<PAGE> 1
File No. 2-91214*
811-1979
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 16 /X/
--
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 21 /X/
--------------------------------
(Exact Name of Registrant)
OHIO NATIONAL VARIABLE ACCOUNT B
(Name of Depositor)
THE OHIO NATIONAL LIFE INSURANCE COMPANY
(Address of Depositor's Principal Executive Offices)
237 William Howard Taft Road
Cincinnati, Ohio 45219
(Depositor's Telephone Number)
(513) 861-3600
--------------------------------
(Name and Address of Agent for Service)
Ronald L. Benedict, Second Vice President and Counsel
The Ohio National Life Insurance Company
P.O. Box 237
Cincinnati, Ohio 45201
Notice to:
W. Randolph Thompson, Esq.
Jones & Blouch
2100 Pennsylvania Avenue, N.W.
Washington, D.C. 20037
--------------------------------
Approximate Date of Proposed Public Offering: As soon after the effective date
of this amendment as is practicable.
Registrant has heretofore registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2 and on February 16, 1995
filed its Rule 24f-2 Notice for its most recent fiscal year.**
It is proposed that this filing will become effective (check appropriate
space):
----- immediately upon filing pursuant to paragraph (b)
----- on (date) pursuant to paragraph (b)
----- 60 days after filing pursuant to paragraph (a)(i)
X
----- on October 2, 1995, pursuant to paragraph (a)(i)
----- 75 days after filing pursuant to paragraph (a)(ii)
----- on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
----- this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE> 2
* The prospectus contained in this registration statement also
relates to variable annuity contracts no longer being sold but for which
additional purchase payments are accepted and which are covered by earlier
registration statements under Files No. 2-36591, 2-73471, 2-68456 and 2-78653.
** Certain contracts filed pursuant to Files No. 2-73471 and 2-68456
contain a Guarantee of the Depositor. The value of the contracts to which the
Guarantee relates is indeterminable. Pursuant to Rule 456(m) under the 1933
Act, no separate fee is being paid for the Guarantee.
<TABLE>
OHIO NATIONAL VARIABLE ACCOUNT B
<CAPTION>
N-4 Item Caption in Prospectus
-------- ---------------------
<S> <C>
1 Cover Page
2 Glossary of Special Terms
3 Not applicable
4 Accumulation Unit Values
5 The Ohio National Companies
6 Deductions and Expenses
7 Description of Variable Annuity Contracts
8 Annuity Period
9 Death Benefit
10 Accumulation Period
11 Surrender and Partial Withdrawal
12 Federal Tax Status
13 Not applicable
14 Table of Contents
Caption in Statement of Additional Information
----------------------------------------------
15 Cover Page
16 Table of Contents
17 Not applicable
18 Custodian
Independent Certified Public Accountants
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
19 See Prospectus (Distribution of Variable Annuity Contracts)
20 Underwriter
21 Calculation of Money Market Subaccount Yield
Total Return
22 See Prospectus (Annuity Period)
23 Financial Statements
Caption in Part C
-----------------
24 Financial Statements and Exhibits
25 Directors and Officers of the Depositor
26 Persons Controlled by or Under Common Control with the Depositor or
Registrant
27 Number of Contractowners
28 Indemnification
29 Principal Underwriter
30 Location of Accounts and Records
31 Not applicable
32 Not applicable
</TABLE>
<PAGE> 4
PART A
PROSPECTUS
<PAGE> 5
PROSPECTUS
FLEXIBLE PURCHASE PAYMENT
INDIVIDUAL NON-TAX QUALIFIED VARIABLE ANNUITY CONTRACTS
OHIO NATIONAL VARIABLE ACCOUNT B
THE OHIO NATIONAL LIFE INSURANCE COMPANY
237 WILLIAM HOWARD TAFT ROAD
CINCINNATI, OHIO 45219
TELEPHONE (513) 559-6452
This prospectus offers a multiple funded, flexible purchase payment, individual
variable annuity contract, designed for non-tax qualified retirement plans,
that provides for the accumulation of values and the payment of annuity
benefits on a variable and/or fixed basis. Unless specifically stated
otherwise, only provisions relating to the variable portion of the contracts
are described in this prospectus. The fixed portion ("Guaranteed Accumulation
Account") is briefly described in an appendix to the Statement of Additional
Information.
Variable annuities are designed to provide lifetime annuity payments which will
vary with the investment results of the investment vehicle chosen. The
accumulation value of a contract will vary with the investment performance of
Ohio National Fund, Inc. (the "Fund"), prior to the annuity payout date, and
the amount of each annuity payment will vary with the Fund's investment
performance subsequent to the commencement of annuity payments. There can be
no assurance that the value of a contract during the years prior to the annuity
payout date or the aggregate amount of annuity payments received after such
date will equal or exceed the purchase payments made therefor.
The variable annuity contracts offered by this prospectus are flexible purchase
payment contracts designed to be sold on an individual basis for use in
retirement plans which do not qualify for special tax treatment under the
Internal Revenue Code.
The minimum purchase payment is $25. Payments after the first payment may be
made at any time. Generally the maximum purchase payment is $10,000 per year.
Purchase payments are allocated to one or more subaccounts of Ohio National
Variable Account B ("VAB") in such portion as the contract owner may choose.
VAB is a separate account established by The Ohio National Life Insurance
Company ("Ohio National Life"). The assets of VAB are invested in shares of
the Fund, a mutual fund having nine portfolios in which the contracts' assets
may be invested: Equity Portfolio, Money Market Portfolio, Bond Portfolio, Omni
Portfolio, International Portfolio, Capital Appreciation Portfolio, Small Cap
Portfolio, Global Contrarian Portfolio and Aggressive Growth Portfolio. (See
the accompanying prospectus of the Fund.)
All or part of the contract's accumulation value may be withdrawn before the
annuity payout date. Amounts withdrawn may be subject to federal income tax
penalties, and a contingent deferred sales charge may be assessed equal to
7 3/4% of total purchase payments made during the 96 months immediately
preceding the withdrawal, or 7 3/4 % of the amount withdrawn, if less. After
the first year, up to 10% of the accumulation value may be withdrawn each year
without this charge.
The contracts offered hereby may be revoked by the purchaser without penalty
within 20 days of their delivery.
This prospectus should be retained for future reference. It sets forth the
information about VAB and the variable annuity contracts offered by this
prospectus that you should know before investing. Additional information about
VAB has been filed with the Securities and Exchange Commission in a Statement
of Additional Information dated October 2, 1995. The Statement of Additional
Information is incorporated herein by reference and is available upon request
and without charge by writing or calling Ohio National Life at the above
address. The table of contents for the Statement of Additional Information is
on page 2.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE ACCOMPANIED BY THE CURRENT PROSPECTUS OF OHIO
NATIONAL FUND, INC.
OCTOBER 2, 1995
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
Fee Table . . . . . . . . . . . . . . . . . . . . 3
Accumulation Unit Values . . . . . . . . . . . . 4
Financial Statements . . . . . . . . . . . . . 5
The Ohio National Companies . . . . . . . . . . . 5
Ohio National Life . . . . . . . . . . . . . . 5
Ohio National Variable Account B . . . . . . . 5
Ohio National Fund, Inc. . . . . . . . . . . . 5
Distribution of Variable Annuity Contracts . . . 6
Deductions and Expenses
Contingent Deferred Sales Charge . . . . . . . 6
Contract Administration Charge . . . . . . . . 6
Deduction for Administrative Expenses . . . . . 6
Deduction for Risk Undertakings . . . . . . . . 7
Transfer Fee . . . . . . . . . . . . . . . . . 7
Deduction for State Premium Tax . . . . . . . . 7
Fund Expenses . . . . . . . . . . . . . . . . . 7
Description of Variable Annuity Contracts . . . . 7
20-Day Free Look . . . . . . . . . . . . . . . 7
Accumulation Period . . . . . . . . . . . . . . 7
Annuity Period . . . . . . . . . . . . . . . . 10
Other Contract Provisions . . . . . . . . . . . 12
Performance Data . . . . . . . . . . . . . . . 12
Federal Tax Status . . . . . . . . . . . . . . . 13
Prior Contracts . . . . . . . . . . . . . . . . . 14
Accumulation Unit Values for
Prior Contracts . . . . . . . . . . . . . . . . 15
Statement of Additional Information
Custodian
Independent Certified Public Accountants
Underwriter
Calculation of Money Market Subaccount Yield
Total Return
Financial Statements for VAB and Ohio National Life
Appendix: Guaranteed Accumulation Account
</TABLE>
GLOSSARY OF SPECIAL TERMS
Accumulation Period - The period prior to the annuity payout date and during
the lifetime of the annuitant.
Accumulation Unit - A unit of measure used to determine the value of contracts
during the accumulation period.
Accumulation Value - The cash value of an annuity contract before the annuity
payout date.
Annuitant - Any natural person who is to receive or is receiving annuity
payments and upon whose continuation of life annuity payments with life
contingencies depend.
Annuity Payout Date - The date on which annuity payments are to begin.
Annuity Payments - Periodic payments made to an annuitant pursuant to an
annuity contract.
Annuity Unit - A unit of measure used to determine the second and subsequent
variable annuity payments and reflecting the investment performance of the
Fund.
Fund Shares - Shares of Ohio National Fund, Inc., or shares of another
registered open-end investment company substituted therefor.
Owner - During the lifetime of the designated annuitant and prior to the
specified annuity payout date, the owner is the person in whose name the
contract is registered. On and after the annuity payout date the annuitant
becomes the owner. After the death of the annuitant, the beneficiary becomes
the owner.
Purchase Payments - The amount of payments made by the owner or on his behalf
under the annuity contract.
Settlement - The application of the accumulation value of an annuity contract
under the settlement provisions contained therein.
Subaccount - The Equity subaccount, Money Market subaccount, Bond subaccount,
Omni subaccount, International subaccount, Capital Appreciation subaccount,
Small Cap subaccount, Global Contrarian subaccount, Aggressive Growth
subaccount, or such other subaccounts as may be established under VAB.
Valuation Period - The period of time from one determination of accumulation
unit and annuity unit values to their next determination. Such determination
is made at the same time that the net asset value of Fund Shares is determined.
See page 17 of the accompanying Fund prospectus.
1940 Act - The Investment Company Act of 1940, as amended, or any similar
successor federal legislation.
2
<PAGE> 7
FEE TABLE
<TABLE>
<S> <C>
CONTRACTOWNER TRANSACTION EXPENSES
Deferred Sales Load (as a percentage
of lesser of payments made
in the prior 8 yrs, or amount surrendered) 7.75%
(Thereafter) 0%
Exchange (transfer) Fee $ 3 (currently no charge for the first 4 transfers per year)
Annual Contract Fee $ 30
</TABLE>
<TABLE>
<CAPTION>
Capital Global Aggre-
Money Inter- Appre- Small Con- sive
Equity Market Bond Omni national ciation Cap tranian Growth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VAB Annual Expenses (as a
percentage
of average account value)
Mortality and Expense Risk Fees 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85%
Account Fees and Expenses 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total VAB Annual Expenses 1.10% 1.10% 1.10% 1.10% 1.10% 1.10% 1.10% 1.10% 1.10%
Fund Annual Expenses (as a
percentage
of the Fund's average net assets)
Management Fees 0.58% 0.25%* 0.60% 0.60% 0.90% 0.80% 0.80% 0.90% 0.80%
Other Expenses 0.17% 0.13% 0.18% 0.18% 0.15% 0.13% 0.12% 0.40%** 0.25%**
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Annual Expenses 0.75% 0.38% 0.78% 0.78% 1.05% 0.93% 0.92% 1.30% 1.05%
EXAMPLE
If you surrendered your 1 Year $87 $84* $88 $88 $90 $89 $89 $93 $90
contract at the end of the
applicable time period, you 3 Years 125 114* 125 125 133 131 129 140 133
would pay the following
aggregate expenses on a
$1,000 5 Years 164 147* 165 165 178 174 172 190 178
investment, assuming 5%
annual return: 10 Years 226 187* 230 230 257 249 244 285 257
EXAMPLE
If you do not surrender your 1 Year 20 16* 20 20 23 22 21 25 23
contract or you annuitize at
the end of the applicable 3 Years 61 50* 62 62 70 68 66 78 70
time period, you would
pay the following 5 Years 105 86* 106 106 120 116 113 134 120
aggregate expenses
on the same investment 10 Years 226 187* 230 230 257 249 244 285 257
</TABLE>
The purpose of the above table is to help you to understand the costs and
expenses that a variable annuity contractowner will bear directly or
indirectly. The example included in the above table should not be considered a
representation of past or future expense, and actual expenses may be greater or
less than those shown. Note that the expense amounts shown in the example are
aggregate amounts for the total number of years indicated. In the example, the
annual fee is treated as if it were deducted as a percentage of assets, based
upon the average account value for all contracts, including ones from which a
portion of the contract fee may be paid from amounts invested in the general
account. For the surrender of a contract at the end of years 3 or 5, the
example reflects the right of a contract owner to withdraw up to 10% of the
accumulation value without assessment of the contingent deferred sales charge.
Neither the table nor the example reflect any premium taxes that may be
applicable to a contract, which currently range from 0% to 2%. The above table
and example reflect only the charges for contracts currently offered by this
prospectus and not other contracts that may be mentioned in the discussion
of Prior Contracts. For further details, see Deductions and Expenses, page 6.
*For the Money Market Portfolio, management fees in excess of 0.25% are
presently being waived by the Fund's investment adviser. Without the waiver,
the Money Market Portfolio's Management Fee would be 0.30%, its Total Fund
Annual Expenses would be 0.43%, and its expenses would total $85 for a $1,000
contract surrendered at the end of 1 year, $115 if surrendered at the end of 3
years, $148 if surrendered at the end of 5 years or $190 if surrendered at the
end of 10 years. For a $1,000 contract annuitized or not surrendered, the
expenses without the waiver would be $16 for 1 year, $51 for 3 years, $87 for 5
years or $190 for 10 years.
**Estimated
3
<PAGE> 8
ACCUMULATION UNIT VALUES*
EQUITY SUBACCOUNT
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C>
1985 $10.000000 $12.272883 6,144
1986 12.272883 14.969156 31,919
1987 14.969156 16.408525 205,775
1988 16.408525 18.669469 191,700
1989 18.669469 22.753001 212,938
1990 22.753001 21.636728 262,249
1991 21.636728 25.720884 312,047
1992 25.720884 27.360011 388,812
1993 27.360011 30.876667 499,176
1994 30.876667 30.616106 561,394
</TABLE>
MONEY MARKET SUBACCOUNT**
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C>
1985 $10.214605 $10.886462 11,467
1986 10.886462 11.466470 9,953
1987 11.466470 12.032975 35,985
1988 12.032975 12.750508 10,731
1989 12.750508 13.732719 28,714
1990 13.732719 14.654912 37,310
1991 14.654912 15.298267 38,997
1992 15.298267 15.611622 15,107
1993 15.611622 15.865417 10,933
1994 15.865417 16.319825 43,614
</TABLE>
BOND SUBACCOUNT
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C>
1985 $10.000000 11.377297 10,802
1986 $11.377297 12.659264 44,190
1987 $12.659264 12.622887 37,221
1988 $12.622887 13.327541 22,679
1989 $13.327541 14.594592 23,798
1990 $14.594592 15.564009 20,973
1991 $15.564009 17.389500 27,244
1992 $17.389500 18.497622 39,037
1993 $18.497622 20.262393 79,658
1994 $20.252393 19.263675 84,726
</TABLE>
OMNI SUBACCOUNT
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C>
1985 $10.259405 $11.730053 59,535
1986 $11.730053 13.684043 380,919
1987 $13.684043 13.307185 516,327
1988 $13.307185 15.141013 319,173
1989 $15.141013 17.291232 302,288
1990 $17.291232 17.429676 317,239
1991 $17.429676 20.368389 314,428
1992 $20.368389 21.879988 396,691
1993 $21.879988 24.423644 607,420
1994 $24.423644 24.030898 658,067
</TABLE>
INTERNATIONAL SUBACCOUNT***
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C>
1993 $10.000000 $12.404596 269,335
1994 $12.404596 13.259582 909,768
<FN>
*Current series of variable annuity contracts commenced September 10, 1984.
For earlier series, see pages 14-16.
**The current annualized yield of the Money Market subaccount for the seven
days ended on December 31, 1994, was 4.50%.
***International subaccount commenced on April 30, 1993.
</TABLE>
4
<PAGE> 9
FINANCIAL STATEMENTS
The complete financial statements of VAB and Ohio National Life, and the
Independent Auditors' Reports thereon, may be found in the Statement of
Additional Information.
THE OHIO NATIONAL COMPANIES
OHIO NATIONAL LIFE
Ohio National Life was organized under the laws of Ohio in 1909 as a stock life
insurance company and became a mutual life insurance company in 1959. It
writes life, accident and health insurance and annuities in 45 states and the
District of Columbia. Currently it has admitted assets in excess of $3.8
billion and unassigned surplus and asset valuation reserves in excess of $275
million. Its home office is located at 237 William Howard Taft Road,
Cincinnati, Ohio.
OHIO NATIONAL VARIABLE ACCOUNT B
VAB was established in 1969 by Ohio National Life as a separate account under
Ohio law for the purpose of funding variable annuity contracts. Purchase
payments for the variable annuity contracts are allocated to one or more
subaccounts of VAB. Income, gains and losses, whether or not realized, from
assets allocated to VAB are, as provided in the contracts, credited to or
charged against VAB without regard to other income, gains or losses of Ohio
National Life. The assets maintained in VAB will not be charged with any
liabilities arising out of any other business conducted by Ohio National Life.
Nevertheless, all obligations arising under the contracts, including the
commitment to make annuity payments, are general corporate obligations of Ohio
National Life. Accordingly, all of Ohio National Life's assets are available
to meet its obligations under the contracts. VAB is registered as a unit
investment trust under the 1940 Act.
OHIO NATIONAL FUND, INC.
The assets of each subaccount of VAB are invested at net asset value (without
an initial sales charge) in shares of a corresponding portfolio of the Fund:
the Equity Portfolio, Money Market Portfolio, Bond Portfolio, Omni Portfolio (a
flexible portfolio fund), International Portfolio, Capital Appreciation
Portfolio, Small Cap Portfolio, Global Contrarian Portfolio or Aggressive
Growth Portfolio. The Fund is a diversified, open-end, management investment
company registered under the 1940 Act. The value of the Fund's investments
fluctuates daily and is subject to the risk of changing economic conditions as
well as the risk inherent in the ability of management to anticipate changes
necessary in such investments to meet changes in economic conditions. The Fund
receives investment advice, for a fee, from its investment adviser, O.N.
Investment Management Company, and from Societe Generale Asset Management Corp.
