investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 634,334 130,374
in (Note 3)
Net contract surrenders and transfers (3,900,090) (1,537,206)
out (Note 3)
Benefit payments to annuitants (14,478) (119,771)
Net decrease from accumulation (3,280,234) (1,526,603)
unit transactions
Net (Decrease) Increase in Net Assets 1,134,986 789,323
Net Assets:
Net assets at December 31, 1996 20,340,862 10,652,130
Net assets at December 31, 1997 $21,475,848 $11,441,453
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Putnam Putnam
Variable Trust Variable Trust
Voyager Voyager
Qualified * Non-Qualified *
Investment Operations:
Investment income-net ($18,840) ($16,213)
Realized capital gain distributions 87,856 71,570
Net realized gain on investments 59,862 30,400
Net unrealized gain (loss) on investment 355,156 323,702
Net increase in net assets from 484,034 409,459
investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 87,480 105,653
in (Note 3)
Net contract surrenders and transfers (139,414) (57,462)
out (Note 3)
Benefit payments to annuitants 0 0
Net decrease from accumulation (51,934) 48,191
unit transactions
Net (Decrease) Increase in Net Assets 432,100 457,650
Net Assets:
Net assets at December 31, 1996 1,874,327 1,577,774
Net assets at December 31, 1997 $2,306,427 $2,035,424
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Year Ended December 31, 1996
Money Money
Market Market
Qualified Non-Qualified
Investment Operations:
Investment income-net $72,643 $102,212
Realized capital gain distributions 0 0
Net realized gain on investments 0 0
Net unrealized gain (loss) on investment 0 0
Net increase in net assets from 72,643 102,212
investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 193,701 369,107
in (Note 3)
Net contract surrenders and transfers (689,435) (418,286)
out (Note 3)
Benefit payments to annuitants (6,946) (45,762)
Net decrease from accumulation (502,680) (94,941)
unit transactions
Net (Decrease) Increase in Net Assets (430,037) 7,271
Net Assets:
Net assets at December 31, 1995 2,180,815 2,636,535
Net assets at December 31, 1996 $1,750,778 $2,643,806
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Income Income
Qualified Non-Qualified
Investment Operations:
Investment income-net $229,902 $390,863
Realized capital gain distributions 0 0
Net realized gain on investments 64,603 63,568
Net unrealized gain (loss) on investment (250,811) (378,320)
Net increase in net assets from 43,694 76,111
investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 31,739 45,238
in (Note 3)
Net contract surrenders and transfers (847,678) (814,955)
out (Note 3)
Benefit payments to annuitants (17,397) (98,073)
Net decrease from accumulation (833,336) (867,790)
unit transactions
Net (Decrease) Increase in Net Assets (789,642) (791,679)
Net Assets:
Net assets at December 31, 1995 4,956,685 8,297,641
Net assets at December 31, 1996 $4,167,043 $7,505,962
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Growth and Growth and
Income II Income II
Qualified* Non-Qualified*
(formerly Equity (formerly Equit
Division) Division)
Investment Operations:
Investment income-net $601,112 $286,557
Realized capital gain distributions 379,168 183,293
Net realized gain on investments 695,956 214,865
Net unrealized gain (loss) on investment 1,997,565 1,148,474
Net increase in net assets from 3,673,801 1,833,189
investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 505,790 312,619
in (Note 3)
Net contract surrenders and transfers (2,843,516) (662,722)
out (Note 3)
Benefit payments to annuitants (58,423) (122,302)
Net decrease from accumulation (2,396,149) (472,405)
unit transactions
Net (Decrease) Increase in Net Assets 1,277,652 1,360,784
Net Assets:
Net assets at December 31, 1995 19,063,210 9,291,346
Net assets at December 31, 1996 $20,340,862 $10,652,130
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Voyager Voyager
Qualified * Non-Qualified *
Investment Operations:
Investment income-net $11,845 $10,358
Realized capital gain distributions 66,446 56,289
Net realized gain on investments 39,741 13,542
Net unrealized gain (loss) on investment 81,373 87,666
Net increase in net assets from 199,405 167,855
investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 41,561 540
in (Note 3)
Net contract surrenders and transfers (112,563) (30,200)
out (Note 3)
Benefit payments to annuitants 0 0
Net decrease from accumulation (71,002) (29,660)
unit transactions
Net (Decrease) Increase in Net Assets 128,403 138,195
Net Assets:
Net assets at December 31, 1995 1,745,924 1,439,579
Net assets at December 31, 1996 $1,874,327 $1,577,774
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
Note 1. Organization
Investors Life Insurance Company of North America ("Investors
Life") established Investors Life Insurance Company of North
America - Separate Account I (the "Separate Account") as a unit
investment trust registered under the Investment Company Act of
1940, as amended. Operations of the Separate Account commenced on
September 15, 1982. The Separate Account currently has four
Divisions each corresponding to a portfolio of Putnam Variable
Trust (formerly known as Putnam Capital Manager Trust). Prior to
the substitution of shares of Putnam Variable Trust for shares of
CIGNA Annuity Funds Group as the underlying funding vehicle for the
Separate Account (the "Substitution"), the Separate Account
contained five divisions. The Substitution was effective as of
April 18, 1995, following approvals of the Substitution by the U.S.
