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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-28976
IDS LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0823832
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
IDS TOWER 10, MINNEAPOLIS, MINNESOTA 55440-0534
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (612) 671-2581
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [Not Applicable]
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL
INSTRUCTIONS J(1) (a) and (b) OF FORM 10-K AND IS THEREFORE
FILING THIS FORM WITH THE PERMITTED ABBREVIATED NARRATIVE
DISCLOSURE.
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PART I
ITEM 1. BUSINESS
IDS Life Insurance Company (the Company) is a stock life
insurance company organized under the laws of the State of
Minnesota. The Company is a wholly owned subsidiary of American
Express Financial Corporation (formerly IDS Financial
Corporation), which is a wholly owned subsidiary of American
Express Company. The Company serves residents of all states
except New York. IDS Life Insurance Company of New York is a
wholly owned subsidiary of the Company and serves New York State
residents. The Company also wholly owns American Enterprise Life
Insurance Company, which issues fixed and variable annuity
contracts through banks and thrift institutions and American
Partners Life Insurance Company, which is currently inactive. In
Fortune magazine's May 1994 listing of the 50 largest life
insurance companies as ranked by assets, IDS Life Insurance
Company ranked fifteenth.
The Company's principal products are deferred annuities and
universal life insurance, which are issued primarily to
individuals. It offers single premium and annual premium
deferred annuities on both a fixed and variable dollar basis.
Immediate annuities are offered as well. The Company's insurance
products include universal life (fixed and variable), whole life,
single premium life and term products (including waiver of
premium and accidental death benefits). The Company also markets
disability income and long-term care insurance.
The Company's principal annuity product in terms of amount in
force is the fixed deferred annuity. The annuity contract
guarantees a minimum interest rate during the accumulation period
(the time before annuity payments begin), although the Company
normally pays a higher rate reflective of current market rates.
The Company has also adopted a practice whereby the higher
current rate is guaranteed for a specified period. The Company
also offers a variable annuity product under the name "Flexible
Annuity." This is a fixed/variable annuity offering the
purchaser a choice among mutual funds with portfolios of
equities, bonds, managed assets and/or short-term securities, and
the Company's "general account", as the underlying investment
vehicle. With respect to funds applied to the variable portion
of the annuity, the purchaser, rather than the Company, assumes
the investment risks and receives the rewards inherent in the
ownership of the underlying investment. The Flexible Annuity
provides for a surrender charge during the first six years after
a purchase payment is made. At December 31, 1994, the Company
had $28.2 billion of deferred annuities in force, an increase of
9 percent from the prior year end.
The Company offers a flexible-premium, adjustable-benefit
universal life insurance policy. In this type of insurance
policy, each premium payment accumulates interest in a cash value
account. The policyholder has access to the cash surrender value
in whole or in part after the first year. The size of the cash
value of the fund can also be controlled by the policyholder by
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increasing or decreasing premiums, subject only to maintaining a
required minimum to keep the policy in force. Monthly deductions
from the cash value of the policy are made for the cost of
insurance, expense charges and any policy riders. At December
31, 1994, the Company had $37.9 billion of universal life-type
insurance in force, up 16 percent from December 31, 1993.
Assets held in segregated accounts which fund the variable
annuity and variable life insurance products totaled $10.9
billion at December 31, 1994, a 21 percent increase from December
31, 1993.
IDS Life Insurance Company, IDS Life Insurance Company of New
York, American Enterprise Life and American Partners Life are
subject to comprehensive regulation by the Minnesota Department
of Commerce (Insurance Division), the New York Department of
Insurance, the Indiana Department of Insurance and the Arizona
Department of Insurance, respectively. The laws of the other
states in which the Company does business regulate such matters
as the licensing of sales personnel and, in some cases, the
contents of insurance policies. The purpose of such regulation
and supervision is primarily to protect the interests of
policyholders. In the United States, the McCarran-Ferguson Act
provides that the primary regulation of the insurance industry is
left to the individual states. Typically, states regulate such
matters as company licensing, agent licensing, cancellation or
nonrenewal of policies, minimum health insurance policy benefits,
life insurance cost disclosure, solicitation and replacement
practices, unfair trade and claims practices, rates, forms,
advertising, investment type and quality, minimum capital and
surplus levels and changes in control. Virtually all states
mandate participation in insurance guaranty associations, which
assess insurance companies in order to fund claims of
policyholders of insolvent insurance companies. In addition to
state laws, the Company is affected by a variety of federal laws,
and there is periodic federal interest in various aspects of the
insurance industry including taxation, solvency and accounting
procedures, as well as the treatment of persons differently
because of sex, with respect to terms, conditions, rates or
benefits of an insurance contract. If any of these issues were
resolved unsatisfactorily, there could be an adverse effect upon
the Company.
As a distributor of variable contracts, the Company is registered
as a broker-dealer. As the investment manager for various
investment companies, the Company is registered as an investment
advisor under applicable federal laws and is a member of the
National Association of Securities Dealers, Inc.
The insurance and annuity business is highly competitive and the
Company's competitors consist of insurance companies and other
financial institutions. Competitive factors applicable to the
business of the Company include the interest rates credited to
its products, the financial strength of the organization and the
services provided to policyholders.
For additional information, see Note 10, Segment information, in
the "Notes to Consolidated Financial Statements".
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ITEM 2. PROPERTIES
The Company occupies office space in Minneapolis, Minnesota,
which is leased by its parent, American Express Financial
Corporation. The Company reimburses American Express Financial
Corporation for rent based on direct and indirect allocation
methods. IDS Life Insurance Company of New York rents office
space in Albany, New York. Facilities occupied by the Company
and its subsidiaries are believed to be adequate for the purposes
for which they are used and are well maintained.
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in various lawsuits, none of which, in
the opinion of the Company counsel, will result in a material
liability.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Not applicable.
ITEM 6. SELECTED FINANCIAL DATA
Item omitted pursuant to General Instructions J(2) (a) of Form
10-K.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
1994 Compared to 1993:
Consolidated net income increased 24 percent to $336 million in
1994, compared to $270 million in 1993. Earnings growth resulted
primarily from increases in spread income, policyholder and
contractholder charges, and management fees. These increases
reflect higher average insurance and annuities in force during
1994. For the full year, investment margins were comparable to
1993 levels, although investment margins for the fourth quarter
of 1994 were below prior year levels. It is expected that this
trend will continue through the first half of 1995. As a result,
the growth in 1995 earnings is expected to be less than that
experienced in 1994.
Consolidated income before income taxes totaled $513 million in
1994, compared with $413 million in 1993. In 1994, $123 million
was from the life, disability income, health and long-term care
insurance segment, compared with $104 million in 1993. In 1994,
$394 million was from the annuity segment, compared with $315
million in 1993. There was a $4.3 million net loss on
investments in 1994, compared with a net loss on investments of
$6.7 million in 1993.
Total premiums received increased to $5.7 billion in 1994,
compared with $5.3 billion in 1993. This increase is primarily
due to continued strong sales of variable annuities. In
addition, the Company reported small increases in its fixed
single premium deferred annuity line. Universal life-type
insurance and variable universal life insurance premiums received
also increased from the prior year.
Total revenues increased to $2.3 billion in 1994, compared with
$2.2 billion in 1993. The increase is primarily due to increases
in policyholder and contractholder charges, and management fees.
Net investment income, the largest component of revenues, was
basically unchanged from the prior year, reflecting a slight
increase in total investments offset by a decrease in the rate
earned on those investments.
Policyholder and contractholder charges, which consist primarily
of cost of insurance charges on universal life-type policies,
increased 19 percent to $220 million in 1994, compared with $184
million in 1993. This increase reflects higher total life
insurance in force which grew 14 percent to $52.7 billion at
December 31, 1994.
Management and other fees increased 37 percent to $164 million in
1994, compared with $120 million in 1993. This is primarily due
to an increase in assets held in segregated asset accounts, which
grew 21 percent to $10.9 billion at December 31, 1994, resulting
from strong sales of variable products. The Company provides
investment management services for the mutual funds used as
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investment options for variable annuities and variable life
insurance. The Company also receives a mortality and expense
risk fee from the segregated asset accounts.
Total benefits and expenses decreased slightly to $1.8 billion in
1994. The largest component of expenses, interest credited to
policyholder accounts for universal life-type insurance and
investment contracts, decreased to $1.2 billion. This is
primarily due to a decrease in interest credited rates, partially
offset by higher aggregate amounts in force.
Amortization of deferred policy acquisition costs increased to
$280 million in 1994, compared with $212 million in 1993. This
increase is a result of a higher level of amortizable deferred
costs and a high level of surrenders as a result of an exchange
plan announced during the first quarter of 1994 and completed
prior to the end of 1994.
