<PAGE> 1
As filed with the Securities and Exchange Commission
'33 Act Registration No. 2-28596
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-3
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 35 /x/
SEPARATE ACCOUNT NO. 1
(Exact Name of Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
GORDON E. McCUTCHAN, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Name and Address of Agent for Service)
This Post-Effective Amendment amends the Registration Statement by the
registration of additional securities, and updating of the prospectus,
Statement of Additional Information and financial statements.
It is proposed that this filing will become effective (check appropriate space)
immediately upon filing pursuant to paragraph (b) of Rule 485
------
x on May 1, 1995 pursuant to paragraph (b) of Rule 485
------
60 days after filing pursuant to paragraph (a)(i)of Rule 485
------
on (date), pursuant to paragraph (a)(i) of Rule 485
------
75 days after filing pursuant to paragraph (a)(ii) of Rule 485
------
on (date) pursuant to paragraph (a)(ii) of Rule 485
------
================================================================================
<PAGE> 2
SEPARATE ACCOUNT NO. 1
REFERENCE TO ITEMS
REQUIRED BY FORM N-3
<TABLE>
<CAPTION>
Part A INFORMATION REQUIRED IN A PROSPECTUS
<S> <C>
Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 3. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 4. Condensed Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 5. General Description of Registrant and Insurance Company . . . . . . . . . . . . . 8
Item 6. Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 7. Deductions and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 8. General Description of Variable Annuity Contracts . . . . . . . . . . . . . . . . 13
Item 9. Annuity Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 10. Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 11. Purchases and Contract Value . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 12. Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 14. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 15. Table of Contents of the Statement of Additional Information . . . . . . . . . . 21
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 16. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Item 17. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Item 18. General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . 22
Item 19. Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . . . . 22
Item 20. Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 21. Investment Advisory and Other Services . . . . . . . . . . . . . . . . . . . . . 24
Item 22. Brokerage Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 23. Purchase and Pricing of Securities Being Offered . . . . . . . . . . . . . . . . 24
Item 24. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 25. Calculation of Yield Quotations of Money Market Sub-Accounts . . . . . . . . . . 25
Item 26. Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 27. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Part C OTHER INFORMATION
Item 28. Financial Statements and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . 59
Item 29. Directors and Officers of the Insurance Company . . . . . . . . . . . . . . . . . 60
Item 30. Persons Controlled by or Under Common Control with the
Insurance Company or Registrant . . . . . . . . . . . . . . . . . . . . . . . . . 62
Item 31. Number of Contractowners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Item 32. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Item 33. Business and Other Connections of Investment Adviser . . . . . . . . . . . . . . 72
Item 34. Principal Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Item 35. Location of Accounts and Records . . . . . . . . . . . . . . . . . . . . . . . . 72
Item 36. Management Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Item 37. Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
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<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY
Home Office
P.O. Box 16738
One Nationwide Plaza
Columbus, Ohio 43216
(614) 249-5346
GROUP COMMON STOCK VARIABLE ANNUITY CONTRACTS
ISSUED BY
NATIONWIDE LIFE INSURANCE COMPANY
(THE "COMPANY")
The Group Common Stock Variable Annuity Contracts (the "Contract"
or "Contracts") described in this Prospectus are sold to corporations and
unincorporated businesses for use with pension, profit sharing, and other
retirement plans (collectively referred to as the "Plan"). The Plan must
qualify for special federal tax treatment under sections 401 and 403(a) of
the Internal Revenue Code. (See "Federal Income Tax Status" for more
information.)
The Contracts permit the Contractholder to accumulate Plan
Contributions on a variable basis. Plan Contributions will be credited to
the accounts of Participants in the form of Accumulation Units, the value
of which will vary to reflect the results of Separate Account No. 1
("Separate Account"). The assets of the Separate Account will be held for
the sole benefit of the holders of, and persons entitled to benefits under,
Contracts issued pursuant to this Prospectus. The investments of the
Separate Account are intended to be composed primarily of common stocks.
The value of the interests of Participants under the Contracts and the
dollar amount of the Variable Annuity payments thereunder will, therefore,
vary with the dividends and interest and fluctuations in the market value
of the securities held in the Separate Account, and will be subject to the
same risks as are inherent in the ownership of common stocks. The
composition of the investments held will be determined from the long-term
view of an investor concerned with the preservation of his capital and with
the growth of his capital in relation to the growth of the economy and the
changing value of the dollar. (See "Investment Objectives and Policies" in
the Prospectus and in the "Statement of Additional Information".)
The Company may sell Fixed Dollar Annuity Contracts (the
"Companion Fixed Contracts") to the same Contractholder if the Plan permits
investment flexibility to the Contractholder or Participants.
This Prospectus provides you with the basic information you should
know about the Group Common Stock Variable Annuity Contracts issued by the
Company before investing. You should read it and keep it for future
reference. A Statement of Additional Information dated May 1, 1995,
containing further information about the Contracts, the Company, and
Separate Account No. 1 has been filed with the Securities and Exchange
Commission. You can obtain a copy without charge from The Company by
calling the number listed above, or writing P.O. Box 16738, One Nationwide
Plaza, Columbus, Ohio 43216.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1995, IS
INCORPORATED HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT
OF ADDITIONAL INFORMATION APPEARS IN THIS PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1995
1
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<PAGE> 4
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT -- This is a statistical index measuring the net investment
results of the Separate Account. It is the unit of measurement used to
determine the value of a Contract and each Participant's Account.
ANNUITANT -- This is the person actually receiving annuity payments and upon
whose continuation of life any annuity payment involving life contingencies
depends.
ANNUITY UNIT -- This is an accounting unit of measure used to calculate the
value of Variable Annuity payments.
BENEFICIARY -- This is the person named by the Contractholder to receive
certain benefits under the Contract upon the death of the Participant. The
Beneficiary can be changed by the Contractholder as set forth in the Contract.
COMPANY -- Nationwide Life Insurance Company.
CONTRACT ANNIVERSARY -- An anniversary of the Date of Issue of the Contract.
CONTRACTHOLDER -- During the lifetime of the designated Annuitant and prior to
the Annuity Commencement Date, the Contractholder shall be the person so
designated in the Application or as subsequently changed. On and after the
Annuity Commencement Date, the Annuitant shall become the Contractholder. After
the death of the Annuitant, the Contractholder shall be the Beneficiary.
CONTRIBUTIONS -- THESE ARE amounts paid to the Company pursuant to the
Contracts in order to provide retirement income benefits.
PARTICIPANT -- This is an eligible employee, member, or other person who is
entitled to benefits under the Plan. Such persons are determined and reported
to the Company by the Contractholder.
PARTICIPANT ACCOUNT -- This is an account established by the Company for each
Participant in which all financial transactions occurring with respect to a
Participant under the Contract, other than the purchase and payment of an
annuity, are recorded.
PLAN -- The document referred to in the Contract Schedule as the Plan.
QUALIFIED PLANS -- These are retirement plans which receive favorable tax
treatment under the provisions of the Internal Revenue Code.
RETIRED PARTICIPANT -- A Participant who is receiving retirement income in the
form of an annuity.
VARIABLE ANNUITY -- An annuity providing for payments which vary in amount with
the investment experience of the Separate Account.
2
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<PAGE> 5
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<CAPTION>
PARTICIPANT TRANSACTION EXPENSES
<S> <C>
Maximum Deferred Sales Load (as a percentage of purchase payments) 7 %
------
Surrender Fees (as a percentage of surrender value) 7 %
------
Exchange Fee $ 15
-----
ANNUAL CONTRACT FEE $ 30
-----
ANNUAL EXPENSES
(as a percentage of average net assets)
Contract Maintenance Charge 1.30 %
-------
Total Annual Expenses 1.30 %
-------
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
If you surrender your contract at the end of
the applicable time period:
You would pay the following expenses
on a $1,000 investment, assuming
5% annual return on assets: $ 92 $ 139 $ 188 $ 231
---- ----- ----- -----
If you do not surrender your contract:
You would pay the following expenses
on a $1,000 investment, assuming
5% annual return on assets: $ 20 $ 62 $ 107 $ 231
---- ----- ----- -----
If you annuitize at the end of the applicable
time period:
You would pay the following expenses
on a $1,000 investment, assuming
5% annual return on assets: $ 92 $ 139 $ 188 $ 325
---- ----- ----- -----
</TABLE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
The purpose of the preceding table is to assist the Participant in
understanding the various costs and expenses that a Participant will bear
directly or indirectly when investing in the Contracts. The Deferred Sales
Load of not more than 7% is imposed only on Contributions made within 96
months of the date of withdrawal. No Deferred Sales Load is imposed if part
or all of a Participant's Account is used for purchase of an annuity,
redemption upon death, or transfer to a Companion Fixed Contract. The
Annual Contract Fee of not more than $30 is deducted from each
Participant's Account on each Contract Anniversary and upon cancellation of
all or part of a Participant's Account unless the cancellation is for the
purpose of purchasing an annuity or making a redemption upon death. The
Surrender Charge is a one-time charge deducted from the Participant's
Account upon the purchase of an annuity. In addition to the expenses shown
above, premium taxes may also be applicable, depending upon where the
Contract is sold. For a more detailed explanation of these expenses, see
"Charges And Other Deductions".
3
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<PAGE> 6
CONDENSED FINANCIAL INFORMATION
INCOME AND CAPITAL CHANGES PER ACCUMULATION UNIT*
<TABLE>
<CAPTION>
================================================================================================================
FROM FROM FROM FROM FROM
JAN. 1, 1985 JAN. 1, 1986 JAN. 1, 1987 JAN. 1, 1988 JAN. 1, 1989
TO TO TO TO TO
DEC. 31, 1985 DEC. 31, 1986 DEC. 31, 1987 DEC. 31, 1988 DEC. 31, 1989
================================================================================================================
<S> <C> <C> <C> <C> <C>
Unit value at beginning of
period 4.6253768 6.5259213 7.6185156 7.7663472 9.1559374
- ----------------------------------------------------------------------------------------------------------------
NET INCOME
Investment Income .2212053 .2141446 .2337846 .2546169 .4314503
- ----------------------------------------------------------------------------------------------------------------
Change to Separate Account
for expenses, taxes and
additions to surplus -0- -0- -0- -0- -0-
- ----------------------------------------------------------------------------------------------------------------
Net Income .2212053 .2141446 .2337846 .2546169 .4314503
- ----------------------------------------------------------------------------------------------------------------
CAPITAL CHANGES
Net realized capital gains
(losses) .7227749 1.1516375 .7980317 .8922013 1.0246383
- ----------------------------------------------------------------------------------------------------------------
Net unrealized capital gains
(losses) .9565643 (.2731878) (.8839849) .2427721 1.6822566
- ----------------------------------------------------------------------------------------------------------------
Unit Value at end of period 6.5259213 7.6185156 7.7663472 9.1559374 12.2942826
- ----------------------------------------------------------------------------------------------------------------
Number of Accumulation
Units outstanding at end of
period 2,124,305.21 1,985,195.92 1,844,372.64 1,644,078.96 1,526,288.77
- ----------------------------------------------------------------------------------------------------------------
Increase (decrease) in Unit
Value during period 41.09% 16.74% 1.94% 17.89% 34.27%
- ----------------------------------------------------------------------------------------------------------------
RATIOS
Expenses to average net
assets .125% .164% .239% .293% .246%
- ----------------------------------------------------------------------------------------------------------------
Net investment income to
average net assets 3.96% 2.81% 2.62% 3.20% 5.15%
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 32.1% 26.1% 23.8% 31.8% 28.6%
</TABLE>
All adjustments necessary to a fair statement of the results of such period
have been included.
Due to changes in the Contracts described in this Prospectus, the historical
data supplied above should not be relied upon for future trends and results.
*The product of the ending unit values and the number of Accumulation Units
will not balance to the total market value of the assets in the Separate
Account. The difference is accounted for by the fact that a portion of the
annuity reserve, and hence the net assets, of the Separate Account relate to
Contracts not described in this Prospectus.
(CONTINUED ON NEXT PAGE)
4
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<PAGE> 7
CONDENSED FINANCIAL INFORMATION
INCOME AND CAPITAL CHANGES PER ACCUMULATION UNIT* (CONTINUED)
<TABLE>
<CAPTION>
====================================================================================================================
FROM FROM FROM FROM FROM
JAN. 1, 1990 JAN. 1, 1991 JAN. 1, 1992 JAN. 1, 1993 JAN. 1, 1994
TO TO TO TO TO
DEC. 31, 1990 DEC. 31, 1991 DEC. 31, 1992 DEC. 31, 1993 DEC. 31, 1994
====================================================================================================================
<S> <C> <C> <C> <C> <C>
Unit value at beginning of
period 12.2942826 12.2965444 16.2373889 16.7112913 17.8516259
- --------------------------------------------------------------------------------------------------------------------
NET INCOME
Investment Income .6862452 .4278250 .4656912 .4480584 2.9687004
- --------------------------------------------------------------------------------------------------------------------
Change to Separate Account
for expenses, taxes and
additions to surplus -0- -0- -0- -0- -0-
- --------------------------------------------------------------------------------------------------------------------
Net Income .6862452 .4278250 .4656912 .4480584 2.9687004
- --------------------------------------------------------------------------------------------------------------------
CAPITAL CHANGES
Net realized capital gains
(losses) .2962199 1.1910187 .4577232 .4424591 .1158852
- --------------------------------------------------------------------------------------------------------------------
Net unrealized capital gains
(losses) (.9802034) 2.3220008 (.4495120) .2498171 (2.9348545)
- --------------------------------------------------------------------------------------------------------------------
Unit Value at end of period 12.2965444 16.2373889 16.7112913 17.8516259 18.0013570
- --------------------------------------------------------------------------------------------------------------------
Number of Accumulation
Units outstanding at end of
period 1,436,543.92 1,251,874.00 1,241,981.00 1,313,747.00 1,282,594.00
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Unit
Value during period .02% 32.05% 2.92% 6.82% .84%
- --------------------------------------------------------------------------------------------------------------------
RATIOS
Expenses to average net
assets .334% .225% .251% .239% .189%
- --------------------------------------------------------------------------------------------------------------------
Net investment income to
average net assets 3.24% 2.95% 2.60% 2.74% 2.83%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 15.1% 25.8% 9.10% 9.2% 2.1%
</TABLE>
All adjustments necessary to a fair statement of the results of such period
have been included.
Due to changes in the Contracts described in this Prospectus, the
historical data supplied above should not be relied upon for future trends
and results.
*The product of the ending unit values and the number of Accumulation Units
will not balance to the total market value of the assets in the Separate
Account. The difference is accounted for by the fact that a portion of the
annuity reserve, and hence the net assets, of the Separate account relate
to Contracts not described in this Prospectus.
5
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<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY
The Company is a stock life insurance company organized under the laws of
the State of Ohio in March, 1929. The Company is a member of the "Nationwide
Insurance Enterprise" with its home offices at One Nationwide Plaza, Columbus,
Ohio 43215.
The Company offers a complete line of life insurance, including annuities,
and accident and health insurance. It is admitted to do business in the
District of Columbia, Puerto Rico, the Virgin Islands and in all states.
THE SEPARATE ACCOUNT
The Separate Account, which was established pursuant to Ohio insurance law
on April 1, 1967, is administered and accounted for as part of the Company's
business. All contractual obligations arising under the Contracts (e.g., the
making of the payments provided for thereunder, the manner in which the amount
of those payments will be determined, and the promise that the payments will
continue for the lifetime of the Annuitant) will be general corporate
obligations of the Company. The Company will be responsible for the safekeeping
of the assets of the Separate Account.
The Separate Account will be legally segregated from the Company's other
assets, i.e., the assets of the Separate Account will not be subject to claims
of any persons except those investing in the Separate Account.
As explained below, the Contracts described in this Prospectus provide for
benefits that vary according to the investment results of a separate investment
portfolio. This portfolio is a Separate Account of the Company. This Prospectus
will be devoted primarily to a description of the manner of operation of the
Separate Account. The assets of the Separate Account will be held for the sole
benefit of the holders of, and persons entitled to benefits under, the
Contracts described in this Prospectus, and other variable contracts issued by
the Company which provide for the dollar amount of payments or values to vary
in order to reflect the investment results of the Separate Account. A
Participant has no voice in the investment policies of the Separate Account.
Except to the extent of their interest in the Separate Account, as
described in "Experience Credits", Participants in the Contracts offered herein
do not participate in the experience of the Company.
INVESTMENT OBJECTIVES AND POLICIES
The Separate Account is an open-end managed separate account of the
Company. It is a diversified portfolio of common stock, segregated from the
general assets of the Company. The objectives of the Company and its policy in
making investments for the Separate Account are as follows:
1. The composition of the investments held will be determined from the
long-term view as a prudent investor concerned with the
preservation and growth of his capital in relation to the growth of
the economy and the changing value of the dollar. Since earned
income and realized capital gains will be compounded through
reinvestment, account will be taken of the combination of current
income and the possibilities of capital appreciation.
2. The assets usually will be invested in a diversified portfolio of
equities which, for the foreseeable future, will be primarily
common stocks, with such changes as from time to time may be
advisable, to take into account changes in the outlook of
particular industries or companies. A relatively small percentage
of the assets may be held in the form of preferred stocks,
government bonds and corporate bonds or debentures, whether or not
convertible into stock or with stock warrants. A reserve of cash
and short-term debt securities may be held pending investment in
accordance with investment policies.
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<PAGE> 9
3. Purchases will be made for investment and not for trading
purposes. Generally, long-range performances will be emphasized
with minor concern for short-term market fluctuations, except to
the extent that such fluctuations may provide attractive buying or
selling levels for the portfolio. However, freedom of action is
reserved to dispose of any investment, however short a time held,
if its appreciation possibilities appear to have been
substantially realized, or if the market risks have become such as
to make its retention unwise. Furthermore, complete freedom is
retained to dispose of investments whether gains or losses are
thereby realized.
4. All investments made must be restricted to those authorized by the
laws of the State of Ohio in effect at the time such investments
are made, with respect to separate account investments.
5. Freedom of action is reserved to invest as much as 10% of the
assets in real estate.
6. The following practices will be prohibited: maintenance of a
"short" or a "margin" trading position in any security, commodity
trading, speculative trading in foreign exchange, the making of
loans of cash or of securities to officers or directors of the
Company, the purchase of securities of any type for the purpose of
thereby gaining control or influencing the management of any other
company, or engaging in underwriting the distribution of
securities.
With respect to item 4 of the above investment policy, the current
restrictions under Ohio law are as follows:
A) Except in the case of securities of investment companies
registered under the Investment Company Act of 1940, not
more than 10% of the amounts allocated to a separate
account and the accumulations therein shall be invested in
the stocks, notes, debentures, bonds, or other securities
of any one corporation or issuer.
B) Not more than 10% of the issued and outstanding voting
securities of any one corporation or issuer may be
acquired by all separate accounts of the insurer.
C) No security of any corporation which is a subsidiary of or
which is affiliated through stock ownership with the
insurer shall be allocated to any such account.
D) No investment or other asset in any separate account shall
be transferred to any other separate account or to the
general assets of the insurer and no investment among the
general assets of the insurer shall be transferred to any
such separate account unless:
(a) Such transfer is made solely:
(1) to establish a separate account or support
contract guarantees,
(2) to withdraw amounts no longer needed to
support guarantees, and
(b) Such transfer is of cash or securities having a
readily determinable market value or unless
(c) Such transfer is approved by the Superintendent of
Insurance.
In light of investment policy restrictions, neither the Company
nor the Separate Account intend to invest more than 25% of the value of
their respective assets in any one industry.
By investing in securities that are subject to financial and
market risk, the Separate Account is subject to great fluctuations in its
market value and involves the assumption of a higher degree of risk as
compared to a portfolio investing in government obligations or instruments
guaranteed by agencies of the U.S. Government.
7
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<PAGE> 10
MANAGEMENT
The Separate Account does not have a Board of Managers, but is managed by
the Investment Department of the Company. The Investment Department of the
Company acts as its own investment adviser. All individuals working in the
Investment Department are employees of the Company, and no investment adviser
fees or brokerage commissions are involved in the operation of the Separate
Account.
CHARGES AND OTHER DEDUCTIONS
The Contingent Deferred Sales Charge, Participant's Account Charge,
Contract Maintenance Charge, and Purchase Rate Charge are not deducted from a
Participant's Account maintained under the Nationwide Agents' Retirement Plan.
All of the following charges and deductions apply to other Plans:
(a) CONTINGENT DEFERRED SALES CHARGE
No deduction for a sales charge is made from Contributions to
these Contracts. However, the Contingent Deferred Sales Charge, described
below, when it is applicable, will be used to cover expenses relating to
the sale of the Contracts, including commissions paid to sales personnel,
the costs of sales literature, promotional activity, and other acquisition
expenses. The Company expects to recover most of its distribution costs
relating to the sale of these Contracts by this Contingent Deferred Sales
Charge. Any shortfall will be incurred by the Company. Gross commissions
paid on the sale of these Contracts are not more than 5% of Contributions.
If part or all of a Participant's Account is cancelled for any
reason other than purchase of an annuity, redemption upon death, or
transfer to a Companion Fixed Contract, the Company will deduct from the
Participant's Account a Contingent Deferred Sales Charge. This charge will
be stated in the Contract and will not be more than (i) total Contributions
made to this Contract and all Companion Fixed Contracts, on behalf of the
Participant, during the 96-month period preceding the date of cancellation,
or (ii) the amount cancelled, whichever is less, multiplied by 7%.
The amount of the Contingent Deferred Sales Charge will be reduced
when the sale of a Contract to a Plan results in savings of sales expenses.
Entitlement to a reduction in Contingent Deferred Sales Charges will be
determined by the Company in the following manner:
1. The number of Participants will be considered. Generally, the
sales expenses for a larger group are less than for a smaller
group because of the ability to cover a larger number of
Participants with fewer sales contacts.
2. The total amount of Contributions to be received from the Plan
will be considered. Per Contract sales expenses are likely to be
less on larger Contributions than on smaller ones.
3. The nature of the employee group covered by the Plan will be
considered. Certain types of employee groups are more likely to
continue Plan and Contract participation for longer periods than
are other groups. Such stability reduces the number of sales
contacts required; thus, sales expenses are reduced.
4. There may be other circumstances of which the Company is not
presently aware which could result in reduced sales expenses.
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<PAGE> 11
No Contingent Deferred Sales Charge will be assessed against any
Contribution made to Contracts issued by the Company prior to May 1, 1982,
and subsequently transferred to this class of Contracts. No Contingent
Deferred Sales Charge will be assessed when an annuity is purchased; the
Purchase Rate Charge is assessed.
(b) PARTICIPANT ACCOUNT CHARGE
Each year on the Contract Anniversary, the Company deducts a charge, not
to exceed $30, from each Participant Account. The Participant Account Charge
is to reimburse the Company for expenses incurred in maintaining the
Participant Accounts and reporting the values thereof to Participants. The
Participant Account Charge will also be deducted upon cancellation of all or
part of a Participant Account unless the cancellation is for the purpose of
purchasing an annuity or making a redemption upon death.
The Participant Account Charge may be reduced to the extent that the
Contractholder assumes responsibility for maintaining Participant Account
records and reporting values thereof to Participants.