(subadviser to the International and Global Contrarian Portfolios), T. Rowe
Price Associates, Inc. (subadviser to the Capital Appreciation Portfolio),
Founders Asset Management, Inc. (subadviser to the Small Cap Portfolio, and
Strong Capital Management, Inc. (subadviser to the Aggressive Growth
Portfolio). For additional information concerning the Fund, including the
investment objectives of each of its portfolios, see the attached Fund
prospectus. Read the Fund prospectus carefully before investing.
In addition to being offered to VAB, Fund shares are currently offered to other
separate accounts of Ohio National Life in connection with variable annuity
contracts and a separate account of Ohio National Life Assurance Corporation in
connection with variable life insurance contracts. In the future, Fund shares
may be offered to other insurance company separate accounts. It is conceivable
that in the future it may become disadvantageous for both variable life and
variable annuity separate accounts to invest in the Fund. Although neither
Ohio National Life nor the Fund currently foresees any such disadvantage, the
Board of Directors of the Fund will monitor events in order to identify any
material conflict between variable life and variable annuity contractowners and
to determine what action, if any, should be taken in response thereto,
including the possible withdrawal of VAB's participation in the Fund. Material
conflicts could result from such things as (1) changes in state insurance law;
(2) changes in federal income tax law; (3) changes in the investment management
of any portfolio of the Fund; or (4) differences between voting instructions
given by variable life and variable annuity contractowners.
VOTING RIGHTS
Ohio National Life shall vote Fund shares held in VAB at meetings of Fund
shareholders in accordance with voting instructions received from contract
owners. The number of Fund shares for which an owner is entitled to give
instructions will be determined by Ohio National Life in the manner described
below, not more than 90 days prior to the meeting of the Fund. Fund proxy
material will be distributed to each owner together with appropriate forms for
giving voting instructions. Fund shares held in VAB, for which no timely
instructions are received, will be voted by Ohio National Life in proportion to
the instructions which are received with respect to all contracts participating
in VAB.
5
<PAGE> 10
During the accumulation period, the number of Fund shares for which
instructions may be given to Ohio National Life is determined by dividing the
variable accumulation value of a subaccount of the contract by the net asset
value of a share of the corresponding Fund portfolio as of the same date.
During the annuity payment period, the number of Fund portfolio shares for
which such instructions may be given is determined by dividing the actuarial
liability for variable annuities in the course of payment by the net asset
value of a Fund portfolio share as of the same date. Generally, the number of
votes tends to decrease as annuity payments progress.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The variable annuity contracts will be sold by Ohio National Life insurance
agents who are also registered representatives of The O. N. Equity Sales
Company ("ONESCO"), a wholly-owned subsidiary of Ohio National Life,
registered under the Securities Exchange Act of 1934, and a member of the
National Association of Securities Dealers, Inc. (or some other
broker-dealer). ONESCO is the principal underwriter of the contracts. As
compensation for its sales efforts, ONESCO will receive a fee from Ohio
National Life equal to 6% of purchase payments. ONESCO will remunerate its
registered representatives or other broker/dealers from its own funds.
Purchase payments on which no compensation is paid to ONESCO registered
representatives will not be included in amounts on which the 6% sales
compensation will be paid to ONESCO. To the extent that the amount of the
contingent deferred sales charge received by Ohio National Life is not
sufficient to recover the fee paid to ONESCO, any deficiency will be made up
from Ohio National Life's general account assets which include, among other
things, any profit from the mortality and expense risk charges. ONESCO is the
sole shareholder of O.N. Investment Management Company, the investment adviser
to the Fund.
DEDUCTIONS AND EXPENSES
CONTINGENT DEFERRED SALES CHARGE
No deduction for sales expense is made from purchase payments. A contingent
deferred sales charge may be assessed by Ohio National Life when a contract is
surrendered or a partial withdrawal of accumulation value is made before the
annuity payout date to defray expenses relating to the sale of the contract,
including compensation to sales personnel, cost of sales literature and
prospectuses, and other expenses related to sales activity. Such charge equals
the lesser of (a) 7 3/4% of the total purchase payments made during the 96
months immediately preceding the surrender or partial withdrawal, or (b) 7 3/4%
of the accumulation value being surrendered or withdrawn. On or after the
first contract anniversary, a partial withdrawal of not more than 10% of the
accumulation value (as of the date the partial withdrawal is requested) may be
made once each contract year without the imposition of the contingent deferred
sales charge.
CONTRACT ADMINISTRATION CHARGE
Each year on the contract anniversary (or at the time of surrender of the
contract), Ohio National Life will deduct a contract administration charge of
$30 from the accumulation value to reimburse it for the expenses relating to
the maintenance of the contract. Such charge is not designed to produce a
profit and Ohio National Life does not expect to recover from such charge any
amount in excess of accumulated administrative expenses. Ohio National Life
guarantees not to change the contract administration charge.
DEDUCTION FOR ADMINISTRATIVE EXPENSES
A deduction is made at the end of each valuation period equal to 0.25% on an
annual basis of the contract value for administrative expenses. This deduction
is not designed to produce a profit but to reimburse Ohio National Life for
expenses incurred for accounting, auditing, legal, contract owner services,
reports to regulatory authorities and contract owners, contract issue, etc.,
not covered by the contract administration charge. Because the administrative
expense deduction is a percentage of assets, it is possible that larger
contracts may bear a portion of the cost of administering smaller contracts.
6
<PAGE> 11
DEDUCTION FOR RISK UNDERTAKINGS
Prior to the annuity payout date, Ohio National Life guarantees that the
accumulation value of all contracts will not be affected by any excess of sales
and administrative expenses over the deductions provided therefor. Ohio
National Life also guarantees to pay a death benefit in the event of the
annuitant's death prior to the annuity payout date (see Death Benefit, page
10). After the annuity payout date, Ohio National Life guarantees that
variable annuity payments will not be affected by adverse mortality experience
or expenses.
For assuming these risks, Ohio National Life, in determining the
accumulation unit values and the annuity unit values for each subaccount, makes
a deduction from the applicable investment results equal to 0.85% of the
contract value on an annual basis. Such deduction may be decreased by Ohio
National Life at any time and may be increased not more frequently than
annually to not more than 1.55% on an annual basis. Although Ohio National
Life views the risk charge as an indivisible whole, of the amount currently
being deducted, it has estimated that a reasonable allocation would be 0.35%
for mortality risk, and 0.5% for expense risk. Although Ohio National Life
hopes to realize a profit from this charge, if the deduction is insufficient to
cover the actual risk involved, the loss will fall on Ohio National Life;
conversely, if the deduction proves more than sufficient, the excess will be a
gain to Ohio National Life.
TRANSFER FEE
A transfer fee of $3 (which may be increased to $15) is made for each transfer
from one subaccount to another. The fee is charged against the subaccount from
which the transfer is effected. Currently no fee is charged for the first four
transfers each year.
DEDUCTION FOR STATE PREMIUM TAX
State premium taxes presently range from 0% to 2% for these contracts. In
those jurisdictions permitting, such taxes will be deducted when annuity
payments begin. Elsewhere, they will be deducted from purchase payments.
FUND EXPENSES
There are deductions from, and expenses paid out of, the assets of the Fund.
These are described in the attached Fund prospectus.
DESCRIPTION OF VARIABLE ANNUITY
CONTRACTS 20-DAY FREE LOOK
The contract owner may revoke the contract at any time until the end of 20
days after receipt of the contract and receive a refund of the entire purchase
price. To revoke, the owner must return the contract to Ohio National Life
within the 20 day period. In those states where required by law, the value of
the contract as of the date of cancellation will be returned in lieu of the
entire purchase price in case of revocation during the 20 day free look period.
ACCUMULATION PERIOD
PURCHASE PAYMENT PROVISIONS
The contracts provide for minimum purchase payments of $25 per payment and a
maximum payment of $10,000 per year. (Larger total payments may be made with
Ohio National Life's consent.) Payments after the first may be made at any
time. Failure to make such payments shall not constitute a default, but could
result in involuntary termination (see Ohio National Life's Right to Terminate,
page 8).
ACCUMULATION UNITS
Prior to the annuity payout date, the contract value is measured by
accumulation units. Each purchase payment results in the crediting of
accumulation units to the contract (see Crediting Accumulation Units, page 8).
The number of accumulation units so credited remains constant but the dollar
value of accumulation units will vary depending upon the investment results of
the particular subaccount to which payments are allocated.
7
<PAGE> 12
CREDITING ACCUMULATION UNITS
Completed application forms, together with a check for the first purchase
payment, are forwarded to the home office of Ohio National Life for acceptance.
Upon acceptance, a contract is issued to the contract owner, and the first
purchase payment is then credited to the contract in the form of accumulation
units. Initial purchase payments are credited not later than two business days
after receipt if the application and all information necessary for processing
the purchase payment are complete. If an application is not accepted within
five business days, the purchase payment will be returned immediately to the
applicant unless the applicant specifically consents to having Ohio National
Life retain the purchase payment until the application is completed. After
that, the purchase payment will be credited within two business days.
Subsequent purchase payments are sent directly to the home office of Ohio
National Life and are applied to provide that number of accumulation units (for
each subaccount) determined by dividing the amount of the purchase payment by
the value of the appropriate accumulation unit next computed after the payment
is received at the home office of Ohio National Life.
ALLOCATION OF PURCHASE PAYMENTS
In the contract application, you may direct the allocation of your purchase
payments among the subaccounts of VAB and the general account of Ohio National
Life. The amount allocated to any subaccount or the general account must equal
a whole percentage. The allocation of future purchase payments may be changed
at any time upon written notice to the home office of Ohio National Life.
ACCUMULATION UNIT VALUE AND ACCUMULATION VALUE
The accumulation unit value of each subaccount of VAB was set at $10 when the
first payment was allocated to each such subaccount. The accumulation unit
value for any subsequent valuation period is determined by multiplying the
accumulation unit value for the immediately preceding valuation period by the
net investment factor (described below) for such subsequent valuation period.
The accumulation value is determined by multiplying the total number of
accumulation units (for each subaccount) credited to the contract by the
accumulation unit value (for such subaccount) for the valuation period for
which the accumulation value is being determined.
NET INVESTMENT FACTOR
The net investment factor is a quantitative measure of the investment results
of each subaccount of VAB. The net investment factor for each subaccount for
any valuation period is determined by dividing (a) by (b), then subtracting (c)
from the result, where:
(a) is --
(1) the net asset value of a share in the appropriate portfolio of the
Fund determined as of the end of a valuation period, plus
(2) The per share amount of any dividends or other distributions
declared for that portfolio by the Fund if the "ex-dividend" date
occurs during the valuation period, plus or minus
(3) a per share charge or credit for any taxes paid or reserved for which
is determined by Ohio National Life to result from the maintenance or
operation of that subaccount of VAB; (No federal income taxes are
applicable under present law.)
(b) is the net asset value of a share in the appropriate portfolio of the
Fund determined as the end of the preceding valuation period; and
(c) is the deduction for administrative and sales expenses and risk
undertakings. (See Deduction for Administrative Expenses, page 6, and
Deduction for Risk Undertakings, page 7.)
OHIO NATIONAL LIFE'S RIGHT TO TERMINATE
Ohio National Life may, at its option, require surrender of a contract on any
anniversary when the accumulation value is less than the lesser of (a) $1,000
or (b) $250 times the number of years the contract has been in force. Such
termination could have adverse tax consequences. (See Federal Tax Status, page
13)
8
<PAGE> 13
SURRENDER AND PARTIAL WITHDRAWAL
Prior to the annuity payout date, the owner of a contract may surrender
(totally withdraw the value of) his or her contract for its accumulation value
or elect a partial (at least $100) withdrawal therefrom. These transactions
may be subject to the contingent deferred sales charge described on page 6.
Such charge is a percentage of the total amount withdrawn. For example, if a
partial withdrawal of $100 is requested, Ohio National Life would pay you $100,
but the total amount deducted from the accumulation value would be $108.40
(i.e., $108.40 x 7 3/4% = $8.40). Unless otherwise specified, the withdrawal
will be made pro-rata from the values of each subaccount. The amount available
for withdrawal is the sum of the subaccount values less the contingent deferred
sales charge, if any. In the case of a complete surrender, the amount payable
is also reduced by the amount of the contract administration charge. Payment
by Ohio National Life shall be made within seven days from the date of receipt
of the request for such payment except as it may be deferred under the
circumstances described below. For tax consequences of a surrender or
withdrawal, see Federal Tax Status, page 13.
Occasionally Ohio National Life may receive a request for a surrender or
partial withdrawal which includes contract values derived from purchase
payments which have not cleared the banking system. Ohio National Life may
delay mailing that portion which relates to such payments until the check for
the purchase payment has cleared. Ohio National Life requires the return of
the contract in the case of a complete surrender.
The right to withdraw may be suspended or the date of payment postponed (1) for
any period during which the New York Stock Exchange is closed (other than
customary weekend and holiday closings) or during which trading on the
Exchange, as determined by the Securities and Exchange Commission, is
restricted; (2) for any period during which an emergency, as determined by the
Commission, exists as a result of which disposal of securities held in the Fund
is not reasonably practical, or it is not reasonably practical to determine the
value of the Fund's net assets; or (3) or such other periods as the Commission
may by order permit for the protection of security holders.
TRANSFERS AMONG SUBACCOUNTS
Contract values may be transferred from one subaccount to another upon the
request of the owner. Transfers may be made at any time during the
accumulation period. The amount of any such transfer must be at least $300 (or
the entire value of the contract's interest in a subaccount, if less). Ohio
National Life reserves the right to limit the number, frequency, method or
amount of transfers. Transfers from any portfolio of the Fund on any one day
may be limited to 1% of the previous day's total net assets of that portfolio
if Ohio National Life or the Fund, in its or their discretion, believes that
the portfolio might otherwise be damaged. After the annuity payout date,
transfers among subaccounts can only be made once each calendar quarter. Such
transfers may then be made without a transfer fee. (See Transfer Fee, page 7,
and Transfers After Annuity Payout Date, page 12).
SCHEDULED TRANSFERS (DOLLAR COST AVERAGING)
Ohio National Life administers a scheduled transfer ("DCA") program enabling
you to preauthorize automatic monthly or quarterly transfers of a specified
dollar amount from any variable subaccount(s) to any other subaccount(s),
including the Guaranteed Accumulation Account. Each DCA transfer must be at
least $500 and at least 12 DCA transfers must be scheduled. No transfer fee is
charged for DCA transfers. Ohio National Life may discontinue the DCA program
at any time. You may also discontinue further DCA transfers by giving Ohio
National Life written notice at least 7 business days before the next scheduled
transfer.
DCA generally has the effect of reducing the risk of purchasing at
the top, and selling at the bottom, of market cycles. DCA transfers from a
fund with a stabilized net asset value, such as the Money Market subaccount,
will generally reduce the average total cost of indirectly purchasing Fund
shares because greater numbers of shares will be purchased when the share
prices are lower than when prices are higher. However, DCA does not assure you
of a profit, nor does it protect against losses in a declining market.
Moreover, for transfers from a subaccount not having a stabilized net asset
value, DCA will have the effect of reducing the average price of the shares
being redeemed. DCA might also be used to systematically transfer accumulation
values from variable subaccounts to the General Accumulation Account, in
anticipation of retirement, in order to reduce the risk of making a single
transfer during a low market.
9
<PAGE> 14
TELEPHONE TRANSFERS
If the contract owner first submits a pre-authorization form to Ohio National
Life, transfers may be made by telephoning Ohio National Life at
1-800-635-3225. Ohio National Life will honor pre-authorized telephone
transfer instructions from anyone who is able to provide the personal
identifying information requested, but reserves the right to refuse to honor
any such request if that seems prudent. Ohio National Life will use
reasonable procedures to confirm that telephone instructions are genuine.
(Otherwise, Ohio National Life may be liable for any losses due to unauthorized
or fraudulent instructions.) A written confirmation will be sent following each
telephone transfer.
DEATH BENEFIT
In the event of the death of the annuitant prior to the annuity payout date,
the contract provides a death benefit to be paid to a designated beneficiary.
The amount of the death benefit will be determined as of the end of the
valuation period in which written notice of death of the annuitant is received
by Ohio National Life. It will be paid in one sum into an interest-bearing
checking account established in the beneficiary's name with Bank One,
Springfield, Illinois, unless the owner or beneficiary elects settlement under
one or more of the settlement options provided in the contract. The checking
account will bear interest based upon then current money market rates. The
beneficiary will then be able to write checks against such account at any time
and in any amount up to the total in the account. Such checks must be for a
minimum of $250. The amount of death benefit is the accumulation value of the
contract or, if greater, the total purchase payments made less any partial
withdrawals.
OHIO NATIONAL LIFE EMPLOYEE DISCOUNT
Ohio National Life and its affiliated companies offer a credit on the purchase
of contracts by any of their employees, directors or retirees, or their spouse
or the surviving spouse of a deceased retiree, covering any of the foregoing or
any of their minor children, or any of their children ages 18 to 21 who is
either (i) living in the purchaser's household or (ii) a full-time college
student being supported by the purchaser, or any of the purchaser's minor
grandchildren under the Uniform Gifts to Minors Act. This credit is treated as
additional income under the contract. The amount of the credit equals 3.2% of
all purchase payments made in the first contract year and 5.5% of purchase
payments made in the second through sixth contract years.
ANNUITY PERIOD
ANNUITY PAYOUT DATE
Annuity payments under a contract will begin on the annuity payout date. This
date is selected by the owner at the time the contract is issued and must be at
least 30 days after the contract date. It may be changed from time to time by
the owner so long as the annuity payout date selected is the first day of any
month at least 30 days after the date of such change. The contract restricts
the annuity payout date to not later than the first of the month following the
annuitant's 75th birthday; however, this restriction may be waived by mutual
agreement between Ohio National Life and the owner.
The contracts include Ohio National Life's assurance that annuity payments
will be paid for the lifetime of the annuitant in accordance with the annuity
rates contained in the contract, regardless of actual mortality experience.
Once annuity payments commence, the contract cannot be surrendered for cash
except that, upon the death of the annuitant, the beneficiary shall be
entitled to surrender contract for the commuted value of any remaining
period-certain payments.
ANNUITY OPTIONS
The owner may elect one or more of the following annuity options, and may
change such election anytime before the annuity payout date.
Option 1(a): Life Annuity with installment payments for the lifetime of the
annuitant (under this option it is possible for the annuitant
to receive only one payment; this could happen if the
annuitant should die before receiving the second payment;
there is no residual value of the contract after annuitant's
death).
Option 1(b): Life Annuity with installment payments guaranteed for five
years and continuing thereafter during the remaining lifetime
of the annuitant.
Option 1(c): Life Annuity with installment payments guaranteed for ten
years and continuing thereafter during the remaining lifetime
of the annuitant.
10
<PAGE> 15
Option 1(d): Installment Refund Life Annuity with payments guaranteed for
a period certain and continuing thereafter during the remaining
lifetime of the annuitant. The number of period-certain
payments is equal to the amount applied under this
option divided by the amount of the first payment.