Other insurance and operating expenses, which include non-
capitalized commissions and indirect selling expenses, direct and
indirect operating expenses, premium taxes and guaranty
association expenses decreased to $210 million in 1994, compared
with $242 million in 1993. This decrease primarily reflects a
decrease in amounts accrued for future guaranty association
assessments.
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan,"
and SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures," are effective January 1,
1995. The new rules are not expected to have a material impact on
the Company's results of operations or financial condition.
1993 Compared to 1992:
Consolidated income before income taxes totaled $413 million in
1993, compared with $316 million in 1992. In 1993, $104 million
was from the life, disability income, health and long-term care
insurance segment, compared with $96 million in 1992. In 1993,
$315 million was from the annuity segment, compared with $223
million in 1992. The remaining $6.7 million loss in 1993 was a
net loss on investments, compared with a net loss on investments
of $3.7 million in 1992.
Total premiums received increased to $5.3 billion in 1993,
compared with $4.4 billion in 1992. This increase is primarily
due to strong sales of variable annuities due to the low interest
rate environment. In addition, the Company reported small
increases in its fixed single premium deferred annuity line.
Universal life-type insurance and variable universal life
insurance premiums received also increased from the prior year.
Total revenues increased to $2.2 billion in 1993, compared with
$2.0 billion in 1992. Of this, net investment income was $1.8
billion in 1993, compared with $1.6 billion in 1992, reflecting
an increase in invested assets. Total investments grew 14
percent to $21.9 billion at December 31, 1993, from $19.2 billion
at December 31, 1992.
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Policyholder and contractholder charges, which consist primarily
of cost of insurance charges on universal life-type policies,
increased 18 percent to $184 million in 1993, compared with $156
million in 1992. This increase reflects higher total life
insurance in force which grew 13 percent to $46.1 billion at
December 31, 1993.
Management and other fees increased 41 percent to $120 million in
1993, compared with $85 million in 1992. This is primarily due
to an increase in assets held in segregated asset accounts, which
grew 45 percent to $9.0 billion at December 31, 1993, resulting
from strong sales of variable products. The Company provides
investment management services for the mutual funds used as
investment options for variable annuities and variable life
insurance. The Company also receives a mortality and expense
risk fee from the segregated asset accounts.
Total benefits and expenses increased to $1.8 billion in 1993,
compared with $1.7 billion in 1992. The largest component of
expenses, interest credited to policyholder accounts for
universal life-type insurance and investment contracts,
aggregated $1.2 billion and was essentially unchanged from the
prior year. This reflected interest credited to higher
accumulation values offset by lower interest credited rates.
Amortization of deferred policy acquisition costs increased to
$212 million in 1993, compared with $140 million in 1992,
reflecting prior years' growth of life insurance and annuity
business and a cumulative adjustment driven by the long-term
decrease in accrual rates on fixed annuities.
Other insurance and operating expenses, which include non-
capitalized commissions and indirect selling expenses, direct and
indirect operating expenses, premium taxes and guaranty
association expenses increased to $242 million in 1993, compared
with $216 million in 1992.
Risk Management
The Company primarily invests in fixed income securities, over a
broad range of maturities for the purpose of providing fixed
annuity clients with a competitive rate of return on their
investments while minimizing risk, and to provide a dependable
and consistent margin between the interest rate earned on
investments and the interest rate credited to clients' accounts.
The Company does not invest in securities to generate trading
profits.
The Company has an investment committee that holds regularly
scheduled meetings and, when necessary, special meetings. At
these meetings, the committee reviews models projecting different
interest rate scenarios and their impact on profitability. The
objective of the committee is to structure the investment
security portfolio based upon the type and behavior of products
in the liability portfolio so as to achieve targeted levels of
profitability.
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Rates credited to clients' accounts are generally reset at
shorter intervals than the maturity of underlying investments.
Therefore, margins may be negatively impacted by increases in the
general level of interest rates. Part of the committee's
strategy includes the purchase of some types of derivatives, such
as interest rate caps, for hedging purposes. These derivatives
protect margins by increasing investment returns if there is a
sudden and severe rise in interest rates, thereby mitigating the
impact of an increase in rates credited to clients' accounts.
Liquidity and Capital Resources
The liquidity requirements of the Company are met by funds
provided from operations and investment activity. The primary
components of the funds provided are premiums, investment income,
proceeds from sales of investments as well as maturities and
periodic repayments of investment principal.
The primary uses of funds are policy benefits, commissions and
operating expenses, policy loans and new investment purchases.
The Company has available lines of credit with three banks
aggregating $100 million, which are used strictly as short-term
sources of funds. Borrowings outstanding under the agreements
were $nil at December 31, 1994. The Company also uses reverse
repurchase agreements for short-term liquidity needs. There were
no reverse repurchase agreements outstanding at December 31,
1994.
At December 31, 1994, investments in fixed maturities comprised
87 percent of the Company's total invested assets. Of the fixed
maturity portfolio, approximately 47 percent is invested in GNMA,
FNMA and FHLMC mortgage-backed securities which are considered
AAA/Aaa quality.
At December 31, 1994, approximately 8.9 percent of the Company's
investments in fixed maturities were below investment grade
bonds. These investments may be subject to a higher degree of
risk than the more "traditional" issues because of the borrower's
generally greater sensitivity to adverse economic conditions, such
as recession or increasing interest rates, and in certain
instances, the lack of an active secondary market. Expected
returns on below investment grade bonds reflect consideration of
such factors. The Company has identified those fixed maturities
for which a decline in fair value is determined to be other than
temporary, and has written them down to fair value with a charge to
earnings.
At December 31, 1994, net unrealized depreciation on fixed
maturities held to maturity included $111 million of gross
unrealized appreciation and $686 million of gross unrealized
depreciation. Net unrealized depreciation on fixed maturities
available for sale included $35 million of gross unrealized
appreciation and $477 million of gross unrealized depreciation.
At December 31, 1994, the Company had an allowance for losses for
mortgage loans totaling $35 million and for real estate totaling
$8 million.
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The economy and other factors have caused an increase in the
number of insurance companies that are under regulatory
supervision. This circumstance has resulted in an increase in
assessments by state guaranty associations to cover losses to
policyholders of insolvent or rehabilitated companies. Some
assessments can be partially recovered through a reduction in
future premium taxes in certain states. The Company established
an asset for guaranty association assessments from those states
allowing a reduction in future premium taxes over a reasonable
period of time. The asset will be amortized as future premium
taxes are reduced. The Company has also estimated the potential
effect of future assessments on the Company's financial position
and results of operations and has established a reserve
for such potential assessments.
In the first quarter of 1995, the Company paid a $70 million
dividend to its parent. In 1994, dividends paid to its parent
were $165 million.
The National Association of Insurance Commissioners has
established risk-based capital standards to determine the capital
requirements of a life insurance company based upon the risks
inherent in its operations. These standards require the
computation of a risk-based capital amount which is then compared
to a company's actual total adjusted capital. The computation
involves applying factors to various statutory financial data to
address four primary risks: asset default, adverse insurance
experience, interest rate risk and external events. These
standards provide for regulatory attention when the percentage of
total adjusted capital to authorized control level risk-based
capital is below certain levels. As of December 31, 1994, the
Company's total adjusted capital was well in excess of the levels
requiring regulatory attention.
Segment Information
The Company's operations consist of two business segments:
Individual and group life, disability income, long-term care and
health insurance; and fixed and variable annuity products
designed for individuals, pension plans, small businesses and
employer-sponsored groups. The Company is not dependent upon any
single customer and no single customer accounted for more than 10
percent of revenue in 1994, 1993 or 1992. (See Note 10, Segment
information, in the "Notes to Consolidated Financial Statements".)
Reinsurance
Reinsurance arrangements are used to reduce exposure to large
losses. The maximum amount of risk retained by the Company on
any one life is $750,000 of life and waiver of premium benefits
plus $50,000 of accidental death benefits. The excesses are
reinsured with other life insurance companies. At December 31,
1994, traditional life and universal life-type insurance in force
aggregated $52.7 billion, of which $3.2 billion was reinsured.
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Investments
Of the Company's consolidated total investments of $22.1 billion
at December 31, 1994, 41 percent was invested in mortgage-backed
securities, 45 percent in corporate and other bonds, 11 percent
in primary mortgage loans on real estate, 1.8 percent in policy
loans and the remaining 1.2 percent in other investments.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted in a separate section of
this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Item omitted pursuant to General Instructions J(2) (c) of Form
10-K.
ITEM 11. EXECUTIVE COMPENSATION
Item omitted pursuant to General Instructions J(2) (c) of Form
10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Item omitted pursuant to General Instructions J(2) (c) of Form
10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item omitted pursuant to General Instructions J(2) (c) of Form
10-K.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) (1) Financial Statements
See Index to Financial Statements and Financial
Statement Schedules.