The amount of the Participant Account Charge will be stated in the
Contract.
(c) CONTRACT MAINTENANCE CHARGE
A Contract Maintenance Charge will be deducted from each Participant
Account daily at an annual rate not to exceed 1.3% of the value of such
Participant Account. The amounts charged will be used to cover the Company's
expense incurred in administering the Contract, Separate Account, and Plan.
The Contract Maintenance Charge may be reduced to the extent that the
Contractholder assumes responsibility for Plan administration services.
Generally, these services include drafting Plan documents, preparation of
Plan descriptions for Participants, and completion of government filings and
reports.
The Contract Maintenance Charge will be stated in the Contract.
(d) PURCHASE RATE CHARGE
A Purchase Rate Charge of not more than 7% is charged against the
annuity purchase rates. The Purchase Rate Charge covers the Company's
expense of processing and paying annuities, calculating and reporting
amounts payable under various annuity forms, calculating and reporting
taxable income, and sales commissions paid on the purchase of an annuity
which are not more than 3% of the amount applied to purchase the annuity.
The Purchase Rate Charge may be reduced to the extent that sales
commissions are less than 3%. The charge may also be reduced to the extent
that the Contractholder assumes responsibility for calculating and reporting
amounts payable under various annuity forms, and calculating and reporting
taxable income.
The Purchase Rate Charge is a part of the purchase rate and is not
separately stated in the Contracts. It is a one-time charge deducted from
the Participant's Account upon the purchase of an annuity.
9
11 OF 75
<PAGE> 12
(e) PREMIUM TAXES
The Company will charge against the Contract value the amount of
any premium taxes levied by a state or any other government entity upon
annuity considerations received by the Company. To the best of the
Company's present knowledge, premium taxes currently imposed by certain
states range from 0% to 3.5%. The Company is currently deducting such taxes
from a Participant Account value at the time of annuitization, except in
those states which require such taxes to be paid during the accumulation
phase.
(f) FEDERAL INCOME TAXES AND STATE EXCISE TAXES
The operation of the Separate Account may result in taxable income
to the Company. The Company reserves the right to deduct from the Separate
Account an amount necessary to reimburse itself for all or a portion of its
federal income and state excise tax liability. Any deductions made will
occur when the tax is incurred.
The amount of tax which may be incurred by the Company cannot be
determined in advance and is subject to applicable federal and state laws
and regulations.
No charges other than those described above will be made under these
Contracts. If the amounts charged are in excess of allocated expenses, then
after provision for a surplus deemed sufficient to provide adequately for the
fulfillment of the Company's contractual obligations, the excess may be used to
provide additional benefits. (See "Experience Credits".) If the amounts charged
are insufficient to defray the expenses and to provide for the fulfillment of
the contractual obligations, the deficiency will be met out of the Company's
general surplus.
After the Contracts have been in effect, the charges, as well as other
Contract provisions, may be changed by the Company. (See "Additional
Contractual Obligations of the Company and Changes Which May Be Made Without
the Consent of the Contractholder, Participant, or Participating Employer".)
If the Plan permits, the Contractholder or an employer may pay, in addition
to Contributions, any or all of the expense charges directly to the Company. In
this event, the charges so paid will not be deducted from the Participant's
Account.
SURRENDER (REDEMPTION)
If the Plan permits, redemption of a Participant Account will be made (a)
upon the death of a Participant before an annuity is purchased, or (b) upon the
request of the Contractholder for the benefit of the Participant.
Upon the death of a Participant, the amount redeemed will be the dollar
value of the Participant Account (the Accumulation Units multiplied by the
Accumulation Unit Value on the date of redemption). The timing of the
redemption will be determined by the terms of the Plan, but not before the
Company's receipt of proof of death. Some Plans may permit the Beneficiary to
elect annuity payments in lieu of surrender. If a Beneficiary elects, the
Participant Account may be applied to purchase a Variable Annuity. (See
"Purchase Of Variable Annuity".)
Upon a request for surrender by the Contractholder for the benefit of a
Participant, all or a portion of a Participant Account will be redeemed usually
within 7 days of the Company's receipt of the request, by cancelling a number
of Accumulation Units in the Participant Account subject to any applicable
charges.
10
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<PAGE> 13
Restrictions and penalties are imposed on some Qualified Plan
withdrawals before specified conditions are met. Also, there are possible
adverse tax consequences resulting from withdrawals. Contractholders,
employers, and Participants are cautioned to consult a competent tax
advisor before requesting a withdrawal.
No redemption will be made after an annuity has been purchased.
The Company reserves the right to suspend or postpone the date of any
redemption beyond the usual 7-day period during any period (1) when the New
York Stock Exchange is closed, (2) when trading on the Exchange is
restricted, (3) when an emergency exists as a result of which disposal of
securities held in the Separate Account is not reasonably practicable or it
is not reasonably practicable to determine the value of the Separate
Account's net assets, or (4) during any other period when the Securities
and Exchange Commission, by order, so permits for the protection of
security holders; provided that applicable rules and regulations of the
Securities and Exchange Commission shall govern as to whether the
conditions prescribed in (2) and (3) exist.
ADDITIONAL CONTRACTUAL OBLIGATIONS OF THE COMPANY AND CHANGES
WHICH MAY BE MADE WITHOUT THE CONSENT OF THE CONTRACTHOLDER,
PARTICIPANT, OR PARTICIPATING EMPLOYER
The Contract does not contain a promise that the dollar value of a
Participant Account will be equal to or more than the sum of the
Contributions made to the Participant Account. The Contracts provide that
certain provisions cannot be changed during the first 5 years. These are:
the basis for crediting Accumulation Units, the basis for determining the
Accumulation Unit Value and the Annuity Unit Value, the tables of annuity
purchase rates, expense charges, and the basis for determining the amount
of single-sum payments and transfer payments. After the Contracts have been
in effect for 5 years, the Company reserves the right to make changes in
the amount of the charges and in the annuity purchase rate.
EXPERIENCE CREDITS
In the event that Participant Account Charges and Contract
Maintenance Charges made under this Contract accrue to the Company in
excess of an amount deemed necessary then at the sole discretion of the
Company's Board of Directors, such excess may be allocated to the Contract
by purchasing additional Accumulation Units and crediting such additional
units to the Participant Accounts. There have not been any Experience
Credits to date. The Company cannot offer any assurance that there will be
Experience Credits in the future.
GENERAL DESCRIPTION OF THE CONTRACTS
The Contracts described in this Prospectus are designed to fund
and provide benefits (which will vary in dollar amount) under Qualified
Plans. A Qualified Plan is a pension, profit sharing, or other retirement
plan which receives favorable tax treatment under the provisions of
sections 401 and 403(a) of the Internal Revenue Code. Generally, Plans are
maintained by employers for the benefit of eligible employees
("Participants") and their Beneficiaries.
11
13 OF 75
<PAGE> 14
THE ROLE OF THE CONTRACTS IN FUNDING AND PROVIDING RETIREMENT
INCOME PAYMENTS UNDER QUALIFIED PLANS
In an attempt to keep pace with the cost of living, the Contracts are
designed to provide retirement income that varies with changing economic
conditions. Under the Contracts, periodic payments do not remain fixed in
dollar amount, but vary according to the investment results of a designated
portfolio of securities. There is no assurance that the Contracts, either alone
or in conjunction with other means of providing retirement income, will
accomplish this purpose.
These Contracts provide for the accumulation of Contributions primarily in
common stocks to provide variable retirement income payments. The Company
offers, in addition to the Contracts, Companion Fixed Contracts, which are not
described in this Prospectus. Under all contracts, the Company assumes the
mortality risk. A significant difference, however, is that the Company assumes
the investment risk under the Companion Fixed Contracts, but not under the
Contracts described herein.
The mortality risk is that the actuarial estimate of the mortality rates
among Participants under the Contracts may prove higher than the mortality
actually experienced. Thus, under all contracts, the Company promises that the
annuity payments payable under such contracts will continue for the lifetimes
of the Participants. Under the Companion Fixed Contracts, the promised payments
are in a specified dollar amount per month. Under the Contracts described
herein, the promised payments will be equal to the varying value of a specified
number of Annuity Units per month, varying to reflect the investment results
obtained from the segregated portfolio of investments.
HOW ACCUMULATION UNITS ARE CREDITED
The minimum initial Contribution to a Participant Account is $250.00. There
are no minimum requirements for subsequent Contributions. The Accumulation Unit
is the basis on which records under the Contracts will be kept and the payments
thereunder determined. When a Contribution is made by or on behalf of a
Participant, 100% thereof will be credited to the Participant's Account in the
form of Accumulation Units.
The number of Accumulation Units credited will be determined by dividing
the amount credited by the Accumulation Unit Value for the date on which the
Accumulation Units are credited. Accumulation Units will be credited on the
Business Day coinciding with or next following the date the Contribution is
received by the Company. "Business Day" means any day on which the Company's
Home Office in Columbus, Ohio, and the New York Stock Exchange are both open
for business. Accumulation units will not be credited on the following
nationally recognized holidays: New Year's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Presidents' Day, Thanksgiving and Christmas.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value at the end of March, 1967, was fixed at $1.00.
The Accumulation Unit Value for any subsequent Business Day is determined by
multiplying what is known as the Accumulation Change Factor for that Business
Day by the Accumulation Unit Value for the preceding Business Day. The
Accumulation Change Factor for any Business Day reflects the investment results
of the Separate Account since the last Business Day. Accordingly, the
Accumulation Unit Value will go up or down each Business Day in accordance with
the investment results of the Separate Account. Market determination, the value
of the portfolio securities at the close of the New York Stock Exchange, is the
method used to value the Registrant's assets.
12
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<PAGE> 15
The factors taken into account in determining the investment
results of the Separate Account are investment income and realized and
unrealized capital gains and losses.
The Accumulation Unit Values shown below, for each quarter, were
calculated to reflect hypothetical investment results of the Separate
Account since March, 1975. While this period was one of generally rising
common stock prices, it also included some interim periods of substantial
market decline. It should not be assumed that the results shown are
representative of those that might be realized upon Contributions made
today and in the future. There is no assurance that favorable investment
results will be attained in the future. The Accumulation Unit Value is
likely to fall when common stock value declines generally.
<TABLE>
<CAPTION>
ACCUMULATION UNIT VALUES* AT THE END OF EACH QUARTER
<S> <C> <C> <C> <C> <C>
Mar. 1975 1.2323180 Dec. 1981 2.7659801 Sept. 1988 8.9607960
June 1975 1.3904027 Mar. 1982 2.6983907 Dec. 1988 9.1559374
Sept. 1975 1.2246980 June 1982 2.7121107 Mar. 1989 9.9636435
Dec. 1975 1.3423913 Sept. 1982 3.0397381 June 1989 10.6742854
Mar. 1976 1.5106830 Dec. 1982 3.4783376 Sept. 1989 11.9347701
June 1976 1.5671775 Mar. 1983 3.8214250 Dec. 1989 12.2942826
Sept. 1976 1.6226746 June 1983 4.1514343 Mar. 1990 11.7646683
Dec. 1976 1.6520855 Sept. 1983 4.2253097 June 1990 12.5345438
Mar. 1977 1.6014589 Dec. 1983 4.3025179 Sept. 1990 11.1707863
June 1977 1.6487669 Mar. 1984 4.2234741 Dec. 1990 12.2965444
Sept. 1977 1.6345287 June 1984 4.1987538 Mar. 1991 14.2006556
Dec. 1977 1.6612530 Sept. 1984 4.5821032 June 1991 14.0854417
Mar. 1978 1.6161771 Dec. 1984 4.6253768 Sept. 1991 14.5603900
June 1978 1.7508039 Mar. 1985 5.1569491 Dec. 1991 16.2373889
Sept. 1978 1.8934789 June 1985 5.6386079 Mar. 1992 15.3685232
Dec. 1978 1.8241798 Sept. 1985 5.5241146 June 1992 15.4486637
Mar. 1979 1.9317751 Dec. 1985 6.5259213 Sept. 1992 15.9783810
June 1979 2.0099303 Mar. 1986 7.5932573 Dec. 1992 16.7112913
Sept. 1979 2.1456834 June 1986 8.0905822 Mar. 1993 16.3132491
Dec. 1979 2.1093074 Sept. 1986 7.3220521 June 1993 16.6761553
Mar. 1980 2.0179971 Dec. 1986 7.6185156 Sept. 1993 16.9286930
June 1980 2.2449442 Mar. 1987 9.1073826 Dec. 1993 17.8516259
Sept. 1980 2.4343502 June 1987 9.4745614 Mar. 1994 17.0998701
Dec. 1980 2.5509427 Sept. 1987 9.9845837 June 1994 17.3439309
Mar. 1981 2.7120916 Dec. 1987 7.7663472 Sept. 1994 18.2996496
June 1981 2.7593172 Mar. 1988 8.3888862 Dec. 1994 18.0013570
Sept. 1981 2.5313853 June 1988 8.8571798
</TABLE>
*Hypothetical unit values if a Group Common Stock Variable Annuity Contract
had been issued March 31, 1975.
13
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<PAGE> 16
HISTORICAL TABLE SHOWING HYPOTHETICAL VALUES OF $1,000 DEPOSITED
TO A PARTICIPANT ACCOUNT EACH YEAR IF A GROUP COMMON STOCK
VARIABLE ANNUITY CONTRACT HAD BEEN ISSUED APRIL 1, 1967
<TABLE>
<CAPTION>
============================================================================================================================
Accumulated Value* Of
Contract Participant Deposits Account
Accumulated Maintenance Account Accumulated Less Expense On Date
Date Deposits Charge Charge Charges Charges Shown
============================================================================================================================
$1,000 Deposit Made April 1, 1967 and Each March 31 thereafter
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Apr. 1, 1967 $1,000.00 -0- -0- -0- 1,000.00 1,000.00
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1968 2,000.00 13.17 30.00 43.17 1,956.83 1,969.84
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1969 3,000.00 29.38 30.00 102.55 2,897.45 3,200.73
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1970 4,000.00 39.34 30.00 171.89 3,828.11 3,956.81
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1971 5,000.00 62.02 30.00 263.91 4,736.09 5,679.02
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1972 6,000.00 85.29 30.00 379.20 5,620.80 7,445.13
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1973 7,000.00 100.72 30.00 509.92 6,490.08 8,616.88
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1974 8,000.00 90.34 30.00 630.26 7,369.74 7,828.57
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1975 9,000.00 97.64 30.00 757.90 8,242.10 8,382.77
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1976 10,000.00 133.59 30.00 921.49 9,078.51 11,112.71
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1977 11,000.00 153.15 30.00 1,104.64 9,895.36 12,597.32
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1978 12,000.00 165.27 30.00 1,299.91 10,700.09 13,517.82
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1979 13,000.00 210.04 30.00 1,539.95 11,460.05 16,917.46
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1980 14,000.00 229.75 30.00 1,799.70 12,200.30 18,412.79
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1981 15,000.00 321.71 30.00 2,151.41 12,848.59 25,394.21
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1982 16,000.00 328.45 30.00 2,509.86 13,490.14 25,907.46
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1983 17,000.00 476.95 30.00 3,016.81 13,983.19 37,182.85
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1984 18,000.00 534.23 30.00 3,581.04 14,418.96 41,530.60
- ----------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1985 19,000.00 659.21 30.00 4,270.25 14,729.75 51,020.53
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*IN THE EVENT OF A REFUND TO A PARTICIPANT OR TRANSFER TO FUNDING SUCCESSOR,
THE VALUE IS REDUCED BY THE CONTINGENT DEFERRED SALES CHARGE.
(CONTINUED ON NEXT PAGE)
14
16 OF 75
<PAGE> 17
HISTORICAL TABLE SHOWING HYPOTHETICAL VALUES OF $1,000 DEPOSITED
TO A PARTICIPANT ACCOUNT EACH YEAR IF A GROUP COMMON STOCK
VARIABLE ANNUITY CONTRACT HAD BEEN ISSUED APRIL 1, 1967
(continued)
<TABLE>
<CAPTION>
==================================================================================================================================
Accumulated Value* Of
Contract Participant Deposits Account
Accumulated Maintenance Account Accumulated Less Expense Date On
Date Deposits Charge Charge Charges Charges Shown
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Mar. 31, 1986 20,000.00 976.64 30.00 5,276.89 14,723.11 75,117.59
----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1986 same -0- -0- -0- same 75,367.46
----------------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1987 21,000.00 1,171.21 30.00 6,478.10 14,521.90 89,895.15
----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1987 same -0- -0- -0- same 76,658.35
----------------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1988 22,000.00 1,076.46 30.00 7,584.56 14,415.44 82,696.72
----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1988 same -0- -0- -0- same 90,258.22
----------------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1989 23,000.00 1,275.15 30.00 8,889.71 14,110.29 97,913.62
----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1989 same -0- -0- -0- same 120,817.02
----------------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1990 24,000.00 1,515.52 30.00 10,435.23 13,564.77 115.066.93
----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1990 same -0- -0- -0- same 120,269.06
----------------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1991 25,000.00 1,841.97 30.00 12,307.20 12,692.80 139,850.04
----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1991 same -0- -0- -0- same 159,908.08
----------------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1992 26,000.00 1,961.31 30.00 14,268.51 11,731.49 148,431.81
----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1992 same -0- -0- -0- same 161,400.49
----------------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1993 27,000.00 2,060.85 30.00 16,359.36 10,640.64 156,465.27
----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1993 same -0- -0- -0- same 171,220.30
----------------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1994 28,000.00 2,144.67 30.00 18,534.03 9,465.97 162,835.39
----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1994 same -0- -0- -0- same 171,419.90
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*IN THE EVENT OF A REFUND TO A PARTICIPANT OR TRANSFER TO FUNDING SUCCESSOR,THE
VALUE IS REDUCED BY THE CONTINGENT DEFERRED SALES CHARGE.
15
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<PAGE> 18
PARTICIPANT'S ACCOUNT VALUE
The total number of Accumulation Units credited to a Participant's Account,
as of any date, multiplied by the Accumulation Unit Value less any applicable
charges and taxes constitutes the Participant Account Value as of such date.
There is no assurance that the value of any Participant interest in the
Contract will equal or exceed the Contributions made to the Participant
Account. The circumstances under which withdrawals from a Participant Account
are permitted are described under "Surrender (Redemption)".
TRANSFERS
A Contractholder may transfer a portion of such Contractholder's investment
in the Contract to a Companion Contract or to another investment option under
the Plan. Such transfers are permitted one time per year, so long as at least
$1,000 remains in the Contract on behalf of such Contractholder. The Company
will assess a $15 charge against the transferred amount.
Transfers to the Contracts from a Companion Contract can be made at 25% of
the value of such Companion Contract. If $500 or less would remain in the
Companion Contract after such transfer, the entire value of the Companion
Contract will be transferred to the Contracts.
The number, amount, and timing of transfers permitted to each Participant
are determined by the Plan under which he is covered. (See the Statement of
Additional Information.)
PURCHASE OF VARIABLE ANNUITY
When a Retired Participant wishes to have a Variable Annuity purchased to
provide retirement income payments under the Plan, written notice must be
mailed to the Company at its home office at the address on page 1 of this
Prospectus specifying the date on which annuity payments are to begin and the
form of annuity, furnishing proof of the Participant's date of birth and that
of any other person on whose life the continuation of payments may be
conditioned. The Contracts contain four standard options which may be selected
by a Participant: (1) Straight Life Annuity, (2) Life Annuity with Period
Certain, (3) Joint and Survivor Annuity, or (4) Annuity for a 10-year Period
Certain. Under the first option, the Variable Annuity will be paid monthly to
the Retired Participant during his or her lifetime. Under the second option,
the Variable Annuity will be paid monthly during the lifetime of the Retired
Participant, but with a minimum period of 10 years. If the Retired Participant
should die prior to the end of the 10-year period, the unpaid monthly annuity
payments for the remainder of the 10-year period will be payable to the
Beneficiary. If the Beneficiary is other than a natural person or is an estate,
the commuted value of the unpaid monthly annuity payments certain will be
payable in one sum. Under the third option, the Variable Annuity will be paid
monthly so long as either the Retired Participant or another designated
individual is living. Under the fourth option, the Variable Annuity will be
payable for a 10-year period. As explained below, the monthly annuity payments
will differ depending upon the option selected, in addition to varying with the
investment results of the Separate Account. Each option selected will have
varying advantages and disadvantages. Participants are urged to consult a
qualified tax advisor.
The basis for determining the amount of each monthly payment is the Annuity
Unit. Like the Accumulation Unit, the Annuity Unit has an Annuity Unit Value.
(See "Annuity Unit Value".) The Participant's Accumulation Units will be
converted into their equivalent in "Premium Units" by multiplying the number of
Accumulation Units by the ratio of the Accumulation Unit Value to the Annuity
Unit Value for the last Business Day of the second calendar month preceding the
date of conversion.
16
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<PAGE> 19
The Premium Units will be applied to purchase a Variable Annuity
in the form selected, with the first monthly payment made on the date on
which the Premium Units are so applied. The number of Annuity Units in each
monthly annuity payment will depend upon the number of Premium Units
applied and the appropriate annuity rate which is determined from tables
set forth in the Contracts, taking into account the option selected, and
the age of the Annuitant and any other designated individual. The dollar
amount of each monthly payment of the Variable Annuity will be equal to the
number of Annuity Units in each Variable Annuity payment multiplied by the
Annuity Unit Value for the second calendar month preceding the month in
which the payment is payable. The annuity rate tables for any particular
Contract are also subject to a percentage charge, which is made once, when
an annuity is purchased, and reduces the annuity purchase rates. (See
"Purchase Rate Charge".) As disclosed previously, these tables may be
changed after the Contracts have been in effect for 5 years.
ANNUITY UNIT VALUE
The Annuity Unit Value for March, 1967, was fixed at $1.00. The
Annuity Unit Value for any subsequent month is determined by multiplying
the Annuity Change Factor for that month by the Annuity Unit Value for the
preceding month. The Annuity Change Factor for any month reflects the
extent to which the investment return of the Separate Account for that
month differs from an assumed effective investment return at the rate of 3
1/2% per year. Accordingly, the Annuity Unit Value will go up or down each
month depending upon whether the actual effective investment return in that
month is at an annual rate greater or less than the 3 1/2% assumption.
If the 3 1/2% investment increment assumption were changed to some
other assumption, such as 2% or 5% (with an equal change in the 3 1/2%
assumption used to determine the Annuity Change Factor), this would result
in changing both the amount of the initial payment and the manner in which
the subsequent payments would vary. A higher assumption would mean a higher
initial payment, but a more slowly rising series of subsequent payments (or
a more rapidly falling series, if there were adverse investment results). A
lower assumption would have the opposite effect. If a Contractholder wishes
to adopt an assumption different from the 3 1/2% assumption described
above, the Company is willing to issue a Contract with an assumption which
is higher or lower than the 3 1/2% assumption.
