INVESTORS
LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Herein called Investors Life)
SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
December 31, 1999
(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
<PAGE>
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, 1999, 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 in the United States. 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 in the
United States 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 which included confirmation of securities at December 31, 1999 by
correspondence with the underlying funds provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Dallas, Texas
February 22, 2000
<PAGE>
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
COMBINED BALANCE SHEET
Year Ended December 31, 1999
ASSETS
Investments at Market Value (Notes 1 and 2):
Portfolios of Putnam Capital Manager Trust:
Putnam Variable Trust Money Market
1,172,768 qualified shares (Cost $1,172,828) $ 1,172,768
2,066,171 non-qualified shares (Cost $2,066,171) 2,066,171
Putnam Variable Trust Income Fund U.S.
Government and High Quality Bond
(formerly US Government and High
Quality Bond)
155,742 qualified shares (Cost $2,192,957) 1,949,894
440,643 non-qualified shares (Cost $5,842,750) 5,516,851
Putnam Variable Trust Growth and Income
629,836 qualified shares (Cost $15,012,363) 16,879,608
83,028 shares owned by Investors Life (Cost $1,979,000) 2,225,149
304,717 non-qualified shares (Cost $7,065,759) 8,166,403
83,252 shares owned by Investors Life (Cost $1,930,451) 2,231,161
Putnam Variable Trust Voyager
17,946 qualified shares (Cost $537,566) 1,188,893
45,247 shares owned by Investors Life (Cost $1,355,402) 2,997,638
16,061 non-qualified shares (Cost $471,451) 1,064,022
45,193 shares owned by Investors Life (Cost $1,326,614) 2,994,058
Total Assets $ 48,452,616
CONTRACT OWNERS' EQUITY
Contract Owners' Equity (Notes 3 and 6):
Putnam Variable Trust Money Market
506,682 qualified accumulation
units outstanding ($2.3146040 Per Unit) $ 1,172,768
899,105 non-qualified accumulation
units outstanding ($2.2980310 Per Unit) 2,066,171
Putnam Variable Trust Income
(formerly U.S. Government and
High Quality Bond)
552,955 qualified accumulation
units outstanding ($3.5263160 Per Unit) 1,949,894
1,582,528 non-qualified accumulation
units outstanding ($3.4861000 Per Unit) 5,516,851
Putnam Variable Trust Growth and Income
1,938,006 qualified accumulation
units outstanding ($8.7097810 Per Unit) 16,879,608
255,477 Investors Life equity ($8.7097810 Per Unit) 2,225,149
1,092,316 non-qualified accumulation
units outstanding ($7.4762280 Per Unit) 8,166,403
298,434 Investors Life equity ($7.4762280 Per Unit) 2,231,161
Putnam Variable Trust Voyager
198,305 qualified accumulation
units outstanding ($5.9952760 Per Unit) 1,188,893
500,000 Investors Life equity ($5.9952760 Per Unit) 2,997,638
177,689 non-qualified accumulation
units outstanding ($5.9881160 Per Unit) 1,064,022
500,000 Investors Life equity ($5.9881160 Per Unit) 2,994,058
Contract Owners' Equity $ 48,452,616
The accompanying notes are an integral part of these financial statements
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INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
INDIVIDUAL STATEMENTS OF OPERATIONS
Period Year December 31, 1999
Putnam Putnam
Variable Trust Variable Trust
Money Money
Market Market
Qualified Non-Qualified
Investment Income:
Dividends $57,734 $100,984
Expenses:
Mortality risk and expense
fees guarantees (Notes 1 and 3) 14,831 25,566
Investment income - net 42,903 75,418
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 211,767 183,191
Cost of shares sold 211,767 183,191
Net realized gain (loss) on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net realized and unrealized gain (loss)
on investments 0 0
Net Increase (Decrease) in Net Assets
from Investment Operations $42,903 $75,418
Putnam Variable Putnam Variable
Trust Income Trust Income
Fund (formerly Fund (formerly
U.S. Govmnt and U.S. Govmnt and
High Quality Bond) High Quality Bond)
Qualified Non-Qualified
Investment Income:
Dividends $171,708 $383,277
Expenses:
Mortality risk and expense
fees guarantees (Notes 1 and 3) 28,699 70,156
Investment income - net 143,009 313,121
Net Realized and Unrealized Gain
(Loss) on Investments:
Net realized capital gain distributions 15,104 33,714
Net realized gain (loss) on investments:
Proceeds from sale of shares 907,719 773,957
Cost of shares sold 866,626 717,616
Net realized gain (loss) on investments 41,093 56,341
Net unrealized gain (loss) on investments (282,576) (596,956)
Net realized and unrealized gain (loss)