(2) Financial Statement Schedules
See Index to Financial Statements and Financial
Statement Schedules.
(3) Listing of Exhibits
3.1 Articles of Incorporation of IDS Life
Insurance Company are incorporated by
reference to Exhibit A(6)(a) to Form
N-8B-2, File Number 2-97637, filed April
28, 1986.
3.2 By-laws of IDS Life Insurance Company are
incorporated by reference to Exhibit
A(6)(b) to Form N-8B-2, File Number
2-97637, filed April 28, 1986.
10.1 Copy of Group Annuity Contract is
incorporated by reference to Exhibit 4.1 to
Pre-Effective Amendment No. 1 to
Registration Statement No. 33-28976 filed
on Form S-1 on or about October 3, 1990.
10.2 Copy of Group Annuity Certificate is
incorporated by reference to Exhibit 4.2 to
Pre-Effective Amendment No. 1 to
Registration Statement No. 33-28976 filed
on Form S-1 on or about October 3, 1990.
10.3 Copy of Endorsement No. 30340C-GP to the
Group Annuity Contract is incorporated by
reference to Exhibit 4.3 to Post-Effective
Amendment No. 1 to Registration Statement
No. 33-28976 filed on Form S-1 on or about
February 22, 1991.
10.4 Copy of Endorsement No. 30340C to the Group
Annuity Certificate is incorporated by
reference to Exhibit 4.4 to Post-Effective
Amendment No. 1 to Registration Statement
No. 33-28976 filed on Form S-1 on or about
February 22, 1991.
22. Copy of List of Subsidiaries is
incorporated by reference to Exhibit 22 to
Registration Statement No. 33-28976 filed
on Form S-1 on or about May 30, 1989.
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(b) Reports on Form 8-K filed in the fourth quarter of 1994
No reports on Form 8-K were required to be filed by the
Company for the quarter ended December 31, 1994.
(c) Exhibits
The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a
separate section of this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IDS LIFE INSURANCE COMPANY
Registrant
March 27, 1995 By _____________________________
Date James A. Mitchell, Chairman
of the Board and Chief
Executive Officer
March 27, 1995 By _____________________________
Date Melinda S. Urion, Executive
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been duly signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
March 27, 1995 By _____________________________
Date David R. Hubers, Director
March 27, 1995 By _____________________________
Date Richard W. Kling, President
March 27, 1995 By _____________________________
Date Paul F. Kolkman, Executive
Vice President
March 27, 1995 By _____________________________
Date James A. Mitchell, Chairman
of the Board and Chief
Executive Officer
March 27, 1995 By _____________________________
Date Stuart A. Sedlacek, Executive
Vice President, Assured
Assets
March 27, 1995 By _____________________________
Date Melinda S. Urion, Executive
Vice President and Controller
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ANNUAL REPORT ON FORM 10-K
ITEM 8 and ITEM 14(a) (1) and (2) and (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1994
IDS LIFE INSURANCE COMPANY
MINNEAPOLIS, MINNESOTA
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IDS LIFE INSURANCE COMPANY
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of IDS Life
Insurance Company are included in Item 8:
Report of Independent Auditors
Responsibility for Preparation of Financial Statements
Consolidated Balance Sheets at December 31, 1994 and 1993
Consolidated Statements of Income for the years ended
December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
The following consolidated financial statement schedules of IDS
Life Insurance Company are included in Item 14(d):
I. Summary of Investments - Other than Investments in
Related Parties
II. Supplementary Insurance Information
III. Reinsurance
IV. Valuation and Qualifying Accounts
All other schedules to the consolidated financial statements
required by Article 7 of Regulation S-X are not required under the
related instructions or are inapplicable and therefore have been
omitted.
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Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying consolidated balance sheets
of IDS Life Insurance Company (a wholly owned subsidiary of
American Express Financial Corporation) as of December 31,
1994 and 1993 and the related consolidated statements of
income and cash flows for each of the three years in the
period ended December 31, 1994. Our audits also included
the financial statement schedules listed in the index at
Item 14(a). These financial statements and schedules are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and 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.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the consolidated financial position of IDS Life Insurance
Company at December 31, 1994 and 1993, and the consolidated
results of its operations and its cash flows for each of the
three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
As discussed in Note 1 to the consolidated financial
statements, the Company changes its method of accounting for
certain investments in debt and equity securities in 1994.
Ernst & Young LLP
Minneapolis, Minnesota
February 3, 1995
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IDS Life Insurance Company
Responsibility for Preparation of Financial Statements
The management of IDS Life Insurance Company is responsible for
the preparation of the financial statements and related notes
included in this Form 10-K. The statements have been prepared in
conformity with generally accepted accounting principles
appropriate in the circumstances, and include amounts based on
the best judgment of management. Financial information included
elsewhere in this Form 10-K is consistent with these financial
statements.
In recognition of its responsibility for the integrity and
objectivity of data in the financial statements, management
maintains a system of internal accounting controls. This system
includes an organizational structure with clearly defined lines
of responsibility and delegation of authority. To ensure the
effective administration of internal control, employees are
carefully selected and trained, written policies and procedures
are developed and disseminated, and appropriate communication
channels are provided to foster an environment conducive to the
effective functioning of controls.
The system is supported by an internal auditing function that
reports its findings to management throughout the year. IDS Life
Insurance Company's independent auditors are engaged to express
an opinion on the year-end financial statements. They
objectively and independently review the performance of
management in carrying out its responsibility for reporting
operating results and financial condition. With the coordinated
support of the internal auditors, they review and test the system
of internal accounting controls and the data contained in the
financial statements.
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IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
ASSETS 1994 1993
(thousands)
<S> <C> <C>
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1994, $10,694,800) $11,269,861 $ -
Available for sale, at fair value (Amortized cost:
1994, $8,459,128) 8,017,555 -
Investment securities, at amortized cost (Fair value:
1993, $20,425,979) - 19,392,424
19,287,416 19,392,424
Mortgage loans on real estate
(Fair value: 1994, $2,342,520; 1993, $2,125,686) 2,400,514 2,055,450
Policy loans 381,912 350,501
Other investments 51,795 56,307
Total investments 22,121,637 21,854,682
Cash and cash equivalents 267,774 146,281
Receivables:
Reinsurance 80,304 55,298
Amounts due from brokers 7,933 5,719
Other accounts receivable 49,745 21,459
Premiums due 1,594 1,329
Total receivables 139,576 83,805
Accrued investment income 317,510 307,177
Deferred policy acquisition costs 1,865,324 1,652,384
Deferred income taxes 124,061 -
Other assets 30,426 21,730
Assets held in segregated asset
accounts, primarily common stocks
at market 10,881,235 8,991,694
Total assets $35,747,543 $33,057,753
======== ========
See accompanying notes.
<PAGE>
PAGE 22
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (continued)
December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1994 1993
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities $19,361,979 $18,492,135
Universal life-type insurance 2,896,100 2,753,455
Traditional life insurance 206,754 210,205
Disability income, health and
long-term care insurance 244,077 185,272
Policy claims and other
policyholders' funds 50,068 44,516
Deferred income taxes - 43,620
Amounts due to brokers 226,737 351,486
Other liabilities 291,902 292,024
Liabilities related to segregated
asset accounts 10,881,235 8,991,694
Total liabilities 34,158,852 31,364,407
Stockholder's equity:
Capital stock, $30 par value per share;
100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 222,000 222,000
Net unrealized gain (loss) on investments (275,708) 114
Retained earnings 1,639,399 1,468,232
Total stockholder's equity 1,588,691 1,693,346
Total liabilities and stockholder's equity $35,747,543 $33,057,753
======== ========
Commitments and contingencies (Note 6)
See accompanying notes.
</TABLE>
<PAGE>
PAGE 23
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31,
1994 1993 1992
(thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 48,184 $ 48,137 $ 49,719
Disability income and
long-term care insurance 96,456 79,108 64,660
Total premiums 144,640 127,245 114,379
Policyholder and contractholder
charges 219,936 184,205 156,368
Management and other fees 164,169 120,139 84,591
Net investment income 1,781,873 1,783,219 1,616,821
Net loss on investments (4,282) (6,737) (3,710)
Total revenues 2,306,336 2,208,071 1,968,449
Benefits and expenses:
Death and other benefits:
Traditional life insurance 28,263 32,136 34,139
Universal life-type insurance
and investment contracts 52,027 49,692 42,174
Disability income, health and
long-term care insurance 13,393 13,148 10,701
Increase (decrease) in liabilities for
future policy benefits:
Traditional life insurance (3,229) (4,513) (5,788)
Disability income, health and
long-term care insurance 37,912 32,528 27,172
Interest credited on universal life-type
insurance and investment contracts 1,174,985 1,218,647 1,188,379
Amortization of deferred policy
acquisition costs 280,372 211,733 140,159
Other insurance and operating expenses 210,101 241,974 215,692
Total benefits and expenses 1,793,824 1,795,345 1,652,628
Income before income taxes 512,512 412,726 315,821
Income taxes 176,343 142,647 104,651
Net income $ 336,169 $ 270,079 $ 211,170
======= ======= =======
See accompanying notes.