17
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<PAGE> 20
ANNUITY UNIT VALUES* AT THE END OF EACH QUARTER
<TABLE>
<S> <C> <C> <C> <C> <C>
Mar. 1975 .9739300 Dec. 1981 1.7925811 Sept. 1988 5.0188653
June 1975 1.0908130 Mar. 1982 1.7359408 Dec. 1988 5.0916250
Sept. 1975 .9537858 June 1982 1.7305361 Mar. 1989 5.4933407
Dec. 1975 1.0377989 Sept. 1982 1.9229774 June 1989 5.8356153
Mar. 1976 1.1593476 Dec. 1982 2.1815971 Sept. 1989 6.4688440
June 1976 1.1938913 Mar. 1983 2.3762545 Dec. 1989 6.6076882
Sept. 1976 1.2271288 June 1983 2.5593550 Mar. 1990 6.2688926
Dec. 1976 1.2402329 Sept. 1983 2.5825910 June 1990 6.6219279
Mar. 1977 1.1934020 Dec. 1983 2.6072616 Sept. 1990 5.8517062
June 1977 1.2196532 Mar. 1984 2.5374442 Dec. 1990 6.3862002
Sept. 1977 1.2002773 June 1984 2.5009891 Mar. 1991 7.2568733
Dec. 1977 1.2109632 Sept. 1984 2.7059580 June 1991 7.1903870
Mar. 1978 1.1694732 Dec. 1984 2.7081212 Sept. 1991 7.3691860
June 1978 1.2576072 Mar. 1985 2.9934951 Dec. 1991 8.0818179
Sept. 1978 1.3501253 June 1985 3.2450574 Mar. 1992 7.6455389
Dec. 1978 1.2911817 Sept. 1985 3.1519399 June 1992 7.6195924
Mar. 1979 1.3573209 Dec. 1985 3.6916616 Sept. 1992 7.8133694
June 1979 1.4018878 Mar. 1986 4.2586598 Dec. 1992 8.1017796
Sept. 1979 1.4856076 June 1986 4.4987245 Mar. 1993 7.8410758
Dec. 1979 1.4497808 Sept. 1986 4.0365210 June 1993 7.9468659
Mar. 1980 1.3768583 Dec. 1986 4.1639886 Sept. 1993 7.9981244
June 1980 1.5204793 Mar. 1987 4.9351179 Dec. 1993 8.3619441
Sept. 1980 1.6367040 June 1987 5.0901180 Mar.1994 7.9412180
Dec. 1980 1.7025496 Sept. 1987 5.3181853 June 1994 7.9855824
Mar. 1981 1.7968159 Dec. 1987 4.1012392 Sept. 1994 8.3040963
June 1981 1.8147096 Mar. 1988 4.3916141 Dec. 1994 8.1469286
Sept. 1981 1.6526309 June 1988 5.0036811
</TABLE>
*Hypothetical unit values if a Group Common Stock Variable Annuity Contract had
been issued March 31, 1975.
FEDERAL INCOME TAX STATUS
The Company does not make any guarantee regarding the tax status of any
Contract or any transaction involving the Contracts.
Section 72 of the Internal Revenue Code ("Code") governs taxation of
annuities in general. That section sets forth specific rules for annuities
purchased by Qualified Plans (including corporate pension and profit sharing
plans and retirement plans for proprietorships and partnerships). The Contracts
are designed for use with Qualified Plans. The tax rules applicable to
Participants in such Plans vary according to the terms and conditions of the
Plan itself. Therefore, no attempt is made herein to provide more than general
information about the use of the Contracts with the various types of Plans.
Participants under such plans as well as Contractholders, employers, and
Beneficiaries are cautioned that the rights of any person to any benefits under
such Plans are subject to the terms and conditions of the Plans themselves
regardless of the terms and conditions of the Contracts issued in connection
therewith.
The Tax Reform Act of 1986 and subsequent legislation changed some of the
rules regarding the tax treatment of distributions from Qualified Plans and of
annuities purchased by Qualified Plans. You should consult your financial
consultant or legal or tax advisor to discuss in detail your particular tax
situation and the use of the Contracts. For additional information regarding
eligibility, limitations on permissible amounts of purchase payments, and tax
consequences on distribution from Qualified Plans, the purchasers of the
Contracts should seek competent tax advice.
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<PAGE> 21
The Code permits the rollover of most distributions from Qualified
Plans to other Qualified Plans, Individual Retirement Accounts, or
Individual Retirement Annuities. Distributions which may not be rolled
over are those which are:
1. one of a series of substantially equal annual (or more
frequent) payments made: a) over the life (or life
expectancy) of the employee, b) the joint lives (or joint
life expectancies) of the employee and the employee's
designated beneficiary, or c) for a specified period of
ten years or more, and
2. a required minimum distribution.
Any eligible rollover distribution will be subject to federal tax
withholding at a 20% rate unless the distribution is transferred directly
to a Qualified Plan, Individual Retirement Account or Individual Retirement
Annuity.
Contracts issued in Puerto Rico are subject to rules which vary
from those described above. If considering the purchase of a contract in
connection with a plan affected by Puerto Rican law, you should seek legal
counsel.
LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary
routine litigation incidental to the business to which the Company and the
Separate Account are parties or to which any of their property is the
subject.
<TABLE>
<CAPTION>
TABLE OF CONTENTS OF STATEMENT
OF ADDITIONAL INFORMATION
<S> <C>
General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Advisory and Other Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Brokerage Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Purchase and Pricing of Securities Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Calculation of Yield Quotations of Money Market Sub-Accounts . . . . . . . . . . . . . . . . . . . . . . . . 4
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
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<PAGE> 22
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1995
GROUP COMMON STOCK VARIABLE ANNUITY CONTRACTS
ISSUED BY
NATIONWIDE LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the Prospectus
and should be read in conjunction with the Prospectus dated May 1, 1995. The
Prospectus may be obtained from Nationwide Life Insurance Company by writing P.
O. Box 16766, One Nationwide Plaza, Columbus, Ohio 43216, or calling
1-800-545-4730.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Advisory and Other Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Brokerage Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Purchase and Pricing of Securities Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Calculation of Yield Quotations of Money Market Sub-Accounts . . . . . . . . . . . . . . . . . . . . . . 4
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
GENERAL INFORMATION AND HISTORY
Separate Account No. 1 is a separate investment account of Nationwide Life
Insurance Company ("Company"). The Company is a member of the Nationwide
Insurance Enterprise and all of the Company's common stock is owned by
Nationwide Corporation. Nationwide Corporation is a holding company. All of
its common stock is held by Nationwide Mutual Insurance Company (95.2%) and
Nationwide Mutual Fire Insurance Company (4.8%).
INVESTMENT OBJECTIVES AND POLICIES
The objectives of the Company and its policy in making investments for the
Separate Account are as follows:
1. The composition of the investments held will be determined from
the long-term view as a prudent investor concerned with the
preservation and growth of his capital in relation to the growth
of the economy and the changing value of the dollar. Since earned
income and realized capital gains will be compounded through
reinvestment, account will be taken of the combination of current
income and the possibilities of capital appreciation.
1
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<PAGE> 23
2. The assets usually will be invested in a diversified
portfolio of equities which, for the foreseeable future,
will be primarily common stocks, with such changes as from
time to time may be advisable, to take into account
changes in the outlook of particular industries or
companies. A relatively small percentage of the assets may
be held in the form of preferred stocks, government bonds
and corporate bonds or debentures, whether or not
convertible into stock or with or without stock warrants.
A reserve of cash and short-term debt securities may be
held pending investment in accordance with investment
policies.
3. Purchases will be made for investment and not for trading
purposes. Generally, long-range performances will be
emphasized with minor concern for short-term market
fluctuations, except to the extent that such fluctuations
may provide attractive buying or selling levels for the
portfolio. However, freedom of action is reserved to
dispose of any investment, however short a time held, if
its appreciation possibilities appear to have been
substantially realized, or if the market risks have become
such as to make its retention unwise. Furthermore,
complete freedom is retained to dispose of investments
whether gains or losses are thereby realized.
4. All investments made must be restricted to those
authorized by the laws of the State of Ohio in effect at
the time such investments are made, with respect to
separate account investments.
5. Freedom of action is reserved to invest as much as 10% of
the assets in real estate.
6. The following practices will be prohibited: maintenance of
a "short" or a "margin" trading position in any security,
commodity trading, speculative trading in foreign
exchange, the making of loans of cash or of securities to
officers or directors of the Company, the purchase of
securities of any type for the purpose of thereby gaining
control or influencing the management of any other
company, or engaging in underwriting the distribution of
securities.
With respect to item 4 of the above investment policy, the current
restrictions under Ohio law are as follows:
A) Except in the case of securities of investment companies
registered under the Investment Company Act of 1940, not
more than 10% of the amounts allocated to a separate
account and the accumulation therin shall be invested in
the stocks, notes, debentures, bonds, or other securities
of any one corporation or issuer.
B) Not more than 10% of the issued and outstanding voting
securities of any one corporation or issuer may be
acquired by all separate accounts of the insurer.
C) No security of any corporation which is a subsidiary of or
which is affiliated through stock ownership with the
insurer shall be allocated to any such account.
D) No investment or other asset in any separate account shall
be transferred to any other separate account or to the
general assets of the insurer and no investment among the
general assets of the insurer shall be transferred to any
such separate account unless:
(a) Such transfer is made solely:
(1) to establish a separate account or
support Contract guarantees,
(2) to withdraw amounts no longer needed to
support guarantees, and
(b) Such transfer is of cash or securities having a
readily determinable market value or unless
(c) Such transfer is approved by the Superintendent
of Insurance.
2
23 OF 75
<PAGE> 24
In light of investment policy restrictions, neither the Company nor the
Separate Account intend to invest more than 25% of the value of their
respective assets in any one industry.
During fiscal years 1994, 1993 and 1992, the portfolio turnover rates were
2.1%, 9.2% and 9.1%, respectively. A portfolio turnover rate of 100% would
occur if all the portfolio securities were replaced in one fiscal year. The
turnover rates experienced in the years ending December 31, 1994, December 31,
1993 and December 31, 1992, were based upon the replacement of existing stocks
with stocks of higher investment quality, and buying and selling to take
advantage of favorable market conditions.
MANAGEMENT
The Separate Account is managed by the Investment Department of the
Company, and all involved individuals are employees of the Company. There is no
Board of Managers associated with the Separate Account.
INVESTMENT ADVISORY AND OTHER SERVICES
The Company acts as its own investment adviser and pays no fees for
investment advisory services to any non-affiliated entity. All individuals
involved in any advisory capacity are full-time employees of the Company
without other affiliation.
The financial statements and schedule included herein have been included
herein in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, Two Nationwide Plaza, Columbus, Ohio 43215, and
upon the authority of said firm as experts in accounting and auditing.
BROKERAGE ALLOCATION
Transactions in portfolio securities are not conducted through brokerage
concerns, therefore no brokerage commissions are paid in such transactions. The
full-time employees of the Investment Department of the Company constantly
evaluate the relative values of the investments of the Separate Account.
Investments of the Separate Account are placed where, in the judgment of the
Investment Department, the best price and executions can be obtained. The
objective results of this process are measured quarterly by the Company against
the investment objectives of the Separate Account. Although brokers are not
used for purposes of investment advice, brokers are used to place orders once
the Investment Department determines its purchases.
PURCHASE AND PRICING OF SECURITIES BEING OFFERED
The Contracts will be sold by licensed insurance agents in the states where
the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
("NASD").
A Participant under a Plan which utilizes the Contracts and one or more
Companion Fixed Contracts as the funding media will, at the outset, inform the
Company of the proportion of his Contributions that are to be paid under the
Contracts. The remainder, less any amount applied toward insurance coverage,
will be credited under the Companion Fixed Contracts. This proportion may be
changed, as new Contributions are made, by notice to the Company.
3
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<PAGE> 25
Transfers of amounts accumulated under the Contracts may be made
to the Companion Fixed Contracts. Similarly, transfers may be made into the
Contracts from a Companion Fixed Contract. The number, amount, and timing
of such transfers permitted to each Participant are determined by the Plan
under which he is covered. However, the Company reserves the right not to
issue a Contract in any case where, in its judgment, the transfer
provisions of the Plan appear to the Company to be inconsistent with
long-term retirement objectives. The transfer arrangement would permit a
Participant to adjust the balance between the Contracts and Companion Fixed
Contract balances to take account of changes in the Participant's financial
circumstances. It might also enable the Participant to split contributions
among the Contracts during the period before retirement, but at retirement
to elect to receive retirement income under the Contracts in the form of
either a Variable Annuity or a Fixed-Dollar Annuity, or any reasonable
combination of both. If the Plan so provides, a Participant may elect to
receive his retirement benefits in the form of a single lump sum payment. A
single lump sum payment could create possible adverse tax consequences.
Some employers may not wish their employees to have this much flexibility.
If so, they may design their Plans accordingly. Any request to transfer
part of a Participant's Account under the Contracts which would leave a
balance less than $500.00 will be treated as a request for a complete
transfer.
The Contracts give the Contractholder or a participating employer
the right to notify the Company that future Contributions under the Plan
involved are to be paid instead to another funding agency (such as a
trustee or another insurance company), in which case no further
Contributions will be due or payable on behalf of the Participants affected
thereby unless otherwise agreed to by the Company and the Contractholder.
Following the receipt of such a notice, the value of the accumulations of
affected Participants will continue to reflect the investment results of
the Separate Account until they are paid to the persons entitled thereto in
accordance with the Plan and the Contract.
The Contracts also provide that the Contractholder or a
participating employer may transfer the value of the accumulation of all
the Participants under a Plan to another funding agency. Such transfer
payments will commence on a Transfer Date, which is the later to occur of:
(a) the first Business Day of the calendar month specified in the request,
or (b) the first Business Day of the first calendar month which begins at
least thirty days after receipt of the request by the Company. The Company
reserves the right, if such a request is made by a Contractholder, to
transfer, in any one-month period commencing on the Transfer Date, no more
than $1,000,000 or 5% of the value on the Transfer Date of all Accumulation
Units under the Contract on that date, whichever is greater. It may be
advisable to consult tax counsel before making such a transfer. The amount
of any transfer payment will be equal to the product of the number of
Accumulation Units allocated for transfer and the Accumulation Unit Value
as of the Business Day on which any transfer is made, less the Contingent
Deferred Sales Charge.
UNDERWRITERS
The Company is the principal underwriter of the Contracts which
are offered continuously. No underwriting commissions are paid.
CALCULATION OF YIELD QUOTATIONS OF MONEY MARKET SUB-ACCOUNTS
The Separate Account does not include Money Market Sub-Accounts.
ANNUITY PAYMENTS
See "Purchase of Variable Annuity" and "Annuity Unit Value" in the
Prospectus.
4
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<PAGE> 26
INDEPENDENT AUDITORS' REPORT
The Board of Directors and the Contract Owners of
Nationwide Life Insurance Company
Separate Account No. 1:
We have audited the accompanying statement of assets, liabilities and contract
owners' equity of Nationwide Life Insurance Company Separate Account No. 1,
including the schedule of portfolio investments, as of December 31, 1994, and
the related statements of operations and changes in contract owners' equity for
each of the years in the three-year period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
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. Our
procedures included confirmation of securities owned as of December 31, 1994,
by correspondence with the custodian. 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 Nationwide Life Insurance
Company Separate Account No. 1 as of December 31, 1994, and the results of its
operations and its changes in contract owners' equity for each of the years in
the three-year period then ended in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 24, 1995
5
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<PAGE> 27
NATIONWIDE LIFE INSURANCE
COMPANY SEPARATE ACCOUNT NO. 1
Statement of Assets, Liabilities
and Contract Owners' Equity
December 31, 1994
<TABLE>
<S> <C>
Assets:
Investments in securities at market value, per accompanying schedule of
investments (cost $21,177,826) $ 31,252,801
Cash 5,622
Dividends receivable 54,350
Other 168,051
----------
Total assets 31,480,824
----------
Liabilities:
Accounts payable to Nationwide Life Insurance Company 151,509
----------
Total liabilities 151,509
----------
Contract owners' equity (note 2) $ 31,329,315
==========
</TABLE>
See accompanying notes to financial statements.
27 OF 75
<PAGE> 28
NATIONWIDE LIFE INSURANCE
COMPANY SEPARATE ACCOUNT NO. 1
Statements of Operations and Changes
in Contract Owners' Equity
Years ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Investment activity:
Dividends and interest $ 917,469 897,268 828,530
---------- ---------- ----------
Gain (loss) on investments:
Realized (note 3) 35,814 886,055 814,354
Unrealized (907,009) 500,276 (799,745)
---------- ---------- ----------
Net (loss) gain on investments (871,195) 1,386,331 14,609
---------- ---------- ----------
Net investment activity 46,274 2,283,599 843,139
---------- ---------- ----------
Equity transactions:
Deposits received from contract owners 2,408,097 3,161,689 3,192,958
Contract withdrawals and transfers (4,413,536) (3,609,176) (3,432,851)
Annuity payments (171,071) (58,335) (69,079)
Adjustment to maintain annuity reserves 195,021 (108,899) 81,927
---------- ---------- ----------
Net equity transactions (1,981,489) (614,721) (227,045)
---------- ---------- ----------
Expenses--
Contract charges (note 4) (183,863) (267,045) (227,481)
---------- ---------- ----------
Net change in contract owners' equity (2,119,078) 1,401,833 388,613
Contract owners' equity:
At beginning of year 33,448,393 32,046,560 31,657,947
---------- ---------- ----------
At end of year $ 31,329,315 33,448,393 32,046,560
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
28 OF 75
<PAGE> 29
NATIONWIDE LIFE INSURANCE
COMPANY SEPARATE ACCOUNT NO. 1
Notes to Financial Statements
December 31, 1994, 1993 and 1992
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) ACCOUNTING ENTITY
Effective April 1, 1967, Separate Account No. 1 (Separate
Account) of Nationwide Life Insurance Company (NLIC) was
established in accordance with the laws of the State of
Ohio. The Separate Account is the accounting entity
wherein all segregated account transactions of contract
owners are to be reflected. This account contains the
contract owners' equity and reflects the variable annuity
reserves of annuitants receiving variable annuity payments.
The assets and liabilities of the Separate Account are
clearly identifiable and distinguished from the other assets
and liabilities of NLIC.
(B) ANNUITY CONTRACTS
As of December 31, 1994, the Separate Account has 7 variable
annuity contracts, of which 5 are of the type described
in this prospectus. In addition to these contracts, there
are 89 other annuity contracts which provide for fixed-dollar
annuity benefits. During the accumulation phase, no
guarantees are made regarding amounts which will ultimately
be available in the form of annuity payments to participants
under the fixed or variable contracts.
(C) SECURITY VALUATION, TRANSACTIONS AND RELATED INVESTMENT INCOME
Common stocks are valued at market prices which are based on
published quotations on December 31, 1994. Short-term
investments through Nationwide Cash Management Company
(NCMC), an affiliate of NLIC, are valued at amortized cost,
which approximates market. Security transactions are
accounted for on the trade date (date the order to buy or
sell is executed) and dividend income is recorded on the
ex-dividend date.
(D) FEDERAL INCOME TAXES
Under current IRC statutes, no federal income taxes are
provided on the earnings or appreciation of funds held
for qualified plans in the Separate Account. Taxes are the
responsibility of the annuitant receiving payments.
(Continued)
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<PAGE> 30
2
NATIONWIDE LIFE INSURANCE
COMPANY SEPARATE ACCOUNT NO. 1
Notes to Financial Statements, Continued
(2) ACCUMULATION AND EQUITY UNITS
The number of accumulation and equity units, reserve value per unit
and related amount of contract owners' equity in annuity reserve
(including $419,979 for annuities in the payout phase) as of
December 31, 1994 are:
<TABLE>
<CAPTION>
Reserve Contract owners'
Accumulation Equity value equity in
units units per unit* annuity reserve
----- ----- -------- ---------------
<S> <C> <C> <C> <C>
Fixed-dollar contracts:
100% reserve --- 225,491 17.9004484 $ 4,036,390
95% reserve --- 88,855 17.0053350 1,511,009
Other --- 160,956 15.9954068 2,574,556
Variable-dollar contracts:
HR-10 1,282,594 --- 18.0013570 23,088,432
Other 7,039 --- 16.8956187 118,928
--------- ------ ----------- ----------
$ 31,329,315
==========
</TABLE>
*Reserve value per unit represents redemption value.
(3) INVESTMENT GAINS
The net realized gain on investments was calculated on the basis of
specific security identification:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Considerations $ 5,888,186 7,297,679 7,149,889
Cost (5,852,372) (6,411,624) (6,335,535)
----------- ---------- ----------
Net realized gain on investments $ 35,814 886,055 814,354
=========== ========== ==========
</TABLE>
(4) CONTRACT CHARGES
Contracts participating in the Separate Account currently
provide for the following contract charges to cover such
expenses as administrative costs and other expenses incurred by NLIC
for administering the Separate Account. These charges may be
deducted from participants' contracts or paid directly to NLIC by
participants:
(a) Fixed-dollar contracts provide for periodic
charges for expenses established for each
contract.
(Continued)
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<PAGE> 31
3
NATIONWIDE LIFE INSURANCE
COMPANY SEPARATE ACCOUNT NO. 1
Notes to Financial Statements, Continued
(b) Variable-dollar contracts issued prior to
May 1, 1982 provide for: (i) a
percentage of each participant's contributions
to be used to cover expenses (including
commissions of the sales representatives) and
contingencies (the percentage is 5% for
participants whose employers adopted the plan
prior to May 1, 1973 and 6 1/2% for other
participants); (ii) a daily expense charge at
the effective annual rate of 0.5% of each
participant's account balance; and (iii) an
annual charge of not more than $25 for the
first year of participation and $10
thereafter.
(c) Variable-dollar contracts issued on or
after May 1, 1982 provide for: (i) a
contingent deferred sales charge not to exceed
7% of total contributions during the 96-month
period preceding the date of withdrawal; (ii)
a contract maintenance charge at the effective
annual rate of 1.3% of each participant's
account; and (iii) an annual charge not to
exceed $30 per each participant's account.
(5) RELATED PARTY TRANSACTIONS
In 1982, the Separate Account entered into an agreement with NCMC, an
affiliate, under which NCMC acts as a common agent in handling
the purchase and sale of short-term securities for the respective
accounts of the participants. The amount of Separate Account funds
invested in NCMC was $2,063,096 as of December 31, 1994, and is
included in investments in the accompanying financial statements.