on investments (226,379) (506,901)
Net Increase (Decrease) in Net Assets
from Investment Operations ($83,370) ($193,780)
The accompanying notes are an integral part of these financial statements
<PAGE>
Putnam Variable Putnam Variable
Trust Growth Trust Growth
and Income and Income
Qualified* Non-Qualified*
Investment Income:
Dividends $526,077 $279,419
Expenses:
Mortality risk and expense
fees guarantees (Notes 1 and 3) 249,617 134,171
Investment income - net 276,460 145,248
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 1,232,297 654,519
Net realized gain (loss) on investments:
Proceeds from sale of shares 3,250,365 1,429,163
Cost of shares sold 1,902,142 865,725
Net realized gain (loss) on investments 1,348,223 563,438
Net unrealized gain (loss) on investments (2,650,900) (1,270,668)
Net realized and unrealized gain (loss)
on investments (70,380) (52,711)
Net Increase (Decrease) in Net Assets
from Investment Operations $206,080 $92,537
Putnam Putnam
Variable Trust Variable Trust
Voyager Voyager
Qualified * Non-Qualified *
Investment Income:
Dividends $3,042 $2,913
Expenses:
Mortality risk and expense
fees guarantees (Notes 1 and 3) 36,046 35,119
Investment income - net ($33,004) ($32,206)
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 243,942 233,561
Net realized gain (loss) on investments:
Proceeds from sale of shares 194,292 69,466
Cost of shares sold 98,409 33,123
Net realized gain (loss) on investments 95,883 36,343
Net unrealized gain (loss) on investments 1,199,690 1,224,694
Net realized and unrealized gain (loss)
on investments 1,539,515 1,494,598
Net Increase (Decrease) in Net Assets
from Investment Operations $1,506,511 $1,462,392
The accompanying notes are an integral part of these financial statements
* Includes shares owned by Investors Life.
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INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
INDIVIDUAL STATEMENTS OF CHANGES IN TOTAL ASSETS
Year Ended December 31, 1999
Putnam Putnam
Variable Trust Variable Trust
Money Money
Market Market
Qualified Non-Qualified
Investment Operations:
Investment income-net $42,903 $75,418
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net increase (decrease) in net assets
from investment operations 42,903 75,418
Accumulation Unit Transactions:
Net contract considerations
and transfers in (Note 3) 3,522 134
Net contract surrenders
and transfers out (Note 3) (190,069) (109,670)
Benefit payments to annuitants (9,154) (48,256)
Net increase (decrease) from
accumulation unit transactions (195,701) (157,792)
Net Increase (Decrease) in Net Assets (152,798) (82,374)
Net Assets:
Net assets at December 31, 1998 1,325,566 2,148,545
Net assets at December 31, 1999 $1,172,768 $2,066,171
Putnam Putnam
Variable Trust Variable Trust
Money Money
Market Market
Qualified Non-Qualified
Investment Operations:
Investment income-net $56,991 $92,738
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net increase (decrease) in net assets
from investment operations 56,991 92,738
Accumulation Unit Transactions:
Net contract considerations
and transfers in (Note 3) 198,798 436,426
Net contract surrenders
and transfers out (Note 3) (394,261) (618,288)
Benefit payments to annuitants (7,075) (34,277)
Net increase (decrease) from
accumulation unit transactions (202,538) (216,139)
Net Increase (Decrease) in Net Assets (145,547) (123,401)
Net Assets:
Net assets at December 31, 1997 1,471,113 2,271,946
Net assets at December 31, 1998 $1,325,566 $2,148,545
The accompanying notes are an integral part of these financial statements
<PAGE>
Putnam Variable Putnam Variable
Trust Income Trust Income
Fund (formerly Fund (formerly
U.S. Govmnt and U.S. Govmnt and
High Quality Bond High Quality Bond)
Qualified Non-Qualified
Investment Operations:
Investment income-net $143,009 $313,121
Realized capital gain distributions 15,104 33,714
Net realized gain (loss) on investments 41,093 56,341
Net unrealized gain (loss) on investments (282,576) (596,956)
Net increase (decrease) in net assets
from investment operations (83,370) (193,780)
Accumulation Unit Transactions:
Net contract considerations
and transfers in (Note 3) 2,647 532
Net contract surrenders
and transfers out (Note 3) (764,398) (608,753)
Benefit payments to annuitants (18,177) (94,181)
Net increase (decrease) from
accumulation unit transactions (779,928) (702,402)
Net Increase (Decrease) in Net Assets (863,298) (896,182)
Net Assets:
Net assets at December 31, 1998 2,813,192 6,413,033
Net assets at December 31, 1999 $1,949,894 $5,516,851
Putnam Variable Putnam Variable
Trust Income Trust Income
Fund (formerly Fund (formerly