<PAGE>
PAGE 24
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
1994 1993 1992
(thousands)
Cash flows from operating activities:
Net income $ 336,169 $ 270,079 $ 211,170
Adjustments to reconcile net income to
net cash provided by operating activities:
Policy loans, excluding universal
life-type insurance:
Issuance (37,110) (35,886) (32,881)
Repayment 33,384 29,557 26,750
Change in reinsurance receivable (25,006) (55,298) -
Change in other accounts receivable (28,286) (1,364) (4,772)
Change in accrued investment income (10,333) (22,057) (15,853)
Change in deferred policy acquisition
costs, net (192,768) (211,509) (229,252)
Change in liabilities for future policy
benefits for traditional life,
disability income, health and
long-term care insurance 55,354 79,695 21,384
Change in policy claims and other
policyholders' funds 5,552 (5,383) (1,347)
Change in deferred income taxes (19,176) (44,237) (30,385)
Change in other liabilities (122) 56,515 88,997
Amortization of premium
(accretion of discount), net 30,921 (27,438) (4,289)
Net loss on investments 4,282 6,737 3,710
Activity related to universal
life-type insurance:
Premiums 409,035 397,883 312,621
Surrenders and death benefits (290,427) (255,133) (166,162)
Interest credited to account
balances 150,955 156,885 161,873
Policyholder and contractholder
charges, non-cash (126,918) (115,140) (100,975)
Other, net (8,974) (1,907) (10,647)
Net cash provided by operating
activities $ 286,532 $ 221,999 $ 229,942
See accompanying notes.
<PAGE>
PAGE 25
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended December 31,
1994 1993 1992
(thousands)
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ (879,740) $ - $ -
Maturities, sinking fund payments and calls 1,651,762 - -
Sales 58,001 - -
Fixed maturities available for sale:
Purchases (2,763,278) - -
Maturities, sinking fund payments and calls 1,234,401 - -
Sales 374,564 - -
Fixed maturities:
Purchases - (6,548,852) (6,590,279)
Maturities, sinking fund payments and calls - 3,934,055 2,696,239
Sales - 487,983 1,011,093
Other investments, excluding policy loans:
Purchases (634,807) (553,694) (411,069)
Sales 243,862 123,352 67,097
Change in amounts due from brokers (2,214) 14,483 289,335
Change in amounts due to brokers (124,749) 92,832 42,182
Net cash used in investing activities (842,198) (2,449,841) (2,895,402)
Cash flows from financing activities:
Activity related to investment contracts:
Considerations received 3,157,778 2,843,668 2,821,069
Surrenders and death benefits (3,311,965) (1,765,869) (1,168,633)
Interest credited to account balances 1,024,031 1,071,917 1,026,506
Universal life-type insurance policy loans:
Issuance (78,239) (70,304) (72,007)
Repayment 50,554 46,148 40,351
Capital contribution from parent - 200,000 -
Cash dividend to parent (165,000) (25,000) (20,000)
Net cash provided by financing activities 677,159 2,300,560 2,627,286
Net increase (decrease) in cash and
cash equivalents 121,493 72,718 (38,174)
Cash and cash equivalents at
beginning of year 146,281 73,563 111,737
Cash and cash equivalents at
end of year $ 267,774 $ 146,281 $ 73,563
======== ======== ========
See accompanying notes.
</TABLE>
<PAGE>
PAGE 26
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
($ thousands)
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ thousands)
1. Summary of significant accounting policies
Nature of business
IDS Life Insurance Company (the Company) is engaged in the
insurance and annuity business. The Company sells various forms of
fixed and variable individual life insurance, group life insurance,
individual and group disability income insurance, long-term care
insurance, and single and installment premium fixed and variable
annuities.
Basis of presentation
The Company is a wholly owned subsidiary of American Express
Financial Corporation (formerly IDS Financial Corporation), which
is a wholly owned subsidiary of American Express Company. The
accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries, IDS Life
Insurance Company of New York, American Enterprise Life Insurance
Company and American Partners Life Insurance Company. All material
intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements have been
prepared in conformity with generally accepted accounting
principles which vary in certain respects from reporting practices
prescribed or permitted by state insurance regulatory authorities.
Investments
As of January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Under SFAS No. 115,
fixed maturities that the Company has both the positive intent and
the ability to hold to maturity are classified as held to maturity
and carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale
and carried at fair value. Unrealized gains and losses on
securities classified as available for sale are carried as a
separate component of stockholder's equity. The effect of adopting
SFAS No. 115 was to increase stockholder's equity by approximately
$181 million, net of tax, as of January 1, 1994, but the adoption
had no impact on the Company's net income.
Management determines the appropriate classification of fixed
maturities at the time of purchase and reevaluates the
classification at each balance sheet date.
<PAGE>
PAGE 27
1. Summary of significant accounting policies (continued)
Mortgage loans on real estate are carried principally at the unpaid
principal balances of the related loans. Policy loans are carried
at the aggregate of the unpaid loan balances which do not exceed
the cash surrender values of the related policies. Other
investments include interest rate caps and equity securities. When
evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to
income. Equity securities are carried at market value and the
related net unrealized appreciation or depreciation is reported as
a credit or charge to stockholder's equity.
Realized investment gain or loss is determined on an identified
cost basis.
Prepayments are anticipated on certain investments in
mortgage-backed securities in determining the constant effective
yield used to recognize interest income. Prepayment estimates are
based on information received from brokers who deal in
mortgage-backed securities.
Statement of cash flows
The Company considers investments with a maturity at the date of
their acquisition of three months or less to be cash equivalents.
These securities are carried principally at amortized cost which
approximates fair value.
Supplementary information to the consolidated statement of cash
flows for the years ended December 31 is summarized as follows:
1994 1993 1992
Cash paid during the year for:
Income taxes $226,365 $188,204 $140,445
Interest on borrowings 1,553 2,661 1,265
Recognition of profits on annuity contracts and insurance policies
The Company issues single premium deferred annuity contracts that
provide for a service fee (surrender charge) at annually decreasing
rates upon withdrawal of the annuity accumulation value by the
contract owner. No sales fee is deducted from the contract
considerations received on these contracts ("no load" annuities).
All of the Company's single premium deferred annuity contracts
provide for crediting the contract owners' accumulations at
specified rates of interest. Such rates are revised by the Company
from time to time based on changes in the market investment yield
rates for fixed-income securities.
Profits on single premium deferred annuities and installment
annuities are recognized by the Company over the lives of the
contracts and represent the excess of investment income earned from
investment of contract considerations over interest credited to
contract owners and other expenses.
<PAGE>
PAGE 28
1. Summary of significant accounting policies (continued)
The retrospective deposit method is used in accounting for
universal life-type insurance. This method recognizes profits over
the lives of the policies in proportion to the estimated gross
profits expected to be realized.
Premiums on traditional life, disability income, health and
long-term care insurance policies are recognized as revenue when
collected or due, and related benefits and expenses are associated
with premium revenue in a manner that results in recognition of
profits over the lives of the insurance policies. This association
is accomplished by means of the provision for future policy
benefits and the deferral and subsequent amortization of policy
acquisition costs.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales
compensation, policy issue costs, underwriting and certain sales
expenses, have been deferred on insurance and annuity contracts.
The deferred acquisition costs for single premium deferred
annuities and installment annuities are amortized based upon
surrender charge revenue and a portion of the excess of investment
income earned from investment of the contract considerations over
the interest credited to contract owners. The costs for universal
life-type insurance are amortized over the lives of the policies as
a percentage of the estimated gross profits expected to be realized
on the policies. For traditional life, disability income, health
and long-term care insurance policies, the costs are amortized over
an appropriate period in proportion to premium revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance, single premium
deferred annuities and installment annuities are accumulation
values.
Liabilities for fixed annuities in a benefit status are based on
the Progressive Annuity Table with interest at 5 percent, the 1971
Individual Annuity Table with interest at 7 percent or 8.25
percent, or the 1983a Table with various interest rates ranging
from 5.5 percent to 9.5 percent, depending on year of issue.