31 OF 75
<PAGE> 32
NATIONWIDE LIFE INSURANCE
COMPANY SEPARATE ACCOUNT NO. 1
Schedule of Portfolio Investments
December 31, 1994
<TABLE>
<CAPTION>
Number Market
Name of issuer and title of issue of shares Cost(1) value
--------------------------------- --------- ---- ------
<S> <C> <C> <C>
COMMON STOCKS (93.4%)
BROADCASTING (4.9%)
Capital Cities/ABC, Inc. 10,000 $ 241,875 852,500
CBS, Inc. 3,500 132,006 193,375
Tele-Communications, Inc., Class A 21,900 331,325 476,325
------ ---------- ---------
35,400 705,206 1,522,200
------ ---------- ---------
BUILDING MATERIALS (2.9%)
Vulcan Materials Co. 18,000 87,908 911,250
------ ---------- ---------
18,000 87,908 911,250
------ ---------- ---------
CHEMICAL (7.4%)
Avery Dennison Corporation 5,900 120,609 209,450
IMC Global, Inc. 11,400 586,973 498,750
Monsanto Company 7,500 308,100 528,750
Morton International, Inc. 37,500 459,873 1,068,750
------ ---------- ---------
62,300 1,475,555 2,305,700
------ ---------- ---------
DRUGS AND HOSPITAL SUPPLY (7.8%)
Baxter International, Inc. 1,600 45,869 45,200
Bristol-Myers Squibb Company 9,000 257,293 520,875
Caremark International, Inc. 400 4,635 6,850
Pfizer Incorporated 2,500 179,266 193,125
Schering-Plough Corporation 11,500 304,698 851,000
Werner-Lambert Company 10,900 474,463 839,300
------ ---------- ---------
35,900 1,266,224 2,456,350
------ ---------- ---------
FINANCIAL SERVICES (11.2%)
Chubb Corporation 20,400 587,381 1,578,450
Citicorp 13,000 574,665 537,875
Corestates Financial Corp. 15,600 363,700 405,600
Keycorp 3,620 96,500 90,500
National City Corporation 22,000 353,375 569,250
NBD Bankcorp Incorporated 11,250 150,266 307,969
------ ---------- ---------
85,870 2,125,887 3,489,644
------ ---------- ---------
</TABLE>
- -----------------
(1) Also represents cost for federal income tax purposes. (Continued)
32 OF 75
<PAGE> 33
2
NATIONWIDE LIFE INSURANCE
COMPANY SEPARATE ACCOUNT NO. 1
Schedule of Portfolio Investments, Continued
<TABLE>
<CAPTION>
Number Market
Name of issuer and title of issue of shares Cost(1) Value
--------------------------------- --------- ---- ------
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED):
FOOD AND BEVERAGES (12.5%)
Anheuser-Busch Companies, Inc. 12,400 $ 517,967 630,850
Kellogg Company 14,700 373,586 854,438
Pepsico, Inc. 16,000 405,770 580,000
Philip Morris Companies, Inc. 5,600 169,003 322,000
The Quaker Oats Company 36,600 950,234 1,125,450
Ralcorp Holdings, Inc. 2,433 39,479 54,134
Ralston-Continental Baking Group 1,460 15,636 5,475
Ralston-Ralston Purina Group 7,300 297,989 325,762
------ ----------- ---------
96,493 2,769,664 3,898,109
------ ----------- ---------
HOUSEHOLD PRODUCTS (7.0%)
Avon Products, Inc. 11,000 503,535 657,250
The Gillette Company 12,100 426,849 905,988
Procter & Gamble Co. 10,200 432,384 632,400
------ ----------- ---------
33,300 1,362,768 2,195,638
------ ----------- ---------
MISCELLANEOUS (8.5%)
Alco Standard Corporation 11,200 591,920 702,800
Mattel, Inc. 9,690 60,451 243,461
Minnesota Mining & Mfg. Co. 13,800 630,184 736,575
The Singer Company 33,000 761,337 977,625
------ ----------- ---------
67,690 2,043,892 2,660,461
------ ----------- ---------
NONFERROUS METALS (1.8%)
Phelps Dodge Corporation 9,000 289,327 556,875
------ ----------- ---------
9,000 289,327 556,875
------ ----------- ---------
OIL (10.2%)
Mobil Corporation 8,000 554,780 674,000
Schlumberger Limited 10,000 557,660 503,750
Texaco, Inc. 24,000 1,247,051 1,437,000
Unocal Corporation 21,400 490,335 583,150
------ ----------- ---------
63,400 2,849,826 3,197,900
------ ----------- ---------
PAPER AND PAPER PRODUCTS (3.8%)
Temple-Inland, Inc. 24,900 454,425 1,123,612
Union Camp Corporation 1,600 67,320 75,400
------ ----------- ---------
26,500 521,745 1,199,012
------ ----------- ---------
</TABLE>
- -----------------
(1) Also represents cost for federal income tax purposes. (Continued)
33 OF 75
<PAGE> 34
3
NATIONWIDE LIFE INSURANCE
COMPANY SEPARATE ACCOUNT NO. 1
Schedule of Portfolio Investments, Continued
<TABLE>
<CAPTION>
Number Market
Name of issuer and title of issue of shares Cost(1) Value
--------------------------------- --------- ---- ------
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED):
PRINTING AND PUBLISHING (11.4%)
American Greetings Corp., Class A 48,000 $ 739,936 1,296,000
Dun & Bradstreet Corporation 4,400 175,682 242,000
Gannett Co., Inc. 12,000 405,748 639,000
Gibson Greetings, Inc. 30,000 663,125 442,500
Knight-Ridder, Inc. 10,000 381,919 505,000
The Times Mirror Co., Class C 12,514 255,691 392,627
The Times Mirror Co., Series A 1,514 34,129 47,502
------- --------- ---------
118,428 2,656,230 3,564,629
------- --------- ---------
RETAIL TRADE (1.2%)
The Kroger Company 16,300 289,864 393,237
------- --------- ---------
16,300 289,864 393,237
------- --------- ---------
TRANSPORTATION EQUIPMENT (1.7%)
Trinity Industries, Inc. 16,350 249,689 515,025
------- --------- ---------
16,350 249,689 515,025
------- --------- ---------
TRUCKING AND SHIPPING ( .2%)
Carolina Freight Corporation 5,200 181,948 50,050
------- --------- ---------
5,200 181,948 50,050
------- --------- ---------
UTILITIES--TELEPHONE ( .9%)
Bell Atlantic Corporation 5,500 238,997 273,625
------- --------- ---------
5,500 238,997 273,625
------- --------- ---------
Total common stocks 695,631 19,114,730 29,189,705
------- ---------- ----------
SHORT-TERM SECURITIES (6.6%)
Nationwide Cash Management Company
Participation 2,063,096 2,063,096
------------ ----------
TOTAL INVESTMENTS $ 21,177,826 31,252,801
============ ==========
</TABLE>
See accompanying independent auditors' report.
- ----------------------
(1) Also represents cost for federal income tax purposes.
34 OF 75
<PAGE> 35
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Nationwide Life Insurance Company:
We have audited the accompanying consolidated balance sheets of Nationwide
Life Insurance Company (a wholly owned subsidiary of Nationwide
Corporation) and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of income, shareholder's equity and cash
flows for each of the years in the three-year period ended December 31,
1994. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
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.
Participating insurance and the related surplus are discussed in note 13.
The Company and its counsel are of the opinion that the ultimate ownership
of the participating surplus in excess of the contemplated equitable
policyholder dividends belongs to the shareholder. The accompanying
consolidated financial statements are presented on such basis.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Nationwide Life Insurance Company and subsidiaries as of December 31, 1994
and 1993, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1994, in
conformity with generally accepted accounting principles.
As discussed in note 2 to the consolidated financial statements, in 1994
the Company adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities.
In 1993, the Company adopted the provisions of SFAS No. 109, Accounting for
Income Taxes and SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions.
KPMG Peat Marwick LLP
Columbus, Ohio
February 27, 1995
35 OF 75
<PAGE> 36
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Balance Sheets
December 31, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Assets 1994 1993
------ ------------ ------------
<S> <C> <C>
Investments (notes 5, 8 and 9):
Securities available-for-sale, at fair value:
Fixed maturities (cost $8,318,865 in 1994) $ 8,045,906 -
Equity securities (cost $18,373 in 1994; $8,263 in 1993) 24,713 16,593
Fixed maturities held-to-maturity, at amortized cost (fair value $3,602,310
in 1994; $10,886,820 in 1993) 3,688,787 10,120,978
Mortgage loans on real estate 4,222,284 3,871,560
Real estate 252,681 253,831
Policy loans 340,491 315,898
Other long-term investments 63,914 118,490
Short-term investments (note 14) 131,643 41,797
------------ ------------
16,770,419 14,739,147
------------ ------------
Cash 7,436 21,835
Accrued investment income 220,540 190,886
Deferred policy acquisition costs 1,064,159 811,944
Deferred Federal income tax 36,515 -
Other assets 790,603 636,161
Assets held in Separate Accounts (note 8) 12,222,461 9,006,388
------------ ------------
$31,112,133 25,406,361
============ ============
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims (notes 6 and 8) 16,321,461 14,092,255
Policyholders' dividend accumulations 338,058 322,686
Other policyholder funds 72,770 71,959
Accrued Federal income tax (note 7):
Current 13,126 12,294
Deferred - 31,659
------------ ------------
13,126 43,953
------------ ------------
Other liabilities 235,778 217,952
Liabilities related to Separate Accounts (note 8) 12,222,461 9,006,388
------------ ------------
29,203,654 23,755,193
------------ ------------
Shareholder's equity (notes 3, 4, 7 and 13):
Capital shares, $1 par value. Authorized 5,000 shares, issued and
outstanding 3,815 shares 3,815 3,815
Paid-in additional capital 622,753 422,753
Unrealized gains (losses) on securities available-for-sale, net of adjustment to
deferred policy acquisition costs of $82,525 ($0 in 1993) and net of deferred (119,668) 6,747
Federal income tax benefit of $64,425 ($1,583 expense in 1993)
Retained earnings 1,401,579 1,217,853
------------ ------------
1,908,479 1,651,168
------------ ------------
Commitments and contingencies (notes 9 and 16)
$31,112,133 25,406,361
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
36 OF 75
<PAGE> 37
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Income
Years ended December 31, 1994, 1993 and 1992
(000's omitted)
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Revenues (note 17):
Traditional life insurance premiums $ 209,538 215,715 226,888
Accident and health insurance premiums 324,524 312,655 430,009
Universal life and investment product policy charges 239,021 188,057 148,464
Net investment income (note 5) 1,289,501 1,204,426 1,120,157
Net ceded commissions from disposition of credit life and
credit accident and health business (note 12) - - 27,115
Realized gains (losses) on investments (notes 5 and 14) (16,384) 113,673 (19,315)
----------- ----------- -----------
2,046,200 2,034,526 1,933,318
----------- ----------- -----------
Benefits and expenses:
Benefits and claims 1,279,763 1,236,906 1,319,735
Provision for policyholders' dividends on participating
policies (note 13) 46,061 53,189 61,834
Amortization of deferred policy acquisition costs 94,744 102,134 99,197
Other operating costs and expenses 352,402 329,396 321,993
----------- ----------- -----------
1,772,970 1,721,625 1,802,759
----------- ----------- -----------
Income before Federal income tax and cumulative
effect of changes in accounting principles 273,230 312,901 130,559
----------- ----------- -----------
Federal income tax (note 7):
Current expense 79,847 75,124 47,402
Deferred expense (benefit) 9,657 31,634 (13,660)
----------- ----------- -----------
89,504 106,758 33,742
----------- ----------- -----------
Income before cumulative effect of changes in
accounting principles 183,726 206,143 96,817
Cumulative effect of changes in accounting principles,
net of tax (note 3) - 5,365 -
----------- ----------- -----------
Net income $ 183,726 211,508 96,817
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
37 OF 75
<PAGE> 38
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1994, 1993 and 1992
(000's omitted)
<TABLE>
<CAPTION>
Unrealized
gains (losses)
Paid-in on securities Total
Capital additional available-for- Retained shareholder's
shares capital sale, net earnings equity
--------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1992:
Balance, beginning of year $ 3,815 311,753 96,048 933,179 1,344,795
Dividends paid to shareholder - - - (5,846) (5,846)
Net income - - - 96,817 96,817
Unrealized losses on equity
securities, net of deferred
Federal income tax - - (5,524) - (5,524)
--------- --------- ------------ ------------ ------------
Balance, end of year $ 3,815 311,753 90,524 1,024,150 1,430,242
========= ========= ============ ============ ============
1993:
Balance, beginning of year 3,815 311,753 90,524 1,024,150 1,430,242
Capital contributions - 111,000 - - 111,000
Dividends paid to shareholder - - - (17,805) (17,805)
Net income - - - 211,508 211,508
Unrealized losses on equity
securities, net of deferred
Federal income tax - - (83,777) - (83,777)
--------- --------- ------------ ------------ ------------
Balance, end of year $ 3,815 422,753 6,747 1,217,853 1,651,168
========= ========= ============ ============ ============
1994:
Balance, beginning of year 3,815 422,753 6,747 1,217,853 1,651,168
Capital contribution - 200,000 - - 200,000
Net income - - - 183,726 183,726
Adjustment for change in
accounting for certain investments
in debt and equity securities, net
of adjustment to deferred policy - - 216,915 - 216,915
acquisition costs and deferred
Federal income tax (note 3)
Unrealized losses on securities
available-for-sale, net of
adjustment to deferred policy
acquisition costs and deferred
Federal income tax - - (343,330) - (343,330)
--------- --------- ------------ ------------ ------------
Balance, end of year $ 3,815 622,753 (119,668) 1,401,579 1,908,479
========= ========= ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
38 OF 75
<PAGE> 39
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Cash Flows
Years ended December 31, 1994, 1993 and 1992
(000's omitted)
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 183,726 211,508 96,817
Adjustments to reconcile net income to net cash provided by
operating activities: (264,434) (191,994) (177,928)
Capitalization of deferred policy acquisition costs
Amortization of deferred policy acquisition costs 94,744 102,134 99,197
Amortization and depreciation 6,207 11,156 5,607
Realized losses (gains) on invested assets, net 15,949 (113,648) 19,092
Deferred Federal income tax benefit (2,166) (6,006) (13,105)
Increase in accrued investment income (29,654) (4,218) (11,518)
(Increase) decrease in other assets (112,566) (549,277) 6,132
Increase in policyholder account balances 1,038,641 509,370 19,087
Increase in policyholders' dividend accumulations 15,372 17,316 18,708
Increase (decrease) in accrued Federal income tax payable 832 16,838 (15,723)
Increase in other liabilities 17,826 26,958 73,512
Other, net (19,303) (11,745) (10,586)
----------- ----------- -----------
Net cash provided by operating activities 945,174 18,392 109,292
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 579,067 - -
Proceeds from sale of securities available-for-sale 247,876 247,502 27,844
Proceeds from maturity of fixed maturities held-to-maturity 516,003 1,192,093 1,030,397
Proceeds from sale of fixed maturities - 33,959 123,422
Proceeds from repayments of mortgage loans on real estate 220,744 146,047 259,659
Proceeds from sale of real estate 46,713 23,587 22,682
Proceeds from repayments of policy loans and
sale of other invested assets 134,998 59,643 99,189
Cost of securities available-for-sale acquired (2,569,672) (12,550) (12,718)
Cost of fixed maturities held-to-maturity acquired (675,835) (2,016,831) (2,687,975)
Cost of mortgage loans on real estate acquired (627,025) (475,336) (654,403)
Cost of real estate acquired (15,962) (8,827) (137,843)
Policy loans issued and other invested assets acquired (118,012) (76,491) (97,491)
----------- ----------- -----------
Net cash used in investing activities (2,261,105) (887,204) (2,027,620)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from capital contributions 200,000 111,000 -
Dividends paid to shareholder - (17,805) (5,846)
Increase in universal life and investment product account balances 3,640,958 2,249,740 2,468,236
Decrease in universal life and investment product account balances (2,449,580) (1,458,504) (575,180)
----------- ----------- -----------
Net cash provided by financing activities 1,391,378 884,431 1,887,210
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 75,447 15,619 (31,118)
Cash and cash equivalents, beginning of year 63,632 48,013 79,131
----------- ----------- -----------
Cash and cash equivalents, end of year $ 139,079 63,632 48,013
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
39 OF 75
<PAGE> 40
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
(000's omitted)
(1) Organization and Description of Business
Nationwide Life Insurance Company (NLIC) is a wholly owned subsidiary of
Nationwide Corporation (Corp.). Wholly-owned subsidiaries of NLIC
include Financial Horizons Life Insurance Company (FHLIC), West Coast
Life Insurance Company (WCLIC), National Casualty Company and
subsidiaries (NCC), Nationwide Financial Services, Inc. (NFS), and
effective December 31, 1994, Employers Life Insurance Company of Wausau
and subsidiary (ELICW). NLIC and its subsidiaries are collectively
referred to as "the Company."
NLIC, FHLIC, WCLIC and ELICW are life and accident and health insurers
and NCC is a property and casualty insurer. The Company is licensed in
all 50 states, the District of Columbia, the Virgin Islands and Puerto
Rico. The Company offers a full range of life, health and annuity
products through exclusive agents and other distribution channels and is
subject to competition from other insurers throughout the United
States. The Company is subject to regulation by the Insurance
Departments of states in which it is licensed, and undergoes periodic
examinations by those departments.
The following is a description of the most significant risks facing
life and health insurers and how the Company mitigates those risks:
Legal/Regulatory Risk is the risk that changes in the legal or
regulatory environment in which an insurer operates will create
additional expenses not anticipated by the insurer in pricing its
products. That is, regulatory initiatives designed to reduce insurer
profits, new legal theories or insurance company insolvencies through
guaranty fund assessments may create costs for the insurer beyond those
recorded in the consolidated financial statements. The Company
mitigates this risk by offering a wide range of products and by
operating throughout the United States, thus reducing its exposure to
any single product or jurisdiction, and also by employing underwriting
practices which identify and minimize the adverse impact of this risk.
Credit Risk is the risk that issuers of securities owned by the Company
or mortgagors on mortgage loans on real estate owned by the Company
will default or that other parties, including reinsurers, which owe the
Company money, will not pay. The Company minimizes this risk by
adhering to a conservative investment strategy, by maintaining sound
reinsurance and credit and collection policies and by providing for any
amounts deemed uncollectible.
Interest Rate Risk is the risk that interest rates will change and cause
a decrease in the value of an insurer's investments. This change
in rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent that
liabilities come due more quickly than assets mature, an insurer would
have to borrow funds or sell assets prior to maturity and potentially
recognize a gain or loss.
(2) Summary of Significant Accounting Policies
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) which
differ from statutory accounting practices prescribed or permitted by
regulatory authorities. See note 4.
In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the date of the consolidated
financial statements and revenues and expenses for the period. Actual
results could differ significantly from those estimates.
The estimates susceptible to significant change are those used in
determining the liability for future policy benefits and claims and
those used in determining valuation allowances for mortgage loans on
real estate and real estate. Although some variability is inherent in
these estimates, management believes the amounts provided are adequate.
40 OF 75
<PAGE> 41
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
(a) Consolidation Policy
The December 31, 1994, 1993 and 1992 consolidated financial statements
include the accounts of NLIC and its wholly owned subsidiaries FHLIC,
WCLIC, NCC and NFS. The December 31, 1994 consolidated balance sheet
also includes the accounts of ELICW, which was acquired by NLIC
effective December 31, 1994. See Note 14. All significant
intercompany balances and transactions have been eliminated.
(b) Valuation of Investments and Related Gains and Losses
Prior to January 1, 1994, the Company classified fixed maturities in
accordance with the then existing accounting standards, and
accordingly, fixed maturity securities were carried at amortized cost,
adjusted for amortization of premium or discount, since the Company
had both the ability and intent to hold those securities until
maturity. Equity securities were carried at fair value with the
unrealized gains and losses, net of deferred Federal income tax,
reported as a separate component of shareholder's equity.
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 115 - Accounting for
Certain Investments in Debt and Equity Securities (SFAS 115). SFAS
115 requires fixed maturities and equity securities to be classified
as either held-to-maturity, available-for-sale, or trading. The
Company has no trading securities. The Company adopted SFAS 115 as of
January 1, 1994, with no effect on consolidated net income. See note
3 regarding the effect on consolidated shareholder's equity.
Fixed maturity securities are classified as held-to-maturity when the
Company has the positive intent and ability to hold the securities to
maturity and are stated at amortized cost. Fixed maturity securities
not classified as held-to-maturity and all equity securities are
classified as available-for-sale and are stated at fair value, with
the unrealized gains and losses, net of adjustments to deferred policy
acquisition costs and deferred Federal income tax, reported as a
separate component of shareholder's equity. The adjustment to
deferred policy acquisition costs represents the change in
amortization of deferred policy acquisition costs that would have been
required as a charge or credit to operations had such unrealized
amounts been realized.
Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based on a
review by portfolio managers. Loans in foreclosure and loans
considered in-substance foreclosed as of the balance sheet date are
placed on non-accrual status and written down to the fair value of the
existing property to derive a new cost basis. Real estate is carried
at cost less accumulated depreciation and valuation allowances. Other
long-term investments are carried on the equity basis, adjusted for
valuation allowances.
Realized gains and losses on the sale of investments are determined on
the basis of specific security identification. Estimates for
valuation allowances and other than temporary declines are included in
realized gains and losses on investments.
In May, 1993, the FASB issued Statement of Financial Accounting
Standards No. 114 - Accounting by Creditors for Impairment of a
Loan(SFAS 114). SFAS 114, which was amended by Statement of Financial
Accounting Standards No. 118 - Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosurein October, 1994,
requires the measurement of impaired loans be based on the present
value of expected future cash flows discounted at the loan's effective
interest rate or, as a practical expedient, at the loan's observable
market price or the fair value of the collateral if the loan is
collateral dependent. The impact on the consolidated financial
statements of adopting SFAS 114 as amended is not expected to be
material. Previously issued consolidated financial statements shall
not be restated. The Company will adopt SFAS 114 as amended in 1995.
41 OF 75
<PAGE> 42
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
(c) Revenues and Benefits
Traditional Life Insurance Products: Traditional life insurance
products include those products with fixed and guaranteed premiums and
benefits and consist primarily of whole life, limited-payment life,
term life and certain annuities with life contingencies. Premiums for
traditional life insurance products are recognized as revenue when due
and collected. Benefits and expenses are associated with earned
premiums so as to result in recognition of profits over the life of
the contract. This association is accomplished by the provision for
future policy benefits and the deferral and amortization of policy
acquisition costs.
Universal Life and Investment Products: Universal life products
include universal life, variable universal life and other
interest-sensitive life insurance policies. Investment products
consist primarily of individual and group deferred annuities,
annuities without life contingencies and guaranteed investment
contracts. Revenues for universal life and investment products
consist of cost of insurance, policy administration and surrender
charges that have been earned and assessed against policy account
balances during the period. Policy benefits and claims that are
charged to expense include benefits and claims incurred in the period
in excess of related policy account balances and interest credited to
policy account balances.
Accident and Health Insurance: Accident and health insurance premiums
are recognized as revenue over the terms of the policies. Policy
claims are charged to expense in the period that the claims are
incurred.
(d) Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions, certain
expenses of the policy issue and underwriting department and certain
variable agency expenses have been deferred. For traditional life and
individual health insurance products, these deferred acquisition costs
are predominantly being amortized with interest over the premium
paying period of the related policies in proportion to the ratio of
actual annual premium revenue to the anticipated total premium
revenue. Such anticipated premium revenue was estimated using the
same assumptions as were used for computing liabilities for future
policy benefits. For universal life and investment products, deferred
policy acquisition costs are being amortized with interest over the
lives of the policies in relation to the present value of estimated
future gross profits from projected interest margins, cost of
insurance, policy administration and surrender charges. For years in
which gross profits are negative, deferred policy acquisition costs
are amortized based on the present value of gross revenues. Beginning
January 1, 1994, deferred policy acquisition costs are adjusted to
reflect the impact of unrealized gains and losses on fixed maturity
securities available-for-sale. See note 2(b).