U.S.Govmnt and U.S. Govmnt and
High Quality Bond) High Quality Bond)
Qualified Non-Qualified
Investment Operations:
Investment income-net $126,862 $285,132
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 73,516 72,798
Net unrealized gain (loss) on investments (3,021) 81,679
Net increase (decrease) in net assets
from investment operations 197,357 439,609
Accumulation Unit Transactions:
Net contract considerations
and transfers in (Note 3) 119,096 15,992
Net contract surrenders
and transfers out (Note 3) (614,443) (612,664)
Benefit payments to annuitants (23,515) (99,141)
Net increase (decrease) from
accumulation unit transactions (518,862) (695,813)
Net Increase (Decrease) in Net Assets (321,505) (256,204)
Net Assets:
Net assets at December 31, 1997 3,134,697 6,669,237
Net assets at December 31, 1998 $2,813,192 $6,413,033
The accompanying notes are an integral part of these financial statements.
<PAGE>
Putnam Variable Putnam Variable
Trust Growth Trust Growth
and Income and Income
Qualified Non-Qualified
Investment Operations:
Investment income-net $276,460 $145,248
Realized capital gain distributions 1,232,297 654,519
Net realized gain (loss) on investments 1,348,223 563,438
Net unrealized gain (loss) on investments (2,650,900) (1,270,668)
Net increase (decrease) in net
assets from investment operations 206,080 92,537
Accumulation Unit Transactions:
Net contract considerations
and transfers in (Note 3) 225,501 760
Net contract surrenders
and transfers out (Note 3) (2,884,977) (1,158,315)
Benefit payments to annuitants (103,795) (132,264)
Net increase (decrease)
from accumulation unit transactions (2,763,271) (1,289,819)
Net Increase (Decrease) in Net Assets (2,557,191) (1,197,282)
Net Assets:
Net assets at December 31, 1998 21,661,948 11,594,846
Net assets at December 31, 1999 $19,104,757 $10,397,564
Putnam Variable Putnam Variable
Trust Growth Trust Growth
and Income and Income
Qualified Non-Qualified
Investment Operations:
Investment income-net $568,935 $314,487
Realized capital gain distributions 1,899,116 1,038,467
Net realized gain (loss) on investments 1,168,549 632,438
Net unrealized gain (loss) on investments (842,800) (471,025)
Net increase (decrease) in net
assets from investment operations 2,793,800 1,514,367
Accumulation Unit Transactions:
Net contract considerations
and transfers in (Note 3) 217,936 261,081
Net contract surrenders
and transfers out (Note 3) (2,719,592) (1,493,533)
Benefit payments to annuitants (106,044) (128,522)
Net increase (decrease)
from accumulation unit transactions (2,607,700) (1,360,974)
Net Increase (Decrease) in Net Assets 186,100 153,393
Net Assets:
Net assets at December 31, 1997 21,475,848 11,441,453
Net assets at December 31, 1998 $21,661,948 $11,594,846
The accompanying notes are an integral part of these financial statements.
<PAGE>
Putnam Putnam
Variable Trust Variable Trust
Voyager Voyager
Qualified * Non-Qualified *
Investment Operations:
Investment income-net $(33,004) $(32,206)
Realized capital gain distributions 243,942 233,561
Net realized gain (loss) on investments 95,883 36,343
Net unrealized gain (loss) on investments 1,199,690 1,224,694
Net increase (decrease) in net
assets from investment operations 1,506,511 1,462,392
Accumulation Unit Transactions:
Net contract considerations
and transfers in (Note 3) 112,768 31,423
Net contract surrenders
and transfers out (Note 3) (162,479) (37,677)
Benefit payments to annuitants (9,464) 0
Net increase (decrease)
from accumulation unit transactions (59,175) (6,254)
Net Increase (Decrease) in Net Assets 1,447,336 1,456,138
Net Assets:
Net assets at December 31, 1998 2,739,195 2,601,942
Net assets at December 31, 1999 $4,186,531 $4,058,080
Putnam Putnam
Variable Trust Variable Trust
Voyager Voyager
Qualified * Non-Qualified *
Investment Operations:
Investment income-net $(23,657) $(20,804)
Realized capital gain distributions 141,877 126,718
Net realized gain (loss) on investments 99,378 76,938
Net unrealized gain (loss) on investments 292,657 302,163
Net increase (decrease) in net
assets from investment operations 510,255 485,015
Accumulation Unit Transactions:
Net contract considerations
and transfers in (Note 3) 33,436 229,908
Net contract surrenders
and transfers out (Note 3) (106,935) (148,405)
Benefit payments to annuitants (3,988) 0
Net increase (decrease)
from accumulation unit transactions (77,487) 81,503
Net Increase (Decrease) in Net Assets 432,768 566,518
Net Assets:
Net assets at December 31, 1997 2,306,427 2,035,424
Net assets at December 31, 1998 $2,739,195 $2,601,942
The accompanying notes are an integral part of these financial statements.