Option 2(a): Joint & Survivor Life Annuity with installment payments during
the lifetime of an annuitant and continuing during the lifetime
of a designated contingent annuitant (under this option it is
possible for the annuitant and contingent annuitant to receive
only one payment; this could happen if both were to die before
receiving the second payment).
Option 2(b): Joint & Survivor Life Annuity with installment payments
guaranteed for ten years and continuing thereafter during the
remaining lifetime of the annuitant or a designated contingent
annuitant.
Unless the contract owner directs otherwise, as of the annuity payout date the
contract values will be applied to provide annuity payments pro-rata from each
subaccount in the same proportion as the contract values immediately prior to
the annuity payout date.
If no election is in effect on the annuity payout date, the accumulation value
of the contract will be applied under Option 1(c) with the beneficiary as payee
for an remaining period-certain installments payable after the death of the
annuitant. Options 2(a) and 2(b) are available only with the consent of Ohio
National Life if the contingent annuitant is not related to the annuitant.
Other settlement options are available as agreed to by Ohio National Life.
DETERMINATION OF AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
The first variable annuity payment is determined by applying the accumulation
value for each subaccount in accordance with the settlement option tables
contained in the contract. The rates contained in those tables depend upon the
annuitant's (and any contingent annuitant's) age and sex and the option
selected. The accumulation value to be applied is determined at the end of a
valuation period (selected by Ohio National Life and uniformly applied) not
more than 10 valuation periods before the annuity payout date.
If the amount to be applied under an option is less than $5,000, the option
shall not be available and accumulation value shall be paid in a single sum to
the annuitant. If the first periodic payment under any option would be less
than $25, Ohio National Life reserves the right to change the frequency of
payments so that the first such payment is at least $25.
ANNUITY UNIT AND THE DETERMINATION OF SUBSEQUENT PAYMENTS
Subsequent variable annuity payments will vary to reflect the investment
performance of each applicable subaccount. The amount of each subsequent
payment is determined by annuity units. The number of annuity units for each
subaccount is determined by dividing the dollar amount of the first annuity
payment from each subaccount by the value of the subaccount annuity unit for
the same valuation period used to determine the accumulation value of the
contract applied to provide annuity payments. This number of annuity units
remains fixed during the annuity payment period unless changed as provided
below.
The annuity unit value for each subaccount was set at $10 for the valuation
period as of which the first variable annuity payable from each subaccount of
VAB was calculated. The annuity unit value for each subsequent valuation
period equals the annuity unit value for the immediately preceding valuation
period multiplied by the net investment factor (see page 8) for such subsequent
valuation period and by a factor (0.9998925 for a one-day valuation period) to
neutralize the assumed interest rate discussed below.
The dollar amount of each subsequent variable annuity payment is equal to the
fixed number of annuity units for each subaccount multiplied by the value of
the annuity unit for the valuation period.
The annuity rate tables contained in the contracts are based on the Progressive
Annuity Mortality Table with compound interest at the effective rate of 4% per
year. A higher interest assumption would mean a higher initial annuity payment
but a more slowly rising series of subsequent annuity payments if annuity unit
values were increasing (or a more rapidly falling series of subsequent annuity
payments if annuity unit values were decreasing). A lower interest assumption
would have the opposite effect. If the actual net investment rate were equal
to the assumed interest rate, annuity payments would be level.
11
<PAGE> 16
TRANSFERS AFTER ANNUITY PAYOUT DATE
After annuity payments have been made for at least 12 months, the annuitant
can, once each 12 months, change the subaccount(s) on which variable annuity
payments are based. On at least 30 days written notice to Ohio National Life
at its home office, that portion of the periodic variable annuity payment
directed by the annuitant will be changed to reflect the investment results of
a different subaccount. The annuity payment immediately after such change will
be the amount that would have been paid without such change. Subsequent
payments will reflect the new mix of subaccount allocation.
OTHER CONTRACT PROVISIONS
ASSIGNMENT
Any amount payable in settlement of the contracts may not be commuted,
anticipated, assigned or otherwise encumbered. To the extent permitted by law,
no such amounts shall be subject in any way to any legal process to subject
them to payment of any claims against an annuitant before the annuity payout
date. A contract may be collaterally assigned and the ownership may be
transferred by the owner before the annuity payout.
PERIODIC REPORTS
Ohio National Life will furnish each owner, at least annually after the first
contract year, and prior to the annuity payout date, a statement showing the
number of accumulation units credited to the contract by subaccount and the
accumulation unit value of each such unit as of a date not more than four
months from the date of furnishing of the report. In addition, as long as the
contract remains in effect, Ohio National Life will forward such periodic
reports as may be furnished it by the Fund.
SUBSTITUTION FOR FUND SHARES
If investment in the Fund is no longer possible or in Ohio National Life's
judgment becomes inappropriate to the purposes of the contract, Ohio National
Life may substitute another mutual fund. Substitution may be made with respect
to both existing investments and the investment of future purchase payments.
However, no such substitution will be made without any necessary approval of
the Securities and Exchange Commission. We may also add other investment
portfolios of the Fund as eligible investments of VAB.
CONTRACT OWNER INQUIRIES
Any questions from contract owners should be directed to Ohio National Life,
Variable Annuity Administration, P.O. Box 2669, Cincinnati, Ohio 45201;
telephone (513) 559-6452.
PERFORMANCE DATA
Ohio National Life may advertise performance data for the various Fund
portfolios showing the percentage change in the value of an accumulation unit
based on the performance of the applicable portfolio over a period of time
(usually a calendar year). Such percentage change is determined by dividing
the increase (or decrease) in value for the unit by the accumulation unit value
at the beginning of the period. This percentage figure will reflect the
deduction of any asset-based charges under the contracts but will not reflect
the deduction of any applicable contract administration charge or contingent
deferred sales charge. The deduction of any applicable contract administration
charge or contingent deferred sales charge would reduce any percentage increase
or make greater any percentage decrease.
Any such advertising will also include average annual total return figures
calculated as shown in the Statement of Additional Information. The average
annual total return figures will reflect the deduction of applicable contract
administration charges and contingent deferred sales charges as well as
applicable asset-based charges.
Ohio National Life may also distribute sales literature comparing separate
account performance to the Consumer Price Index or to such established market
indexes as the Dow Jones Industrial Average, the Standard & Poor's 500 Stock
Index, Donoghue's Money Market Fund Reports, Lehman Brothers Bond Indices, the
Morgan Stanley Europe Australia Far East Index, Morgan Stanley World Index,
Russell 2000 Index, or other variable annuity separate accounts.
12
<PAGE> 17
FEDERAL TAX STATUS
The following discussion of federal income tax treatment of amounts received
under a variable annuity contract is not exhaustive, does not purport to cover
all situations, and is not intended as tax advice. A qualified tax adviser
should always be consulted with regard to the application of law to individual
circumstances. Tax laws can change, even with respect to contracts that have
already been issued. Tax law revisions, with unfavorable consequences to
contracts offered by this prospectus, could have retroactive effect on
previously issued contracts or on subsequent voluntary transactions in
previously issued contracts.
Ohio National Life is taxed as a life insurance company under Subchapter L of
the Internal Revenue Code (the "Code"). Since the operations of VAB are a part
of, and are taxed with, the operations of Ohio National Life, VAB is not
separately taxed as a "regulated investment company" under Subchapter M of
the Code.
The contracts described in this prospectus are considered annuity contracts
under Section 72 of the Code, which generally provides for taxation of
annuities. Under existing provisions of the Code, if the owner of the contract
is a natural person, any increase in the accumulation value of the contract is
not taxable to you as the owner or annuitant until you receive it, either in
the form of annuity payments, as contemplated by the contract, or in some other
form of distribution. With certain exceptions, where the owner of the contract
is a non-natural person (corporation, partnership or trust) any increase in the
accumulation value of the contract attributable to purchase payments made after
February 28, 1986 will be treated as ordinary income received or accrued by the
owner during the current tax year.
When annuity payments commence under the contract each payment is taxable
under Section 72 of the Code as ordinary income in the year of receipt if the
annuitant has neither paid any portion of the purchase payments for the
contract nor has previously been taxed on any portion of the purchase
payments. If any portion of the purchase payments has been paid from or
included in your taxable income, this aggregate amount will be considered your
"investment in the contract." You will be entitled to exclude from your
taxable income a portion of each annuity payment equal to your "investment in
the contract" divided by the period of expected annuity payments, determined
by your life expectancy and the form of annuity benefit. Once your
"investment in the contract" is recovered, the entire portion of each
annuity payment will be included in your taxable income.
If an election is made to receive the accumulated value in a single sum in lieu
of annuity payments, the net amount so received will be treated as taxable
income to the extent it exceeds the "investment in the contract." A partial
withdrawal of contract values is taxable as income to the extent that the
accumulated value of the contract immediately before the payment exceeds the
"investment in the contract." Such a withdrawal is treated as a distribution
of earnings first and only second as a recovery of your "investment in the
contract." If any part of the value of the contract is assigned or pledged to
secure a loan, such value will be taxed as if it had been a partial withdrawal,
and it may be subject to the penalty tax.
There is a penalty tax equal to 10% of any amount that must be included in
gross income for tax purposes. The penalty will not apply to a redemption that
is (1) received on or after the taxpayer reaches age 59 1/2; (2) made to a
beneficiary on or after the death of the annuitant; (3) attributable to the
taxpayer's becoming disabled; (4) made as a series of substantially equal
periodic payments for the life of the annuitant (or joint lives of the
annuitant and beneficiary); (5) from a contract that is a qualified funding
asset for purposes of a structured settlement; or (6) made under an annuity
contract that is purchased with a single premium and with an annuity payout
date not later than a year from the purchase of the annuity. If an election is
made not to have withholding apply to the early withdrawal or if an
insufficient amount is withheld, the contract owner may be responsible for
payment of estimated tax. You may also incur penalties under the estimated tax
rules if the withholding and estimated tax payments are not sufficient.
Failure to provide your taxpayer identification number will automatically
subject any payments under the contract to withholding.
Section 1035(a) of the Code provides for tax-free exchanges of annuity
contracts, with the new contract maintaining the same tax status as the old.
To the extent that the value of a new contract is allocable to payments made
prior to August 14, 1982 under the old contract, any withdrawal of contract
values will be treated as a return of the investment in the contract to the
extent available. Amounts in excess of the investment in the contract will be
treated as ordinary income. Such contracts will be subject to the penalty tax
only with respect to amounts attributable to payments made after August 13,
1982.
13
<PAGE> 18
When a contract is issued in connection with a deferred compensation plan or
arrangement, all rights, discretions and powers relative to the contract, are
vested in the employer and you must look only to your employer for the payment
of deferred compensation benefits. Generally an annuitant will have no
"investment in the contract" and amounts received by you from your employer
under a deferred compensation arrangement will be taxable in full as ordinary
income in the year of receipt.
PRIOR CONTRACTS
ANNUAL PAYMENT VARIABLE ANNUITY
Prior to December 15, 1981, Ohio National Life and VAB issued Annual Payment
Variable Annuity contracts, some of which by their terms remain active and
under which payments may still be made. These contracts called for deductions
from purchase payments in the following amounts:
<TABLE>
<CAPTION>
DEDUCTION FOR DEATH TOTAL*
PORTION OF TOTAL DEDUCTION FOR ADMINISTRATIVE BENEFIT COMBINED
PURCHASE PAYMENTS SALES EXPENSE EXPENSE PREMIUM DEDUCTIONS
----------------- ------------- ------- -------- -----------
<S> <C> <C> <C> <C>
First $10,000 6.3% 2.2% 0.5% 9.0%
Next $15,000 5.5% 2.0% 0.5% 8.0%
Next $25,000 4.8% 1.7% 0.5% 7.0%
Next $50,000 4.0% 1.5% 0.5% 6.0%
Balance over $100,000 3.3% 1.2% 0.5% 5.0%
*Plus 50 cents per payment
</TABLE>
These deductions are in lieu of any contingent deferred sales charge, contract
administration charge and deduction for administrative expense as provided for
in the contracts described in this prospectus. The deduction for mortality and
expense risk undertakings is 1% of the contract value on an annual basis. Such
deduction may be decreased by Ohio National Life at any time and may be
increased not more frequently than annually to not more than 1.5% on an annual
basis.
These prior contracts provide for annuity payments on a 3 1/2% assumed interest
rate which results in a somewhat smaller initial annuity payment, but one that
rises more rapidly in a rising market and falls more slowly in a declining
market. These contracts provide for accumulation of values only in what now
constitutes the Equity subaccount of VAB and/or on a fixed-dollar guaranteed
basis within the general assets of Ohio National Life with limited transfer
privileges between such fixed-dollar accumulation and the Equity subaccount.
VARIABLE INTEREST ANNUITY
From July 15, 1981 until November 2, 1982 Ohio National Life and the Variable
Interest Account, a separate account of Ohio National Life funded by the Money
Market Portfolio of the Fund, issued Variable Interest Annuity contracts.
Under the terms of these contracts, purchase payments can be continued until
the annuity commencement date specified therein. These contracts are
substantially the same as the contracts described in this prospectus except
that there is no right to transfer the contract values to any other underlying
funding media. These contracts also included a guarantee of the investment
performance. Such investment guarantee is regarded as a separate security
offered by Ohio National Life. The deduction for mortality, expense and
investment risk undertaking is 1.3% of the contract value on an annual basis.
Such deduction may be decreased by Ohio National Life at any time and may be
increased not more frequently than annually to not more than 2% on an annual
basis. These contracts do not provide for a deduction from contract value for
administrative expense. They do provide for a contract administration charge
and a contingent deferred sales charge.
FLEXIBLE PAYMENT COMBINATION ANNUITY
From December 1, 1981 until November 2, 1982, Ohio National Life and VAB issued
Flexible Payment Combination Annuity contracts. Under the terms of these
contracts purchase payments can be continued until the annuity commencement
date specified therein. These contracts are substantially the same as the
contracts described in this prospectus except that values can be accumulated
only in what now constitutes the Equity subaccount of VAB and/or within the
general assets of Ohio National Life on a fixed-dollar guaranteed basis. A
deduction is made at the end of each valuation period for the administrative
expense and mortality and expense risk undertakings equal to 1.1% on an annual
basis. Such deduction may be decreased by Ohio National at any time and may be
increased not more frequently than annually to not more than 1.75% on an annual
basis. Although these contracts provide for limited transfer of values between
the Equity subaccount and the general assets of Ohio National Life, such
transfer is only permitted during the accumulation period.
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<PAGE> 19
MULTIPLE FUNDED COMBINATION ANNUITY
From November 2, 1982 to September, 10, 1984, Ohio National Life and VAB issued
Multiple Funded Combination Annuity contracts substantially the same as the
contracts described in this prospectus. However, such prior contracts include
a guarantee of the investment performance of the Money Market subaccount and a
deduction therefor at the end of each valuation period equal to 0.2% of Money
Market assets on an annual basis. Such investment guarantee is regarded as a
separate security offered by Ohio National Life. In addition, the rate for the
contingent deferred sales charge for such prior contracts is 5% and the
deduction for risk undertakings is 1.3%.
ACCUMULATION UNIT VALUES FOR PRIOR CONTRACTS
ANNUAL PAYMENT VARIABLE ANNUITY
EQUITY SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ------------------ ----------- --------------
<S> <C> <C> <C>
1985 $26.484522 $32.435471 57,573
1986 32.435471 39.600493 48,378
1987 39.600493 43.451334 44,660
1988 43.451334 49.487430 37,867
1989 49.487430 60.371234 34,866
1990 60.371234 57.466552 36,191
1991 57.466552 68.381552 33,557
1992 68.381552 72.811547 30,548
1993 72.811547 82.251550 25,610
1994 82.251550 81.637986 24,924
</TABLE>
VARIABLE INTEREST ANNUITY
MONEY MARKET SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ------------------ ----------- --------------
<S> <C> <C> <C>
1985 $15.453095 $16.436976 221,664
1986 16.436976 17.248371 194,302
1987 17.248371 18.096347 140,573
1988 18.096347 19.137568 117,383
1989 19.137568 20.571199 91,600
1990 20.571199 21.909036 70,747
1991 21.909036 22.825685 54,444
1992 22.825685 23.247080 44,016
1993 23.247080 23.578345 35,017
1994 23.578345 24.205890 30,075
</TABLE>
FLEXIBLE PAYMENT COMBINATION ANNUITY
EQUITY SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ------------------ ------------ --------------
<S> <C> <C> <C>
1985 $13.695411 $16.756121 11,356
1986 16.756121 20.437343 11,865
1987 20.437343 22.402511 10,712
1988 22.402511 25.489364 3,873
1989 25.489364 31.071251 3,584
1990 31.071251 29.546880 3,439
1991 29.546880 35.124150 3,428
1992 35.124150 37.362530 1,864
1993 37.362530 42.164841 1,849
1994 42.164841 41.809023 1,833
</TABLE>
15
<PAGE> 20
MULTIPLE FUNDED COMBINATION ANNUITY
EQUITY SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
------------- ----------------- ----------- --------------
<S> <C> <C> <C>
1985 $11.888062 $14.544867 131,468
1986 14.544867 17.740283 114,653
1987 17.740283 19.446105 102,146
1988 19.446105 22.125593 50,489
1989 22.125593 26.965078 40,668
1990 26.965078 25.642156 37,320
1991 25.642156 30.482379 34,831
1992 30.482379 32.424943 31,442
1993 32.424943 36.592684 31,997
1994 36.592684 36.283811 30,805
</TABLE>
MONEY MARKET SUBACCOUNT OF VAB
<TABLE>
<S> <C> <C> <C>
1985 $11.718228 $12.464314 74,991
1986 12.464314 13.079601 57,510
1987 13.079601 13.722624 44,776
1988 13.722624 14.512201 91,090
1989 14.512201 15.599344 77,381
1990 15.599344 16.613832 74,879
1991 16.613832 17.308925 71,106
1992 17.308925 17.628473 67,360
1993 17.628473 17.879672 17,645
1994 17.879672 18.355539 11,948
</TABLE>
BOND SUBACCOUNT OF VAB
<TABLE>
<S> <C> <C> <C>
1985 $11.301932 $13.585736 12,269
1986 13.585736 15.116531 9,119
1987 15.116531 15.073082 6,538
1988 15.073082 15.914517 4,337
1989 15.914517 17.427516 3,751
1990 17.427516 18.585115 5,481
1991 18.585115 20.764956 4,532
1992 20.764956 22.088165 4,261
1993 22.088165 24.183548 3,921
1994 24.183549 23.002903 3,679
</TABLE>
OMNI SUBACCOUNT OF VAB
<TABLE>
<S> <C> <C> <C>
1985 $10.324465 $11.804444 25,142
1986 11.804444 13.770831 56,134
1987 13.770831 13.391588 57,721
1988 13.391588 15.237044 48,061
1989 15.237044 17.400912 45,355
1990 17.400912 17.540233 46,036
1991 17.540233 20.497592 46,892
1992 20.497592 22.018769 48,792
1993 22.018769 24.578556 53,581
1994 24.578556 24.183329 52,580
</TABLE>
INTERNATIONAL SUBACCOUNT OF VAB
<TABLE>
<S> <C> <C> <C>
1993* $10.000000 $12.404596 1,427
1994* 12.404596 13.259582 13,999
<FN>
*International Subaccount added April 30, 1993.