(e) Separate Accounts
Separate Account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. The investment income and gains or losses of
these accounts accrue directly to the contractholders. The activity
of the Separate Accounts is not reflected in the consolidated
statements of income and cash flows except for the fees the Company
receives for administrative services and risks assumed.
(f) Future Policy Benefits
Future policy benefits for traditional life and individual health
policies have been calculated using a net level premium method based
on estimates of mortality, morbidity, investment yields and
withdrawals which were used or which were being experienced at the
time the policies were issued, rather than the assumptions prescribed
by state regulatory authorities. See note 6.
Future policy benefits for annuity policies in the accumulation phase,
universal life and variable universal life policies have been
calculated based on participants' contributions plus interest credited
less applicable contract charges.
Future policy benefits and claims for group long-term disability
policies are the present value (primarily discounted at 5.5%) of
amounts not yet due on reported claims and an estimate of amounts to
be paid on incurred but unreported claims. The impact of reserve
discounting is not material. Future policy benefits and claims on
other group health policies are not discounted.
42 OF 75
<PAGE> 43
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
(g) Participating Business
Participating business represents approximately 45% (48% in 1993 and
1992) of the Company's ordinary life insurance in force, 72% (72% in
1993; 71% in 1992) of the number of policies in force, and 41% (45% in
1993 and 1992) of life insurance premiums. The provision for
policyholder dividends is based on current dividend scales. Future
dividends are provided for ratably in future policy benefits based on
dividend scales in effect at the time the policies were issued.
Dividend scales are approved by the Board of Directors.
Income attributable to participating policies in excess of
policyholder dividends is accounted for as belonging to the
shareholder. See note 13.
(h) Federal Income Tax
NLIC, FHLIC, WCLIC and NCC file a consolidated Federal income tax
return with Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Corp. Through 1994, ELICW filed a consolidated Federal
income tax return with Employers Insurance of Wausau A Mutual Company.
Beginning in 1995, ELICW will file a separate Federal income tax
return.
In 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 -Accounting for Income Taxes, which required a
change from the deferred method of accounting for income tax of APB
Opinion 11 to the asset and liability method of accounting for income
tax. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under this
method, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when necessary to
reduce the deferred tax assets to the amounts expected to be realized.
Prior to 1993, the Company applied the deferred method of accounting
for income tax which recognized deferred income tax for income and
expense items that are reported in different years for financial
reporting purposes and income tax purposes using the tax rate
applicable for the year of calculation. Under the deferred method,
deferred tax is not adjusted for subsequent changes in tax rates. See
note 7.
The Company has reported the cumulative effect of the change in method
of accounting for income tax in the 1993 consolidated statement of
income. See note 3.
(i) Reinsurance Ceded
Reinsurance premiums ceded and reinsurance recoveries on benefits and
claims incurred are deducted from the respective income and expense
accounts. Assets and liabilities related to reinsurance ceded are
reported on a gross basis.
(j) Cash Equivalents
For purposes of the consolidated statements of cash flows, the Company
considers all short-term investments with original maturities of three
months or less to be cash equivalents.
(k) Reclassification
Certain items in the 1993 and 1992 consolidated financial statements
have been reclassified to conform to the 1994 presentation.
43 OF 75
<PAGE> 44
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
(3) Changes in Accounting Principles
Effective January 1, 1994, the Company changed its method of
accounting for certain investments in debt and equity securities in
connection with the issuance of a new accounting standard by the FASB
as described in Note 2(b). As of January 1, 1994, the company
classified fixed maturity securities with amortized cost and fair
value of $6,593,844 and $7,024,736, respectively, as
available-for-sale and recorded the securities at fair value.
Previously, these securities were recorded at amortized cost. The
effect as of January 1, 1994 has been recorded as a direct credit to
shareholder's equity as follows:
<TABLE>
<S> <C>
Excess of fair value over amortized cost of fixed maturity
securities available-for-sale $ 430,892
Adjustment to deferred policy acquisition costs (97,177)
Deferred Federal income tax (116,800)
---------
$ 216,915
=========
</TABLE>
During 1993, the Company adopted accounting principles in connection
with the issuance of two accounting standards by the FASB. The effect
as of January 1, 1993, the date of adoption, has been recognized in
the 1993 consolidated statement of income as the cumulative effect of
changes in accounting principles, as follows:
<TABLE>
<S> <C>
Asset/liability method of recognizing income tax (note 7) $ 26,344
Accrual method of recognizing postretirement benefits other
than pensions (net of tax benefit of $11,296), (note 11) (20,979)
---------
Net cumulative effect of changes in accounting principles $ 5,365
=========
</TABLE>
(4) Basis of Presentation
The consolidated financial statements have been prepared in accordance
with GAAP. Annual Statements for NLIC and FHLIC, WCLIC, ELICW and
NCC, filed with the Department of Insurance of the State of Ohio,
California Department of Insurance, Wisconsin Insurance Department and
Michigan Bureau of Insurance, respectively, are prepared on the basis
of accounting practices prescribed or permitted by such regulatory
authorities. Prescribed statutory accounting practices include a
variety of publications of the National Association of Insurance
Commissioners (NAIC), as well as state laws, regulations and general
administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The Company has
no material permitted statutory accounting practices.
The following reconciles the statutory net income of NLIC as reported
to regulatory authorities to the net income as shown in the
accompanying consolidated financial statements:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Statutory net income $ 76,532 185,943 33,812
Adjustments to restate to the basis of GAAP:
Consolidating statutory net income of subsidiaries 14,350 19,545 21,519
Increase in deferred policy acquisition costs, net 167,166 89,860 78,731
Future policy benefits (76,310) (70,640) (63,355)
Deferred Federal income tax (expense) benefit (9,657) (31,634) 13,660
Equity in earnings of affiliates 1,013 7,121 4,618
Valuation allowances and other than temporary
declines accounted for directly in surplus 6,275 (6,638) 3,402
Interest maintenance reserve (7,332) 13,754 7,588
Cumulative effect of changes in accounting principles, net of tax - 5,365 -
Other, net 11,689 (1,168) (3,158)
-------- -------- --------
Net income per accompanying consolidated
statements of income $183,726 211,508 96,817
======== ======== ========
</TABLE>
44 OF 75
<PAGE> 45
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
The following reconciles the statutory capital shares and surplus of
NLIC as reported to regulatory authorities to the shareholder's equity
as shown in the accompanying consolidated financial statements:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Statutory capital shares and surplus $1,262,861 992,631 647,307
Add (deduct) cumulative effect of adjustments:
Deferred policy acquisition costs 1,064,159 811,944 722,084
Nonadmitted assets and furniture and equipment charged to
income in the year of acquisition, net of accumulated
depreciation 16,120 22,573 15,712
Asset valuation reserve 153,387 105,596 138,727
Interest maintenance reserve 18,843 21,069 7,315
Future policy benefits (310,302) (238,231) (167,591)
Deferred Federal income tax, including effect of changes in
accounting principles in 1993 36,515 (31,659) (82,724)
Cumulative effect of change in accounting principles for
postretirement benefits other than pensions, gross - (32,275) -
Difference between amortized cost and fair value of fixed
maturity securities available-for-sale, gross (272,959) - -
Other, net (60,145) (480) 149,412
---------- ---------- ----------
Shareholder's equity per accompanying consolidated
balance sheets $1,908,479 1,651,168 1,430,242
========== ========== ==========
</TABLE>
(5) Investments
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturities $ 674,346 - -
Equity securities 550 7,230 6,949
Fixed maturities held-to-maturity 193,009 800,255 754,876
Mortgage loans on real estate 376,783 364,810 334,769
Real estate 40,280 39,684 27,410
Short-term 6,990 5,080 7,298
Other 42,831 33,832 30,717
---------- ---------- ----------
Total investment income 1,334,789 1,250,891 1,162,019
Less investment expenses 45,288 46,465 41,862
---------- ---------- ----------
Net investment income $1,289,501 1,204,426 1,120,157
========== ========== ==========
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale and fixed maturities held-to-maturity
follows for the years ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ (703,851) - -
Equity securities (1,990) (128,837) (9,195)
Fixed maturities held-to-maturity (421,427) 223,392 17,774
----------- ---------- ----------
$(1,127,268) 94,555 8,579
=========== ========== ==========
</TABLE>
45 OF 75
<PAGE> 46
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
An analysis of realized gains (losses) on investments by investment
type follows for the years ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Realized on disposition of investments:
Securities available-for-sale:
Fixed maturities $(13,720) - -
Equity securities 1,427 129,728 7,215
Fixed maturities - 21,159 13,399
Mortgage loans on real estate (16,130) (17,763) (30,334)
Real estate and other 5,765 (12,813) (12,997)
---------- ---------- ----------
(22,658) 120,311 (22,717)
---------- ---------- ----------
Valuation allowances:
Securities available-for-sale:
Fixed maturities 6,600 - -
Fixed maturities - (934) 1,792
Mortgage loans on real estate (4,332) (10,478) (5,969)
---------- ---------- ----------
Real estate and other 4,006 4,774 7,579
---------- ---------- ----------
6,274 (6,638) 3,402
---------- ---------- ----------
$(16,384) 113,673 (19,315)
========== ========== ==========
</TABLE>
The amortized cost and estimated fair value of securities
available-for-sale and fixed maturities held-to-maturity were as
follows as of December 31, 1994:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Securities available-for-sale
-----------------------------
Fixed maturities:
US Treasury securities and obligations of US
government corporations and agencies $ 393,156 1,794 (18,941) 376,009
Obligations of states and political subdivisions 2,202 55 (21) 2,236
Debt securities issued by foreign governments 177,910 872 (9,205) 169,577
Corporate securities 4,201,738 50,405 (128,698) 4,123,445
Mortgage-backed securities 3,543,859 18,125 (187,345) 3,374,639
---------- -------- --------- ---------
Total fixed maturities 8,318,865 71,251 (344,210) 8,045,906
Equity securities 18,373 6,636 (296) 24,713
---------- -------- --------- ---------
$8,337,238 77,887 (344,506) 8,070,619
========== ======== ========== =========
Fixed maturity securities held-to-maturity
------------------------------------------
Obligations of states and political subdivisions $ 11,613 92 (255) 11,450
Debt securities issued by foreign governments 16,131 111 (39) 16,203
Corporate securities 3,661,043 34,180 (120,566) 3,574,657
---------- -------- --------- ---------
$3,688,787 34,383 (120,860) 3,602,310
========== ======== ========== =========
</TABLE>
46 OF 75
<PAGE> 47
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
The amortized cost and estimated fair value of investments of fixed
maturity securities were as follows as of December 31, 1993:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
----------- ---------- -------- ----------
<S> <C> <C> <C> <C>
US Treasury securities and obligations of US
government corporations and agencies $ 287,738 18,204 (392) 305,550
Obligations of states and political subdivisions 16,519 2,700 (5) 19,214
Debt securities issued by foreign governments 137,092 7,719 (1,213) 143,598
Corporate securities 6,819,355 647,778 (15,648) 7,451,485
Mortgage-backed securities 2,860,274 121,721 (15,022) 2,966,973
----------- ------- -------- ----------
$10,120,978 798,122 (32,280) 10,886,820
=========== ======= ======== ==========
</TABLE>
As of December 31, 1993 the net unrealized gain on equity securities,
before providing for deferred Federal income tax, was $8,330,
comprised of gross unrealized gains of $8,345 and gross unrealized
losses of $15.
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale and fixed maturity securities
held-to-maturity as of December 31, 1994, by contractual maturity, are
shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
---------- ----------
<S> <C> <C>
Fixed maturity securities available-for-sale
--------------------------------------------
Due in one year or less $ 294,779 294,778
Due after one year through five years 2,553,825 2,490,886
Due after five years through ten years 1,382,311 1,327,089
Due after ten years 544,091 558,514
---------- ----------
4,775,006 4,671,267
Mortgage-backed securities 3,543,859 3,374,639
---------- ----------
$8,318,865 8,045,906
========== ==========
Fixed maturity securities held-to-maturity
------------------------------------------
Due in one year or less $ 333,517 333,000
Due after one year through five years 1,953,179 1,942,260
Due after five years through ten years 1,080,069 1,013,083
Due after ten years 322,022 313,967
---------- ----------
$3,688,787 3,602,310
========== ==========
</TABLE>
Proceeds from the sale of securities available-for-sale during 1994
were $247,876, while proceeds from sales of investments in fixed
maturity securities during 1993 were $33,959 ($123,422 during 1992).
Gross gains of $3,406 ($2,413 in 1993 and $3,194 in 1992) and gross
losses of $21,866 ($39 in 1993 and $513 in 1992) were realized on
those sales.
Investments that were non-income producing for the twelve month period
preceding December 31, 1994 amounted to $11,513 ($13,158 for 1993) and
consisted of $11,111 ($10,907 in 1993) in real estate and $402 ($2,251
in 1993) in other long-term investments.
Real estate is presented at cost less accumulated depreciation of
$29,275 in 1994 ($24,717 in 1993) and valuation allowances of $27,330
in 1994 ($31,357 in 1993). Other valuation allowances are $0 in 1994
($6,680 in 1993) on fixed maturities and $47,892 in 1994 ($42,350 in
1993) on mortgage loans on real estate.
47 OF 75
<PAGE> 48
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
The Company generally initiates foreclosure proceedings on all
mortgage loans on real estate delinquent sixty days. Foresclosures of
mortgage loans on real estate were $37,187 in 1994 ($39,281 in 1993)
and mortgage loans on real estate in process of foreclosure or
in-substance foreclosed as of December 31, 1994 totaled $19,878
($24,658 as of December 31, 1993), which approximates fair value.
Investments with an amortized cost of $11,137 and $11,383 as of
December 31, 1994 and 1993, respectively, were on deposit with various
regulatory agencies as required by law.
(6) Future Policy Benefits and Claims
The liability for future policy benefits for traditional life and
individual health policies has been established based upon the
following assumptions:
Interest rates: Interest rates vary as follows:
<TABLE>
<CAPTION>
Year of issue Life Health
------------- ---- ------
<S> <C> <C>
1994 7.2 %, not graded - permanent contracts with loan provisions; 5.0%
6.0%, not graded - all other contracts
1984-1993 7.4% to 10.5%, not graded 5.0% to 6%
1966-1983 6% to 8.1%, graded over 20 years to 4% to 6.6% 3.5% to 6%
1965 and prior generally lower than post 1965 issues 3.5% to 4%
</TABLE>
Withdrawals: Rates, which vary by issue age, type of coverage and
policy duration, are based on Company experience.
Mortality: Mortality and morbidity rates are based on published
tables, modified for the Company's actual experience.
The liability for future policy benefits for investment contracts
(approximately 81% and 80% of the total liability for future policy
benefits as of December 31, 1994 and 1993, respectively) has been
established based on policy term, interest rates and various contract
provisions. The average interest rate credited on investment product
policies was 6.5%, 7.0% and 7.5% for the years ended December 31,
1994, 1993 and 1992, respectively.
Future policy benefits and claims for group long-term disability
policies are the present value (primarily discounted at 5.5%) of
amounts not yet due on reported claims and an estimate of amounts to
be paid on incurred but unreported claims. The impact of reserve
discounting is not material. Future policy benefits and claims on
other group health policies are not discounted.
Activity in the liability for unpaid claims and claim adjustment
expenses is summarized for the years ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Balance as of January 1 $591,258 760,312 672,581
Less reinsurance recoverables 429,798 547,786 445,934
-------- -------- --------
Net balance as of January 1 161,460 212,526 226,647
-------- -------- --------
Incurred related to:
Current year 273,299 309,721 360,545
Prior years (26,156) (26,248) (17,433)
-------- -------- --------
Total incurred 247,143 283,473 343,112
-------- -------- --------
Paid related to:
Current year 175,700 208,978 226,886
Prior years 73,889 125,561 130,347
-------- -------- --------
Total paid 249,589 334,539 357,233
-------- -------- --------
Unpaid claims of ELICW (note 14) 40,223 - -
-------- -------- --------
Net balance as of December 31 199,237 161,460 212,526
Plus reinsurance recoverables 457,694 429,798 547,786
-------- -------- --------
Balance as of December 31 $656,931 591,258 760,312
======== ======== ========
</TABLE>
48 OF 75
<PAGE> 49
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
As a result of changes in estimates for insured events of prior years,
the provision for claims and claim adjustment expenses decreased in
each of the three years ended December 31, 1994 due to
lower-than-anticipated costs to settle accident and health claims.
(7) Federal Income Tax
Prior to 1984, the Life Insurance Company Income Tax Act of 1959 as
amended by the Deficit Reduction Act of 1984 (DRA), permitted the
deferral from taxation of a portion of statutory income under certain
circumstances. In these situations, the deferred income was
accumulated in the Policyholders' Surplus Account (PSA). Management
considers the likelihood of distributions from the PSA to be remote;
therefore, no Federal income tax has been provided for such
distributions in the consolidated financial statements. The DRA
eliminated any additional deferrals to the PSA. Any distributions
from the PSA, however, will continue to be taxable at the then current
tax rate. The balance of the PSA is approximately $35,344 as of
December 31, 1994.
The Company adopted Statement of Financial Accounting Standards No.
109 - Accounting for Income Taxes (SFAS 109), as of January 1, 1993.
See note 3. The 1992 consolidated financial statements have not been
restated to apply the provisions of SFAS 109.
The significant components of deferred income tax expense for the
years ended December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993
------ -------
<S> <C> <C>
Deferred income tax expense (exclusive of the
effects of other components listed below) $9,657 29,930
Adjustments to deferred income tax assets and
liabilities for enacted changes in tax laws and rates - 1,704
------ -------
$9,657 31,634
====== =======
</TABLE>
For the year ended December 31, 1992, the deferred income tax benefit
results from timing differences in the recognition of income and
expense for income tax and financial reporting purposes. The primary
sources of those timing differences were deferred policy acquisition
costs (deferred expense of $16,457) and reserves for future policy
benefits (deferred benefit of $32,045).
Total Federal income tax expense for the years ended December 31,
1994, 1993 and 1992 differs from the amount computed by applying the
U.S. Federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
Amount % Amount % Amount %
------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $95,631 35.0 $109,515 35.0 $44,390 34.0
Tax exempt interest and dividends
received deduction (194) (0.1) (2,322) (0.7) (4,172) (3.2)
Current year increase in U.S. Federal
income tax rate - - 1,704 0.5 - -
Real estate valuation allowance
adjustment - - - - (3,463) (2.7)
Other, net (5,933) (2.1) (2,139) (0.7) (3,013) (2.3)
-------- ----- --------- ----- -------- -----
Total (effective rate of each year) $89,504 32.8 $106,758 34.1 $33,742 25.8
======== ===== ========= ===== ======== =====
</TABLE>
Total Federal income tax paid was $87,576, $58,286 and $63,124 during
the years ended December 31, 1994, 1993 and 1992, respectively.
49 OF 75
<PAGE> 50
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset (liability) as of December
31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $124,044 129,995
Fixed maturity securities available-for-sale 95,536 -
Liabilities in Separate Accounts 94,783 64,722
Mortgage loans on real estate and real estate 25,632 24,020
Other policyholder funds 7,137 7,759
Other assets and other liabilities 57,528 41,390
--------- ---------
Total gross deferred tax assets 404,660 267,886
--------- ---------
Deferred tax liabilities:
Deferred policy acquisition costs 317,224 243,731
Fixed maturities, equity securities and other
long-term investments 3,620 11,137
Other 47,301 44,677
--------- ---------
Total gross deferred tax liabilities 368,145 299,545
--------- ---------
Net deferred tax asset (liability) $ 36,515 (31,659)
========= =========
</TABLE>
The Company has determined that valuation allowances are not necessary
as of December 31, 1994 and 1993 and January 1, 1993 (date of adoption
of SFAS 109) based on its analysis of future deductible amounts. All
future deductible amounts can be offset by future taxable amounts or
recovery of Federal income tax paid within the statutory carryback
period. In addition, for future deductible amounts for securities
available-for-sale, affiliates of the Company which are included in
the same consolidated Federal income tax return hold investments that
could be sold for capital gains that could offset capital losses
realized by the Company should securities available-for-sale be sold
at a loss.
(8) Disclosures about Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 - Disclosures
about Fair Value of Financial Instruments (SFAS 107) requires
disclosure of fair value information about existing on and off-balance
sheet financial instruments. In cases where quoted market prices are
not available, fair value is based on estimates using present value or
other valuation techniques.
These techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows.
Although fair value estimates are calculated using assumptions that
management believes are appropriate, changes in assumptions could
cause these estimates to vary materially. In that regard, the derived
fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in the
immediate settlement of the instruments. SFAS 107 excludes certain
assets and liabilities from its disclosure requirements. Accordingly,
the aggregate fair value amounts presented do not represent the
underlying value of the Company.
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from SFAS 107 disclosures, estimated fair value of policy reserves on
insurance contracts are provided to make the fair value disclosures
more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the
Company in estimating its fair value disclosures:
Cash, short-term investments and policy loans: The carrying
amount reported in the balance sheets for these instruments
approximate their fair value.
50 OF 75
<PAGE> 51
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
Investment securities: Fair value for fixed maturity
securities is based on quoted market prices, where available.
For fixed maturity securities not actively traded, fair value
is estimated using values obtained from independent pricing
services or, in the case of private placements, is estimated
by discounting expected future cash flows using a current
market rate applicable to the yield, credit quality and
maturity of the investments. The fair value for equity
securities is based on quoted market prices.
Separate Account assets and liabilities: The fair value of
assets held in Separate Accounts is based on quoted market
prices. The fair value of liabilities related to Separate
Accounts is the amount payable on demand.
Mortgage loans on real estate: The fair value for mortgage
loans on real estate is estimated using discounted cash flow
analyses, using interest rates currently being offered for
similar loans to borrowers with similar credit ratings.
Loans with similar characteristics are aggregated for
purposes of the calculations. Fair value for mortgages in
default is valued at the estimated fair value of the
underlying collateral.
Investment contracts: Fair value for the Company's
liabilities under investment type contracts is disclosed
using two methods. For investment contracts without defined
maturities, fair value is the amount payable on demand. For
investment contracts with known or determined maturities,
fair value is estimated using discounted cash flow analysis.
Interest rates used are similar to currently offered
contracts with maturities consistent with those remaining for
the contracts being valued.
Policy reserves on insurance contracts:. Included are
disclosures for individual life, universal life and
supplementary contracts with life contingencies for which the
estimated fair value is the amount payable on demand. Also
included are disclosures for the Company's limited payment
policies, which the Company has used discounted cash flow
analyses similar to those used for investment contracts with
known maturities to estimate fair value.
Policyholders' dividend accumulations and other policyholder
funds: The carrying amount reported in the consolidated
balance sheets for these instruments approximates their fair
value.
