<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. 36 /x/
SEPARATE ACCOUNT NO. 1
(Exact Name of Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216
(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 43216
(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, 1996 pursuant to paragraph (b) of Rule 485
- -------
60 days after filing pursuant to paragraph (a)(1)of Rule 485
- -------
on (date), pursuant to paragraph (a)(1) of Rule 485
- -------
================================================================================
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<PAGE> 2
SEPARATE ACCOUNT NO. 1
REFERENCE TO ITEMS
REQUIRED BY FORM N-3
<TABLE>
<S> <C>
Part A INFORMATION REQUIRED IN A PROSPECTUS
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 14. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 15. Table of Contents of the Statement of Additional Information . . . . . . . . . . . . . . . . . . . . 20
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 16. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 17. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 18. General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 19. Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 20. Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Item 21. Investment Advisory and Other Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Item 22. Brokerage Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Item 23. Purchase and Pricing of Securities Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Item 24. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 25. Calculation of Yield Quotations of Money Market Sub-Accounts . . . . . . . . . . . . . . . . . . . . 24
Item 26. Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 27. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Part C OTHER INFORMATION
Item 28. Financial Statements and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Item 29. Directors and Officers of the Insurance Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Item 30. Persons Controlled by or Under Common Control with the
Insurance Company or Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Item 31. Number of Contractowners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Item 32. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Item 33. Business and Other Connections of Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . 78
Item 34. Principal Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Item 35. Location of Accounts and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Item 36. Management Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Item 37. Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
</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 (the "Code") (see "Federal Income Tax Status" section).
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 or her capital and with the growth of his or her 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") and other variable annuity 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, 1996, 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, 1996, IS
INCORPORATED HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF
ADDITIONAL INFORMATION APPEARS ON PAGE 18 OF THIS PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996.
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<PAGE> 4
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT - 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 - The person actually receiving annuity payments and upon whose
continuation of life any annuity payment involving life contingencies depends.
ANNUITY UNIT - An accounting unit of measure used to calculate the value of
Variable Annuity payments.
BENEFICIARY - 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.
CODE - The Internal Revenue Code of 1986, as amended.
COMPANY - Nationwide Life Insurance Company.
CONTRACT ANNIVERSARY - An anniversary of the Date of Issue of the Contract.
CONTRACTHOLDER - The Contract Owner.
CONTRIBUTIONS - Amounts paid to the Company pursuant to the Contract in order
to provide retirement income benefits.
DISTRIBUTION - Any payment by the Company of part or all of the Participant
Account Value under the Contract.
PARTICIPANT - An eligible employee who is entitled to benefits under the Plan.
Such persons are determined and reported to the Company by the Contractholder.
PARTICIPANT ACCOUNT - 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 as the Plan.
QUALIFIED PLANS - Retirement plans which receive favorable tax treatment under
Section 401 of the 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.
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<PAGE> 5
SUMMARY OF CONTRACT EXPENSES
PARTICIPANT TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Contingent Deferred Sales Charge (as a percentage of contributions) 6.5%
-------
Surrender Fees (as a percentage of surrender value) 7%
-------
Exchange Fee $ 15
-------
PARTICIPANT ACCOUNT CHARGE $ 15
- -------------------------- -------
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 cancel your Participant Account at
the end of the applicable time period:
You would pay the following expenses
on a $1,000 investment, assuming 5% $92 $139 $188 $231
annual return on assets:
- ------------------------------------------------------------------------------------------------------------------------
If you do not cancel your Participant
Account:
You would pay the following expenses $20 $62 $107 $231
on a $1,000 investment, assuming 5%
annual return on assets:
- ------------------------------------------------------------------------------------------------------------------------
If you annuitize at the end of the
applicable time period:
You would pay the following expenses
on a $1,000 investment, assuming 5% $92 $139 $188 $325
annual return on assets:
========================================================================================================================
</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 Contract. A Contingent Deferred Sales Charge of
not more than 6.5% is imposed only on contributions made within 96 months of
the date of withdrawal. No Contingent Deferred Sales Charge 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. A Participant
Account Charge of not more than $15 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
charged, 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, 1986 JAN. 1, 1987 JAN. 1, 1988 JAN. 1, 1989 JAN. 1, 1990
TO TO TO TO TO
DEC. 31, 1986 DEC. 31, 1987 DEC. 31, 1988 DEC. 31, 1989 DEC. 31, 1990
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
Unit value at beginning of 6.5259213 7.6185156 7.7663472 9.1559374 12.2942826
period
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME .2141446 .2337846 .2546169 .4314503 .6862452
Investment Income
- -------------------------------------------------------------------------------------------------------------------------------
Change to Separate Account
for expenses, taxes and -0- -0- -0- -0- -0-
additions to surplus
- -------------------------------------------------------------------------------------------------------------------------------
Net Income .2141446 .2337846 .2546169 .4314503 .6862452
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL CHANGES
Net realized capital gains 1.1516375 .7980317 .8922013 1.0246383 .2962199
(losses)
- -------------------------------------------------------------------------------------------------------------------------------
Net unrealized capital
gains (.2731878) (.8839849) .2427721 1.6822566 (.9802034)
(losses)
- -------------------------------------------------------------------------------------------------------------------------------
Unit Value at end of
period 7.6185156 7.7663472 9.1559374 12.2942826 12.2965444
- -------------------------------------------------------------------------------------------------------------------------------
Number of Accumulation
Units outstanding at end 1,985,195.92 1,844,372.64 1,644,078.96 1,526,288.77 1,436,543.92
of period
- -------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in 16.74% 1.94% 17.89% 34.27% .02%
Unit Value during period
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS
Expenses to average net .164% .239% .293% .246% .334%
assets
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income to 2.81% 2.62% 3.20% 5.15% 3.24%
average net assets
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26.1% 23.8% 31.8% 28.6% 15.1%
===============================================================================================================================
</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.
(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, 1991 JAN. 1, 1992 JAN. 1, 1993 JAN. 1, 1994 JAN. 1, 1995
TO TO TO TO TO
DEC. 31, 1991 DEC. 31, 1992 DEC. 31, 1993 DEC. 31, 1994 DEC. 31, 1995
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
Unit value at beginning of 12.2965444 16.2373889 16.7112913 17.8516259 18.0013570
period
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME .4278250 .4656912 .4480584 2.9687004 .4955136
Investment Income
- -------------------------------------------------------------------------------------------------------------------------------
Change to Separate Account
for expenses, taxes and -0- -0- -0- -0- -0-
additions to surplus
- -------------------------------------------------------------------------------------------------------------------------------
Net Income .4278250 .4656912 .4480584 2.9687004 .4955136
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL CHANGES
Net realized capital gains 1.1910187 .4577232 .4424591 .1158852 1.5533117
(losses)
- -------------------------------------------------------------------------------------------------------------------------------
Net unrealized capital 2.3220008 (.4495120) .2498171 (2.9348545) 3.2331516
gains (losses)
- -------------------------------------------------------------------------------------------------------------------------------
Unit Value at end of 16.2373889 16.7112913 17.8516259 18.0013570 23.2833339
period
- -------------------------------------------------------------------------------------------------------------------------------
Number of Accumulation
Units outstanding at end 1,251,874.00 1,241,981.00 1,313,747.00 1,282,594.00 1,111,254.00
of period
- -------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in 32.05% 2.92% 6.82% .84% 29.34%
Unit Value during period
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS
Expenses to average net .225% .251% .239% .189% .190%
assets
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income to 2.95% 2.60% 2.74% 2.83% 2.49%
average net assets
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 25.8% 9.10% 9.2% 2.1% 20.4%
===============================================================================================================================
</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 Office at One Nationwide Plaza,
Columbus, Ohio 43216.
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.
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.
6
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<PAGE> 9
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 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, 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 6.5%.
The amount of the Contingent Deferred Sales Charge
will be reduced when the sale of a Contract to a Plan results
in savings of acquisition 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.
8
10 of 80
<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 $15, from each Participant Account.
This 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 1.30%
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 80
<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 contributions 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 in this prospectus 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 canceling a number of
Accumulation Units in the Participant Account subject to any applicable
charges.
10
12 of 80
<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, 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 Code. Generally, Plans are maintained by employers for the
benefit of eligible employees ("Participants") and their Beneficiaries.
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.
11
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<PAGE> 14
These Contracts provide for the accumulation of Contributions primarily in
common stocks investments 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
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 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 Company's assets.
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.
12
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<PAGE> 15
ACCUMULATION UNIT VALUES* AT THE END OF EACH QUARTER
<TABLE>
<S> <C> <C> <C> <C> <C>
Mar. 1975 1.2323180 Mar. 1982 2.6983907 Mar. 1989 9.9636435
June 1975 1.3904027 June 1982 2.7121107 June 1989 10.6742854
Sept. 1975 1.2246980 Sept. 1982 3.0397381 Sept. 1989 11.9347701
Dec. 1975 1.3423913 Dec. 1982 3.4783376 Dec. 1989 12.2942826
Mar. 1976 1.5106830 Mar. 1983 3.8214250 Mar. 1990 11.7646683
June 1976 1.5671775 June 1983 4.1514343 June 1990 12.5345438
Sept. 1976 1.6226746 Sept. 1983 4.2253097 Sept. 1990 11.1707863
Dec. 1976 1.6520855 Dec. 1983 4.3025179 Dec. 1990 12.2965444
Mar. 1977 1.6014589 Mar. 1984 4.2234741 Mar. 1991 14.2006556
June 1977 1.6487669 June 1984 4.1987538 June 1991 14.0854417
Sept. 1977 1.6345287 Sept. 1984 4.5821032 Sept. 1991 14.5603900
Dec. 1977 1.6612530 Dec. 1984 4.6253768 Dec. 1991 16.2373889
Mar. 1978 1.6161771 Mar. 1985 5.1569491 Mar. 1992 15.3685232
June 1978 1.7508039 June 1985 5.6386079 June 1992 15.4486637
Sept. 1978 1.8934789 Sept. 1985 5.5241146 Sept. 1992 15.9783810
Dec. 1978 1.8241798 Dec. 1985 6.5259213 Dec. 1992 16.7112913
Mar. 1979 1.9317751 Mar. 1986 7.5932573 Mar. 1993 16.3132491
June 1979 2.0099303 June 1986 8.0905822 June 1993 16.6761553
Sept. 1979 2.1456834 Sept. 1986 7.3220521 Sept. 1993 16.9286930
Dec. 1979 2.1093074 Dec. 1986 7.6185156 Dec. 1993 17.8516259
Mar. 1980 2.0179971 Mar. 1987 9.1073826 Mar. 1994 17.0998701
June 1980 2.2449442 June 1987 9.4745614 June 1994 17.3439309
Sept. 1980 2.4343502 Sept. 1987 9.9845837 Sept. 1994 18.2996496
Dec. 1980 2.5509427 Dec. 1987 7.7663472 Dec. 1994 18.0013570
Mar. 1981 2.7120916 Mar. 1988 8.3888862 Mar. 1995 19.0619759
June 1981 2.7593172 June 1988 8.8571798 June 1995 20.3702707
Sept. 1981 2.5313853 Sept. 1988 8.9607960 Sept. 1995 21.8627328
Dec. 1981 2.7659801 Dec. 1988 9.1559374 Dec. 1995 23.2833339
</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
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
*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)
====================================================================================================================================
</TABLE>
14
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<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
<TABLE>
<CAPTION>
====================================================================================================================================
Accumulated Value* Of
Contract Participant Deposits Account
Accumulated Maintenance Account Accumulated Less Expense On Date
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 171,316.13
- ------------------------------------------------------------------------------------------------------------------------------------
Mar. 31, 1995 29,000.00 2,389.42 30.00 20,953.45 8,046.55 181,409.77
- ------------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1995 same -0- -0- -0- same 221,583.76
- ------------------------------------------------------------------------------------------------------------------------------------
</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 or she 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 or a portion
thereof 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.
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
16
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<PAGE> 19
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 3.5% 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 3.5% assumption.
If the 3.5% investment increment assumption were changed to some
other assumption, such as 2% or 5% (with an equal change in the 3.5% 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 3.5% assumption described above, the Company is
willing to issue a Contract with an assumption which is higher or lower than
the 3.5% assumption.