</TABLE>
16
<PAGE> 21
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 22
OHIO NATIONAL VARIABLE ACCOUNT B
OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY
237 William Howard Taft Road
Cincinnati, Ohio 45219
Telephone (513) 559-6452
STATEMENT OF ADDITIONAL INFORMATION
October 2, 1995
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the prospectus for Ohio National Variable Account B
("VAB") flexible purchase payment individual non-tax qualified variable annuity
contracts dated October 2, 1995. To obtain a free copy of the VAB prospectus,
write or call The Ohio National Life Insurance Company ("Ohio National Life")
at the above address.
<TABLE>
Table of Contents
<S> <C>
Custodian . . . . . . . . . . . . . . . . . . . . . . . . 2
Independent Certified Public Accountants . . . . . . . . . 2
Underwriter . . . . . . . . . . . . . . . . . . . . . . . 2
Calculation of Money Market Subaccount Yield . . . . . . . 3
Total Return . . . . . . . . . . . . . . . . . . . . . . . 3
Transfer Limitations . . . . . . . . . . . . . . . . . . . 4
Financial Statements . . . . . . . . . . . . . . . . . . . 5
Appendix: Guaranteed Accumulation Account . . . . . . . .32
</TABLE>
"TOP II" NON-TAX QUALIFIED
<PAGE> 23
CUSTODIAN
Ohio National Life has executed an agreement with The Provident Bank ("the
Bank"), Cincinnati, Ohio, pursuant to which the shares of Ohio National Fund,
Inc. ("Fund") and other assets credited to VAB will be held in the custody of
the Bank. The agreement provides that the Bank will purchase Fund shares at
their net asset value determined as of the end of the valuation period of VAB
during which the purchase payment is received by Ohio National Life for
outstanding contracts or, in the case of new contracts, the value determined as
of the end of the valuation period during which the contract is issued. The
Bank effects redemptions of Fund shares held by VAB upon instructions from Ohio
National Life at net asset value determined as of the end of the valuation
period of VAB during which a redemption request is received or made by Ohio
National Life. In addition, the Bank maintains appropriate records with
respect to all transactions in Fund shares relative to VAB.
The agreement requires the Bank to have at all times an aggregate capital,
surplus and undivided profit of not less than $2 million and prohibits
resignation by the Bank until (a) a successor custodian bank having the
qualifications enumerated above shall have agreed to serve as custodian, or (b)
VAB has been completely liquidated and the proceeds of such liquidation
properly distributed. Subject to these conditions the agreement of
custodianship may be terminated by either party upon sixty days written notice.
For its services as custodian, the Bank will be paid a fee to be agreed upon
from time to time by the Bank and Ohio National Life.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The financial statements of VAB as of December 31, 1994 and for the periods
indicated herein and of The Ohio National Life Insurance Company and
consolidated subsidiaries as of December 31, 1994 and 1993 and for the periods
indicated herein have been included herein in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
The audited financial statements of The Ohio National Life Insurance Company
and consolidated subsidiaries have been prepared in accordance with accounting
practices prescribed or permitted by the Department of Insurance of the State
of Ohio, which are currently considered generally accepted accounting
principles for mutual life insurance companies. Additionally, as discussed in
the notes to the Company's financial statements, the Company changed its method
of accounting for postretirement health care and life insurance benefits to the
accrual method as prescribed by the National Association of Insurance
Commissioners.
UNDERWRITER
The O.N. Equity Sales Company ("ONESCO"), a wholly owned subsidiary of Ohio
National Life, is the principal underwriter of the contracts. The offering of
the contracts is continuous. The aggregate amount of underwriting commissions
paid to ONESCO with respect to contracts issued by VAB, and the amounts
retained by ONESCO, for each of the last three years have been:
-2-
<PAGE> 24
<TABLE>
<CAPTION>
Aggregate Retained
Year Commissions Commissions
---- ----------- -----------
<S> <C> <C>
1994 $963,635 $110,006
1993 747,048 87,412
1992 331,151 39,687
</TABLE>
CALCULATION OF MONEY MARKET SUBACCOUNT YIELD
The current yield of the Money Market subaccount for the seven days ended on
December 31, 1994, was 4.50%. This was calculated by determining the net
change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one accumulation unit of the
subaccount at the beginning of the seven-day period, dividing the net change in
subaccount value by the value of the subaccount at the beginning of the base
period to obtain the base period return, and multiplying the difference by
365/7. The resulting figure is carried to the nearest hundredth of one
percent.
TOTAL RETURN
The average annual compounded rate of return for a contract with respect to a
particular subaccount over a given period is found by equating the initial
amount invested to the ending redeemable value using the following formula:
P(1 + T)n = ERV
where: P = a hypothetical initial payment of $1,000,
T = the average annual total return,
n = the number of years, and
ERV = the ending redeemable value of a
hypothetical $1,000 beginning-of-period
payment at the end of the period (or
fractional portion thereof).
For this purpose, it should be noted that the current series of contracts were
initially offered September 10, 1984. Hypothetical results based upon the
performance of the subaccounts prior to that date assume that the same charges
and deductions applicable to the current contracts were in effect from the
inception of each corresponding portfolio of the Fund. Note also that, for
purposes of these calculations, the annual contract administration charge of
$30 has been converted to an annualized percentage charge of 0.09%. This is
based upon an average accumulation value of $35,000 for all contracts in this
series. The actual effect that the contract administration charge would have
on total returns would be less than that percentage for contracts having a
higher accumulation value and greater than that percentage for contracts having
a lower accumulation value.
The average annual total returns for current contracts in each of the
subaccounts from the inception of the subaccount and for the one-, five- and
ten-year periods ending on December 31,
-3-
<PAGE> 25
1994, and assuming surrender of the contract on the latter date, are as
follows:
<TABLE>
<CAPTION>
One Five Ten From Inception
Year Years Years Inception Date
---- ----- ----- --------- -----------
<S> <C> <C> <C> <C> <C>
Equity -0.94% 6.09% 11.84% 8.26% 10-06-69
Money Market 2.81% 3.36% 4.59% 5.85% 03-20-80
Bond -5.03% 5.68% 7.35% 6.59% 11-02-82
Omni -1.72% 6.79% 8.89% 8.33% 09-10-84
International 6.88% N/A N/A 15.02% 04-30-93
Capital Appreciation N/A N/A N/A 3.34% 05-01-94
Small Cap N/A N/A N/A 20.07% 05-01-94
Global Contrarian N/A N/A N/A N/A 03-31-95
Aggressive Growth N/A N/A N/A N/A 03-31-95
</TABLE>
TRANSFER LIMITATIONS
To the extent that transfers, surrenders, partial withdrawals and annuity
payments from a subaccount exceed net purchase payments and transfers into that
subaccount, securities of the corresponding portfolio of the Fund may have to
be sold. Excessive sales of a portfolio's securities on short notice could be
detrimental to that portfolio and to contractowners with values allocated to
the corresponding subaccount. To protect the interests of all contractowners,
Ohio National Life reserves the right to limit the number, frequency, method or
amount of transfers. Transfers from any portfolio of the Fund on any one day
may be limited to 1% of the previous day's total net assets of that portfolio
if Ohio National Life or the Fund, in its or their discretion, believes that
the portfolio might otherwise be damaged.
If and when transfers must be so limited, some transfer requests will not be
made. In determining which requests will be made, scheduled transfers (that
is, those pursuant to a pre-existing dollar cost averaging program) will be
made first, followed by mailed written requests in the order postmarked and,
lastly, telephone and facsimile requests in the order received. Contractowners
whose transfer requests are not made will be so notified. Current SEC rules
preclude Ohio National Life from processing at a later date those requests that
were not made. Accordingly, a new transfer request would have to be submitted
in order to make a transfer that was not made because of these limitations.
-4-
<PAGE> 26
KPMG PEAT MARWICK LLP (LOGO)
1600 PNC CENTER
201 EAST FIFTH STREET
CINCINNATI, OH 45202
Dayton, OH
Independent Auditors' Report
-----------------------------
The Board of Directors
The Ohio National Life Insurance Company:
We have audited the accompanying consolidated balance sheets of The Ohio
National Life Insurance Company and consolidated subsidiaries as of December
31, 1994 and 1993 and the related consolidated statements of operations,
surplus and cash flow for each of the years in the three-year period ended
December 31, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 financial position of The Ohio National
Life Insurance Company and consolidated subsidiaries as of December 31, 1994
and 1993, and the results of their operations and their cash flow for each of
the years in the three-year period ended December 31, 1994 in conformity with
accounting practices prescribed or permitted by the Department of Insurance of
the State of Ohio, which are currently considered generally accepted accounting
principles for mutual life insurance companies (Note 1).
As discussed in Note 6 to the financial statements, effective January 1, 1993,
the Company changed its method of accounting for postretirement health care and
life insurance benefits to the accrual method as prescribed by the National
Association of Insurance Commissioners (NAIC). Postretirement benefit costs
for 1992, which were recorded on a cash basis, have not been restated.
KPMG Peat Marwick LLP
Cincinnati, Ohio
February 10, 1995
-5-
<PAGE> 27
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1994 and 1993
(in thousands)
<TABLE>
<CAPTION>
Admitted Assets 1994 1993
--------------- ---- ----
<S> <C> <C>
Investments - other than investments in affiliates (notes 2 and 10):
Fixed maturities at amortized cost $ 2,772,889 2,459,380
Preferred stocks, at cost (market - $17,861 in 1994 and $20,256 in 1993) 20,112 20,499
Common stocks, at market (cost - $32,105 in 1994 and $25,636 in 1993) 41,542 37,706
Mortgage loans on real estate 771,191 794,985
Real estate (less encumbrances of $3,578 in 1994 and
$3,642 in 1993), at cost less accumulated depreciation 39,168 36,332
Policy loans 142,934 142,882
Short-term investments 41,947 206,366
Other invested assets 36,075 28,885
--------------- ----------
Total investments 3,865,858 3,727,035
Cash 9,399 57,590
Investment in common stock of unconsolidated subsidiaries,
at equity (cost $840 in 1994 and 1993) 429 675
Accrued investment income 58,151 51,946
Premiums and other considerations deferred and uncollected 26,012 22,412
Other general account assets 23,406 28,890
Separate account assets, at market 307,373 232,648
--------------- ----------
Total admitted assets $ 4,290,628 4,121,196
=============== ==========
Liabilities, Reserves and Surplus
---------------------------------
Reserves for future policy benefits:
Life policies and contracts $ 1,934,567 1,777,487
Accident and health policies 55,653 49,747
Annuity and other deposit funds 1,121,102 1,274,497
Policy and contract claims (note 4) 18,263 15,350
Other policyholders' funds:
Policyholders' dividend accumulations 65,584 65,350
Provision for policyholders' dividends payable in the following year 23,272 26,202
Other 392,171 397,689
Federal income taxes (note 7) 11,561 7,986
Other general account liabilities 71,610 55,282
Interest maintenance reserve 22,197 22,316
Asset valuation reserve 43,589 41,810
Separate account liabilities 299,085 219,593
--------------- ----------
Total liabilities and reserves 4,058,654 3,953,309
=============== ==========
Surplus (note 8):
Surplus note (note 9) 49,708 -
Surplus 182,266 167,887
--------------- ----------
Total surplus 231,974 167,887
Commitments and contingencies (notes 10 and 11)
Total liabilities, reserves and surplus $ 4,290,628 4,121,196
=============== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 28
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1994, 1993 and 1992
(in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Premiums and other considerations:
Life and annuity $192,332 178,262 144,607
Accident and health 19,601 18,566 19,271
Annuity and other fund deposits 378,679 442,676 463,031
Supplementary contracts 22,570 17,616 17,466
-------- ------- -------
613,182 657,120 644,375
-------- ------- -------
Investment income:
Interest on fixed maturities 230,209 220,346 192,745
Dividends on stocks 3,011 3,191 1,900
Interest on mortgage loans 75,763 81,239 84,483
Real estate income 6,998 4,710 4,433
Interest on policy loans 9,061 8,510 8,281
Other investment income 10,669 8,247 7,219
-------- ------- -------
Total investment income 335,711 326,243 299,061
Less investment expenses 15,561 12,825 12,607
-------- ------- -------
Net investment income 320,150 313,418 286,454
-------- ------- -------
Total operating income 933,332 970,538 930,829
-------- ------- -------
Death and other benefits:
Death benefits 52,186 45,795 39,224
Accident and health benefits 10,956 9,849 9,058
Annuity benefits, fund withdrawals, and other benefits
to policyholders and beneficiaries 623,576 502,676 410,271
-------- ------- -------
686,718 558,320 458,553
Increase in reserves for future policy benefits and other funds 86,714 266,266 346,068
Commissions 42,263 40,404 37,715
General insurance expenses 41,914 35,899 30,692
Insurance taxes, licenses and fees 7,799 6,759 5,397
-------- ------- -------
865,408 907,648 878,425
-------- ------- -------
Income before dividends to policyholders,
provision for Federal income taxes
and realized capital gains (losses) 67,924 62,890 52,404
Dividends to policyholders 22,126 25,385 23,783
-------- ------- -------
Income before provision for Federal income taxes
and realized capital gains (losses) 45,798 37,505 28,621
Provision for Federal income taxes (note 7) 20,647 17,908 10,197
-------- ------- -------
Income before realized capital gains (losses) 25,151 19,597 18,424
Net realized capital (losses) gains, net of interest maintenance
reserve and taxes (notes 2 and 7)
(510) (514) 1,152
-------- ------- -------
Net income $ 24,641 19,083 19,576
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 29
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Surplus
Years ended December 31, 1994, 1993 and 1992
(in thousands)
<TABLE>
<S> <C>
Surplus, December 31, 1991 $ 138,860
Net income 19,576
Net unrealized capital losses on investments (note 2) (10)
Change in non-admitted assets and other items 2,367
Transfer from mandatory securities valuation reserve 24,020
Transfer to asset valuation reserve (29,790)
----------------
Surplus, December 31, 1992 155,023
Net income 19,083
Net unrealized capital gains on investments (note 2) 3,079
Change in non-admitted assets and other items 1,418
Transfer to asset valuation reserve (10,716)
----------------
Surplus, December 31, 1993 167,887
Net income 24,641
Surplus note issue (note 9) 49,708
Net unrealized capital losses on investments (note 2) (7,603)
Change in non-admitted assets and other items (881)
Transfer to asset valuation reserve (1,778)
----------------
Surplus, December 31, 1994 $ 231,974
================
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE> 30
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flow
Years ended December 31, 1994, 1993 and 1992
(in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash from operations:
Premiums, annuity considerations, and
fund deposits $ 547,472 603,693 624,524
Investment income 312,683 311,169 278,971
------------ -------- ---------
860,155 914,862 903,495
------------ -------- ---------
Less:
Death and other benefits 680,871 558,043 458,287
Commissions, taxes and other expenses 106,558 109,812 84,073
Dividends paid to policyholders 25,242 23,358 25,525
Increase in policy loans 52 4,533 5,777
------------ -------- ---------
812,723 695,746 573,662
------------ -------- ---------
Net cash from operations 47,432 219,116 329,833
------------ -------- ---------
Proceeds from investments sold, matured or repaid:
Fixed maturities 221,344 589,727 511,344
Stocks 10,905 15,871 4,653
Mortgage loans 129,816 76,666 73,080
Real estate 6,634 3,611 5,067
Other invested assets 3,685 3,129 35,357
------------ -------- ---------
372,384 689,004 629,501
------------ -------- ---------
Less cost of investments acquired:
Fixed maturities 541,481 623,744 1,013,033
Stocks 15,951 42,118 14,136
Mortgage loans 110,871 41,409 56,685
Real estate 5,679 4,548 4,220
Other invested assets 7,736 (3,866) 17,345
------------ -------- ---------
681,718 707,953 1,105,419
------------ -------- ---------
Net cash used for investments (309,334) (18,949) (475,918)
------------ -------- ---------
Net proceeds from issuance of surplus notes 49,708 - -
Other, net (416) 3,453 (1,434)
------------ -------- ---------
49,292 3,453 (1,434)
------------ -------- ---------
Net (decrease) increase in cash and
short-term investments (212,610) 203,620 (147,519)
Cash and short-term investments:
Beginning of year 263,956 60,336 207,855
------------ -------- ---------
End of year $ 51,346 263,956 60,336
============ ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
9
<PAGE> 31
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
(1) Basis of Presentation and Significant Accounting Policies
--------------------------------------------------------
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, Ohio National Life Assurance
Corporation (ONLAC) and The Pennsylvania National Life Insurance
Company (PNLIC). All significant intercompany balances and
transactions have been eliminated in consolidation. Certain other
subsidiaries not engaged in the business of life insurance (which
are not significant in relation to the Company) are reflected in
the financial statements on the equity basis.
On July 1, 1993, the Company purchased all of the issued and outstanding
shares of The Pennsylvania National Life Insurance Company (PNLIC)
located in Harrisburg, Pennsylvania. The purchase price
approximated $16,700,000 plus $200,000 in finders fees. PNLIC's
adjusted surplus at July 1, 1993 was approximately $9,700,000,
leaving approximately $7,200,000 as goodwill associated with the
acquisition; PNLIC's total assets approximated $150,000,000 at
July 1, 1993. The goodwill amount will be amortized on a
straight-line basis over a ten-year period. The results of PNLIC
operations for the 6 months ended December 31, 1993 of
approximately $482,800 are included in the consolidated statement
of operations.
On July 1, 1994, assets of $4.6 million and all of the outstanding PNLIC
common stock plus paid-in capital and surplus totaling $4.6
million were sold to an unrelated party for $5 million. All of
the remaining assets, liabilities and obligations of PNLIC were
transferred to ONLAC. The goodwill determined as described above
will continue under the original amortization schedule.
The accompanying financial statements have been prepared principally in
accordance with accounting practices prescribed or permitted by
the Department of Insurance of the State of Ohio, which practices
are considered generally accepted accounting principles for mutual
life insurance companies. For purposes of filing the annual
statement with regulatory authorities, wholly-owned subsidiaries
are carried on the equity method rather than consolidated.