Liabilities for future benefits on traditional life insurance have
been computed principally by the net level premium method, based on
anticipated rates of mortality (approximating the 1965-1970 Select
and Ultimate Basic Table for policies issued after 1980 and the
1955-1960 Select and Ultimate Basic Table for policies issued prior
to 1981) and the 1975-1980 Select and Ultimate Basic Table for term
insurance policies issued after 1984, policy persistency derived
from Company experience data (first year rates ranging from
approximately 70 percent to 90 percent and increasing rates
thereafter), and estimated future investment yields of 4 percent
for policies issued before 1974 and 5.25 percent for policies
issued from 1974 to 1980. Cash value plans issued in 1980 and
later assume future investment rates that grade from 9.5 percent to
<PAGE>
PAGE 29
1. Summary of significant accounting policies (continued)
5 percent over 20 years. Term insurance issued from 1981 to 1984
assumes an 8 percent level investment rate, term insurance issued
from 1985-1993 assumes investment rates that grade from 10 percent
to 6 percent over 20 years and term insurance issued after 1993
assumes investment rates that grade from 8.7 percent to 6.57
percent over 7 years.
Liabilities for future disability income policy benefits have been
computed principally by the net level premium method, based on the
1964 Commissioners Disability Table with the 1958 Commissioners
Standard Ordinary Mortality Table at 3 percent interest for 1980
and prior, 8 percent interest for persons disabled from 1981 to
1991, 7.7 percent interest for persons disabled in 1992 and 6
percent interest for persons disabled after 1992.
Liabilities for future benefits on long-term care insurance have
been computed principally by the net level premium method, using
morbidity rates based on the 1985 National Nursing Home Survey and
mortality rates based on the 1983a Table. The interest rate basis
is 9.5 percent grading to 7 percent over ten years for policies
issued from 1989 to 1992, 7.75 percent grading to 7 percent over
four years for policies issued after 1992, 8 percent for claims
incurred in 1989 to 1991, 7.7 percent for claims incurred in 1992
and 6.7 percent for claims incurred after 1992.
Reinsurance
The maximum amount of life insurance risk retained by the Company
on any one life is $750 of life and waiver of premium benefits plus
$50 of accidental death benefits. The maximum amount of disability
income risk retained by the Company on any one life is $6 of
monthly benefit for benefit periods longer than three years. The
excesses are reinsured with other life insurance companies on a
yearly renewable term basis. Graded premium whole life policies
and long term care are primarily reinsured on a coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated
federal income tax return of American Express Company. The Company
provides for income taxes on a separate return basis, except that,
under an agreement between American Express Financial Corporation
and American Express Company, tax benefit is recognized for losses
to the extent they can be used on the consolidated tax return. It
is the policy of American Express Financial Corporation and its
subsidiaries that American Express Financial Corporation will
reimburse a subsidiary for any tax benefit.
Included in other receivables at December 31, 1994 is $22,034
receivable from American Express Financial Corporation for federal
income taxes. Included in other liabilities at December 31, 1993
is $14,709 payable to American Express Financial Corporation for
federal income taxes.
<PAGE>
PAGE 30
1. Summary of significant accounting policies (continued)
Segregated asset account business
The segregated asset account assets and liabilities represent funds
held for the exclusive benefit of the variable annuity and variable
life insurance contract owners. The Company receives investment
management and mortality and expense assurance fees from the
variable annuity and variable life insurance mutual funds and
segregated asset accounts. The Company also deducts a monthly cost
of insurance charge and receives a minimum death benefit guarantee
fee and issue and administrative fee from the variable life
insurance segregated asset accounts.
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the segregated asset
accounts will not be affected by future variations in the actual
life expectancy experience of the annuitants and the beneficiaries
from the mortality assumptions implicit in the annuity contracts.
The Company makes periodic fund transfers to, or withdrawals from,
the segregated asset accounts for such actuarial adjustments for
variable annuities that are in the benefit payment period. The
Company guarantees, for the variable life insurance policyholders,
the contractual insurance rate and that the death benefit will
never be less than the death benefit at the date of issuance.
Reclassification
Certain 1993 and 1992 amounts have been reclassified to conform to
the 1994 presentation.
2. Investments
Fair values of investments in fixed maturities represent quoted
market prices and estimated values when quoted prices are not
available. Estimated values are determined by established
procedures involving, among other things, preview of market
indices, price levels of current offerings of comparable issues,
price estimates and market data from independent brokers and
financial files.
Net gain (loss) on investments for the years ended December 31 is
summarized as follows:
1994 1993 1992
Fixed maturities $(1,575) $ 20,583 $ 22,075
Mortgage loans (3,013) (25,056) (13,444)
Other investments 306 (2,264) (12,341)
$(4,282) $ (6,737) $ (3,710)
===== ===== =====
Changes in net unrealized appreciation (depreciation) of
investments for the years ended December 31 are summarized as
follows:
<PAGE>
PAGE 31
2. Investments (continued)
1994 1993 1992
Fixed maturities:
Held to maturity $(1,329,740) $ -- $ --
Available for sale (720,449) -- --
Investment securities -- 323,060 (128,683)
Equity securities (2,917) (156) 300
The amortized cost, gross unrealized gains and losses and fair
values of investments in fixed maturities and equity securities at
December 31, 1994 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government
agency obligations $ 21,500 $ 43 $ 4,372 $ 17,171
State and municipal
obligations 9,687 132 -- 9,819
Corporate bonds
and obligations 8,806,707 100,468 459,568 8,447,607
Mortgage-backed
securities 2,431,967 10,630 222,394 2,220,203
$11,269,861 $111,273 $686,334 $10,694,800
======== ======= ======= ========
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
U.S. Government
agency obligations $ 128,093 $ 756 $ 1,517 $ 127,332
State and municipal
obligations 11,008 702 -- 11,710
Corporate bonds
and obligations 1,142,321 24,166 7,478 1,159,009
Mortgage-backed
securities 7,177,706 9,514 467,716 6,719,504
Total fixed maturities 8,459,128 35,138 476,711 8,017,555
Equity securities 4,663 -- 2,757 1,906
$8,463,791 $35,138 $479,468 $8,019,461
======= ======= ======= =======
</TABLE>
The change in net unrealized gain (loss) on available for sale
securities included as a separate component of stockholder's equity
was $(275,822) in 1994.
The amortized cost, gross unrealized gains and losses and fair
values of investments in fixed maturities carried at amortized cost
at December 31, 1993 are as follows:
<TABLE><CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government
agency obligations $ 63,532 $ 3,546 $ 1,377 $ 65,701
State and municipal
obligations 11,072 2,380 -- 13,452
Corporate bonds
and obligations 9,339,297 768,747 22,929 10,085,115
Mortgage-backed
securities 9,978,523 341,067 57,879 10,261,711
$19,392,424 $1,115,740 $ 82,185 $20,425,979
======== ======== ======== ========
/TABLE
<PAGE>
PAGE 32
2. Investments (continued)
At December 31, 1993, net unrealized appreciation on equity
securities included $160 of gross unrealized appreciation, $nil of
gross unrealized depreciation and deferred tax credits of $46. The
fair value of equity securities was $1,900 at December 31, 1993.
The amortized cost and fair value of investments in fixed
maturities at December 31, 1994 by contractual maturity are shown
below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
Amortized Fair
Held to maturity Cost Value
Due in one year or less $ 108,056 $ 109,228
Due from one to five years 1,412,335 1,423,394
Due from five to ten years 5,467,826 5,245,742
Due in more than ten years 1,849,677 1,696,233
Mortgage-backed securities 2,431,967 2,220,203
$11,269,861 $10,694,800
======== ========
Amortized Fair
Available for sale Cost Value
Due from one to five years $ 757,160 $ 756,842
Due from five to ten years 433,717 449,057
Due in more than ten years 90,545 92,152
Mortgage-backed securities 7,177,706 6,719,504
$8,459,128 $8,017,555
======= =======
During the year ended December 31, 1994, fixed maturities
classified as held to maturity were sold with proceeds of $58,001
and gross realized gains and losses on such sales were $226 and
$3,515, respectively. The sale of these fixed maturities was due
to credit deterioration.
In addition, fixed maturities available for sale were sold during
1994 with proceeds of $374,564 and gross realized gains and losses
on such sales were $1,861 and $7,602, respectively.
Proceeds from sales of investments in fixed maturities during 1993
were $487,983. During 1993, gross gains of $48,499 and gross
losses of $43,039, respectively, were realized on those sales.
At December 31, 1994, bonds carried at $6,536 were on deposit with
various states as required by law.