ANNUITY UNIT VALUES* AT THE END OF EACH QUARTER
<TABLE>
<S> <C> <C> <C> <C> <C>
Mar. 1975 .9739300 Mar. 1982 1.7359408 Mar. 1989 5.4933407
June 1975 1.0908130 June 1982 1.7305361 June 1989 5.8356153
Sept. 1975 .9537858 Sept. 1982 1.9229774 Sept. 1989 6.4688440
Dec. 1975 1.0377989 Dec. 1982 2.1815971 Dec. 1989 6.6076882
Mar. 1976 1.1593476 Mar. 1983 2.3762545 Mar. 1990 6.2688926
June 1976 1.1938913 June 1983 2.5593550 June 1990 6.6219279
Sept. 1976 1.2271288 Sept. 1983 2.5825910 Sept. 1990 5.8517062
Dec. 1976 1.2402329 Dec. 1983 2.6072616 Dec. 1990 6.3862002
Mar. 1977 1.1934020 Mar. 1984 2.5374442 Mar. 1991 7.2568733
June 1977 1.2196532 June 1984 2.5009891 June 1991 7.1903870
Sept. 1977 1.2002773 Sept. 1984 2.7059580 Sept. 1991 7.3691860
Dec. 1977 1.2109632 Dec. 1984 2.7081212 Dec. 1991 8.0818179
Mar. 1978 1.1694732 Mar. 1985 2.9934951 Mar. 1992 7.6455389
June 1978 1.2576072 June 1985 3.2450574 June 1992 7.6195924
Sept. 1978 1.3501253 Sept. 1985 3.1519399 Sept. 1992 7.8133694
Dec. 1978 1.2911817 Dec. 1985 3.6916616 Dec. 1992 8.1017796
Mar. 1979 1.3573209 Mar. 1986 4.2586598 Mar. 1993 7.8410758
June 1979 1.4018878 June 1986 4.4987245 June 1993 7.9468659
Sept. 1979 1.4856076 Sept. 1986 4.0365210 Sept. 1993 7.9981244
Dec. 1979 1.4497808 Dec. 1986 4.1639886 Dec. 1993 8.3619441
Mar. 1980 1.3768583 Mar. 1987 4.9351179 Mar. 1994 7.9412180
June 1980 1.5204793 June 1987 5.0901180 June 1994 7.9855824
Sept. 1980 1.6367040 Sept. 1987 5.3181853 Sept. 1994 8.3040963
Dec. 1980 1.7025496 Dec. 1987 4.1012392 Dec. 1994 8.1469286
Mar. 1981 1.7968159 Mar. 1988 4.3916141 Mar. 1995 8.5530561
June 1981 1.8147096 June 1988 5.0036811 June 1995 9.0618110
Sept. 1981 1.6526309 Sept. 1988 5.0188653 Sept. 1995 9.6424504
Dec. 1981 1.7925811 Dec. 1988 5.0916250 Dec. 1995 10.1810574
--------- ----------
</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.
17
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<PAGE> 20
Section 72 of the 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.
The Code permits the rollover of most Distributions from Qualified
Plans and Tax Sheltered Annuities 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 OF CONTENTS OF STATEMENT
OF ADDITIONAL INFORMATION
<TABLE>
<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>
18
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<PAGE> 21
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1996
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,
1996. 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 OF CONTENTS
<TABLE>
<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 which has
two classes of common stock, each of which has one-half of the voting power.
All of the Class A common stock is held by Nationwide Mutual Insurance Company.
All of the Class B 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.
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.
1
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<PAGE> 22
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 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.
During fiscal years 1995, 1994 and 1993, the portfolio turnover rates
were 20.4%, 2.1% and 9.2%, 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, 1995, December
31, 1994 and December 31, 1993, 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.
2
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<PAGE> 23
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 schedules 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 or her 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.
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 or she 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 or her 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.
3
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<PAGE> 24
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> 25
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, 1995, and
the related statements of operations and changes in contract owners' equity and
schedules of changes in unit value for each of the years in the two-year period
then ended. These financial statements and schedules of changes in unit value
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedules of changes in
unit value 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 and
schedules of changes in unit value are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and schedules of changes in unit value
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, 1995, and the results of its operations and its changes in
contract owners' equity and the schedules of changes in unit value for each of
the years in the two-year period then ended in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 26, 1996
<PAGE> 26
NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT NO. 1
Statement of Assets, Liabilities
and Contract Owners' Equity
December 31, 1995
<TABLE>
<S> <C>
Assets:
Investments in securities at market value, per accompanying
schedule of investments (cost $20,442,176) $ 35,961,933
Cash 74,602
Dividends receivable 38,678
Accounts receivable 109,700
-----------
Total assets 36,184,913
-----------
Liabilities:
Accounts payable to Nationwide Life Insurance Company 232,693
Other 174,702
-----------
Total liabilities 407,395
-----------
Contract owners' equity (note 2) $ 35,777,518
===========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 27
NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT NO. 1
Statements of Operations and Changes
in Contract Owners' Equity
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Investment activity:
Dividends and interest $ 834,471 917,469
----------- -----------
Gain (loss) on investments:
Realized (note 3) 2,615,859 35,814
Unrealized 5,444,798 (907,009)
----------- -----------
Net gain (loss) on investments 8,060,657 (871,195)
----------- -----------
Net investment activity 8,895,128 46,274
----------- -----------
Equity transactions:
Deposits received from contract owners 1,453,862 2,408,097
Contract withdrawals and transfers (5,288,172) (4,413,536)
Annuity payments (156,461) (171,071)
Adjustment to maintain annuity reserves (342,751) 195,021
----------- -----------
Net equity transactions (4,333,522) (1,981,489)
----------- -----------
Expenses:
Contract charges (note 4) (113,403) (183,863)
----------- -----------
Net change in contract owners' equity 4,448,203 (2,119,078)
Contract owners' equity:
At beginning of year 31,329,315 33,448,393
----------- -----------
At end of year $35,777,518 31,329,315
=========== ===========
</TABLE>
See accompanying notes to financial statements.
27 of 80
<PAGE> 28
NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT NO. 1
Notes to Financial Statements
December 31, 1995 and 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) ACCOUNTING ENTITY AND NATURE OF OPERATIONS
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 the contract owners are to be reflected. This
account contains the contract owners' equity and reflects the
variable annuity reserves of the contract owners 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.
NLIC offers tax qualified Group Flexible Fund Retirement
Contracts through the Separate Account. The primary
distribution for the contracts is with corporate pension plans
through Pension Plan Administrators.
(b) ANNUITY CONTRACTS
As of December 31, 1995, the Separate Account has 5 variable annuity
contracts. 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, 1995, 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
contract owner receiving payments.
(e) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with
generally accepted accounting principles may require management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities, if any, at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
(Continued)
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<PAGE> 29
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 $474,537 for annuities in the payout phase) as of December
31, 1995 are:
<TABLE>
<CAPTION>
Reserve Contract owners'
Accumulation Equity value equity in
Contracts units units per unit* annuity reserves
--------- ------------ ------ --------- ----------------
<S> <C> <C> <C> <C>
100% reserve -- 227,774 23.072052 $ 5,255,213
95% reserve -- 81,928 23.072052 1,890,247
Other - Payout -- 135,710 20.394191 2,767,696
HR-10 1,105,710 -- 23.283334 25,744,615
Other - Accumulation 5,507 -- 21.744507 119,747
========= ======= ========= -----------
$35,777,518
===========
</TABLE>
* Reserve value per unit represents redemption value.
(3) INVESTMENT GAINS
The net realized gain and investments was calculated on the basis of
specific security identification:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Considerations 6,276,423 5,888,186
Cost (3,660,564) (5,852,372)
----------- -----------
NET REALIZED GAIN ON INVESTMENTS $ 2,615,859 35,814
=========== ===========
</TABLE>
(Continued)
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<PAGE> 30
NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT NO. 1
Notes to Financial Statements, Continued
(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.
(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
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 for 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 $3,543,484 as of December 31, 1995, and is
included in the investments in the accompanying financial statements.
30 of 80
<PAGE> 31
NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT NO. 1
Schedules of Changes in Unit Value
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
95% and
100% Other Other
Reserve Payout HR-10 Accumulation
------- ------ ----- ------------
<S> <C> <C> <C> <C>
1995:
Beginning unit value - Jan. 1 $17.900448 15.995407 18.001357 16.895682
Reinvested capital gains and dividends 0.513409 0.456146 0.517259 0.484208
Unrealized gain (loss) 4.729461 4.203144 4.764718 4.460635
Asset charges (0.071266) (0.260506) 0.000000 (0.096018)
---------- ---------- ---------- ----------
Ending unit value - Dec. 31 $23.072052 20.394191 23.283334 21.744507
========== ========== ========== ==========
Percentage increase (decrease) in unit value* 29% 28% 29% 29%
1994:
Beginning unit value - Jan. 1 $17.813698 16.091501 17.851626 16.838911
Reinvested capital gains and dividends 0.503259 0.452150 0.505213 0.475366
Unrealized gain (loss) (0.354630) (0.319513) (0.355482) (0.335097)
Asset charges (0.061879) (0.228731) 0.000000 (0.083498)
---------- ---------- ---------- ----------
Ending unit value - Dec. 31 $17.900448 15.995407 18.001357 16.895682
========== ========== ========== ==========
Percentage increase (decrease) in unit value* 0% (1)% 1% 0%
</TABLE>
* An annualized rate of return cannot be determined as asset charges do not
include the contract charges described in note 4.
See accompanying independent auditors' report.
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<PAGE> 32
NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT NO. 1
Schedule of Portfolio Investments
December 31, 1995
<TABLE>
<CAPTION>
Number Market
Name of issuer and title of issue of shares Cost (1) Value
--------------------------------- --------- -------- -----
<S> <C> <C> <C>
COMMON STOCKS (90.1%)
BROADCASTING (5.5%)
Capital Cities/ABC, Inc. 10,000 $ 241,875 1,233,750
Cox Communications, Inc., Class A 8,630 81,688 168,285
Tele-Comm Liberty Media Group 5,475 80,850 147,141
Tele-Communications, Inc. Class A 21,900 250,475 435,262
--------- ----------- -----------
46,005 654,888 1,984,438
--------- ----------- -----------
BUILDING MATERIALS (2.9%)
Vulcan Materials Co. 18,000 87,908 1,037,250
--------- ----------- -----------
18,000 87,908 1,037,250
--------- ----------- -----------
CHEMICAL (9.7%)
Avery Dennison Corporation 5,900 120,609 295,738
IMC Global, Inc. 22,800 586,973 929,100
Monsanto Company 7,500 308,100 918,750
Morton International, Inc. 37,500 459,873 1,345,312
--------- ----------- -----------
73,700 1,475,555 3,488,900
--------- ----------- -----------
DRUGS AND COSMETICS (10.5%)
American Home Products Corp. 8,000 593,720 776,000
Bristol-Myers Squibb Company 9,000 257,293 772,875
Pfizer, Inc. 5,000 179,266 315,000
Schering-Plough Corporation 15,400 204,872 843,150
Warner-Lambert Company 10,900 474,463 1,058,662
--------- ----------- -----------
48,300 1,709,614 3,765,687
--------- ----------- -----------
</TABLE>
- --------------------
(1) Also represents cost for federal income tax purposes.
(Continued)
32 of 80
<PAGE> 33
NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT NO. 1
Schedule of Portfolio Investments, Continued
December 31, 1995
<TABLE>
<CAPTION>
Number Market
Name of issuer and title of issue of shares Cost (1) Value
- --------------------------------- -------- -------- -----
<S> <C> <C> <C>
Common Stocks, Continued
FINANCIAL SERVICES (10.5%)
Chubb Corporation 10,400 $287,872 1,006,200
Citicorp 13,000 574,665 874,250
Corestates Financial Corporation 15,600 363,700 590,850
First Chicago NBD Corporation 11,250 150,266 444,375
Keycorp 3,620 96,500 131,225
National City Corporation 22,000 353,375 728,750
---------- ----------- -----------
75,870 1,826,378 3,775,650
---------- ----------- -----------
FOODS AND BEVERAGES (8.6%)
Anheuser-Busch Companies 12,400 517,967 829,250
Kellogg Company 2,700 68,618 208,575
PEPSICO 16,000 405,770 894,000
Quaker Oats Company 18,600 491,554 641,700
Ralcorp Holdings 2,433 39,479 59,000
Ralston-Ralston Purina Group 7,429 313,582 463,384
---------- ----------- -----------
59,562 1,836,970 3,095,909
---------- ----------- -----------
HOSPITAL SUPPLIES (.2%)
Baxter International, Inc. 1,600 45,869 67,000
Caremark International 400 4,635 7,250
---------- ----------- -----------
2,000 50,504 74,250
---------- ----------- -----------
HOUSEHOLD PRODUCTS (8.2%)
Avon Products, Inc. 11,000 503,535 829,126
Gillette Company 24,200 426,849 1,261,425
Procter & Gamble Company 10,200 432,384 846,600
---------- ----------- -----------
45,400 1,362,768 2,937,150
---------- ----------- -----------
</TABLE>
- --------------------
(1) Also represents cost for federal income tax purposes.