In April 1993, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40, Applicability of Generally Accepted
Accounting Principles to Mutual Life Insurance and Other
Enterprises. The Interpretation requires mutual life insurance
enterprises that have traditionally issued statutory basis
financial statements that have been reported to be in conformity
with generally accepted accounting principles (GAAP), to apply all
authoritative accounting pronouncements in preparing those
statements, effective for periods beginning after December 15,
1994. The effective date of Interpretation 40 was extended by
Statement of Financial Accounting Standards No. 120, Accounting
and Reporting by Mutual Life Insurance Enterprises for Certain
Long-Duration Participating Contracts, to years beginning of the
December 15, 1995. The effects of applying the provisions of the
Interpretation may result in policyholder surplus and net income
differing from amounts as reported under the existing accounting
practices. However, these differences have not yet been
determined. If the Company elects to continue to prepare
financial statements on the basis of statutory accounting
practices after 1995, it will no longer be described as prepared
in conformity with GAAP.
(Continued)
10
<PAGE> 32
2
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1) Basis of Presentation and Significant Accounting Policies, Continued
--------------------------------------------------------------------
The significant accounting policies follow:
(a) Revenues and Expenses
---------------------
Premiums are credited to revenue over the premium-paying period of
the policies. Expenses, including acquisition costs related
to acquiring new business, are charged to operations as
incurred. Investment income is recognized as earned.
(b) Valuation of Investments
------------------------
Bonds and stocks are valued as prescribed by the National
Association of Insurance Commissioners (NAIC). Bonds are
generally carried at amortized cost, preferred stocks at cost,
common stocks of unaffiliated companies at market value, and
mortgage and policy loans at the amount of outstanding
receivables. Short-term investments are carried at amortized
cost, which approximates market value. Investments in
unconsolidated subsidiaries are carried at the equity in their
net assets with changes in net assets, other than amounts
invested and dividends declared, recognized as net unrealized
capital gains. Real estate is generally carried at
depreciated cost, net of encumbrances.
During 1992, pursuant to changes in statutory requirements, the
mandatory securities valuation reserve was replaced by the
asset valuation reserve (AVR) and interest maintenance reserve
(IMR). The AVR is a formula reserve which addresses specific
asset risk areas and consists of two components--the default
component and the equity component. The default component
provides for future credit-related losses on fixed income
investments including corporate debt securities and preferred
stock and mortgages. The equity component covers all types of
equity investments. The two components are designed to
address the default and equity risks of the Company's assets
by calculating maximum reserve targets and controlling the
flow of the reserve from and into surplus. Realized capital
gains and losses for all types of fixed income investments
that result from changes in the overall level of interest
rates are credited or charged to the IMR, and these capital
gains or losses are amortized into income over the remaining
life of the investment sold. Management believes that the
balance of the default component of the AVR at December 31,
1994 is adequate to absorb potential credit and market losses
on investments.
Valuations of mortgage loans and net real estate acquired in
satisfaction of mortgage loans (included in other general
account assets in the accompanying consolidated balance sheet)
are periodically performed by management, and the carrying
value of such assets is reduced by a charge to realized
capital losses if the carrying value exceeds the estimated net
realizable value (see Note 2). The carrying value of mortgage
loans and real estate currently owned had cumulatively been
reduced by $2,133,000 and $8,387,000 at December 31, 1994, and
$1,098,000 and $12,324,000 at December 31, 1993, respectively.
(Continued)
11
<PAGE> 33
3
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1) Basis of Presentation and Significant Accounting Policies, Continued
--------------------------------------------------------------------
(c) Capital Gains and Losses
------------------------
Unrealized capital gains and losses are reflected as direct
credits and charges to surplus. Under the guidelines for the
IMR, realized capital gains and losses, net of tax, attributed
to interest rate changes as defined under established
guidelines (see Note 1(b)) are credited or charged to the IMR.
These realized capital gains and losses are amortized into
investment income as permitted under established guidelines in
order to allocate income over remaining years based on
original maturity dates of investments.
(d) Reserves for Future Policy Benefits
-----------------------------------
Reserves for traditional life products are based on statutory
mortality and interest requirements without consideration for
withdrawals. The mortality table and interest assumptions
currently being used for the majority of new policies issued
are the 1980 CSO table with 4% to 6% interest. With respect
to older policies, the mortality table and interest
assumptions vary from the American Experience table with 3%
interest to the 1958 CSO table with 2.25% to 4.5% interest.
Approximately 77% and 76% of the reserves were calculated on a
net level reserve basis at December 31, 1994 and 1993,
respectively.
Reserves for universal life and variable universal life policies
have been calculated based on participants' net contributions
plus interest credited less applicable contract charges, less
an initial allowance according to the Commissioner's Reserve
Valuation Method (CRVM).
The reserves and deposit liabilities for deferred annuity products
have been established based on the participants' net
contributions, policy term, interest rates and various
contract provisions. The average interest rate credited on
these annuity policies was 7.4% for the year ended December
31, 1994 (7.9% for the year ended December 31, 1993). The
reserves for individual annuity policies issued after 1991
have been adjusted for possible future surrender charges in
accordance with the Commissioner's Annuity Reserve Valuation
Method (CARVM).
Reserves for immediate annuities are determined primarily on either
the 1971 Individual Annuity and Mortality Table (interest
rates 6% to 7.5%) or the 1983 Annuity Table (interest rates
6.5% to 9.25%). Group immediate annuity reserves are based
primarily on the 1983 Group Annuity and Mortality Table at
7.5% to 9.25% interest.
The aggregate reserves for individual accident and health policies
consist of active life reserves, disabled life reserves and
unearned premium reserves. The active life reserves are
calculated on a two year preliminary term basis at 3% to 5.5%
interest, using either the 1964 Commissioner's Disability
Table (policies issued prior to 1990) or the 1985
Commissioner's Individual Disability Table A (policies issued
after 1989).
(Continued)
12
<PAGE> 34
4
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1) Basis of Presentation and Significant Accounting Policies, Continued
--------------------------------------------------------------------
(d) Reserves for Future Policy Benefits, Continued
----------------------------------------------
The disabled life reserves are calculated using either the 1985
Commissioner's Individual Disability Table A, at 5% to 5.5%
interest (claims incurred after 1989) or the 1971 modification
of the 1964 Commissioner's Disability Table, at 3.5% interest
(claims incurred prior to 1990).
The aggregate reserves for group accident and health policies
consist of active life reserves and unearned premium reserves.
The active life reserves are calculated on the 1987
Commissioner's Group Disability Table, at 6% interest.
(e) Federal Income Taxes
--------------------
Federal income taxes are charged to operations based on operating
income that is currently taxable. No charge to operations is
made or liability established for the tax effect of temporary
differences between financial reporting and taxable income.
(f) Separate Accounts
-----------------
Separate account assets represent contractholders' funds which
have been segregated into accounts with specific investment
objectives. The investment income and gains or losses of
these accounts accrue directly to the contractholders.
Separate account liabilities for individual annuities issued
in 1992 and after represent contractholders' funds adjusted
for possible future surrender charges in accordance with
CARVM. The difference between full account value and CARVM is
reflected in other liabilities, as prescribed by the NAIC, on
the statutory statement of admitted assets, liabilities,
reserves and surplus. The annual change in the difference
between full account value and CARVM is reflected in the
statutory statements of operations as part of the net
transfers to separate accounts.
(g) Non-Admitted Assets
-------------------
Certain assets designated as "non-admitted assets" (principally
furniture, equipment, and certain receivables) have been
excluded from total admitted assets by a direct charge to
surplus.
(h) Other
-----
Under Statement of Financial Accounting Standards No. 107,
Disclosures about Fair Value of Financial Instruments, (SFAS
No. 107), the Company is required to disclose fair value
information about financial instruments, whether or not
recognized in the consolidated balance sheets as of December
31, 1994 and 1993. SFAS No. 107 excludes certain financial
instruments such as insurance contracts (other than financial
guarantees and investment contracts) and all nonfinancial
instruments from its disclosure requirements. Accordingly,
the aggregate fair value
(Continued)
13
<PAGE> 35
5
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1) Basis of Presentation and Significant Accounting Policies, Continued
--------------------------------------------------------------------
(h) Other Continued
---------------
amount presented do not represent the underlying value of the
Company. The carrying amounts reported in the consolidated
balance sheet approximate fair value for the following
financial instruments: cash, short-term investments, policy
loans and separate account assets.
(2) Investments
-----------
(a) Stocks, Bonds, Notes and Other Debt Securities
----------------------------------------------
These debt and equity securities are held for investment purposes,
and fair values are based on quoted market prices or dealer
quotes. If a quoted market price is not available, fair value
is estimated by discounting the future cash flows of the
financial instrument at rates comparable to similar financial
instruments of issuers with similar credit worthiness.
The amortized cost and estimated market values of investments in
debt securities at December 31, 1994 and 1993 are as follows
(in thousands):
<TABLE>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
1994 cost gains losses value
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
US Treasuury securities and
onligations of US government
corporations and agencies $ 251,723 1,823 (18,629) 234,917
Obligations of states and political
subdivisons 25,410 54 (1,309) 24,155
Debt securities issued by foreign
governments 78,220 1,285 (8,552) 70,953
Corporate securities 2,171,191 41,654 (94,486) 2,118,359
Mortgage-backed securities 288,292 2,617 (17,689) 273,220
---------- ------- -------- -----------
2,814,836 47,433 (140,665) 2,721,604
Less short-term investments 41,947 - - 41,947
---------- ------- ---------- -----------
Totals 2,772,889 47,433 (140,665) 2,679,657
========== ======= ========= ===========
</TABLE>
(Continued)
-14-
<PAGE> 36
6
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) Investments, Continued
----------------------
(a) Stocks, Bonds, Notes and Other Debt Securities, Continued
---------------------------------------------------------
<TABLE>
Gross Gross Estimated
Amorized unrealized unrealized market
1993 cost gains losses value
---- -------- ---------- --------- ---------
<S> <C> <C> <C> <C>
US Treasury securities and
obligations of US government
corporations and agencies $ 262,720 13,529 (753) 275,496
Obligations of states and political
subdivisions 17,159 1,200 (8) 18,351
Debt securities issued by foreign
governments 49,047 4,045 (241) 52,851
Corporate securities 2,070,000 194,683 (8,717) 2,255,966
Mortgage-backed securities 266,820 12,357 (1,742) 277,435
---------- ------- ----- ---------
2,665,746 225,814 (11,461) 2,880,099
Less short-term investments 206,366 - - 206,366
---------- ------- ------- ---------
Totals $2,459,380 225,814 (11,461) 2,673,733
========== ======= ======= =========
</TABLE>
<TABLE>
The amortized cost and estimated market value of debt securities at December 31, 1994, by contractual
maturity, are shown below (in thousands). 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.
<CAPTION>
Estimated
Amortized market
cost value
---------- ---------
<S> <C> <C>
Due in one year or less $ 100,557 101,335
Due after one year through five years 307,000 309,450
Due after five years through ten years 886,882 868,731
Due after ten years 1,520,397 1,442,088
---------- ---------
$2,814,836 2,721,604
========== =========
</TABLE>
Proceeds from sales, calls and maturities of investments in debt
securities during 1994 and 1993 were $221,344,000 and
$589,727,000, respectively. Gross gains of $2,357,000 and
$29,667,000 and gross losses of $377,000 and $5,760,000 in
1994 and 1993, respectively, were realized on those
transactions.
At December 31, 1994 and 1993, 92.7% and 92.8%, respectively, of
the statement value of the Company's total bonds and
short-term investments are rated investment grade (a 1 or 2
designation by the NAIC).
(Continued)
15
<PAGE> 37
<TABLE>
7
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) Investments, Continued
----------------------
(b) Mortgage Loans
--------------
The fair value of these residential and commercial mortgage loans is estimated by discounting the future cash
flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the
same remaining maturities.
The net carrying value and estimated fair value of mortgage loans at December 31, 1994 and 1993 are as follows
(in thousands):
1994 1993
---- ----
<S> <C> <C>
Carrying value 771,191 794,985
Estimated fair value 756,740 817,104
(c) Other Invested Assets
--------------------
The fair value of other invested assets, consisting primarily of investments in limited partnerships, is
determined by an independent third party management group and is carried on the financial statement on an equity
basis approximating fair value.
(d) Investment Gains and Losses
----------------------------
The following is a summary of recorded investment gains and losses in 1994, 1993 and 1992 (in thousands):
Change in Total
Realized unrealized investment
gains gains gains
1994 (losses) (losses) (losses)
---- -------- -------- --------
<S> <C> <C> <C>
Bonds $1,980 (4,005) (2,025)
Stocks:
Preferred 34 - 34
Common 2,006 (3,598) (1,592)
Mortgage loans (391) - (391)
Real estate (2,068) - (2,068)
Other 698 - 698
------- ------- -------
Total 2,259 (7,603) (5,344)
Less amount credited to
interest maintenance
reserve (2,314) - (2,314)
------- ------- -------
Net loss before tax (55) (7,603) (7,658)
Taxes on capital gains (455) - (455)
------- ------- -------
$ (510) (7,603) (8,113)
======= ======= =======
</TABLE>
(Continued)
16
<PAGE> 38
8
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) Investments, Continued
----------------------
(d) Investment Gains and Losses, Continued
--------------------------------------
<TABLE>
Total
Realized Change in investment
gains gains gains
1993 (losses) (losses) (losses)
---- ------- --------- ----------
<S> <C> <C> <C>
Bonds $23,907 4,571 28,478
Stocks:
Preferred 186 - 186
Common 1,591 (1,492) 99
Mortgage loans (1,749) - (1,749)
Real estate (3,200) - (3,200)
Other (192) - (192)
-------- ------- ---------
Total 20,543 3,079 23,622
Less amount credited to interest
maintenance reserve (16,260) - (16,260)
-------- ------- ---------
Net gain before tax 4,283 3,079 7,362
Taxes on capital gains (4,797) - (4,797)
-------- ------- ---------
$ (514) 3,079 2,565
======== ======= =========
1992
----
Bonds $ 15,050 (1,954) 13,096
Stocks:
Preferred 868 - 868
Common (239) 979 740
Mortgage loans (867) - (867)
Real estate (1,473) - (1,473)
Other 15 965 980
-------- ------- ---------
Net gain before tax 13,354 (10) 13,344
Taxes on capital gains (4,572) - (4,572)
-------- ------- ---------
$ 1,152 (10) 1,142
======== ======= =========
</TABLE>
(Continued)
-17-
<PAGE> 39
9
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(3) Additional Disclosures About Fair Values of Financial Instruments
-----------------------------------------------------------------
(a) Deposit Liabilities
-------------------
The fair value of guaranteed investment contracts is estimated
using the rates currently offered for deposits of similar
remaining maturities. The fair value of deferred annuities
are estimated by discounting at the current rate offered for
deposits of similar contracts the future cash flows at the
contract guaranteed interest rates until contract maturity.
The estimated fair values of the company's deposit liabilities at
December 31, 1994 and 1993 are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
------------------------- ------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Guaranteed investment contracts $ 861,006 835,974 1,032,596 1,078,677
Individual deferred annuities 912,191 909,337 820,464 831,729
Immediate and other annuity
deposits 778,790 738,181 764,866 798,558
</TABLE>
(b) Credit Commitments and Financial Guarantees
-------------------------------------------
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account
the remaining terms of the agreements and the present
creditworthiness of the counterparties. For fixed-rate loan
commitments, fair value also considers the difference between
current levels of interest rates and committed rates. The
fair value of guarantees is based on fees currently charged
for similar agreements or on the estimated cost to terminate
them or otherwise settle the obligations with the
counterparties at the reporting date. The fair value
approximated the commitment amount at December 31, 1994 (see
Note 10).
(Continued)
18
<PAGE> 40
10
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(4) Liability for Policy and Contract Claims
----------------------------------------
Activity in the liability for policy and contract claims is summarized
below (in thousands):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Balance at January 1 $ 15,350 13,851
------------- -------
Incurred related to:
Current year 55,102 53,877
Prior years 8,042 2,276
------------- -------
Total incurred 63,144 56,153
------------- -------
Current year 52,417 52,626
Prior years 7,814 2,028
------------- -------
Total paid 60,231 54,654
------------- -------
Balance at December 31 $ 18,263 15,350
============= =======
</TABLE>
Amounts recoverable from reinsurers totaled $938,000 and $3,619,000 at
December 31, 1994 and 1993, respectively.
(5) Pension and Retirement Plans
----------------------------
The Company maintains a qualified non-contributory defined benefit
pension plan and a qualified contributory defined contribution
progress sharing plan covering substantially all of its employees.
In addition, the Company has a qualified non-contributory defined
contribution pension plan covering career agents. All of the
plans are funded through insurance contracts issued by the
Company. The defined benefit pension plan was fully funded as of
DecemberE31, 1994.
The pension plan covering employees provides pension benefits that are
based on the employee's years of service and compensation during
five consecutive years in the last 10 years of employment
preceding retirement. Contributions are made to the plan as
needed to meet actuarially computed plan benefits in compliance
with minimum funding standards of ERISA. The expense reported for
contributions to the plan for 1994 and 1993 were $1, 345,000 and
$0, respectively.
Contributions to the Career Agent's Pension Plan is subject to the
minimum funding required under Internal Revenue Code Section 412.
The expense reported for contributions to the plan for 1994 and
1993 were $420,000 and $403,000, respectively.
19
<PAGE> 41
11
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5) Pension and Retirement Plans Continued
--------------------------------------
Company contributions to the Progress Sharing Plan are in part based on
the net earnings of the Company and are payable at the sole
discretion of management. The expense reported for contributions
to the plan for 1994 and 1993 were $1,355,000 and $1,321,000,
respectively.
(6) Other Benefit Plans
-------------------
The Company currently offers eligible retirees the opportunity to
participate in a health plan. The Company has two health plans,
one is offered to home office employees, the other is offered to
career agents.
Home Office Employee Health Plan
--------------------------------
The Company provides a declining service schedule.
Substantially all home office employees may become
eligible for these benefits provided that the
employee meets the age and years of service
requirements. The plan states that an employee
becomes eligible as follows: 55 years of age with 20
years of credited service at retirement, age 56 with
18 years of service, age 57 with 16 years of service
and age 64 with two years of service. The health plan
is contributory with retirees contributing
approximately 15% of premium for coverage.
Career Agents Health Plan
-------------------------
Substantially all career agents may become eligible for
these benefits provided that the agent be at least 55
years of age and have 15 years of credited service at
retirement. The health plan is contributory, with
retirees contributing approximately 47% of medical
costs.
Effective January 1, 1993, the Company changed its method of accounting
for postretirement health care and life insurance benefits to the
accrual method, as prescribed by the NAIC. The expense and
liability related to these plans are reflected on the Company's
financial statements and do not appear on the financial statements
of the Company's fully-owned subsidiaries. Postretirement benefit
costs for 1992, which were recorded on a cash basis, have not been
restated. Retiree health insurance plans are not funded. The
Company is amortizing the transition obligation of $7,584,000 on
the straight-line method over a period of 20 years.