Net investment income for the years ended December 31 is summarized
as follows:
<PAGE>
PAGE 33
2. Investments (continued)
1994 1993 1992
Interest on fixed maturities $1,556,756 $1,589,802 $1,449,234
Interest on mortgage loans 196,521 175,063 148,693
Other investment income 38,366 29,345 24,281
Interest on cash equivalents 6,872 2,137 5,363
1,798,515 1,796,347 1,627,571
Less investment expenses 16,642 13,128 10,750
$1,781,873 $1,783,219 $1,616,821
======= ======= =======
At December 31, 1994, investments in fixed maturities comprised 87
percent of the Company's total invested assets. These securities
are rated by Moody's and Standard & Poor's (S&P), except for
securities carried at cost approximately $1.7 billion which are
rated by American Express Financial Corporation internal analysts
using criteria similar to Moody's and S&P. A summary of
investments in fixed maturities, at amortized cost, by rating on
December 31 is as follows:
Rating 1994 1993
Aaa/AAA $ 9,708,047 $ 9,959,884
Aa/AA 242,914 258,659
Aa/A 119,952 160,638
A/A 2,567,947 2,021,177
A/BBB 725,755 654,949
Baa/BBB 3,849,188 3,936,366
Baa/BB 796,063 717,606
Below investment grade 1,719,123 1,683,145
$19,728,989 $19,392,424
======== ========
At December 31, 1994, 97 percent of the securities rated Aaa/AAA
are GNMA, FNMA and FHLMC mortgage-backed securities. No holdings
of any other issuer are greater than 1 percent of the Company's
total investments in fixed maturities.
At December 31, 1994, approximately 10.9 percent of the Company's
invested assets were mortgage loans on real estate. Summaries of
mortgage loans by region of the United States and by type of real
estate at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
<S> <C> <C> <C> <C>
East North Central $ 581,142 $ 62,291 $ 552,150 $ 20,933
West North Central 257,996 7,590 361,704 16,746
South Atlantic 597,896 63,010 452,679 52,440
Middle Atlantic 408,940 34,478 260,239 41,090
New England 209,867 23,087 155,214 17,620
Pacific 138,900 -- 120,378 15,492
West South Central 50,854 -- 43,948 525
East South Central 67,503 -- 73,748 --
Mountain 122,668 18,750 70,410 14,594
2,435,766 209,206 2,090,470 179,440
Less allowance for losses 35,252 -- 35,020 --
$2,400,514 $209,206 $2,055,450 $179,440
======= ======= ======= =======
<PAGE>
PAGE 34
2. Investments (continued)
December 31, 1994 December 31, 1993
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
Apartments $ 904,012 $ 56,964 $ 744,788 $ 79,153
Department/retail stores 802,522 88,325 624,651 65,402
Office buildings 321,761 21,691 234,042 15,583
Industrial buildings 232,962 18,827 217,648 9,279
Nursing/retirement homes 89,304 4,649 83,768 917
Hotels/motels 32,666 -- 33,138 --
Medical buildings 36,490 15,651 30,429 5,954
Residential 20 -- 78 --
Other 16,029 3,099 121,928 3,152
2,435,766 209,206 2,090,470 179,440
Less allowance for losses 35,252 -- 35,020 --
$2,400,514 $209,206 $2,055,450 $179,440
======= ======= ======= =======
</TABLE>
Mortgage loan fundings are restricted by state insurance regulatory
authorities to 80 percent or less of the market value of the real
estate at the time of origination of the loan. The Company holds
the mortgage document, which gives the right to take possession of
the property if the borrower fails to perform according to the
terms of the agreement. The fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage
interest rates currently offered for mortgages of similar
maturities. Commitments to purchase mortgages are made in the
ordinary course of business. The fair value of the mortgage
commitments is $nil.
3. Income taxes
The Company qualifies as a life insurance company for federal
income tax purposes. As such, the Company is subject to the
Internal Revenue Code provisions applicable to life insurance
companies.
Income tax expense consists of the following:
1994 1993 1992
Federal income taxes:
Current $186,508 $180,558 $130,998
Deferred (19,175) (44,237) (30,385)
167,333 136,321 100,613
State income taxes-current 9,010 6,326 4,038
Income tax expense $176,343 $142,647 $104,651
====== ====== ======
Increases (decreases) to the federal tax provision applicable to
pretax income based on the statutory rate are attributable to:
<PAGE>
PAGE 35
3. Income taxes (continued)
<TABLE>
<CAPTION>
1994 1993 1992
Provision Rate Provision Rate Provision Rate
<S> <C> <C> <C> <C> <C> <C>
Federal income
taxes based on
the statutory rate $179,379 35.0% $144,454 35.0% $107,379 34.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (9,939) (2.0) (11,002) (2.7) (8,209) (2.6)
Other, net (2,107) (0.4) 2,869 0.7 1,443 0.4
Federal income taxes $167,333 32.6% $136,321 33.0% $100,613 31.8%
====== === ====== === ====== ===
</TABLE>
A portion of life insurance company income earned prior to 1984 was
not subject to current taxation but was accumulated, for tax
purposes, in a "policyholders' surplus account." At December 31,
1994, the Company had a policyholders' surplus account balance of
$19,032. The policyholders' surplus account is only taxable if
dividends to the stockholder exceed the stockholder's surplus
account or if the Company is liquidated. Deferred income taxes of
$6,661 have not been established because no distributions of such
amounts are contemplated.
Significant components of the Company's deferred tax assets and
liabilities as of December 31 are as follows:
1994 1993
Deferred tax assets:
Policy reserves $533,433 $453,436
Investments 116,736 --
Life insurance guarantee
fund assessment reserve 32,235 35,000
Total deferred tax assets 682,404 488,436
Deferred tax liabilities:
Deferred policy acquisition costs 553,722 509,868
Investments -- 10,151
Other 4,621 12,037
Total deferred tax
liabilities 558,343 532,056
Net deferred tax assets (liabilities) $124,061 $(43,620)
====== ======
The Company is required to establish a "valuation allowance" for
any portion of the deferred tax assets that management believes
will not be realized. In the opinion of management, it is more
likely than not that the Company will realize the benefit of the
deferred tax assets, and, therefore, no such valuation allowance
has been established.
<PAGE>
PAGE 36
4. Stockholder's equity
Retained earnings available for distribution as dividends to the
parent are limited to the Company's surplus as determined in
accordance with accounting practices prescribed by state insurance
regulatory authorities. Statutory unassigned surplus aggregated
$1,020,981 as of December 31, 1994 and $922,246 as of December 31,
1993 (see Note 3 with respect to the income tax effect of certain
distributions). In addition, any dividend distributions in 1995 in
excess of approximately $288,601 would require approval of the
Department of Commerce of the State of Minnesota.
Statutory net income for 1994, 1993 and 1992 and capital and
surplus as of December 31, 1994, 1993 and 1992 are summarized as
follows:
1994 1993 1992
Statutory net income $ 294,699 $ 275,015 $180,296
Statutory capital and surplus 1,261,958 1,157,022 714,942
Dividends paid to American Express Financial Corporation were
$165,000 in 1994, $25,000 in 1993 and $20,000 in 1992.
5. Related party transactions
The Company has loaned funds to American Express Financial
Corporation under three loan agreements. The balance of the first
loan was $40,000 and $75,000 at December 31, 1994 and 1993,
respectively. This loan can be increased to a maximum of $75,000
and pays interest at a rate equal to the preceding month's
effective new money rate for the Company's permanent investments.
It is collateralized by equities valued at $110,034 at December 31,
1994. The second loan was used to fund the construction of the IDS
Operations Center. This loan was paid off during 1994 and had an
outstanding balance of $84,588 at December 31, 1993. The loan was
secured by a first lien on the IDS Operations Center property and
had an interest rate of 9.89 percent. The Company also had a loan
to an affiliate which was used to fund construction of the IDS
Learning Center. This loan was sold to the parent during 1994 and
the balance outstanding was $22,573 at December 31, 1993. The loan
was secured by a first lien on the IDS Learning Center property and
had an interest rate of 9.82 percent. Interest income on the above
loans totaled $2,894, $11,116 and $10,711 in 1994, 1993 and 1992,
respectively.
The Company purchased a five year secured note from an affiliated
company which had an outstanding balance of $23,333 and $27,222 at
December 31, 1994 and 1993, respectively. The note bears a fixed
rate of 8.42 percent. Interest income on the above note totaled
$2,278, $2,605 and $2,278 in 1994, 1993 and 1992, respectively.
The Company has a reinsurance agreement whereby it assumed 100
percent of a block of single premium life insurance business from
an affiliated company. The accompanying consolidated balance sheet
at December 31, 1994 and 1993 includes $765,366 and $759,714,
respectively, of future policy benefits related to this agreement.
<PAGE>
PAGE 37
5. Related party transactions (continued)
The accompanying consolidated statement of income includes revenue
from policyholder charges of $8, $21 and $109, and expenses of
$6,912, $4,931 and $5,897 related to this agreement for 1994, 1993
and 1992, respectively.