(Continued)
33 of 80
<PAGE> 34
NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT NO. 1
Schedule of Portfolio Investments, Continued
December 31, 1995
<TABLE>
<CAPTION>
Number Market
Name of issuer and title of issue of shares Cost (1) Value
- --------------------------------- --------- -------- -----
<S> <C> <C> <C>
Common Stocks, Continued
MISCELLANEOUS (10.6%)
ALCO Standard Corporation 22,400 $591,920 1,022,000
Corning Incorporated 18,500 610,325 692,000
Mattel, Inc. 12,112 60,448 372,444
Minnesota Mining & Mfg Company 13,800 630,184 915,975
The Singer Company 33,000 761,337 919,875
---------- ----------- -----------
99,812 2,654,214 3,822,294
---------- ----------- -----------
NONFERROUS MATERIALS (1.6%)
Phelps Dodge Corporation 9,000 289,327 560,250
---------- ----------- -----------
9,000 289,327 560,250
---------- ----------- -----------
OIL (6.1%)
Mobil Corporation 8,000 554,780 894,000
Schlumberger Limited 10,000 667,660 692,500
Unocal Corporation 21,400 490,336 623,275
---------- ----------- -----------
39,400 1,602,776 2,209,775
---------- ----------- -----------
PAPER AND PAPER PRODUCTS (3.0%)
Temple-Inland, Inc. 24,900 454,425 1,092,488
---------- ----------- -----------
24,900 454,425 1,092,488
---------- ----------- -----------
</TABLE>
- --------------------
(1) Also represents cost for federal income tax purposes.
(Continued)
34 of 80
<PAGE> 35
NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT NO. 1
Schedule of Portfolio Investments, Continued
December 31, 1995
<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 (8.6%)
American Greetings Corp., Class A 24,000 $ 391,580 663,000
Dun & Bradstreet Corporation 4,400 175,682 284,900
Gannett Company, Inc. 12,000 405,748 736,500
Gibson Greetings, Inc. 27,500 614,063 440,000
Knight-Ridder, Inc. 10,000 381,919 625,000
Times Mirror Company 9,829 146,823 332,967
---------- ----------- -----------
87,729 2,114,815 3,082,357
---------- ----------- -----------
RETAIL TRADE (1.7%)
Kroger Company 16,300 289,864 609,213
---------- ----------- -----------
16,300 289,864 609,213
---------- ----------- -----------
TRANSPORTATION EQUIPMENT (1.4%)
Trinity Industries 16,350 249,689 515,025
---------- ----------- -----------
16,350 249,689 515,025
---------- ----------- -----------
UTILITIES - TELEPHONE (1.0%)
Bell Atlantic Corporation 5,500 238,997 367,813
---------- ----------- -----------
5,500 238,997 367,813
---------- ----------- -----------
Total common stocks 667,828 16,898,692 32,418,449
---------- ----------- -----------
SHORT-TERM SECURITIES (9.9%)
NATIONWIDE CASH MANAGEMENT COMPANY
Participation 3,543,484 3,543,484
----------- -----------
TOTAL INVESTMENTS $20,442,176 35,961,933
=========== ===========
</TABLE>
SEE ACCOMPANYING INDEPENDENT AUDITORS' REPORT.
- --------------------
(1) Also represents cost for federal income tax purposes.
35 of 80
<PAGE> 36
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Nationwide Life Insurance Company:
We have audited the consolidated financial statements of Nationwide Life
Insurance Company (a wholly owned subsidiary of Nationwide Corporation) and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the financial
statement schedules as listed in the accompanying index. These consolidated
financial statements and financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements and financial statement schedules 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 12. 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, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
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 26, 1996
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Balance Sheets
December 31, 1995 and 1994
(000's omitted)
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ----------------- ----------------
<S> <C> <C>
Investments (notes 5, 8 and 9):
Securities available-for-sale, at fair value:
Fixed maturities (cost $13,438,630 in 1995; $8,318,865 in 1994) $ 14,167,377 8,045,906
Equity securities (cost $27,362 in 1995; $18,372 in 1994) 33,718 24,713
Fixed maturities held-to-maturity, at amortized cost (fair value $3,602,310 in 1994) - 3,688,787
Mortgage loans on real estate 4,786,599 4,222,284
Real estate 239,089 252,681
Policy loans 370,908 340,491
Other long-term investments 67,280 63,914
Short-term investments (note 13) 45,732 131,643
----------- -----------
19,710,703 16,770,419
----------- -----------
Cash 10,485 7,436
Accrued investment income 239,881 220,540
Deferred policy acquisition costs 1,094,195 1,064,159
Deferred Federal income tax -- 36,515
Other assets 795,169 790,603
Assets held in Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
$40,614,111 31,112,133
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Future policy benefits and claims (notes 6 and 8) 18,200,128 16,321,461
Policyholders' dividend accumulations 353,554 338,058
Other policyholder funds 71,155 72,770
Accrued Federal income tax (note 7):
Current 34,064 13,126
Deferred 238,877 -
----------- -----------
272,941 13,126
----------- -----------
Other liabilities 284,143 235,778
Liabilities related to Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
37,945,599 29,203,654
----------- -----------
Shareholder's equity (notes 3, 4, 5, 7, 12 and 13):
Capital shares, $1 par value. Authorized 5,000 shares, issued and
outstanding 3,815 shares 3,815 3,815
Additional paid-in capital 673,782 622,753
Retained earnings 1,606,607 1,401,579
Unrealized gains (losses) on securities available-for-sale, net 384,308 (119,668)
----------- -----------
2,668,512 1,908,479
----------- -----------
Commitments and contingencies (notes 9 and 15)
$40,614,111 31,112,133
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Income
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
--------------- -------------- -------------
<S> <C> <C> <C>
Revenues (note 16):
Traditional life insurance premiums $ 274,957 209,538 215,715
Accident and health insurance premiums 509,658 324,524 312,655
Universal life and investment product policy charges 307,676 239,021 188,057
Net investment income (note 5) 1,482,980 1,289,501 1,204,426
Realized gains (losses) on investments (notes 5 and 13) 836 (16,384) 113,673
---------- ---------- ----------
2,576,107 2,046,200 2,034,526
---------- ---------- ----------
Benefits and expenses:
Benefits and claims 1,656,287 1,279,763 1,236,906
Provision for policyholders' dividends on participating policies (note 12) 48,074 46,061 53,189
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Other operating costs and expenses 458,970 352,402 329,396
---------- ---------- ----------
2,256,375 1,772,970 1,721,625
---------- ---------- ----------
Income before Federal income tax expense and cumulative effect of
changes in accounting principles 319,732 273,230 312,901
---------- ---------- ----------
Federal income tax expense (note 7):
Current 103,464 79,847 75,124
Deferred 3,790 9,657 31,634
---------- ---------- ----------
107,254 89,504 106,758
---------- ---------- ----------
Income before cumulative effect of changes in accounting principles 212,478 183,726 206,143
Cumulative effect of changes in accounting principles, net (note 3) -- -- 5,365
---------- ---------- ----------
Net income $ 212,478 183,726 211,508
========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Unrealized
gains (losses)
Additional on securities Total
Capital paid-in Retained available-for- shareholder's
shares capital earnings sale, net equity
----------- ----------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
1993:
Balance, beginning of year $ 3,815 311,753 1,024,150 90,524 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 -- -- -- (83,777) (83,777)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 422,753 1,217,853 6,747 1,651,168
========== ========== ========= ========== ==========
1994:
Balance, beginning of year 3,815 422,753 1,217,853 6,747 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 (note 3) -- -- -- 216,915 216,915
Unrealized losses on securities available-
for-sale, net -- -- -- (343,330) (343,330)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 622,753 1,401,579 (119,668) 1,908,479
========== ========== ========== ========== ==========
1995:
Balance, beginning of year 3,815 622,753 1,401,579 (119,668) 1,908,479
Capital contribution (note 13) -- 51,029 -- (4,111) 46,918
Dividends paid to shareholder -- -- (7,450) -- (7,450)
Net income -- -- 212,478 -- 212,478
Unrealized gains on securities available-
for-sale, net -- -- -- 508,087 508,087
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 673,782 1,606,607 384,308 2,668,512
========== ========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
-------------- ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 212,478 183,726 211,508
Adjustments to reconcile net income to net cash provided by operating
activities:
Capitalization of deferred policy acquisition costs (349,456) (264,434) (191,994)
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Amortization and depreciation 10,319 6,207 11,156
Realized losses (gains) on invested assets, net 717 15,949 (113,648)
Deferred Federal income tax expense (benefit) 4,023 (2,166) (6,006)
Increase in accrued investment income (19,341) (29,654) (4,218)
Increase in other assets (3,227) (112,566) (549,277)
Increase in policy liabilities 198,200 1,038,641 509,370
Increase in policyholders' dividend accumulations 15,496 15,372 17,316
Increase in accrued Federal income tax payable 20,938 832 16,838
Increase in other liabilities 48,365 17,826 26,958
Other, net (20,556) (19,303) (11,745)
----------- ----------- ------------
Net cash provided by operating activities 211,000 945,174 18,392
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 706,442 579,067 --
Proceeds from sale of securities available-for-sale 131,420 247,876 247,502
Proceeds from maturity of fixed maturities held-to-maturity 633,173 516,003 1,192,093
Proceeds from sale of fixed maturities -- -- 33,959
Proceeds from repayments of mortgage loans on real estate 215,134 220,744 146,047
Proceeds from sale of real estate 48,477 46,713 23,587
Proceeds from repayments of policy loans and sale of other invested assets 79,620 134,998 59,643
Cost of securities available-for-sale acquired (2,232,047) (2,569,672) (12,550)
Cost of fixed maturities held-to-maturity acquired (669,449) (675,835) (2,016,831)
Cost of mortgage loans on real estate acquired (821,078) (627,025) (475,336)
Cost of real estate acquired (10,970) (15,962) (8,827)
Policy loans issued and other invested assets acquired (92,904) (118,012) (76,491)
----------- ----------- ------------
Net cash used in investing activities (2,012,182) (2,261,105) (887,204)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from capital contributions 46,918 200,000 111,000
Dividends paid to shareholder (7,450) -- (17,805)
Increase in universal life and investment product account balances 3,202,135 3,640,958 2,249,740
Decrease in universal life and investment product account balances (1,523,283) (2,449,580) (1,458,504)
----------- ----------- -----------
Net cash provided by financing activities 1,718,320 1,391,378 884,431
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (82,862) 75,447 15,619
Cash and cash equivalents, beginning of year 139,079 63,632 48,013
----------- ----------- -----------
Cash and cash equivalents, end of year $ 56,217 139,079 63,632
=========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(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
Nationwide Life and Annuity Insurance Company (NLAIC) (formerly known as
Financial Horizons Life Insurance Company), West Coast Life Insurance
Company (WCLIC), Employers Life Insurance Company of Wausau and
subsidiaries (ELICW), National Casualty Company (NCC) and Nationwide
Financial Services, Inc. (NFS). NLIC and its subsidiaries are
collectively referred to as "the Company."
NLIC, NLAIC, 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 insurance, health insurance
and annuity products through exclusive agents, brokers 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 currently 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.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosures of contingent assets and liabilities as of the
date of the consolidated financial statements and the reported amounts of
revenues and expenses for the reporting period. Actual results could differ
significantly from those estimates.
The most significant estimates include those used in determining deferred
policy acquisition costs, valuation allowances for mortgage loans on real
estate and real estate investments and the liability for future policy benefits
and claims. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
(a) CONSOLIDATION POLICY
The December 31, 1995 consolidated financial statements include the
accounts of NLIC and its wholly owned subsidiaries NLAIC, WCLIC, ELICW, NCC
and NFS. The December 31, 1994 and 1993 consolidated financial statements
include the accounts of NLIC, NLAIC, 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 13. All
significant intercompany balances and transactions have been eliminated.
(b) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES
The Company is required to classify its fixed maturity securities and
equity securities as either held-to-maturity, available-for-sale or
trading. 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. The Company has no fixed maturity
securities classified as held-to-maturity or trading as of
December 31, 1995.
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. The measurement of impaired loans is 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 fair value of the collateral, if
the loan is collateral dependent. Loans in foreclosure and loans considered
to be impaired are placed on non-accrual status. Interest received on
non-accrual status mortgage loans on real estate are included in interest
income in the period received.
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 March, 1995, the Financial Accounting Standards Board (FASB) issued
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 121 - ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF
(SFAS 121). SFAS 121 requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. SFAS 121 also addresses
the accounting for long-lived assets that are expected to be disposed of.