20
<PAGE> 42
12
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6) Other Benefit Plans, Continued
------------------------------
The following table sets forth the plans' accumulated postretirement
benefit obligation reconciled with the amount included in the
consolidated balance sheet as of December 31, 1994 and 1993 (in
thousands):
<TABLE>
1994 1993
---- ----
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 6,617 5,627
Fully eligible active plan participants 2,373 2,491
--------- ---------
Accumulated postretirement benefit obligation 8,990 8,118
Plan assets - -
Unrecognized transition obligation (6,457) (7,205)
Unrecognized net loss from changes in
assumptions (673) -
--------- ---------
Accrued postretirement benefit cost in the
balance sheet $ 1,860 913
========= =========
</TABLE>
The expected obligation for active plan participants not yet eligible to
retire was $8,801,000 and $9,625,000 at December 31, 1994 and
1993, respectively.
Postretirement expense for fiscal 1994 and 1993 includes the following
components (in thousands):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Service cost $ 334 316
Interest cost 634 607
Net amortization and deferral 401 379
-------- -----
Postretirement expense $ 1,369 1,302
======== =====
</TABLE>
The weighted-average annual assumed rate of increase in the per capita
cost of covered health care benefits is 13% and 14% for 1994 and
1993, respectively, and is assumed to decrease gradually to 5% in
2002 and remain at that level thereafter. The health care cost
trend rate assumption has a significant effect on the amounts
reported. Increasing the assumed health care cost trend rates by
one percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1994 and 1993
by approximately $690,000 and $628,000, respectively. The
weighted-average discount rate used in determining the accumulated
postretirement benefit obligation and expense was 7.5% and 8% at
December 31, 1994 and 1993, respectively.
(7) Federal Income Taxes
--------------------
Life insurance companies are, in general, taxed under provisions of the
Tax Reform Act of 1984 (1984 Act) and the Revenue Reconciliation
Act of 1993 (1993 Act). The 1984 Act requires taxable income of
mutual life insurance companies to be increased by a "differential
earnings amount", which serves as an equity tax designed to limit
the deduction for policyholder dividends. The 1984 Act also
requires life insurance companies to recompute policy reserves for
tax purposes.
(Continued)
21
<PAGE> 43
13
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) Federal Income Taxes, Continued
-------------------------------
The 1993 Act made certain changes to the laws governing the taxation of
life insurers and increased the maximum Federal income tax rate
from 34% to 35% in 1993 and later years. The Company is also
subject to the 20% corporate alternative minimum tax that became
effective in 1987.
The reasons for the difference between total tax expense and the amount
computed by applying the maximum Federal income tax rate (35% in
1994 and 1993 and 34% in 1992) to operating income before tax are
set forth as follows (in thousands):
<TABLE>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Federal income tax at statutory rate $16,680 13,127 9,731
Differential earnings amount 3,094 2,366 2,094
Difference between statutory and tax policy
reserves 1,369 1,143 29
Difference between statutory and tax
investment income (704) (843) (513)
Difference between statutory and tax
general expenses (30) (68) (969)
Deferred acquisition costs for tax 2,254 2,950 2,629
Other (2,016) (767) (2,804)
------- ------ ------
$20,647 17,908 10,197
======= ====== ======
</TABLE>
Net realized capital gains are reflected in operations, net of taxes of
$455,000, $4,797,000 and $4,572,000 for 1994, 1993 and 1992,
respectively (see Note 2(d)).
(8) Capital and Surplus
-------------------
The Company's and ONLAC's capital and surplus exceed the NAICs risk based
capital requirements for life and health insurance companies at
the end of 1994.
The Company has designated special surplus funds for separate account
contingencies and investment guarantees totaling $1,497,000 and
$1,229,000 at December 31, 1994 and 1993, respectively.
The payment of dividends by the Company to its participating
policyholders is based on the dividend scale declared at least
annually by the Company's Board of Directors.
(Continued)
22
<PAGE> 44
14
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(9) Surplus Notes
-------------
On July 11, 1994, the Company issued $50,000,000, 8 7/8% surplus notes,
due July 15, 2004. The notes have been issued in accordance with
Section 3941.13 of the Ohio Revised Code. The net proceeds of
$49,708,000 from the issuance of the notes were recorded by the
Company as additional admitted assets. However, except as
provided in Section 3941.13, the notes are not part of the legal
liabilities of the Company and are not a liability or claim
against the Company or any of its assets. Interest payments are
scheduled semi-annually but must be approved for payment by the
Director of the Department of Insurance of the State of Ohio.
Principal payments must also be approved by the Director. All
issuance costs have been capitalized and will be amortized over
the terms of the notes. These capitalized costs are non-admitted
for statutory accounting purposes.
(10) Financial Instruments Disclosure
--------------------------------
(a) Concentrations of Credit Risk
-----------------------------
Mortgage loans are collateralized by the underlying properties.
Collateral must meet or exceed 125% of the loan at the time
the loan is made. The Company grants mainly commercial
mortgage loans to customers throughout the United States. The
Company has a diversified loan portfolio. The summary below
depicts loan exposure of remaining principal balances by
geographic area and by type at December 31, 1994 and 1993 (in
thousands):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Mortgage assets by state
-------------------------
California $135,222 $145,702
Michigan 85,918 94,039
Texas 66,886 61,342
Ohio 63,356 68,881
Florida 53,925 56,606
All others (none greater than $50 million) 365,884 368,415
-------- --------
$771,191 $794,985
======== ========
Mortgage assets by type
------------------------
Office $221,278 225,513
Retail 188,977 190,968
Industrial 145,974 157,611
Other 214,962 220,893
-------- --------
$771,191 $794,985
======== ========
</TABLE>
(Continued)
23
<PAGE> 45
15
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(10) Financial Instruments Disclosure, Continued
-------------------------------------------
(b) Financial Instruments with Off-Balance-Sheet Risk
-------------------------------------------------
The Company had outstanding commitments to fund mortgage loans,
bonds and venture capital partnerships of approximately $111.6
million and $54.6 million at December 31, 1994 and 1993,
respectively. These commitments involve, in varying degrees,
elements of credit and market risk in excess of amounts
recognized in the financial statements. The credit risk of
all financial instruments, whether on- or off-balance sheet,
is controlled through credit approvals, limits, and monitoring
procedures.
(c) Lines of Credit
---------------
As of December 31, 1994 and 1993, the Company had a $10,000,000
unsecured line of credit which has not been utilized.
(11) Contingencies
-------------
The Company and its subsidiaries are defendants in various legal actions
arising in the normal course of business. While the outcome of
such matters cannot be predicted with certainty, management
believes such matters will be resolved without material adverse
impact on the financial condition of the Company.
The Company routinely enters into reinsurance transactions with other
insurance companies. This reinsurance involves either ceding
certain risks to or assuming risks from other insurance companies.
The primary purpose of ceded reinsurance is to protect the Company
from potential losses in excess of levels that it is prepared to
accept. Reinsurance does not discharge the Company from its
primary liability to policyholders and to the extent that a
reinsureer should be unable to meet its obligations, the Company
would be liable to policyholders. Ceded reserves approximated
$35,900,000 and $33,500,000 at December 31, 1994 and 1993,
respectively.
The Company and all other solvent life insurance companies, are
periodically assessed by certain state guaranty funds to cover
losses to policyholders of insolvent or rehabilitated companies.
Some of these assessments are partially recoverable through a
reduction in future premium taxes in some states. The Company
recognizes its obligation for guaranty fund assessments when it
receives notice that an amount is payable. The Company also
recognizes an admitted asset to the extent that the assessment
can be recovered. At December 31, 1994, the Company is not able
to reasonably estimate the potential amounts of any future
assessments and accordingly, the accompanying financial statements
do not include any provision for such assessments.
24
<PAGE> 46
OHIO NATIONAL VARIABLE ACCOUNT B
INDEPENDENT AUDITORS' REPORT
The Board of Directors
The Ohio National Life Insurance Company
The Contract Owners
Ohio National Variable Account B
We have audited the accompanying statements of assets and contract owners'
equity of Ohio National Variable Account B as of December 31, 1994, and the
related statement of operations and changes in contract owners' equity for each
of the two years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of December 31,
1994, by correspondence with the custodian and transfer agent of the underlying
mutual fund. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ohio National Variable
Account B at December 31, 1994, and the results of its operations for each of
the two years then ended, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included
in Schedule 1 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
KPMG PEAT MARWICK LLP
Cincinnati, Ohio
January 20, 1995
==============================================================================
Ohio National Variable Account B
Statements of Assets and Contract Owners' Equity
December 31, 1994
<TABLE>
<CAPTION>
MONEY CAPITAL SMALL
EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets - Investments at market
value (note 2) $22,459,900 $2,317,121 $2,466,000 $18,483,012 $14,973,436 $ 357,235 $ 477,642
=========== ========== ========== =========== =========== =========== ==========
Contract owners' equity:
Contracts in accumulation
period (note 3) $21,596,829 $2,248,134 $2,430,122 $18,184,000 $14,973,436 $ 357,235 $ 477,642
Annuity reserves for contracts
in payment period 863,071 68,987 35,878 299,012 _ _ _
----------- ---------- ---------- ----------- ----------- ----------- ----------
Total contract owners'
equity $22,459,900 $2,317,121 $2,466,000 $18,483,012 $14,973,436 $ 357,235 $ 477,642
=========== ========== ========== =========== =========== =========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
-25-
<PAGE> 47
<TABLE>
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
----------------------------------------------------------------------------------------
EQUITY MONEY MARKET BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT
1994 1993 1994 1993 1994 1993
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested capital gains and
dividends $ 681,207 $ 519,606 $ 61,214 $ 64,738 $ 150,716 $ 85,799
------------ ----------- ---------- ----------- ---------- -----------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) 258,005 199,991 -- -- (21,722) 5,569
Unrealized gain (loss) (955,121) 1,552,974 -- -- (208,926) 22,095
------------ ----------- ---------- ----------- ---------- -----------
Net gain (loss) on investments (697,116) 1,752,965 -- -- (230,648) 27,664
------------ ----------- ---------- ----------- ---------- -----------
Net investment activity (15,909) 2,272,571 61,214 64,738 (79,932) 113,463
------------ ----------- ---------- ----------- ---------- -----------
Equity transactions:
Sales:
Contract purchase payments 4,453,181 3,871,814 1,225,440 621,730 1,052,268 1,041,575
Transfers from fixed and other
subaccounts 815,860 927,877 400,324 503,853 10,306 95,154
------------ ----------- ---------- ----------- ---------- -----------
5,629,041 4,799,691 1,625,764 1,125,583 1,062,574 1,136,729
------------ ----------- ---------- ----------- ---------- -----------
Redemptions:
Withdrawals and surrenders 572,332 568,863 88,760 1,081,226 39,153 25,110
Annuity and death benefit
payments 253,271 482,275 82,427 13,809 28,557 69,059
Transfers to fixed and other
subaccounts 1,744,883 842,441 545,685 1,187,388 367,642 56,572
------------ ----------- ---------- ----------- ---------- -----------
2,570,486 1,893,579 716,872 2,282,423 435,352 150,741
------------ ----------- ---------- ----------- ---------- -----------
Net equity transactions 2,698,555 2,906,112 908,892 (1,156,840) 627,222 985,988
------------ ----------- ---------- ----------- ---------- -----------
Risk and administrative expense
(note 4) 230,219 182,623 18,366 30,466 21,729 14,789
------------ ----------- ---------- ----------- ---------- -----------
Net change in contract
owners' equity 2,452,427 4,996,060 951,740 (1,122,568) 525,561 1,084,662
Contract owners' equity:
Beginning of period 20,007,473 15,011,413 1,365,381 2,487,949 1,940,439 855,777
------------ ----------- ---------- ----------- ---------- -----------
End of period $ 22,459,900 $20,007,473 $2,317,121 $ 1,365,381 $2,466,800 $ 1,940,439
============ =========== ========== =========== ========== ===========
<CAPTION>
--------------------------------------------------------------------------------------
OMNI INTERNATIONAL(a) CAPITAL APPR.(b) SMALL CAP(b)
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
1994 1993 1994 1993 1994 1994
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested capital gains and
dividends $ 683,941 $ 480,090 $105,074 $ 937 $ 3,624 $ 4,377
----------- ----------- ----------- ----------- ------------ ------------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) 196,821 106,298 43,126 14,237 190 1,283
Unrealized gain (loss) (974,886) 935,010 152,271 275,459 (3,228) 11,800
----------- ----------- ----------- ----------- ------------ ------------
Net gain (loss) on investments (778,065) 1,041,308 195,397 289,696 (3,038) 13,083
----------- ----------- ----------- ----------- ------------ ------------
Net investment activity (94,124) 1,521,398 300,471 290,633 586 17,460
----------- ----------- ----------- ----------- ------------ ------------
Equity transactions:
Sales:
Contract purchase payments 4,009,573 6,028,074 7,633,263 2,070,264 340,464 410,006
Transfers from fixed and other
subaccounts 449,347 719,635 4,000,876 1,176,241 33,537 64,261
----------- ----------- ----------- ----------- ------------ ------------
4,458,920 6,747,709 11,634,139 3,246,505 374,001 474,267
----------- ----------- ----------- ----------- ------------ ------------
Redemptions:
Withdrawals and surrenders 665,282 478,608 82,769 2,461 -- --
Annuity and death benefit
payments 236,699 111,784 105,283 2,975 -- --
Transfers to fixed and other
subaccounts 1,691,319 536,219 191,310 -- 16,617 12,604
----------- ----------- ----------- ----------- ------------ ------------
2,593,300 1,126,611 379,362 5,436 16,617 12,604
----------- ----------- ----------- ----------- ------------ ------------
Net equity transactions 1,865,620 5,621,098 11,254,777 3,241,069 357,384 461,663
----------- ----------- ----------- ----------- ------------ ------------
Risk and administrative expense
(note 4) 203,448 141,071 105,301 8,213 735 1,481
----------- ----------- ----------- ----------- ------------ ------------
Net change in contract
owners' equity 1,568,048 7,001,425 11,449,947 3,523,489 357,235 477,642
Contract owners' equity:
Beginning of period 16,914,964 9,913,539 3,523,489 -- -- --
----------- ----------- ----------- ----------- ------------ ------------
End of period $18,483,012 $16,914,964 $14,973,436 $ 3,523,489 $ 357,235 $ 477,642
=========== =========== =========== =========== ============ ============
<FN>
(a) Commenced operations April 30, 1993
(b) Commenced operations May 1, 1994
The accompanying notes are an integral part of these financial statements.
</TABLE>
-26-
<PAGE> 48
OHIO NATIONAL VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ohio National Variable Account B (the Account) is a separate account of The
Ohio National Life Insurance Company (ONLIC) and all obligations arising
under annuity contracts are general corporate obligations of (ONLIC). The
Account has been registered as a unit investment trust under the Investment
Company Act of 1940.
Assets of the Account are invested in shares of Ohio National Fund, Inc.
(the Fund), a diversified open-end management investment company. The
Fund's investments are subject to varying degrees of market, interest and
financial risks; the issuers' abilities to meet certain obligations may be
affected by economic developments in their respective industries.
Annuity reserves are computed for currently payable contracts according to
the Progressive Annuity Mortality Table. The assumed interest rate is 3.5
and 4.0 percent depending on the contract selected by the annuitant.
Charges to annuity reserves for adverse mortality and expense risks
experience are reimbursed to the Account by ONLIC.
Investments are valued at the net asset value of fund shares held. Shares
transactions are recorded on the trade dates. Income and capital gains
distributions are recorded on the ex-dividend dates. Net realized capital
gain or loss is determined on the basis of average cost.
(2) INVESTMENTS
At December 31, 1994 the aggregate cost and number of shares of Ohio
National Fund, Inc. owned by the respective subaccounts were:
<TABLE>
<CAPTION>
MONEY CAPITAL SMALL
EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate cost $19,468,449 $2,317,121 $2,639,043 $17,564,262 $14,545,706 $360,463 $465,842
Number of shares 968,308 231,712 254,410 1,252,661 1,125,568 34,859 39,837
</TABLE>
(3) CONTRACTS IN ACCUMULATION PERIOD
At December 31, 1994 the accumulation units and value per unit of the
respective subaccounts were:
<TABLE>
<CAPTION>
Accumulation Units Value per Unit
------------------ --------------
<S> <C> <C>
Equity Subaccount:
Series I 24,924.341 $81.637986
Series II 1,832.942 41.809023
Series III 30,804.764 36.283811
Series IV 561,394.335 30.616106
Series V 115,983.148 10.173015
Money Market Subaccount:
Series I 30,074.726 24.205890
Series II 11,947.813 18.355539
Series III 43,613.973 16.319825
Series IV 56,892.139 10.354108
Bond Subaccount:
Series I 3,679.343 23.002903
Series II 84,721.401 19.263675
Series III 75,521.272 9.445623
Omni Subaccount:
Series I 52,580.474 24.183329
Series II 658,066.920 24.030898
Series III 109,852.798 9.999661
International Subaccount:
Series I 13,998.872 13.259582
Series II 909,767.840 13.259582
Series III 234,799.291 11.604279
Capital Appreciation Subaccount:
Series I 34,382.168 10.390128
Small Cap Subaccount:
Series I 39,627.034 12.053440
</TABLE>
(continued)
-27-
<PAGE> 49
OHIO NATIONAL VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994
(4) RISK AND ADMINISTRATIVE EXPENSE
A deduction is made at the end of each valuation period on an annual basis
from the contract value for administrative expenses, based on premiums
established at the time the contracts are issued.
Although variable annuity payments differ according to the investment
performance of the Accounts, they are not affected by mortality or expense
experience because ONLIC assumes the expense risk and the mortality risk
under the contracts. ONLIC charges the Accounts' assets for assuming
those risks, based on premiums established at the time the contracts are
issued.
The expense risk assumed by ONLIC is the risk that the deductions for
sales and administrative expenses provided for in the variable annuity
contract may prove insufficient to cover the cost of those terms.
The mortality risk results from a provision in the contract in which ONLIC
agrees to make annuity payments regardless of how long a particular
annuitant or other payee lives and how long all annuitants or other payees
as a class live if payment options involving life contingencies are
chosen. Those annuity payments are determined in accordance with annuity
purchase rate provisions established at the time the contracts are issued.
(5) CONTRACT CHARGES
No deduction for a sales charge is made from purchase payments. A
contingent deferred sales charge may be assessed by ONLIC when a contract
is surrendered or a partial withdrawal of accumulation value is made
before the annuity payout date.
Each year on the contract anniversary (or at the time of surrender of the
contract), ONLIC will deduct a contract administration charge from the
accumulation value.
A transfer fee is charged for each transfer from one subaccount to
another. The fee is charged against the contract owner's equity in the
subaccount from which the transfer is effected.
State premium taxes presently range from 0% to 2% for these contracts.
In those jurisdictions permitting, such taxes will be deducted when
annuity payments begin. Elsewhere, they will be deducted from purchase
payments.
