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WASHINGTON NATIONAL INSURANCE COMPANY
SEMIANNUAL REPORT
TO CONTRACT OWNERS
JUNE 30, 1999
Separate Account 1 of Washington National Insurance Company
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SEMIANNUAL REPORT TO CONTRACT OWNERS
TABLE OF CONTENTS
JUNE 30, 1999
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SEPARATE ACCOUNT I OF WASHINGTON NATIONAL INSURANCE COMPANY PAGE
Statement of Assets and Liabilities as of June 30, 1999............................................................... 1
Statements of Operations for the Six Months Ended June 30, 1999, and the Year Ended December 31, 1998................. 2
Statements of Changes in Net Assets for the Six Months Ended June 30, 1999, and the Year Ended December 31, 1998...... 2
Notes to Financial Statements......................................................................................... 3
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SEPARATE ACCOUNT 1 OF WASHINGTON NATIONAL INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
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NET ASSET
SHARES COST VALUE
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Assets:
Investments in portfolio shares (Note 2)
Scudder Variable Life Portfolio:
Bond Portfolio........................................................... 812,802.5 $ 5,410,03 $ 5,258,833
Money Market Portfolio................................................... 377,998.0 377,998 377,998
Capital Growth Portfolio................................................. 1,613,057.7 27,990,790 38,584,340
Growth & Income Portfolio................................................ 213,980.2 2,384,350 2,477,891
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Net assets ............................................................ $ 46,699,062
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TOTAL VALUE
UNITS UNIT VALUE OF UNITS
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Net assets attributable to:
Contract owners' deferred annuity reserves:
Scudder Variable Life Portfolio:
Bond Portfolio........................................................... 1,843,526.2 $ 2.852594 $ 5,258,833
Money Market Portfolio................................................... 186,825.3 2.023268 377,998
Capital Growth Portfolio................................................. 5,287,569.4 7.297179 38,584,340
Growth & Income Portfolio................................................ 1,424,501.8 1.739479 2,477,891
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Net assets ............................................................ $ 46,699,062
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The accompanying notes are an integral part of these financial statements.
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SEPARATE ACCOUNT 1 OF WASHINGTON NATIONAL INSURANCE COMPANY
STATEMENTS OF OPERATIONS
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SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
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Investment income:
Dividends from investments in portfolio shares............................................... $ 4,276,604 $ 2,598,105
Expenses:
Mortality and expense risk fees.............................................................. 263,054 497,481
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Net investment income...................................................................... 4,013,550 2,100,624
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Net realized gains (losses) and unrealized appreciation (depreciation) of investments
in portfolio shares:
Net realized gains on sales of investments in portfolio shares............................... 1,241,542 1,765,635
Net change in unrealized appreciation (depreciation) of investments in portfolio shares...... (1,361,929) 3,315,989
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Net gain (loss) on investments in portfolio shares......................................... (120,387) 5,081,624
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Net increase in net assets from operations............................................. $ 3,893,163 $ 7,182,248
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STATEMENTS OF CHANGES IN NET ASSETS
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SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
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Changes from operations:
Net investment income........................................................................ $ 4,013,550 $ 2,100,624
Net realized gains on sales of investments in portfolio shares............................... 1,241,542 1,765,635
Net change in unrealized appreciation (depreciation) of investments in portfolio shares...... (1,361,929) 3,315,989
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Net increase in net assets from operations................................................. 3,893,163 7,182,248
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Changes from contract owners' transactions:
Net contract purchase payments............................................................... 402,109 986,456
Contract redemptions......................................................................... (3,120,619) (4,443,893)
Net transfers................................................................................ 593,948 358,051
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Net decrease in net assets from contract owners' transactions............................ (2,124,562) (3,099,386)
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Net increase in net assets............................................................. 1,768,601 4,082,862
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Net assets, beginning of period................................................................. 44,930,461 40,847,599
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Net assets, end of period.............................................................. $ 46,699,062 $ 44,930,461
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The accompanying notes are an integral part of these financial statements.
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SEPARATE ACCOUNT 1 OF WASHINGTON NATIONAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
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(1) GENERAL
The Separate Account I of Washington National Insurance Company (the
"Account") was established in 1982 as a segregated investment account for
individual annuity contracts which are registered under the Securities Act of
1933. The Account is registered under the Investment Company Act of 1940 (the
"Act"), as amended, as a unit investment trust. The Account was originally
registered with the U.S. Securities and Exchange Commission as a diversified
open-end management investment company under the Act. Effective July 1, 1996,
the Account was restructured into a single unit investment trust which invests
solely in shares of the portfolios of the Scudder Variable Life Investment Fund
(the "Fund"), a diversified open-end management investment company. The
investment options available are the Bond, Capital Growth, Growth & Income and
Money Market portfolios.
The operations of the Account are included in the operations of Washington
National Insurance Company ("WNIC") pursuant to the provisions of the Illinois
Insurance Code. WNIC is an indirect wholly owned subsidiary of Conseco, Inc., a
publicly-held specialized financial services holding company listed on the New
York Stock Exchange.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and
the reported increases and decreases in net assets during the reporting period.