The statement is effective for fiscal years beginning after December 15,
1995 and earlier application is permitted. Previously issued consolidated
financial statements shall not be restated. The Company will adopt SFAS 121
in 1996 and the impact on the consolidated financial statements is not
expected to be material.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(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.
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 asset fees, 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 policy 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, asset fees, 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. Deferred policy acquisition costs are
adjusted to reflect the impact of unrealized gains and losses on fixed
maturity securities available-for-sale as described in 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
insurance 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.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Future policy benefits and claims for collectively renewable long-term
disability policies (primarily discounted at 5.2%) and group long-term
disability policies (primarily discounted at 5.5%) are the present value 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 insurance policies are not discounted.
(g) PARTICIPATING BUSINESS
Participating business represents approximately 45% (45% in 1994 and
48% in 1993) of the Company's ordinary life insurance in force, 72% (72% in
1994 and 1993) of the number of policies in force, and 39% (41% in 1994 and
45% in 1993) 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 12.
(h) FEDERAL INCOME TAX
NLIC, NLAIC, 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 files 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.
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.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(k) RECLASSIFICATION
Certain items in the 1994 and 1993 consolidated financial
statements have been reclassified to conform to the 1995
presentation.
(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 STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 115 - ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. 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>
<CAPTION>
<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
=========
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:
Asset/liability method of recognizing income tax (note 2(h)) $ 26,344
Accrual method of recognizing postretirement benefits other
than pensions (net of tax benefit of $11,296) (note 11) (20,979)
--------
$ 5,365
========
</TABLE>
(4) BASIS OF PRESENTATION
The consolidated financial statements have been prepared in accordance
with GAAP. Annual Statements for NLIC and NLAIC, WCLIC, ELICW and NCC,
filed with the Department of Insurance of the State of Ohio (the
Department), 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 statutory capital shares and surplus of NLIC as reported to
regulatory authorities as of December 31, 1995, 1994 and 1993 was
$1,363,031, $1,262,861 and $992,631, respectively. The statutory net
income of NLIC as reported to regulatory authorities for the years
ended December 31, 1995, 1994 and 1993 was $86,529, $76,532 and
$185,943, respectively.
<PAGE> 11
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(5) INVESTMENTS
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------ ------------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturities $ 772,589 674,346 --
Equity securities 1,436 550 7,230
Fixed maturities held-to-maturity 232,692 193,009 800,255
Mortgage loans on real estate 410,965 376,783 364,810
Real estate 39,222 40,280 39,684
Short-term investments 12,249 6,990 5,080
Other 61,701 42,831 33,832
---------- ---------- ----------
Total investment income 1,530,854 1,334,789 1,250,891
Less investment expenses 47,874 45,288 46,465
---------- ---------- ----------
Net investment income $1,482,980 1,289,501 1,204,426
========== ========== ==========
</TABLE>
An analysis of realized gains (losses) on investments, net of
valuation allowances, by investment type follows for the years ended
December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- --------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 6,792 (7,120) --
Equity securities 3,435 1,427 129,728
Fixed maturities -- -- 20,225
Mortgage loans on real estate (7,312) (20,462) (28,241)
Real estate and other (2,079) 9,771 (8,039)
-------- -------- --------
$ 836 (16,384) 113,673
======== ======== ========
</TABLE>
The components of unrealized gains (losses) on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
1995 1994
--------------- -------------
<S> <C> <C>
Gross unrealized gains (losses) $ 735,103 (266,618)
Adjustment to deferred policy acquisition costs (143,851) 82,525
Deferred Federal income tax (206,944) 64,425
--------- ---------
$ 384,308 (119,668)
========= =========
</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>
1995 1994 1993
--------------- ------------- -------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 1,001,706 (703,851) --
Equity securities 15 (1,990) (128,837)
Fixed maturities held-to-maturity 86,477 (421,427) 223,392
----------- ----------- -----------
$ 1,088,198 (1,127,268) 94,555
=========== =========== ===========
</TABLE>
<PAGE> 12
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of securities available-for-sale
were as follows as of December 31, 1995:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
-------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 438,109 36,714 (53) 474,770
Obligations of states and political subdivisions 9,742 1,252 (1) 10,993
Debt securities issued by foreign governments 162,442 9,641 (66) 172,017
Corporate securities 8,902,494 524,796 (30,561) 9,396,729
Mortgage-backed securities 3,925,843 196,645 (9,620) 4,112,868
--------- ----------- ----------- -----------
Total fixed maturities 13,438,630 769,048 (40,301) 14,167,377
Equity securities 27,362 6,441 (85) 33,718
---------- ----------- ----------- -----------
$13,465,992 775,489 (40,386) 14,201,095
=========== =========== ============ ===========
</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:
U.S. Treasury securities and obligations of U.S.
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 18,372 6,637 (296) 24,713
---------- ---------- ---------- ---------
$8,337,237 77,888 (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>
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of fixed maturity securities
available-for-sale as of December 31, 1995, 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 $ 641,490 647,639
Due after one year through five years 5,365,703 5,623,126
Due after five years through ten years 2,477,457 2,609,262
Due after ten years 1,028,137 1,174,482
----------- -----------
9,512,787 10,054,509
Mortgage-backed securities 3,925,843 4,112,868
----------- -----------
$13,438,630 14,167,377
=========== ===========
</TABLE>
Proceeds from the sale of securities available-for-sale during 1995 and 1994
were $131,420 and $247,876, respectively, while proceeds from sales of
investments in fixed maturity securities during 1993 were $33,959. Gross gains
of $7,197 ($3,406 in 1994 and $2,413 in 1993) and gross losses of $2,309
($21,866 in 1994 and $39 in 1993) were realized on those sales.
During 1995, the Company transferred fixed maturity securities classified as
held-to-maturity with amortized cost of $27,929 to available-for-sale
securities due to evidence of a significant deterioration in the issuer's
creditworthiness. The transfer of those fixed maturity securities resulted in
a gross unrealized loss of $4,285.
As permitted by the FASB's Special Report, A GUIDE TO IMPLEMENTATION OF
STATEMENT 115 ON ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES, issued in November, 1995, the Company transferred all of its fixed
maturity securities previously classified as held-to-maturity to
available-for-sale. As of December 14, 1995, the date of transfer, the fixed
maturity securities had amortized cost of $3,705,644, resulting in a gross
unrealized gain of $171,531.
Investments that were non-income producing for the twelve month period
preceding December 31, 1995 amounted to $28,958 ($11,513 for 1994) and
consisted of $8,228 (none in 1994) in fixed maturity securities, $14,740
($11,111 in 1994) in real estate and $5,990 ($402 in 1994) in other long-term
investments.
Real estate is presented at cost less accumulated depreciation of $30,931 in
1995 ($29,275 in 1994) and valuation allowances of $26,250 in 1995 ($27,330 in
1994).
Other long-term investments are presented net of valuation allowances of $457
as of December 31, 1995. There were no such valuation allowances as of December
31, 1994.
As of December 31, 1995, the recorded investment of mortgage loans on real
estate considered to be impaired (under STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN as amended
by STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 118, ACCOUNTING BY CREDITORS
FOR IMPAIRMENT OF A LOAN - INCOME RECOGNITION AND DISCLOSURE) was $44,995,
which includes $23,975 of impaired mortgage loans on real estate for which the
related valuation allowance was $5,276 and $21,020 of impaired mortgage loans
on real estate for which there was no valuation allowance. During 1995, the
average recorded investment in impaired mortgage loans on real estate was
approximately $22,621 and interest income recognized on those loans was $416,
which is equal to interest income recognized using a cash-basis method of
income recognition.
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the year ended December 31, 1995:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Allowance, beginning year $ 47,892
Additions charged to operations 7,653
Direct write-downs charged against the allowance (4,850)
--------
Allowance, end of year $ 50,695
========
</TABLE>
Foresclosures of mortgage loans on real estate were $37,187 in 1994 and
mortgage loans on real estate in process of foreclosure or in-substance
foreclosed as of December 31, 1994 totaled $19,878, which approximated fair
value.
Fixed maturity securities with an amortized cost of $13,982 and $11,137 as
of December 31, 1995 and 1994, 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 investment contracts represents
approximately 82% and 81% of the total liability for future policy benefits
as of December 31, 1995 and 1994, respectively. The average interest rate
credited on investment product policies was approximately 6.5%, 6.5% and
7.0% for the years ended December 31, 1995, 1994 and 1993, respectively.
The liability for future policy benefits for traditional life insurance and
individual health insurance policies has been established based upon the
following assumptions:
INTEREST RATES: Interest rates vary as follows:
<TABLE>
<CAPTION>
Health
Year of issue Life Insurance insurance
-------------- ------------------------------------------------------------ ---------------
<S> <C> <C>
1995 7.6%, not graded - permanent contracts with loan provisions 4.5%
7.7%, not graded - all other contracts
1984-1994 6.0% to 10.5%, not graded 5.0% to 6.0%
1966-1983 6.0% to 8.1%, graded over 20 years to 4.0% to 6.6% 3.5% to 6.0%
1965 and prior generally lower than post 1965 issues 3.5% to 4.0%
</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.
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the liability for unpaid claims and claim adjustment expenses is
summarized for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 637,998 592,180 760,209
Less reinsurance recoverables 438,761 430,720 547,683
--------- --------- ---------
Net balance, beginning of year 199,237 161,460 212,526
--------- --------- ---------
Incurred related to:
Current year 425,907 273,299 309,721
Prior years (17,203) (26,156) (26,248)
--------- --------- ---------
Total incurred 408,704 247,143 283,473
--------- --------- ---------
Paid related to:
Current year 290,605 175,700 208,978
Prior years 111,353 73,889 125,561
--------- --------- ---------
Total paid 401,958 249,589 334,539
--------- --------- ---------
Unpaid claims of acquired companies 2,542 40,223 --
--------- --------- ---------
Net balance, end of year 208,525 199,237 161,460
Plus reinsurance recoverables 491,321 438,761 430,720
--------- --------- ---------
Balance, end of year $ 699,846 637,998 592,180
========= ========= =========
</TABLE>
Reinsurance recoverables include amounts from affiliates, as discussed in
note 13, of $477,912, $430,936, $430,278 and $534,983 as of December 31,
1995, 1994, 1993 and 1992, respectively.
The provision for claims and claim adjustment expenses for prior years
decreased in each of the three years ended December 31, 1995 due to
lower-than-anticipated costs to settle accident and health insurance claims.
(7) FEDERAL INCOME TAX
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset (liability) as of December 31,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $ 179,916 124,044
Fixed maturity securities available-for-sale -- 95,536
Liabilities in Separate Accounts 129,120 94,783
Mortgage loans on real estate and real estate 26,062 25,632
Other policyholder funds 7,752 7,137
Other assets and other liabilities 47,215 57,528
--------- ---------
Total gross deferred tax assets 390,065 404,660
--------- ---------
Deferred tax liabilities:
Deferred policy acquisition costs 312,616 317,224
Fixed maturity securities available-for-sale 266,184 --
Equity securities available-for-sale and other
long-term investments 3,431 3,620
Other 46,711 47,301
--------- ---------
Total gross deferred tax liabilities 628,942 368,145
--------- ---------
$(238,877) 36,515
========= =========
</TABLE>
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company has determined that valuation allowances are not necessary as
of December 31, 1995, 1994 and 1993 based on its analysis of future
deductible amounts. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion
of the total gross deferred tax assets will not be realized. 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.
<TABLE>
Total Federal income tax expense for the years ended December 31, 1995,
1994 and 1993 differs from the amount computed by applying the U.S.
Federal income tax rate to income before tax as follows:
<CAPTION>
1995 1994 1993
---------------------- ---------------------- ----------------------
Amount % Amount % Amount %
--------------- ----- -------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $ 111,906 35.0 $ 95,631 35.0 $ 109,515 35.0
Tax exempt interest and dividends
received deduction (137) (0.1) (194) (0.1) (2,322) (0.7)
Current year increase in U.S. Federal
income tax rate -- -- -- -- 1,704 0.5
Other, net (4,515) (1.4) (5,933) (2.1) (2,139) (0.7)
--------- ---- --------- ---- --------- ----
Total (effective rate of each year) $ 107,254 33.5 $ 89,504 32.8 $ 106,758 34.1
========= ==== ========= ==== ========= ====
</TABLE>
Total Federal income tax paid was $75,309, $87,576 and $58,286 during the
years ended December 31, 1995, 1994 and 1993, respectively.
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 was approximately $35,344 as of December 31, 1995.