The Company has a reinsurance agreement to cede 50 percent of its
long-term care insurance business to an affiliated company. The
accompanying consolidated balance sheet at December 31, 1994 and
1993 includes $65,123 and $44,086, respectively, of reinsurance
receivables related to this agreement. Premiums ceded amounted to
$20,360, $16,230 and $12,499 and reinsurance recovered from
reinsurers amounted to $62, $404 and $250 for the years ended
December 31, 1994, 1993 and 1992, respectively.
The Company participates in the retirement plan of American Express
Financial Corporation which covers all permanent employees age 21
and over who have met certain employment requirements. The
benefits are based on years of service and the employee's monthly
average of basic annual salary rates in effect on January 1 or such
other date at determined by American Express Financial Corporation
of the highest five consecutive annual salaries of the last 10
years. American Express Financial Corporation's policy is to fund
retirement plan costs accrued subject to ERISA and federal income
tax considerations. The Company's share of the total net periodic
pension cost was $nil in 1994, 1993 and 1992.
The Company also participates in defined contribution pension plans
of American Express Financial Corporation which cover all employees
who have met certain employment requirements. Company
contributions to the plans are a percent of either each employee's
eligible compensation or basic contributions. Costs of these plans
charged to operations in 1994, 1993 and 1992 were $957, $2,008 and
$1,826, respectively.
The Company participates in defined benefit health care plans of
American Express Financial Corporation that provide health care and
life insurance benefits to retired employees and retired financial
advisors. The plans include participant contributions and service
related eligibility requirements. Upon retirement, such employees
are considered to have been employees of American Express Financial
Corporation. American Express Financial Corporation expenses these
benefits and allocates the expenses to its subsidiaries.
Accordingly, costs of such benefits to the Company are included in
employee compensation and benefits and cannot be identified on a
separate company basis. At December 31, 1994, the total
accumulated post retirement benefit obligation, determined in
accordance with SFAS 106 and based on an assumed interest rate of
8.75 percent and a health care cost trend rate of 7 percent, has
been recorded as a liability by American Express Financial
Corporation.
Charges by American Express Financial Corporation for use of joint
facilities, marketing services and other services aggregated
$335,183, $243,346 and $204,675 for 1994, 1993 and 1992,
respectively. Certain of these costs are included in deferred
<PAGE>
PAGE 38
5. Related party transactions (continued)
policy acquisition costs. In addition, the Company rents its home
office space from American Express Financial Corporation on an
annual renewable basis. Such rentals aggregated $965, $4,513 and
$4,074 for 1994, 1993 and 1992, respectively.
6. Commitments and contingencies
At December 31, 1994 and 1993, traditional life insurance and
universal life-type insurance in force aggregated $52,666,567 and
$46,125,515, respectively, of which $3,246,608 and $3,038,426 were
reinsured at the respective year ends. The Company also reinsures
a portion of the risks assumed under disability income policies.
Under the agreements, premiums ceded to reinsurers amounted to
$29,489, $28,276 and $24,222 and reinsurance recovered from
reinsurers amounted to $5,505, $3,345 and $6,766 for the years
ended December 31, 1994, 1993 and 1992.
Reinsurance contracts do not relieve the Company from its primary
obligation to policyholders.
The Company is a defendant in various lawsuits, none of which, in
the opinion of the Company counsel, will result in a material
liability.
The Company settled all remaining IRS audit issues for the tax
years 1984 through 1986 in September of 1994. There was no
material impact as a result of this audit. Also, the IRS is
currently auditing the Company's 1987 through 1989 tax years.
Management does not believe there will be a material impact as a
result of this audit.
7. Lines of credit
The Company has available lines of credit with three banks
aggregating $100,000 at 40 to 80 basis points over the banks' cost
of funds or equal to the prime rate, depending on which line of
credit agreement is used. Borrowings outstanding under these
agreements were $nil and $1,519 at December 31, 1994 and 1993,
respectively.
8. Derivative financial instruments
The Company enters into transactions involving derivative
financial instruments to manage its exposure to interest rate risk,
including hedging specific transactions. The Company manages risks
associated with these instruments as described below. The Company
does not hold derivative instruments for trading purposes.
Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor
from which the instrument derives its value, primarily an interest
rate. The Company is not impacted by market risk related to
derivatives held for non-trading purposes beyond that inherent in
cash market transactions. Derivatives held for purposes other than
trading are largely used to manage risk and, therefore, the cash
flow and income effects of the derivatives are inverse to the
effects of the underlying transactions.<PAGE>
PAGE 39
8. Derivative financial instruments (continued)
Credit risk is the possibility that the counterparty will not
fulfill the terms of the contract. The Company monitors credit
exposure related to derivative financial instruments through
established approval procedures, including setting concentration
limits by counterparty and industry, and requiring collateral,
where appropriate. A vast majority of the Company's counterparties
are rated A or better by Moody's and Standard & Poor's.
The notional or contract amount of a derivative financial
instrument is generally used to calculate the cash flows that are
received or paid over the life of the agreement. Notional amounts
are not recorded on the balance sheet. Notional amounts far exceed
the related credit exposure.
Credit exposure related to interest rate caps is measured by the
replacement cost of the contracts. The replacement cost
represents the fair value of the instruments. Financial futures
contracts are settled in cash daily.
<TABLE>
<CAPTION>
Notional Carrying Total Credit
Assets Amount Value Fair Value Exposure
<S> <C> <C> <C> <C>
Financial futures contracts $ 159,800 $ 2,072 $ 2,072 $ -
Interest rate caps 4,400,000 29,054 42,365 42,365
$4,559,800 $31,126 $44,437 $42,365
======= ===== ===== =====
</TABLE>
The fair values of derivative financial instruments are based on
market values, dealer quotes or pricing models. The financial
futures contracts expire in 1995. The interest rate caps expire on
various dates from 1995 to 1999.
Financial futures contracts and interest rate caps are used
principally to manage the Company's exposure to rising interest
rates. These instruments are used primarily to protect the margin
between interest rate earned on investments and the interest rate
credited to related annuity contract holders.
Changes in the fair value of financial futures contracts are
accounted for as adjustments to the carrying amount of the hedged
investments and amortized over the remaining lives of such
investments. The cost of interest rate caps is amortized to
interest expense over the life of the contracts and payments
received as a result of these agreements are recorded as a
reduction of interest expense when realized. The amortized cost of
interest rate cap contracts is included in other investments.
9. Fair values of financial instruments
The Company is required to disclose fair value information for most
on- and off-balance sheet financial instruments for which it is
practical to estimate that value. Certain financial instruments
such as life insurance obligations, receivables and all
non-financial instruments, such as deferred acquisition costs are
<PAGE>
PAGE 40
9. Fair values of financial instruments (continued)
excluded from required disclosure. Off-balance sheet intangible
assets, such as the value of the field force, are also excluded.
Management believes the value of excluded assets is significant.
The fair value of the Company, therefore, cannot be estimated by
aggregating the amounts presented.
<TABLE>
<CAPTION>
1994 1993
Carrying Fair Carrying Fair
Financial Assets Value Value Value Value
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $11,269,861 $10,694,800 $ -- $ --
Available for sale 8,017,555 8,017,555 -- --
Investment securities -- -- 19,392,424 20,425,979
Mortgage loans on
real estate (Note 2) 2,400,514 2,342,520 2,055,450 2,125,686
Other:
Equity securities (Note 2) 1,906 1,906 1,900 1,900
Derivative financial
instruments (Note 8) 31,126 44,437 26,923 14,201
Cash and
cash equivalents (Note 1) 267,774 267,774 146,281 146,281
Assets held in segregated
asset accounts (Note 1) 10,881,235 10,881,235 8,991,694 8,991,694
Financial Liabilities
Future policy benefits
for fixed annuities 18,325,870 17,651,897 17,519,876 16,881,747
Liabilities related to
segregated asset accounts 10,398,861 9,943,672 8,645,418 8,305,209
</TABLE>
At December 31, 1994 and 1993, the carrying amount and fair value
of future policy benefits for fixed annuities exclude life
insurance-related contracts carried at $971,897 and $913,127,
respectively, and policy loans of $64,212 and $59,132,
respectively. The fair value of these benefits is based on the
status of the annuities at December 31, 1994 and 1993. The fair
value of deferred annuities is estimated as the carrying amount
less any applicable surrender charges and related loans. The fair
value for annuities in non-life contingent payout status is
estimated as the present value of projected benefit payments at the
rate appropriate for contracts issued in 1994 and 1993.
At December 31, 1994 and 1993 the fair value of liabilities related
to segregated asset accounts is estimated as the carrying amount
less variable insurance contracts carried at $482,374 and $346,276,
respectively, and surrender charges, if applicable.