Carrying amount and estimated fair value of financial instruments
subject to SFAS 107 and policy reserves on insurance contracts were
as follow as of December 31:
<TABLE>
<CAPTION>
1994 1993
---- ----
Carrying Estimated Carrying Estimated
amount fair value amount fair value
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Assets
------
Investments:
Securities available-for-sale:
Fixed maturities $ 8,045,906 8,045,906 - -
Equity securities 24,713 24,713 16,593 16,593
Fixed maturities held-to-maturity 3,688,787 3,602,310 10,120,978 10,886,820
Mortgage loans on real estate 4,222,284 4,173,284 3,871,560 4,175,271
Policy loans 340,491 340,491 315,898 315,898
Short-term investments 131,643 131,643 41,797 41,797
Cash 7,436 7,436 21,835 21,835
Assets held in Separate Accounts 12,222,461 12,222,461 9,006,388 9,006,388
Liabilities
-----------
Investment contracts 12,189,894 11,657,556 10,332,661 10,117,288
Policy reserves on insurance contracts 3,170,085 2,934,384 2,945,120 2,873,503
Policyholders' dividend accumulations 338,058 338,058 322,686 322,686
Other policyholder funds 72,770 72,770 71,959 71,959
Liabilities related to Separate Accounts 12,222,461 11,807,331 9,006,388 8,714,586
</TABLE>
51 OF 75
<PAGE> 52
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
(9) Additional Financial Instruments Disclosures
Financial Instruments with Off-Balance-Sheet Risk: The Company is a
party to financial instruments with off-balance-sheet risk in the
normal course of business through management of its investment
portfolio. These financial instruments include commitments to extend
credit in the form of loans. These instruments involve, to varying
degrees, elements of credit risk in excess of amounts recognized on
the consolidated balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are
agreements to lend to a borrower, and are subject to conditions
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment
of a deposit. Commitments extended by the Company are based on
management's case-by-case credit evaluation of the borrower and the
borrower's loan collateral. The underlying mortgage property
represents the collateral if the commitment is funded. The Company's
policy for new mortgage loans on real estate is to lend no more than
80% of collateral value. Should the commitment be funded, the
Company's exposure to credit loss in the event of nonperformance by
the borrower is represented by the contractual amounts of these
commitments less the net realizable value of the collateral. The
contractual amounts also represent the cash requirements for all
unfunded commitments. Commitments on mortgage loans on real estate of
$243,200 extending into 1995 were outstanding as of December 31, 1994.
Significant Concentrations of Credit Risk: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the
United States. The Company has a diversified portfolio with no more
than 22% (23% in 1993) in any geographic area and no more than 2% (2%
in 1993) with any one borrower. The summary below depicts loans by
remaining principal balance as of each December 31:
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
-------- --------- --------- ------- ----------
<S> <C> <C> <C> <C> <C>
1994:
East North Central $109,233 103,499 540,686 191,489 944,907
East South Central 24,298 10,803 127,845 76,897 239,843
Mountain 3,150 13,770 140,358 39,682 196,960
Middle Atlantic 61,299 53,285 140,847 30,111 285,542
New England 10,536 43,282 139,131 4 192,953
Pacific 195,393 210,930 397,911 68,768 873,002
South Atlantic 87,150 81,576 424,150 210,354 803,230
West North Central 127,760 11,766 80,854 4,738 225,118
West South Central 51,013 84,796 184,923 194,788 515,520
-------- ------- --------- ------- ----------
$669,832 613,707 2,176,705 816,831 4,277,075
======== ======= ========= =======
Less valuation allowances and unamortized discount 54,791
----------
Total mortgage loans on real estate, net $4,222,284
==========
1993:
East North Central $109,208 108,478 470,755 158,964 847,405
East South Central 27,562 1,460 117,341 69,991 216,354
Mountain 3,228 4,742 105,560 23,065 136,595
Middle Atlantic 56,664 52,766 132,821 15,414 257,665
New England 10,565 48,398 142,530 8 201,501
Pacific 174,409 185,116 389,428 65,497 814,450
South Atlantic 112,640 58,165 391,102 238,337 800,244
West North Central 104,933 13,458 78,408 3,917 200,716
West South Central 50,955 47,103 183,420 161,033 442,511
-------- ------- --------- ------- ----------
$650,164 519,686 2,011,365 736,226 3,917,441
======== ======= ========= =======
Less valuation allowances and unamortized discount 45,881
----------
Total mortgage loans on real estate, net $3,871,560
==========
</TABLE>
52 OF 75
<PAGE> 53
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
(10) Pension Plan
NLIC, FHLIC, WCLIC, NCC, and NFS participate together with other
affiliated companies, in a pension plan covering all employees who
have completed at least one thousand hours of service within a
twelve-month period and who have met certain age requirements. Plan
contributions are invested in a group annuity contract of NLIC.
Benefits are based upon the highest average annual salary of any three
consecutive years of the last ten years of service. The Company funds
pension costs accrued for direct employees plus an allocation of
pension costs accrued for employees of affiliates whose work efforts
benefit the Company.
Pension costs charged to operations by the Company during the years
ended December 31, 1994, 1993 and 1992 were $10,451, $6,702 and
$4,613, respectively.
The Company's net accrued pension expense as of December 31, 1994 and
1993 was $1,836 and $1,472, respectively.
The net periodic pension cost for the plan as a whole for the years
ended December 31, 1994, 1993 and 1992 follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 64,740 47,694 44,343
Interest cost on projected benefit obligation 73,951 70,543 68,215
Actual return on plan assets (21,495) (105,002) (62,307)
Net amortization and deferral (62,150) 20,832 (24,281)
-------- -------- --------
Net periodic pension cost $ 55,046 34,067 25,970
======== ======== ========
</TABLE>
Basis for measurements, net periodic pension cost:
<TABLE>
<S> <C> <C> <C>
Weighted average discount rate 5.75% 6.75% 7.25%
Rate of increase in future compensation levels 4.50% 4.75% 5.25%
Expected long-term rate of return on plan assets 7.00% 7.50% 8.00%
</TABLE>
Information regarding the funded status of the plan as a whole as of
December 31, 1994 and 1993 follows:
<TABLE>
<CAPTION>
1994 1993
---------- ---------
<S> <C> <C>
Accumulated benefit obligation:
Vested $ 914,850 972,475
Nonvested 7,570 10,227
---------- ---------
$ 922,420 982,702
========== =========
Projected benefit obligation for
services rendered to date 1,305,547 1,292,477
Plan assets at fair value 1,241,771 1,208,007
---------- ---------
Plan assets less than projected benefit obligation (63,776) (84,470)
Unrecognized prior service cost 46,201 49,551
Unrecognized net losses 39,408 55,936
Unrecognized net assets at January 1, 1987 (21,994) (24,146)
---------- ---------
Net accrued pension expense $ (161) (3,129)
========== =========
</TABLE>
Basis for measurements, funded status of plan:
<TABLE>
<S> <C> <C>
Weighted average discount rate 7.50% 5.75%
Rate of increase in future compensation levels 6.75% 4.50%
</TABLE>
53 OF 75
<PAGE> 54
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
(11) Postretirement Benefits Other Than Pensions
In addition to the defined benefit pension plan, NLIC, FHLIC, WCLIC,
NCC and NFS participate with other affiliated companies in life and
health care defined benefit plans for qualifying retirees.
Postretirement life and health care benefits are contributory and
available to full time employees who have attained age 55 and have
accumulated 15 years of service with the Company after reaching age
40. Postretirement life insurance contributions are based on age and
coverage amount of each retiree. Postretirement health care benefit
contributions are adjusted annually and contain cost-sharing features
such as deductibles and coinsurance. The accounting for the health
care plan anticipates future cost-sharing changes to the written plan
that are consistent with the Company's expressed intent to increase
the retiree contribution amount annually for expected health care
inflation. The Company's policy is to fund the cost of health care
benefits in amounts determined at the discretion of management. The
Company began funding in 1994. Plan assets are invested in group
annuity contracts of NLIC.
Effective January 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 106 - Employers'
Accounting for Postretirement Benefits Other Than Pensions (SFAS 106),
which requires the accrual method of accounting for postretirement
life and health care insurance benefits based on actuarially
determined costs to be recognized over the period from the date of
hire to the full eligibility date of employees who are expected to
qualify for such benefits. Postretirement benefit cost for 1992,
which was recorded on a cash basis, has not been restated.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation as of January 1, 1993. Accordingly,
a noncash charge of $32,275 ($20,979 net of related income tax
benefit) was recorded in the consolidated statement of income as a
cumulative effect of a change in accounting principle. See note 3.
The adoption of SFAS 106, including the cumulative effect of the
change in accounting principle, increased the expense for
postretirement benefits by $35,277 to $36,544 in 1993. Net periodic
postretirement benefit cost for 1994 was $4,627. The Company's
accrued postretirement benefit obligation as of December 31, 1994 and
1993 was $36,001 and $35,277, respectively.
Actuarial assumptions for the measurement of the December 31, 1994
accumulated postretirement benefit obligation include a discount rate
of 8% and an assumed health care cost trend rate of 11%, uniformly
declining to an ultimate rate of 6% over 12 years.
Actuarial assumptions for the measurement of the December 31, 1993
accumulated postretirement benefit obligation and the 1994 net
periodic postretirement benefit cost include a discount rate of 7% and
an assumed health care cost trend rate of 12%, uniformly declining to
an ultimate rate of 6% over 12 years.
Actuarial assumptions used to determine the accumulated postretirement
benefit obligation as of January 1, 1993 and the 1993 net periodic
postretirement benefit cost include a discount rate of 8% and an
assumed health care cost trend rate of 14%, uniformly declining to an
ultimate rate of 6% over 12 years.
Information regarding the funded status of the plan as a whole as of
December 31, 1994 and 1993 follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 76,677 90,312
Fully eligible, active plan participants 22,013 24,833
Other active plan participants 59,089 84,103
--------- ---------
Accumulated postretirement benefit obligation 157,779 199,248
Plan assets at fair value 49,012 -
--------- ---------
Plan assets less than accumulated postretirement
benefit obligation (108,767) (199,248)
Unrecognized net (gains) losses (41,497) 15,128
--------- ---------
Accrued postretirement benefit obligation $(150,264) (184,120)
========= =========
</TABLE>
54 OF 75
<PAGE> 55
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
The amount of net periodic postretirement benefit cost for the plan as
a whole for the years ended December 31, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Net periodic postretirement benefit cost:
Service cost - benefits attributed to employee service during the year $ 8,586 7,090
Interest cost on accumulated postretirement benefit obligation 14,011 13,928
Actual return on plan assets (1,622) -
Net amortization and deferral 1,622 -
--------- ---------
Net periodic postretirement benefit cost $22,597 21,018
========= =========
</TABLE>
The health care cost trend rate assumption has a significant effect on
the amounts reported. A one percentage point increase in the assumed
health care cost trend rate would increase the accumulated
postretirement benefit obligation as of December 31, 1994 and 1993 by
$8,109 and $15,621, respectively, and the net periodic postretirement
benefit cost for the years ended December 31, 1994 and 1993 by $866
and $2,377, respectively.
(12) Portfolio Transfer of Credit Life and Credit Accident and Health
On March 13, 1992, WCLIC entered into an assignment and assumption
agreement with American Bankers Life Assurance Company of Florida
(ABLAC) under which ABLAC assumed, by portfolio transfer,
substantially all of WCLIC's credit life and accident and health
policies in force as of January 1, 1992. A pre-tax loss of
approximately $15,000 was recognized from this transaction in 1992.
The loss represents approximately $34,000 of amortization of deferred
policy acquisition costs, less approximately $27,000 in ceded
commissions earned, plus death benefits incurred and other expenses.
Under the terms defined in the assignment and assumption agreement,
WCLIC is contingently liable for adverse development of claims
activity up to a defined limit. As of December 31, 1994, WCLIC has
provided for a contingent liability based on the development of claims
experience through December 31, 1994. As of December 31, 1993, WCLIC
had provided for the maximum contingent liability in the absence of
conclusive claims experience development.
(13) Regulatory Risk-Based Capital, Retained Earnings and Dividend
Restrictions
Each insurance company's state of domicile imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas
for determining the amount of risk-based capital specify various
weighting factors that are applied to financial balances or various
levels of activity based on the perceived degree of risk. Regulatory
compliance is determined by a ratio of the company's regulatory total
adjusted capital, as defined by the NAIC, to its authorized control
level risk-based capital, as defined by the NAIC. Companies below
specific trigger points or ratios are classified within certain
levels, each of which requires specified corrective action. NLIC and
each of its insurance subsidiaries exceed the minimum risk-based
capital requirements.
In accordance with the requirements of the New York statutes, the
Company has agreed with the Superintendent of Insurance of that state
that so long as participating policies and contracts are held by
residents of New York, no profits on participating policies and
contracts in excess of the larger of (a) ten percent of such profits
or (b) fifty cents per year per thousand dollars of participating life
insurance in force, exclusive of group term, at the year-end shall
inure to the benefit of the shareholders. Such New York statutes
further provide that so long as such agreement is in effect, such
excess of profits shall be exhibited as "participating policyholders'
surplus" in annual statements filed with the Superintendent and shall
be used only for the payment or apportionment of dividends to
participating policyholders at least to the extent required by statute
or for the purpose of making up any loss on participating policies.
In the opinion of counsel for the Company, the ultimate ownership of
the entire surplus, however classified, of the Company resides with
the shareholder, subject to the usual requirements under state laws
and regulations that certain deposits, reserves and minimum surplus be
maintained for the protection of the policyholders until all policy
contracts are discharged.
55 OF 75
<PAGE> 56
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
Based on the opinion of counsel with respect to the ownership of its
surplus, the Company is of the opinion that the earnings attributable
to participating policies in excess of the amounts paid as dividends
to policyholders belong to the shareholder rather than the
policyholders, and such earnings are so treated by the Company.
The amount of shareholder's equity other than capital shares was
$1,904,664, $1,647,353, and $1,426,427 as of December 31, 1994, 1993
and 1992, respectively. The amount thereof not presently available
for dividends to the shareholder due to the New York restrictions and
to adjustments relating to GAAP was $929,934, $954,037 and $841,583 as
of December 31, 1994, 1993 and 1992, respectively.
Ohio law limits the payment of dividends to shareholders. The maximum
dividend that may be paid by the Company without prior approval of the
Director of the Department of Insurance of the State of Ohio is
limited to the greater of statutory gain from operations of the
preceding calendar year or 10% of statutory shareholder's surplus as
of the prior December 31. Therefore, $1,707,110, of shareholder's
equity, as presented in the accompanying consolidated financial
statements, is restricted as to dividend payments in 1995.
California law limits the payment of dividends to shareholders of
WCLIC. The maximum dividend that may be paid by WCLIC without prior
approval of the Commissioner of the State of California Department of
Insurance is limited to the greater of WCLIC's statutory net income of
the preceding calendar year or 10% of WCLIC's statutory shareholder's
surplus as of the prior December 31. Therefore, $126,489 of WCLIC's
shareholder's equity is restricted as to dividend payments in 1995.
Wisconsin law limits the payment of dividends to shareholders of
ELICW. The maximum dividend that may be paid by ELICW without prior
approval of the Commissioner of the State of Wisconsin is limited to
the greater of ELICW's statutory net income of the preceding calendar
year or 10% of ELICW's statutory surplus as of the prior December 31,
Therefore, $135,369 of ELICW's shareholders' equity is restricted as
to dividend payments in 1995.
Michigan law limits the payment of dividends to shareholders of NCC.
The maximum dividend that may be paid by NCC without prior approval of
the Commissioner of the State of Michigan Bureau of Insurance is
limited to the greater of NCC's statutory net income, not including
realized capital gains, of the preceding calendar year or 10% of NCC's
statutory shareholder's surplus as of the prior December 31.
Therefore, $66,564 of NCC's shareholder's equity is restricted as to
dividend payments in 1995. In addition, prior approval is not
required for a dividend which does not increase gross leverage to a
point in excess of the United States consolidated industry average for
the most recent available year.
(14) Transactions With Affiliates
Effective December 31, 1994, NLIC purchased all of the outstanding
shares of ELICW from Wausau Service Corporation (WSC) for an amount
approximating $165,000, subject to specified adjustments, if any,
subsequent to year end. NLIC transferred fixed maturity securities
and cash with a fair value of $155,000 to WSC on December 28, 1994,
which resulted in a realized loss of $19,239 on the disposition of the
securities. An accrual approximating $10,000 is reflected in the
accompanying consolidated balance sheet. The purchase price
approximated both the historical cost basis and fair value of net
assets of ELICW. ELICW has and will continue to share home office,
other facilities, equipment and common management and administrative
services with WSC.
The deferred compensation annuity line of business of the Company is
primarily sold through Public Employees Benefit Services Corporation
(PEBSCO). The Company paid PEBSCO commissions and administrative fees
of $26,699, $22,681 and $20,146 in 1994, 1993 and 1992, respectively.
PEBSCO is a wholly owned subsidiary of Corp.
The Company and NEA Valuebuilder Investor Services, Inc. (NEAVIS) have
contracted with the National Education Association (NEA) to provide
individual annuity contracts to be marketed exclusively to members of
the NEA. The Company paid NEAVIS a marketing development fee of
$11,095, $9,229 and $6,426 in 1994, 1993 and 1992, respectively.
NEAVIS is a wholly owned subsidiary of Corp.
The Company shares home office, other facilities, equipment and common
management and administrative services with affiliates.
56 OF 75
<PAGE> 57
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
The Company participates in intercompany repurchase agreements with
affiliates whereby the seller will transfer securities to the buyer at
a stated value. Upon demand or a stated period, the securities will
be repurchased by the seller at the original sales price plus a price
differential. Transactions under the agreements during 1994 and 1993
were not material.
During 1993, the Company sold equity securities with a market value
$194,515 to NMIC, resulting in a realized gain of $122,823. With the
proceeds, the Company purchased securities with a market value of
$194,139 and cash of $376 from NMIC.
Intercompany reinsurance contracts exist between NLIC and NMIC, NLIC
and WCLIC, NLIC and NCC, WCLIC and NMIC and WCLIC and ELICW as of
December 31, 1994. These contracts are immaterial to the consolidated
financial statements.
NCC participates in several 100% quota share reinsurance agreements
with NMIC. NCC serves as the licensed insurer as required for an
affiliated excess and surplus lines company and cedes 100% of direct
written premiums to NMIC. In 1989, NCC transferred 100% of assets and
unearned premiums and loss reserves related to a discontinued block of
assumed reinsurance to NMIC (95.3%) and Nationwide Mutual Fire
Insurance Company (4.7%). Effective January 1, 1993, NCC entered into
a 100% quota share reinsurance agreement to cede to NMIC 100% of all
written premiums not subject to any other reinsurance agreements.
As a result of these agreements, and in accordance with Statement of
Financial Accounting Standards No. 113 - Accounting and Reporting for
Reinsurance of Short-Duration and Long-Duration Contracts, the
following amounts are included in the consolidated financial
statements as of December 31, 1994 and 1993 for reinsurance ceded:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Reinsurance recoverable $ 575,721 533,401
Unearned premium reserves (118,092) (102,644)
Loss and claim reserves (371,974) (352,303)
Loss and expense reserves (85,655) (78,454)
--------- ---------
$ 0 0
========= =========
</TABLE>
The ceding of reinsurance does not discharge the original insurer from
primary liability to its policyholder. The insurer which assumes the
coverage assumes the related liability and it is the practice of
insurers to treat insured risks, to the extent of reinsurance ceded,
as though they were risks for which the original insurer is not
liable. Management believes the financial strength of NMIC reduces to
an acceptable level any risk to NCC under these intercompany
reinsurance agreements.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC) and California Cash
Management Company (CCMC), both affiliates, under which NCMC and CCMC
act as common agents in handling the purchase and sale of short-term
securities for the respective accounts of the participants. Amounts
on deposit with NCMC and CCMC were $92,531 and $28,683 at December 31,
1994 and 1993, respectively, and are included in short-term
investments on the accompanying consolidated balance sheets.
(15) Bank Lines of Credit
As of December 31, 1994 and 1993, NLIC had $120,000 of confirmed but
unused bank lines of credit which support a $100,000 commercial paper
borrowing authorization. Additionally, NFS had $27,000 of confirmed
but unused bank lines of credit.
57 OF 75
<PAGE> 58
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
(16) Contingencies
The Company is a defendant in various lawsuits. In the opinion of
management, the effects, if any, of such lawsuits are not expected to
be material to the Company's financial position or results of
operations.
(17) Major Lines of Business
The Company operates in the life and accident and health lines of
business in the life insurance and property and casualty insurance
industries. Life insurance operations include whole life, universal
life, variable universal life, endowment and term life insurance and
annuity contracts issued to individuals and groups. Accident and
health operations also provide coverage to individuals and groups.
The following table summarizes the revenues and income before Federal
income tax and cumulative effect of changes in accounting principles
for the years ended December 31, 1994, 1993 and 1992 and assets as of
December 31, 1994, 1993 and 1992, by line of business.
<TABLE>
<CAPTION>
1994 1993 1992
------------ ---------- ---------
<S> <C> <C> <C>
Revenues:
Life insurance $ 1,577,809 1,479,956 1,406,417
Accident and health 345,544 339,764 475,290
Investment income allocated to capital and surplus 122,847 214,806 51,611
------------ ---------- ---------
Total $ 2,046,200 2,034,526 1,933,318
============ ========== =========
Income before Federal income tax and cumulative
effect of changes in accounting principles:
Life insurance 141,650 83,917 78,627
Accident and health 13,220 15,043 436
Investment income allocated to capital and surplus 118,360 213,941 51,496
------------ ---------- ---------
Total $ 273,230 312,901 130,559
============ ========== =========
Assets:
Life insurance 28,351,628 22,982,186 19,180,561
Accident and health 852,026 773,007 343,535
Capital and surplus 1,908,479 1,651,168 1,430,242
------------ ---------- ---------
Total $ 31,112,133 25,406,361 20,954,338
============ ========== =========
</TABLE>
Included in life insurance revenues are premiums from certain
annuities with life contingencies of $20,134 ($35,341 and $54,066 for
the years ended December 31, 1993 and 1992, respectively) as well as
universal life and investment product policy charges of $239,021
($188,057 and $148,464 for the years ended December 31, 1993 and 1992
respectively) for the year ended December 31, 1994.
Allocations of investment income and certain general expenses were
based on a number of assumptions and estimates, and reported operating
results would change by line if different methods were applied.
Investment income and realized gains allocable to policyholders in
1994 were $1,193,292 and $1,775, respectively.
(18) Subsequent Event
On January 30, 1995, FHLIC received approval from the Ohio Secretary
of State to change its name to Nationwide Life and Annuity Insurance
Company.
58 OF 75
<PAGE> 59
PART C. OTHER INFORMATION
ITEM 28. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
(a) Financial Statements: Page
<S> <C>
(1) Financial statements and schedule included
in Prospectus (Part A):
Condensed Financial Information for each of the ten years
in the period ended December 31, 1994. 6
(2) Financial statements and schedule included in Part B:
Those financial statements and schedule required by Item 27
to be included in Part B have been incorporated therein by
reference to the Prospectus (Part A).