(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. SFAS 107 defines the fair value of a financial instrument as
the amount at which the financial instrument could be exchanged in a
current transaction between willing parties. 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.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
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
life 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 consolidated balance sheets for these
instruments approximates their fair value.
FIXED MATURITY AND EQUITY 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 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 LIFE 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.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Carrying amount and estimated fair value of financial instruments
subject to SFAS 107 and policy reserves on life insurance contracts were
as follow as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------------------------- -------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
- ------
Investments:
Securities available-for-sale:
Fixed maturities $14,167,377 14,167,377 8,045,906 8,045,906
Equity securities 33,718 33,718 24,713 24,713
Fixed maturities held-to-maturity -- -- 3,688,787 3,602,310
Mortgage loans on real estate 4,786,599 5,169,805 4,222,284 4,173,284
Policy loans 370,908 370,908 340,491 340,491
Short-term investments 45,732 45,732 131,643 131,643
Cash 10,485 10,485 7,436 7,436
Assets held in Separate Accounts 18,763,678 18,763,678 12,222,461 12,222,461
LIABILITIES
- -----------
Investment contracts 13,561,943 13,221,724 12,189,894 11,657,556
Policy reserves on life insurance contacts 3,695,814 3,659,074 3,170,085 2,934,384
Policyholders' dividend accumulations 353,554 353,554 338,058 338,058
Other policyholder funds 71,155 71,155 72,770 72,770
Liabilities related to Separate Accounts 18,763,678 18,224,933 12,222,461 11,807,331
</TABLE>
(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 $361,974 extending into 1996 were
outstanding as of December 31, 1995.
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 20% (22%
in 1994) in any geographic area and no more than 2% (2% in 1994) with any
one borrower.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The summary below depicts loans by remaining principal balance as of
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995:
East North Central $ 140,732 110,361 534,814 184,201 970,108
East South Central 23,978 15,653 183,790 84,588 308,009
Mountain -- 18,940 144,156 48,727 211,823
Middle Atlantic 124,079 72,201 183,562 18,383 398,225
New England 9,594 39,526 153,644 1 202,765
Pacific 190,628 239,687 395,914 107,650 933,879
South Atlantic 101,904 74,731 458,355 279,692 914,682
West North Central 134,866 14,205 81,521 37,586 268,178
West South Central 69,143 99,618 194,717 272,323 635,801
--------- --------- --------- --------- ---------
$ 794,924 684,922 2,330,473 1,033,151 4,843,470
========= ========= ========= =========
Less valuation allowances and unamortized discount 56,871
---------
Total mortgage loans on real estate, net $4,786,599
=========
</TABLE>
<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
=========
</TABLE>
(10) PENSION PLAN
------------
The Company is a participant, 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. Benefits are based upon the highest average
annual salary of a specified number of 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.
Effective January 1, 1995, the plan was amended to provide enhanced
benefits for participants who met certain eligibility requirements and
elected early retirement no later than March 15, 1995. The entire cost of
the enhanced benefit was borne by NMIC and certain of its property and
casualty insurance company affiliates.
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Effective December 31, 1995, the Nationwide Insurance Companies and
Affiliates Retirement Plan was merged with the Farmland Mutual Insurance
Company Employees' Retirement Plan and the Wausau Insurance Companies
Pension Plan to form the Nationwide Insurance Enterprise Retirement
Plan. Immediately prior to the merger, the plans were amended to provide
consistent benefits for service after January 1, 1996. These amendments had
no significant impact on the accumulated benefit obligation or projected
benefit obligation as of December 31, 1995.
Pension costs charged to operations by the Company during the years ended
December 31, 1995, 1994 and 1993 were $14,105, $10,451 and $6,702,
respectively.
The Company's net accrued pension expense as of December 31, 1995 and
1994 was $1,376 and $1,836, respectively.
The net periodic pension cost for the Nationwide Insurance Companies and
Affiliates Retirement Plan as a whole for the years ended December 31,
1995, 1994 and 1993 follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 64,524 64,740 47,694
Interest cost on projected benefit obligation 95,283 73,951 70,543
Actual return on plan assets (249,294) (21,495) (105,002)
Net amortization and deferral 143,353 (62,150) 20,832
--------- --------- ---------
$ 53,866 55,046 34,067
========= ========= =========
</TABLE>
Basis for measurements, net periodic pension cost:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Weighted average discount rate 7.50% 5.75% 6.75%
Rate of increase in future compensation levels 6.25% 4.50% 4.75%
Expected long-term rate of return on plan assets 8.75% 7.00% 7.50%
</TABLE>
Information regarding the funded status of the Nationwide Insurance
Enterprise Retirement Plan as a whole as of December 31, 1995
(post-merger) and the Nationwide Insurance Companies and Affiliates
Retirement Plan as of December 31, 1995 (pre-merger) and 1994 follows:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Accumulated benefit obligation:
Vested $ 1,236,730 1,002,079 914,850
Nonvested 26,503 8,998 7,570
----------- ----------- -----------
$ 1,263,233 1,011,077 922,420
=========== =========== ===========
Net accrued pension expense:
Projected benefit obligation for services rendered
to date $ 1,780,616 1,447,522 1,305,547
Plan assets at fair value 1,738,004 1,508,781 1,241,771
----------- ----------- -----------
Plan assets (less than) in excess of projected
benefit obligation (42,612) 61,259 (63,776)
Unrecognized prior service cost 42,845 42,850 46,201
Unrecognized net (gains) losses (63,130) (86,195) 39,408
Unrecognized net obligation (asset) at transition 41,305 (19,841) (21,994)
----------- ----------- -----------
$ (21,592) (1,927) (161)
=========== =========== ===========
</TABLE>
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Basis for measurements, funded status of plan:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Weighed average discount rate 6.00% 6.00% 7.50%
Rate of increase in future compensation levels 4.25% 4.25% 6.25%
</TABLE>
Assets of the Nationwide Insurance Enterprise Retirement Plan are invested
in group annuity contracts of NLIC and ELICW. Prior to the merger, the
assets of the Nationwide Insurance Companies and Affiliates Retirement
Plan were invested in a group annuity contract of NLIC.
(11) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
-------------------------------------------
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally 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 health
care benefit contributions are adjusted annually and contain cost-sharing
features such as deductibles and coinsurance. In addition, there are caps
on the Company's portion of the per-participant cost of the postretirement
health care benefits. These caps can increase annually, but not more than
three percent. The Company's policy is to fund the cost of health care
benefits in amounts determined at the discretion of management. Plan
assets are invested primarily 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.
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 1993 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. Certain affiliated companies elected to amortize their
initial transition obligation over periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of
December 31, 1995 and 1994 was $51,490 and $36,001, respectively, and the
net periodic postretirement benefit cost (NPPBC) for 1995 and 1994 was
$8,269 and $4,627, respectively.
The amount of NPPBC for the plan as a whole for the years ended
December 31, 1995, 1994 and 1993 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits attributed to employee service during the year $ 6,235 8,586 7,090
Interest cost on accumulated postretirement benefit obligation 14,151 14,011 13,928
Actual return on plan assets (2,657) (1,622) --
Amortization of unrecognized transition obligation of affiliates 2,966 568 568
Net amortization and deferral (1,619) 1,622 --
-------- -------- --------
$ 19,076 23,165 21,586
======== ======== ========
</TABLE>
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Information regarding the funded status of the plan as a whole as of
December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Accrued postretirement benefit expense:
Retirees $ 88,680 76,677
Fully eligible, active plan participants 28,793 22,013
Other active plan participants 90,375 59,089
--------- ---------
Accumulated postretirement benefit obligation (APBO) 207,848 157,779
Plan assets at fair value 54,325 49,012
--------- ---------
Plan assets less than accumulated postretirement benefit obligation (153,523) (108,767)
Unrecognized transition obligation of affiliates 1,827 6,577
Unrecognized net gains (1,038) (41,497)
--------- ---------
$(152,734) (143,687)
========= =========
</TABLE>
Actuarial assumptions used for the measurement of the APBO as of
December 31, 1995 and 1994 and the NPPBC for 1995, 1994 and 1993 were
as follows:
<TABLE>
<CAPTION>
1995 1995 1994 1994 1993
APBO NPPBC APBO NPPBC NPPBC
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Discount rate 6.75% 8% 8% 7% 8%
Assumed health care cost trend rate:
Initial rate 11% 10% 11% 12% 14%
Ultimate rate 6% 6% 6% 6% 6%
Uniform declining period 12 Years 12 Years 12 Years 12 Years 12 Years
</TABLE>
The health care cost trend rate assumption has an effect on the amounts
reported. For the plan as a whole, a one percentage point increase in
the assumed health care cost trend rate would increase the APBO as of
December 31, 1995 by $641 and the NPPBC for the year ended December 31,
1995 by $107.
(12) 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, as of the year-end shall
inure to the benefit of the shareholder. 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.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
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.
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
$2,664,697, $1,904,664 and $1,647,353 as of December 31, 1995, 1994 and
1993, respectively. The amount thereof not presently available for
dividends to the shareholder due to the New York restrictions was
$1,503,241, $929,934 and $954,037 as of December 31, 1995, 1994 and 1993,
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 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, $2,468,687
of shareholder's equity, as presented in the accompanying consolidated
financial statements, is so restricted as to dividend payments in 1996.
Each of NLIC's insurance company subsidiaries are limited in their
payment of dividends by the state insurance department of their
respective state of domicile. As of December 31, 1995, the maximum amount
of shareholder's equity available for dividend payment to NLIC in 1996 by
its insurance company subsidiaries without prior approval are:
<TABLE>
<S> <C>
Nationwide Life and Annuity Insurance Company $10,143
West Coast Life Insurance Company 13,153
Employers Life Insurance Company of Wausau 10,132
National Casualty Company --
-------
$33,428
=======
</TABLE>
(13) TRANSACTIONS WITH AFFILIATES
----------------------------
On March 1, 1995, Corp. contributed all of the outstanding shares of
Farmland Life Insurance Company (Farmland) to NLIC, which then merged
Farmland into WCLIC effective June 30, 1995. The contribution resulted in
a direct increase to consolidated shareholder's equity of $46,918. The
contribution of Farmland has been accounted for in a manner similar to a
pooling of interests and accordingly, Farmland's results are included in
the consolidated statements of income beginning January 1, 1995. However,
prior period consolidated financial statements have not been restated due
to the impact of Farmland being immaterial.
Effective December 31, 1994, NLIC purchased all of the outstanding shares
of ELICW from Wausau Service Corporation (WSC) for $155,000. 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. 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.
Certain annuity products are sold through three affiliated companies
which are also subsidiaries of Corp. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1995 were
$57,969, $50,470 and $44,577, respectively.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company shares home office, other facilities, equipment and common
management and administrative services with affiliates.
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 1995 and
1994 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, 1995. These contracts are immaterial to the consolidated financial
statements.
NCC participates in several 100% quota share reinsurance agreements with
NMIC and Nationwide Mutual Fire Insurance Company, the minority
shareholder of Corp. As a result of these agreements, the following
assets and (liabilities) are included in the consolidated financial
statements as of December 31, 1995 and 1994 for reinsurance ceded:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Reinsurance recoverable $ 590,379 541,289
Unearned premium reserves (112,467) (110,353)
Liability for unpaid claims and claim adjustment expense (477,912) (430,936)
</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.
ELICW assumes certain accident and health insurance business from
Employers Insurance of Wausau A Mutual Company, an affiliate. During
1995, total premiums assumed by ELICW under the reinsurance
agreement were $150,622.
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 $21,644 and $92,531 as of December 31, 1995 and 1994,
respectively, and are included in short-term investments on the
accompanying consolidated balance sheets.
(14) BANK LINES OF CREDIT
--------------------
As of December 31, 1995 and 1994, NLIC had $120,000 of confirmed but
unused bank lines of credit which support a $100,000 commercial paper
borrowing authorization.
(15) 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.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(16) SEGMENT INFORMATION
-------------------
The Company operates in the long-term savings, life insurance and
accident and health insurance lines of business in the life insurance and
property and casualty insurance industries. Long-term savings operations
include both qualified and non-qualified annuity contracts issued to both
individuals and groups. Life insurance operations include whole life,
universal life, variable universal life and endowment and term life
insurance issued to individuals and groups. Accident and health insurance
operations also provide coverage to individuals and groups. Corporate
primarily includes investments, and the related investment income, which
are not specifically allocated to one of the three operating segments. In
addition, realized gains and losses on all general account investments
are reported as a component of the corporate segment.
During 1995, the Company changed its reporting segments to better reflect
the way the businesses are managed. Prior periods have been restated to
reflect these changes.