10. Segment information
The Company's operations consist of two business segments; first,
individual and group life insurance, disability income, health and
long-term care insurance, and second, annuity products designed for
individuals, pension plans, small businesses and employer-sponsored
groups. The consolidated statement of income for the years ended
December 31, 1994, 1993 and 1992 and total assets at December 31,
1994, 1993 and 1992 by segment are summarized as follows:
<PAGE>
PAGE 41
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Net investment income:
Life, disability income,
health and long-term
care insurance $ 247,047 $ 250,224 $ 246,676
Annuities 1,534,826 1,532,995 1,370,145
$1,781,873 $1,783,219 $1,616,821
======= ======= =======
Premiums, charges
and fees:
Life, disability income,
health and long-term
care insurance $335,375 $281,284 $250,386
Annuities 193,370 143,876 104,952
$528,745 $425,160 $355,338
====== ====== ======
Income before income taxes:
Life, disability income,
health and long-term
care insurance $122,677 $104,127 $ 96,215
Annuities 394,117 315,336 223,316
Net loss
on investments (4,282) (6,737) (3,710)
$512,512 $412,726 $315,821
====== ====== ======
Total assets:
Life, disability income,
health and long-term
care insurance $ 5,269,188 $ 4,810,145 $ 4,093,778
Annuities 30,478,355 28,247,608 23,201,995
$35,747,543 $33,057,753 $27,295,773
========= ======== ========
</TABLE>
Allocations of net investment income and certain general expenses
are based on various assumptions and estimates.
Assets are not individually identifiable by segment and have been
allocated principally based on the amount of future policy benefits
by segment.
Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
<PAGE>
PAGE 42
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1994
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
<S> <C> <C> <C>
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 1,301,547 $ 1,177,730 $ 1,301,547
States, municipalities and
polictical subdivisions 9,687 9,819 9,687
All other corporate bonds 9,958,627 9,507,251 9,958,627
Total held to maturity 11,269,861 10,694,800 11,269,861
Available for sale:
United States Government and
government agencies and
authorities (b) 3,783,176 3,514,514 3,514,514
States, municipalities and
polictical subdivisions 11,008 11,710 11,710
All other corporate bonds 4,664,944 4,491,331 4,491,331
Total available for sale 8,459,128 8,017,555 8,017,555
Mortgage loans on real estate 2,400,514 XXXXXXXXX 2,400,514
Policy loans 381,912 XXXXXXXXX 381,912
Other investments 51,795 XXXXXXXXX 51,795
Total investments $22,563,210 $ XXXXXXXXX $22,121,637
(a) - Includes mortgage-backed securities with a cost and market value of $1,280,047 and $1,160,559, respectively.
(b) - Includes mortgage-backed securities with a cost and market value of $3,655,083 and $3,387,182, respectively.
</TABLE>
<PAGE>
PAGE 43
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE II - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1994
Column A Column B Column C Column D Column E Column F Column G
Segment Deferred Future Unearned Other policy Premium Net
policy policy premiums claims and revenue investment
acquisition benefits, benefits income
cost losses, payable
claims and
loss
expenses
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Annuities $1,150,585 $19,361,979 $ - $23,888 $ - $1,534,826
Life, DI,
Long-term Care and
Health Insurance 714,739 3,346,931 - 26,180 144,640 247,047
_____________________________________________________________________________________________________________________________
Total $1,865,324 $22,708,910 $ - $50,068 $144,640 $1,781,873
_____________________________________________________________________________________________________________________________
Column H Column I Column J Column K
Benefits, Amortization Other Premiums
claims, of deferred operating written
losses and policy expenses
settlement acquisition
expenses costs
_____________________________________________________________________________________________________________________________
Annuities $ (5,762) $ 194,060 $131,515 N/A
Life, DI,
Long-term Care and
Health Insurance 134,128 86,312 78,586 N/A
_____________________________________________________________________________________________________________________________
Total $ 128,366 $ 280,372 $210,101 N/A
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 44
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE II - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1993
Column A Column B Column C Column D Column E Column F Column G
Segment Deferred Future Unearned Other policy Premium Net
policy policy premiums claims and revenue investment
acquisition benefits, benefits income
cost losses, payable
claims and
loss
expenses
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Annuities $1,008,378 $18,492,135 $ - $21,508 $ - $1,532,995
Life, DI,
Long-term Care and
Health Insurance 644,006 3,148,932 - 23,008 127,245 250,22
_____________________________________________________________________________________________________________________________
Total $1,652,384 $21,641,067 $ - $44,516 $127,245 $1,783,219
_____________________________________________________________________________________________________________________________
Column H Column I Column J Column K
Benefits, Amortization Other Premiums
claims, of deferred operating written
losses and policy expenses
settlement acquisition
expenses costs
_____________________________________________________________________________________________________________________________
Annuities $ 3,656 $ 139,602 $122,999 N/A
Life, DI,
Long-term Care and
Health Insurance 119,335 72,131 118,975 N/A
_____________________________________________________________________________________________________________________________
Total $ 122,991 $ 211,733 $241,974 N/A
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 45
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE II - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1992
Column A Column B Column C Column D Column E Column F Column G
Segment Deferred Future Unearned Other policy Premium Net
policy policy premiums claims and revenue investment
acquisition benefits, benefits income
cost losses, payable
claims and
loss
expenses
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Annuities $ 860,027 $16,342,419 $ - $28,705 $ - $1,370,145
Life, DI,
Long-term Care and
Health Insurance 580,848 2,883,469 - 21,194 114,379 246,676
_____________________________________________________________________________________________________________________________
Total $1,440,875 $19,225,888 $ - $49,899 $114,379 $1,616,821
_____________________________________________________________________________________________________________________________
Column H Column I Column J Column K
Benefits, Amortization Other Premiums
claims, of deferred operating written
losses and policy expenses
settlement acquisition
expenses costs
_____________________________________________________________________________________________________________________________
Annuities $ 1,870 $ 81,706 $100,928 N/A
Life, DI,
Long-term Care and
Health Insurance 106,528 58,453 114,764 N/A
_____________________________________________________________________________________________________________________________
Total $ 108,398 $ 140,159 $215,692 N/A
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 46
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1994
Life insurance in force $50,814,651 $3,246,608 $1,851,916 $49,419,959 3.75%
______________________________________________________________________________________________________________
Premiums:
Life insurance $ 51,219 $ 3,354 $ 319 $ 48,184 0.66%
DI & health insurance 114,049 17,593 -- 96,456 0.00%
Total premiums $ 165,268 $ 20,947 $ 319 $ 144,640 0.22%
______________________________________________________________________________________________________________
For the year ended
December 31, 1993
Life insurance in force $44,188,493 $3,038,426 $1,937,022 $43,087,089 4.50%
______________________________________________________________________________________________________________
Premiums:
Life insurance $ 51,764 $ 3,627 $ -- $ 48,137 0.00%
DI & health insurance 96,250 17,142 -- 79,108 0.00%
Total premiums $ 148,014 $ 20,769 $ -- $ 127,245 0.00%
______________________________________________________________________________________________________________
For the year ended
December 31, 1992
Life insurance in force $38,888,963 $2,937,590 $2,015,382 $37,966,755 5.31%
______________________________________________________________________________________________________________
Premiums:
Life insurance $ 53,238 $ 3,849 $ 330 $ 49,719 0.66%
DI & health insurance 78,347 13,687 -- 64,660 0.00%
Total premiums $ 131,585 $ 17,536 $ 330 $ 114,379 0.29%
______________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 47
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE IV - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Column A Column B Column C Column D Column E
Additions
---------
Balance at Charged to
Description Beginning Charged to Other Accounts- Deductions- Balance at End
of Period Costs & Expenses Describe * Describe ** of Period
________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1994
-----------------------------
Reserve for Mortgage Loans $35,020 $232 $ 0 $ 0 $35,252
Reserve for Fixed Maturities $22,777 ($16,777) $ 0 $6,000 $ 0
Reserve for Other Investments $10,700 ($3,185) $ 0 $ 0 $ 7,515
For the year ended
December 31, 1993
-----------------------------
Reserve for Mortgage Loans $23,595 $13,635 $ 0 $2,210 $35,020
Reserve for Fixed Maturities $37,899 ($15,122) $ 0 $22,777
Reserve for Other Investments $12,834 ($4,344) $ 0 ($2,210) $10,700
For the year ended
December 31, 1992
------------------------------
Reserve for Mortgage Loans $16,131 $8,440 $ 0 $976 $23,595
Reserve for Fixed Maturities $45,100 ($7,601) $400 $ 0 $37,899
Reserve for Other Investments $ 7,782 $4,076 $ 0 ($976) $12,834
* Cash received on bond previously written down.
** 1994 amount represents a direct writedown of the related investments in fixed maturities. 1993 and 1992 amounts represent
transfers between reserve accounts.
</TABLE>