* Includes shares owned by Investors Life
<PAGE>
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
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 Variable
Trust Money Market Fund, Putnam Variable Trust Income Fund (formerly Putnam
Variable Trust U.S. Government and High Quality Bond Fund), Putnam Variable
Trust Growth and Income Fund or Putnam Variable Trust 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 not subject such transfers to current
taxation.
<PAGE>
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, 1999; (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, 1999, were $117,666
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, 1999, the total of all transfers was $259,621. Contract
surrender benefits amounted to $5,656,717. Annuity benefits amounted to
$415,291. 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 Internal Revenue 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.
<PAGE>
Note 6. Accumulation Unit Transactions:
The changes in the number of accumulation units (the measure of ownership in the
Separate Account) during the period ended December 31, 1999 and units
outstanding at December 31, 1999 were as follows:
Putnam Putnam
Variable Trust Variable Trust
Money Money
Market Market
Qualified Non-Qualified
Units outstanding at December 31, 1998 593,464 968,809
Units purchased and transfers in 1,566 59
Benefits, surrenders and transfers out (88,348) (69,763)
Units outstanding at December 31, 1999 506,682 899,105
Putnam Variable Putnam Variable
Trust Income Fund Trust Income Fund
(formerly US Gov't (formerly US Gov't
High Quality Bond) High Quality Bond)
Qualified Non-Qualified
Units outstanding at December 31, 1998 772,236 1,781,007
Units purchased and transfers in 639 158
Benefits, surrenders and transfers out (219,880) (198,637)
Units outstanding at December 31, 1999 552,995 1,582,528
Putnam Variable Putnam Variable
Trust Growth Trust Growth
and Income and Income
Qualified Non-Qualified
Units outstanding at December 31, 1998 2,497,011 1,557,788
Units purchased and transfers in 24,749 99
Benefits, surrenders and transfers out (328,277) (167,137)
Units outstanding at December 31, 1999 2,193,483 1,390,750
<PAGE>
Putnam Putnam
Variable Trust Variable Trust
Voyager Voyager
Qualified * Non-Qualified *
Units outstanding at December 31, 1998 714,343 679,382
Units purchased and transfers in 26,133 7,224
Benefits, surrenders and transfers out (42,171) (8,917)
Units outstanding at December 31, 1999 698,305 677,689
* 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, 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
Putnam Variable Trust
Money Market, Qualified 39,840 $92,214
Putnam Variable Trust
Money Market, Non-Qualified 220,371 $506,419
Putnam Variable Trust
Growth and Income, Qualified 113,964 $992,601
Putnam Variable Trust
Growth and Income, Non-Qualified 83,942 $627,570
Putnam Variable Trust
Income Fund, Qualified 75,009 $264,505
Putnam Variable Trust
Income Fund, Non-Qualified 217,389 $757,840
Putnam Variable Trust Voyager, Qualified 28,201 $169,071
Monthly Annuity
Annuity Units Unit Value
Putnam Variable Trust Money Market, Qualified 825 $0.7978806
Putnam Variable Trust Money Market, Non-Qualified 6,730 $0.7982616
Putnam Variable Trust Growth and Income, Qualified 4,949 $1.8535421
Putnam Variable Trust Growth and Income, Non-Qualified 6,025 $1.9900205
Putnam Variable Trust Income Fund, Qualified 1,517 $1.2999081
Putnam Variable Trust Income Fund, Non-Qualified 8,264 $1.2978484
Putnam Variable Trust Voyager, Qualified 462 $1.5900704