The following table summarizes the revenues and income (loss) before
Federal income tax expense and cumulative effect of changes in accounting
principles for the years ended December 31, 1995, 1994 and 1993 and
assets as of December 31, 1995, 1994 and 1993, by business segment.
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Long-term savings $ 1,406,241 1,125,013 1,048,045
Life insurance 502,885 452,795 432,343
Accident and health insurance 532,383 345,545 339,764
Corporate 134,598 122,847 214,374
------------ ------------ ------------
$ 2,576,107 2,046,200 2,034,526
============ ============ ============
Income (loss) before Federal income tax expense and
cumulative effect of changes in accounting principles:
Long-term savings 129,475 95,530 47,966
Life insurance 63,169 46,119 36,383
Accident and health insurance (12,521) 13,221 15,041
Corporate 139,609 118,360 213,511
------------ ------------ ------------
$ 319,732 273,230 312,901
============ ============ ============
Assets:
Long-term savings 34,634,892 25,815,273 20,695,598
Life insurance 3,675,581 3,231,651 2,897,574
Accident and health insurance 307,643 291,296 297,200
Corporate 1,995,995 1,773,913 1,515,989
------------ ------------ ------------
$ 40,614,111 31,112,133 25,406,361
============ ============ ============
</TABLE>
<PAGE> 37
PART C. OTHER INFORMATION
Item 28. FINANCIAL STATEMENTS AND EXHIBITS
(a)Financial Statements:
<TABLE>
<S> <C>
(1)Financial statements and schedule included PAGE
in Prospectus (Part A):
Condensed Financial Information. 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). 25
Nationwide Life Insurance Company Separate Account No. 1:
Independent Auditors' Report. 25
Statement of Assets, Liabilities and Contract
Owners' Equity as of December 31, 1995. 26
Statements of Operations and Changes in
Contract Owners' Equity for the years ended
December 31, 1995 and 1994. 27
Notes to Financial Statements. 28
Schedules of Changes in Unit Value. 31
Schedule of Portfolio Investments. 32
Nationwide Life Insurance Company:
Independent Auditors' Report 36
Consolidated Balance Sheets as of December
31, 1995 and 1994. 37
Consolidated Statements of Income for the
years ended December 31, 1995, 1994 and
1993. 38
Consolidated Statements of Shareholder's
Equity for the years ended December 31,
1995, 1994 and 1993. 39
Consolidated Statements of Cash Flows for
the years ended December 31, 1995, 1994
and 1993. 40
Notes to Consolidated Financial Statements. 41
Schedule I - Summary of Investments -
Other than Investments in Related Parties 61
Schedule III - Supplementary Insurance
Information 62
Schedule IV - Reinsurance 63
Schedule V - Valuation and Qualifying
Accounts 64
</TABLE>
61 of 80
<PAGE> 38
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 Olives, NC 28365
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
1100 East Main Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Charles L. Fuellgraf, Jr. Director
600 South Washington Street
Butler, PA 16001
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Henry S. Holloway Chairman of the
1247 Stafford Road Board
Darlington, MD 21034
D. Richard McFerson Chairman and Chief Executive Officer-
One Nationwide Plaza Nationwide Insurance Enterprise
Columbus, OH 43215 and Director
David O. Miller Director
115 Sprague Drive
Hebron, Ohio 43025
C. Ray Noecker Director
2770 State Route 674 South
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
</TABLE>
62 of 80
<PAGE> 39
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Arden L. Shisler Director
1356 North Wenger 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
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, Ohio 43215
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-Chief Actuary-
One Nationwide Plaza Life, Health and Annuities
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Michael D. Bleiweiss Vice President-
One Nationwide Plaza Deferred Compensation
Columbus, OH 43215
</TABLE>
63 of 80
<PAGE> 40
<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-
One Nationwide Plaza Pensions
Columbus, OH 43215
Timothy E. Murphy Vice President-
One Nationwide Plaza Strategic Marketing
Columbus, Ohio 43215
R. Dennis Noice Vice President-
One Nationwide Plaza Individual 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
64 of 80
<PAGE> 41
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C>
Affiliate Agency, Inc. Delaware Life Insurance Agency
Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency
Allnations, Inc. Ohio Promotes cooperative insurance
corporations worldwide
American Marine Underwriters, Inc. Florida Underwriting Manager
Auto Direkt Insurance Company Germany Insurance Company
The Beak and Wire Corporation Ohio Radio Tower Joint Venture
California Cash Management Company California Investment Securities Agent
Colonial County Mutual Insurance Texas Insurance Company
Company
Colonial Insurance Company of California Insurance Company
California
Columbus Insurance Brokerage and Germany Insurance Broker
Service GMBH
Companies Agency, Inc. Wisconsin Insurance Broker
Companies Agency Insurance Services of California Insurance Broker
California
Companies Agency of Alabama, Inc. Alabama Insurance Broker
Companies Agency of Idaho, Inc. Idaho Insurance Broker
Companies Agency of Illinois, Inc. Illinois Acts as Collection Agent for
Policies placed through Brokers
Companies Agency of Kentucky, Inc. Kentucky Insurance Broker
Companies Agency of Massachusetts, Inc. Massachusetts Insurance Broker
Companies Agency of New York, Inc. New York Insurance Broker
Companies Agency of Pennsylvania, Inc. Pennsylvania Insurance Broker
</TABLE>
65 of 80
<PAGE> 42
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
CHART) UNLESS
STATE OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C>
Companies Agency of Phoenix, Inc. Arizona Insurance Broker
Companies Agency of Texas, Inc. Texas Insurance Broker
Companies Annuity Agency of Texas, Inc. Texas Insurance Broker
Countrywide Services Corporation Delaware Products Liability, Investigative
and Claims Management Services
Employers Insurance of Wausau Wisconsin Insurance Company
A Mutual Company
Employers Life Insurance Company of Wisconsin Life Insurance Company
Wausau
F & B, Inc. Iowa Insurance Agency
Farmland Mutual Insurance Company Iowa Insurance Company
Financial Horizons Distributors Agency Alabama Life insurance Agency
of Alabama, Inc.
Financial Horizons Distributors Agency Ohio Insurance Agency
of Ohio, Inc.
Financial Horizons Distributors Agency Oklahoma Life Insurance Agency
of Oklahoma, Inc.
Financial Horizons Distributors Agency Texas Life Insurance Agency
of Texas, Inc.
Financial Horizons Investment Trust Massachusetts Investment Company
Financial Horizons Securities Oklahoma Broker-Dealer
Corporation
Gates, McDonald & Company Ohio Cost Control Business
Gates, McDonald & Company of Nevada Nevada Self-Insurance Administration,
Claims Examination, and Data
Processing Services
Gates, McDonald & Company of New York, New York Workers Compensation Claims
Inc. Administration
Greater La Crosse Health Plans, Inc. Wisconsin Writes Commercial Health and
Medicare Supplement Insurance
InHealth Agency, Inc. Ohio Insurance Agency
</TABLE>
66 of 80
<PAGE> 43
<TABLE>
<CAPTION>
NO. VOTING SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
InHealth Management Systems, Inc. Ohio Develops and Operates Managed
Care Delivery System
Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance
Agency
Key Health Plan California Pre-paid Health Plans
Landmark Financial Services of New New York Life Insurance Agency
York, Inc.
Leben Direkt Insurance Company Germany Life Insurance Company
Lone Star General Agency, Inc. Texas Insurance Agency
** MRM Investments, Inc. Ohio Owns and Operates a
Recreational Ski Facility
** National Casualty Company Michigan Insurance Company
National Casualty Company of America, Great Britain Insurance Company
Ltd.
** National Premium and Benefit Delaware Insurance Administrative
Administration Company Services
Nationwide Agribusiness Insurance Iowa Insurance Company
Company
Nationwide Cash Management Company Ohio Investment Securities Agent
Nationwide Communications Inc. Ohio Radio Broadcasting Business
Nationwide Community Urban Ohio Redevelopment of Blighted Areas
Redevelopment Corporation Within the City of Columbus,
Ohio
Nationwide Corporation Ohio Organized for the purpose of
acquiring, holding,
encumbering, transferring, or
otherwise disposing of shares,
bonds, and other evidences of
indebtedness, securities, and
contracts of other persons,
associations, corporations,
domestic or foreign and to form
or acquire the control of other
corporations.
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
Nationwide Development Company Ohio Owns, leases and manages
commercial real estate
</TABLE>
67 of 80
<PAGE> 44
<TABLE>
<CAPTION>
NO. VOTING SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
** Nationwide Financial Services, Inc. Ohio Registered Broker-Dealer,
Investment Manager and
Administrator
Nationwide General Insurance Company Ohio Insurance Company
Nationwide HMO, Inc. Ohio Health Maintenance
Organization
Nationwide Indemnity Company Ohio Reinsurance Company
Nationwide Insurance Enterprise Ohio Membership Non-Profit
Foundation Corporation
Nationwide Insurance Golf Charities, Ohio Membership Non-Profit Golf
Inc. Corporation
Nationwide Investing Foundation Michigan Investment Company
Nationwide Investing Foundation II Massachusetts Investment Company
Nationwide Investment Services Oklahoma Registered Broker-Dealer in
Corporation Deferred Compensation Market
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
** Nationwide Life and Annuity Insurance Ohio Life Insurance Company
Company
** Nationwide Life Insurance Company Ohio Life Insurance Company
Nationwide Lloyds Texas Texas Lloyds Company
Nationwide Mutual Fire Insurance Ohio Insurance Company
Company
Nationwide Mutual Insurance Company Ohio Insurance Company
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
** Nationwide Property Management, Inc. Ohio Owns, leases, manages and
deals in Real Property
Nationwide Separate Account Trust Massachusetts Investment Company
NEA Valuebuilder Investor Services, Delaware Life Insurance Agency
Inc.
NEA Valuebuilder Investor Services of Alabama Life Insurance Agency
Alabama, Inc.
NEA Valuebuilder Investor Services of Arizona Life Insurance Agency
Arizona, Inc.
</TABLE>
68 of 80
<PAGE> 45
<TABLE>
<CAPTION>
NO. VOTING SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
NEA Valuebuilder Investor Services of Massachusetts Life Insurance Agency
Massachusetts, Inc.
NEA Valuebuilder Investor Services of Montana Life Insurance Agency
Montana, Inc.
NEA Valuebuilder Investor Services of Nevada Life Insurance Agency
Nevada, Inc.
NEA Valuebuilder Investor Services of Ohio Life Insurance Agency
Ohio, Inc.
NEA Valuebuilder Investor Services of Oklahoma Life Insurance Agency
Oklahoma, Inc.
NEA Valuebuilder Investor Services of Texas Life Insurance Agency
Texas, Inc.
NEA Valuebuilder Investor Services of Wyoming Life Insurance Agency
Wyoming, Inc.
NEA Valuebuilder Services Insurance Massachusetts Life Insurance Agency
Agency, Inc.