(6) FEDERAL INCOME TAXES
Operations of the Account form a part of, and are taxed with, operations
of ONLIC which is taxed as a life insurance company under the Internal
Revenue Code. Taxes are the responsibility of the contract owner upon
termination or withdrawal. No Federal income taxes are payable under
present law on dividend income or capital gains distribution from the Fund
shares held in the Account or on capital gains realized by the Account on
redemption of the Fund shares.
(7) SCHEDULE 1
Schedule 1 presents the components of the change in the unit values,
which are the basis for determining contract owners' equity. This
schedule is presented for each series, as applicable, in the following
format:
- Beginning unit value
- Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to capital
gain and dividend distributions from the underlying mutual fund.)
- Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the fund.)
- Contract charges
(This amount reflects the decrease in the unit value due to the
charges discussed in note 5.)
- Ending unit value
- Percentage increase (decrease) in unit value.
-28-
<PAGE> 50
<TABLE>
<CAPTION>
SCHEDULE 1
OHIO NATIONAL VARIABLE ACCOUNT B
EQUITY SUBACCOUNT
SCHEDULES OF CHANGES IN UNIT VALUES
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
1994 Series 1 Series 2 Series 3 Series 4 Series 5
<S> <C> <C> <C> <C> <C>
Beginning unit value 82.251550 42.164841 36.592684 30.876667 10.239365
Reinvested capital gains and dividends 2.711190 1.399652 1.206926 1.017393 0.336496
Unrealized loss -2.502581 -1.292096 -1.040544 -0.846236 -0.310933
Contract charges -0.822173 -0.463374 -0.475255 -0.431718 -0.091913
Ending unit value 81.637986 41.809023 36.283811 30.616106 10.173015
Percentage decrease in unit value* -0.7% -0.8% -0.8% -0.8% -0.6%
1993 Series 1 Series 2 Series 3 Series 4 Series 5
Beginning unit value 72.811547 37.362530 32.424943 27.360011 10.000000**
Reinvested capital gains and dividends 2.494718 1.292195 1.112986 0.940819 0.075476
Unrealized gain 8.416339 4.359943 3.754924 3.173986 0.255005
Contract charges -1.471054 -0.849827 -0.700169 -0.598149 -0.091116
Ending unit value 82.251550 42.164841 36.592684 30.876667 10.239365
Percentage increase in unit value* 13.0% 12.9% 12.9% 12.9% 2.4%
<FN>
* An annualized rate of return cannot be determined as contract charges do not include the contract charges discussed in note (5).
** Commenced operations October 7, 1993.
</TABLE>
<TABLE>
<CAPTION>
OHIO NATIONAL VARIABLE ACCOUNT B
MONEY MARKET SUBACCOUNT SCHEDULES OF CHANGES IN UNIT VALUES
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<S> <C> <C> <C> <C>
1994 Series 1 Series 2 Series 3 Series 4
Beginning unit value 23.578345 17.879672 15.865417 10.045964
Reinvested dividends 0.937356 0.746707 0.631794 0.400467
Contract charges -0.309811 -0.270840 -0.177386 -0.092323
Ending unit value 24.205890 18.355539 16.319825 10.354108
Percentage increase in unit value* 2.7% 2.7% 2.9% 3.1%
1993 Series 1 Series 2 Series 3 Series 4
Beginning unit value 23.247080 17.628473 15.611622 10.000000**
Reinvested dividends 0.635468 0.517316 0.426686 0.136308
Contract charges -0.304203 -0.266117 -0.172891 -0.090344
Ending unit value 23.578345 17.879672 15.865417 10.045964
Percentage increase in unit value* 1.4% 1.4% 1.6% 0.5%
* An annualized rate of return cannot be determined as contract charges do not include the contract charges discussed in note (5).
** Commenced operations October 7, 1993.
(continued)
</TABLE>
<PAGE> 51
<TABLE>
SCHEDULE 1 (CONTINUED)
OHIO NATIONAL VARIABLE ACCOUNT B
BOND SUBACCOUNT
SCHEDULES OF CHANGES IN UNIT VALUES
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<CAPTION>
1994 Series 1 Series 2 Series 3
<S> <C> <C> <C>
Beginning unit value 24.183549 20.252393 9.910842
Reinvested capital gains and dividends 1.737965 1.456380 0.710898
Unrealized loss -2.614973 -2.230031 -1.090233
Contract charges -0.303638 -0.215067 -0.085884
Ending unit value 23.002903 19.263675 9.445623
Percentage decrease in unit value* -4.9% -4.9% -4.7%
1993 Series 1 Series 2 Series 3
Beginning unit value 22.088165 18.497622 10.000000**
Reinvested capital gains and dividends 1.532950 1.293552 0.149362
Unrealized gain (loss) 0.868058 0.679532 -0.149216
Contract charges -0.305624 -0.218313 -0.089304
Ending unit value 24.183549 20.252393 9.910842
Percentage increase (decrease) in unit value* 9.5% 9.5% -0.9%
<FN>
* An annualized rate of return cannot be determined as contract charges do not include the
contract charges discussed in note (5).
** Commenced operations October 7, 1993.
</TABLE>
<TABLE>
OHIO NATIONAL VARIABLE ACCOUNT B
OMNI SUBACCOUNT
SCHEDULES OF CHANGES IN UNIT VALUES
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<CAPTION>
1994 Series 1 Series 2 Series 3
<S> <C> <C> <C>
Beginning unit value 24.578556 24.423644 10.143037
Reinvested capital gains and dividends 0.968614 0.959682 0.398562
Unrealized loss -1.048413 -1.087806 -0.451972
Contract charges -0.315428 -0.264622 -0.089966
Ending unit value 24.183329 24.030898 9.999661
Percentage decrease in unit value* -1.6% -1.6% -1.4%
1993 Series 1 Series 2 Series 3
Beginning unit value 22.018769 21.879988 10.000000**
Reinvested capital gains and dividends 0.885338 0.883171 0.088634
Unrealized gain 1.979094 1.917589 0.145079
Contract charges -0.304645 -0.257104 -0.090676
Ending unit value 24.578556 24.423644 10.143037
Percentage increase in unit value* 11.6% 11.6% 1.4%
<FN>
* An annualized rate of return cannot be determined as contract charges do not include the
contract charges discussed in note (5).
** Commenced operations October 7, 1993.
</TABLE>
(continued)
-30-
<PAGE> 52
<TABLE>
<CAPTION>
SCHEDULE 1 (CONTINUED)
OHIO NATIONAL VARIABLE ACCOUNT B
INTERNATIONAL SUBACCOUNT
SCHEDULES OF CHANGES IN UNIT VALUES
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
1994 Series 1 Series 2 Series 3
<S> <C> <C> <C>
Beginning unit value 12.404596 12.404596 10.834626
Reinvested capital gains and dividends 0.141563 0.141861 0.124472
Unrealized gain 0.887395 0.860090 0.750694
Contract charges -0.173972 -0.146965 -0.105513
Ending unit value 13.259582 13.259582 11.604279
Percentage increase in unit value* 6.9% 6.9% 7.1%
1993 Series 1 Series 2 Series 3
Beginning unit value 10.000000** 10.000000** 10.000000***
Reinvested capital gains and dividends 0.008739 0.008012 0.002818
Unrealized gain 2.549084 2.524808 0.927674
Contract charges -0.153227 -0.128224 -0.095866
Ending unit value 12.404596 12.404596 10.834626
Percentage increase in unit value* 24.0% 24.0% 8.3%
<FN>
* An annualized rate of return cannot be determined as contract charges do not include the contract charges discussed in note (5).
** Commenced operations April 30, 1993.
*** Commenced operations October 7, 1993.
</TABLE>
<TABLE>
OHIO NATIONAL VARIABLE ACCOUNT B
CAPITAL APPRECIATION SUBACCOUNT
SCHEDULE OF CHANGES IN UNIT VALUES
FOR THE YEAR ENDED DECEMBER 31, 1994
1994 Series 1
<S> <C>
Beginning unit value 10.000000**
Reinvested capital gains and dividends 0.240457
Unrealized gain 0.243420
Contract charges -0.093749
Ending unit value 10.390128
Percentage increase in unit value* 3.9%
</TABLE>
<TABLE>
OHIO NATIONAL VARIABLE
ACCOUNT B SMALL CAP SUBACCOUNT
SCHEDULE OF CHANGES IN UNIT VALUES
FOR THE YEAR ENDED DECEMBER 31, 1994
1994 Series 1
<S> <C>
Beginning unit value 10.000000**
Reinvested capital gains and dividends 0.254904
Unrealized gain 1.905839
Contract charges -0.107303
Ending unit value 12.053440
Percentage increase in unit value* 20.5%
<FN>
*An annualized rate of return cannot be determined as contract charges do not
include the contract charges discussed in note (5).
**Commenced operations May 1, 1994
</TABLE>
See accompanying independent auditors' report.
-31-
<PAGE> 53
APPENDIX
GUARANTEED ACCUMULATION ACCOUNT
The Guaranteed Accumulation Account guarantees a fixed return for a specified
period of time and guarantees the principal against loss. Any portion of a
contract relating to the Guaranteed Accumulation Account is not registered
under the Securities Act of 1933. The Guaranteed Accumulation Account is not
registered as an investment company under the 1940 Act. Accordingly, neither
the Guaranteed Accumulation Account nor any interests in it are subject to the
provisions or restrictions of either such Act, and the disclosures in this
appendix have not been reviewed by the staff of the Securities and Exchange
Commission.
The Guaranteed Accumulation Account consists of all of Ohio National Life's
general assets other than those allocated to a separate account. Purchase
payments and accumulation values under a contract will be allocated between the
Guaranteed Accumulation Account and VAB. The allocation will be as elected by
the owner at the time of purchase or as subsequently changed.
Ohio National Life will invest its general assets in its discretion as allowed
by applicable state law. Investment income from Ohio National Life's general
assets will be allocated to those contracts having guaranteed accumulation
values in accordance with the terms of such contracts.
The amount of investment income allocated to the contracts will vary from year
to year in Ohio National Life's sole discretion. However, Ohio National Life
guarantees that it will credit interest at a rate of not less than 3.25% per
year, compounded annually, to contract values allocated to the Guaranteed
Accumulation Account. Ohio National Life may credit interest at a rate in
excess of 3.25%, but any such excess interest credit will be in Ohio National
Life's sole discretion.
Ohio National Life guarantees that the guaranteed accumulation value of a
contract will never be less than (a) the amount of purchase payments allocated
to, and transfers into, the Guaranteed Accumulation Account, plus (b) interest
credited at the rate of 3.25% per year compounded annually, plus (c) any
additional excess interest Ohio National Life may credit to guaranteed
accumulation values, and less (d) any partial withdrawals and transfers from
the guaranteed accumulation values, and less (e) any contingent deferred sales
charges on partial withdrawals, state premium taxes, transfer fees, and the
portion of the $30 annual contract administration charge allocable to the
Guaranteed Accumulation Account. No deductions are made from the Guaranteed
Accumulation Account for administrative expenses or risk undertakings. (See
"Deductions and Expenses" in the prospectus.)
As provided by applicable state law, Ohio National Life reserves the right to
defer the payment of amounts withdrawn from the Guaranteed Accumulation Account
for a period not to exceed six months from the date written request for such
withdrawal is received by Ohio National Life.
-32-
<PAGE> 54
OHIO NATIONAL VARIABLE ACCOUNT B
FORM N-4
PART C
OTHER INFORMATION
<PAGE> 55
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements of the Registrant are included in Part B of
this Registration Statement:
Independent Auditors' Report of KPMG Peat Marwick LLP dated January 20,
1995
Statements of Assets and Contract Owners' Equity dated December 31, 1994
Statement of Operations and Changes in Contract Owners' Equity for the
Years Ended December 31, 1994 and 1993
Notes to Financial Statements dated December 31, 1994
Schedules of Changes in Unit Values for the Years Ended December 31, 1994
and 1993
The following consolidated financial statements of the Depositor and its
subsidiaries are also included in Part B of this Registration Statement:
Independent Auditors' Report of KPMG Peat Marwick LLP dated February 10,
1995.
Consolidated Balance Sheets dated December 31, 1994 and 1993
Consolidated Statements of Operations for the Years Ended December 31,
1994, 1993 and 1992
Consolidated Statements of Surplus for the Years Ended December 31, 1994,
1993 and 1992
Consolidated Statements of Cash Flow for the Years Ended December 31,
1994, 1993 and 1992
Notes to Consolidated Financial Statements dated December 31, 1994, 1993
and 1992
The following financial information is included in Part A of this Registration
Statement:
Accumulation Unit Values
Accumulation Unit Values for Prior Contracts
Consents of the Following Persons:
KPMG Peat Marwick LLP
Exhibits:
All irrelevant exhibits, which have previously been filed with the
Commission and are incorporated herein by reference, are as follows:
-1-
<PAGE> 56
<TABLE>
<S> <C>
(1) Resolution of Board of Directors of the Depositor authorizing establishment of the Registrant was filed as Exhibit
A(1) of the Registrant's registration statement on Form S-6 on August 3, 1982 (File no. 2-78653).
(2) Agreement of Custodianship between the Depositor and The Provident Bank was filed as Exhibit 3 of the Registrant's
Form N-4, Post-effective Amendment no. 5 on April 27, 1988 (File no. 2-91214).
(3)(a) Distribution Agreement between the Depositor and The O.N. Equity Sales Company was filed as Exhibit A(3)(a) of the
Registrant's registration statement on Form S-6 on October 25, 1982 (File no. 2-78653).
(3)(b) Registered Representative's Sales Contract with Variable Annuity Supplement was filed as Exhibit (3)(b) of the
Registrant's Form N-4, Post-effective Amendment no. 9 on February 27, 1991 (File no. 2-91214).
(3)(c) Variable Annuity Sales Commission Schedule was filed as Exhibit A(3)(c) of the Registrant's registration statement on
Form S-6 on May 18, 1984 (File no. 2-91214).
(4) Combination Annuity Contract, Form 90-VB-1, was filed as Exhibit (4) of the Registrant's Form N-4, Post-effective
Amendment no. 9 on February 27, 1991 (File No. 2-91214).
(5) Variable Annuity Application, Form V-4890B, was filed as Exhibit (5) of the Registrant's Form N-4, Post-effective
Amendment no. 11 on April 29, 1992 (File No. 2-91214).
(6)(a) Articles of Incorporation of the Depositor were filed as Exhibit A(6)(a) of Ohio National Variable Interest Account
registration statement on Form N-8B-2 on July 11, 1980 (File no. 811-3060).
(6)(b) Code of Regulations (by-laws) of the Depositor were filed as Exhibit A(6)(b) of Ohio National Variable Interest Account
registration statement on Form N-8B-2 on July 11, 1980 (File no. 811-3060).
(8) Powers of Attorney by certain Directors of the Depositor were filed as Exhibit (8) of the Registrant's Form N-4,
Post-effective Amendment no. 15 on March 27, 1995 (File no. 2-91214).
(13) Computation of Performance Data was filed as Exhibit (13) of the Registrant's Form N-4, Post-effective Amendment
no. 15 on March 27, 1995 (File no. 2-91214).
</TABLE>
-2-
<PAGE> 57
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
------------------ ---------------------
<S> <C>
Trudy K. Backus* Vice President, Individual Insurance Services
Howard C. Becker* Vice President, Corporate and Human Resources
Paul L. Bergmann* Vice President, Financial Control (Treasurer)
Michael A. Boedeker* Vice President, Fixed Income Securities
Tom D. Bowman* Vice President, Group and Pensions
Joseph P. Brom* Senior Vice President & Chief Investment Officer
Dale P. Brown Director
36 East Seventh Street
Cincinnati, Ohio 45202
Jack E. Brown Director
50 E. Rivercenter Blvd.
Covington, Kentucky 41011
William R. Burleigh Director
One West Fourth Street
Suite 1100
Cincinnati, Ohio 45202
Victoria B. Buyniski Director
2343 Auburn Avenue
Cincinnati, Ohio 45219
Raymond R. Clark Director
201 East Fourth Street
Cincinnati, Ohio 45202
David W. Cook* Senior Vice President and Actuary
Dr. Alvin H. Crawford Director
Children's Hospital Medical Center
Department of Orthopedics
Elland and Bethesda Avenues
Cincinnati, Ohio 45229
Robert M. DiTommaso* Vice President, Career Marketing
Ronald J. Dolan* Senior Vice President and Chief Financial Officer
</TABLE>
-3-
<PAGE> 58
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
------------------ ---------------------
<S> <C>
Bannus B. Hudson Director
One Eastwood Drive
Cincinnati, Ohio 45227
Daniel W. LeBlond Director
7680 Innovation Way
Mason, Ohio 45040
David G. McClure* Vice President, Variable Product Sales
Charles S. Mechem, Jr. Director
One East Fourth Street
Cincinnati, Ohio 45202
Joan E. Mettey* Vice President, Claims
James I. Miller, II* Vice President, Marketing Support
James W. Nethercott Director
8431 Concord Hills Circle
Cincinnati, Ohio 45243
Thomas O. Olson* Vice President, Underwriting
David B. O'Maley* Director, Chairman, President and Chief Executive Officer
George B. Pearson, Jr.* Vice President, PGA Marketing
Dallas L. Pennington* Vice President, Information Systems
J. Donald Richardson* Regional Vice President
D. Gates Smith* Senior Vice President, Sales
Michael D. Stohler* Vice President, Mortgages and Real Estate
Stuart G. Summers* Senior Vice President and General Counsel
Oliver W. Waddell Director
425 Walnut Street
Cincinnati, Ohio 45202
Bradley L. Warnemunde Director and Chairman Emeritus
250 William Howard Taft Road
Cincinnati, Ohio 45219
Donald J. Zimmerman* Director and Senior Vice President, Insurance Operations
and Secretary
</TABLE>
*The principal business address for these individuals is 237 William Howard
Taft Road, Cincinnati, Ohio 45219
-4-
<PAGE> 59
<TABLE>
============================================================================================================================
T H E O H I O N A T I O N A L L I F E INSURANCE COMPANY / CINCINNATI
A MUTUAL LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
============================================================================================================================
| | S E P A R A T E A C C O U N T S |
| | --------------------------------- |
| | A B C D E F |
| | ----------------------------- |
<CAPTION> | | | |
| | | |
------------------------------- ------------------------------- | -----------------------------------
ENTERPRISE PARK - INC. THE O.N EQUITY SALES COMPANY | OHIO NATIONAL LIFE
| ASSURANCE CORPORATION
|
| An Ohio Corporation
A Georgia Corporation An Ohio Corporation | A stock life insurance company
Real Estate Development Company A Broker/Dealer | capitalized by ONU @ $32,000,000
Capatilized by ONU $50,000 Capitalized by ONU @ $790,000 | Incorporated under the laws of Ohio
------------------------------- ------------------------------- | -----------------------------------
<S> <C> <C> <C> | <C> <C>
Pres. & Dir. M. Stohler Pres. & Dir. D. O'Maley | Chm./Pres./CEO & Dir. D. O'Maley
V P & Dir. J. Brom V.P. & Dir. T. Bowman | Sr. VP & Dir. R. Dolan
Secy. & Dir. T. Tews V.P. COO & Dir. D. McClure | Sr. VP/Secy. & Dir. D. Zimmerman
Treas. & Dir. P. Bergmann Secy. & Dir. R. Benedict | Sr. VP & Dir. S. Summers
Director S. Summers | Sr. VP & Dir. J. Brom
Director D. Zimmerman | Sr. Vice Pres. D. Cook
Treasurer K. Jaeger | Sr. Vice Pres. G. Smith
Asst. Secretary B. Hopewell | Vice Pres. P. Bergmann
Compliance Director A. Starkey | Vice Pres. M. Boedeker
| Vice Pres. R. DiTomasso
| Vice Pres. G. Pearson
| Vice Pres. D. Pennington
| Vice Pres. M. Stohler
| Asst. Secretary R. Benedict
| Asst. Secretary T. Tews
| Asst. Actuary K. Flischel
------------------------------- ------------------------------- | -----------------------------------
| |------------ Separate Account
| ------------------
| | R
| ----------
| |
<CAPTION> |
| |
------------------------------- ------------------------------- -----------------------------------
ONE FUND, INC. O.N. INVESTMENT MANAGEMENT CO. | OHIO NATIONAL FUND, INC.