Nationwide Life Insurance Company Separate Account No. 1:
Independent Auditors' Report. 26
Statement of Assets, Liabilities and Contract Owners'
Equity as of December 31, 1994. 27
Statements of Operations and Changes in Contract Owners'
Equity for the years ended December 31, 1994, 1993 and 1992. 28
Notes to Financial Statements. 29
Schedule of Portfolio Investments as of December 31, 1994. 32
Nationwide Life Insurance Company:
Independent Auditors' Report. 35
Consolidated Balance Sheets as of December 31, 1994 and 1993. 36
Consolidated Statements of Income for the years ended
December 31, 1994, 1993 and 1992. 37
Consolidated Statements of Shareholder's Equity for the years
ended December 31, 1994, 1993 and 1992. 38
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992. 39
Notes to Consolidated Financial Statements. 40
</TABLE>
59 OF 75
<PAGE> 60
ITEM 29. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olive, NC 28365
Willard J. Engel Director
1100 East Main Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Peter F. Frenzer President and Chief Operating
One Nationwide Plaza Officer and Director
Columbus, OH 43215
Charles L. Fuellgraf, Jr. Director
600 South Washington Street
Butler, PA 16001
Henry S. Holloway Chairman of the Board and
1247 Stafford Road Director
Darlington, MD 21034
D. Richard McFerson President and Chief
One Nationwide Plaza Executive Officer - Nationwide
Columbus, Ohio 43215 Insurance Enterprise and Director
David O. Miller Director
115 Sprague Drive
Hebron, OH 43025
C. Ray Noecker Director
2770 State Route 674 South
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
Robert H. Rickel Director
P.O. Box 319
Bayview, ID 83803
</TABLE>
60 OF 75
<PAGE> 61
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Arden L. Shisler Director
2724 West Lebanon Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
10835 Georgetown Street NE
Louisville, OH 44641
Harold W. Weihl Director
14282 King Road
Bowling Green, OH 43402
Gordon E. McCutchan Executive Vice President -
One Nationwide Plaza Law and Corporate Services
Columbus, OH 43215 and Secretary
James E. Brock Senior Vice President --
One Nationwide Plaza Investment Product Operations
Columbus, OH 43215
W. Sidney Druen Senior Vice President, and General
One Nationwide Plaza Counsel and Assistant Secretary
Columbus, OH 43215
Harvey S. Galloway, Jr. Senior Vice President -
One Nationwide Plaza Chief Actuary - Life, Health and Annuities
Columbus, OH 43215
Richard A. Karas Senior Vice President--Sales
One Nationwide Plaza Financial Services
Columbus, OH 43215
Robert A. Oakley Senior Vice President--
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
Carl J. Santillo Senior Vice President -
One Nationwide Plaza Life and Health Operations
Columbus, OH 43215
Michael D. Bleiweiss Vice President-- Deferred Compensation
One Nationwide Plaza
Columbus, OH 43215
Joseph F. Ciminero Vice President-- Financial Operations
One Nationwide Plaza
Columbus, OH 43215
</TABLE>
61 OF 75
<PAGE> 62
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Matthew S. Easley Vice President--
One Nationwide Plaza Annuity and Pension Actuarial
Columbus, OH 43215
Ronald L. Eppley Vice President-- Pensions
One Nationwide Plaza
Columbus, OH 43215
Timothy E. Murphy Vice President-- Strategic
One Nationwide Plaza Marketing
Columbus, OH 43215
R. Dennis Noice Vice President-- Individual
One Nationwide Plaza Investment Products
Columbus, OH 43215
Joseph P. Rath Vice President--
One Nationwide Plaza Associate General Counsel
Columbus, OH 43215
</TABLE>
Item 30. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
* Subsidiaries for which separate financial statements are filed
** Subsidiaries included in the respective consolidated financial
statements
*** Subsidiaries included in the respective group financial statements filed
for unconsolidated subsidiaries
**** other subsidiaries
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(see Attached Chart)
unless otherwise
STATE OF indicated PRINCIPAL
COMPANY ORGANIZATION BUSINESS
<S> <C> <C> <C>
Affiliate Agency, Inc. Delaware Life Insurance Agency
Affiliate Agency Ohio Life Insurance Agency
of Ohio, Inc.
Allnations, Inc. Ohio Promotes cooperative
insurance corporations
worldwide.
American Marine Florida Underwriting Manager
Underwriters, Inc.
Auto-Direkt Insurance Germany Insurance Company
Company
The Beak and Wire Ohio Radio Tower Joint Venture
Corporation
California Cash California Investment Securities Agent
Management Company
Colonial County Mutual Texas Insurance Company
Insurance Company
</TABLE>
62 OF 75
<PAGE> 63
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(see Attached Chart)
STATE OF unless otherwise PRINCIPAL
COMPANY ORGANIZATION indicated BUSINESS
<S> <C> <C> <C>
Colonial General Arizona Insurance Agency
Insurance Agency, Inc.
Colonial Insurance California Insurance Company
Company of California
Columbus Service, Germany Insurance Broker
GMBH
Companies Agency, Wisconsin Insurance Broker
Inc. (Wisconsin)
Companies Agency California Insurance Broker
Insurance Services
of California, Inc.
Companies Agency Alabama Insurance Broker
of Alabama, Inc.
Companies Agency Idaho Insurance Broker
of Idaho, Inc.
Companies Agency of Illinois Acts as Collection Agent
Illinois, Inc. for Policies Placed
through Brokers
Companies Agency of Kentucky Insurance Broker
Kentucky, Inc.
Companies Agency Massachusetts Insurance Broker
of Massachusetts, Inc.
Companies Agency New York Insurance Broker
of New York, Inc.
Companies Agency Pennsylvania Insurance Broker
of Pennsylvania, Inc.
Companies Agency Arizona Insurance Broker
of Phoenix, Inc.
Countrywide Services Delaware Products Liability,
Corporation Investigative and Claims
Management Services
Employers Insurance Wisconsin Insurance Company
of Wausau A Mutual
Company
** Employers Life Wisconsin Life Insurance Company
Insurance Company
of Wausau
F&B, Inc. Iowa Insurance Agency
Farmland Life Iowa Life Insurance Company
Insurance Company
</TABLE>
63 OF 75
<PAGE> 64
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(see Attached Chart)
STATE OF unless otherwise PRINCIPAL
COMPANY ORGANIZATION indicated BUSINESS
<S> <C> <C> <C>
Farmland Mutual Iowa Insurance Company
Insurance Company
Financial Horizons Delaware Insurance Agency
Distributors Agency, Inc.
Financial Horizons Alabama Life Insurance Agency
Distributors Agency
of Alabama, Inc.
Financial Horizons Ohio Insurance Agency
Distributors Agency
of Ohio, Inc.
Financial Horizons Oklahoma Life Insurance Agency
Distributors Agency of
Oklahoma, Inc.
Financial Horizons Texas Life Insurance Agency
Distributors Agency
of Texas, Inc.
Financial Horizons Massachusetts Investment Company
Investment Trust
Financial Horizons Oklahoma Broker-Dealer
Securities Corporation
Gates, McDonald & Ohio Cost Control Business
Company
Gates, McDonald & Nevada Self-Insurance
Company of Nevada Administration, Claims
Examination, and
Data Processing
Services
Gates, McDonald & New York Workers Compensation
Company of New York Claims Administration
Greater La Crosse Wisconsin Writes Commercial Health
Health Plans, Inc. and Medicare Supplement
Insurance
InHealth, Inc. Ohio Health Maintenance
Organization
InHealth Agency, Ohio Insurance Agency
Inc.
InHealth Management Ohio Develops and
Systems, Inc. operates Managed Care
Delivery System
Insurance Ohio Insurance Broker and
Intermediaries, Inc. Insurance Agency
Key Health Plan, Inc. California Pre-paid health plans
</TABLE>
64 OF 75
<PAGE> 65
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(see Attached Chart)
STATE OF unless otherwise PRINCIPAL
COMPANY ORGANIZATION indicated BUSINESS
<S> <C> <C> <C>
Landmark Financial New York Life Insurance Agency
Services of New York,
Inc.
Leben Direkt Germany Life Insurance Company
Insurance Company
Lone Star General Texas Insurance Agency
Agency, Inc.
** MRM Investments, Ohio Owns and operates a
Inc. Recreational
Ski Facility
** National Casualty Michigan Insurance Company
Company
** National Premium Delaware Insurance Administrative
and Benefit Administration Services
Company
Nationwide Agri- Iowa Insurance Company
business Insurance
Company
Nationwide Cash Ohio Investment Securities Agent
Management Company
Nationwide Ohio Radio Broadcasting
Communications Inc. Business
Nationwide Ohio Redevelopment
Community Urban of blighted areas within
Redevelopment the City of Columbus, Ohio
Corporation
Nationwide Ohio Organized for the purpose
Corporation of acquiring, holding,
encumbering, transferring,
or otherwise disposing of
shares, bonds, and other
evidences of indebtedness,
securities, and contracts of
other persons, associ-
ations, corporations,
domestic or foreign and to
form or acquire the control
of other corporations
NWE, Inc. Ohio Special Investments
Nationwide Ohio Owns, leases and manages
Development Company commercial real estate
</TABLE>
65 OF 75
<PAGE> 66
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(see Attached Chart)
STATE OF unless otherwise PRINCIPAL
COMPANY ORGANIZATION indicated BUSINESS
<S> <C> <C> <C>
** Nationwide Financial Ohio Registered Broker-Dealer,
Services, Inc. Investment Manager
and Administrator
Nationwide General Ohio Insurance Company
Insurance Company
Nationwide Health Ohio Develops and operates
Care Corporation Managed Care Delivery
System
Nationwide Indemnity Ohio Reinsurance Company
Company
Nationwide Insurance Ohio Membership Non-Profit
Enterprise Foundation Corporation
Nationwide Insurance Ohio Membership Non-Profit
Golf Charities, Inc. Corporation
Nationwide Investing Michigan Investment Company
Foundation
Nationwide Investing Massachusetts Investment Company
Foundation II
Nationwide Investors Ohio Stock Transfer Agent
Services, Inc.
** Nationwide Life and Ohio Life Insurance Company
Annuity Insurance
Company
** Nationwide Life Ohio Life Insurance
Insurance Company Company
Nationwide Mutual Ohio Insurance Company
Insurance Company
(Casualty)
Nationwide Mutual Ohio Insurance Company
Fire Insurance
Company
Nationwide Property Ohio Insurance Company
& Casualty Insurance
Company
** Nationwide Property Ohio Owns, leases, manages and
Management, Inc. deals in Real Property
Nationwide Separate Massachusetts Investment Company
Account Trust
NEA Valuebuilder Delaware Life Insurance Agency
Investor Services, Inc.
NEA Valuebuilder Alabama Life Insurance Agency
Investor Services of
Alabama, Inc.
</TABLE>
66 OF 75
<PAGE> 67
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(see Attached Chart)
STATE OF unless otherwise PRINCIPAL
COMPANY ORGANIZATION indicated BUSINESS
<S> <C> <C> <C>
NEA Valuebuilder Massachusetts Life Insurance Agency
Investor Services of
Massachusetts, Inc.
NEA Valuebuilder Ohio Life Insurance Agency
Investor Services of
Ohio, Inc.
NEA Valuebuilder Oklahoma Life Insurance Agency
Investor Services of
Oklahoma, Inc.
NEA Valuebuilder Texas Life Insurance Agency
Investor Services of
Texas, Inc.
Neckura General Germany Insurance Company
Insurance Company
Neckura Holding Germany Administrative Service for
Company Neckura Insurance Group
Neckura Insurance Germany Insurance Company
Company
Neckura Life Germany Life Insurance
Insurance Company Company
PEBSCO of Massachusetts Markets and Administers
Massachusetts Insurance Deferred Compensation
Agency, Inc. Plans for Public Employees
PEBSCO of Texas, Texas Markets and Administers
Inc. Deferred Compensation
Plans for Public Employees
PEBSCO Securities Oklahoma Registered Broker-Dealer in
Corp. Deferred Compensation
Market
Pension Associates of Wisconsin Pension plan administration
Wausau, Inc. recordkeeping and consult-
ing and compensation con-
sulting
Public Employees Delaware Marketing and Administration
Benefit Services of Deferred Employee
Corporation Compensation Plans for
Public Employees
Public Employees Alabama Markets and Administers
Benefit Services Deferred Compensation
Corporation of Alabama Plans for Public Employees
</TABLE>
67 OF 75
<PAGE> 68
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(see Attached Chart)
STATE OF unless otherwise PRINCIPAL
COMPANY ORGANIZATION indicated BUSINESS
<S> <C> <C> <C>
Public Employees Arkansas Markets and Administers
Benefit Services Deferred Compensation
Corporation of Arkansas Plans for Public
Employees
Public Employees Montana Markets and Administers
Benefit Services Deferred Compensation
Corporation of Montana Plans for Public
Employees
Public Employees New Mexico Markets and Administers
Benefit Services Deferred Compensation
Corporation of New Mexico Plans for Public
Employees
SVM Sales GMBH, Germany Sales support for Neckura
Neckura Insurance Insurance Group
Group
Scottsdale Insurance Ohio Insurance Company
Company
Scottsdale Indemnity Ohio Insurance Company
Company
Video Eagle, Inc. Ohio Operates Several Video
Cable Systems
Wausau Business Illinois Insurance Company
Insurance Company
Wausau General Illinois Insurance Company
Insurance Company
Wausau Insurance United Kingdom Insurance and Reinsurance
Co. Limited (U.K.) Company
Wausau International California Special Risks, Excess &
Underwriters Surplus Lines Insurance
Underwriting Manager
Wausau Lloyds Texas Texas Lloyds Company
** Wausau Preferred Wisconsin Insurance and Reinsurance
Health Insurance Company
Company
Wausau Service Wisconsin Holding Company
Corporation
Wausau Underwriters Wisconsin Insurance Company
Insurance Company
** West Coast Life California Life Insurance Company
Insurance Company
</TABLE>
68 OF 75
<PAGE> 69
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(see Attached Chart)
STATE OF unless otherwise PRINCIPAL
COMPANY ORGANIZATION indicated BUSINESS
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Issuer of Annuity
Separate Account Contracts
* NACo Variable Ohio Nationwide Life Issuer of Annuity
Account Separate Account Contracts
* Nationwide DC Ohio Nationwide Life Issuer of Annuity
Variable Account Separate Account Contracts
* Nationwide Fidelity Nationwide Life Separate Issuer of Annuity
Advisor Account Contracts
* Nationwide Multi-Flex Ohio Nationwide Life Issuer of Annuity
Variable Account Separate Account Contracts
* Nationwide VA Ohio Nationwide Life and Annuity Issuer of Annuity
Separate Account-A Separate Account Contracts
* Nationwide VA Ohio Nationwide Life and Annuity Issuer of Annuity
Separate Account - B Separate Account Contracts
* Nationwide VA Separate Ohio Nationwide Life and Annuity Issuer of Annuity
Account - C Separate Account Contracts
* Nationwide VA Separate Ohio Nationwide Life and Annuity Issuer of Annuity
Account - Q Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-II Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-3 Separate Account Contacts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-4 Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-5 Separate Account Contracts
* Nationwide Variable Nationwide Life Separate Issuer of Annuity
Account - 6 Ohio Account Contracts
* Nationwide VL Ohio Nationwide Life and Annuity Issuer of Life
Separate Account-A Separate Account Insurance Contracts
* Nationwide VLI Ohio Nationwide Life Issuer of Life
Separate Account Separate Account Insurance Contracts
* Nationwide VLI Ohio Nationwide Life Issuer of Life
Separate Account-2 Separate Account Insurance Contracts
* Nationwide VLI Ohio Nationwide Life Issuer of Life
Separate Account-3 Separate Account Insurance Contracts
* Separate Account Ohio Nationwide Life Issuer of Annuity
No. 1 Separate Account Contracts
</TABLE>
69 OF 75
<PAGE> 70
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side}
______________________
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|______________________|
<S> <C> <C>
________________________________________________________________________________________________
| EMPLOYERS INSURANCE OF WAUSAU |
| A MUTUAL COMPANY |
| |=================================
| Contribution Note Cost |
| ----------------- ---- |
| Casualty $400,000,000 |
|________________________________________________________________________________________________|
| |
_____________|_________________ _____________|__________________ _____________________
| WAUSAU INSURANCE CO. | | WAUSAU SERVICE | | |
| (U.K.) LIMITED | | CORPORATION (WSC) | | |
| | | | | WAUSAU LLOYDS |
| Common Stock: 8,506,800 | | Common Stock: 1,000 | | |
| ------------- Shares | | ------------- Shares |=============| |
| | | | | |
| Cost | | Cost | | |
| ---- | | ---- | | A TEXAS LLOYDS |
| Employers-- | | Employers-- | | |
| 100% $15,683,300 | | 100% $106,763,000 | | |
|_______________________________| |________________________________| |_____________________|
|
| ______________________________
| | WAUSAU BUSINESS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 5,900,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ----- |
| | WSC-100% $11,800,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU UNDERWRITERS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 8,750 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $24,560,006 |
| |______________________________|
|
| ______________________________
| | GREATER LA CROSSE |
| | HEALTH PLANS, INC. |
| | |
| | Common Stock: 3,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-33.3% $861,761 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ALABAMA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF KENTUCKY, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PENNSYLVANIA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF MASSACHUSETTS, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF NEW YORK, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF IDAHO, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PHOENIX |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COUNTRYWIDE SERVICES |
| | CORPORATION |
| | |
| | Common Stock: 100 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $145,852 |
| |______________________________|
|
|
| ______________________________
| | WAUSAU GENERAL |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 200,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $31,000,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU INTERNATIONAL |
| | UNDERWRITERS |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $10,000 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | INSURANCE SERVICES |
| | OF CALIFORNIA |
| | |
|____| Common Stock: 1,000 |
| | ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
| ______________________________
| | AMERICAN MARINE |
| | UNDERWRITERS, INC. (AMU) |
| | |
| | Common Stock: 20 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $248,222 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ILLINOIS, INC. |
| | |
| | Common Stock: 250 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $2,500 |
| |______________________________|
|
| ______________________________ _____________________________
| | COMPANIES AGENCY, INC. | | PENSION ASSOCIATES |
| | (WISCONSIN) | | OF WAUSAU, INC. |
| | | | |
| | Common Stock: 100 | | Common Stock: 1,000 |
|____| ------------- Shares |____| ------------- Shares |
| | | |
| Cost | | Companies Cost |
| ---- | | Agency, Inc. ---- |
| WSC-100% $10,000 | | (Wisconsin) -- $10,000 |
|______________________________| | 100% |
|_____________________________|
</TABLE>
<PAGE> 71
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C> <C>
_________________________________
| NATIONWIDE ENTERPRISE INSURANCE |
| FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|_________________________________|
_________________________________________ ___________________________
| | | |
===| NATIONWIDE MUTUAL |=============================================| NATIONWIDE MUTUAL |
| (CASUALTY) | | FIRE |
|_________________________________________| |___________________________|
| | | |__________________________________________________________________ :
| | | | | :
______________|__________ | | | _____________________________ _____________|_:____________________
| ALLNATIONS | | | | | NATIONWIDE | | NATIONWIDE |
| | | | | | GENERAL | | CORPORATION |
| Common Stock: 2,939 | | | | | | | |
| ------------- Shares | | | | | Common Stock: 20,000 Shares | | Common Stock: Control |
| | | | |___| ------------- | | ------------- ------- |
| Cost | | | | | | | $13,092,790 100% |
| ---- | | | | | Cost | | |
| Casualty-26% $88,320 | | | | | ---- | | Shares Cost |
| Fire-26% $88,463 | | | | | Casualty-100% $5,944,422 | | ----- ---- |
|_________________________| | | | |_____________________________| | Casualty $12,443,280 $710,293,557 |
| | | | Fire 649,510 24,007,936 |
_________________________ | | | _____________________________ | |
| FARMLAND MUTUAL | | | | | NATIONWIDE PROPERTY | | (See Page 2) |
| INSURANCE COMPANY | | | | | AND CASUALTY | |____________________________________|
| | | | | | |
| Guaranty Fund |____| | | | Common Stock: 60,000 Shares |
| ------------- |______| |___| ------------- |
| Certificate | | | |
| ----------- | | | Cost |
| | | | ---- |
| Cost | | | Casualty-100% $6,000,000 |
| ---- | | |_____________________________|
| Casualty $500,000 | |
|_________________________| | _____________________________
| | | COLONIAL INS. CO. |
_______________|___________ | | OF CALIFORNIA |
| F & B, INC. | | | |
| | | | Common Stock: 1,750 Shares |
| Common Stock: 1 Share | |___| ------------- |
| ------------- | | | |
| | | | Cost |
| Cost | | | ---- |
| ---- | | | Casualty-100% $11,750,000 |
| Farmland Mutual- $10 | | |_____________________________|
| 100% | |
|___________________________| | _____________________________ __________________________
____________________________ | | SCOTTSDALE | | COLONIAL GENERAL |
| FARMLAND LIFE | | | INSURANCE COMPANY | | INSURANCE AGENCY, INC. |
| INSURANCE COMPANY | | | | | |
| | | | Common Stock: 30,136 Shares | | Common Stock: 1 Share |
| Common Stock: 1,000,000 |___|___| ------------- |______| ------------ |
| ------------- Shares | | | | | |
| | | | Cost | | Cost |
| Cost | | | ---- | | ---- |
| ---- | | | Casualty-100% $150,000,000 | | Scottsdale- $1,082,336 |
| Casualty-100% $23,826,196 | | |_____________________________| | 100% |
|____________________________| | |__________________________|
| _____________________________
| | NATIONWIDE AGRIBUSINESS |
| | INS. CO. |
| | |
| | Common Stock: 1,000,000 |
| | ------------- Shares |
| | |
|___| Casualty- Cost |
| | 99.9% ---- |
| | $26,300,981 |
| | Other Capital: |
| | Casualty- |
| | Ptd. $713,567 |
| |_____________________________|
|
| _____________________________ ______________________________
| | NECKURA HOLDING CO. | | NECKURA |
| | (NECKURA) | | INSURANCE CO. |
| | | | |
| | Common Stock: 10,000 Shares | | Common Stock: 6,000 Shares |
|___| ------------- |____________________| ------------- |
| | | | | |
| | Cost | | | Cost |
| | --- | | | ---- |
| | Casualty-100% $87,943,140 | | | Neckura-100% DM 6,000,000 |
| |_____________________________| | |______________________________|
| |
| | _____________________________
| | | NECKURA LIFE |
| | | |
| | | Common Stock: 4,000 Shares |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 15,825,681 |
| | |_____________________________|
| |
| | _____________________________
| | | NECKURA GENERAL |
| | | AUTO INSURANCE CO. |
| | | |
| | | Common Stock: 1,500 Shares |
| |_____| ------------ |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,656,925 |
| | |_____________________________|
| |
| | _____________________________