Neckura General insurance Company Germany Insurance Company
Neckura Holding Company Germany Administrative Service For
Neckura Insurance Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life Insurance Company
NWE, Inc. Ohio Special Investments
PEBSCO of Massachusetts Insurance Massachusetts Markets and Administers
Agency, Inc. Deferred Compensation Plans
for Public Employees
PEBSCO of Texas, Inc. Texas Markets and Administers
Deferred Compensation Plans
for Public Employees
Pension Associates of Wausau, Inc. Wisconsin Pension plan administration
Recordkeeping and consulting
and compensation consulting
Public Employees Benefit Services Delaware Marketing and Administration
Corporation of Deferred Employee
Compensation Plans for
Public Employees
Public Employees Benefit Services Alabama Markets and Administers
Corporation of Alabama Deferred Compensation Plans
for Public Employees
</TABLE>
69 of 80
<PAGE> 46
<TABLE>
<CAPTION> NO. VOTING SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Public Employees Benefit Services Arkansas Markets and Administers
Corporation of Arkansas Deferred Compensation
plans for Public Employee
Public Employees Benefit Services Montana Markets and Administers
Corporation of Montana Deferred Compensation
Plans for Public
Employees
Public Employees Benefit Services New Mexico Markets and Administers
Corporation of New Mexico Deferred Compensation
Plans for Public
Employees
Scottsdale Indemnity Company Ohio Insurance Company
Scottsdale Insurance Company Ohio Insurance Company
SVM Sales GMBH, Neckura Insurance Group Germany Sales Support for Neckura
Insurance Group
Wausau Business Insurance Company Illinois Insurance Company
Wausau General Insurance Company Illinois Insurance Company
Wausau Insurance Company (U.K.) Limited United Kingdom Insurance and Reinsurance
Company
Wausau International Underwriters California Special Risks, Excess &
Surplus Lines Insurance
Underwriting Manager
** Wausau Preferred Health Insurance Wisconsin Insurance and Reinsurance
Company Company
Wausau Service Corporation Wisconsin Holding Company
Wausau Underwriters Insurance Company Wisconsin Insurance Company
** West Coast Life Insurance Company California Life Insurance Company
</TABLE>
70 of 80
<PAGE> 47
<TABLE>
<CAPTION>
NO. VOTING SECURITIES
STATE OF (SEE ATTACHED CHART) PRINCIPAL BUSINESS
COMPANY ORGANIZATION UNLESS OTHERWISE
INDICATED
<S><C> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity
Account Contract
* NACo Variable Account Nationwide Life Separate Issuer of Annuity
Account Contracts
* Nationwide DC Variable Account Nationwide Life Separate Issuer of Annuity
Account Contract
* Nationwide Fidelity Advisor Variable Nationwide Life Separate Issuer of Annuity
Account Account Contract
* Nationwide Life Insurance Separate Ohio Nationwide Life Separate Issuer of Annuity
Account No. 1 Account Contracts
* Nationwide Multi-Flex Variable Account Nationwide Life Separate Issuer of Annuity
Account Contracts
* Nationwide VA Separate Account-A Nationwide Lie and Issuer of Annuity
Annuity Separate Account Contract
* Nationwide VA Separate Account-B Nationwide Lie and Issuer of Annuity
Annuity Separate Account Contract
* Nationwide VA Separate Account-C Nationwide Lie and Issuer of Annuity
Annuity Separate Account Contracts
* Nationwide VA Separate Account-Q Nationwide Lie and Issuer of Annuity
Annuity Separate Account Contract
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity
Account Contracts
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity
Account Contracts
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity
Account Contracts
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity
Account Contracts
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity
Account Contracts
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity
Account Contracts
* Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity
Account Contracts
* Nationwide VL Separate Account-A Ohio Nationwide Life and Issuer of Life Insurance
Annuity Separate Account Contracts
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
</TABLE>
71 of 80
<PAGE> 48
<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 |
| (EMPLOYERS) |_________________________________
| Contribution Note Cost |_________________________________
| ----------------- ---- |
| Casualty $400,000,000 |
|________________________________________________________________________________________________|
| |
_____________|_________________ _____________|__________________ _____________________ __________________
| WAUSAU INSURANCE CO. | | WAUSAU SERVICE | | | | |
| (U.K.) LIMITED | | CORPORATION (WSC) | | | | |
| | | | | NATIONWIDE LLOYDS | | COMPANIES |
| Common Stock: 8,506,800 | | Common Stock: 1,000 | | | | |
| ------------- Shares | | ------------- Shares |_____| |_____| AGENCY OF |
| | | |_____| |_____| |
| Cost | | Cost | | | | TEXAS, INC. |
| ---- | | ---- | | A TEXAS LLOYDS | | |
| Employers-- | | Employers-- | | | | |
| 100% $15,683,300 | | 100% $106,763,000 | | | | |
|_______________________________| |________________________________| |_____________________| |__________________|
|
| ______________________________
| | WAUSAU BUSINESS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 10,900,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ----- |
| | WSC-100% $21,800,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU UNDERWRITERS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 8,750 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $44,560,006 |
| |______________________________|
|
| ______________________________
| | 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 PHOENIX, 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 |
| |______________________________|
|
|
| ______________________________
| | 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. |
| | |
| | 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 |
| | | | 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>
72 of 80
<PAGE> 49
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C> <C>
_________________________________
| |
| NATIONWIDE INSURANCE |
| ENTERPRISE FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|_________________________________|
_________________________________________ ___________________________
| | | |
___| NATIONWIDE MUTUAL |_____________________________________________| NATIONWIDE MUTUAL |
___| INSURANCE COMPANY |_____________________________________________| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
|_________________________________________| |___________________________|
| || |________________________________________________________________ |
| || | | |
______________|_______________ || | _____________________________ _____________|_______|______________
| | || | | | | |
| ALLNATIONS, INC. | || | | NATIONWIDE GENERAL | | NATIONWIDE |
| | || | | INSURANCE COMPANY | | CORPORATION |
| Common Stock: 2,936 | || | | | | |
| ------------- Shares | || | | Common Stock: 20,000 Shares | | Common Stock: Control |
| Cost | || |___| ------------- | | ------------- ------- |
| ---- | || | | | | $13,642,432 100% |
| Casualty-26% $88,320 | || | | Cost | | |
| Fire-26% $88,463 | || | | ---- | | Shares Cost |
| Preferred Stock: 1,466 Shares| || | | Casualty-100% $5,944,422 | | ----- ---- |
| ---------------- | || | |_____________________________| | Casualty 12,992,922 $751,352,485 |
| Cost | || | | Fire 649,510 24,007,936 |
| ---- | || | | |
| Casualty-6.8% $100,000 | || | | (See Page 2) |
| Fire-6.8% $100,000 | || | |____________________________________|
|______________________________| || |
|| |
_________________________ || | _____________________________
| | || | | |
| FARMLAND MUTUAL | || | | NATIONWIDE PROPERTY |
| INSURANCE COMPANY | || | | AND CASUALTY |
| | || | | INSURANCE COMPANY |
| Guaranty Fund |______|| | | |
| ------------- |_______| | | Common Stock: 60,000 Shares |
| Certificate | | | ------------- |
| ----------- | | | Cost |
| | | | ---- |
| Cost | | | Casualty-100% $6,000,000 |
| ---- | | |_____________________________|
| Casualty $500,000 | |
|_________________________| | _____________________________
| | | |
| | | COLONIAL INSURANCE |
_______________|___________ | | COMPANY OF CALIFORNIA |
| F & B, INC. | | | (COLONIAL) |
| | | | |
| Common Stock: 1 Share | |___| Common Stock: 1,750 Shares |
| ------------- | | | ------------- |
| | | | Cost |
| Cost | | | ---- |
| ---- | | | Casualty-100% $11,750,000 |
| Farmland Mutual- $10 | | |_____________________________|
| 100% | |
|___________________________| | _____________________________ __________________________
____________________________ | | | | |
| | | | SCOTTSDALE | | NATIONAL PREMIUM & |
| NATIONWIDE AGRIBUSINESS | | | INSURANCE COMPANY | | BENEFIT ADMINISTRATION |
| INSURANCE COMPANY | | | | | COMPANY |
| | | | Common Stock: 30,136 Shares | | |
| Common Stock: 1,000,000 |___|___| ------------- |______| Common Stock: 10,000 |
| ------------- Shares | | | | | ------------ Shares |
| | | | Cost | | |
| | | | ---- | | Cost |
| | | | Casualty-100% $150,000,000 | | ---- |
| Casualty-99.9% $26,714,335 | | |_____________________________| | Scottsdale-100% $10,000 |
| | | |__________________________|
| Other Capital: | |
| -------------- | |
| Casualty-Ptd. $ 713,567 | |
|____________________________| |
|
|
|
|
| _____________________________ ______________________________
| | NECKURA HOLDING | | NECKURA |
| | COMPANY (NECKURA) | | INSURANCE COMPANY |
| | | | |
| | 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 |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 4,000 Shares |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 15,825,681 |
| | |_____________________________|
| |
| | _____________________________
| | | NECKURA GENERAL |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| |_____| ------------ |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,656,925 |
| | |_____________________________|
| |
| | _____________________________
| | | COLUMBUS INSURANCE |
| | | BROKERAGE AND SERVICE |
| | | GmbH |
| | | |
| | | Common Stock: 1 Share |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ----- |
| | | Neckura-100% DM 51,639 |
| | |_____________________________|
| |
| | _____________________________
| | | AUTO DIREKT |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| | | ------------- |
| |_____| |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,643,149 |
| | |_____________________________|
| |
| _____________________________ | ____________________________
| | NATIONWIDE | | | SVM SALES |
| | DEVELOPMENT COMPANY | | | 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 COMPANY |
| | |
|___| Common Stock: 50,000 Shares |
| | ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $8,800,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE |
| | INDEMNITY COMPANY |
| | |
| | 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-100% $5,000,000 | | Colonial $500,000 |
| |_____________________________| | Lone Star 150,000 |
| |__________________________|
|
| _____________________________
| | NATIONWIDE |
| | COMMUNITY URBAN |
| | REDEVELOPMENT |
| | CORPORATION |
| | |
| | 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 COMPANY |
| | |
| | Common Stock: 100 Shares |
| | ------------- |
|___| |
| | Cost |
| | ---- |
| | Casualty-90% $9,000 |
| | NW Fin Serv- 1,000 |
| | 10% |
| |_____________________________|
|
|
| _____________________________
| | CALIFORNIA CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 90 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $9,000 |
| |_____________________________|
|
|
| _____________________________ __________________________
| | 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
Contractual Association - Double Line
December 31, 1995
</TABLE>
73 of 80
<PAGE> 50
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side)
<S> <C> <C>
_______________________________________
| |
| EMPLOYERS INSURANCE |___________________________________________
| OF WAUSAU |___________________________________________
| A MUTUAL COMPANY |
|_______________________________________|
__________________________
|
____________|_________________
| NATIONWIDE LIFE INSURANCE |
| COMPANY (NW LIFE) |
|Common Stock: 3,814,779 Shares|
| ------------- |
| |
| NW Corp.- Cost |
| 100% ---- |
| $950,226,915 |
|______________________________|
_________________________________________________________________________________|
____________|_____________ ___________|_______________ | ______________________________
| NATIONWIDE | | NATIONAL CASUALTY | | | NATIONWIDE LIFE AND |
| FINANCIAL SERVICES, INC. | | COMPANY (NC) | | | ANNUITY INSURANCE COMPANY |
| (NW FIN. SERV.) | | Common Stock: 100 Shares | | | |
______|Common Stock: 7,676 Shares| | ------------- | | | Common Stock: 66,000 Shares |
| ____|------------- | | | |_______| ------------- |
| | | Cost | | Cost | | | NW Life- Cost |
| | | ---- | | ---- | | | 100% ---- |
| | | NW Life-100% $5,996,261 | | NW Life-100% $66,132,811 | | | $58,070,003 |
| | |__________________________| |___________________________| | |______________________________|
| | __________________________ ___________|_______________ | ________________________________
| | | NATIONWIDE | | | | | WEST COAST LIFE |
| | | INVESTOR SERVICES, INC. | | | | | INSURANCE COMPANY |
| | | Common Stock: 5 Shares | | NCC OF AMERICA, INC. | | | Common Stock: 1,000,000 Shares|
| |___| ------------- | | (INACTIVE) | |_______| ------------- |
| | | NW Fin. Serv.-100% | | | | | |
| | | Cost | | NC-100% | | | Cost |
| | | ---- | | | | | ---- |
| | | $5,000 | | | | | NW Life-100% $133,809,265 |
| | |__________________________| |___________________________| | |________________________________|
| | __________________________ ______________________________ | ____________________________
| | | NATIONWIDE | | EMPLOYERS LIFE INSURANCE CO. | | | NATIONWIDE PROPERTY |
| | | INVESTING | | OF WAUSAU (ELIOW) | | | MANAGEMENT, INC. |
| | | FOUNDATION | | | | | Common Stock: 59 Shares |