A Maryland Corporation An Ohio Corporation |-------- A Maryland Corporation
An open and diversified A Financial Advisory service An open end diversified
management investment company Capatilized by ONESCO $145,000 management investment company
------------------------------- ------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C>
Pres. & Dir. D. Zimmerman Pres. & Dir. J. Brom Pres. & Dir. D. Zimmerman
Vice Pres. M. Boedeker V.P. & Dir. M. Boedeker Vice Pres. M. Boedeker
Vice Pres. J. Brom Advisor V.P. & Dir. D. McClure Advisor Vice Pres. J. Brom
Vice Pres. D. McClure to V.P. & Dir. S. Williams to Vice Pres. S. Williams
Vice Pres. S. Williams Treasurer D. Taney Treasurer D. Taney
Treasurer D. Taney Secretary R. Benedict Secy. & Dir. R. Benedict
Secy. & Dir. R. Benedict Asst. Secy. B. Hopewell Asst. Secy. B. Hopewell
Asst. Secy. B. Hopewell Director J. Baker
Director J. Baker Director G. Castrucci
Director G. Castrucci Director M. Kirby
Director M. Kirby
------------------------------- ------------------------------- -----------------------------------
</TABLE>
-4A-
<PAGE> 60
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Organization Chart showing the relationships among the Depositor, the
Registrant and their affiliated entities is on page 4A hereof.
ITEM 27. NUMBER OF CONTRACTOWNERS
As of July 12, 1995, the Registrant's contracts were owned by 6,050 owners.
ITEM 28. INDEMNIFICATION
The sixth article of the Depositor's Articles of Incorporation, as amended,
provides as follows:
Each former, present and future Director, Officer or Employee
of the Corporation (and his heirs, executors or administrators), or
any such person (and his heirs, executors or administrators) who
serves at the Corporation's request as a director, officer, partner,
member or employee of another corporation, partnership or business
organization or association of any type whatsoever shall be
indemnified by the Corporation against reasonable expenses, including
attorneys' fees, judgments, fine and amounts paid in settlement
actually and reasonably incurred by him in connection with the defense
of any contemplated, pending or threatened action, suit or proceeding,
civil, criminal, administrative or investigative, other than an action
by or in the right of the corporation, to which he is or may be made a
party by reason of being or having been such Director, Officer, or
Employee of the Corporation or having served at the Corporation's
request as such director, officer, partner, member or employee of any
other business organization or association, or in connection with any
appeal therein, provided a determination is made by majority vote of a
disinterested quorum of the Board of Directors (a) that such a person
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation, and (b) that, in
any matter the subject of criminal action, suit or proceeding, such
person had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself create a presumption that the person
did not act in good faith in any manner which he reasonably believed
to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, he had reasonable
cause to believe that his conduct was unlawful. Such right of
indemnification shall not be deemed exclusive of any other rights to
which such person may be entitled. The manner by which the right to
indemnification shall be determined in the absence of a disinterested
quorum of the Board of Directors shall be set forth in the Code of
Regulations or in such other manner as permitted by law. Each former,
present, and future Director, Officer or Employee of the Corporation
(and his heirs, executors or administrators) who serves at the
Corporation's request as a director, officer, partner, member or
employee of another corporation, partnership or business organization
or association of any type whatsoever shall be indemnified by the
Corporation against reasonable expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense
or settlement of any contemplated, pending or threatened action, suit
or proceeding, by or in the right of the Corporation to procure a
judgment in its favor, to which he is or may be a party by reason of
being or having been such Director, Officer or Employee of the
Corporation or having served at the Corporation's request as such
director, officer, partner, member or employee of any other business
organization or association, or in connection with any appeal therein,
provided a determination is made by majority vote of a disinterested
quorum of the Board of Directors (a) that such person was not, and has
not been adjudicated to have been negligent or guilty of misconduct in
the performance of his duty to the Corporation or to such other
business organization or association, and (b) that such person acted
in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation.
-5-
<PAGE> 61
Such right of indemnification shall not be deemed exclusive of
any other rights to which such person may be entitled. The manner by
which the right of indemnification shall be determined in the absence
of a disinterested quorum of the Board of Directors shall be as set
forth in the Code of Regulations or in such other manner as permitted
by law.
In addition, Article XII of the Depositor's Code of Regulations states as
follows:
If any director, officer or employee of the Corporation may be
entitled to indemnification by reason of Article Sixth of the Amended
Articles of Corporation, indemnification shall be made upon either (a)
a determination in writing of the majority of disinterested directors
present, at a meeting of the Board at which all disinterested
directors present constitute a quorum, that the director, officer or
employee in question was acting in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
this Corporation or of such other business organization or association
in which he served at the Corporation's request, and that, in any
matter which is the subject of a criminal action, suit or proceeding,
he had no reasonable cause to believe that his conduct was unlawful
and in an action by or in the right of the Corporation to procure a
judgment in its favor that such person was not and has not been
adjudicated to have been negligent or guilty of misconduct in the
performance of his duty to the Corporation or to such other business
organization or association; or (b) if the number of all disinterested
directors would not be sufficient at any time to constitute a quorum,
or if the number of disinterested directors present at two consecutive
meetings of the Board has not been sufficient to constitute a quorum,
a determination to the same effect as set forth in the foregoing
clause (a) shall be made in a written opinion by independent legal
counsel other than an attorney, or a firm having association with it
an attorney, who has been retained by or who has performed services
for this Corporation, or any person to be indemnified within the past
five years, or by the majority vote of the policyholders, or by the
Court of Common Pleas or the court in which such action, suit or
proceeding was brought. Prior to making any such determination, the
Board of Directors shall first have received the written opinion of
General Counsel that a number of directors sufficient to constitute a
quorum, as named therein, are disinterested directors. Any director
who is a party to or threatened with the action, suit or proceeding in
question, or any related action, suit or proceeding, or has had or has
an interest therein adverse to that of the Corporation, or who for any
other reason has been or would be affected thereby, shall not be
deemed a disinterested director and shall not be qualified to vote on
the question of indemnification. Anything in this Article to the
contrary notwithstanding, if a judicial or administrative body
determines as part of the settlement of any action, suit or proceeding
that the Corporation should indemnify a director, officer or employee
for the amount of the settlement, the Corporation shall so indemnify
such person in accordance with such determination. Expenses incurred
with respect to any action, suit or proceeding which may qualify for
indemnification may be advanced by the Corporation prior to final
disposition thereof upon receipt of an undertaking by or on behalf of
the director, officer or employee to repay such amount if it is
ultimately determined hereunder that he is not entitled to
indemnification or to the extent that the amount so advanced exceeds
the indemnification to which he is ultimately determined to be
entitled.
ITEM 29. PRINCIPAL UNDERWRITERS
The principal underwriter of the Registrant's securities is The O.N. Equity
Sales Company ("ONESCO"). ONESCO is a wholly-owned subsidiary of the
Depositor. ONESCO also serves as the principal underwriter of securities
issued by Ohio National Variable Accounts A and D, other separate accounts of
the Depositor which are registered as unit investment trusts; and Ohio National
Variable Account R, a separate account of the Depositor's subsidiary, Ohio
National Life Assurance Corporation, which separate account is also registered
as a unit investment trust; and ONE Fund, Inc., an open-end investment company
of the management type.
-6-
<PAGE> 62
The directors and officers of ONESCO are:
<TABLE>
<CAPTION>
Name Positions with Underwriter
---- --------------------------
<S> <C>
David B. O'Maley Chairman and Director
Donald J. Zimmerman President And Director
David G. McClure Vice President, Chief Operating Officer
and Director
Ronald L. Benedict Secretary and Director
Tom D. Bowman Vice President and Director
Stuart G. Summers Director
Kenneth M. Jaeger Treasurer
Amy D. Starkey Compliance Director
Barbara A. Hopewell Assistant Secretary
</TABLE>
The principal business address of each of the foregoing is 237 William Howard
Taft Road, Cincinnati, Ohio 45219.
During the last fiscal year, ONESCO received the following commissions and
other compensation, directly or indirectly, from the Registrant:
<TABLE>
<CAPTION>
Net Underwriting Compensation
Discounts and on Redemption Brokerage
Commissions or Annuitization Commissions Compensation
---------------- ---------------- ----------- ------------
<S> <C> <C> <C>
$963,635 None None None
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The books and records of the Registrant which are required under Section 31(a)
of the 1940 Act and Rules thereunder are maintained in the possession of the
following persons:
(1) Journals and other records of original entry:
The Ohio National Life Insurance Company ("Depositor")
237 William Howard Taft Road
Cincinnati, Ohio 45219
The Provident Bank ("Custodian")
One East Fourth Street
Cincinnati, Ohio 45269
(2) General and auxiliary ledgers:
Depositor and Custodian
(3) Securities records for portfolio securities:
Custodian
(4) Corporate charter, by-laws and minute books:
Registrant has no such documents.
(5) Records of brokerage orders:
Not applicable.
-7-
<PAGE> 63
(6) Records of other portfolio transactions:
Custodian
(7) Records of options:
Not applicable
(8) Records of trial balances:
Custodian
(9) Quarterly records of allocation of brokerage orders and commissions:
Not applicable
(10) Records identifying persons or group authorizing portfolio
transactions:
Depositor
(11) Files of advisory materials:
Not applicable
(12) Other records
Custodian and Depositor
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Not applicable.
-8-
<PAGE> 64
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant, Ohio National Variable Account B, has caused this
post-effective amendment to the registration statement to be signed on its
behalf in the City of Cincinnati and the State of Ohio on this 27th day of
July, 1995.
OHIO NATIONAL VARIABLE ACCOUNT B
(Registrant)
By THE OHIO NATIONAL LIFE INSURANCE
COMPANY (Depositor)
By /S/Donald Zimmerman
------------------------------
Donald J. Zimmerman, Senior Vice
President, Insurance Operations
Attest:
/S/Ronald L. Benedict
--------------------------------
Ronald L. Benedict
Second Vice President and Counsel
and Assistant Secretary
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the depositor. The Ohio National Life Insurance Company, has caused this
post-effective ammendment to the registration statement to be signed on its
behalf in the City of Cincinnati and the State of Ohio on the 27th day of
July, 1995.
THE OHIO NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By /S/Donald J. Zimmerman
--------------------------------------
Donald J. Zimmerman, Senior Vice
President. Insurance Operations
Attest:
/S/Ronald L. Benedict
----------------------------------
Ronald L. Benedict
Second Vice President and Counsel
and Assistant Secretary
<PAGE> 65
As required by the Securities Act of 1933, this post-effective amendment to the
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/David B. O'Maley
---------------------- Chairman, President, July 27, 1995
David B. O'Maley Chief Executive Officer
and Director
* /s/Dale P. Brown
---------------------- Director July 27, 1995
Dale P. Brown
* /s/Jack E. Brown
----------------------- Director July 27, 1995
Jack E. Brown
* /s/William R. Burleigh
----------------------- Director July 27, 1995
William R. Burleigh
* /s/Victoria B. Buyniski
----------------------- Director July 27, 1995
Victoria B. Buyniski
* /s/Raymond R. Clark
----------------------- Director July 27, 1995
Raymond R. Clark
*/s/Alvin H. Crawford
----------------------- Director July 27, 1995
Alvin H. Crawford
*/s/Bannus B. Hudson
---------------------- Director July 27, 1995
Bannus B. Hudson
* Daniel W. LeBlond
----------------------- Director July 27, 1995
Daniel W. LeBlond
*/s/Charles S. Mechem, Jr.
----------------------- Director July 27, 1995
Charles S. Mechem, Jr.
*/s/James W. Nethercott
----------------------- Director July 27, 1995
James W. Nethercott
</TABLE>
<PAGE> 66
<TABLE>
<S> <C> <C>
*/s/Oliver W. Waddell
----------------------- Director July 27, 1995
Oliver W. Waddell
*/s/Bradley L. Warnemunde
----------------------- Chairman Emeritus and July 27, 1995
Bradley L. Warnemunde Director
/s/David J. Zimmerman
------------------------ Senior Vice President, July 27, 1995
Donald J. Zimmerman Insurance Operations &
Secretary and Director
*By /s/Donald J. Zimmerman
--------------------------
Donald J. Zimmerman, Attorney in Fact pursuant to Powers of Attorney, copies of which have previously been filed as exhibits
to the Registrant's registration statement.
</TABLE>
<PAGE> 67
INDEX OF CONSENTS AND EXHIBITS
<TABLE>
<CAPTION>
Page Number in
Exhibit Sequential
Number Description Numbering System
------- ----------- --------------
<S> <C>
Consent of KPMG Peat Marwick LLP
</TABLE>
<PAGE> 68
CONSENTS
<PAGE> 69
Independant Auditors' Consent
-----------------------------
The Board of Directors
The Ohio National Life Insurance Company:
We consent to the inclusion of our reports included herein and to the reference
to our firm under the heading "Independent Certified Public Accountants" in the
Statement of Additional Information.
The audited financial statements of The Ohio National Life Insurance
Company and consolidated subsidaries have been prepared in accordance with
accounting practices prescribed or permitted by the Department of Insurance of
the State of Ohio, which are currently considered generally accepted accounting
principles for mutual life insurance companies. Additionally, as discussed in
the notes to The Ohio National Life Insurance Company financial statements, The
Ohio National Life Insurance Company changed its method of accounting for
postretirement health care and life insurance benefits to the accrual method as
prescribed by the National Association of Insurance Commissioners.
KPMG Peat Marwick LLP
July 26,1995
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 1
<NAME> EQUITY
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 19,468,449
<INVESTMENTS-AT-VALUE> 22,459,900
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22,459,900
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 863,071
<TOTAL-LIABILITIES> 863,071
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 734,940
<SHARES-COMMON-PRIOR> 578,884
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 21,596,829
<DIVIDEND-INCOME> 681,207
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 230,219
<NET-INVESTMENT-INCOME> 450,988
<REALIZED-GAINS-CURRENT> 258,005
<APPREC-INCREASE-CURRENT> (955,121)
<NET-CHANGE-FROM-OPS> (246,128)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,269,041
<NUMBER-OF-SHARES-REDEEMED> 2,570,486
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 2
<NAME> MONEY MARKET
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 2,317,121
<INVESTMENTS-AT-VALUE> 2,317,121
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,317,121
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 68,987
<TOTAL-LIABILITIES> 68,987
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 142,529
<SHARES-COMMON-PRIOR> 64,800
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,248,134
<DIVIDEND-INCOME> 61,214
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 18,366
<NET-INVESTMENT-INCOME> 42,848
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 42,848
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,625,764
<NUMBER-OF-SHARES-REDEEMED> 716,872
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 3
<NAME> BOND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 2,639,043
<INVESTMENTS-AT-VALUE> 2,466,000
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,466,000
<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 35,878
<TOTAL-LIABILITIES> 35,878
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 163,922
<SHARES-COMMON-PRIOR> 102,943
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,430,122
<DIVIDEND-INCOME> 150,716
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 21,729
<NET-INVESTMENT-INCOME> 128,987
<REALIZED-GAINS-CURRENT> (21,722)
<APPREC-INCREASE-CURRENT> (208,926)
<NET-CHANGE-FROM-OPS> (101,661)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,062,574
<NUMBER-OF-SHARES-REDEEMED> 435,352
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 4
<NAME> OMNI
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 17,564,262
<INVESTMENTS-AT-VALUE> 18,483,012
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<SHARES-COMMON-STOCK> 820,500
<SHARES-COMMON-PRIOR> 705,348
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<ACCUM-APPREC-OR-DEPREC> 0
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<DIVIDEND-INCOME> 683,941
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<NET-INVESTMENT-INCOME> 480,493
<REALIZED-GAINS-CURRENT> 196,821
<APPREC-INCREASE-CURRENT> (974,886)
<NET-CHANGE-FROM-OPS> (297,572)
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<NUMBER-OF-SHARES-SOLD> 4,458,920
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 5
<NAME> INTERNATIONAL
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 6
<NAME> CAPITAL APPRECIATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
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<NET-ASSETS> 357,235
<DIVIDEND-INCOME> 3,624
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<NET-INVESTMENT-INCOME> 2,889
<REALIZED-GAINS-CURRENT> 190
<APPREC-INCREASE-CURRENT> (3,228)
<NET-CHANGE-FROM-OPS> (149)
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<NUMBER-OF-SHARES-SOLD> 374,001
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 7
<NAME> SMALL CAP
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 465,842
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS OF THE OHIO NATIONAL
LIFE INSURANCE COMPANY AND CONSOLIDATED SUBSIDIARIES, DECEMBER 31, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000073980
<NAME> THE OHIO NATIONAL LIFE INSURANCE COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<DEBT-HELD-FOR-SALE> 0
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<DEBT-MARKET-VALUE> 0
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<RECOVER-REINSURE> 938
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<POLICY-LOSSES> 3,110,635
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<POLICY-OTHER> 18,263
<POLICY-HOLDER-FUNDS> 481,027
<NOTES-PAYABLE> 0
<COMMON> 0
0
0
<OTHER-SE> 231,974
<TOTAL-LIABILITY-AND-EQUITY> 4,290,628
613,182
<INVESTMENT-INCOME> 320,150
<INVESTMENT-GAINS> (510)
<OTHER-INCOME> 0
<BENEFITS> 686,718
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 84,177
<INCOME-PRETAX> 45,798
<INCOME-TAX> 20,647
<INCOME-CONTINUING> 24,641
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<EPS-PRIMARY> 0
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<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