Actual results may differ from these estimates.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENT VALUATION,
TRANSACTIONS, AND INCOME
Investments in portfolio shares are valued using the net asset value of the
respective portfolios of the Fund at the end of each New York Stock Exchange
business day. Investment share transactions are accounted for on a trade date
basis (the date the order to purchase or redeem shares is executed) and dividend
income is recorded on the ex-dividend date. The cost of investments in portfolio
shares sold is determined on a first-in first-out basis. The Account does not
hold any investments which are restricted as to resale.
Net investment income and net realized gains (losses) and unrealized
appreciation (depreciation) on investments are allocated to the contracts on
each valuation date based on each contract's pro rata share of the assets of the
Account as of the beginning of the valuation date.
FEDERAL INCOME TAXES
No provision for federal income taxes has been made in the accompanying
financial statements because the operations of the Account are included in the
total operations of WNIC, which is treated as a life insurance company for
federal income tax purposes under the Internal Revenue Code. Net investment
income and realized gains (losses) are retained in the Account and are not
taxable until received by the contract owner or beneficiary in the form of
annuity payments or other distributions.
ANNUITY RESERVES
Deferred annuity contract reserves are comprised of net contract purchase
payments less redemptions and benefits. These reserves are adjusted daily for
the net investment income and net realized gains (losses) and unrealized
appreciation (depreciation) on investments.
(3) PURCHASES AND SALES OF INVESTMENTS IN PORTFOLIO SHARES
The aggregate cost of purchases of investments in portfolio shares for the
six months ended June 30, 1999, and the year ended December 31, 1998, were
$6,233,220 and $6,249,235, respectively. The aggregate proceeds from sales of
investments in portfolio shares for the six months ended June 30, 1999, and for
the year ended December 31, 1998, were $4,344,075 and $7,247,998, respectively.
(4) DEDUCTIONS AND EXPENSES
Although periodic retirement payments to contract owners vary according to
the investment performance of the portfolios, such payments are not affected by
expense or mortality experience because the WNIC assumes the mortality risk and
the expense risk under the contracts.
The mortality risk assumed by WNIC results from the life annuity payment
option in the contracts in which WNIC agrees to make annuity payments regardless
of how long a particular annuitant or other payee lives. The annuity payments
are determined in accordance with annuity purchase rate provisions established
at the time the contracts are issued. Based on the actuarial determination of
expected mortality, WNIC is required to fund any deficiency in the annuity
payment reserves from its general account assets.
The expense risk assumed by WNIC is the risk that the deductions for
financial accounting services may prove insufficient to cover the actual
expenses.
WNIC deducts daily from the Account an annuity rate guarantee charge, which
is equal on an annual basis to 0.80 percent of the daily value of the total
investments of the Fund, for assuming the mortality and expense risks. These
fees were $183,439 and $348,238 for the six months ended June 30, 1999, and for
the year ended December 31, 1998, respectively.
WNIC deducts daily from the Account a financial accounting charge, which is
equal on an annual basis to 0.35 percent of the daily value of the total
investments of the Fund, for assuming the expense risk. These fees were $78,915
and $149,243 for the six months ended June 30, 1999, and for the year ended
December 31, 1998, respectively.
An annual contract administrative charge of $30 is deducted from the
accumulated value of each contract on the contract anniversary or on the date of
surrender if it occurs between contract anniversaries. This fee does not apply
to contracts for individual retirement accounts, or to contracts which at the
end of any contract anniversary have received at least $1,200 of payments and in
which the accumulated value is at least $20,000. These fees were $8,983 and
$19,508 for the six months ended June 30, 1999, and for the year ended December
31, 1998, respectively.
WNIC deducts a contingent deferred sales charge of 6% on any amounts
withdrawn which are in excess of 10% of the contract's accumulated value on the
date of the first withdrawal during the respective year, except that no such
charge is made for withdrawals of purchase payments received 72 months prior to
the date of withdrawal and no such charge is made if the withdrawal amount is
applied to a settlement option after the contract has been in force for five
years or if the contract contains life contingencies. These fees were $32,696
and $73,059 for the six months ended June 30, 1999, and for the year ended
December 31, 1998, respectively.
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SEPARATE ACCOUNT 1 OF
WASHINGTON NATIONAL INSURANCE COMPANY
SPONSOR
Washington National Insurance Company - Carmel, Indiana.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP - Indianapolis, Indiana.
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WASHINGTON NATIONAL INSURANCE COMPANY IS AN INDIRECT WHOLLY OWNED
SUBSIDIARY OF CONSECO, INC., A FINANCIAL SERVICES ORGANIZATION HEADQUARTERED
IN CARMEL, INDIANA. CONSECO, THROUGH ITS SUBSIDIARY COMPANIES, IS ONE OF
MIDDLE AMERICA'S LEADING SOURCES FOR INSURANCE, INVESTMENT AND LENDING
PRODUCTS, HELPING 12 MILLION CUSTOMERS STEP UP TO A BETTER, MORE SECURE FUTURE.
WASHINGTON NATIONAL INSURANCE COMPANY
11815 North Pennsylvania Street
Carmel, Indiana 46032
(8/99) 06104
(C) 1999 Washington National Insurance Company
www.conseco.com
Insurance Investments Lending
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