| |___| | ______| Common Stock: 250,000 Shares |____|_______| ------------ |
| ___| | | | ------------- Cost | | | Cost |
| | | | | | ---- | | | ---- |
| | | | | | NW Life-100% $155,000,000 | | | NW Life-100% $1,907,896 |
| | | COMMON LAW TRUST | | |______________________________| | |__________________________ |
| | |__________________________| | | |
| | | _____________________________ | __________|_______________
| | __________________________ | | WAUSAU PREFERRED | | | MRM INVESTMENTS, INC. |
| | | NATIONWIDE | | | HEALTH INSURANCE CO. | | | |
| | | INVESTING | | | | | | Common Stock: 1 Share |
| |___| FOUNDATION II | |______| Common Stock: 200 Shares | | | ------------ |
| ___| | | | ------------- | | | |
| | | | | | Cost | | | Cost |
| | | | | | ---- | | | Nat. Prop. ---- |
| | | COMMON LAW TRUST | | | ELIOW -- 100% $57,413,193 | | | Mgmt.-100% $550,000 |
| | |__________________________| | |_____________________________| | |___________________________|
| | | |
| | | _____________________________ | ___________________________
| | __________________________ | | KEY HEALTH PLAN, INC. | | | NWE, INC. |
| | | NATIONWIDE | | | | | | |
| | | SEPARATE ACCOUNT | |______| Common Stock: 1,000 Shares | |______| Common Stock: 100 Shares |
| | | TRUST | | ------------- | | ------------ |
| |___| | | Cost | | Cost |
| ___| | | ---- | | ---- |
| | | COMMON LAW TRUST | | ELIOW-80% $2,700,000 | | NW Life-100% $35,971,375 |
| | | | |_____________________________| |___________________________|
| | |__________________________|
| |
| | __________________________
| | | FINANCIAL HORIZONS |
| | | INVESTMENT TRUST |
| |___| |
|_____| |
| COMMON LAW TRUST |
|__________________________|
</TABLE>
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<PAGE> 51
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (middle)
<S> <C> <C> <C>
_______________________________________
| |
________________________________| NATIONWIDE MUTUAL |___________________________________________________________
________________________________| INSURANCE COMPANY |___________________________________________________________
| (CASUALTY) |
|_______________________________________|
| _______________________________________________________________
__________________|______________|___
| NATIONWIDE CORPORATION (NW Corp) |
| Common Stock: Control: |
| ------------- ------- |
| 13,642,432 100% |
| |
| Shares Cost |
| ------ ---- |
| Casualty 12,992,922 $751,352,485 |
| Fire 649,510 24,007,936 |
|_____________________________________|
|
____________________________________________________|______________________________________________________________________________
| | |
___________|_________________ _____________|_____________ ____________|______________
| PUBLIC EMPLOYEES BENEFIT | | GATES, McDONALD | | NATIONWIDE FINANCIAL |
|SERVICES CORPORATION (PEBSCO) | | & COMPANY (GATES) | | INSTITUTION DISTRIBUTORS |
______| Common Stock: 236,494 Shares | | Common Stock: 254 Shares | | AGENCY, INC. (NFIDAI)|
| ____| ------------- | | ------------- |___ _____| Common Stock: 1,000 Shares|
| | | Cost | | | | | ___| ------------- |
| | | NW Corp.- ---- | | Cost | | | | | Cost |
| | | 100% $ 7,830,936 | | ---- | | | | | NW Corp. ---- |
| | |______________________________| | NW Corp.- $25,683,532 | | | | | 100% $19,501,000 |
| | | 100% | | | | |___________________________|
| | |___________________________| | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | | ___________________________
| | | PEBSCO SECURITIES | | OF NEW YORK, INC. | | | | | FINANCIAL HORIZONS |
| | | CORP. | | Common Stock: 3 Shares | | | | | DISTRIBUTORS AGY. |
| |____| Common Stock: 5,000 Shares | | ------------- |___| | | | OF ALABAMA, INC. |
| | | ------------- | | | | | |___|Common Stock: 10,000 Shares|
| | | Cost | | Cost | | | | |----------- |
| | | ---- | | ---- | | | | | Cost |
| | | PEBSCO-100% $25,000 | | Gates-100% $106,947 | | | | | ---- |
| | |____________________________| | | | | | | NFIDAI-100% $100 |
| | |___________________________| | | | |___________________________|
| | | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | |
| | | PEBSCO OF | | OF NEVADA | | | | ___________________________
| | | ALABAMA | | | | | | | LANDMARK FINANCIAL |
| | |Common Stock: 100,000 Shares| | Common Stock: 40 Shares |___| | | | SERVICES OF |
| |____|------------- | | | | | | NEW YORK, INC. |
| | | Cost | | Gates-100% Cost | | |___|Common Stock: 10,000 Shares|
| | | ---- | | ---- | | | |------------- |
| | | PEBSCO-100% $1,000 | | $93,750 | | | | Cost |
| | |____________________________| |___________________________| | | | ---- |
| | | | | NFIDAI-100% $10,100 |
| | | | |___________________________|
| | | |
| | | |
| | ____________________________ | |
| | | PEBSCO OF | | |
| | | ARKANSAS | | | ___________________________
| | | Common Stock: 50,000 Shares| | | | FINANCIAL HORIZONS |
| |____| ------------- | | | | SECURITIES CORP. |
| | | Cost | ________________________________|_|___|Common Stock: 10,000 Shares|
| | | ---- | | AFFILIATE AGENCY, INC. | | | |------------- |
| | | PEBSCO-100% $500 | | | | | | Cost |
| | |____________________________| | Common Stock: 100 Shares | | | | ---- |
| | | | | | | NFIDAI-100% $153,000 |
| | | NFIDAI-100% Cost | | | |___________________________|
| | | ---- | | |
| | ___________________________ | $100 | | |
| | | PEBSCO OF MASSACHUSETTS | |___________________________| | |
| | | INSURANCE AGENCY, INC. | | | ___________________________
| |____| Common Stock: 1,000 Shares| | | | |
| | | ------------- | | | | FINANCIAL HORIZONS |
| | | Cost | | |___| DISTRIBUTORS |
| | | ---- | | ___| AGENCY OF OHIO, |
| | | PEBSCO-100% $1,000 | | | | INC. |
| | |___________________________| | | |___________________________|
| | | |
| | | |
| | | |
| | ___________________________ | | ___________________________
| | | PEBSCO OF | | | | |
| | | MONTANA | | |___| FINANCIAL HORIZONS |
| |____| Common Stock: 500 Shares | | ___| DISTRIBUTORS AGENCY |
| | | ------------- | | | | OF OKLAHOMA, INC. |
| | | Cost | | | |___________________________|
| | | ---- | | |
| | | PEBSCO-100% $500 | | |
| | |___________________________| | |
| | | |
| | ___________________________ | |
| | | PEBSCO OF | | | ___________________________
| | | NEW MEXICO | | | | |
| | | | | |___| FINANCIAL HORIZONS |
| |____|Common Stock: 1,000 Shares | | ___| DISTRIBUTORS AGENCY |
| | |------------- | | | | OF TEXAS, INC. |
| | | Cost | | | |___________________________|
| | | ----- | | |
| | | PEBSCO-100% $1,000 | | |
| | |___________________________| | | ___________________________
| | | | | |
| | ___________________________ | |___| AFFILIATE |
| |____| | |_____| AGENCY OF |
|______| PEBSCO OF | | OHIO, INC. |
| TEXAS, INC. | | |
|___________________________| |___________________________|
</TABLE>
75 of 80
<PAGE> 52
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C>
_______________________________________
| |
______________________| NATIONWIDE MUTUAL |
______________________| FIRE INSURANCE COMPANY |
| (FIRE) |
|_______________________________________|
________________________________________|
____________________________________________________________________
| | |
_____________|_____________ | ____________|______________
| NEA VALUEBUILDER | | | NATIONWIDE HMO, INC. |
| INVESTOR SERVICES, INC. | | | (NW HMO) |
| (NEA) | | | Common Stock: 100 Shares |
_______| Common Stock: 500 Shares | |_____| ------------ |
| _____| ------------- | | | Cost |
| | | Cost | | | ---- |
| | | NW Corp.- ---- | | | NW Corp.- |
| | | 100% $5,000 | | | 100% $14,603,732 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH MANAGEMENT |
| | | INVESTOR SERVICES | | | SYSTEMS, INC. |
| |_____| OF ALABAMA, INC. | | | Common Stock: 100 Shares |
| | | Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | | |
| | | Cost | | | Cost |
| | | ---- | | | NW HMO ---- |
| | | NEA-100% $5,000 | | | INC.-100% $25,149 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH |
| | | INVESTOR SERVICES | | | AGENCY, INC. |
| | | OF MONTANA, INC. | | | Common Stock: 100 Shares |
| |_____| Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | Cost |
| | | Cost | | NW HMO ---- |
| | | ----- | | INC.-99% $116,077 |
| | | NEA-100% $500 | |___________________________|
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF NEVADA, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF OHIO, INC. |
| | | Common Stock: 100 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-91% $5,000 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF WYOMING, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | |
| | | NEA VALUEBUILDER |
| |_____| INVESTOR SERVICES |
| | | OF TEXAS, INC. |
| | | |
| | |___________________________|
| |
| | ___________________________
| | | |
| |_____| NEA VALUEBUILDER |
|_______| INVESTOR SERVICES |
| OF OKLAHOMA, INC. |
| |
|___________________________|
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
December 31, 1995
</TABLE>
Page 2
76 of 80
<PAGE> 53
Item 31. NUMBER OF CONTRACT OWNERS
The number of contract Owners of Qualified and Non-Qualified
Contracts as of March 1, 1996, 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 UNDERWRITER
Not Applicable.
Item 35. LOCATION OF ACCOUNTS AND RECORDS
Robert O. Cline
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43216
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.
77 of 80
<PAGE> 54
OFFERED BY
NATIONWIDE
LIFE INSURANCE COMPANY
Group Common Stock
Variable Annuity Contracts
Separate Account No. 1
PROSPECTUS
MAY 1, 1996
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<PAGE> 55
ACCOUNTANTS' CONSENT AND INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT
SCHEDULES
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide Life Insurance Company Separate Account No. 1:
The audits referred to in our report on Nationwide Life Insurance Company (the
Company) dated February 26, 1996, included the related financial statement
schedules as of December 31, 1995, and for each of the years in the three-year
period ended December 31, 1995, included in the registration statement. These
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Services" in the Statement of Additional
Information.
KPMG Peat Marwick LLP
Columbus, Ohio
April 26, 1996
79 of 80
<PAGE> 56
SIGNATURES
As required by the Securities Act of 1933 the Registrant, NATIONWIDE LIFE
INSURANCE COMPANY SEPARATE ACCOUNT NO. 1, certifies that it meets the
requirements of Securities Act Rule 485(b) for effectiveness of this
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, 1996.
NATIONWIDE LIFE INSURANCE COMPANY
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 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
LEWIS J. ALPHIN Director
- -----------------------------
Lewis J. Alphin
KEITH W. ECKEL Director
- -----------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- -----------------------------
Willard J. Engel
FRED C. FINNEY Director
- -----------------------------
Fred C. Finney
CHARLES L. FUELLGRAF, JR. Director
- -----------------------------
Charles L. Fuellgraf, Jr.
JOSEPH J. GASPER President/Chief Operating Officer and Director
- -----------------------------
Joseph J. Gasper
HENRY S. HOLLOWAY Chairman of the Board and Director
- -----------------------------
Henry S. Holloway
D. RICHARD MCFERSON Chairman and Chief Executive Officer--Nationwide
- ----------------------------- Insurance Enterprise and Director
D. Richard McFerson
DAVID O. MILLER Director
- -----------------------------
David O. Miller
C. RAY NOECKER Director
- -----------------------------
C. Ray Noecker
ROBERT A. OAKLEY Executive Vice President-Chief Financial Officer
- -----------------------------
Robert A. Oakley
JAMES F. PATTERSON Director By/s/JOSEPH P. RATH
- ----------------------------- -----------------------------------
James F. Patterson Joseph P. Rath
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>
80 of 80
<PAGE> 57
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 1993, 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, Nationwide Multi-Flex Variable Account and
Nationwide Variable Account-8; 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, Nationwide DCVA III, 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 VLI Separate Account, Nationwide
VLI Separate Account-2, Nationwide VLI Separate Account-3 of Nationwide Life
Insurance Company, hereby constitutes and appoints D. Richard McFerson, Joseph
J. Gasper, 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 4th day of April, 1996.
/s/ Lewis J. Alphin /s/ David O. Miller
- ------------------------------------- -------------------------------------
Lewis J. Alphin, Director David O. Miller, Director
/s/ Keith W. Eckel /s/ C. Ray Noecker
- ------------------------------------- -------------------------------------
Keith W. Eckel, Director C. Ray Noecker, Director
/s/ Willard P. Engel /s/ Robert A. Oakley
- ------------------------------------- -------------------------------------
Willard P. Engel, Director Robert A. Oakley, Executive Vice
President and Chief Financial Officer
/s/ Fred C. Finney
- ------------------------------------- /s/ James F. Patterson
Fred C. Finney, Director -------------------------------------
James F. Patterson, Director
/s/ Charles L. Fuellgraf
- ------------------------------------- /s/ Arden L. Shisler
Charles L. Fuellgraf, Director -------------------------------------
Arden L. Shisler, Director
/s/ Joseph J. Gasper
- ------------------------------------- /s/ Robert L. Stewart
Joseph J. Gasper, President and Chief -------------------------------------
Operating Officer and Director Robert L. Stewart, Director
/s/ Henry S. Holloway /s/ Nancy C. Thomas
- ------------------------------------- -------------------------------------
Henry S. Holloway, Chairman of the Nancy C. Thomas, Director
Board, Director
/s/ Harold W. Weihl
/s/ D. Richard McFerson -------------------------------------
- ------------------------------------- Harold W. Weihl, Director
D. Richard McFerson, Chairman and
Chief Executive Officer-Nationwide
Insurance Enterprise and Director