| | | COLUMBUS SERVICE |
| | | GmbH |
| | | |
| | | Common Stock: 1 Share |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ----- |
| | | Neckura-100% DM 51,639 |
| | |_____________________________|
| |
| | _____________________________
| | | AUTO DIRECT |
| | | INSURANCE CO. |
| | | |
| | | Common Stock: 1,500 Shares |
| | | ------------- |
| |_____| |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,643,149 |
| | |_____________________________|
| |
| _____________________________ | ____________________________
| | NATIONWIDE | | | SVM SALES |
| | DEVELOPMENT | | | GmbH |
| | | | | |
| | Common Stock: 99,000 Shares | | | Common Stock: 50 Shares |
| | ------------- | |_____| ------------- |
| | | | |
|___| Cost | | Cost |
| | --- | | ---- |
| | Casualty-100% $15,100,000 | | Neckura-100% DM 50,000 |
| | Other Capital: | |____________________________|
| | -------------- |
| | Casualty-Ptd. $ 2,796,100 |
| |_____________________________|
|
|
| _____________________________
| | SCOTTSDALE |
| | INDEMNITY |
| | |
|___| Common Stock: 50,000 Shares |
| | ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $8,800,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE INDEMNITY |
| | |
| | Common Stock: 28,000 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $294,529,000 |
| |_____________________________|
|
| _____________________________ __________________________
| | LONE STAR | | COLONIAL COUNTY MUTUAL |
| | GENERAL AGENCY, INC. | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 1,000 Shares | | Surplus Debentures: |
|___| ------------- |______| ------------------- |
| | |______| |
| | Cost | | Cost |
| | ---- | | ---- |
| | Casualty $5,000,000 | | Colonial $500,000 |
| | 100% | | Lone Star 150,000 |
| |_____________________________| |__________________________|
|
| _____________________________
| | NATIONWIDE |
| | COMMUNITY URBAN |
| | REDEVELOPMENT |
| | |
| | Common Stock: 10 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,000 |
| |_____________________________|
|
| _____________________________
| | INSURANCE |
| | INTERMEDIARIES, INC. |
| | |
| | Common Stock: 1,615 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,615,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE |
| | CASH MANAGEMENT |
| | |
| | Common Stock: 100 Shares |
| | ------------- |
|___| |
| | Cost |
| | ---- |
| | Casualty-90% $9,000 |
| | NW Fin Serv- 1,000 |
| | 10% |
| |_____________________________|
|
|
| _____________________________ __________________________
| | CALIFORNIA | | VIDEO EAGLE INC. |
| | CASH MANAGEMENT | | |
| | | | Common Stock: 750 Shares |
| | Common Stock: 90 Shares | | ------------- |
|___| ------------- | ____| |
| | | | | Cost |
| | Cost | | | ---- |
| | ---- | | | NW Comm.- $0 |
| | Casualty-100% $9,000 | | | 100% |
| |_____________________________| | |__________________________|
| |
| |
| |
| _____________________________ | __________________________
| | NATIONWIDE | | | THE BEAK AND |
| | COMMUNICATIONS INC. | | | WIRE CORPORATION |
| | | | | |
| | Common Stock: 14,750 Shares | | | Common Stock: 750 Shares |
|___| ------------- |__|___| ------------- |
| | | |
| Cost | | Cost |
| ---- | | ---- |
| Casualty-100% $11,510,000 | | NW Comm- $531,000 |
| | | 100% |
| Other Capital: | |__________________________|
| -------------- |
| Casualty-Ptd. 1,000,000 |
|_____________________________|
<FN>
Subsidiary Companies - Solid Line
Associated Companies - Dotted Line
Contractural Association - Double Line
December 31, 1994
</TABLE>
<PAGE> 72
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side)
<S> <C> <C>
_______________________________________
| |
| EMPLOYERS INSURANCE |___________________________________________
| OF WAUSAU |___________________________________________
| A MUTUAL COMPANY |
|_______________________________________|
__________________________
|
____________|__________________
| NATIONWIDE LIFE |
| Common Stock: 3,814,779 |
| ------------- Shares |
| |
| NW Corp.- Cost |
| 100% ---- |
| $909,179,664 |
|______________________________|
|
_________________________________________________________________________________|
| | |
____________|____________ ___________|_______________ | ______________________________
| NATIONWIDE | | NATIONAL CASUALTY | | | FINANCIAL HORIZONS |
| FINANCIAL SERVICES | | Common Stock: 100 Shares | | | LIFE |
| Common Stock: 7,676 | | ------------- | | | Common Stock: 66,000 |
______| ------------- Shares | _____| | |_______| ------------- Shares |
| ____| Cost | | | Cost | | | NW Life- Cost |
| | | ---- | | | ---- | | | 100% ---- |
| | | NW Life-100% $5,996,261 | | | NW Life-100% $66,132,811 | | | $58,070,003 |
| | |_________________________| | |___________________________| | |______________________________|
| | | | | |
| | _________________________ | ___________|_|_____________ |
| | | NATIONWIDE | | | | |
| | | INVESTOR SERVICES | | | | |
| | | Common Stock: 5 Shares | | | NCC OF AMERICA, | |
| |____| ------------- | | | INC. (INACTIVE) | | ______________________________
| | | | | | | | | WEST COAST LIFE |
| | | NW Fin. Serv.- Cost | | | | | | Common Stock: 1,000,000 |
| | | 100% ---- | | | | | | ------------- Shares |
| | | $5,000 | | | | |_______| Cost |
| | |_________________________| | |___________________________| | | ---- |
| | | | | NW Life-100% $92,762,014 |
| | _________________________ | ___________________________ | |______________________________|
| | | NATIONWIDE | | | HICKEY-MITCHELL | |
| | | INVESTING | | | INSURANCE AGENCY | |
| | | FOUNDATION | | | Common Stock: 101 Shares | |
| |____| | |_____| ----------- | |
| ____| | | | | ______________________________
| | | | | Cost | | | EMPLOYERS LIFE INSURANCE CO. |
| | | | | ---- | | | OF WAUSAU (EL) |
| | | COMMON LAW TRUST | | Nat. Cas.-100% $4,701,200 | | | |
| | |_________________________| |___________________________| | | Common Stock: 250,000 Shares |
| | | |_______| ------------- |
| | _________________________ ____________|______________ | | ---- |
| | | NATIONWIDE | | NATIONAL PREMIUM & | | | NW Life-100% $165,627,416 |
| | | INVESTING | | BENEFIT ADMINISTRATION | | |______________________________|
| |____| FOUNDATION II | | Common Stock: 10,000 | | |
| ____| | | ------------ Shares | | |
| | | | | Cost | | |
| | | | | Hickey- ---- | | ___________|_________________
| | | COMMON LAW TRUST | | Mitchell-100% $1,319,469 | | | WAUSAU PREFERRED |
| | |_________________________| |___________________________| | | HEALTH INS. CO. |
| | | | |
| | | | Common Stock: 200 Shares |
| | _________________________ | | ------------- |
| | | NATIONWIDE | | | EL -- 100% Cost |
| |____| SEPARATE ACCOUNT | | | ---- |
| ____| TRUST | | | $51,413,193 |
| | | COMMON LAW TRUST | | |_____________________________|
| | |_________________________| |
| | |
| | |
| | _________________________ |
| | | FINANCIAL HORIZONS | | ______________________________
| |____| INVESTMENT TRUST | | | NATIONWIDE |
|______| TRUST | | | PROPERTY MANAGEMENT |
| COMMON LAW TRUST | | | Common Stock: 59 Shares |
|_________________________| |_______| ------------- |
| | |
| | Cost |
| | ---- |
| | NW Life-100% $1,907,896 |
| |______________________________|
| |
| |
| |
| |
| ____________|_________________
| | MRM INVESTMENTS, INC. |
| | Common Stock: 1 Share |
| | ------------ |
| | |
| | Cost |
| | Nat. Prop. ---- |
| | Mgmt.-100% $550,000 |
| |______________________________|
|
|
| ___________________________
| | NWE, INC. |
| | |
| | Common Stock: 100 Shares |
|_______| |
| NW Life-100% Cost |
| ---- |
| $35,971,375 |
|___________________________|
</TABLE>
<PAGE> 73
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (middle)
<S> <C> <C> <C>
_______________________________________
| |
________________________________| NATIONWIDE MUTUAL |___________________________________________________________
________________________________| (CASUALTY) |___________________________________________________________
| |
|_______________________________________|
| _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
__________________|______________|___
| NATIONWIDE CORPORATION |
| Common Stock: Control: |
| ------------- ------- |
| 13,092,790 100% |
| |
| Shares Cost |
| ------ ---- |
| Casualty $12,443,280 $710,293,557 |
| Fire 649,510 24,007,936 |
|_____________________________________|
|
____________________________________________________|______________________________________________________________________________
| | |
___________|_______________ _____________|_____________ ____________|______________
| PUBLIC EMPLOYEES | | GATES, McDONALD | | FINANCIAL HORIZONS |
| BENEFIT SERV. CORP. | | & COMPANY (GATES) | | DISTRIBUTORS AGY., INC. |
______| Common Stock: 236,494 | | Common Stock: 254 Shares | | Common Stock: 1,000 Shares|
| ____| ------------- Shares | | ------------- |___ _____| ------------- |
| | | Cost | | | | | ___| |
| | | NW Corp.- ---- | | Cost | | | | | Cost |
| | | 100% $12,830,936 | | ---- | | | | | NW Corp. ---- |
| | |___________________________| | MW Corp.- $22,126,323 | | | | | 100% $19,501,000 |
| | | 100% | | | | |___________________________|
| | |___________________________| | | |
| | | | |
| | ___________________________ | | |
| | ___________________________ | GATES, McDONALD & Co. | | | | ___________________________
| | | PEBSCO SECURITIES | | OF NEW YORK | | | | | FINANCIAL HORIZONS |
| | | CORP. | | Common Stock: 3 Shares | | | | | DISTRIBUTORS AGY. |
| |____| Common Stock: 5,000 | | ------------- |___| | | | OF ALABAMA, INC. |
| | | ------------- Shares | | | | | |___| Common Stock: 10,000 |
| | | Cost | | Cost | | | | | ----------- Shares |
| | | Pub. Emp. Ben. ---- | | ---- | | | | | Cost |
| | | Serv.Corp.-100% $25,000 | | Gates-100% $106,947 | | | | | ---- |
| | |___________________________| | | | | | | FHDAI-100% $100 |
| | |___________________________| | | | |___________________________|
| | | | |
| | | | |
| | ___________________________ | | |
| | ___________________________ | GATES, McDONALD & Co. | | | |
| | | PEBSCO OF | | OF NEVADA | | | | ___________________________
| | | NEW MEXICO | | | | | | | LANDMARK FINANCIAL |
| | | Common Stock: 1,000 | | Common Stock: 40 Shares |___| | | | SERVICES OF |
| |____| ------------- Shares | | | | | | NEW YORK, INC. |
| | | Cost | | Gates-100% Cost | | |___| Common Stock: 10,000 |
| | | Pub. Emp. Ben. ---- | | ---- | | | | ------------- Shares |
| | | Serv.Corp.-100% $1,000 | | $93,750 | | | | Cost |
| | |___________________________| |___________________________| | | | ---- |
| | | | | FHDAI-100% $10,100 |
| | | | |___________________________|
| | | |
| | | |
| | ___________________________ | |
| | | PEBSCO OF | | |
| | | ARKANSAS | | | ___________________________
| | | Common Stock: 50,000 | | | | FINANCIAL HORIZONS |
| |____| ------------- Shares | | | | SECURITIES CORP. |
| | | Cost | | |___| Common Stock: 10,000 |
| | | Pub. Emp. Ben. ---- | | | | ------------- Shares |
| | | Serv.Corp. 100% $500 | | | | Cost |
| | |___________________________| | | | ---- |
| | | | | FHDAI-100% $153,000 |
| | | | |___________________________|
| | | |
| | ___________________________ | |
| | | PEBSCO OF | ___________________________ | |
| | | MONTANA | | AFFILIATE AGENCY, INC. | | | ___________________________
| |____| Common Stock: 500 | | | | | | |
| | | ------------- Shares | | Common Stock: 100 Shares |__ | | | FINANCIAL HORIZONS |
| | | Cost | | | | |___| DISTRIBUTORS |
| | | Pub. Emp. Ben. ---- | | FHDAI-100% Cost | | ___| AGENCY OF TEXAS, |
| | | Serv.Corp.-100% $500 | | ---- | | | | INC. |
| | |___________________________| | $100 | | | |___________________________|
| | |___________________________| | |
| | | |
| | | |
| | ___________________________ | | ___________________________
| | | PEBSCO OF | | | | |
| | | ALABAMA | | |___| FINANCIAL HORIZONS |
| |____| Common Stock: 100,000 | | ___| DISTRIBUTORS AGY. |
| | | ------------- Shares | | | | OF OHIO, INC. |
| | | Cost | | | |___________________________|
| | | Pub. Emp. Ben. ---- | | |
| | | Serv.Corp.-100% $1,000 | | |
| | |___________________________| | |
| | | |
| | ___________________________ | |
| | | PEBSCO OF | | | ___________________________
| | | MASSACHUSETTS | | | | |
| | | INSURANCE AGENY, INC. | | |___| FINANCIAL HORIZONS |
| |____| Common Stock: 1,000 | | ___| DISTRIBUTORS AGY. |
| | | ------------- Shares | | | | OF OKLAHOMA, INC. |
| | | Cost | | | |___________________________|
| | | Pub. Emp. Ben. ----- | | |
| | | Serv.Corp.-100% $1,000 | | |
| | |___________________________| | | ___________________________
| | | | | |
| | ___________________________ | |___| AFFILIATE |
| |____| | |_____ AGENCY OF |
|______| PEBSCO OF | | OHIO, INC. |
| TEXAS | | |
|___________________________| |___________________________|
</TABLE>
<PAGE> 74
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C>
_______________________________________
| |
______________________| NATIONWIDE MUTUAL |
______________________| FIRE (FIRE) |
| |
|_______________________________________|
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _|
____________________________________________________________________
| | |
_____________|_____________ | ____________|______________
| NEA VALUEBUILDER | | | INHEALTH, INC. |
| INVESTOR SERVICES, INC. | | | Common Stock: 100 |
_______| Common Stock: 500 | | | ------------ Shares |
| _____| ------------- Shares | | | Cost |
| | | Cost | | | ---- |
| | | NW Corp.- ---- | | | NW Corp.- |
| | | 100% $5,000 | | | 100% $12,046,413 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | NATIONWIDE |
| | | INVESTOR SERVICES | | | HEALTH CARE |
| |_____| OF ALABAMA, INC. | |_____| Common Stock: 15 Shares |
| | | Common Stock: 500 | _____| ------------ |
| | | ------------- Shares | | | |
| | | Cost | | | Cost |
| | | ---- | | | NW Corp.- ---- |
| | | NEA-100% $5,000 | | | 100% $16,850,000 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH MGT. |
| | | INVESTOR SERVICES | | | SYSTEMS, INC. |
| | | OF OHIO, INC. | | | Common Stock: 100 Shares |
| |_____| Common Stock: 100 | |_____| ------------- |
| | | ------------- Shares | | | |
| | | Cost | | | Cost |
| | | ----- | | | NW Health ---- |
| | | NEA-91% $5,000 | | | Care-100% $25,149 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | | | | INHEALTH |
| | | | | | AGENCY, INC. |
| | | NEA VALUEBUILDER | | | Common Stock: 99 Shares |
| |_____| INVESTOR SERVICES | |_____| ------------- |
| | | OF TEXAS, INC. | | Cost |
| | | | | NW Health ---- |
| | | | | Corp.-99% $116,077 |
| | |___________________________| |___________________________|
| |
| | ___________________________
| | | |
| | | |
| |_____| NEA VALUEBUILDER |
|_______| INVESTOR SERVICES |
| OF OKLAHOMA, INC. |
| |
|___________________________|
<FN>
Subsidiary Companies -- Solid Line
Associated Companies -- Dotted Line
Contractual Association -- Double Line
December 31, 1994
</TABLE>
Page 2
<PAGE> 75
ITEM 31. NUMBER OF CONTRACT OWNERS
The number of Contractholders of Qualified and Non-Qualified Contracts
as of March 1, 1995, was 5 and 0, respectively.
ITEM 32. INDEMNIFICATION
Provision is made in the Company's Amended Code of Regulations and
expressly authorized by the General Corporation Law of the State of
Ohio, for indemnification by the Company of any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative by reason of the fact that such person
is or was a director, officer or employee of the Company, against
expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, to the extent and
under the circumstances permitted by the General Corporation Law of
the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable.
ITEM 33. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS
Not Applicable.
ITEM 34. PRINCIPAL UNDERWRITERS
Not Applicable.
ITEM 35. LOCATION OF ACCOUNTS AND RECORDS
Joseph F. Ciminero
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43215
ITEM 36. MANAGEMENT SERVICES
Not Applicable
ITEM 37. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement
are never more than 16 months old for so long as payments
under the variable annuity contracts may be accepted;
(b) include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant
can check to request a Statement of Additional Information,
or (2) a post card or similar written communication affixed
to or included in the prospectus that the applicant can
remove to send for a Statement of Additional Information; and
(c) deliver any Statement of Additional Information and any
financial statements required to be made available under this
Form promptly upon written or oral request.
72 OF 75
<PAGE> 76
OFFERED BY
NATIONWIDE
LIFE INSURANCE COMPANY
Group Common Stock
Variable Annuity Contracts
Separate Account
No. 1
PROSPECTUS
MAY 1, 1995
73 OF 75
<PAGE> 77
ACCOUNTANTS' CONSENT
The Board of Directors
Nationwide Life Insurance Company
and Contract Owners of Separate Account No. 1:
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Investment Advisory and Other Services" in the
Statement of Additional Information.
KPMG Peat Marwick LLP
Columbus, Ohio
April 26, 1995
74 OF 75
<PAGE> 78
SIGNATURES
As required by the Securities Act of 1933, the Registrant, SEPARATE
ACCOUNT NO. 1, certifies that it meets the requirements of Securities Act Rule
485(b) for effectiveness of the Post-Effective Amendment and has caused this
Post-Effective Amendment to be signed on its behalf in the City of Columbus,
and State of Ohio, on this 26th day of April, 1995.
SEPARATE ACCOUNT NO. 1
----------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
---------------------------------
(Depositor)
By /s/ JOSEPH P. RATH
---------------------
Joseph P. Rath,
Vice President and
Associate General Counsel
As required by the Securities Act of 1933, this Post-Effective
Amendment has been signed by the following persons in the capacities indicated
on the 26th day of April, 1995.
<TABLE>
<CAPTION>
Signature Title
<S> <C> <C>
LEWIS J. ALPHIN Director
- ---------------------------------
Lewis J. Alphin
WILLARD J. ENGEL Director
- ---------------------------------
Willard J. Engel
FRED C. FINNEY Director
- ---------------------------------
Fred C. Finney
PETER F. FRENZER President and Chief Operating Officer and
- --------------------------------- Director
Peter F. Frenzer
CHARLES L. FUELLGRAF, JR. Director
- ---------------------------------
Charles L. Fuellgraf, Jr.
HENRY S. HOLLOWAY Chairman of the Board and
- --------------------------------- Director
Henry S. Holloway
D. RICHARD McFERSON Chief Executive Officer and By /s/ JOSEPH P. RATH
- --------------------------------- Director ---------------------
D. Richard McFerson Joseph P. Rath
Attorney-in-Fact
DAVID O. MILLER Director
- ---------------------------------
David O. Miller
C. RAY NOECKER Director
- ---------------------------------
C. Ray Noecker
JAMES F. PATTERSON Director
- ---------------------------------
James F. Patterson
ROBERT H. RICKEL Director
- ---------------------------------
Robert H. Rickel
ARDEN L. SHISLER Director
- ---------------------------------
Arden L. Shisler
ROBERT L. STEWART Director
- ---------------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- ---------------------------------
Nancy C. Thomas
HAROLD W. WEIHL Director
- ---------------------------------
Harold W. Weihl
</TABLE>
75 OF 75
<PAGE> 79
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as
directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio
corporation, which has filed or will file with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933, as amended,
various Registration Statements and amendments thereto for the registration
under said Act of Individual Deferred Variable Annuity Contracts in connection
with the MFS Variable Account, Nationwide Variable Account, Nationwide Variable
Account-II, Nationwide Variable Account-3, Nationwide Variable Account-4,
Nationwide Variable Account-5, Nationwide Variable Account-6, Nationwide
Fidelity Advisor Variable Account and Nationwide Multi-Flex Variable Account;
and the registration of fixed interest rate options subject to a market value
adjustment offered under some or all of the aforementioned Individual Variable
Annuity Contracts in connection with the Nationwide Multiple Maturity Separate
Account; and the registration of Group Flexible Fund Retirement Contracts in
connection with the Nationwide DC Variable Account and the NACo Variable
Account; and the registration of Group Common Stock Variable Annuity Contracts
in connection with Separate Account No.1; and the registration of variable life
insurance policies in connection with the Nationwide VU Separate Account,
Nationwide VU Separate Account-2 and Nationwide VU Separate Account-3 of
Nationwide Life Insurance Company, hereby constitutes and appoints D. Richard
McFerson, Peter F. Frenzer, Gordon E. McCutchan, W. Sidney Druen, and Joseph P.
Rath, and each of them with power to act without the others, his/her attorney,
with full power of substitution and resubstitution, for and in his/her name,
place and stead, in any and all capacities, to approve, and sign such
Registration Statements and any and all amendments thereto, with power to affix
the corporate seal of said corporation thereto and to attest said seal and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby granting unto
said attorneys, and each of them, full power and authority to do and perform
all and every act and thing requisite to all intents and purposes as he/she
might or could do in person, hereby ratifying and confirming that which said
attorneys, or any of them, may lawfully do or cause to be done by virtue
hereof. This instrument may be executed in one or more counterparts.
IN WITNESS WHEREOF, the undersigned have herewith set their names and
seals as of this fifth day of April, 1995.
/s/ Lewis J. Alphin /s/ C. Ray Noecker
- ------------------------------------- --------------------------------------
Lewis J. Alphin, Director C. Ray Noecker, Director
/s/ Willard J. Engel /s/ Robert A. Oakley
- ------------------------------------- --------------------------------------
Willard J. Engel, Director Robert A. Oakley, Senior Vice
President and Chief Financial Officer
/s/ Fred C. Finney
- ------------------------------------- /s/ James F. Patterson
Fred C. Finney, Director --------------------------------------
James F. Patterson, Director
/s/ Peter F. Frenzer
- ------------------------------------- /s/ Robert H. Rickel
Peter F. Frenzer, President/Chief -------------------------------------
Operating Officer and Director Robert H. Rickel, Director
/s/ Charles L. Fuellgraf, Jr. /s/ Arden L. Shisler
- ------------------------------------- --------------------------------------
Charles L. Fuellgraf, Jr., Director Arden L. Shisler, Director
/s/ Henry S. Holloway /s/ Robert L. Stewart
- ------------------------------------- --------------------------------------
Henry S. Holloway, Chairman of the Robert L. Stewart, Director
Board, Director
/s/ Nancy C. Thomas
/s/ D. Richard McFerson --------------------------------------
- ------------------------------------- Nancy C. Thomas, Director
D. Richard McFerson, Chief Executive
Officer and Director /s/ Harold W. Weihl
-------------------------------------
/s/ David O. Miller Harold W. Weihl, Director
- -------------------------------------
David O. Miller, Director