Securities and Exchange Commission and the contractholders having
their contract values determined by the affected portfolios of the
CIGNA Annuity Funds Group. In connection with the Substitution,
the Equity Division was merged with the Growth and Income Division;
thereafter, the Equity Division was renamed the Growth and Income
Division II. Each Division contains two subdivisions, one for the
allocation of tax qualified and one for the allocation of non-tax
qualified net payments made under variable annuity contracts.
Net purchase payments to the Separate Account may be allocated to
one or more of the following classes of shares of the Putnam
Variable Trust: Putnam VT Money Market Fund, Putnam VT U.S.
Government and High quality Bond Fund, Putnam VT Growth and Income
Fund or Putnam VT Voyager Fund. The contract owners' equity of
each subdivision of the Separate Account is affected by the
investment results of the appropriate portfolio(s) of shares of
Putnam Variable Trust designated for the subdivision and the
mortality risk and expense fees guarantees assessed on the Separate
Account assets (See Note 3), and the administrative charge
deductions.
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 are not subject to current
taxation. There can be no assurance that future changes in the
Code will subject such transfers to current taxation.
Note 2. Significant Accounting Policies
Following is a summary of the significant accounting policies of
the Separate Account:
(a) the market value of the investments is based on closing bid
prices (net asset value) at December 31, 1997; (b) investment
transactions are accounted for on the trade date and income is
recorded on the ex-dividend date; (c) the cost of investments sold
is determined on the specific identification method. See Notes 4
and 5 with respect to income taxes.
Note 3. Contract Owner Transactions
Net contract considerations represent gross contributions under
variable annuity contracts less deductions by Investors Life for
any applicable premium taxes. Net contract considerations for the
year ended December 31, 1997, were $327,007 after deductions for
premium taxes of $0. Contract owners have limited rights to
transfer their contract values between Separate Account Divisions.
For the year ended December 31, 1997, the total of all transfers
was $935,332. Contract surrender benefits amounted to $8,337,592.
Annuity benefits amounted to $234,200. Investors Life 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 1.2% is made against the average net value of the
Separate Account.
Note 4. Income Taxes
Investors Life is taxed as a life insurance company under the
Code. The Separate Account is taxed as a part of Investors Life.
Under the current provisions of the Code, no federal income taxes
are payable by Investors Life with respect to the operations of the
Separate Account when such operations are used to determine the
contract values of the Separate Account. Investors Life retains
the right to make adjustments for taxes to Separate Account assets
should future changes in the Code so warrant.
Note 5. Diversification Requirements
Under the provisions of Section 817(h) of the 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. Investors Life believes that the Separate
Account satisfies the current requirements of the regulations.
Note 6. Accumulation Unit transaction:
The changes in the number of accumulation units (the measure of
ownership in the Separate Account) during 1997, and units
outstanding at December 31, 1997 were as follows:
Putnam Putnam
Variable Trust Variable Trust
Money Market Money Market
Qualified Non-Qualified
Units outstanding at December 31, 1996 847,412 1,288,780
Units purchased and transfers in 72,953 16,757
Benefits, surrenders and transfers out (235,579) (240,475)
Units outstanding at December 31, 1997 684,786 1,065,062
Putnam Variable Putnam Variable
Trust U.S. Trust U.S.
Government and Government and
High Quality Bond High Quality Bo
Qualified Non-Qualified
Units outstanding at December 31, 1996 1,313,122 2,394,183
Units purchased and transfers in 22,469 45,280
Benefits, surrenders and transfers out (415,405) (457,876)
Units outstanding at December 31, 1997 920,186 1,981,587
Putnam Putnam
Variable Trust Variable Trust
Growth and Growth and
Income Income
Qualified* Non-Qualified*
Units outstanding at December 31, 1996 3,277,019 2,002,962
Units purchased and transfers in 144,106 22,024
Benefits, surrenders and transfers out (602,150) (271,918)
Units outstanding at December 31, 1997 2,818,975 1,753,068
Putnam Putnam
Variable Trust Variable Trust
Voyager Voyager
Qualified * Non-Qualified
Units outstanding at December 31, 1996 751,632 633,799
Units purchased and transfers in 33,033 39,117
Benefits, surrenders and transfers out (45,783) (19,702)
Units outstanding at December 31, 1997 738,882 653,214
*Includes shares owned by Investors Life.
The accumulation units for six of the subdivisions include units
applicable to contract owners who are "on benefit annuitants." At
December 31, 1997 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
Putnam Variable Trust Money Market, Qualified 24,966 $53,634
Putnam Variable Trust Money Market, Non-Qualified 166,795 $355,801
Putnam Variable Trust Growth and Income, Qualified 93,502 $712,328
Putnam Variable Trust Growth and Income,
Non-Qualified 106,907 $697,732
Putnam Variable Trust U.S. Government 54,958 $187,219
and High Quality Bond, Qualified
Putnam Variable Trust U.S. Government 206,048 $693,476
and High Quality Bond, Non-Qualified
Monthly Annuity
Annuity Units Unit Value
Putnam Variable Trust Money Market, Qualified 585 $0.8320552
Putnam Variable Trust Money Market, Non-Qualified 3,958 $0.8325533
Putnam Variable Trust Growth and Income, Qualified 3,994 $1.8217311
Putnam Variable Trust Growth and Income,
Non-Qualified 5,706 $1.9519047
Putnam Variable Trust U.S. Government 1,180 $1.4109542
and High Quality Bond, Qualified
Putnam Variable Trust U.S. Government 4,987 $1.4078279
and High Quality Bond, Non-Qualified
